StrictlyVC: August 26, 2014

Happy Tuesday morning, everyone! (Web visitors, for an easier-to-read version of today’s email, click here.)

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Top News in the A.M.

That Google acquisition of Twitch, a popular site for watching people play games, wasn’t a done deal after all. In fact, Amazon is buying it, The Information reported yesterday morning. Amazon made it official soon after, announcing that it’s acquiring the company for $970 million in cash. The exit means a big win for a number of firms, and early investor Alsop-Louie is among the biggest winners, notes the WSJ.

So what happened? According to The Information, Twitch’s deal with Google fell apart in the six weeks after a term sheet was signed. The biggest sticking point: Twitch’s growing concerns about its ability to remain relatively independent within Google’s massive YouTube division. Forbes meanwhile reports that Google was unable to close the deal because it was concerned about potential antitrust issues that could have come with the acquisition.

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This Four-Year-Old Internet Startup Just Landed $63 Million in Series A Funding

You probably haven’t heard yet of four-year-old ZipRecruiter, a profitable, L.A.-based online hiring platform for small and medium-size businesses. In recent months, though, plenty of growth-stage equity firms were kicking its tires and hoping the company might bring them aboard as investors. In the end, its four cofounders agreed to a $63 million round led by Institutional Venture Partners, with participation from Industry Ventures and the brand-new L.A. firm Basepoint. I talked with one of those cofounders, ZipRecruiter CEO Ian Siegel, last week about the company’s low-flying trajectory so far.

You spent 20 years working for L.A.-based startups. Why start ZipRecruiter when you did?

My experience and my cofounders’ experience was the same. Because the companies were so small where we were working, there was no HR department, no one to do hiring for you but you. So I was the only one posting jobs. I was the one vetting candidates and making decisions about who and when to hire. Part of the reason those companies stayed small was it was so painful to bring another person on board. We weren’t HR professionals. We just thought, Let’s build something that would be useful for us. And it took off. We’ve been profitable since our first month.

What’s so special about your technology?

What ZipRecruiter does is take a set of services that have been used by Fortune 500 companies, from an applicant job tracking system to easy-to-search databases, and [offers these technologies] to small and medium-size businesses. The value for our customers is they can post a job to many job boards at once — Monster, Twitter, Glassdoor; more than 50 at once — then we present them with candidates from all of those places in one, easy-to-review [interface] so they can screen and track candidates.

This is a SaaS business. How much do you charge users?

We charge $129 [per month] and scale up depending on how many jobs a company has to post. Some customers post [a lot of] jobs, and it’s more than $1,000 per month.

You say you’ve been growing like a weed. Give us some metrics.

At the beginning, it was pretty much four founders who were rotating between each other’s kitchens. I took every customer support email and phone call. A dog would be going crazy in the background, and I’d say, “I don’t hear a dog, do you hear a dog?” Now, we’re moving into a 40,000-square-foot space in Santa Monica. We have 150 employees, tens of millions of dollars in annual revenue and we’ll have more new subscribers this year than in all previous years combined. We’ll have 100,000 customers in the relatively new future.

You’re already very profitable, by your own account. How will you use the money you’ve just raised?

More than 7,000 new businesses create an account on ZipRecruiter each month and the primary person [who signs up] is the person who manages HR. And that person is responsible for hiring, but also, potentially, for payroll, insurance, vacation tracking, and for on-boarding. So we’ll do a bit of development into new areas and see what the reaction is. When you’re bootstrapping, everything has to come back to bottom line. Taking investment really frees us as to how much more can we do to make the job of HR managers easier.

How are you reaching all of these far-flung customers?

It was all driven through [search engine marketing] initially. As we grew, we began to benefit from word of mouth — a substantial double digit percentage of our new users come without a marketing source attached to them. But because the product sells so well, we’ve been able to branch into direct mail, TV commercials, and radio. The challenge of going after a disaggregated market is finding [all your customers]. You can’t just buy ads on Google.

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New Fundings

Alchemist Accelerator, a two-year-old, Menlo Park-based accelerator program that’s focused on enterprise startups and accepts 13 companies every four months, has a new backer. Yesterday, Foundation Capital said that it has joined CiscoDFJKhosla VenturesSalesforce.comSAP Ventures, and US Venture Partners as an investor in the program, which typically provides startups with $28,000 in seed funding.

Appcelerator, an eight-year-old, Mountain View, Ca.-based maker of an open source platform for building smartphone applications, has raised $22 million in Series D funding led by Rembrandt Venture PartnersUnion Grove Venture Partners also participated in the round, along with earlier investors Storm VenturesSierra VenturesMayfield FundTranslink CapitalRelay Ventures and EDB Investments.

Civitas Therapeutics, a five-year-old, Chelsea, Ma.-based biopharmaceutical company that’s developing pulmonary delivery therapies, has closed $55 million in Series C funding from new investors Adage Capital ManagementOrbiMed AdvisorsPartner Fund ManagementRock Springs Capital and Sofinnova Ventures. All earlier investors in the company also joined the funding, including Alkermes PLCBay City CapitalCanaan PartnersFountain Healthcare PartnersLongitude CapitalRA Capital and Wellington Management Company.

Datanyze, a two-year-old, San Mateo, Ca.-based sales lead generation company, has raised $2 million in seed funding led by IDG Ventures, with participation from Google VenturesMark CubanAngelListGil PenchinaNeeraj AgrawalJeff Epstein and Kyle York.

DreamsCloud, a four-year-old, Reston, Va.-based company that makes an app-based dream interpretation tool, has raised $2 million in Series A funding led by Sphere Capital Holdings.

Hootsuite Media, the six-year-old, Vancouver-based social-media management platform, is close to securing an investment from Fidelity Investments, the Boston-based mutual-fund giant, according to a WSJ source. More here. The company has raised roughly $190 million to date, including from Accel PartnersBlumberg CapitalInsight Venture Partners, and OMERS Ventures.

Iyzico, a two-year-old, Istanbul-based payment service startup that enables e-commerce sites and other apps to easily accept online payments, has raised $1.4 million in Series B funding led by the Turkish VC 212 Invest.Previous backers Pahicle and Speedinvest also joined the round, which brings the company’s total funding to $3.2 million. TechCrunch has the story here.

Korbit, a year-old, Seoul, Korea-based Bitcoin exchange, wallet and merchant processor, has raised $3 million in Series A funding led by SoftBank Ventures KoreaPantera Capital led the round from the U.S. side, with participation from BAM Ventures and previous investors Bitcoin Opportunity Corp.Tim DraperPietro Dova and initial investor Strong Ventures. The company has now raised $4 million to date.

Smart Energy Instruments, a 10-year-old, Oakville, Ontario-based company that’s developing low-cost sensors for the power grid, has received $5 million in new funding, including from 3M New VenturesArcTern Ventures, the Ontario Capital Growth Corp, and Venturelink Funds.

Theatro, a three-year-old Dallas-based startup that makes a tiny, clip-on voice-controlled wearable device to improve communications for the retail, hospitality and manufacturing industries (employees can ask inventory-related questions, for example), has raised $8.8 million in Series A funding. Kholsa Ventures led the round, joined by angel investors. Dallas Business Journal has more here.

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New Funds

The government-backed New Zealand Venture Investment Fund has held a first close of $75 million on a new fund that aims to back startups from New Zealand to greater China. More here.

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IPOs

Calithera Biosciences, a four-year-old, South San Francisco, Ca.-based clinical-stage pharmaceutical company at work on small molecule drugs directed against tumor metabolism, has filed to raise roughly $80 million in an IPO. The company has raised at least $105 million from private investors, shows Crunchbase. According to its S-1, its biggest shareholders include Delphi Ventures, which owns 19.5 percent of the company; Morgenthaler Venture Partners, which owns 18.3 percent; Advanced Technology Ventures, which owns 18.3 percent; Adage Capital Management, which owns 18.1 percent; T. Rowe Price, which owns 7.2 percent; Wellington Management Company, which owns 6.0 percent; and Longwood Fund, which owns 5.8 percent.

HubSpot, the eight-year-old, Cambridge, Ma.-based marketing software company, has filed a highly anticipated S-1, revealing plans to raise up to $100 million. The company’s revenues for the first half of the year were $51.3 million, compared to $35 million during the same period a year earlier, according to the SEC filing. The firm’s net loss during the first six months was $17.7 million, up from $16.3 million a year before. Hubspot has raised roughly $100 million from private investors; its biggest shareholders include General Catalyst Partners, which owns 27.1 percent of the company; Matrix Partners, which owns 17.1; Scale Venture Partners, which owns 6.8 percent; Sequoia Capital, which owns 10.3 percent; and CRV, which owns 5 percent.

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Exits

Covagen, a seven-year-old, Zurich, Switzerland-based biotech focused on developing anti-inflammatory antibodies, has been acquired by Cilag GmbH International, an affiliate of Janssen Pharmaceutical Companies of Johnson & Johnson. Terms of the deal were not disclosed. Covagen has raised at least $90 million from investors, shows Crunchbase. Its backers include VentechBaxter VenturesMP Healthcare Venture ManagementNovartis Venture FundSeroba Kernel, and Edmond de Rothschild Venture Capital.

Moosify, a two-year-old, West Hollywood, Ca.-based mobile-first “social dating” app that connects people around music, has been acquired by London-based Tastebuds, the app that also matches people based on their musical tastes. Terms of the deal weren’t disclosed. TechCrunch has more here. Moosify raised an undisclosed amount of seed funding, including from the Germany TV network ProSiebenSat.1 Media AG; Tastebuds is also seed-funded.

Sapiens Steering Brain Stimulation, a privately held medical device company that’s focused on brain function and based in the Netherlands, has been acquired by publicly traded Medtronic for about $200 million in cash. More here.

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People

Venture capitalist Mike Dauber is joining Amplify Partners as a partner, Fortune reported yesterday. Dauber had spent the past six years as a principal with Battery Ventures. (Earlier this year, StrictlyVC had coffee with Amplify founder Sunil Dhaliwal about why he, too, left Battery Ventures in 2012 to start the firm.)

Noah Lichtenstein, a partner at the venture firm Cowboy Ventures, was apparently feeling a little lonely in San Francisco yesterday afternoon, tweeting, “You know it’s #BurningMan when SOMA is empty at lunchtime on a weekday.” (What he didn’t know at the time: Burning Man festival organizers were turning away hundreds of people because of a downpour yesterday. They re-opened the roads leading to Burning Man at 6 o’clock this morning.)

Tim O’Shaughnessy has backed two startups since stepping down as CEO of LivingSocial earlier this month. But don’t start calling him a venture capitalist just yet.

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Job Listings

Yesterday, we told you that Samsung is looking for a senior associate to work at its Open Innovation Center, which invests in startups, as well as helps incubate them. Turns out it’s also looking for an investment analyst. Both jobs are in Mountain View, Ca.

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Happenings

Startups have 7.5 weeks left to apply to the fall Y Combinator batch. (Just remarking.)

The San Francisco-based New Co. festival is also fast approaching. Free visits to 125 startups in the city on September 11 and 12. More information here.

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Data

LinkedIn has published has a new research report on diversity in tech startups. Its title: “Why You Shouldn’t Drop Out of School to Start a Company.”

Over the past 18 months, investors who wanted the most bang for their buck should have considered venture capitalsays Dow Jones.

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Essential Reads

The rise and fall and rise of virtual reality.

The relative cost of bandwidth around the world.

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Detours

The filming locations of Emmy-nominated dramas, via Google Maps.

How serious is the California drought? Take a look at these pictures, taken just three years apart.

Bon Appetit ranks the 10 best new restaurants in America.

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Retail Therapy

A made-to-order DJ console.

That Knee Defender we once recommended? It’s maybe not such a good idea after all.

We’ll have one Double Whopper, an Android smartphone, and a Croissan’wich with egg to go, please.


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