StrictlyVC: October 15, 2013

110611_2084620_176987_imageHappy Tuesday! Apologies in advance for today’s shorter newsletter; preschools were closed yesterday for Columbus Day, so StrictlyVC spent much of the day playing “bears.”

Remember, you can reach out to me any time at connie@strictlyvc.com. The sign-up for the newsletter is here.

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Top News in the A.M. 

A Google Watch is reportedly coming soon.
Apple hires yet another big wheel from the fashion industry: Burberry CEO Angela Ahrendts
We’re all still waiting on a deal to reopen the government and raise the debt limit.
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Med-Tech in the Midwest: Are the Coasts Missing Out?

As a Cleveland native, I often find myself reading about some advanced medical technology that’s bubbling out of Northeast Ohio. To learn more about what’s really happening in the Midwest, I recently caught up with Mike Stubler, the Pittsburgh-based managing director and the cofounder of Draper Triangle Ventures, who nicely answered my very broad questions.

You focus on healthcare in the Midwest, right?

About 25 to 40 percent of what we do is med-tech. The balance is generally information technology, enterprise and cloud computing. But we’ve had great success with med-tech companies and frankly, we can’t ignore them; we live in a very rich environment for it. The Cleveland Clinic is arguably one of the world’s most renowned research institutions and a pioneer in coronary care. Meanwhile, here in Pittsburgh, the University of Pittsburgh Medical Center is a great research institution.

What’s changing in the industry? My understanding is that the focus used to be on licensing technology to big pharmaceutical companies, but now there are more development groups helping to commercialize these technologies.

A lot of different efforts come into play now: Universities, government-backed venture development groups, other combined programs. Many more people are now focused on getting this research commercialized rather than just licensing the technology to somebody. [The Cleveland-based, early-stage support organization] JumpStart has probably made 60 or 70 investments at this point. Innovation Works [an equivalent program focused on Southwestern Pennsylvania’s startup ecosystem] has made dozens of investments to which we pay very close attention, to see what’s coming through.

We’ve also seen more companies getting funded with super angel kinds of rounds. You didn’t see that five or six years ago.

Do you have more or less venture competition than you did, say, five years ago?

Well, you see some big coastal firms coming in, especially once you see a company gain some traction. Sequoia Capital just did a bio deal in Cincinnati last year. Drive Capital [newly cofounded by former Sequoia investors Mark Kvamme and Chris Olson, who are investing in Midwestern startups] has closed on $180 million of a $300 million target. I think when Mark Kwamme came from Silicon Valley, he was probably cynical but quickly saw the opportunities here.

Unfortunately, the contraction that’s taking place throughout the industry is also taking place in the Midwest, so there are fewer firms. We’ve always been more collaborative than cutthroat, as in the Valley, where every one is fighting for the same great deal. But those that are here are really trying  to work together more so than ever.

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New Fundings

Centri Technology, a four-year-old, Seattle-based producer of mobile network management software, has raised $500,000 toward a $1.5 million financing round, according to an SEC filing. The company has previously raised $7.17 million, including from the Matthew Pritzker Company.

Druva, a five-year-old, Sunnyvale, Calif.-based maker of data protection and sharing software, has raised a $25 million Series C investment from Sequoia CapitalNexus Venture Partners and Tenaya Capital. In fact, Sequoia has backed the company across its three rounds; Nexus participated in Druva’s Series B. One Druva’s earliest investors is Indian Angel Network. So far, the company has raised roughly $42 million.

FlockTag, an Ann Arbor-based company that helps businesses set up and manage customer-loyalty programs through its website and smartphone app, has finished raising a financing round of $1.25 million, according to Crain’s Detroit Business. Investors in the round were not disclosed.

Nginx, a company that makes Web server software and has offices in San Francisco and Moscow, has raised $10 million Series B round led by New Enterprise Associates. The round also included previous investors, including e.venturesRuna Capital, and MSD Capital. Individual investor Aaron Levie, CEO and founder of Box, was also included in the financing.

SundaySky, a seven-year-old, New York-based company that creates video ads that are customized and updated for individual viewers, has raised $20 million in Series C funding led by Comcast Ventures. New investors Liberty Global Ventures and Vintage Investment Partners also participated in the round, alongside earlier investors Carmel VenturesGlobespan Capital Partners, and Norwest Venture Partners. The company has raised $40 million altogether.

Supercell, the 3.5-year-old Finnish gaming giant, has traded a 51 percent ownership share for a whopping $1.53 billion from Japan’s SoftBank and games developer GungHo Online Entertainment in a move that makes Supercell a subsidiary of Softbank. Techcrunch notes that the deal represents a quadrupled valuation for 100-employee Supercell to over $3 billion in the last seven months, when it raised its last round of $130 million. Altogether, Supercell has now raised $1.8 billion, including from AtomicoIndex VenturesInstitutional Ventures Partners and earlier investors Accel PartnersLondon Venture PartnersInitial CapitalCerval Investments, and Lifeline Capital.

Vensun Pharmaceuticals, a two-year-old, Yardley, Pa.-based company that’s working with partners to develop a range of generic prescription, has raised $10.7 million, according to an SEC filing, which states the company’s fundraising goal as $15.8 million. (H/T: Startup Report.)

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New Funds

Fenox Venture Capital, a stage-agnostic venture firm with a global focus, has raised $20 million of the $60 million it hopes to raise for its third fund, reports VentureWire. The two-year-old, San Jose, Calif.-based firm has previously had a single corporate LP in each of its two previous funds: Fenox Global Group invested in its first fund and Inter Media Japan Corp., backed its second fund.

Lemnos Labs, a two-year-old hardware incubator based in San Francisco, is targeting a $15 million second fund, reports VentureWire.

Sovereign’s Capital, a Raleigh, North Carolina-based venture firm that makes investments in emerging markets in the IT, healthcare, and consumer goods and services industries, has raised $12 million toward its $30 million offering, according to an SEC filing. The 34-month-old firm has five partners; three live in or just outside of Jakarta, Indonesia.

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Exits

Nanostim, a six-year-old, Milipitas, Calif.-based company, is being acquired by the publicly traded medical device company St. Jude Medical, based in St. Paul, Minnesota. Nanostim had raised $19.5 million to develop a wireless pacemaker that’s roughly the size of an AAA battery, according to SEC filings. St. Jude is paying $123.5 million to Nanostim shareholders, and promising another $65 million in cash if numerous milestones are reached down the road. Nanostim’s 45 employees become part of St. Jude’s implantable electronic systems unit.

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People

Richard Rosenblatt, Demand Media’s chairman and CEO, is leaving the online content company he co-founded, its board announced yesterday.

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Happenings

Ad Age is hosting a digital conference in San Francisco at the Ritz Carlton today. Things kick off around 9 a.m.; you can check out the agenda here.

The Verge‘s sustainability conference rolls into its second day at San Francisco’s Palace Hotel. You can view the various tracks here.

It’s also day two of O’Reilly’s Velocity engineering conference in New York. (VC Fred Wilson will be speaking at the conference, though we’re not sure at what time.) Learn more here.

And in New York today, GreenHomeNYC is hosting an event at the Marriott Marquis Hotel in Times Square that will feature talks on building, sustainability and resilience. More information is available here.

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Job Listings

Boston-based dunnhumby Ventures (dhV) is looking for an associate to join its team. Requirements include two to four years of experience in VC, private equity, investment banking with strong references, and a strong academic record.

Essential Reads

How the .0001% made its money.

Twitter is now allowing any of your followers to send you a direct message.

Yesterday, we linked to the New Yorker’s new profile of Jack Dorsey, but some of you complained that it was too damn long, especially after poring over Nick Bilton’s account of Twitter last week. (We feel you.) Some good news: Business Insider penned a cheat sheet.

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Detour

Valleywag republishes the deleted Web poetry of a much younger Jack Dorsey, leaving everyone who wrote their own crummy poetry in paper notebooks feeling very thankful.

Oops. Academic researchers discover a drug in the mainstream sports supplement Craze that’s never been studied in humans.

How a radical new teaching method could unleash a generation of geniuses.

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Retail Therapy

This is really smart: a wearable tracking device for dogs that can help owners and, in some cases, their caregivers, know when something is amiss.

Ralph Lauren’s favorite 22 cars of all time.

Last week, we featured a gun that shoots rubberbands. That was kids’ stuff compared with this deliciously sinister crossbow that shoots marshmallows. Ideal for camping trips and torturing siblings.

Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking hereIf 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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