Monthly Archives: November 2013

StrictlyVC: November 27, 2013

110611_2084620_176987_imageIt’s Wednesday! Happy Thanksgiving, U.S. readers! Hope you have a wonderful break. StrictlyVC won’t be publishing over the next two days but we have some great things lined up for next week, so stay tuned and we’ll see you then!

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Top News in the A.M.

Be warned: East Coast airports are already experiencing delays, with heavy precipitation, combined with the crush of passengers, gumming up the works.

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FirstMark Capital: Health Care Investor? 

FirstMark Capital, the early-stage, New York-based venture firm, is best-known for its consumer investments, including Pinterest, the mega-successful online bulletin-board network whose newest, $225 round of funding valued the company at $3.8 billion. (FirstMark participated in its $500,000 seed fund in early 2010.)

Lesser known is FirstMark’s newer, self-imposed mandate to fund more healthcare IT companies, which its partners view as a giant opportunity that happens to be highly complementary to the firm’s existing skill set.

Not only is the health care IT market “gigantic” and the “cost curves unsustainable,” as managing director Amish Jani recently noted to me, but thanks to numerous trends — like cloud platforms that connect practitioners and patients in new ways — it has also become accessible to investors who might not have PhDs but who know their way around platform technologies.

For example, FirstMark has backed Gravie, a consumer marketplace for healthcare insurance; Greenphire, a company that makes Web-based payment software that’s marketed to the clinical trial industry; and Superior Access Insurance Services, an online insurance exchange that’s used to connect carriers with insurance agents.

Its investment in BioDigital is another example of a health care company that FirstMark seems well-suited to help. The 11-year-old medical visualization firm already develops 3D animations of the human anatomy for drug makers and medical device makers; with the help of FirstMark — which led a $4 million Series A round for the company in September — BioDigital is working toward new, freemium models, too, including with consumer Web companies that want to augment their content with its technology.

Still, not everyone thinks the strategy of FirstMark — or other Internet investors like Social+Capital Partnership that are suddenly focusing more on healthcare IT — makes sense. Bijan Salehizadeh, for one, a longtime PhD and managing director at NaviMed Capital in Washington, D.C., recently wrote a thoughtful piece about how easy it is to underestimate the complexities of healthcare investing, not least because healthcare is a “slow-to-evolve industry with powerful and durable relationships.”

Domain expertise matters, Salehizadeh had argued.

Maybe so. Then again, the right health care investment could reframe the way that FirstMark is viewed by entrepreneurs and investors alike. As Pinterest illustrates, sometimes it takes just one savvy bet to change everything.

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New Fundings

Athos, an 18-month old, Redwood City, Calif.-based wearable technology company, has raised $3.5 million in seed funding from Social+Capital Partnership. Athos’s technology can track muscle groups, heart rate, and breathing levels, among other things. TechCrunch has an overview of the company and its background story here.

Beyond the Rack, a four-year-old, Montreal-based private online shopping club that features steeply discounted designer fashions and accessories, has raised a $25 million round led by Investissement QuébecIris Capital and Tandem Expansion Fund. Previous investors Highland Capital PartnersPanorama CapitalBDC Venture Capital IT Fund and iNovia Capital also contributed to the funding, which brings the company’s total capital raised to just more than $70 million.

DraftKings, a nearly two-year-old, Boston-based daily fantasy sports operator, has raised $24 million in Series B funding. Redpoint Ventures led the round, with participation by GGV CapitalAtlas Venture, and BDS Ventures. The company has reportedly raised $34.5 million so far.

Extreme Reality, an eight-year-old, Herzelia, Israel- based company whose software enables full-body, 3D motion control on any device via a standard 2D camera, has raised a new, $10 million round of funding. The money comes from previous investor Marker and another source that the company is declining to name. Extreme Reality has raised at least $24 million to date, according to Crunchbase.

Gridco, a three-year-old, Woburn, Mass.-based company, has raised a fresh $10 million in funding led by Kleiner Perkins Caufield & Byers, judging by a new SEC filing. Previous investors North Bridge Venture PartnersLux Capital, and General Catalyst Partners also appear on the filing. Gridco, founded by Sycamore Network founder Naimish Patel, is working on smart grid power management technologies.

Lock8, an 18-month-old, “smart” bike lock maker with offices in London in Berlin, has raised an undisclosed amount of “seven-figure” funding from Horizons Ventures and Otto Capital.

Mouth Foods, a three-year-old, Brooklyn, N.Y-based online platform that helps makers of “artisan” foods sell to customers, has raised $1.5 million in Series A funding led by Vocap Ventures. Other participants in the funding included VegasTechFund and angel investors Joanne Wilson and Jason Calacanis. (“It’s about the art of the food,” Mouth founder Craig Kanarick told the WSJ yesterday. “We don’t sell things like carrots and milk.”)

New Seasons Market, a 14-year-old chain of privately owned grocery stores operating in Oregon and Washington, has raised $17.6 million in equity, according to a new SEC filing. Among the non-executive directors listed on the filing is Caryn Ellison, a former CFO of Crocs Inc.; Theresa Marquez, long the chief marketing exec at Organic Valley foods; and Stan Amy of New Villages Group, a Portland-based investment firm that targets “sustainable investments and communities.”

Supersolid, a nearly two-year-old, London-based mobile games studio, has raised an undisclosed amount of funding from Index Ventures and Intel Capital. The company’s first game, “Super Penguins,” has been downloaded by more than 10 million people, according to the company.

Wire Labs, a 10-month-old, Seattle-based company behind a new mobile messaging application, has raised $1.8 million in seed funding from numerous angel investors. Among them: Zillow CEO Spencer RascoffPaul Allen of Vulcan Capital, former Expedia CEO Erik Blachford; and former Facebook executive Owen Van Natta. Earlier this year, the company, founded by a former pair of Amazon engineers, had announced a separate round of $150,000 in seed funding.

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New Funds

Artis Ventures, a 12-year-old, San Francisco-based hedge fund, is raising a new $15 million venture-focused fund titled Artis Ventures II, L.P., according to a new SEC filing that lists only firm cofounder Stuart Peterson. Artis has a wide-ranging portfolio, from the well-funded electronic medical record platform Practice Fusion, to the cloud and storage startup Nimble Storage (which filed to go public last month), to the smart grid concern Silver Spring Networks. (Silver Spring went public in March. Its shares were offered at $17; today, they’re trading at $20.)

Blade, a new, Boston-based “startup foundry” has raised almost $20 million from undisclosed funding sources, according to BloombergPaul English, the co-founder and chief technology officer of Kayak Software (sold to Priceline.com in May for roughly $1.8 billion) is managing the fund. English plans to invest an average of $2 million across 10 startups to help them get off the ground and, eventually, to “make an obscene amount of money for investors.”

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People

Venture capitalist Brad Feld astutely observes that: “Sometimes you have to stop doing things to make more progress.”

Malaysian billionaire Vincent Tan is looking to take his 14-year-old online payments company, MOL Global Pte, public in a dual listing on Kuala Lumpur’s stock exchange and either Hong Kong or Singapore, reports Bloomberg. In 2009, MOL Global acquired the social networking site Friendster.

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Exits

dLoop, a two-year-old, Bay Area startup whose content management system promises better analysis and data classification, has been acquired by the online data storage company Box. Terms of the deal were not disclosed, though dLoop doesn’t appear to have raised outside funding. Techcrunch analyzes the deal here.

Seesaw, a year-old, San Francisco-based mobile developer that had been formed by the founders of CoTweet, has been acquired by the San Francisco-based startup Byliner, a digital publisher. Seesaw never disclosed how much seed funding it had raised though it had backing from Freestyle CapitalBaseline VenturesFirst Round Capital and Betaworks. The financial terms of its acquisition aren’t being disclosed, either.

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Job Listings

Morgan Stanley‘s two-year-old, late-stage-investing arm, Expansion Capital, is looking for an analyst  to help it evaluate opportunities to invest in healthcare, digital media, and consumer companies that are mostly based in North America. The unit invests between $5 million and $15 million per transaction, which can be a first institutional financing, a follow-on financing, a carve-out, or a secondary transaction. To apply for the San Francisco-based job, you’ll need a stellar academic record and at least one year of experience at a leading investment bank.

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Essential Reads

Target (yes, that Target) is planning to open an accelerator in Bangalore to compete with Amazon and Walmart, which are themselves busily trying to twist their flag poles in the ground.

Lost in the Game: What is it that has made the first-person shooter such a success?

French conglomerate Vivendi is spinning off its mobile and Internet unit as early as next year.

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Detours

New York Magazine has a fantastic piece on Jordan Belfort, who ran the penny-stock boiler room Stratton Oakmont on Long Island until he was arrested by the FBI in 1998. (Leonardo DiCaprio is starring as Belfort in the upcoming film, “The Wolf of Wall Street.”) Belfort, now 51, tells the magazine of his two years and four months in prison: “I was shocked. Everyone’s playing tennis and basketball. The Latins have their music blasting. I was like, Wow, this isn’t so bad.

During the Cold War, Berlin was one of the most spy-ridden cities in the world. Now it’s the place to go to escape government surveillance.

At your slurvice: Where to drink in London this holiday season.

Examining the perfect joke.

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Retail Therapy

Win-win: Buy one of these indestructible One World Futbols and a child in a disadvantaged community will receive one, too.

These Kano do-it-yourself computer kits are super smart. (The company was co-founded by Index Ventures partner Saul Klein.) Unfortunately, if you haven’t ordered one yet for the budding geek in your family, you’re a little late for the holidays; new kits won’t be available to ship until June.

Beer-flavored cigars. To smoke with your beer. Because that wouldn’t be overdoing things at all.

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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.




FirstMark Capital: Health Care Investor?

stethoscope1FirstMark Capital, the early-stage, New York-based venture firm, is best-known for its consumer investments, including Pinterest, the mega-successful online bulletin-board network whose newest, $225 round of funding valued the company at $3.8 billion. (FirstMark participated in its $500,000 seed fund in early 2010.)

Lesser known is FirstMark’s newer, self-imposed mandate to fund more healthcare IT companies, which its partners view as a giant opportunity that happens to be highly complementary to the firm’s existing skill set.

Not only is the health care IT market “gigantic” and the “cost curves unsustainable,” as managing director Amish Jani recently noted to me, but thanks to numerous trends — like cloud platforms that connect practitioners and patients in new ways — it has also become accessible to investors who might not have PhDs but who know their way around platform technologies.

For example, FirstMark has backed Gravie, a consumer marketplace for healthcare insurance; Greenphire, a company that makes Web-based payment software that’s marketed to the clinical trial industry; and Superior Access Insurance Services, an online insurance exchange that’s used to connect carriers with insurance agents.

Its investment in BioDigital is another example of a health care company that FirstMark seems well-suited to help. The 11-year-old medical visualization firm already develops 3D animations of the human anatomy for drug makers and medical device makers; with the help of FirstMark — which led a $4 million Series A round for the company in September — BioDigital is working toward new, freemium models, too, including with consumer Web companies that want to augment their content with its technology.

Still, not everyone thinks the strategy of FirstMark — or other Internet investors like Social+Capital Partnership that are suddenly focusing more on healthcare IT — makes sense. Bijan Salehizadeh, for one, a longtime PhD and managing director at NaviMed Capital in Washington, D.C., recently wrote a thoughtful piece about how easy it is to underestimate the complexities of healthcare investing, not least because healthcare is a “slow-to-evolve industry with powerful and durable relationships.”

Domain expertise matters, Salehizadeh had argued.

Maybe so. Then again, the right health care investment could reframe the way that FirstMark is viewed by entrepreneurs and investors alike. As Pinterest illustrates, sometimes it takes just one savvy bet to change everything.

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




StrictlyVC: November 26, 2013

110611_2084620_176987_imageHappy Tuesday! Quick reminder to please feel free to reach out any time to chat, complain, or share something juicy. I’m at connie@strictlyvc.com and @cookie.

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Top News in the A.M.

Tesla Motors skimps on overtime wages and denies meal and rest breaks to its California workers, according to a new, proposed employment class action. The suit is the third to be filed against Tesla in the last month.

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Yahoo Chairman Maynard Webb on His Giant, Low-Flying Investing Network

Silicon Valley veteran Maynard Webb has a knack for winding up at the center of things. The former COO of eBay and CEO of LiveOps is the chairman of Yahoo’s board, a director on the board of Salesforce.com, and just yesterday was nominated for election to the board of Visa.

Webb isn’t content to live in the world of public companies, however. On the contrary, since 2010, Webb has been quietly building one of the most sprawling, and lowest-profile, investment networks in Silicon Valley.  Called Webb Investment Network, the outfit, cofounded by Webb’s former LiveOps colleague Michael Neril, has now amassed a network of 90 “friends” who are invited into every deal that Webb is himself invited into — and he has personally backed 50 startups so far. 

Webb calls giving these opportunities to invest alongside him “gifts.” I chatted with Webb yesterday to learn more. Our conversation has been edited for length.

In 2010, you already had plenty going on. Why formalize your investments with this kind of firm?

After I “retired” [in 2006] from eBay – eBay’s word for it – I was out running [the cloud-based call center service] LiveOps within just a couple of months. My wife asked how long I was going to do this and I said five years, thinking that would be a long time. But that five years came and went pretty quickly, and since I’d promised her that I wouldn’t operate companies any more [after LiveOps], as we started to come to late 2010, I thought, “Uh oh. What am I going to spend my time on?” I decided that I wanted to spend it helping entrepreneurs. Once I figured that out, I started looking at how to craft things in a way that I could provide help and also stay in touch with people I care about.

How does the network function? A founder who is raising $1 million allocates $500,000 to you, and you then invite your friends to invest up to half that amount if they want to?

That’s right, and that’s about our sweet spot, too.  I knew there was no way I could adequately provide advice to all the companies I might want to invest in. So I just thought, I’ll give gifts to my friends. So every time we find a deal, we get twice as much as we want to invest, and I ask a few of my friends if they want to invest. They can opt in or out. But if they opt in, they have to [be helpful to the founders].

We thought we’d get 30 to 50 people [interested in the model] but we have 90, and there are usually a handful of people who invest, writing a check directly to the company. They’re like on-demand SWAT teams of executives [from every avenue of the startup world]. It’s been amazing.

It’s early days, I know, but how is your performance so far?

We’ve sold Rypple [a cloud-based social performance management company]; Saleforce bought that [in 2011] and that’s become Work.com. The [e-commerce startup] Fancy was also a very early deal for us and is one of our breakout companies. We have several companies in our portfolio that have raised four or five rounds, and more than half or our startups have raised additional rounds, so we’re feeling good.

Do you subscribe to the theory that just 15 to 20 companies born in any given year become “breakout” companies?

I think there are many more successful companies than just a few. [Companies like] Facebook – those are needle-in-the-haystack kinds of things. But a lot of companies that start with $3 million wind up getting sold for $50 million or even $500 million. It’s harder [to maintain a pro rata stake] in each of those tranches, but I’m very bullish about a wide number of entrepreneurs finding a way to make an impact.

You’re investing up to $30 million of your own in this endeavor. Will you eventually take outside funding?

We have a lot of people who want us to take their money – even affiliates who ask if they can just give us a bunch of cash. What I love about the way we’re doing it now is the only risk is my risk.

As we look forward, I have to figure if I continue to self-fund this and for how long. I’d say the feedback we get is split down the middle: Half [my friends] say, “Don’t be an idiot. Make this a fund [with outside investors]”; others say, “I’d be thrilled to do it on my own.”

As a member of the boards of both Yahoo and Saleforce, two very acquisitive companies, do you help them decide where to shop, or is that beyond the scope of the job?

We have firm policies at both companies that talk about investments and what you can invest in and when you need to notify them; we notify them every quarter of what we’re investing in.

And the companies drive most of the acquisition decisions, at least until they reach certain [financial thresholds], and then the board gets involved. Those thresholds [which are publicly available] are very different at both companies. I’d rather not say more about either company, though, or I’ll get some [angry] emails in the morning. [Laughs.]

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New Fundings

Armo BioSciences, a year-old, Redwood City, Calif.-based company that’s working on a cancer treatment, has raised $20 million in a Series A venture round. Investors include Kleiner Perkins Caufield & ByersOrbiMed Advisors, and DAG Ventures. Xconomy has much more on the company.

Flipboard, the three-year-old, Palo Alto, Calif.-based “social” magazine that lets people tag, assemble and share online stories, is raising another $50 million in venture funding, reports Fortune. The money is reportedly a extension to the $50 million that Flipboard announced in September at a reported $800 million valuation. Rizvi Traverse Management has led both efforts, says Fortune’s report. Other Flipboard investors include Goldman SachsIndex VenturesInsight Venture Partners and Kleiner Perkins Caufield & Byers, which have now given Flipboard a collective $160 million.

Revolv, an 18-month-old, Boulder-based company that makes remote-controlled home monitoring and control software, has raised $4 million in seed financing led by Foundry GroupAmerican Family Insurance and other unnamed angel investors also participated in the round.

Xiaoshouyi, a two-year-old, Beijing-based company that makes customer relationship management software, says it has raised “tens of millions of RMB” in Series A funding from Sequoia Capital. The company, whose name reportedly means “sales made easy,” received seed funding from Cloud Angel Fund last year. (According to Asian Venture Capital Journal, Cloud Angel is a $10 million seed-stage fund backed by China Broadband Capital, Sequoia, Northern Light Venture Capital and GSR Ventures; its focus is on early-stage cloud computing and big data companies in China.)

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New Funds

Cendana Investments, the San Francisco-based investment firm, has filed two Form Ds, for Cendana Capital II, LP and Cendana Investments, LP, with respective targets of $30 million and $25 million. (The forms are here and here.)

Four-year-old Cendana has made a name for itself by backing so-called micro funds, including Freestyle Capital, IA Ventures, K9 Ventures, Lerer Ventures, and SoftTech VC. According to a source familiar with the firm’s thinking, Cendana Capital II, the $30 million vehicle, will continue to make investments in seed-stage-focused venture funds —  adding to roughly $90 million that the firm is already managing toward that end.

Cendana’s first fund was a $28.5 million pool. It later raised a $60 million co-investment fund that Cendana manages with UTIMCO, called the Cendana Co-Investment Fund.

In a new twist, Cendana is moving away from being strictly a fund of funds. The second fund that Cendana is now raising — Cendana Investments, which is targeting $25 million — will make direct investments in startups.

Cendana has yet to raise money for either of its newest funds, according to the filings.

Cendana was founded by Michael Kim, who was among one of the original partners of Rustic Canyon Ventures, where he spent nearly a decade. Before joining Rustic Canyon, Kim spent about two-and-a-half years as an investment banker at Morgan Stanley.

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People

Melinda Gates on her family life and focus on making the world a safer place to live, including through AIDS-related grants: “When [the kids] were little, I sometimes wondered if I had gone overboard. When my oldest daughter was three, she said to her doll, ‘Lay down, you have Aids! I’m gonna give you a shot!’ I thought, ‘Oh my God, what have I done?”

Singer Kanye West interrupted a set over the weekend at Madison Square Garden to tell the audience that Google chairman Eric Schmidt was “in the house.” Reportedly, West proceeded to ask a dozen times, “Do y’all want Eric Schmidt to invest in Donda?” As Business Insider reported last week, West has been hitting up investors left and right to raise money for his fashion startup, saying it will become a “trillion-dollar company.” Before West’s hard sell to Schmidt during his concert, he spent 45 minutes last week at the Brooklyn-based e-commerce startup Fancy, talking about his vision and offering advice to those gathered.

Yahoo cofounder Jerry Yang has joined the board of the publicly traded HR giant Workday. Asked by PandoDaily if the move felt like a kind of redemption, Yang — who was called an “artifact” by one analyst as he parted ways with Yahoo’s board in early 2012 — laughed at the notion. Wall Street analysts can “have whatever memories they want,” he told the outlet. “If you look at the things we’ve done at Yahoo, we’ve made some pretty good moves. Even Marissa is championing some of the things we did back then. They are still around today. I have nothing but very proud and happy memories.”

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IPOs

Good Technology, the 17-year-old, Sunnyvale, Calif.-based mobile device management company, is still hoping to go public, according to a new report out this morning. Good raised $50 million last spring and the Wall Street Journal reported at the time that it had hired four investment banks to explore an offering. Good has raised at least $260 million over the years, according to Crunchbase. Its investors include Oak Investment PartnersDraper Fisher JurvetsonMeritech Capital PartnersDFJ ePlanet VenturesDFJ Growth FundRustic Canyon VenturesAllegis CapitalGKM and Blueprint Ventures.

Dubai and Abu Dhabi are finding that outperforming stocks markets aren’t enough to lure IPOs as restrictive regulations persuade local companies to list in London. Bloomberg has the full story.

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Job Listings

Salesforce.com is looking for a manager to join its corporate development group in San Francisco. The corp dev team is responsible for corporate strategy, M&A, and investments, and is tasked with identifying growth opportunities within new markets, evaluating acquisition candidates, and helping manage the deal execution and integration process. Applicants should have an undergrad degree from a “top institution,” an “understanding and demonstrated interest in cloud computing,” and at least three years of experience at an investment bank or venture capital firm.

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Essential Reads

Yesterday, the BBC produced a jaw-dropping report about what goes on inside an Amazon warehouse. Today, Amazon has tried batting down the report, pointing out the number of jobs it creates, among other things.

The FDA tells 23andMe to stop selling its DNA test service, saying the company hasn’t adequately responded to more than a dozen meetings and hundreds of emails over the years — and that it stopped communicating with the FDA entirely in May. Said a 23andMe spokeswoman yesterday in an email to Bloomberg: “We recognize that we have not met the FDA’s expectations regarding timeline and communication regarding our submission. Our relationship with the FDA is extremely important to us and we are committed to fully engaging with them to address their concerns.”

Law firms Orrick Herrington and Pillsbury Winthrop have ended their two-month-long merger talks, citing conflicts.

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Detours

Did you know? The medical community believes there is a definitive link between marijuana usage and gynecomastia, more commonly known as man boobs.

Esquire on what you’re not supposed to do with Google Glass.

Yesterday, actors Seth Rogan and James Franco released an exact recreation of the much buzzed-about music video “Bound 2.” A minute-long look at both has satisfied any shred of curiosity StrictlyVC might have had in watching MTV again.

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Retail Therapy

Neat. A skateboard with built-in storage for your iPad and more.

Beautiful colored tires, what took you so long!

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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.




Yahoo Chairman Maynard Webb on His Giant, Low-Flying Investing Network

Maynard_Webb_270x271Silicon Valley veteran Maynard Webb has a knack for winding up at the center of things. The former COO of eBay and CEO of LiveOps is the chairman of Yahoo’s board, a director on the board of Salesforce.com, and just yesterday was nominated for election to the board of Visa.

Webb isn’t content to live in the world of public companies, however. On the contrary, since 2010, Webb has been quietly building one of the most sprawling, and lowest-profile, investment networks in Silicon Valley.  Called Webb Investment Network, the outfit, cofounded by Webb’s former LiveOps colleague Michael Neril, has now amassed a network of 90 “friends” who are invited into every deal that Webb is himself invited into — and he has backed 50 startups so far. 

Webb calls giving these opportunities to invest alongside him “gifts.” I chatted with Webb yesterday to learn more. Our conversation has been edited for length.

In 2010, you already had plenty going on. Why formalize your investments with this kind of firm?

After I “retired” [in 2006] from eBay – eBay’s word for it – I was out running [the cloud-based call center service] LiveOps within just a couple of months. My wife asked how long I was going to do this and I said five years, thinking that would be a long time. But that five years came and went pretty quickly, and since I’d promised her that I wouldn’t operate companies any more [after LiveOps], as we started to come to late 2010, I thought, “Uh oh. What am I going to spend my time on?” I decided that I wanted to spend it helping entrepreneurs. Once I figured that out, I started looking at how to craft things in a way that I could provide help and also stay in touch with people I care about.

How does the network function? A founder who is raising $1 million allocates $500,000 to you, and you then invite your friends to invest up to half that amount if they want to?

That’s right, and that’s about our sweet spot, too.  I knew there was no way I could adequately provide advice to all the companies I might want to invest in. So I just thought, I’ll give gifts to my friends. So every time we find a deal, we get twice as much as we want to invest, and I ask a few of my friends if they want to invest. They can opt in or out. But if they opt in, they have to [be helpful to the founders].

We thought we’d get 30 to 50 people [interested in the model] but we have 90, and there are usually a handful of people who invest, writing a check directly to the company. They’re like on-demand SWAT teams of executives [from every avenue of the startup world]. It’s been amazing.

It’s early days, I know, but how is your performance so far?

We’ve sold Rypple [a cloud-based social performance management company]; Saleforce bought that [in 2011] and that’s become Work.com. The [e-commerce startup] Fancy was also a very early deal for us and is one of our breakout companies. We have several companies in our portfolio that have raised four or five rounds, and more than half or our startups have raised additional rounds, so we’re feeling good.

Do you subscribe to the theory that just 15 to 20 companies born in any given year become “breakout” companies?

I think there are many more successful companies than just a few. [Companies like] Facebook – those are needle-in-the-haystack kinds of things. But a lot of companies that start with $3 million wind up getting sold for $50 million or even $500 million. It’s harder [to maintain a pro rata stake] in each of those tranches, but I’m very bullish about a wide number of entrepreneurs finding a way to make an impact.

You’re investing up to $30 million of your own in this endeavor. Will you eventually take outside funding?

We have a lot of people who want us to take their money – even affiliates who ask if they can just give us a bunch of cash. What I love about the way we’re doing it now is the only risk is my risk.

As we look forward, I have to figure if I continue to self-fund this and for how long. I’d say the feedback we get is split down the middle: Half [my friends] say, “Don’t be an idiot. Make this a fund [with outside investors]”; others say, “I’d be thrilled to do it on my own.”

As a member of the boards of Yahoo and Saleforce, two very acquisitive companies, do you help them decide where to shop, or is that beyond the scope of the job?

We have firm policies at both companies that talk about investments and what you can invest in and when you need to notify them; we notify them every quarter of what we’re investing in.

And the companies drive most of the acquisition decisions, at least until they reach certain [financial thresholds], and then the board gets involved. Those thresholds [which are publicly available] are very different at both companies. I’d rather not say more about either company, though, or I’ll get some [angry] emails in the morning. [Laughs.]

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




Seed-Stage LP Cendana Capital Looks to Raise $55M

michael_kim_DV_20110104201014Cendana Investments, the San Francisco-based investment firm, has filed two Form Ds, for Cendana Capital II, LP and Cendana Investments, LP, with respective targets of $30 million and $25 million. (The forms are here and here.)

Four-year-old Cendana has made a name for itself by backing so-called micro funds, including Freestyle Capital, IA Ventures, K9 Ventures, Lerer Ventures, and SoftTech VC. According to a source familiar with the firm’s thinking, Cendana Capital II, the $30 million vehicle, will continue to make investments in seed-stage-focused venture funds —  adding to roughly $90 million that the firm is already managing toward that end.

Cendana’s first fund was a $28.5 million pool. It later raised a $60 million co-investment fund that Cendana manages with UTIMCO, called the Cendana Co-Investment Fund.

In a new twist, Cendana is moving away from being strictly a fund of funds. The second fund that Cendana is now raising, — Cendana Investments, which is targeting $25 million — will make direct investments in startups.

Cendana has yet to raise money for either of its newest funds, according to the filings.

Cendana was founded by Michael Kim, who was among one of the original partners of Rustic Canyon Ventures, where he spent nearly a decade. Before joining Rustic Canyon, Kim spent about two-and-a-half years as an investment banker at Morgan Stanley.




StrictlyVC: November 25, 2013

110611_2084620_176987_imageGood morning, and welcome back!

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Top News in the A.M.

Uber has partnered with car makers and financing providers to reduce the cost of new car ownership for Uber drivers in six of its fastest-growing markets.

Henry Blodget and his venture backers are looking to sell Business Insider for $100 million “in cash,” says media columnist Michael Wolff.

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Betaworks Closes on a New, $20 Million Round

Betaworks, the six-year-old, New York City-based holding company that has collectively created and invested in more than a dozen startups focused on the “real time Web,” has raised $20 million in new funding, says cofounder John Borthwick, who tweeted in the wee hours of Friday morning: “Excited to bring a few new investors into betaworks. Approx. 20m total capital. The first time in 3 yrs+ that we have have done a raise.”

A new SEC filing shows a partial list of the firms to participate in Betaworks’s newest round, including Lerer Ventures, RRE Ventures and White Star Capital in the U.K., all of which are existing investors.

Also listed on the Form D are John Drzik, president and CEO of the management consulting company Oliver Wyman; Michael Buckley, a longtime managing director at Intel Capital who is now the head of finance and strategy at Nike Digital; and Paul Cappuccio, the chief legal officer at Time Warner.

RRE Ventures, Lerer Ventures and White Star Capital were among the first firms to provide Betaworks with its first, $7.5 million round, announced in early 2008.

Two years later, in 2010, Betaworks closed on a $20 million Series B round that was led by RRE Ventures and then-new investor Intel Capital, and which included DFJ Growth, AOL Ventures, The New York Times, Softbank Japan and Softbank NY, and Founder Collective.

Betaworks both invests in, acquires, and helps create real-time media startups. One of its first big wins was with Summize, a search engine that Twitter acquired in a mostly stock deal in 2008. Betaworks is also the company behind the link-tracking analytics company bit.ly, the Web site monitoring service Chartbeat, and numerous other products.

Recently, the company has made a big push into social reading, including acquiring Digg, which it nabbed at a fire-sale price last year, and  purchasing the bookmarking tool Instapaper for an undisclosed amount in April. Betaworks has since relaunched both products.

Reached for comment on Saturday, Borthwick (nicely) declined to comment further, saying only that money was raised “recently.”

Earlier this month, Betaworks hired former Huffington Post Media Group publisher Janet Balis as its very first chief revenue officer, a sign that it’s looking for more ways to earn money off its portfolio. As Borthwick told AllThingsD of Balis’s appointment: “Phase one of Betaworks was building great companies. ” Phase two is “really building Betaworks as an operating media company.”

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New Fundings

Active Mind Technology, a San Francisco-based company, has raised $7.8 million in equity, according to an SEC filing that shows former Palm CEO Ed Colligan is among its board members. Active Mind is a wearable technology outfit that was founded in Galway, Ireland but moved to San Francisco in 2011. Its first hardware and software product, Game Golf, designed with the help of famed designer Yves Behar, enables users to track their own golf games, as well as use the stats to compete online against friends and pros.

Coursera, an 18-month-old, Mountain View, Calif.-based education company that partners with universities to offer their courses online, has raised $20 million, adding to a $43 million Series B round the firm disclosed in summer. AllThingsD has the scoop. Coursera isn’t naming three universities that contributed to the fresh, $20 million, but the company told AllThingsD that the round also included the participation of previous investors GSV Capital and Learn Capital. Coursera has now raised around $85 million altogether, including from Kleiner Perkins Caufield & Byers and New Enterprise Associates.

Kensho Technologies, a year-old, Cambridge, Mass.-based company behind financial modeling and analysis software that some of Wall Street’s biggest institutions have been testing out, has raised $6.13 million in debt, shows an SEC filing. According to the Form D, the outfit plans to raise up to $8 million.

NGame, a two-year-old, Dallas-based startup whose software helps its customers track their own customers’ social media to better sell to them, has raised $680,000, according to an SEC filing.

See Me Group, a two-year-old, Long Island City, N.Y.-based online community of artists who share, Pinterest-style, what they love, has raised $1 million as part of a $2 million equity round, shows an SEC filingO’Reilly AlphaTech Ventures is an investor, as is Founder Collective, along with New York-based angel investor Josh Stylman. Founder William Etundi was featured in the New York Times several years ago, as an artist and street activist who for years hosted popular warehouse parties in Brooklyn.

Sitari Pharmaceuticals, a new, San Diego-based company that’s working on treatments for celiac disease (a condition that damages the lining of the small intestine and prevents it from absorbing important parts of food) has raised $10 million in Series A funding. The money comes from Avalon Ventures and GlaxoSmithKline, which formed the company through a new collaboration designed to fund and launch up to 10 early-stage life sciences companies in San Diego.

TapCommerce, a two-year-old, New York-based mobile retargeting company, has raised $10.5 million in Series A funding led by Bain Capital Ventures and RRE Ventures, along with participation from Nielsen Ventures. Previous investors Metamorphic VenturesEniac Ventures, and Nextview Ventures, also contributed to the round, which brings the company’s total capital raised to date to $11.7 million.

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New Funds

Jerusalem Venture Partners, the 20 year-old, Tel Aviv-based firm, has filed to raise $60 million for a fund branded JVP VII Cyber Strategic Partners, according to an SEC filing first spotted by Alt Assets. It isn’t clear if the fund is part of or separate from JVP II, a fund that is targeting $120 million. (JVP filed for the first late last month.) Asked about the two filings by Alt Assets, a spokeswoman for the firm declined to comment on them.

Cyber security has long been one of JVP’s biggest focus areas. In fact, earlier this year, JVP partner Gadi Tirosh talked with me about a cyber security incubator that the firm is in the process of establishing. The idea is for the firm to help create a dozen startups around different themes, including, as Tirosh had said, the “concept of the honeypot,” or creating fake machines to attract hackers; anomaly detection (monitoring data and discovering discrepancies); and software that defends mobile devices from attacks.

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People

Billionaire Paul Allen appears to have acquired a $27 million mega mansion in tony Atherton, Calif., just a few miles from the new offices of his venture investment firm, Vulcan Ventures, in Palo Alto, Calif. The Real Estalker has all the luscious details about the 22,000-square-foot, 6-bedroom, 10-bathroom spread.

An attendee of last week’s Dreamforce conference, hosted by Salesforce.com, has since shredded Salesforce founder CEO Marc Benioff on Valleywag. (Comparing Benioff to the “Ron Burgundy of tech” is one of the author’s nicer observations.)

David Cowan of Bessemer Venture Partners chats with the WSJ about cyber security investing and Healthcare.gov in particular, saying: “When you think you need to put up a system to serve 100 million, the idea that you could plan in advance and one day launch it and it works, that is delusional. Nobody in the tech world would ever expect that would happen. It’s a delusional idea, and the fact the public expects it is because the public doesn’t understand, but Washington promised. Nobody puts up an app that serves 100 million and works on day one.”

Kristian Tear, the COO of Blackberry, and Frank Coulben, its CMO, have just been ousted from the company, after just one year in their respective roles. Chief Financial Officer Brian Bidulka has also lost his position, and will be leaving the Blackberry shortly. Engadget has the scoop.

Last week, Silicon Valley venture firm Kleiner Perkins Caufield & Byers said in a legal filing that it terminated former partner Ellen Pao for “longstanding performance issues” and not in retaliation for the lawsuit that Pao filed against the firm in May 2012. The response comes on the heels of Pao’s amended complaint, filed on October 16, which cites retaliation as cause for her termination from Kleiner in the fall of 2012. In Kleiner’s newest filing, its attorney, Lynne Hermle, writes that Pao was fired because she “was ‘not viewed as a good team player’ or trusted partner by others.” Pao’s attorney, unsurprisingly, said he strongly disagrees with that assessment. Deborah Gage has the story.

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IPOs

In recent weeks, several Chinese outfits have debuted on U.S. markets, raising the most capital that China-based companies on U.S. exchanges have raised since May 2011, observes Bloomberg. Among other signs of demand for Chinese IPOs, shares of 500.com, the online sports lottery service, surged 54 percent on Friday, their first day of trading. Meanwhile, shares of Sungy Mobile, which makes Android applications and also debuted on Friday, closed up 19 percent.

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Exits

PrimeSense, an eight-year-old, Tel Aviv-based maker of motion-tracking 3D sensors used in Microsoft’s Kinect game console, has officially been acquired by Apple. Terms of the deal weren’t disclosed, but sources have told numerous outlets that the price was somewhere between $300 million and $350 million. According to the Israeli news outlet Globes, PrimeSense has raised $84.5 million over the years, including from Silver Lake PartnersGemini Israel VenturesGenesis PartnersCanaan Partners, and Microsoft.

Qubecell, a two-year-old, Mumbai-based mobile payment startup, has been acquired by a bigger, global, competitor, the mobile payment company Boku. Terms of the deal were not disclosed. Earlier this year, Qubecell raised a seed round led by angel investor Kae Capital, with participation from Mumbai AngelsBlume Ventures and TA Venture. Four-year-old Boku, meanwhile, which has offices in the U.S., Europe, Asia and Latin America, has raised more than $70 million, including from Khosla VenturesIndex VenturesBenchmark, and Andreessen Horowitz.

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Data

Venture capitalists love Ireland, apparently. According to data compiled by Dow Jones VentureSource, Ireland attracted four times as much venture-capital funding per capita as the European average, and 650 times as much per capital as poor Bulgaria, ranked last. After Ireland, the next nine biggest European centers for VC investment are: Sweden, the U.K., Finland, Denmark, the Netherlands, Norway, France, Germany and Switzerland.

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Job Listings

AOL is looking for a corporate development analyst in either New York or its Dulles, Va., headquarters. According to AOL, this role is involved in “domestic and international mergers and acquisitions, divestitures, joint ventures and special projects” and requires “creative and critical analysis of strategic issues most important to the company.” To apply, you need a BS of BA degree in accounting, finance, economics, or business administration and at least one year of experience at an investment bank, private equity firm, or corporate development organization.

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Essential Reads

Eek. Revenge porn is just the tip of the iceberg when it comes to cyber-domestic abuse.

Venture-backed Judicata is part of a constellation of young startups trying to modernize the practice of law, notes Law.com in a solid overview of the company and some of its peers.

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Detours

Got a gut feeling about something? There’s growing evidence that gut bacteria really might influence our minds.

In an interview, singer R. Kelly is asked to turn absurd phrases, including “sex dolphin” and “Italian hero sandwich of love,” into love songs. He does it, easily, and with a straight face.

Dogs slipping on wood floors. (We watched more of this than we’d care to admit.)

Meet James Bernthal, five-year-old realtor.

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Retail Therapy

Everyone loves beautifully packaged products, but this is ridiculous.

Tor, a privacy tool used by activists, criminals, and U.S. intelligence to obscure traces of their online activities, has been repackaged for the mass market and will only set you back $49. Not that you have anything to hide, of course! Heh, heh, ahem.

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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.

 

 




Betaworks Closes a New $20 Million Round

betaworks logoBetaworks, the six-year-old, New York City-based holding company that has collectively created and invested in more than a dozen startups focused on the “real time Web,” has raised $20 million in new funding, says cofounder John Borthwick, who tweeted in the wee hours of Friday morning: “Excited to bring a few new investors into betaworks. Approx. 20m total capital. The first time in 3 yrs+ that we have have done a raise.”

A new SEC filing shows a partial list of the firms to participate in Betaworks’s newest round, including Lerer Ventures, RRE Ventures and White Star Capital in the U.K., all of which are existing investors.

Also listed on the Form D are John Drzik, president and CEO of the management consulting company Oliver Wyman; Michael Buckley, a longtime managing director at Intel Capital who is now the head of finance and strategy at Nike Digital; and Paul Cappuccio, the chief legal officer at Time Warner.

 

RRE Ventures, Lerer Ventures and White Star Capital were among the first firms to provide Betaworks with its first, $7.5 million round, announced in early 2008.

Two years later, in 2010, Betaworks closed on a $20 million Series B round that was led by RRE Ventures and then-new investor Intel Capital, and which included DFJ Growth, AOL Ventures, The New York Times, Softbank Japan and Softbank NY, and Founder Collective.

Betaworks both invests in, acquires, and helps create real-time media startups. One of its first big wins was with Summize, a search engine that Twitter acquired in a mostly stock deal in 2008. Betaworks is also the company behind the link-tracking analytics company bit.ly, the Web site monitoring service Chartbeat, and numerous other products.

Recently, the company has made a big push into social reading, including acquiring Digg, which it nabbed at a fire-sale price last year, and  purchasing the bookmarking tool Instapaper for an undisclosed amount in April. Betaworks has since relaunched both products.

Reached for comment on Saturday, Borthwick (nicely) declined to comment further, saying only that money was raised “recently.”

Earlier this month, Betaworks hired former Huffington Post Media Group publisher Janet Balis as its very first chief revenue officer, a sign that it’s looking for more ways to earn money off its portfolio. As Borthwick told AllThingsD of Balis’s appointment: “Phase one of Betaworks was building great companies. ” Phase two is “really building Betaworks as an operating media company.”

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




StrictlyVC: November 22, 2013

110611_2084620_176987_imageHappy Friday! Hope you have a wonderful weekend. And stay tuned. Among other good stuff next week, we’ll feature Capital Sports Ventures in Washington, D.C. — a firm unlike any you’ve seen before.

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Top News in the A.M.

Tech companies are hiring more women, though they still represent half of all new hires in the industry.

If you were being attacked by snakes on a plane, could you call your loved ones to let them know? This Q&A on new and proposed FCC rules answers all of your burning questions.

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PR Pro to PE Investors: Time to Follow the Lead of VCs

Donna Sokolsky Burke has enjoyed a storied career in Silicon Valley. Having spun out of Netscape 20 years ago to form her own public relations firm, Sparkpr, Burke is probably as familiar with the inner workings of startups as venture capitalists (many of whom have also been Burke’s clients over the years). 

Yesterday, as we chatted about how venture investors promote their portfolio companies, as well as their own firms, I asked Burke who in the startup ecosystem needed help in burnishing their brand. Her immediate answer: “The private equity sector.” 

You say you wonder why PE pros aren’t more open about promoting their portfolio companies as well as themselves, but PE firms have always operated under the radar. Why you think this situation is rife for change?

PE firms aren’t communicating their value proposition or helping their portfolio companies to reinvent their own brands. If I were an institutional investor pouring billions into that asset class, I might wonder why.

What are their most obvious, missed opportunities?

You read the wrap-ups; you learn who did the big deal and spent billions of dollars [to acquire a stake in a company], then you don’t hear anything more about it. That’s very different from venture, where the deal is announced, and then there’s an onslaught of coverage about how a company is innovating within its industry, what incumbents it’s going after, [etc.]. With many of these PE deals, you have this huge inflection point and sometimes a new corporate structure, and it’s a great time to have a [public] discussion about how a portfolio company is reengaging customers and reinvigorating its brand, but it isn’t happening.

What’s the solution?

VCs blog and tweet and use LinkedIn and Quora. A lot people would benefit from authentic observations coming out of the PE industry, too.

As the tech industry has matured, it has produced a large number of mature, growth companies that aren’t necessarily on the verge of going public. And while entrepreneurs are very well-versed on what venture does, it gets more ambiguous what happens after that. Entrepreneurs are very clear on Series B and C and D rounds, but I think a lot of them struggle to understand their options beyond that point.

I’d love to see more PE firms take a stand on areas that they’re passionate about. Why they don’t baffles me.

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New Fundings

Alpine Data Labs, a three-year-old, San Francisco-based company that provides big data and Hadoop analytics to its enterprise customers, has raised $16 million in funding from Sierra VenturesMission VenturesUMC Capital, and Robert Bosch Venture Capital. The company has raised $23.5 million to date, according to Crunchbase.

CoachUp, an 18-month-old, Boston-based online platform that athletes are using to find private coaches in every sport, nationwide, has raised $6.7 million in Series A funding led by Point Judith Capital and General Catalyst Partners. Other investors in the round included Data Point CapitalSuffolk Equity Partners, and individual investors. CoachUp had raised a $2.2 million seed fund last year.

Colingo, a two-year-old, San Francisco-based online English school that offers users live video classes, has raised $2.4 million round of funding led by Atlas Venture. Other participants in the round included 500 Startups, Morado Ventures, Crosslink Capital, Havoc Capital, Social Leverage and numerous angel investors. TechCrunch has more here.

iSTAR Medical, a three-year-old, Belgium-based company whose ophthalmic implants aim to treat glaucoma, has raised $5.4 million in Series A financing led by Capricorn Health-Tech Fund NV and SRIW, with participation from INVESTSUD Group and Namur Invest. iSTAR spun out of the Seattle-based biomaterials company Healionics in 2010.

Rest Devices, a nearly three-year-old, Boston-based company that makes a wearable infant monitor that tracks temperature, among other things, has raised $1.3 million in seed funding, led by The Experiment Fund and joined by Boston area angel investors. The round brings the company’s total funding to $1.8 million. Lora Kolodny has the story here.

Spotify AB, the seven-year-old, Stockholm-based, music-streaming company has raised nearly $250 million in new financing led by Technology Crossover Venturesreports the WSJ, whose sources say the round values Spotify at roughly $4 billion. Last year, Spotify raised more than $100 million from investors at a valuation of around $3 billion.

Wevorce, a two-year-old, San Mateo-based online platform focused on helping divorcing couples, including by reducing the associated costs, has raised $1.7 million in seed funding led by Foundation Capital and Loopt cofounder Sam Altman. The company, a Y Combinator, graduate, has raised $2 million to date.

Xenex Disinfection Services, a four-year-old, San Antonio, Tex.-based company whose room disinfection system eliminates infection-causing bacteria, viruses and spores at healthcare facilities, has raised $11.3 million in funding. The funding comes from new investors Battery Ventures, and Targeted Technology Fund II and previous investors, including RK Ventures.

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New Funds

Union Square Ventures, the 10-year-old, New York-based early-stage venture firm, is raising two, separate, $150 million funds that it expects to close in roughly one month’s time, according to documents viewed by Dow Jones. According to its report, one fund will be designated for early-stage investments; the other will be used to provide follow-on funding to companies in the firm’s portfolio that are breaking away from the pack and need growth financing.

As Dow Jones noted in its report yesterday, USV previously raised $200 million for its third early-stage fund, USV 2012 , and $165 million for its first late-stage pool. Interestingly, the firm says in its documents that it’s seeking smaller funds this time around because it’s of the opinion that both early- and late-stage deals require less investment than they have in recent years.

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People

Shana Fisher, who runs her own early-stage venture firm, High Line Venture Partners, in New York, is joining Andreessen Horowitz as a board partner, a role that will see her representing the firm on some of its portfolio companies’ boards without being in its full-time employ. Fisher’s bets include Pinterest, Stripe, Makerbot, Vine, FiftyThree, and Refinery29.

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IPOs

Care.com, a Waltham, Mass.-based online service for hiring nannies and other at-home caregivers, has filed confidential paperwork with the SEC to hold an IPO next year, sources tell the Journal’s Doug MacMillan.

The New York-based online retailer Gilt Groupe is also eyeing a 2014 IPO — for real, this time, sources tell AllThingsD.

Is the IPO window shutting on biotech? Yesterday, TetraLogic Pharmaceuticals pulled its IPO, just a day after Trevena, a clinical-stage biopharmaceutical company that focuses on acute decompensated heart failure, ditched its own plans to go public right now. TetraLogic produces a drug that’s being tested for treating colorectal cancer, ovarian cancer, and blood cancers.

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Exits

Realtidbits, a 2.5-year-old, San Diego-based company that makes comments, forums, and analytics apps (among other things) for publishers and media companies, has been acquired by the commenting platform Livefyre. Realtidbits never announced venture funding; four-year-old, San Francisco-based Livefyre has raised roughly $20 million over the years, shows Crunchbase. Its backers include Greycroft Partnersff Venture Capital, and Uber CEO Travis Kalanick, among others.

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Data

CB Insights has published some data on which firms have been most actively seed-funding Silicon Valley startups since 2009. The top 10 in descending order, says research firm, are: 500 StartupsSV AngelTrue VenturesFirst Round CapitalFelicis VenturesFounder CollectiveAndreessen HorowitzCharles River VenturesFloodgate and Harrison Metal. You can learn more here.

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Job Listings

PayPal is looking for a director of corporate development in San Jose. To apply, you’ll need seven-plus years of experience in corporate development, or else two to four years in private equity, venture capital, and investment — plus five years in biz dev, product marketing, or product management. You’ll also need an MBA from a “top-rated” school.

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Essential Reads

Amazon Web Services may be worth $50 billion in two years’ time, and even that estimate may be conservative, says this analyst.

It’s looking like a judge may let the Autonomy suit proceed against Hewlett Packard and its CEO, Meg Whitman.

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Detours

Artist Kumi Yamashita dazzles by using nothing but nails and a single continuous thread.

These two, self-possessed kids are pretty dazzling, too.

The Bay Area’s real estate bubble, from both sides.

This guy committed a bunch of crimes while wearing an ankle monitor.

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Retail Therapy

Heading to Paris in the near future? You might want to check out Coolhunting’s newest list of bars and restaurants to visit.

This little device turns your iPad into a 3D printer.

Design your own ugly sweater this holiday season.

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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.




PR Pro to PE Investors: Time to Follow the Lead of VCs

read all about it!Donna Sokolsky Burke has enjoyed a storied career in Silicon Valley. Having spun out of Netscape 20 years ago to form her own public relations firm, Sparkpr, Burke is probably as familiar with the inner workings of startups as venture capitalists (many of whom have also been Burke’s clients over the years). 

Yesterday, as we chatted about how venture investors promote their portfolio companies, as well as their own firms, I asked Burke who in the startup ecosystem needed help in burnishing their brand. Her immediate answer: “The private equity sector.” 

You say you wonder why PE pros aren’t more open about promoting their portfolio companies as well as themselves, but PE firms have always operated under the radar. Why you think this situation is rife for change?

PE firms aren’t communicating their value proposition or helping their portfolio companies to reinvent their own brands. If I were an institutional investor pouring billions into that asset class, I might wonder why.

What are their most obvious, missed opportunities?

You read the wrap-ups; you learn who did the big deal and spent billions of dollars [to acquire a stake in a company], then you don’t hear anything more about it. That’s very different from venture, where the deal is announced, and then there’s an onslaught of coverage about how a company is innovating within its industry, what incumbents it’s going after, [etc.]. With many of these PE deals, you have this huge inflection point and sometimes a new corporate structure, and it’s a great time to have a [public] discussion about how a portfolio company is reengaging customers and reinvigorating its brand, but it isn’t happening.

What’s the solution?

VCs blog and tweet and use LinkedIn and Quora. A lot people would benefit from authentic observations coming out of the PE industry, too.

As the tech industry has matured, it has produced a large number of mature, growth companies that aren’t necessarily on the verge of going public. And while entrepreneurs are very well-versed on what venture does, it gets more ambiguous what happens after that. Entrepreneurs are very clear on Series B and C and D rounds, but I think a lot of them struggle to understand their options beyond that point.

I’d love to see more PE firms take a stand on areas that they’re passionate about. Why they don’t baffles me.

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




StrictlyVC: November 21, 2013

110611_2084620_176987_imageGood morning! Hope you have a great Thursday. StrictlyVC is running out the door to talk venture capital this morning before a group of Wharton alumni. Hope to see some of you there.

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Top News in the A.M.

A gift from Steve Jobs returns home.

Bitcoin is now accepted at a university in Cyprus. (Naturally.)

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AngelList’s Naval Ravikant on His Syndicates Program, Two Months In

Entrepreneurs Naval Ravikant and Babak Nivi have already done much to reshape the startup investing landscape with AngelList, their now four-year-old networking site that has largely replaced coffee meetings with Internet-based matchmaking.

In September, AngelList introduced another game-changer — its Syndicates program, which allows angel investors to syndicate investments themselves, work for which they receive carry. (An angel who syndicates a deal earns 15 percent of any upside, while AngelList collects 5 percent.)

Though Syndicates is still nascent, I caught up with Ravikant yesterday afternoon to see who has begun using it and how it’s doing generally. Our chat has been edited for length.

Can you give us a sense of the activity you’re seeing on Syndicates?

I’d estimate that something like $5 million has moved through the platform already, with several million more dollars [committed but not yet closed]. About 24 deals have closed, and others are in various stages of closing.

Do the deals involve many of the same people or are you seeing fairly disparate groups?

A bit of both. Some people are using it more promiscuously to diversify their portfolio. Others are doing deals because the know the lead backer well and it’s a trust relationship. For example, you see [Path CEO and former Facebook exec] Dave Morin and other Facebook alums co-investing together and backing each other.

Is anyone using the platform who you didn’t anticipate would?

The biggest surprise has been VC interest. The response has been the highest from angels, but we’re in advanced stages of talking about how to do syndicates with four firms, and numerous others are using the platform as a way to scout out deals. As with their scout programs, they’re backing their portfolio CEOs when those CEOs go and find and fund great companies.

Will we see a day when a person can raise $20 million via Syndicates to invest across numerous startups?

The way it’s set up right now, you can [invest] deal by deal…So we’ll hold funds in escrow for one deal. What we’re not doing is [managing a] 10-year commitment. If [Google Ventures partner] Kevin Rose has $2 million in backing, that’s $2 million [for one] deal. But he can drop people, or they can drop out of the syndicate, any time.

Has Kevin Rose made an investment through the platform yet? 

There are three Google Ventures partners who have a lot of syndicate backing but haven’t done a deal yet.

This whole thing seems like a great financial proposition for everyone but you. Is that true?

The idea isn’t to make money in the short term. But yes, today, it’s a money loser. We take 5 percent of [any upside] so if a lead invests $100,000 personally in a company, then raises another $1 million off Syndicates, we get carry off that $1 million, or $50,000 [if the company sells for $10 million]. But most Syndicates are in the $250,000 or $300,000 to $750,000, so at the lower end, that’s about $10,000 for us. Meanwhile, our out-of-pocket fees – to set up the funds, handle customer accounting [and so forth] are $12,000. So we’re basically paying $12,000 for $10,000 in future profit.

Why do it then?

Because longer term, we think we can bring LLC costs down to $5,000. And as syndicate sizes grow, it starts to become marginally profitable.

In the meantime, are you quietly investing a fund for anyone right now? At one point, you were talking about doing that after you’d invested a $20 million angel fund, Hit Forge.

I’ve been offered to raise another; [Hit Forge included stakes in] Uber, Twitter and Stack Overflow. But investing is [just a side hobby] now, and I’m making all my investments through Syndicates. I get to follow my best friends into deals, and I don’t mind paying them for carry if it means I don’t have [as many] coffee meetings.

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New Fundings

Apprenda, a six-year-old, Clyfton Park, N.Y.-based company whose software platform makes it easiser for its enterprise customers to deploy cloud applications, has raised $16 million in a Series C round led by Safeguard Scientifics. Previous investors Ignition Partners and New Enterprise Associates also participated in the funding, which brings the company’s total haul to date to $32 million.

Centzy, a New York-based local search engine which provides informations about nearby businesses, has $4.3 million in funding led by Matrix Partners, with participation from previous investors Cowboy Ventures and ff Venture Capital. The company, which has also just changed its brand from Locality, has raised more than $6 million to date, according to TechCrunch.

Lifecake, a two-year-old, London-based company behind a photo-sharing app meant for families, has raised $1.1 million led by Balderton Capital. The company had previously raised $300,000 in angel funding, including from Techtopia, and EC1 Capital.

Lytro, a two-year-old, Mountain View, Calif.-based camera technology startup, has raised $40 million in Series B funding led by North Bridge Venture Partners. Existing investors also joined the round, including Andreessen HorowitzNew Enterprise Associates, and Greylock Partners. According to Crunchbase, Lytro has raised $90 million altogether so far.

Plain Vanilla, a three-year-old online game studio with offices in San Francisco and Reykjavik, Iceland, has raised $2 million in fresh funding from Sequoia Capital and e.ventures. The company’s signature game is QuizUp; according to VentureBeat, Plain Vanilla has raised $5.6 million altogether, including from CrunchFundBOLDstart VenturesRed GlobeBootfishThe BAM TrustCap-Meridian VenturesGreycroft PartnersIDG VenturesTencent, and MESA+.

Shake, a year-old, New York-based startup that allows users to sign and send legally binding agreements from their phones, has raised a $3 million Series A round led by SoftBank Capital, which was joined by BoxGroupENIAC VenturesMesa+WGI Group and investor Patrick Keane. Previous investor RRE Ventures also participated in the round, which brings Shake’s total funding to $4 million.

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New Funds

Origin Ventures, a 14-year-old, Northbrook, Ill.-based, early-stage venture firm, has closed its third fund with $47 million, it announced yesterday. The fund is focusing on providing Series A financing to software, e-commerce, digital media and ad technology startups. Origin began fundraising for its newest vehicle in January and has made a handful of new investments since, including Aisle50, a startup that makes it easier to save at the grocery store, and DoggyLoot, a daily deals service for dog owners. One of Origin’s higher-profile investments is the online food ordering service GrubHub Seamless, which has been said to be prepping for an IPO.

As Crain’s Chicago Business notes, Origin is one of several other Chicago venture firms to raise new funds recently. Chicago Ventures closed a $40 million fund in June; and Hyde Park Venture Partners closed a $25 million fund, also in June.

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People

Entertainer Kanye West may soon have as many enemies as friends in the startup community. Last month, West set Las Vegas abuzz when he was spotted walking around the city’s downtown with Zappos CEO (and active startup investor) Tony Hsieh. But speaking in a podcast with writer Bret Easton Ellis, West told Ellis of that meeting, ”I got into this giant argument with the head of Zappos that he’s trying to tell me what I need to focus on. Meanwhile, he sells all this s**t product to everybody, his whole thing is based off of selling s**t product.” (West is also suing YouTube cofounder Chad Hurley for filming his recent wedding engagement and posting it online.)

Venture capitalist Fred Wilson weighs in on how to provide employees equity on an ongoing basis.

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IPOs

A group of U.S. mutual funds led by Fidelity Investments holds a combined stake of nearly $250 million in Dropbox, positioning them for a big payoff if the cloud storage company can pull off a stock market debut like that of Twitter, reports Reuters. More here.

Investor-entrepreneur Om Malik writes about TwitterChegg and Zulily — and why all tech IPOs are not created equal.

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Exits

Sources tell Valleywag that Blackjet, an app that promised to marry wealthy travelers with seats on private jets in ten seconds(!), is “out of cash, unable to raise funds, and ‘basically over.’ Another source said: ‘They are f*#ked.'” The company raised between $2 million and $3 million from a wide variety of individual investors, as you can see by scanning this almost comically long list at Crunchbase.

Legacy Locker, a five-year-old, San Francisco-based service that enables users to store an encrypted page of passwords and important documents to be accessed upon their death, has been acquired by two-year-old, San Francisco-based PasswordBox, a password management startup. The terms for the deal aren’t being disclosed, but all information from Legacy Locker accounts will be deleted, reports AllThingD. If its customers want to stick with the service, they’ll have to reregister for it as part of PasswordBox.

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Happenings

We neglected to alert you to the Belgrade Venture Forum 2013 conference, which wrapped up yesterday. (Sorry.) But in news you can perhaps use: Serbian Economy Minister Sasa Radulovic announced at the event’s outset that the government is willing to co-invest up to 4 billion Serbian dinars (or about $47 million) in regional startups beginning in January.

Goldman Sachs‘s super-secret Private Internet Company Conference rolls into its second day in Las Vegas today. Who will leak what today from the event? Stay tuned!

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Data

So far this year, 60 U.S.-based financial software companies have attracted venture backing, according to the PitchBook Platform. The five that have garnered the most are: Clinkle, which raised $25 million; Bill.com, which raised $38 million; Aria Systems, which raised $40 million; Credorax, which raised $40 million, and, in the biggest related funding so far this year, Zuora, which raised $50 million in September. Zuora is a six-year-old, Foster City, Calif.-based company whose platform aims to help tech companies shift to a subscription-based model by helping to automate payments. Its investors include BenchmarkShasta VenturesRedpoint VenturesGreylock Partners, and Index Ventures. The company has raised about $130 million to date.

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Job Listings

eBay is looking for a senior director, corporate development to help source, evaluate, and integrate the company’s many strategic acquisitions. (Over the last five years, the company has acquired more 30 companies, spending more than $6 billion for them altogether.) The company says the idea candidate should have an MBA or JD and more than 12 years of M&A or corporate development experience. It also wants to see a track record of leading complex M&A transactions, either through experience at an investment bank, venture capital firm, or a legal or consulting firm.

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Essential Reads

Business Insider digs up videotaped depositions that suggest Snapchat cofounders Evan Spiegel and Bobby Murphy may owe a former frat brother “something” after all for his role in the earliest days of the now high-flying company.

Box, the eight-year-old, enterprise cloud file storage firm, is raising a fresh $100 million in Series E capital at a valuation of $2 billion, according to TechCrunch sources. Last year, Box raised $125 million at a valuation of a reported $1 billion. The new funding would push the total amount that Box has raised to date — from Draper Fisher JurvetsonScale Venture PartnersUS Venture Partners, among many others — past $400 million.

What’s he really like? Check the Lulu app. (“One of the comments was, ‘laughing at his jokes may take some effort,’ which I certainly thought was subjective,” comedy writer Neel Shah tells the New York Times of his own Lulu profile. “I feel like if you’re using an app like Lulu, you’re probably not interested in nuanced analysis.”)

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Detours

Imagining the post-antibiotics future.

Finding a luxurious home away from home.

Which cheap, terrible beer tastes the best? A group of friends endures a blind taste test so that you won’t have to.

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Retail Therapy

The Dutch brand Vlieger & Vandam pushes the boundaries with its brightly colored Guardian Angel handbags. If you relish opportunities to speak with law enforcement officials, this is the must-have accessory of the season. (H/T: Very Short List.)

Regardless of what you think of vaporizers, you have to admit that this one is pretty amazing. (From a design standpoint!)

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