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VCs Want to Know: What’s Next?
It’s getting tough out there for entrepreneurs. No longer is it enough to create a sustainable, profitable, fast-growing product that’s beloved by customers. These days, top VCs are placing a premium on what’s next.
Andreessen Horowitz is “generally willing to take more risk on a product that hasn’t yet been built,” Marc Andreessen told me last month.
“We want to be in the most extreme propositions — the sort of thing where it’s either a moonshot or a smoking crater in the ground,” he explained. Toward that end, he’d said, “We’re willing to impute value into [what’s coming next out of a startup] if we’re highly confident that the team can build it and that the market is really going to want it.”
Ranjith Kumaran has seen this focus on the future vision first-hand. Kumanran, who cofounded the file sharing and online data storage company YouSendIt (renamed Hightail last July), is CEO of PunchTab, a nearly three-year-old loyalty and engagement platform that helps customers like Arby’s Restaurant Group create instant loyalty programs.
PunchTab’s trajectory has been impressive. In addition to growing revenue five times over last year, it has expanded its enterprise customer base from 10 to more than 40. Nevertheless, Kumanran finds that the VCs with whom he meets care most about Punchtab’s “next-horizon solutions”; they want entrepreneurs to paint a picture.
“I believe that wasn’t the case before,” he observes. “Series B was about how fast you’re growing and how you get to next revenue [milestones].”
If VCs are no longer enamored of velocity alone, the shift likely owes to a number of factors, beginning with the fact that fewer venture firms have come to control greater amounts of capital and need bigger returns than ever to justify such pools.
“It’s a very different dynamic today,” says Brian O’Malley, a general partner at Battery Ventures. “The market has gone from venture people sitting in their office, waiting for whatever company to come and pitch them, to chasing the companies that everyone else wants to invest in. If you’re part of that inner crowd, life is very good and there’s lots of money being thrown at you.”
You just need some imagination to get there.
Aileron Therapeutics, an eight-year-old, Cambridge, Mass-based clinical stage biopharmaceutical company that is developing cancer drugs, has raised $30 million in Series E equity financing from existing investors, including Apple Tree Partners, Roche Venture Fund, Novartis Venture Funds, Lilly Ventures, SR One and Excel Venture Management. The company has raised more than $100 million since its founding, says Xconomy, which reports on the company and its new round here.
Catabasis Pharmaceuticals, a five-year-old, Cambridge, Mass.-based clinical-stage company that’s focused on treating inflammatory and metabolic diseases, has raised $32.4 million in Series B financing. The round was led by Lightstone Ventures; previous investors SV Life Sciences, Clarus Ventures, MedImmune Ventures, and Advanced Technology Ventures also participated in the round. The financing brings the total capital raised by Catabasis to roughly $100 million.
GenapSys, a three-year-old, Redwood City, Calif.-based gene sequency startup, has raised $37 million in Series B funding. Investors in the round included Decheng Capital, IPV Capital, Stanford’s StartX fund, and early Facebook investor Yuri Milner. The company has raised $45.5 million to date, according to Crunchbase.
Knozen, a months-old, New York-based startup that’s currently in stealth mode but sounds a bit like a newer Tickle — the personality-focused quiz site that was acquired by Monster in 2004 — recently raised $2.25 million in seed funding, according to TechCrunch. The company’s investors include FirstMark Capital, Lerer Ventures and Greycroft Partners.
MovieLaLa, a year-old, San Francisco-based social network for movie fans looking to discuss upcoming movies, has raised an undisclosed amount of seed funding. Investors in the round included Wealthfront COO Adam Nash; former HBO executive Jim Moloshok; and Larry Braitman, who cofounded Flycast Communications in 1996.
Sittercity.com, a 12-year-old, Chicago-based source for in-home care, has raised $13 million in funding. Publicly traded Bright Horizons Family Solutions participated in the funding. (It now intends to work with Sittercity to help more families find child care.) Plenty of previous investors also joined in the round, including Apex Venture Partners, Baird Venture Capital, I2A Funds, Point Judith Capital, Pritzker Group Venture Capital, State of Wisconsin Investment Board and new debt provider Square 1 Bank. SIttercity has raised just north of $30 million to date, according to Crunchbase.
Slyce, a two-year-old, Calgary-based company whose technology invites users to photograph a product with their phones, after which it presents them pricing, reviews and the ability to buy the product, has raised $2.2 million. Its investors weren’t named, but the Calgary Herald has a feature story on the company here if you want to learn more.
Station X, a three-year-old, San Francisco-based company whose software helps scientists and clinicians store, analyze and visualize large-scale genomic data, has raised a fresh $8.6 million, shows an SEC filing that suggests the company is hoping to raise up to $20 million for the round. The company’s existing investors include Runa Capital and Genomic Health. Station X has raised about $15 million to date.
Talari Networks, a four-year-old, San Jose, Calif.-based company that works with enterprises to ensure their network reliability, has raised $15 million led by new investor Four Rivers Group. Existing investors, including Menlo Ventures and Silver Creek Ventures, also participated. The company has raised roughly $33 million to date.
Mark Gorenberg, a managing director who joined the venture firm Hummer Winblad in 1990, is striking out on his own. According to a new SEC filing, Gorenberg is raising a $40 million fund under the new, San Francisco-based brand Zetta Venture Partners. The Form D shows the first sale has yet to occur; no one other than Gorenberg is listed on the filing. Before joining Hummer Winblad, Gorenberg was an executive at Sun Microsystems. Gorenberg most recently participated in the late October, $1.5 million seed funding of San Francisco-based Pixlee, which provides brands with a platform to create, manage and measure user-generated photo and short form video campaigns.
A European IPO revival is under way, and London is seeing the most activity, reports Reuters.
Share of Zulily, the four-year-old, Seattle-based flash deals site for mothers, soared 71 percent in trading on Friday. The WSJ has more here.
Latista, a 12-year-old, Reston, Va.-based company that makes workflow and collaboration software for the construction industry, was acquired late last week for $35 million by Textura, a publicly traded competitor. Latista’s investors include Blu Venture Investors, a Vienna, Va., venture capital firm focused on early-stage investments in the Mid-Atlantic region, and Berman Venture Capital, a Rockville, Md., firm.
Jeremy Hammond, the Anonymous hacktivist who released millions of emails relating to the private intelligence firm Stratfor, was sentenced on Friday in a Manhattan federal court to 10 years in jail. He told the Guardian that he sees his sentence as a concerted attempt by U.S. authorities to put a chill on political hacking.
Business Insider founder Henry Blodget gets taken to lunch by the Financial Times and pitches his interviewer on the idea of combining enterprises. “We would actually be perfect for a merger. You can take that back [to the FT],” Blodget says.
Salesforce.com’s four-day Dreamforce conference gets underway today in San Francisco, with founder Marc Benioff in conversation with Dropbox cofounder Drew Houston in late afternoon. You can find out more here.
What happens in Vegas…sometimes draws venture funding. According to new data from Pitchbook, investment in the state is on the rise (surely with some thanks to the efforts of entrepreneur-investor Tony Hsieh). Since the beginning of 2009, 34 Nevada-based startups have attracted venture funding, and the amounts they’ve raised is growing by the year. Pitchbook says that the $32 million that local companies have raised so far in 2013 already surpasses that $30 million that Nevada startups raised in 2012.
Fenox Venture Capital, a two-year-old, San Jose, Calif.-based is looking to hire a venture partner to help the firm spot promising investment opportunities in the consumer Internet, retail and software sectors. A “distinguished educational and professional background, including executive management experience at well-regarded companies” is required. It’s a part-time position.
Dow Jones reported last month that Fenox had raised $20 million toward its third fund, which is targeting $60 million from large corporations, funds of funds, and family offices. Part of the firm’s mission, said Dow Jones, is “landing and expanding startups in Asia.”
Fighting an Internet risk that technology can’t fix: People.
The New Yorker takes a look at self-driving technologies and the details are fascinating. Among them: Volvo has a full-time forensics team and whenever a Volvo gets into an accident within a sixty-mile radius of its Swedish headquarters, the team races to the scene with local police to assess the wreckage (and add to four decades of such research). Meanwhile, Nissan, Toyota and Mercedes are probably closest to developing systems like Google’s self-driving cars but hesitate to introduce them for different reasons, including aesthetics. Ralf Herrtwich, Mercedes’s director of driver assistance and chassis systems, tells The New Yorker: “One of my designers said, ‘Ralf, if you ever suggest building [a laser turret atop] one of our cars, I’ll throw you out of this company.’ ”
Facebook addiction has given way to Facebook fatigue, among users, as well as developers, reports the New York Times.
Who gets into Stanford? In short, it’s complicated. “[O]ne year, being a tuba player might be really important. And another year, well, there are already these five even better tuba players and we don’t need another.”
Fascinated with the idea that two totally unrelated people can look like twins, photographer Francois Brunelle set out to take portraits of 200 doppelgangers. (This blew our mind.)
That clam in your chowder might be hundreds of years old.
Art on a plate.
It’s almost Thanksgiving, a time for talking, a time for turkey, a time for, yes, says GQ, some new wool ties.
Brass ID bracelets for men are now considered fashionable. We have no idea how this happened, but unless you are a soldier or a male model, just keep moving.
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