StrictlyVC: June 18, 2014

Hi, good Wednesday morning, everyone. StrictlyVC was out much of yesterday so we have a slightly rushed column for you today. Hope you enjoy it, though, and we’ll see you back here tomorrow!

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Top News in the A.M.

Apple has just released a new model of iMac, and it’s considerably cheaper than its predecessors.

BlackBerry will bring thousands of apps from Amazon‘s store to its Blackberry 10 phones, coming this fall.

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Arvind Sodhani on the Giant that is Intel Capital

Last week, at a conference in San Francisco, I was asked to interview Intel Capital’s president Arvind Sodhani, who also holds the title of executive VP of Intel Corporation. The idea was to give the audience insight into how the nine-year-old corporate venture unit – which employs 85 investors around the world and invests between $300 million and $500 million each year – does what it does.

Suffice it to say that it’s complicated. Here’s a cheat sheet, though, for investors and entrepreneurs looking for more, ahem, intel.

Intel, like most corporate VCs, won’t invest in something that looks like it could be a financial home run but has no bearing on the company’s business. Every investment has to have the potential of delivering both a strategic and financial return. The good news: In one form or another, Intel’s business touches almost every sector out there, so it’s investing in everything from wearables to semiconductors to Hadoop, the bedrock software of so-called big data businesses — which Intel sees as a growth sector. Indeed, readers might recall that in late March, Intel forked over$740 million for an 18 percent stake in Cloudera, which produces the most popular version of the Hadoop software framework.

Which raises another point: Intel Capital is stage agnostic. While it sometimes makes a swing-for-the-fences deal like Cloudera, it’s also willing to fund very nascent ideas, Sodhani told me last week, calling the organization’s “sweet spot between $5 million and $20 million – that’s where we’re doing the bulk of our investments.”

As for where it’s making its bets geographically, Sodhani said that half of Intel Capital’s investments are here in the U.S., with the rest distributed globally, including in China, where the organization recently committed to invest up to $100 million in companies working on smart devices, as well as Israel, Russia, India, Brazil, Japan and elsewhere.

Unsurprisingly, some places work out better than others. Intel Capital has backed companies in places like Vietnam and Chile, for example, but hasn’t been able to consistently find deal flow in either country. It also recently placed an investor in Nigeria to scout out opportunities in Africa, though Sodhani said it “takes a year-and-a-half to two years before someone new in a country can get going and see investments . . . When you arrive in a new country, it takes time to figure out the legal framework, what instruments are available . . . there are lots of different issues.”

One of them is helping to develop a tech-friendly ecosystem, which Sodhani credits Intel Capital with doing in a variety of places like Vietnam, where startups are still a relatively new phenomenon. While there are plenty of founders, said Sodhani, wresting potential employees out of their solid jobs to work for those founders is still in an upward battle. “Entrepreneurs are willing to take the risk; the hard part is how do you get the rest of the people to come and join the company.”

Before we’d parted ways, I’d asked Sodhani to share how investment decisions are made within Intel Capital. He suggested that, despite the sprawling design of the organization, it isn’t unlike most venture firms. Every Tuesday, it holds a weekly partner meeting where all deals receive some air time and potential new investments are presented. Company experts are then brought in to discuss and evaluate new funding prospects, questions are asked and researched, and after at least a second look at a company, a committee of five people within Intel Capital decides whether or not to back it. (Sodhani says that Intel Capital can “move lightening fast when there’s a great deal if we’re made aware that it’s a competitive situation. We can put together a term sheet in less than 24 hours if we want.”)

Like a lot of firms with deep pockets, Intel Capital is also willing to overlook price if the technology is deemed as a must-have. “Valuations are very [high], and I’d say that we’re probably getting to a point where we need to be careful of them,” Sodhani said. Still, he’d added, “some things we have to hold our noses and say, [Let’s move forward], because the technology is important to us.”

Open source software is one of those things, he continued. “It’s becoming very expensive, but open source is producing lot of software that’s critical. The whole trend of IT migration to the cloud — that’s a $30 trillion idea.”

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New Fundings

Appier, a two-year-old, Tapei-based company whose advertising technology is used for cross-screen targeted marketing across a range of devices, has raised $6 million in Series A funding from Sequoia Capital. TechCrunch has more here.

AuraSense Therapeutics, a 4.5-year-old, Evanston, Il.-based company focused on commercializing spherical nucleic acid conjugates, has raised $13.6 million in Series C funding from a long list of investors, including Microsoft cofounder Bill Gates; Microsoft executive Craig MundiePatrick Ryan, founder of Aon; David Walt, co-founder of Illumina; Boon Hwee Koh, director of Agilent Technologies; and the Rathmann Family Foundation. The company has raised at least $21.5 million to date, including from Abbott Biotech Ventures.

BioCatch, a four-year-old, Boston-based company that makes cyber-security software focuses on online and mobile fraud mitigation, has raised $10 million in funding led by Blumberg Capital and the equity crowdfunding firm OurCrowd. Other, unnamed investors also participated in the round, which brings BioCatch’s total funding to $11.6 million

BucketFeet, a three-year-old, Chicago Heights, Il.-based company that specializes in artist-designed footwear, has raised $3.7 million in funding led by Bridge Investments and Jumpstart Ventures. Other participants in the round included Levy Family PartnersListen Ventures, and individual investors, including Crate & Barrel founder Gordon Segal. The company has raised $5.8 million to date.

BitPagos, a year-old, electronic-payment company that supports bitcoin and credit card payments and has offices in both Palo Alto, Ca., and Buenos Aires, has raised $600,000 in seed funding from Pantera CapitalTim DraperBarry SilbertBoost Bitcoin FundAmasia and others. The company is a graduate of the San Mateo, Ca.-based Boost VC accelerator program, which focuses on virtual-currency startups.

Kony, a seven-year-old, Orlando, Fla.-based company behind a mobile application development platform, has raised $50 million in new funding co-led by Softbank Capital and earlier investor Insight Venture Partners. The company has now raised at least $98.4 million, according to Crunchbase, including from Telstra VenturesGeorgian PartnersDelta-v Capital, and Hamilton Lane.

Onapsis, a 4.5-year-old, Cambridge, Ma.-based cyber-security software firm focused protecting highly sensitive applications within large companies and government agencies, has raised $9.58 million in funding led by .406 Ventures, which was joined by Endeavor Catalyst. The company had previously raised $3 million from investors, including TPG founder David Bonderman.

Other Machine Co., a 1.5-year-old San Francisco-based startup that makes what it called 3D cutters, has raised $8.5 million in Series A funding from investors that include Broadway AngelsAllegro Venture PartnersCore Ventures GroupCrunchfundVegasTechFundSlow Ventures and several angel backers including Autodesk CEO Carl Bassand 3D Robotics CEO Chris Anderson. The WSJ has much more on the company here.

Quantum Technology Sciences, a 15-year-old, Cocoa Beach, Ca.-based maker of intrusion detection and movement monitoring software designed for securing energy assets, has raised $4.4 million in Series A funding round from investors knowledgeable about oil and gas production, including Jim Farnsworth, chief exploration officer with Cobalt International Energy, Infinity Oil & Gas; Texas-based investment firm McNair Group; and Bud Brigham of Anthem Ventures.

Rhiza, a six-year-old, Pittsburgh, Pa.-based maker of marketing analytics tools, has raised $3 million in Series A funding led by Draper Triangle Ventures. Other investors in the round included Arthur Ventures andCamp One Ventures.

SIM Partners, an eight-year-old, Evanston, Il.-based digital marketing company, has raised $8 million in Series A funding, including from River Cities Capital Funds in Cincinnati and Chicago-based Jump Capital Partners. The company’s software is used by large companies to provide standardized online-marketing content across their locations and affiliates.

Sunverge Energy, a five-year-old, San Francisco-based maker of distributed energy management systems, has raised $15 million in Series B funding led by the Southern Cross Renewable Energy Fund.Siemens Venture Capital and Total Energy Ventures International also participated in the round.

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New Funds

Arrowroot Capital, a six-month-old, Santa Monica, Ca.-based growth equity firm, is targeting $50 million for its debut fund, shows an SEC filing. Founder and managing partner Matthew Safaii is the only person listed on the filing. Safaii was previously a managing director and head of the acquisitions team at ICG Group, the publicly traded venture capital firm.

Bain Capital Ventures has raised a new, $935 fund, reports Dealbook, a pool that comes in two parts, it says. The core fund totals $715 million, of which $65 million was committed by Bain employees and the balance was from outside investors. Bain also raised a separate fund totaling $220 million, which includes $20 million from Bain insiders. More here.

Danhua Capital, a year-old, Palo Alto, Ca.-based early-stage fund founded by Stanford physics professor Shoucheng Zhang and Stanford alumnae Anjia Gu have raised $91.3 million for its debut fund, shows a new SEC filing. Among the firm’s bets so far is Apportable, a San Francisco-based mobile development technology company that raised $5 million earlier this year.

James Joaquin, a former partner with Catamount Ventures and an entrepreneur whose experience includes roles as CEO of Xmarks, Xoom and Ofoto, as well as co-founder of When.com, is raising his own venture fund under the name Obvious Ventures. A new SEC filing for the fund doesn’t list a target. The site is here.

Lightspeed China Partners is back in the market and raising $260 million for its second fund, shows an SEC filing. The affiliate of Lightspeed Venture Partners closed its first fund with $168 million in January of last year after targeting $150 million. It invests exclusively in China-based businesses, with a focus on startups in the the Internet, mobile, services and enterprise software.

Microsoft Ventures is launching a new, Redmond, Wa.-based accelerator for startups that are developing technologies to automate the home, the company tells Venture Capital Dispatch.

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IPOs

CyberArk Software, a 15-year-old, Lower Newton Falls, Ma.-based cybersecurity software company, recently submitted a preliminary, confidential filing to list on Nasdaq, according to VentureWire sources who say the company plans to sell a 15 percent to 20 percent stake in an IPO at a valuation of between $500 million and $1 billion. CyberArk has raised at least $43 million over the years, show Crunchbase. Its investors include Jerusalem Venture Partners and Goldman Sachs.

Sage Therapeutics, a four-year-old, Cambridge, Ma.-based biopharmaceutical company that’s developing a drug for a life-threatening seizure condition, has filed to go public. The company has raised at least $93 million from investors. Its biggest shareholders include Third Rock Ventures, which owns 58.5 percent of the company; ARCH Venture Partners, which owns 21.3 percent; and Fidelity Investments, which owns 5.6 percent.

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Exits

GlassHouse Technologies, a 13-year-old, Boston-based data center services provider, has filed for bankruptcy, reports Boston Business Journal. The firm twice pulled plans to go public. GlassHouse had raised $91.3 million, shows Crunchbase, including from Citrix SystemsCisco,GrandBanks CapitalKodiak Venture PartnersPaladin Capital GroupGlobespan Capital PartnersMontagu Newhall Associates, and Sigma Partners.

Oracle is nearing a deal to buy the publicly traded hospitality-industry software provider Micros Systems for more than $5 billion, according to Bloomberg sources. The deal would be Oracle’s largest since its $5.7 billion takeover of Sun Microsystems, announced in 2009, says Bloomberg.

Silevo, a seven-year-old, Fremont, Ca.-based company that makes solar modules, is being acquired by SolarCity, the full-service solar energy services company that went public in late 2012. Silevo has raised more than $33 million from investors, including DT Capital PartnersGSR Ventures and NewMargin Ventures.

Tail-f Systems, a nine-year-old, Stockholm-based maker of configuration management and network automation software, has been acquired by Cisco for $175 million to broaden its cloud-services offerings. Tail-f Systems had raised $6.3 million from SEB Venture Capital, according to Crunchbase.

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People

When boxing champion Floyd Mayweather decided to throw a million dollars into his first tech venture, he literally threw a million dollars, stuffed into a gym bag, at the company’s founder, a former employee of his named John Shahidi. “Champ, we can’t do it that way,” Shahidi told him. “There has to be paperwork.”

Richard Mordini has left Javelin Venture Partners — where he spent the last five years as a senior associate, then venture partner — to join Fooda, a three-year-old company that delivers food from local restaurants to employees at work. Mordini joins the company as its VP of finance after taking a “long look at it while an investor,” he tells StrictlyVC. “Fooda’s been at the food game for a bit longer than the newer entrants and is sort of executing in the ‘Chicago style’ of Groupon . . . blocking and tackling unnoticed until all of a sudden it’s not.” Fooda has raised $7.8 million to date, including from Lightbank and Valor Equity Partners.

One Kings Lane, the online home decor retailer that raised a $112 million Series E round at a $900 million valuation in January, is laying off between 15 and 20 percent of its staff, reports Re/code. More here.

Gary Swart, the longtime CEO of oDesk, the online workplace platform, is joining Polaris Partners as a venture partner in San Francisco. Swart left oDesk the first week of April, when its merger with former rival ELance was completed. Swart tells StrictlyVC that at Polaris, he’ll be “focused on marketplaces . . . and SaaS companies, which is very similar to the Polaris approach already.”

Investor Hunter Walk of Homebrew, who spent roughly a decade at Google before becoming a venture capitalist, published some thoughts on Twitter last night about why “startups,” like Facebook‘s new ephemeral messaging app Slingshot, are difficult to nurture inside established large companies. Among the factors Walk listed was legal risk. “Parent co won’t let ‘startup’ into gray areas out of lawsuit fear. Big pocketbook.” A second concern: brand risk, meaning “big [company] brand tied to ‘startup’ influences what startup can do. What happens on Slingshot impacts P&G ad buys on Facebook.” Partner risk is another factor, wrote Walk, tweeting, “Potential partners treat ‘startup’ as part of large [company] and react accordingly to tech, distribution, etc. [opportunities].” Walk added: “Google had all sorts of these ‘startups’ inside. All failed. Now they let those folks start companies [and Google Venture] funds. Much better model.”

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Job Listings

The global, early-stage venture firm e.ventures is looking for an associate, per a new listing on LinkedIn. The job is in San Francisco.

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Happenings

Next Friday, in San Francisco, 500 Startups hosts PreMoney, a one-day conference for accredited investors about the future of venture capital. You can check out the speaker line-up here; registration is over here.

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Essential Reads

Inside the secretive R&D lab where Amazon has been developing a 3D phone since 2009.

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Detours

The genius of “Silicon Valley.”

How to anonymize everything you do online.

Comic John Oliver and celebrated physicist Stephen Hawking talk robots and more. Asks Oliver at the segment’s end: “If time travel were possible, would you want to go back in time and refuse to do this interview?” “Yes,” answers Hawking. Oliver: “You truly are an incredibly smart man.”

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WashApp, a new app that’s trying to crowdsource the business of washing your clothes, is offering StrictlyVC readers a discounted spin (heh, heh) as long as you live in San Francisco. You can download the app here. (To get $10 off, use the code WASH10. If you order from the site directly, just mention the newsletter when you hit the “special instructions” field.)

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