September 2013 – Page 2 – StrictlyVC, LLC

Can Jack Hidary Hack New York’s Mayoral Race?

Jack Hidary is a wealthy tech entrepreneur who wants to be mayor of New York City and is running as an independent. At first blush, he seems to have much in common with New York’s billionaire mayor Mike Bloomberg, a Democrat turned Republican turned independent.

But Bloomberg spent $73 million of his own money to get himself elected the first time around. Hidary has so far raised $450,000. Bloomberg began campaigning early. Hidary, 45, announcing he was running just two months ago. Bloomberg courted nearly everyone; Hidary has been doing more “targeted” campaigning. As told me in a phone call last week, “I have increased name recognition in the core communities that we need.”

In Hidary’s view, there’s an opportunity to hack the election by leveraging both his tech base and his background. Born in Brooklyn to a Spanish-speaking Columbian mother, Hidary went on to cofound two companies. The first, EarthWeb, an IT information and jobs site, went public in 1998, four years after opening for business. (It was taken private in 2000 and sold again in 2005 as Dice.com to private equity investors.) Hidary also cofounded the financial information company Vista Research, which sold to Standard & Poor in 2005.

Since entering the race in mid-July, Hidary has attracted support from many who like his biggest promise: to champion entrepreneurship and create jobs across all five of New York’s boroughs. Among those who’ve lent their support, says Hidary, are Albert Wenger of Union Square Ventures; investors Joanne and Fred Wilson (also of USV); Jim Robinson of RRE Ventures; and Charlie Kim, the founder and CEO Next Jump, a New York-based tech company that powers reward programs.

Still, it’s far from clear that Hidary’s concentrated tactics are working. His team is using CampaignGrid, a venture-backed, data-driven ad platform to deliver pre-roll online video to “specific target markets.” Hidary has also begun running Spanish-language TV ads on various cable channels, including Telemundo. Says Hidary, “We’re using a combination of channels in a more efficient way” than Republican nominee Joseph Lhota and Democratic front-runner Bill de Blasio.

But being efficient has its costs. Hidary is still being called “the New York mayoral candidate you probably haven’t heard of.” Even sources in New York’s tech community tell me they’re waiting for him to gather more traction outside of his insular tech circle before more publicly getting behind him.

Long shot as Hidary may seem, stranger things have happened, particularly in a race where the current leading candidate, de Blasio, is widely seen as part-time populist — and not a terribly tech friendly one at that.

As Charlie O’Donnell of Brooklyn Bridge Ventures puts it: “How friendly will Bill de Blasio be to companies like Uber and Halio when he’s taking money from the taxi lobby? Will he support consumers who rent their rooms on Airbnb or side with the hotels?”

Connie

September 23, 2013

Entrepreneurs, Politics

Jack Hidary, Politics
StrictlyVC: September 23, 2013

Good morning, and happy Monday! If you haven’t signed up yet for StrictlyVC, you can do that here. If you want to chat about anything, email me at connie@strictlyvc.com or find me on Twitter.

Top News in the A.M.

General solicitation rules are different as of today. Here’s why startups need to pay attention to what, specifically, has changed.

Can Jack Hidary Hack New York’s Mayoral Race?

Jack Hidary is a wealthy tech entrepreneur who wants to be mayor of New York City and is running as an independent. At first blush, he seems to have much in common with New York’s billionaire mayor Mike Bloomberg, a Democrat turned Republican turned independent.

But Bloomberg spent $73 million of his own money to get himself elected the first time around. Hidary has so far raised $450,000. Bloomberg began campaigning early. Hidary, 45, announcing he was running just two months ago. Bloomberg courted nearly everyone; Hidary has been doing more “targeted” campaigning. As told me in a phone call last week, “I have increased name recognition in the core communities that we need.”

In Hidary’s view, there’s an opportunity to hack the election by leveraging both his tech base and his background. Born in Brooklyn to a Spanish-speaking Columbian mother, Hidary went on to cofound two companies. The first, EarthWeb, an IT information and jobs site, went public in 1998, four years after opening for business. (It was taken private in 2000 and sold again in 2005 as Dice.com to private equity investors.) Hidary also cofounded the financial information company Vista Research, which sold to Standard & Poor in 2005.

Since entering the race in mid-July, Hidary has attracted support from many who like his biggest promise: to champion entrepreneurship and create jobs across all five of New York’s boroughs. Among those who’ve lent their support, says Hidary, are Albert Wenger of Union Square Ventures; investors Joanne and Wilson (also of USV); Jim Robinson of RRE Ventures; and Charlie Kim, the founder and CEO Next Jump, a New York-based tech company that powers reward programs.

Still, it’s far from clear that Hidary’s concentrated tactics are working. His team is using CampaignGrid, a venture-backed, data-driven ad platform to deliver pre-roll online video to “specific target markets.” Hidary has also begun running Spanish-language TV ads on various cable channels, including Telemundo. Says Hidary, “We’re using a combination of channels in a more efficient way” than Republican nominee Joseph Lhota and Democratic front-runner Bill de Blasio.

But being efficient has its own costs. Hidary is still being called “the New York mayoral candidate you probably haven’t heard of.” Even sources in New York’s tech community tell me they’re waiting for him to gather more traction outside of his insular tech circle before more publicly getting behind him.

Long shot as Hidary may seem, stranger things have happened, particularly in a race where the current leading candidate, de Blasio, is widely seen as part-time populist, and not a terribly tech friendly one at that.

As Charlie O’Donnell of Brooklyn Bridge Ventures puts it: “How friendly will Bill de Blasio be to companies like Uber and Halio when he’s taking money from the taxi lobby? Will he support consumers who rent their rooms on Airbnb or side with the hotels?”

New Fundings

Flipboard, the popular app for browsing news and social media on phones and tablet, has raised $50 million in new funding, in a round led by Rizvi Traverse Management and Goldman Sachs, reports AllThingsD. The new funding puts the valuation of the Palo Alto, Calif., company at $800 million, says the report.

AngelList, the San Francisco-based online network for investors and entrepreneurs, has raised $24 million at a valuation “in the $150 million range,” reports Dan Primack of Fortune. Among the many investors in the deal is Atlas Venture, Google Ventures, Kleiner Perkins Caufield & Byers, Draper Fisher Jurvetson, and dozens of individual investors, including venture capitalist Marc Andreessen and Twitter cofounder Ev Williams.

Darktrace, a U.K.-based cyber defense platform that tricks hackers to expose them, has raised $20 million from Invoke Capital, the new, $1 billion venture capital firm spearheaded by former Autonomy CEO Mike Lynch. Lynch has been accused of misrepresenting financial results to Hewlett-Packard, which acquired Autonomy in 2011; he says the claims have no merit. Darktrace is the first investment of Invoke, which includes many of Lynch’s former staff at Autonomy.

Apmetrix, a San Diego-based company focused on cross-platform high-end video game and mobile app analytics, has raised an undisclosed seed amount from Analytics Ventures, La Costa Investment Group, and KI Investment Holdings.

Bugsnag, a San Francisco-based company that has built a crash monitoring platform for apps, has raised $1.4 million in seed funding led by Matrix Partners, with individuals investors including Andy McLoughlin and Jason Seats participating.

Visualead, a mobile page design platform startup based in Tel Aviv, has raised $1.6 million in Series A funding. Kaedan Capital and Entrée Capital led the round.

IPOs

It’s a good time to be a newly public company. According to research firm IPO Scoop, 139 companies have gone out (as of this past Friday). Of that lot, 101 companies are trading at above their share price, and the total return from the issue price averages 34.27 percent.

FireEye, the cybersecurity software maker that went public on Friday, priced its shares at $20; they opened at $40.30 and closed at $36, raising around $300 million. Early backers of the company include Sequoia Capital and Norwest Venture Partners.

Shares of Rocket Fuel, a San Francisco-based ad tech company, opened at $59.95 on Friday, more than double their IPO offering price. They shot as high as $62.50 before closing the day at $56.10, raising around $116 million. The company’s venture investors include Mohr Davidow Venures, Labrador Ventures, and Northgate Capital.

Veracyte, a seven-year-old, South San Francisco-based company that develops diagnostics for thyroid and non-small cell lung cancer, has filed an S-1 with the SEC. The company has raised about $56 million to date, including from Domain Partners, which owns 19.3 percent of the company; Versant Ventures, which owns 22.6 percent of the company; TPG, which owns 22.2 percent, and Kleiner Perkins Caufield & Byers, which also owns 22.2 percent of the company.

People

On Friday, Kieran Taylor, a former Akamai senior director of marketing, was fined and banned by the SEC from serving as a public company officer or director, to settle charges that he helped funnel illegal tips to Raj Rajaratnam, the hedge fund manager imprisoned for insider trading.

Ayla Networks, a Sunnyvale, Calif.-based company cloud platform company, has hired Michael Maeso as VP of worldwide sales. Maeso has has been a sales exec at numerous startups in the past, including July Systems, Cotendo (acquired by Akamai), and VitalStream (acquired by Internap). Ayla is backed by Voyager Capital and Crosslink Capital.

New Fund News

Iconiq Capital, a months-old San Francisco-based investment firm that invests on behalf of wealthy families, has raised a new, $10 million fund called Iconiq Strategic Partners Co-Invest, L.P., BL, according to a new SEC filing. Presumably, the funds have gone or will go to the firm’s new investment in BlackLine Systems, an L.A.-based company that produces accounting software and which raised an undisclosed amount of funding last month from Iconiq and Silver Lake Sumeru, Silver Lake’s middle market group.

Iconiq was formed earlier this year by Will Griffith, who spent a dozen years at Technology Crossover Ventures and left in January. Iconiq first surfaced in an SEC filing back in May. Griffith has since hired his old TCV colleague, Matthew Jacobson, who left TCV in 2008 to join Groupon. Jacobson had left Groupon in June of last year and was an working as an investor at Battery Ventures before joining Griffith.

Job Listings

Baxter Ventures, the corporate venture arm of Baxter International, is looking for a managing director. The job is in Deerfield, Ill., about 25 miles north of Chicago, and to apply, you need previous experience in a VC role, established relationships with medical device VCs, and some board experience.

Essential Reads

Margit Wennmachers, Andreessen Horowitz‘s famously no-nonsense marketing partner, is profiled in the San Francisco Chronicle, which calls her one of the most powerful people in Silicon Valley. Wennmachers tells the paper of her firm: “We’re so connected, it’s the equivalent of the White House.”

If Twitter is the last splashy IPO for a while, that’s perfectly okay with Silicon Valley investors, they insist. “We might not get the mega-IPOs after Twitter, but lots of start-ups are solving real problems now,” one tells the Sunday Telegraph.

Want to give yourself five stars online? It might cost you, notes the New York Times. Today, New York regulators are announcing the most comprehensive crackdown to date on deceptive reviews on the Internet.

Detour

Maria Konnikova of the New Yorker presents a compelling case against redshirting your kid, writing: “While earlier studies have argued that redshirted children do better both socially and academically — citing data on school evaluations, leadership positions, and test scores — more recent analyses suggest that the opposite may well be the case.”

Billionaire George Soros gets hitched again. (Yes, there’s a prenup in place. William Zabel, Soros’s attorney, told the New York Post last year that he will “leave the bulk of his estate to charity but he intends to provide generously for his wife.”)

Extreme bravery in action by a husband-and-wife pair of photojournalists. (Warning: this link contains some graphic images of that massacre at an upscale mall in Nairobi on Saturday.)

Retail Therapy

Check out this elegant, ridiculous breathalyzer. There’s no better way to convey to your passengers that you tend to drink a lot.

Bonobos makes these pants out of beer bottles (and water and juice and soda bottles and old TV trays). You’ll probably sweat a ton, but you’ll look great and you’ll be helping to save the environment. Sort of.

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.

Connie

September 23, 2013

Morning Summary

Politics
StrictlyVC: September 20, 2013

Top News in the A.M.

Yesterday the California Public Utilities Commission approved the first statewide guidelines in the U.S. for ride-sharing services. The guidelines address things like driver background checks that car companies like Lyft and Sidecar have been implementing from the get-go. But by agreeing to allow the services’ drivers to operate freely as long as they agree to the guidelines, the agency is signaling to the startups that it’s full steam ahead.

Dow Jones and its influential AllThingsD unit are officially parting ways, with Dow Jones keeping the AllThingsD brand and AllThingsD co-executive editors Walt Mossberg and Kara Swisher keeping the AllThingsD readers (presumably). The question is where we can find them, after Dec. 31, when their contract ends. Reportedly, they’re right now in talks with potential backers about an investment that would value their new venture between $30 million and $40 million.

Kleiner, Ellen Pao, and the Reddit Factor

It’s looking like Kleiner Perkins will have to hash it out in court with former partner Ellen Pao, who filed an explosive gender-discrimination lawsuit against the venture firm in May of last year.

This Wednesday, Kleiner was denied its request to move the case to arbitration.

In response, Kleiner told the Mercury News yesterday that it will “vigorously defend the matter” and is “confident we will prevail.”

But Pao’s current job of building strategic partnerships at the social news site Reddit may throw an unexpected wrench into Kleiner’s defense.

As industry watchers may recall, in October of last year, roughly five months after Pao filed her suit — in which she clams she was repeatedly denied opportunities to advance or pay raises — Pao was abruptly terminated by Kleiner, she said. Kleiner has always disputed the characterization, saying it asked Pao to leave “because of long-standing issues having no relationship or bearing on the litigation.”

But now that the case is no longer under appeal, her attorney told the Mercury News yesterday that he’s planning to add a wrongful termination claim to the lawsuit.

Legal experts have told me that Pao’s Reddit gig could work to her advantage in her case against her former employer. For one thing, anyone who claims retaliation in a discrimination case has a duty to look for a job. Joining Reddit could show that Pao tried limiting the financial damage to herself and secured a job under difficult circumstances (i.e., in the middle of a media circus).

Landing the role could also boost Pao’s credibility and make her more believable to a jury, according to employment attorneys; they say that juries want to know, “Can this person work for someone else?”

In cases like these, employment attorneys argue that the burden of proof is always on the employer, and retaliation claims are often more powerful and easier to prove than actual discrimination claims.

And to make matters even worse, Kleiner could be on the hook for more damages than when Pao originally filed her lawsuit as an employee.

For Kleiner, it seems, the Pao case is a nightmare that just will not end.

New Fundings

NewVoiceMedia, a 13-year-old, cloud-based contact and call center company in the U.K., has raised a $35 million Series C round, led Bessemer Venture Partners. Existing investors Highland Capital Partners Europe, Eden Ventures and Notion Capital also participated in the financing, which was company’s second this year. In January, NewVoiceMedia announced that it had raised $20 million in Series B funding from investors. Altogether, it has raised $61.3 million.

Branding Brand, a Pittsburgh-based mobile commerce platform that powers the mobile sites and apps for retail customers, has raised $9.5 million in Series B funding. Existing investor Insight Venture Partners led the round with participation from CrunchFund, Lead Edge Capital and eBay Enterprise. The company had raised a $7.5 million Series A round in October of last year.

Unmetric, whose software enables its customers to analyze their customers’ social media efforts, has raised a $5.5 million Series B round led by Jafco Asia. Earlier investor Nexus Venture Partners also participated in the financing.

Plaid has raised $2.8 million to grow its API for banks. (It makes banks’ data more accessible to developers so that they can ultimately create new applications around that information.) Spark Capital led the round, which also included Homebrew Capital, Google Ventures, Felicis Ventures, and NEA.

Gigya — a Mountain View, Calif.-based firm that specializes in social data management, has raised $35 million in new funding led by Greenspring Associates. Previous investors Benchmark Capital, DAG Ventures, Advance Publications, and Mayfield Fund also participated in the round. The company has now raised roughly $70 million from investors over the last six years.

Exits

Mindshare Technologies, a Salt Lake City-based company that tracks customers with online and phone surveys, has acquired Empathica, a competitor based in Ontario, Canada. Both companies have attracted venture funding. Empathica had raised $7 million in Series A funding from JMI Equity back in 2006. Mindshare raised a $20 million round from the private equity firm Sorenson Capital in 2011. Financial terms of the deal weren’t disclosed.

Google has acquired most of the team and assets of San Francisco-based Hattery, reports Dan Primack of Fortune. The joint digital innovation lab/venture capital firm founded was founded by former Google employees Josh Mendelsohn, Joshua To, and Luis Arbulu. Google is not acquiring any equity in the six projects Hattery has been helping to create and shape.

IPOs

Billionaire Hong Kong investor Li Ka-shing is apparently poised to shake up Asian markets with a planned $700 million IPO for Westports Holdings Bhd., a Malaysian port operator of which he owns roughly 30 percent, according to the Wall Street Journal. The planned October offering of the port operator, which oversees one of Asia’s busiest shipping terminals, is expected to reignite Malaysia’s deal market, which was home to some of the world’s largest IPOs last year.

Shares of Acceleron Pharma, a 10-year-old, Cambridge, Mass.-based company that’s developing therapies for cancer and rare diseases, soared by one-third in their first day of trading yesterday. The shares, which closed up 33 percent, at $19.99, are owned predominately by venture capitalists, who had poured $105.1 million into the company over the years. According to an SEC filing, the company’s largest shareholder after the offering is Polaris Venture Partners, which owns a 12.1 percent stake. Venrock Partners, Advanced Technology Ventures, and Flagship Ventures are among the company’s other major shareholders.

People

Intel Capital has promoted three investment managers to managing director to oversee four new areas for the venture arm. Rob Rueckert, Ken Elefant, and Ramamurthy Sivakumar will now be scouting for deals in the areas of data center software; new devices and wearables; security; and ultrabooks and perceptual computing.

Bitcasa, a two-year-old, cloud storage startup that’s based in Mountain View, Calif., has a new CEO: Brian Taptich, who was most recently the VP of international development at Zynga. Taptich replaces Bitcasa co-founder Tony Gauda. Bitcasa has raised $8.5 million over two rounds, from investors that include Samsung Ventures, First Round Capital, Andreessen Horowitz, Crunchfund, and Pelion Venture Partners.

Job Listings

PriceWaterhouseCoopers is hiring a senior associate in L.A.

Essential Reads

Reporter Brad Stone writes about Joy Covey, Amazon’s first CFO and someone who plainly lived life to its fullest until her death on Wednesday, when she was struck by a car during a bicycle ride in Silicon Valley.

Detour

A father tries doing his 13-year-old daughter’s seemingly insurmountable mountain of homework for a week. It’s not a pretty exercise.

Retail Therapy

AllSaints T-shirts, for those autumn days you want to feel like you’re 12 years old again.

Bourbon marshmallows. We wouldn’t suggesting actually eating one of these, but you’ll get points for being creative if you take them to a party!

——-

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.

Connie

September 20, 2013

Morning Summary

Kleiner Perkins
Kleiner, Ellen Pao and the Reddit Factor

It’s looking like Kleiner Perkins will have to hash it out in court with former partner Ellen Pao, who filed an explosive gender-discrimination lawsuit against the venture firm in May of last year.

This Wednesday, Kleiner was denied its request to move the case to arbitration.

In response, Kleiner told the Mercury News yesterday that it will “vigorously defend the matter” and is “confident we will prevail.”

But Pao’s current job of building strategic partnerships at the social news site Reddit may throw an unexpected wrench into Kleiner’s defense.

As industry watchers may recall, in October of last year, roughly five months after Pao filed her suit — in which she clams she was repeatedly denied opportunities to advance or pay raises — Pao was abruptly terminated by Kleiner, she said. Kleiner has always disputed the characterization, saying it asked Pao to leave “because of long-standing issues having no relationship or bearing on the litigation.”

But now that the case is no longer under appeal, her attorney told the Mercury News yesterday that he’s planning to add a wrongful termination claim to the lawsuit.

Legal experts have told me that Pao’s Reddit gig could work to her advantage in her case against her former employer. For one thing, anyone who claims retaliation in a discrimination case has a duty to look for a job. Joining Reddit could show that Pao tried limiting the financial damage to herself and secured a job under difficult circumstances (i.e., in the middle of a media circus).

Landing the role could also boost Pao’s credibility and make her more believable to a jury, according to employment attorneys; they say that juries want to know, “Can this person work for someone else?”

In cases like these, employment attorneys argue that the burden of proof is always on the employer, and retaliation claims are often more powerful and easier to prove than actual discrimination claims.

And to make matters even worse, Kleiner could be on the hook for more damages than when Pao originally filed her lawsuit as an employee.

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

Connie

September 20, 2013

Lawsuits

Ellen Pao, Kleiner Perkins, Reddit
StrictlyVC: September 19, 2013

Top News in the A.M.

Apple CEO Tim Cook: Sorry for any confusion, people, but “we never had an objective to sell a low-cost phone.”

Dropcam, the $50M Startup That Should Keep ADT Awake at Night

Dropcam is watching you.

To date, the four-year-old startup has raised $47.8 million for its HD wireless home-monitoring cameras that allow consumers to watch the kids from the office, glimpse which neighbor isn’t picking up after his dog, or catch break-ins.

Greg Duffy, Dropcam’s 26-year-old cofounder and CEO, won’t disclose how many of the company’s $150 cameras the company has sold, but he will say that the company is enjoying “5x” year-over-year revenue growth from a “significant sample of users” that “cut across nearly every demographic.”

That’s a lot of video. The company claims that it uploads more video each day than YouTube.

What Dropcam plans to do with all that video is where things get interesting. At Dropcam’s San Francisco offices, where 45 people are now employed, Duffy hints that Dropcam will soon dip its toe into the lucrative realm of home security.

It makes perfect sense. It also puts the company’s funding into perspective.

Right now, 40 percent of Dropcam’s customers pay $9.99 or $99 per year to save up to seven days of footage costs, partly for home security purposes.

Duffy believes Dropcam can capture a much larger piece of the home security pie because, in his view, it’s a market that’s just waiting to be disrupted Not only are the “ADTs of the world” “generally stuck in past eras of technology,” but “they charge you insanely high prices for a very simple service,” he notes.

ADT’s most basic plan — which includes a motion detector, two wireless door or window sensors, and a wireless key fob that enables users to control the system – costs $42.99 per month, a $300 installation fee and requires a three-year commitment. More “advanced” services — including stored video footage and email alerts — cost $57.99 a month, with a $500 installation fee and a three-year contract.

That’s big business: ADT has a market cap of $8.7 billion dollars.

Companies like ADT “make you think that to keep your family safe, you need to pay for something that’s essentially as expensive as a cell phone and requires [an even longer] contract,” Duffy says. “But it costs them nothing to deliver the service, and using today’s technology, you could deliver [the same service] for a fraction of the price.”

Dropcam’s investors — Institutional Venture Partners, Accel Partners, and Kleiner Perkins, among others — evidently think so, too.

New Fundings

Illumio, a Santa Clara, Calif.-based cloud security startup that remains largely in stealth mode, has closed a $34 million Series B round led by General Catalyst Partners, which was joined by Formation 8. Andreessen Horowitz, which led the companies $8 million Series A funding earlier this year, also participated, as did individual investors Marc Benioff, the founder of Salesforce.com, and Box CEO Aaron Levie.

StrongLoop, a San Mateo, Calif.-base company, has raised $8 million in Series A funding led by Shasa Ventures and Ignition Partners, a round that brings its total funding to $9 million SrongLoop develops a backend-as-a-service (MBaaS) that uses Node.js as a platform for developing mobile apps in the cloud or in the data center. The company has named Issac Roth as CEO. Meanwhile, Jason Pressman of Shasta and Nick Sturiale of Ignition have joined the company’s board.

Stackdriver, a Boston-based company, has raised $10 million in Series B funding led by Flybridge Capital Partners. Bain Capital Ventures, which provided the company with $5 million in Series A funding last year, also participated. Stackdriver enables its customers to better manage their cloud-powered applications, including by mapping relationships between the customers’ system, application, and infrastructure resources.

Remind101, a San Francisco-based startup that aims to provide teachers with a safe way to text message students and stay in touch with their parents has raised $3.5 million. The Series A round was led by the Social + Capital Partnership, with famed Internet investor Yuri Milner participating. The money follows a $1 million seed round that came from First Round Capital and numerous individual investors last year.

Syntertainment, a Berkeley, Calif.-based new gaming startup that reportedly focuses on “individual lives,” has raised a $5 million Series A round from investors that include Andreessen Horowitz and former Electronic Arts CEO John Riccitiello.

Cargomatic, an L.A-based startup that appears to be the Uber of the trucking business — it promises to “provide on-demand, pre-screened trucks where and when” shippers need them — has raised $900,000 as part of an expected $1.75 million financing. Investors include the company’s founder and CEO, Jonathan Kessler, and Brett Parker, the chief operating officer of the transportation company Savon Freight.

Crave, a San Francisco-based company that produces “discreet and elegant” sex toys, has raised $2.4 million in Series A funding, including the venture firm Chaotic Ventures and individual investors.

Deliv, a Palo Alto, Calif.-based company focused on providing same-day delivery services, has raised $6.85 million in Series A funding from new investors Upfront Ventures and RPM Ventures. Previous investors in the company’s $1 million seed round, including Redpoint Ventures, Trinity Ventures, PivotNorth Capital, General Catalyst Partners and the Operator’s Fund, also participated.

Exits

At least some limited partners are making big bucks on Groupon. According to AllthingsD, NEA, Groupon’s first institutional investor (it backed Groupon with $4.8 million in 2008) distributed 20 million shares of the company to investors on Friday. The shares are worth roughly $225 at their current trading price of $11.35.

New Fund News

Benu BioVentures, based in Natick, Mass., launched this week, after being spun out of Benu BioPharma, a management and consulting company that focuses on biotechs and medical device startups. The outfit’s cofounders, Dennis Goldberg and Fred Meyer, tell the Boston Business Journal that they intend to invest in human biopharmaceuticals, and their initial investments will be in the “mid-single-digit million” range.

Job Listings

Silicon Valley Bank is on the search for an associate to add to its corporate venture group to source and qualify potential new opportunities for the firm. Among the job’s requirements: knowledge of the VC ecosystem and at last one or two years of experience in finance or banking.

Essential Reads

Kleiner Perkins gets some bad news, as California’s highest court rejects its efforts to take former partner Ellen Pao’s case against it to arbitration.

Time asks whether it’s time for Arthur Levinson to step down as the chairman of Apple’s board, given that Levinson — the chairman and former CEO of Genentech — is becoming CEO of a new, Google-backed health-focused venture called Calico. “There is something about this that feels uncomfortable,” says board expert Lucy Marcus of Levinson’s continuing ties to both companies.

The Economist takes a quick look at why the ambitions of Western firms in emerging markets far exceed their efforts.

New research suggests that established — versus temporary — teams can become too comfortable.

Detour

The snark monsters of Silicon Valley.

Retail Therapy

Witness the world’s first, truly elegant water filter, when you’ve already spent a fortune on your home/office anyway.

And hey, a sensor that attaches to your golf club and breaks down your speed, angle and acceleration. Maybe now, you can Nate Silver your way to a better back nine!

——-

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.

Connie

September 19, 2013

Morning Summary

Dropcam, New Fund News, Startups
Dropcam, the $50M Startup That Should Keep ADT Awake at Night

Dropcam is watching you.

To date, the four-year-old startup has raised $47.8 million for its HD wireless home-monitoring cameras that allow consumers to watch the kids from the office, glimpse which neighbor isn’t picking up after his dog, or catch break-ins.

Greg Duffy, Dropcam’s 26-year-old cofounder and CEO, won’t disclose how many of the company’s $150 cameras the company has sold, but he will say that the company is enjoying “5x” year-over-year revenue growth from a “significant sample of users” that “cut across nearly every demographic.”

That’s a lot of video. The company claims that it uploads more video each day than YouTube.

What Dropcam plans to do with all that video is where things get interesting. At Dropcam’s San Francisco offices, where 45 people are now employed, Duffy hints that Dropcam will soon dip its toe into the lucrative realm of home security.

It makes perfect sense. It also puts the company’s funding into perspective.

Right now, 40 percent of Dropcam’s customers pay $9.99 or $99 per year to save up to seven days of video footage, partly for home security purposes.

Duffy believes Dropcam can capture a much larger piece of the home security pie because, in his view, it’s a market that’s just waiting to be disrupted Not only are the “ADTs of the world” “generally stuck in past eras of technology,” but “they charge you insanely high prices for a very simple service,” he notes.

ADT’s most basic plan — which includes a motion detector, two wireless door or window sensors, and a wireless key fob that enables users to control the system – costs $42.99 per month, a $300 installation fee and requires a three-year commitment. More “advanced” services — including stored video footage and email alerts — cost $57.99 a month, with a $500 installation fee and a three-year contract.

That’s big business: ADT has a market cap of $8.7 billion dollars.

Companies like ADT “make you think that to keep your family safe, you need to pay for something that’s essentially as expensive as a cell phone and requires [an even longer] contract,” Duffy says. “But it costs them nothing to deliver the service, and using today’s technology, you could deliver [the same service] for a fraction of the price.”

Dropcam’s investors — Institutional Venture Partners, Accel Partners, and Kleiner Perkins, among others — evidently think so, too.

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

Connie

September 19, 2013

Entrepreneurs

Accel Partners, Dropcam, Greg Duffy, Institutional Venture Partners, Kleiner Perkins
StrictlyVC: September 18, 2013

Top News in the A.M.

Apple finally gets some good publicity again, with tech columnist Walt Mossberg pronouncing the new iPhone 5s the “best smartphone on the market.”

Stewart Alsop on Introducing 18-Year-Olds to VC

Longtime VC Stewart Alsop believes “people in their 30s and 40s should work.” And by work, he means outside of venture capital. “You should be in a company,” Alsop, 61, explains over breakfast in San Franciso’s Hayes Valley neighborhood. “Your value comes from your work experience. If you sit around a board of directors’ table, and you don’t have experience and a network and a point of view and a domain that you know, you don’t bring any value.”

The stance is somewhat ironic, given that Alsop and his partners at Alsop-Louie Partners have been introducing exceedingly young people into the clubby world of VC since shortly after the firm’s 2006 founding. It was then that the firm begin working with college students, transforming them into part-time campus spies and calling them “associates.”

“The [students] are all, generally speaking, 18 or older,” Alsop tells me, dipping into his eggs. “But they’re younger than the drinking age, so we consider them our kids, and we take care of them,” including “teaching them about employment and taxes and stuff like that.”

Alsop-Louie is hardly alone in bringing college students into the fold. Though the firm is well known for tapping students to help them identify talent, a growing number of venture firms are finding creative ways to identify the next Mark Zuckerberg. Andreessen Horowitz employs an in-house “college talent manager.” Insight Venture Partners employs students as analysts on a full-time basis during the summer. Meanwhile, numerous firms, including Highland Capital Partner and Lerer Ventures, have student-focused summer programs. (Lerer Ventures even calls its program Summer School VC.)

It’s become so competitive on college campuses that Alsop-Louie had to remove a Stanford student who was a finalist for their program after it learned the candidate was already involved in another venture firm’s student program. (“We wouldn’t want someone in our firm out talking with other people,” explains Alsop.)

The question is what impact such programs are having on students involved in these programs. Alsop-Louie hires college students as sophomores, so they can spend three years playing VC. It’s enough time to figure out who’s who on campus, says Alsop. Yet it’s also enough time to begin envisioning a career in venture capital, an industry that’s shrinking, not growing. Is exposing them to a life that most can’t have fair?

Alsop tells me about the numerous former associates – out of 13 to date – who remain close to the firm. Corey Reese, the firm’s first recruit at UC Berkeley, is today CEO of Ness Computing, a personalized search engine that was incubated at Alsop-Louie. It has since raised $20 million from an investor group including Singapore Telecom, American Express, and NTB Docomo.

Another former campus associate, Eli Chait, is the cofounder and CEO of Copilot Labs in San Francisco. The company, which provides real-time marketing intelligence information to restaurants, raised $2 million last summer from undisclosed investors.

Yet another recent UC graduate is working as an engineer at one of Alsop-Louie’s portfolio companies. And the list goes on.

“They each have an innate interest in tech and in venture,” says Alsop.

And yes, some of them hope to become venture capitalists out of college. “They do think that,” Alsop acknowledges. But he says that the firm quickly “beats it out of them” and pushes them to think instead about what else they really want to do.

“We make it clear that this isn’t a job that teaches you anything,” he adds with a laugh.

New Fundings

Tiger Global Management has just taken a bigger bite out of Automattic, parent company of the WordPress blogging platform. According to the WSJ, New York-based Tiger just paid $60 million  for a secondary stake in Automattic, after making a $50 million investment in the company in May. Other interesting details in the piece: Tiger, along with Iconiq Capital — which itself just picked up $15 million in shares — has now bought out the entire stake of one of Automattic’s earliest investors, Polaris Partners. Perhaps it’s no wonder. WordPress founder Matt Mullenweg tells reporter Evelyn Rusli that the company’s valuation is now 25 percent higher than it was in May.

Bright , a San Francisco-based startup whose job platform analyzes thousands of data points, including education, location, and additional certifications to connect job candidates with jobs, has raised $14 million. The Series B round was led by Toba Capital and included previous investors, such as John Burbank of Passport Capital. Bright, founded in 2009, has raised $20 million to date.

Recommind, a San Francisco-based software company founded in 2000, has raised a $15 million, Series C round from SAP Ventures . Recommind’s predictive analytics software focuses on unstructured, human-generated data like email, voicemail and social media, and this new round brings its total funding to date to $22.5 million.

Zipments, a three-year-old, New York-based same-day delivery service, has raised $2.25 million in seed funding. FirstMark Capital and Huron River Ventures were the lead investors, with Windquest Group, New York City Economic Development Corporation, Chicago Ventures and CEO Robert Safrata of Novex Couriers, participating alongside them.

Simplilearn, an online certification and training site for working professionals, announced yesterday that it has raised $10 million in Series B funding from Helion Venture Partners and Kalaari Capital. The company, which was founded in Bangalore and now has an office in Houston, has received funding in the past from the Bangalore-based venture firm IndoUS Ventures.

StrikeAd, a London- and New York-based mobile advertising startup, has raised $7 million in fresh funding led by Karlin Ventures , a relatively new firm in L.A. that focuses on early-stage investments, including in digital media. Other new investors in the round included Canyon Creek Capital and Scentan Ventures in Singapore. Existing investors also participated in the funding, including DFJ Esprit, Softech VC and Siemer Ventures. Altogether, three-year-old StrikeAd has raised $13.5 million.

Cool Planet Energy Systems , a Camarillo, Calif.- based company that’s building small-scale biorefineries for fuel production, has raised $19.4 million in a D round from North Bridge Venture Partners, Shea Ventures, BP, and Google Ventures, among others. The funding comes just four months after a separate, $30 million round was closed by the company and will be used, in part, to begin construction of its first commercial refinery, in Louisiana.

Exits

Hightail, the file-sharing startup formerly known as YouSendIt, has acquired AdeptCloud of San Mateo, Calif., which produces cloud-managed private collaboration software and had raised less than a million dollars in funding from Formative Ventures and Entrepreneurs’ Fund III. The financial terms of the deal weren’t disclosed, but Hightail, based in Campbell, Calif., has raised roughly $50 million in funding over the last nine years. Among its backers are Alloy Ventures, Cambrian Ventures, Adams Street Partners, Emergence Capital Partners, Sevin Rosen Funds, and Sigma Partners.

People

FirstMark Capital of New York City has two new venture partners: Rick Nucci and Josh Abramson.  Nucci co-founded the SaaS integration startup Boomi, which FirstMark helped back and that sold to Dell in 2010. Abramson co-founded Connected Ventures, the parent company of the CollegeHumor Network, which spawned Big Shocker, Busted Tees, CollegeHumor, Defunker, and Vimeo. (Connected Ventures was acquired by IAC – which purchased a 51 percent stake in the company — back in 2006.) FirstMark has a post about its expanded team here.

The investment bank Duff & Phelps has a new president: Jacob Silverman, who joined the firm nine years ago and became its head of investment banking in March 2011, after serving as its CFO for five years.

Jeff Sandquist, senior director of developer relations at Microsoft, is joining Twitter as director of platform partnerships. He announced the move in a tweet, adding that “change invigorates the soul.”

New Fund News

Venture Investors , an life sciences-focused venture firm based in Madison, Wi., has raised $80 million for its fifth venture capital firm. The total is roughly half of the $150 million that the firm set out to raise, according to the Milwaukee Journal Sentinel. The firm’s fourth fund closed on $118 million, the biggest early-stage fund ever raised in Wisconsin, says the paper.

Job Listings

Canaan Partners is looking to hire an analyst to join its Menlo Park IT team. The job is a two- to three-year, pre-MBA role, and technology company experience and/or a technical or quantitative degree is highly preferred, says the firm.

Essential Reads

Yesterday, the Census Bureau released its annual update on income, poverty, and health-insurance coverage, and the numbers are troubling, to say the least. The New Yorker breaks it down for readers . In 1973, a typical middle-class household earned $48,557 in inflation-adjusted dollars. Last year, the typical household earned almost exactly the same amount, or $51,017.

Detour

Evidently, the U.S. has exactly six billionaire bachelors. (So far.)

CNET cofounder Halsey Minor’s $25 million mansion is finally off the super-hot San Francisco real estate market after several steep price cuts. (Any guesses who the buyer might be?)

Eradicating double chins: it may be the next half-billion dollar business.

The New Republic argues, provocatively, for parents to stop forcing their kids to learn a musical instrument. It’s 2013, not 1860, says writer Mark Oppenheimer. You no longer need a “violin-playing daughter” to “cement” your social status.

Retail Therapy.

They exist! Tangle-free headphones! [Happy screams.]

——-

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.

Related articles
- Tony Conrad to Founders: VC Is “Not as Easy as It Looks”
- Early stage VC firm Alsop Louie closes second fund at $98.6M
Connie

September 18, 2013

Morning Summary