Hi, everyone, it is Thursday! [Breakdancing.]
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Top News in the A.M.
A bill that would require a warrant to get your emails has finally made some progress on the Hill.
Yale is clearing the air about its venture returns.
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Bill Gurley on the Newest Superfund Trend
On Monday, the National Venture Capital Association and Thomson Reuters released some surprising data. Despite few opportunities to exit from their investments, 57 venture firms managed to raise $12 billion in the first quarter — more money than VCs have raised since the second quarter of 2006. More, just seven firms counted for nearly two-thirds of all that money, with four raising north of a billion dollars apiece.
“It’s not just the size of the funds but the velocity” at which VCs are returning to their investors, known as limited partners (or LPs), says an astonished Bill Gurley of the venture firm Benchmark. “The Kauffman fund said that billion dollar funds sucked, then everybody went out and raised billion-dollar funds.”
Gurley is referring to a 2012 Kauffman Foundation report that suggests venture capital isn’t a great place for institutions to invest, and that big venture funds are a losing proposition almost entirely.
According to the organization’s findings, which it based on its 20-plus years of investing in more than 100 venture funds, only 20 percent of its investments had generated returns that beat a public market equivalent as of 2012, and even then, the funds outpaced those public market indices by a measly three percent. Kauffman further found that only four of 30 venture funds that exceeded $400 million delivered better returns for investors than a small-cap common stock index.
What’s changed in four years’ time? As far as Gurley is concerned, not a thing. Gurley — whose firm raised one billion-dollar fund in the late ’90s and quickly reverted back to sub $500 million funds — says he doesn’t think big venture funds add up for anyone other than VCs, whose management fees typically equal two percent of a fund. “If you talk with an LP, you’ll hear that funds raised in times of scarcity perform the best, while those raised in peak [fundraising] moments don’t have the best returns. The only type of return that’s guaranteed is excessive fee income. You get that no matter what, which is a conflict, for sure.”
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New Fundings
ContainerShip, a 16-month-old, Pittsburgh, Pa.-based service that aims to make it easier for developers to use Docker containers to develop and deploy their applications, has raised a $2.41 million in seed funding led by Pittsburgh-based Draper Triangle Ventures and Birchmere Ventures. TechCrunch has more here.
KONUX, a 1.5-year-old, Munich, Germany-based industrial IoT company, has raised $7.5 million in Series A funding from New Enterprise Associates; the largest German industrial venture firm, MIG; and individual investors, including Andy Bechtolsheim, Warren Weiss, and Splunk’s founding CEO, Michael Baum.
Onfido, a four-year-old, London-based platform that conducts background checks for on-demand startups and other businesses like online marketplaces, has raised $25 million in Series B funding led by Idinvest Partners, with participation from earlier backers Wellington Partners and CrunchFund. The company has now raised roughly $30 million altogether. TechCrunch has more here.
OnShift, a nine-year-old, Cleveland-based company that makes cloud-based staff scheduling software primarily for long-term care and senior living facilities, has raised $18 million in Series D funding led by Health Velocity Capital, with participation from earlier backers Draper Triangle Ventures, Early Stage Partners, Fifth Third Capital, HLM Venture Partners, North Coast Venture Fund and West Capital Advisors. More here.
Quartet, a two-year-old, New York-based tech company that helps doctors analyze patients’ records to learn if someone’s physiological symptoms are likely to be associated with a mental health condition, has raised $40 million in Series B funding led by GV, with participation from earlier backers Oak HC/FT Partners, F-Prime Capital Partners, and Polaris Partners. Fortune wrote about the company recently here.
Yup, a two-year-old, San Francisco-based mobile app that provides on-demand tutoring for students and was previously known as MathCrunch, has raised $4 million in seed funding from existing and new investors, including Stanford University’s StartX Fund and SOMA Capital. The new funding brings Yup’s total funding to $7.5 million.
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Exits
Barcelona is seeing its biggest ever exit with the sale of 10-year-old, Spanish ecommerce player Privalia to France’s Ventee-Privee. The terms of the deal haven’t been disclosed, but a TechCrunch source says Ventee-Privee is paying €500 million ($563 million). According to CrunchBase, Privalia had raised roughly $190 million over the years, including from General Atlantic and Highland Capital Partners. More here.
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People
Facebook has hired former Google vice president of advanced technology and projects, Regina Dugan, to head up a new group dubbed Building 8. According to Facebook, Dugan’s department will combine R&D with product development, and focus on technologies that “fluidly blend physical and digital worlds.” TechCrunch has more here.
Oracle founder Larry Ellison‘s Hawaiian hotel has a suite that costs $21,000 a night; here‘s what it looks like (via Business Insider).
Nest CEO Tony Fadell went to Google’s all-hands meeting recently to defend Nest. Here’s what he said (via Recode).
Apple has hired Cynthia Hogan, formerly a top lobbyist for the NFL and aide to Vice President Joe Biden, as the new head of its Washington office as it continues to battle law enforcement officials over access to its customers’ data. Politico has more here.
Federal health regulators have proposed banning Theranos founder Elizabeth Holmes from the blood-testing business for at least two years after concluding that the company failed to fix what regulators have called major problems at its laboratory in California. The WSJ has the story here.
Former Reuters journalist Matthew Keys was sentenced today to two years in prison on hacking charges. He faced a maximum sentence of 25 years. TechCrunch has more here.
President Obama is reportedly the only person in the world to receive advanced episodes of the newest “Game of Thrones” season. (“When the commander-in-chief says, ‘I want to see advanced episodes,’ what are you gonna do?,” says showrunner David Benioff.)
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Jobs
Bolt, a hardware-focused seed fund with offices and prototyping shops in Boston and San Francisco, is looking to hire a platform manager. The job is in San Francisco.
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Data
Snapchat’s messaging service is gaining more momentum with teenagers, according to an ongoing survey series fielded by research firm Piper Jaffray that says Snapchat has now caught up to Instagram’s photo-sharing app as the most important social network among this younger demographic. Fortune has more here.
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Essential Reads
Pharmacy startup PillPack is about to lose about a third of its customers, as a competitor is shutting it out of its pharmacy network. (The company has raised $65 million from investors.)
That Coolest cooler project on Kickstarter continues to be a disaster.
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Detours
Kobe’s glorious good-bye (and the 30,699 shots he took leading up to it).
The adult skills that every 18-year-old should have.
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Retail Therapy
Election season scratching posts for cats.
Meanwhile, you might want to pick up some of these for yourself. (You could probably score a discount on the Marco Rubio merch.)