Search results for: “Orphaned Entrepreneurs”

  • Orphaned Entrepreneurs

    left-behind-dvd-front-coverWhen the news broke that Jonathan Teo and Justin Caldbeck were leaving their respective venture firms to create a new firm called Binary, their peers cheered them on, maybe wondering if they might also spin off on their own someday. After all, Teo and Caldbeck are just the latest in a growing string of investors — Tim Connors, Aileen Lee and Kent Goldman among them — to fly the coop.

    For Siqi Chen, though, the development presented worrying questions. Chen is a serial entrepreneur who sold his company Serious Games to Zynga in 2010 and today runs Heyday, a two-year-old startup that puts out a personal journal iPhone app. To date, Heyday has attracted $5.5 million from top funds, among them General Catalyst Partners. The concern for Chen was that Teo — Heyday’s board member — was now leaving General Catalyst. Who would be Heyday’s advocate at the firm?

    Chen soon learned he needn’t fret: Teo could remain on his board, General Catalyst told him. But Chen knows that plenty of entrepreneurs lose cherished board members in such transitions and that for them, a venture industry in flux isn’t always good news. We chatted about these orphaned entrepreneurs yesterday afternoon. Our conversation has been edited for length.

    How did you meet Jonathan Teo?

    I met him through an introduction. [After Serious Games was acquired by Zynga], I worked with Andy Tian, who was GM of Zynga’s China business, for about a year. After I left, Jonathan asked Andy to introduce him to interesting ex-Zynga people and Andy gave him my name. He tried our demo in 2012 and continued to use it and give us really useful feedback, and he finally made us an offer we couldn’t refuse.

    So he was one of your earliest champions.

    Definitely. A firm like Andreessen Horowitz can double down on traction. Then there are VCs who can smell something at the most nascent stages, before they gain traction. Jonathan has a really intuitive consumer nose. He sourced Twitter and Instagram [while a principal earlier in his career] at Benchmark. He also sourced Snapchat [for General Catalyst] and made a personal investment in the company. If you look at his track record, he’s made very few investments, and they’ve been spot on. He identifies opportunities early and [pursues them] aggressively, which is increasingly rare in institutional VC.

    Has he been as active on your board as he was before leaving General Catalyst?

    Yes. He’s still affiliated with General Catalyst in the role of venture advisor … and though he’s been gone for a few months now, and he still comes to every board meeting and is just as involved as before.

    What happens if they eventually transition him away from the company? It is General Catalyst’s board seat.

    We’ve received reassurances on both sides, so for the foreseeable future, he’ll be on our board. But it’s never easy; I can’t imagine any entrepreneur saying [that having a board member replaced] is a good thing. When entrepreneurs pitch VCs, part of [the allure] is the brand. But a large part of your decision is around the partner you’ll be working with. If that person leaves, it’s a big blow. I think any employee who has had a manager be fired or leave knows that feeling, and it’s an even bigger issue if you’re working with investors. You’re losing your biggest fan.

    Do you think there can be repercussions beyond personal disappointment?

    All things being equal, I think it can be a little harder for a venture firm to follow on [and invest more in a company whose lead investor has left], which can create signaling issues. It all depends on a company’s traction.

    What kind of courtesy would you expect a venture firm to give an entrepreneur who will be losing his or her board member? How much notice is fair, and should the entrepreneur have a say in who their new director will be?

    I’d expect at least two quarters of notice. [A change like that] could affect your fundraising plans or your timing.

    As for other expectations, I’m not sure there are any norms or expectations that a founder can interview the rest of the partners. But I’d want a say in it. I’d want it to be a conversation, at a minimum.

    (Update:  Teo was in touch this morning with some thoughts about Chen’s interpretation of his track record:

    I would like to give credit where credit is due, and with regards to Twitter and Instagram, though I was instrumental in getting those deals done … Peter [Fenton] and Matt [Cohler] had as much to do with finessing my thinking there as I did in bringing the deals into play.

    And with Snapchat, though I did source the deal that was done, the origination of the opportunity was from a wonderful associate (he’s now a principal) Niko Bonatsos at [General Catalyst], who in my opinion is one of the guys with the most hustle in the VC industry I’ve come across. If credit is due, I would not have gotten the chance to have my early conviction were it not for him.)

    Connie

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  • StrictlyVC: April 4, 2014

    Happy Friday!

    —–

    Top News in the A.M.

    Despite the torrid pace of IPOs, some signs of investor wariness are beginning to appear, reports Dealbook. Renaissance Capital’s IPO exchange-traded fund, which tracks the stock performance of recent offerings, has lagged behind the Standard & Poor’s 500-stock index for most of the last month, in part because of poor performers.

    —–

    Orphaned Entrepreneurs

    When the news broke that Jonathan Teo and Justin Caldbeck were leaving their respective venture firms to create a new firm called Binary, their peers cheered them on, maybe wondering if they might also spin off on their own someday. After all, Teo and Caldbeck are just the latest in a growing string of investors — Tim Connors, Aileen Lee and Kent Goldman among them — to fly the coop.

    For Siqi Chen, though, the development presented worrying questions. Chen is a serial entrepreneur who sold his company Serious Games to Zynga in 2010 and today runs Heyday, a two-year-old startup that puts out a personal journal iPhone app. To date, Heyday has attracted $5.5 million from top funds, among them General Catalyst Partners. The concern for Chen was that Teo — Heyday’s board member — was now leaving General Catalyst. Who would be Heyday’s advocate at the firm?

    Chen soon learned he needn’t fret: Teo could remain on his board, General Catalyst told him. But Chen knows that plenty of entrepreneurs lose cherished board members in such transitions and that for them, a venture industry in flux isn’t always good news. We chatted about these orphaned entrepreneurs yesterday afternoon. Our conversation has been edited for length.

    How did you meet Jonathan Teo?

    I met him through an introduction. [After Serious Games was acquired by Zynga], I worked with Andy Tian, who was GM of Zynga’s China business, for about a year. After I left, Jonathan asked Andy to introduce him to interesting ex-Zynga people and Andy gave him my name. He tried our demo in 2012 and continued to use it and give us really useful feedback, and he finally made us an offer we couldn’t refuse.

    So he was one of your earliest champions.

    Definitely. A firm like Andreessen Horowitz can double down on traction. Then there are VCs who can smell something at the most nascent stages, before they gain traction. Jonathan has a really intuitive consumer nose. He sourced Twitter and Instagram [while a principal earlier in his career] at Benchmark. He also sourced Snapchat [for General Catalyst] and made a personal investment in the company. If you look at his track record, he’s made very few investments, and they’ve been spot on. He identifies opportunities early and [pursues them] aggressively, which is increasingly rare in institutional VC.

    Has he been as active on your board as he was before leaving General Catalyst?

    Yes. He’s still affiliated with General Catalyst in the role of venture advisor … and though he’s been gone for a few months now, and he still comes to every board meeting and is just as involved as before.

    What happens if they eventually transition him away from the company? It is General Catalyst’s board seat.

    We’ve received reassurances on both sides, so for the foreseeable future, he’ll be on our board. But it’s never easy; I can’t imagine any entrepreneur saying [that having a board member replaced] is a good thing. When entrepreneurs pitch VCs, part of [the allure] is the brand. But a large part of your decision is around the partner you’ll be working with. If that person leaves, it’s a big blow. I think any employee who has had a manager be fired or leave knows that feeling, and it’s an even bigger issue if you’re working with investors. You’re losing your biggest fan.

    Do you think there can be repercussions beyond personal disappointment?

    All things being equal, I think it can be a little harder for a venture firm to follow on [and invest more in a company whose lead investor has left], which can create signaling issues. It all depends on a company’s traction.

    What kind of courtesy would you expect a venture firm to give an entrepreneur who will be losing his or her board member? How much notice is fair, and should the entrepreneur have a say in who their new director will be?

    I’d expect at least two quarters of notice. [A change like that] could affect your fundraising plans or your timing.

    As for other expectations, I’m not sure there are any norms or expectations that a founder can interview the rest of the partners. But I’d want a say in it. I’d want it to be a conversation, at a minimum.

    dropcam_300x250_learn

    New Fundings

    AirXpanders, a 7.5-year-old, Palo Alto, Ca.-based company focused on tissue expansion technologies (like saline-filled implants) for use after reconstructive surgeries, has raised a $7 million credit facility from GE Capital. The company has raised $45 million in venture funding to date, including from Vivo Ventures, GBS Venture Partners, Prolog Ventures, Heron Capital and Shalon Ventures.

    Artsy, a five-year-old, New York-based company puts high-quality images and information about art online in one website, has raised raised $18.5 million in Series B funding led by Thrive Capital, reports the WSJ. Other participants in the round included Peter Thiel, Wendi Deng, art dealerLarry Gagosian, and Earthlink founder Sky Dayton. The company has raised around $26 million to date, shows Crunchbase.

    Bloglovin, a 5.5-year-old, New York-based blog aggregator, has raised $7 million in Series A financing led by the European investor Northzone. Betaworks, Lerer Ventures, White Star Capital, and Bassett Investment Group also participated in the round, which brings the company’s total funding to $8 million.

    Boundary, a three-year-old, Mountain View, Ca.-based cloud service that helps companies understand their applications so they can avoid downtime, has raised $22 million in Series C funding led by Adams Street Partners. Other participants in the round included new investor Triangle Peak Partners and earlier investors Lightspeed Venture Partners and Scale Venture Partners. Boundary has raised $41 million altogether so far.

    Ceros, a 6.5-year-old, New York- and San Francisco-based SaaS company that provides brands with layout and animation tools and real-time analytics so they can create attractive interactive content, has raised $6.4 million in new funding from Sigma Prime, Starvest Partners, and Greycroft Partners. Fortune has much more here.

    Clari, a two-year-old, Mountain View, Ca.-based customer relationship management software company, has raised $6 million in funding from Sequoia Capital. TechCrunch has much more on the company here.

    GemShare, a year-old, San Francisco-based service recommendation application, has raised $1.2 million in seed funding from Greylock Partners and Second Avenue Partners. Numerous individual investors also joined the round, including Rich Barton, Jennifer Fonstad, Lloyd Frink, Ellen Levy, Sonja Perkins, William Quigley, Mika Salmi.

    Health Digital Systems SAPI de CV, an 11-year-old, Mexico-based electronic health records company, has received a $25 million investment from Northgate Capital.

    Hike, a two-year-old, New Delhi, India-based cross-platform instant messaging app, has raised $14 million from BSB, a joint venture between Bharti and SoftBank Corp. The company has raised $21 million altogether.

    Holaira, a 5.5-year-old, Plymouth, Mn.-based medical device company focused on treating obstructive lung diseases, has raised $42 million in Series D funding led by Vertex Venture Holdings. Other participants in the round included Windham Venture Partners, two strategic investors, and all of Holaira’s existing venture investors: Advanced Technology Ventures, Morgenthaler Ventures, Split Rock Partners, and Versant Ventures. Holaira has raised roughly $70 million in funding altogether.

    Jiuxian, a five-year-old, Beijing-based company that sells wine online, has raised RMB425 million ($68.5 million) in two rounds of financing, according to Chinese Money Network. Investors of the two rounds include earlier investors Rich Land Capital, Oriental Fortune Capital and Sequoia Capital. Jiuxian previously received $20 million in Series A funding from a Guangzhou-based alcohol company, Yuekeung Winery, in April 2011. It also received “tens of millions” of dollars in Series B funding from Oriental Fortune Capital and Sequoia in late November 2011. In 2012, Rich Land Capital led an undisclosed Series C found for the company.

    Levels Beyond, a 6.5-year-old, Denver, Co.-based company behind a content inventory platform, has added $2.5 million to its Series A funding led by TCV Capital, bringing its total to $7 million.

    Otologic Pharmaceutics, a five-year-old, Oklahoma City, Ok.-based biopharmaceutical company focused on treating hearing disorders, has raised $4.1 million in Series A funding led by Accele Venture Partnersand i2E.

    Plan B Funding, a 3.5-year-old, Bristol, England-based company that sells digital marketing services to banks and other financial institutions, has raised roughly $500,000 in seed funding from The North West Fund for Digital & Creative, managed by AXM Venture Capital.

    Social Finance, a three-year-old, San Francisco-based peer-to-peer lending company, has raised $80 million in Series C financing led by Discovery Capital Management. Other participants in the round included Peter Thiel and Wicklow Capital. Silicon Valley Business Journal has much more on the company here.

    Tango Card, a four-year-old, Seattle-based customer and employee loyalty rewards platform, has raised $3.3 million in new funding. Allegro Venture Partners, Floodgate, Swan & Legend Venture Partners,Western Technology Investment and Innovation Endeavors participated in the round. The company has raised $9.7 million altogether.

    TrackIf, a year-old, Minneapolis, Mn.-based technology that helps users create their own personalized web alerts based on their interests, has closed $3 million in debt funding. The investors included Chicago Ventures, Wisconsin Investment Partners, New Capital Fund and Confluence Capital.

    —–

    New Funds

    Quadrivio, a 14-year-old, Milan, Italy based venture capital firm, has launched a €100m ($166 million) venture capital fund, according to reports. The fund, Fondo TT Venture Due, will invest in tech startups focusing on life sciences, med tech, new materials and clean tech. More here.

    —–

    IPOs

    It’s a big day for tech IPOs. GrubHub, the 10-year-old, Chicago-based online platform for restaurant pick-up and delivery orders, hits the market today. So does IMS Health Holdings, a five-year-old, Danbury, Ct.-based healthcare information company; OPower, the 6.5-year-old, Arlington, Va. energy software company; and Five9, a 13-year-old, San Ramon, Ca. maker of cloud software for contact centers.

    —–

    Exits

    Datamonk, a three-year-old, Berlin-based mobile targeting and analytics platform, has been acquired by the Berlin-based incubator HitFox Group. (HitFox helps build game companies.) Terms of the deal weren’t disclosed.

    EventSneaker, a 10-month-old, London-based company whose technology connects the ticketing, social, and email platforms used by event organizers to provide an integrated experience, has been acquired by the event publishing firm Evvnt for an undisclosed amount. EventSneaker had raised a small amount of funding from Searchcamp, a 12-week accelerator program in England.

    Novauris Technologies, a 14-year-old, U.K.-based automatic speech recognition technology company, was quietly acquired by Apple some time last year for an undisclosed amount, TechCrunch reports.

    —–

    People

    Steve Case, the former chairman of America Online and cofounder of the investment firm Revolution, made an abrupt decision yesterday to invest $100,000 in each of 10 startups he’d seen describe their businesses at an event sponsored by Google on Wednesday in Mountain View, Ca. “I was so inspired by the consistent quality of each of the pitches that I made an on-the-spot decision to support each company,” Case said in a statement.

    Brendan Eich resigned yesterday from his newly appointed post as CEO of the for-profit Mozilla and the nonprofit foundation that owns it. Eich had been pressured to step down from the moment he was given the job, including because of his support of California’s anti-gay marriage law, Proposition 8. Re/code has more here.

    Josh Felser, a renowned Bay Area entrepreneur and investor, launched the newest of his projects yesterday: a nonprofit called #climate that connects online “influencers” with nonprofits whose profiles they can help raise. The invite-only app is already being used by Twitter CEO Dick Costolo, former Vice President Al Gore, and actor Mark Ruffalo, a clean energy advocate who used it to publish tweets yesterday about the Vote Solar Initiative, among other causes. “Not only does it drive traffic to the nonprofits, but it also injects climate change into a mass-market conversation,” Felser told Re/code. “We’re taking the message to where people already are, on Twitter and Facebook.”

    Sujay Jaswa, a VP at Dropbox who joined the company is 2010, has been promoted to chief financial officer of the online-stage startup, ending a months-long search process.The WSJ has more here.

    Elon Musk and other Sequoia Capital-backed founders talk about their first checks from the venture firm in this new video clip (that’s worth the five minutes it takes to watch).

    Mark Spiering, long the product head of U.S. online photo-hosting site Flickr, has left for EyeEm Mobile of Berlin, which operates a free photo-sharing app.

    —–

    Job Listings

    Glocap, the boutique search firm, is looking for a director for its venture capital and growth equity practice. The role is the organization’s most senior position after the CEO.

    —–

    Data

    Deal activity in the payments tech space hit a five-year high last year, as traditional and corporate VCs plugged $1.2 billion into 193 deals. CB Insights breaks down the deal activity here.

    Fully 90 percent of companies that tapped the public markets for the first time last year used confidential registration, reports American Lawyer.

    —–

    Essential Reads

    More than 330 million new shares of Google hit the U.S. equity market yesterday, completing a two-year process through which Sergey Brin and Larry Page are cementing control of the world’s third-biggest company.

    Facebook‘s Page reach is decreasing. TechCrunch looks at why.

    —–

    Detours

    The 10 least expensive properties for sale in San Francisco’s tony Pacific Heights neighborhood.

    Don’t help your kids with their homework, and other insights from a ground-breaking study of how parents impact children’s academic achievement.

    “You and Your F__king Coffee,” co-starring “Silicon Valley” creator Mike Judge.

    Tiny crocheted animal figures.

    —–

    Retail Therapy

    Good luck with this.

    —–

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

    Connie

  • StrictlyVC: August 31, 2015

    Hi, welcome back, everyone!

    —–

    Top News in the A.M.

    Google is abusing its dominant position to cross-sell its own products, India-based companies have complained to an India-based antitrust regulatory body — which is now formally bringing charges against Google.

    —–

    An Insider on Switching Firms

    Last week, we sat down with venture capitalist Brian O’Malley of Accel Partners to talk about where he’s shopping now.

    We also asked O’Malley — who was recruited into Accel from Battery Partners in 2013 — what it was like to transition between the heavyweight firms, and what he views as the biggest differences between them.

    More from that candid chat follows. Our conversation has been edited lightly for length.

    Founders sometimes feel “orphaned” when a cherished VC board member leaves to start his or her own fund or, in rarer cases, is recruited into a new firm. What happened to your portfolio companies when you changed firms?<

    The simplest way to look at [these transitions] is that with the money comes the board seat, and the money is from the firm, not from Brian. So at the end of the day, it’s the firm’s call about whether you stay or go.

    Sameer [Gandhi], who recruited me in, had [been recruited into Accel from Sequoia Partners back in 2008] and gone through a similar process, so I think there was a general attitude of: “Look, your entrepreneur relationships are the one thing you take with you, and your reputation is all you have, so let’s err on the side of doing right by the teams you’ve backed.” The thinking was, “If it takes these startups a year to get things figured out, that’s okay. At the end of the day, they chose Battery to work with you, and it’s kind of not fair [to abruptly end those ties].”

    What did Battery think?

    More here.

    —–

    New Fundings

    Instabase, a six-month-old, San Francisco-based platform in the cloud for data, applications, and interactive computing, has raised $3.75 million in seed funding from Greylock Partners and New Enterprise Associates.

    Mobcrush, a year-old, L.A.-based live-streaming service centered around mobile games, has quietly raised at least $10 million in new financing led by Kleiner Perkins Caufield & Byers, reports TechCrunch. More here.

    Peleton Technology, a four-year-old, Menlo Park, Ca.-based developer of vehicle safety systems for trucking fleets, has raised $17 million in fresh funding co-led by DENSO International America and Intel Capital, with participation from Lockheed Martin. Just last month, the company raised an undisclosed amount of strategic funding from Nokia Growth Partners. That round had followed a $17 million Series A funding that included Magna International, Castrol innoVentures, Volvo Group Venture Capital, UPS Strategic Enterprise Fund, Birchmere Ventures, Sand Hill Angels, and Band of Angels.

    Vivoom, a three-year-old, Cambridge, Ma.-based mobile marketing platform, has raised $4.65 million from investors, including CommonAngels Ventures, shows an SEC filing.

    —–

    New Funds

    Xiaohong Chen, formerly a managing director in China for Tiger Global, looks to be raising her third venture capital fund under the brand H Capital. According to an SEC filing, she’s targeting $500 million this time, and the first sale has yet to occur. H Capital closed its second fund last year with $300 million, shows an earlier SEC filing.

    Ryan Gembala — who spent more than a year in corporate development at Facebook and, before that, held numerous roles in business development, as well as with Azure Capital Partners, where he was an associate — is raising his own seed-stage fund. According to an SEC filing, it’s called Pathbreaker Ventures and it has already raised $3.4 million from 16 investors. The filing doesn’t list a target.

    —–

    IPOs

    CytomX Theraputics, a seven-year-old, South San Francisco-based biotech company whose cancer immunotherapies aim to avoid healthy cells, plans to raise $100 million in an IPO, shows a new SEC filing. Its principal shareholders include Third Rock Ventures, which owns 30.8 percent of its shares; Canaan Partners, which owns 17.4 percent; Fidelity Management and Research Company, which owns 8.7 percent; and Roche Finance, which owns 6.8 percent. The San Francisco Business Times has more here.

    —–

    Exits

    CytomX Theraputics, a seven-year-old, South San Francisco-based biotech company whose cancer immunotherapies aim to avoid healthy cells, plans to raise $100 million in an IPO, shows a new SEC filing. Its principal shareholders include Third Rock Ventures, which owns 30.8 percent of its shares; Canaan Partners, which owns 17.4 percent; Fidelity Management and Research Company, which owns 8.7 percent; and Roche Finance, which owns 6.8 percent. The San Francisco Business Times has more here.

    —–

    People

    Two founders of startups acquired by Facebook are leaving the company, they announced separately last week. Josh Miller, CEO of Branch, is parting ways with the social network 20 months after his eight-person company was acquired. Ilya Sukhar, whose development platform, Parse, was acquired by Facebook in April 2013, is also moving on. Quartz has the story here.

    Uber has hired two top vehicle security researchers: Charlie Miller, who had been working at Twitter and Chris Valasek, who worked at security firm IOActive. The pair attracted attention earlier this month after demonstrating they could hack into a moving Jeep. Reuters has the story here.

    —–

    Jobs

    PayPal is looking to hire a corporate development associate. The job is in San Jose, Ca.

    —–

    Essential Reads

    Netflix is losing more Hollywood movies. Recode has the story here.

    If a growing number of state bills is any guide, the email addresses and search queries of U.S. schoolchildren are a hot commodity.

    —–

    Detours

    Postcards from Silicon Valley, circa 1985-2000.

    Spotify says age 42 is when many of its users rediscover current pop music.

    What the most expensive house in America looks like.

    —–

    Retail Therapy

    The beloved Jeep Grand Wagoneer is coming back. If you can’t wait, there’s always the vintage market (and it’s a good time to buy).

    Winglights.

    Turntable cassette player combo.

    Connie

  • An Insider on Switching VC Firms

    bpo lrgLast week, we sat down with venture capitalist Brian O’Malley of Accel Partners to talk about where he’s shopping now.

    We also asked O’Malley — who was recruited into Accel from Battery Partners in 2013 — what it was like to transition between the heavyweight firms, and what he views as the biggest differences between them.

    More from that candid chat follows. Our conversation has been edited lightly for length.

    Founders sometimes feel “orphaned” when a cherished VC board member leaves to start his or her own fund or, in rarer cases, is recruited into a new firm. What happened to your portfolio companies when you changed firms?

    The simplest way to look at [these transitions] is that with the money comes the board seat, and the money is from the firm, not from Brian. So at the end of the day, it’s the firm’s call about whether you stay or go.

    Sameer [Gandhi], who recruited me in, had [been recruited into Accel from Sequoia Partners back in 2008] and gone through a similar process, so I think there was a general attitude of: “Look, your entrepreneur relationships are the one thing you take with you, and your reputation is all you have, so let’s err on the side of doing right by the teams you’ve backed.” The thinking was, “If it takes these startups a year to get things figured out, that’s okay. At the end of the day, they chose Battery to work with you, and it’s kind of not fair [to abruptly end those ties].”

    What did Battery think?

    More here.

    Connie

    ,

  • StrictlyVC: October 8, 2013

    110611_2084620_176987_imageGood morning, and happy Tuesday!

    ——

    Wall Street is showing puzzlingly few signs of panic that we’ll default on or debt. Meanwhile, Silicon Valley seems to be paying even less attention. But it’s time to freak-out, argues Dealbook’s Andrew Ross Sorkin.

    —–

    Silicon Valley’s ‘Undertaker’ Doubles Down, Too

    Everyone in Silicon Valley seems to be wearing more than one hat these days. Venture capitalists are active startup founders. Active startup founders are raising venture funds.

    Even Sherwood Partners  – a 30-person company that industry insiders long ago coined “the undertaker” because of its decades-long history of shuttering companies – has launched a second business. Called AgencyIP, it’s a platform for selling the patents, trademarks, and other intellectual property of failed startups that Sherwood unwinds.

    I caught up with Sherwood founder Marty Pichinson yesterday at his Mountain View, Calif., office to learn more, as well as see how Sherwood is doing in these boom times.

    When we last talked a couple of years ago, people thought so-called “winter” was coming for startups. It did not. Has that been bad news for Sherwood?

    Not at all! After more than 20 years in the business, we now have VCs bringing us in earlier where they really want management to focus on tomorrow and let us take care of hiccups or financial problems that can take a company off track. We’ve been doing a lot more corporate restructuring.

    What kind of hiccups are you ridding companies of?

    It can be anything. Sometimes they made a bad deal for equipment, or they paid people to [take the company one direction] and now they’re going another way. VCs will bring us in before raising a new round so we can help reduce any unsecured debt first.

    Beyond renegotiating equipment leases and analyzing who to cut, what else can you do in this kind of roaring economy? Is it impossible to work out cheaper rent right now, given low vacancy rates?

    Nothing is impossible. We’re kind in what we do. If you’re a jerk in life, people don’t want to work with you. Even though we’re renegotiating debt, maybe you’re talking about a few months. If everyone pitches in a little, there’s a better chance that the company will make it.

    What’s the failure rate right now? Has it changed because of all the seed-funding we’ve been seeing?

    Nah. About 2,000 companies are funded per year and about 20 percent of those companies exit, meaning 1,600 [fail]. Maybe it’s because your customers aren’t coming in fast enough, or another player has beat you to market, or your board members don’t have the resources to re-up anymore and they’d sooner walk away and save their dry powder.

    Right now, I’m closing a 12-year-old company that raised $227 million. It needs $40 million more but its investors are tired. Do you put it in this company or put it another? It’s all about placing bets.

    Why launch AgencyIP?

    We probably sell more orphaned [intellectual property] than anyone around. We launched the company eight months ago and we already represent more than 1,800 patents, including from CBS and Showtime and other Fortune 500 companies. We’re like William Morris, negotiating the best deals possible for the IP we have [along with finding ways to repackage it]. We can take two patents that aren’t the best in the world, for example, and put them together and they can become better.

    Who’s buying what, and what’s the range of how much they are willing to pay? 

    Our offices are full of people all the time, so we have excellent relationships with everyone. And we’ve had IP sell for $500,000 and we’ve sold it for between $25 million and $30 million.

    You’ve seen plenty of cycles. Where are we in this one?

    To me, there’s never been storms or halos. Someone is always reinventing something. These young people can see through time. Who ever thought that Facebook would be what it is — or Amazon, or Google, or Twitter?

    Change is continuous and every four or five or six years, there’s a paradigm shift to where smart people think the new deals will be and as part of that readjustment, you get rid of the old things. Maybe you shouldn’t bail out. But you can’t hold on to everything forever.

    JamBase

    New Fundings

    Appoxee, a 2.5-year-old mobile engagement platform based in Tel Aviv, has raised $1.8 million in seed funding led by Lazarus Israel Opportunities Fund and individual investor Mosche Lichtman. Previous investors Cyhaw Ventures and Oryzn Capital also contributed to the funding, which brings the total amount raised by the company to $2.4 million.

    Basis Science, a two-year-old, San Francisco-based smartwatch maker, has raised $11.8 million as part of a Series B round it began raising earlier this year, when it collected $11.5 million. Together, with the company’s Series A funding, Basis Science has raised $32.3 million from investors, including Mayfield Fund, DCM, Norwest Venture Partners, Intel Capital, Dolby Family Trust, Stanford University and Peninsula-KCG.

    Pacejet Logistics, a 36-year-old, Columbus, Oh.-based company whose shipping software connects a customer’s order processing system to a network of shipping carriers, has raised $4.5 million in Series C funding led by Athenian Venture Partners.

    Personalis, a two-year-old, Menlo Park, Calif.-based company that sells genome sequencing and analysis services to life-sciences researchers, has raised a $22 million B round that brings its total funding to $42 million. Investors in the company include Lightspeed Ventures Partners, Mohr Davidow Partners, and life science investor Abingworth.

    Sparkcentral, a two-year-old, San Francisco-based company whose customer service platform aims to help big companies monitor and manage complaints from social media sources, has raised $4.5 million in Series A funding led by Sigma West. Previous backers also participated in the round, including Social+Capital Partnership, Graph Ventures and Sebastien de Halleux, co-founder of Playfish.

    Swirl Networks, a year-old, Boston-based developer of a location-based iPhone app that helps retailers engage with consumers while they shop, has raised $8 million led by Hearst Ventures. The round also included funds from previous investors SoftBank Capital and Longworth Venture Partners.

    ——

    New Funds

    Montage Capital, an early-stage firm focused on investing in financial services, e-commerce, and resources (like energy, food and water) companies that are between their angel and Series A rounds, has raised $2.2 million in funding, according to an SEC filing. Montage, based in Menlo Park, Calif., was founded by Todd Kimmel, who was most recently a general partner at Mayfield Fund, which he joined in 2009. Before Mayfield, Kimmel worked as a principal at Advanced Technology Ventures.

    Thrive Capital Partners, a Peoria, Ill.-based firm that looks to develop and buy companies that offer a positive social impact, is seeking up to $10 million for a new fund, according to an SEC filing. The outfit, which began fundraising late last month, has so far raised $450,000​.

    The Entrepreneurs’ Fund III (TEF3), a San Mateo, Calif.-based, early-stage, IT-focused venture fund, is looking to raise $100 million for a fund called Entrepeneurs’ Fund IV, shows an SEC filing. TEF3 was founded by Jeffrey Webber, a founding partner of R.B. Webber & Co., a Mountain View, Calif.-based management consulting firm that went out of business in 2004, 13 years after it was founded.

    ——-

    Exits

    Publicly traded ad management company Digital Generation has acquired a four-year-old, Santa Monica, Calif.-based company called Republic Project for $1.4 million in cash. Republic Project operates an ad campaign platform and raised $1 million in funding last year from 500 Startups, Google Ventures, Venture 51 and individual investors.

    ——

    IPOs

    Reuters takes a look at how hard it is for even professionals to make money off IPOs once a company is out.

    The hot IPO market isn’t doing much to boost M&A, either, reports Venture Capital Dispatch.

    —–

    People

    Jason Goldberg and Nishith Shah, the CEO and CTO of troubled online retailer Fab.com, have told staffers (and AllThingsD) that they are forfeiting their 2014 salaries. Fab has raised more than $300 million in venture capital from Menlo Ventures, Andreessen Horowitz, and Atomico among many others; the company has raised another $30 million in debt.

    John Martin, a Baker Botts attorney who has been serving as chair of the firm’s technology practice, was just named Partner in Charge of the firm’s Palo Alto office.

    ——

    Happenings

    Place, a day-long conference centered around indoor marketing, starts around 9 a.m this morning in San Francisco. You can find details here.

    If you’re in the Bay Area, you might also want to hit up the Ritz Carlton at Half Moon Bay, for the second day of Venture Alpha West, which kicks off at 8:15 with a keynote by Tim Draper of Draper Fisher Jurvetson.

    ——

    Job Listings

    The pharmaceutical company Merck announced last week that it’s laying off 8,500 employees and cutting $2.5 billion in costs over the next two years. But, good news: it’s still looking for an associate director for its Digital Innovation and Outreach team — a role that requires building relationships with venture capitalists, startups, academia and “thought leaders.” A bachelor’s degree and some exposure to venture capital or private equity is required. The job is in Palo Alto, Calif.

    —–

    Essential Reads

    Twitter could be valued at as much as $20 billion once it begins trading.

    Facebook is building a 394-unit residential community for its employees, just a stone’s throw from its Palo Alto campus. Aside from the creepiness factor (and undeniably, there is one), you might be interested in knowing exactly what the development’s plans look like.

    Nest could help transform people’s homes —  if they don’t choke over the $129 price — says Wired’s Steven Levy.

    Google‘s executive chairman, Eric Schmidt, tells a crowd that Android is “more secure than the iPhone.” (The crowd does not buy it, seemingly.)

    ——

    Detour

    More evidence that you should eat five times a day.

    Amazing pictures by photographer, world traveler, and serial trespasser Bradley Garrett.

    Whatever you think of Supreme Court Justice Antonin Scalia, this is a great interview with him.

    ——-

    Retail Therapy

    In our youth, we had a place for these kinds of sweaters: the Ugly Sweater Drawer. Still, if you’re easy on the eyes and under 35, you can probably pull off one of these retro numbers. (Older than that and the look is really no longer ironic.)

    This is pretty cool, though we don’t advise it for the office. You’d probably feel pretty stupid, getting yourself fired for shooting a rubber band, or 600 of them, at your coworker.

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

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    Connie

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  • Running Two Companies? Even Silicon Valley’s “Undertaker” is Doing It

    37 - Graveyard - HARMSSEN ANDREA - germanyEveryone in Silicon Valley seems to be wearing more than one hat these days. Venture capitalists are active startup founders. Active startup founders are raising venture funds. 

    Even Sherwood Partners  – a 30-person company that industry insiders long ago coined “the undertaker” because of its decades-long history of shuttering companies – has launched a second business. Called AgencyIP, it’s a platform for selling the patents, trademarks, and other intellectual property of failed startups that Sherwood unwinds.

    I caught up with Sherwood founder Marty Pichinson yesterday at his Mountain View office to learn more, as well as see how Sherwood is doing in these boom times.

    When we last talked a couple of years ago, people thought so-called “winter” was coming for startups. It did not. Has that been bad news for Sherwood?

    Not at all! After more than 20 years in the business, we now have VCs bringing us in earlier where they really want management to focus on tomorrow and let us take care of hiccups or financial problems that can take a company off track. We’ve been doing a lot more corporate restructuring.

    What kind of hiccups are you ridding companies of?

    It can be anything. Sometimes they made a bad deal for equipment, or they paid people to [take the company one direction] and now they’re going another way. VCs will bring us in before raising a new round so we can help reduce any unsecured debt first.

    Beyond renegotiating equipment leases and analyzing who to cut, what else can you do in this kind of roaring economy? Is it impossible to work out cheaper rent right now, given low vacancy rates?

    Nothing is impossible. We’re kind in what we do. If you’re a jerk in life, people don’t want to work with you. Even though we’re renegotiating debt, maybe you’re talking about a few months. If everyone pitches in a little, there’s a better chance that the company will make it.

    What’s the failure rate right now? Has it changed because of all the seed-funding we’ve been seeing?

    Nah. About 2,000 companies are funded per year and about 20 percent of those companies exit, meaning 1,600 [fail]. Maybe it’s because your customers aren’t coming in fast enough, or another player has beat you to market, or your board members don’t have the resources to re-up anymore and they’d sooner walk away and save their dry powder.

    Right now, I’m closing a 12-year-old company that raised $227 million. It needs $40 million more but its investors are tired. Do you put it in this company or put it another? It’s all about placing bets.

    Why launch AgencyIP?

    We probably sell more orphaned [intellectual property] than anyone around. We launched the company eight months ago and we already represent more than 1,800 patents, including from CBS and Showtime and other Fortune 500 companies. We’re like William Morris, negotiating the best deals possible for the IP we have [along with finding ways to repackage it]. We can take two patents that aren’t the best in the world, for example, and put them together and they can become better.

    Who’s buying what, and what’s the range of how much they are willing to pay? 

    Our offices are full of people all the time, so we have excellent relationships with everyone. And we’ve had IP sell for $500,000 and we’ve sold it for between $25 million and $30 million.

    You’ve seen plenty of cycles. Where are we in this one?

    To me, there’s never been storms or halos. Someone is always reinventing something. These young people can see through time. Who ever thought that Facebook would be what it is — or Amazon, or Google, or Twitter?

    Change is continuous and every four or five or six years, there’s a paradigm shift to where smart people think the new deals will be and as part of that readjustment, you get rid of the old things. Maybe you shouldn’t bail out. But you can’t hold on to everything forever.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

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    Connie

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