StrictlyVC: August 20, 2014

Good morning, everyone! Hope your Wednesday is off to a fine start.

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Top News in the A.M.

Twitter said yesterday that it will remove images of deceased individuals at the request of family members. Relatedly, the company say it’s actively suspending the accounts of anyone tweeting graphic images of the apparent execution yesterday of photojournalist James Foley.

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Is Keith Teare Crazy, or Crazy Like a Fox?

In Silicon Valley, entrepreneurs and investors are often rewarded for having outsize ambitions. Perhaps it’s no wonder then that tech industry veteran Keith Teare — who hasn’t managed any institutional money in his career – has set his sights on raising two new investment funds that he expects will total $800 million.

The first $400 million fund that Teare plans to open to investors next month is Micro Fund Capital, a fund of funds that will targets micro funds; a second fund that’s also targeting $400 million will make direct investments in the first portfolio’s breakout successes. Its name: 2nd Round Capital.

Certainly, LPs could do worse than listen to Teare, whose background makes him as well-suited to invest hundreds of millions of dollars as many VCs in the business. In 1994, for example, he cofounded one of Britain’s first consumer-facing ISPs, EasyNet, which remains a large DSL carrier. Among other things, Teare also cofounded the Internet keyword company RealNames; the classified ad company edgeio; the media company TechCrunch; and Archimedes Labs, a small outfit that incubates, invests in and advises tech startups.

Not all of Teare’s companies have been unmitigated successes. RealNames was poised to go public just as the dot com bubble burst; it shut down operations in 2002. Teare’s startup edgeio, cofounded with famed blogger Michael Arrington, also landed in the so-called deadpool in 2007. The pair did much better with TechCrunch, which sold to AOL in 2010 for a reported $30 million.

Archimedes Labs –originally a joint endeavor of Arrington and Teare and today a company operated by six other business executives, including Kambiz Hooshmand — has also had hits and misses, though its portfolio holds promise. For example, Archimedes furnished M.dot, a mobile site building app, with its first check. (M.dot was acquired last year by GoDaddy in a mostly stock deal that could prove lucrative if GoDaddy goes public as expected.) Archimedes was also the first investor in Quixley, an app search engine that has raised roughly $75 million over the last five years, including a $50 million round led by Alibaba last fall.

The big question, naturally, is why Teare thinks investors will give him hundreds of millions of dollars to invest for his newest act. While he has raised some outside money for Archimedes, he characterizes the amount as “very small.” (Archimedes typically writes checks of between $25,000 and $100,000 and has 14 companies in its portfolio.) Most operators with a similar profile — including Arrington — start small and raise progressively larger pools as they prove out their theses.

Teare says that he; Hooshmand; and a third partner, Patrick Gannon, a founder at LendingClub, originally planned to raise a $25 million microfund. In fact, he says that “within about two weeks, we had $6 million in commitments.” But he says the interest was coming entirely from small investors — which gave him an idea.

“It’s clear that microfunds are too small for institutional investors” other than the few fund of funds that target them expressly, including Cendana Capital and Weathergage Capital, says Teare. With such firms already overwhelmed by requests — and many nascent startups left with a shortage of post-seed, pre-Series A funding choices, he says, “We thought: Why not do what [Cendana] is doing on a much bigger scale? Why not go and raise a serious amount of money for microfunds?”

Teare says he knows raising the money won’t necessarily be a walk in the park. “I’m a smart guy who knows which way the wind is blowing, but I’d say I’m highly challenged to justify to the world that I can be an investor in other people’s companies except [for showing] what I’ve done at Archimedes.”

Then again, the whole idea of investing in already successful micro fund managers is to “mitigate” investors’ risk, he says. “The issue isn’t whether I can pick companies but whether you think [top micro fund managers] can. No individual can really do better than the market.”

I ask Teare what happens if the leading micro VCs don’t take his money. I ask if he has shared his plans with several whose names he raises during our conversation.

He says he hasn’t. He doesn’t seem terribly concerned that he’ll be turned away, though. “These are people who I admire and know for the most part. The personal risk for me is, can I get access to these fund and companies? And that comes down to personal relationships, which I already have.”

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New Fundings

Avizia, a year-old, Reston, Va.-based telemedicine company that connects medical experts for remote teaching, consultations and more, has raised an undisclosed amount of funding led by NextGen Angels, with Blu Venture Investors and Middleland Capital participating.

Chunyu, a three-year-old, Beijing-based medical app developer, has raised $50 million in Series C funding from CICCRushan Venture Capital, and Pavilion Capital, with participation from earlier investor BlueRun Ventures. TechNode has more here. The company had previously raised at least $4 million, shows Crunchbase.

Clinverse, a six-year-old, Raleigh, N.C.-based company that makes financial management and payments software expressly for clinical trials, has raised $9 million in new funding led by Edison Partners, with earlier investor Hatteras Venture Partners participating. The company has raised at least $15.6 million to date, shows Crunchbase.

Dermira, a four-year-old, Redwood City, Ca.-based biotech company that’s focused on new therapies for dermatology, has raised $51 million in Series C funding. Earlier investors Bay City CapitalNew Enterprise AssociatesCanaan Partners and UCB S.A. participated in the round, alongside new investors Apple Tree PartnersAisling CapitalRock Springs CapitalSabby Capital and others. The company has now raised $128 million altogether.

Enlighted, a five-year-old, Sunnyvale, Ca.-based company whose sensors help monitor things like lighting to save energy, has raised $20 million in Series D funding from earlier investors DFJDraper Nexus VenturesIntel CapitalKleiner Perkins Caufield & Byers and RockPort Capital Partners. The company has raised $55.6 million to date, shows Crunchbase.

Famo.us, a three-year-old, San Francisco, Ca.-based programming startup, has raised $25 million in Series B funding led by Insight Venture Partners and earlier investor Javelin Venture Partners. Famo.us had previously raised roughly $5 million, including from Greylock PartnersCrunchFund, and individuals Barney Pell and Lorenzo Thione, who cofounded Powerset with Famo.us founder Steve Newcomb. (StrictlyVC had interviewed Newcomb last year about his intriguing take on hiring.)

FarmLink, a five-year-old, Kansas City, Ms.-based company whose software helps farmers maximize farm productivity and avoid unnecessary spending, has raised $40 million in Series B funding led by OpenAir Equity Partners. The family office Thorndale FarmEarly Investments and individual investors John Rose and Don Walsworth also participated in the round. Venture Capital Dispatch has much more here.

Groundfloor, a 1.5-year-old, Atlanta-based real estate crowdfunding platform, has raised $1 million in seed funding from Micro Angel Fundand individual investors. The WSJ has more here.

Hireku, a five-year-old, Pittsburgh, Pa.-based online recruiting software company, has raised $15 million in growth financing led by Volition Capital, with participation from Blue Cloud Ventures and Riverfront Ventures. Earlier backers Birchmere Ventures and Rincon Venture Partners also joined the round.

LeadCloud, a 20-month-old, Ellicott City, Md.-based cloud-based online marketing platform, has raised $1 million in Series A funding from undisclosed investors. The round brings the company’s total funding to date to $1.2 million.

Nvite, a year-old, Washington, D.C.-based event registration and ticketing platform, has raised $1 million in seed funding led by Crystal Tech Fund. Other participants in the round included Middle Bridge PartnersCIT Gap FundsMiddleland CapitalDistrict Capital Partners and NextGen Angels.

OrderUp, a five-year-old, Baltimore, Md.-based food delivery service that targets mid-size cities like Phoenix and Denver that aren’t already overrun by food couriers, has raised $7 million in Series A funding fromRevolution Ventures and former LivingSocial chief executive Tim O’Shaughnessy. The Washington Post has more here.

PernixData, a two-year-old, San Jose, Ca.-based flash virtualization startup, has raised $35 million in Series C funding led by Menlo Ventures. Other participants in the round include Kleiner Perkins Caulfield & ByersLightspeed Ventures, Salesforce CEO Marc Benioff, Silver Lake co-founder Jim Davidson, and numerous other individuals. TechCrunch has much more on the company, which has now raised $62 million altogether, here.

PlayFab, a 1.5-year-old, Seattle-based startup that provides online gaming companies with a dashboard for tracking players and purchases, has raised $2.5 million in seed funding including from Larry Bowman of Bowman Capital Management and Startup Capital Ventures.

Sharp Edge Labs, a three-year-old, Pittsburgh, Pa.-based biosensor developer for cellular biology research that was created at Carnegie Mellon University, has raised $600,000 in new funding led by Newlin Investment Co. The company has raised just less than $1 million to date, shows Crunchbase.

Vantage Analytics, a year-old, Toronto-based company that makes predictive analytics and data mining software, has raised $1.1 million in funding led by Real Ventures.

Upstart, a two-year-old, Palo Alto, Ca.-based lending platform that provides loans to individuals based on variety of less traditional signals, is now working with Victory Park Capital, the Chicago-based asset management firm, which will invest $100 million in Upstart loans over the next two years. More here.

Zvooq, a three-year-old, Moscow-based music streaming platform, has raised $20 million in Series A funding led by the Russian e-tailer Ulmart,with participation from Essedel Capital, a private equity fund in Helsinki.

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New Funds

Moonscape Ventures, a new venture capital fund created by the founder of security company AGT International, has launched with $120 million at its disposal, funded by AGT. The firm will be looking to invest in startups in the connected-devices and analytics sectors, as well (interestingly) as in news media, reports VentureWire.

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Exits

FunPlus Group, the four-year-old creator of mobile-social games like “Family Farm,” has agreed to sell its game subsidiary to publicly traded Zhongji Holding for $960 million. VentureBeat has more here.

German industrial company Bosch is in talks to buy Red Bend Software, a 15-year-old, Waltham, Ma.-based maker of mobile phone management software, for $200 million to $250 million, says Reuters, citing Israeli media outlets. Red Bend has raised roughly $35 million in funding over the years from Carmel VenturesCoral GroupGreylock PartnersPitango Venture CapitalPoalim Ventures and Infinity Equity.

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People

Steve Ballmer resigned from the board of Microsoft yesterday, eight months after stepping down as CEO. Ballmer, who remains the company’s largest individual shareholder, cited his “new responsibilities” as new owner of the L.A. Clippers as one reason for his departure. But analyst Brendan Barnicle tells Bloomberg that Ballmer also likely “recognizes that it’s very hard for a new CEO to take the reins and have full authority with the old CEO on the board.”

The New York-based venture firm ffVenture Capital has appointed two individuals as partners, reports FortuneAdam Plotkin, who previously served as an EIR with the firm, and Michael Faber, who was a general partner at NextPoint VC for nearly two decades. The firm, which is investing a $52 million fund, now has five partners.

Intellectual Ventures, the “patent troll” company that Silicon Valley loves to hate, is laying off about 20 percent of its employeesreports Bloomberg Businessweek.

Ping Li of Accel Partners on the one thing he makes certain he does every day: “I try to spend time with my family. My kids are five, two-and-a-half, and fifteen months, so pretty much I’m changing at least a diaper every day at this point. It’s an important thing that I try to do because I think someone said it well, ‘The days are long, but the years are fast’ with the kids. It’s precious times now when they still want to hang out with you.”

A court arbitrator has ruled that game studio Bungie must return founders’ stock to the fired employee who created the music for “Halo” and the upcoming “Destiny” video game series but was later stripped of his founders’ shares. The employee, Marty O’Donnell, also successfully sued the company to recover unpaid wages. VentureBeat has the story here.

David Plouffe, President Obama’s famous campaign manager, has just accepted a job as Uber‘s top lobbyist, reports Recode. With the title of SVP of policy and strategy, Plouffe’s overarching assignment, per recent comments made by Uber CEO Travis Kalanick, will be to take on an “a__hole” opponent “named Taxi” and “bring out the truth about how dark and dangerous and evil” it is.

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Job Listings

Cisco is looking for a business development manager to help lead acquisitions and investments for the company. The job is in San Jose, Ca.

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Data

Private financing rounds that valued U.S. venture-backed companies at $1 billion or more were four times as common through the first half of this year as IPOs where market capitalizations reached $1 billion or more, finds VentureWire.

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Essential Reads

Uber is testing on-demand product deliveries in Washington D.C.

PandoDaily wonders what in tarnation is happening at Google Ventures.

The already meager percentage of women in venture capital is shrinking, reports Sarah McBride of Reuters.

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Detours

James Foley and the last journalists in Syria.

A collection of auditory illusions.

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Retail Therapy

The collapsible hot tub of your dreams.

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