StrictlyVC: June 20, 2014

StrictlyVC is so very happy it’s Friday! Have a terrific weekend, everyone, and we’ll see you Monday.:)

—–

Top News in the A.M.

Apple‘s smartwatch, which could reportedly hit the market as early as October, will likely come in multiple screen sizes and feature more than 10 sensors, including ones to track health and fitness, reports the WSJ.

—–

Currency Expert: Bitcoin “Not a Clear Winner”

Jesse Powell was once a hard-core gamer who spent his teen years playing the trading card game “Magic: The Gathering” in tournaments around the country. The 33-year-old has become somewhat of a currency specialist since. Back in March 2011, while the rest of the tech world was obsessing over Facebook’s valuation, Powell was shutting down his gaming forum and e-commerce business to focus on Bitcoin, eventually founding the venture-backed cryptocurrency exchange Kraken.

Kraken trades a variety of “coins,” including Litecoin, Dogecoin, Namecoin, Ven and Ripple. But the company, which makes its money off exchange fees, receives the bulk of its revenue by trading 1,000 to 2,000 Bitcoin per day (valued at between $600,000 and $1.2 million, based on its current price of $601).

That ratio could change, Powell told me yesterday in an interview that’s been edited for length.

When you were building Kraken, did you anticipate that Bitcoin would become so much more dominant than other virtual currencies?

I didn’t know if Bitcoin would be the currency to end all currencies. I thought it might be version 1.0 and that somebody might come out with something much better. It was hard to know if it’d be the Facebook of currencies or the MySpace, so we wanted to be currency agnostic and be able to capture the market, whichever way it developed.

Do you have your answer now?

I’m not nearly as bullish on Bitcoin as I was a year ago. There are a lot of good-looking new currencies coming out. Bitcoin has a huge network effect right now and a brand name, but technically it has some problems. The mining lately has been a big problem; consolidation is a big risk for the whole system.

You’re talking that mining pool that has, numerous times, provided more than half the computational power needed to mine new coins. Can you explain what a mining pool is to readers and why that’s such bad news?

With mining, you’re basically crunching numbers, solving puzzles with your computing power and coding; it’s the way you prove that you’re securing the network, that you’re auditing the transaction. It’s kind of like, because so much auditing [goes into each transaction] it would be impossible for someone to scam the system. But if someone controls more than 50 percent of all Bitcoin mining taking place, that person or group could have a majority vote and basically dictate what happens. So someone could spend Bitcoin, and you could say, “No, my 51 percent vote says you didn’t” in order to sell the same Bitcoin twice.

Why do people use mining pools in the first place?

It’s like a lottery pool. People compete to mine the coins, with a winner rewarded with 25 of them every 10 minutes. So people tend to pool their mining efforts to increase their likelihood of getting some portion [of those Bitcoin], and they often want to be part of the biggest pool to increase their odds, even though [what they’d win] would be less valuable [divided up among more people]. But a pool that can tip past 50 percent is a big problem.

Wouldn’t miners be hurting themselves if they tried scamming the network?

Financially, it’s not in their best interest, because people would stop using it. But, say, China directed all the fabs in the country to stop producing chips for Apple and start producing Bitcoin mining chips. A country does have the ability to destroy bitcoin.

And no one could do anything about it?

There are things that could be done, changes to the way that mining is done that could make China’s miners obsolete overnight. But other coins that are emerging don’t have this vulnerability, like Ripple [which is] why I could see another currency like Ripple or [the next-generation cryptocurrency] Ethereum emerging as the winning currency – or maybe we’ll just have 100 different currencies.

Do you have a financial stake in Ripple?

Yes, I am an investor in Ripple Labs, and I have some [of its] currency.

It may be that Bitcoin lives on as a store of value, like gold, but isn’t used in day-to-day transactions. But I think there’s enough new interesting stuff that’s built off the Bitcoin idea that it’s not a clear winner.

—–

New Fundings

Algolia, a 1.5-year-old, San Francisco-based company that makes a developer-friendly SaaS API for database search, has raised an additional $1.2 million in seed funding led by Storm Ventures. The company has now raised $2.8 million altogether, including from Y Combinator500 StartupsAlven CapitalIndex Ventures and Point Nine Capital.

Aspire Health, a three-year-old, Nashville-based palliative care start-up, has raised an undisclosed amount of Series B funding from BlueCross BlueShield Venture Partners, the insurance company’s investment arm, which is managed by the Chicago-based firm Sandbox Industries. Aspire was co-founded by former Republican Senator Bill Frist; it sets up house-call physician practices to treat the sick, in person and over the phone. The Tennessean has more here.

Compliant Innovations, a 1.5-year-old, Sunnyvale, Ca.-based company behind a case collaboration app that let’s surgeons and care teams communicate about patient care, has raised an undisclosed amount of Series A funding from Lifeforce Ventures and Attractor Ventures.

ieCrowd, a 3.5-year-old, Riverside, Ca.-based company that buys and tries to commercialize intellectual property from university research labs, has raised $2.2 million in new seed funding from undisclosed investors.

JHL Biotech, a two-year-old, Taiwan-based company that sells contract manufacturing services to companies developing and commercializing biologic medicines in Asia, has raised $35 million in Series B funding led by new investors Milestone Capital and unnamed Taiwanese venture capitalists and individuals. Earlier investors, including China Development Industrial BankBiomark Capital and Kleiner Perkins Caufield & Byers, also participated in the round.

Light Chaser Animation Studios, a 1.5-year-old, Beijing-based company that makes animated films, has raised $20 million in Series B funding led by GGV Capital and Chengwei Capital, with participation from Hillhouse Capital and earlier investor IDG Capital Partners.

MiTu, a two-year-old, Culver City-based developer of streaming digital content for the Latino market, has raised $10 million in Series B funding led by Upfront Ventures. The company’s other investors included The Chernin GroupAdvancit Capital, and Machinima co-founder Allen DeBevoise. MiTu says it has 400 million monthly video views, 40 million subscribers and 1,200 video creators creating content for its channels. Variety wrote about it last year.

Navitor Pharmaceuticals, a new, Cambridge, Ma.-based biotech company that’s exploring uses of the so-called mTORC1 pathway, has raised $23.5 million from Polaris PartnersAtlas Venture, and Johnson & Johnson Development Corp. The Boston Business Journal has muchmore here.

Review Trackers, a two-year-old, Chicago-based service that helps businesses aggregate and manage online reviews about them, has raised $2 million in funding led by Milwaukee’s CSA Partners, with participation from American Family VenturesSymphony Alpha Ventures and angel investor Jeff Rusinow.

Saltside Technologies, a three-year-old, Gothenburg, Sweden-based online marketplaces platform aimed at emerging markets, has raised $25 million in funding, led by AB Kinnevik. The company now has operations in Sri Lanka, Bangladesh and Ghana, Africa. TechCrunch has more here.

Siva Power, an eight-year-old, San Jose, Ca.-based maker of solar panels has closed on $15 million in new funding from the Chinese city of Wuxi and earlier investors Trident CapitalDBL Investors, and Acero Capital Management.

Sidecar Interactive, a four-year-old, Philadelphia-based company that has developed an automated online marketing platform, has raised $3.1 million in new venture funding led by Osage Venture Partners. The company has reportedly now raised $8.1 million to date, including from NextStage CapitalInnovation VenturesGabriel InvestmentsBen Franklin Technology PartnersMid-Atlantic Angel GroupRobinhood Ventures, and ARC Angel Group.

TouchofModern, a two-year-old, San Francisco-based e-commerce website geared toward male customers, has raised $14 million in Series B financing led by Partech Ventures. Other participants in the round included Great Oaks Venture CapitalLucas Venture GroupSilicon Valley Bank and earlier investors Hillsven Capital and Floodgate. The company has raised $17 million to date, shows Crunchbase. PandoDaily has more here.

Tyrogenex, an eight-year-old, West Palm Beach, Ca.-based biotechnology company researching and developing treatments for solid tumors, has raised $15 million in Series D financing from Brace Pharma, the U.S. investment company of EMS S/A, the largest pharmaceutical company in Brazil.

—–

New Funds

Clarus Ventures, a nine-year-old, Cambridge, Ma.-based life sciences venture firm, has raised $234.2 million for its new fund, according to a new SEC filing. Clarus Ventures first registered a filing for the fund, which lists a target of $375 million, in February. At either the current or target size, the fund will be meaningfully smaller than Clarus’s last two funds. The firm closed its second, $660 million fund, in 2008 and its inaugural, $500 million, fund in 2005.

Costanoa Venture Capital, a 2.5-year-old, Palo Alto, Ca.-based early-stage firm, is hoping to raise $135 million for its second fund, shows an SEC filing that states the first sale has yet to occur. The fund, Costanoa Venture Capital II, would be larger than the firm’s debut $100 million fund. Costanoa was founded by Greg Sands, formerly of Sutter Hill Ventures; in February, he added a second partner, Neill Occhiogrosso, who joined from an evergreen fund called Investor Growth Capital. It focuses primarily on cloud-based services — especially companies that focus on data and analytics.

Palo Alto Venture Science, a new, Palo Alto, Ca.-based fund founded by former business-intelligence consultant Matt Oguz, is looking to raise $200 million for a new fund, reports Forbes. Oguz, like Google Ventures and a growing number of firms, has a more data driven-approach, telling Forbes that he has built a a scoring system for companies that looks at 13 variables, including “intellectual property” and “sales approach.” More here.

Polaris Partners, the 18-year-old, Boston-based firm with offices in San Francisco and Dublin, Ireland, is raising a seventh fund and targeting $400 million for the effort, reports Fortune’s Dan Primack. The firm closed its sixth fund, a $375 million pool, in 2011. In what looks like a succession-related step, co-founders Jon Flint and Terry McGuire are now listed on Polaris’s site as founding partners, notes Primack, while four younger professionals — Dave BarrettBrian CheeAmir Nashant and Bryce Youngren — are listed as managing partners.

—–

IPOs

Mobileye, a 15-year-old, Har Hotzvim, Israel-based company whose software algorithms and camera-based technology helps drivers see and manage traffic risks, has registered to go public, though it has yet to disclose how many shares it plans to offer and at what price range. The company has raised at least $515 million over the years, shows Crunchbase. Some of the company’s biggest shareholders include Goldman Sachs, which owns a 17.5 percent stake; Fidelity, which owns 7.8 percent; Enterprise Holdings, which owns 7.1 percent; and Blackrock, which owns 5.7 percent.

—–

Exits

Alpental Technologies, a year-old, Seattle-based wireless communication startup started by former Clearwire engineers including Michael Hart and Pete Gelbman, has been acquired by Google for undisclosed terms. The company never publicly disclosed funding, but Geekwire had discovered an SEC filing last summer that showed it had raised $850,000 from investors. More here.

mDialog, a nine-year-old, Toronto-based video advertising technology startup, has been acquired by Google for an undisclosed amount. MDialog had raised at least $8 million from investors, including Relay Ventures, shows Crunchbase.

MasteryConnect, a 4.5-year-old, Salt Lake City-based maker of evaluation software that helps teachers assess their students’ performances, has acquired 3.5-year-old, Cambridge, Ma.-based education-technology peer Socrative for $5 million in a cash-and-stock deal. MasteryConnect previously raised $1.1 million in a seed round and $7.9 million in a Series A round led by NewSchools Venture Fund and Catamount Ventures. Socrative had raised $760,000 in seed funding led by True Ventures. The WSJ has more here.

—–

People

Life sciences investor Steven Burrill was quietly removed from control of a $283 million venture capital fund back in March, reports Forbes. Burrill famously founded Burrill & Co., the 20-year-old, diversified merchant bank that does venture investing, investment banking, private equity, media, and events. Reportedly, in an inspection of the books and records of the venture fund by a financial advisory services firm, it was discovered that $19.2 million had been paid out to various affiliates of Burrill (the man, not the firm) in excess of what had been earned. Forbes reports that Burrill also failed to make nearly half a million dollars in capital contributions that were required under the firm’s partnership agreement with its investors. It was known that Burrill & Co. had hit on hard times in recent years. Now, it’s looking like a December piece in Xconomy about its woes merely scratched the surface.

Kevin Rose of Google Ventures may have been looking to escape to Portland to get away from anti-tech protesters who began gathering outside his San Francisco home in early April. But Rose finds himself at the center of another controversy, after buying a Willamette Heights home that he now plans to demolish and replace with a new, modern home. According to the Oregonian, hundreds of neighbors have signed a petition asking him to leave alone the somewhat historic house, built in 1892 and “in very good condition,” according to a local real estate broker quoted in the article. “We did expect him to do a substantial remodel,” added the broker. “[B]ut you pay $1.3 million and tear a house down? In Portland? That doesn’t happen in Portland.” Rose has said he would donate the house’s materials to charity to be re-used; he has also apparently offered to sell the house back to its previous owners, who didn’t return a call from the paper.

—–

Job Listings

Handybook, a two-year-old, New York-based company whose app connects users with on-demand housecleaners and home repair services (and that announced $30 million in funding last week), is looking for business development managers in Chicago and Toronto.

—–

Essential Reads

In a unanimous decision, the Supreme Court has ruled that a series of banking patents didn’t cover a concrete software process but an abstract idea, potentially setting a stricter precedent for future patents.

What Silicon Valley investors are using to track the Next Big Thing.

—–

Detours

Life in the ’80s, as seen through old Sharper Image catalogs.

Jeremy Meeks’s mugshot is going viral, “not because he was arrested on five weapons charges” in Stockton, Ca. but “because he’s very, very, handsome.”

We’re a little tired right now, but we’re pretty sure this would be hilarious under any circumstance.

—–

Retail Therapy

Ever wanted to measure your heartbeat through your derriere? Now you can (no pun intended).

—–

To sign up for StrictlyVC, click here. To advertise, click here.


Leave a Reply

Your email address will not be published. Required fields are marked *

*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>