Happy Friday! This is StrictlyVC’s last email until early January. Before signing off, a note of thanks for all the kind words you’ve offered since this product’s launch. All of it, and each of you, is very much appreciated. (Corny sounding, yes, but true!)
If you should see any friends in the industry over the break and want to recommend they sign up for StrictlyVC, that would also be a nice gift (wink). Happy holidays!
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Top News in the A.M.
The University of California is under no obligation to obtain and disclose information about the investment performance of venture capital funds in its portfolio, a California court ruled yesterday.
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Zuora: The Hottest Company You Don’t Know
Zuora isn’t a household name, but the six-year-old is becoming kind of a big deal as private companies go. Its high-touch subscription-billing platform already counts as customers dozens of established corporate giants (HP, Dell, News Corp), newer corporate giants (Box, Docusign, ZenDesk), and up-and-comers (Dollar Shave Club) for whom its technology handles everything from pricing to order management.
Unsurprisingly, investors love the 300-person company. Zuora has raised $128 million to date, including from Benchmark, Index Ventures, Vulcan Ventures, and Marc Benioff of Salesforce.com, where Zuora’s cofounder and CEO, Tien Tzuo, was employee number 10.
Still, Zuora isn’t planning to go public any time soon, say Tzuo. We talked about why earlier this week.
You’ve said that you’d like at least another year or two before tapping the public markets, but it seems like you’d get a warm reception right now.
The private markets are assigning valuations that are as strong if not stronger than pubic markets; there isn’t a lot of inherent value right now to going public. Staying private also allows us to work more on ourselves and to make big bets.
Do you mean acquisitions?
We haven’t made any acquisitions but our private valuation is getting to the size now where it’s starting [to make sense]. I suspect [we’d look at] more adjacent areas, as technology tuck-ins. It’s not a strategy of ours, but staying private gives us more flexibility.
So what kind of big bets are you making?
We’re kind of in a land grab [having recently opened offices in London and Australia, with plans to move into Asia-Pacific]. If we can raise money and focus on [expanding], then it just makes more sense to do that. Our big challenge is evangelizing the shift from a product to a subscription-based economy.
Meaning the renting versus buying economy?
Right. Eighty or 90 percent of companies getting funded now have a subscription model because of [cloud-based servers and other things]. Medical device companies that [used to spend a fortune on equipment] now use services hosted at Amazon and pay as they go for processing power.
Everyone will wake up across the world and realize their business is a subscription-based model. Product-driven society, where you ship as many cars, pens, and computers, is no longer sustainable.
Assuming that’s true, you’re probably as aware as anyone of the types of subscription-based companies that VCs are funding. What are you seeing?
I’m seeing massive niches. Take GoodMouth, which sells toothbrushes. It’s kind of a no-brainer. You’re supposed to change your toothbrush every month or two; GoodMouth sends them to you. With the Internet, you can pick something that has traditionally been too small and scale it to the whole country.
Another example is point-of-sale systems. It might seem like Square has the point-of-sale market locked up, but that’s not so. There are half a dozen companies focused on point-of-sale systems: there’s one that’s focused on grocery stores, another focused on dry cleaners. Very specific vendors can scale to a very large size today, unlike five to ten years ago, and smart VCs know it. Peter Fenton [of Benchmark, who sits on Zuora’s board], has a company in his portfolio called Revinate. It does hotel management systems. That can’t be further afield from the masses, but it’s a multibillion-dollar vertical.
New Fundings
Cyanogen, a four-year-old, Seattle-based custom Android software developer, has raised $23 million in Series B funding led byAndreessen Horowitz. Benchmark and Redpoint Ventures, which provided the company with $7 million in Series A funding just three months ago, also participated in the round, along with the Chinese company Tencent. Cyanogen has built an open-source operating system that reportedly gives Android owners a more customizable and faster experience than they’d get out of the box with an Android phone.
Floored, an 18-month-old, New York-baed technology company whose 3D capture & visualization software sells to the real estate, architecture, interior design and furniture industries, has raised $5.26 million in Series A funding. RRE Ventures led the round. New investorGreycroft Partners and existing investors Two Sigma Ventures,Lerer Ventures and Felicis Ventures, also participated in the financing, which brings the company’s total capital raised to date to $6.3 million.
Foursquare, the four-year-old, New York-based social location service, has raised $35 million in Series D funding led by DFJ Growth and the Capital Group’s Smallcap World Fund. AllThingsD reports that the round was completed at a valuation slightly north of Foursquare’s last valuation of $600 million. Read more about it here. The company has now raised $106 million in equity, and another $41 million in debt, according to Crunchbase.
Freshdesk, a three-year-old, Walnut, Calif.-based maker of customer support software, has raised $7 million in Series C funding. Existing investors Accel Partners and Tiger Global Management participated in the round. The company has raised roughly $14 million to date.
Folloze, a months-old, Palo Alto, Calif.-based company, has raised $1.97 million, according to an SEC filing that doesn’t list any investors but shows the round’s target is $3.5 million. The company is still operating in stealth mode but says its mission is to “democratize content contribution and distribution in the enterprise” through a “new approach for enterprise content that empowers individuals to outperform in their day-to-day job.” (We know, not so helpful, but there you have it.)
Hightower, a months-old, New York-based company whose mobile technology allows landlords and brokers to collaborate on deals in real time, as well as track important documents and information, has raised $2.12 million in seed funding. Bessemer Venture Partners and Thrive Capital led the round, which also included participation from RRE Ventures, Red Swan, and a gaggle of individual investors. David Tisch, Aaron Levie, Joe Lonsdale, Jason Tan, Chris Howard, Brad Silverberg, Brandon Shorenstein, Lee Linden, and Gary Vaynerchuck, were among them.
Kurtosys, a nine-year-old, London-based company whose financial technology software targets asset managers, has raised $8 million in Series C financing from Triangle Peak Partners and existing investorTrue Ventures. The company has raised $21.7 million altogether, according to Crunchbase.
MyOwnMed, a year-old, Chevy Chase, Md.-based company whose mobile health app captures between-visit health data, has raised $1.3 million in funding, shows an SEC filing. No investors are listed on the form.
ResolutionTube, a months-old, Seattle-based augmented reality collaboration platform for the customer service industry, has raised $1.5 million in seed funding led by Madrona Venture Group with participation from numerous individual investors, including David Cohen, Rudy Gadre, Owen Van Natta, and Vijay Vashee.Acceleprise Ventures also participated in the round.
Robinhood, a two-year-old, Redwood City, Calif.-based company whose free mobile application allows users to read stock news, rate companies, and trade stocks, has raised $3 million in seed funding led by Index Ventures. Tim Draper, Rothenberg Ventures, andAndreessen Horowitz also participated in the financing, among others.
TaxiBeat, a nearly three-year-old, Athens, Greece-based company whose mobile app allows passengers to call a specific, nearby taxi based on distance, user ratings, and car model, has raised $4 million. The money comes from Hummingbird Ventures in London; the company, which is expanding into several European cities and Latin America, has raised $7 million altogether, reports TechCrunch.
Vensun Pharmaceuticals, a 2.5-year-old, Yardley, Pa.-based generic pharmaceutical company, has raised $15.8 million in Series B funding. The round was led by JW Asset Management, which also led Vensun’s 2012 Series A financing. Additional investors in the financing included entities affiliated with Allen Chao, the co-founder of Watson Pharmaceuticals, now Actavis.
Warby Parker, the three-year-old, New York-based online eyeyglasses company, has raised $60 million in new funding led by existing investorTiger Global Management, reports Fortune. Other previous investors to join in the round include General Catalyst Partners, Spark Capital,Thrive Capital, and First Round Capital. The giant round brings the company’s total financing to date to $116 million.
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New Funds
Boulder Ventures, an 18-year-old, Boulder, Colo.-based venture firm that backs early-stage tech and life sciences companies in Colorado and the Mid-Atlantic region, is in the process of raising its sixth fund, shows a new SEC filing. The target listed is $100 million. The filing, which says the first sale has yet to occur, lists three partners: Kyle Lefkoff, Jonathan Perl, and Peter Roshko. One of the firm’s biggest hits in recent years was Rally Software, a Boulder-based company that makes project management software and which held a successful public offering in 2010 after raising around $70 million. (The company’s market cap today is $425 million; SEC filings show that Boulder Ventures owned 10 percent of the company.)
Flywheel Ventures, an 11-year-old, Santa Fe, N.M.-based seed and early-stage venture firm focused on tech and physical sciences ventures in the Southwest/Rockies region, has raised $8.74 million for its second fund, an SEC filing shows. The total offering amount for the vehicle is listed as indefinite. Flywheel’s sole GP is Trevor Loy; among the firm’s most recent investments is ByteLight, a Boston- based retail indoor location company, which raised $3 million in Series A funding earlier this fall, including from Motorola Solutions, the eCoast Angel Network, Sand Hill Angels and Google evangelist Don Dodge.
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People
Yesterday, we noted that venture capitalist John Doerr was having a good week, having offloaded Google shares for more than $4 million. But that haul pales in comparison to the $91 million that Facebook board member Marc Andreessen will reportedly see from the sale of 1.65 million class A shares of Facebook in the company’s secondary offering, announced yesterday.
Venture capitalist and Illinois Republican gubernatorial hopeful Bruce Rauner has reportedly “been working overtime to cast himself to voters as a man who picked himself up by his bootstraps, worked for everything he earned and remained humble even as he acquired the wealth and success that earned him a spot as an adviser and confidant to Mayor Rahm Emanuel.” StrictlyVC doesn’t have a horse in this race, but Rauner’s ads are certainly interesting.
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IPOs
Congratulations, America: 2013 was the best year for the U.S. IPO market since 2000. Renaissance Capital breaks down the year here.
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Exits
Inspirato, a three-year-old, Denver-based, private club that provides its members exclusive access to luxury homes and hotels, along with adventure travel experiences, has combined with competitor Portico Club. The new company is being called, unfortunately, Inspirato with American Express. Inspirato has raised nearly $50 million in funding, including from DAG Ventures, Millennium Technology Value Partners, Kleiner Perkins Caufield & Byers, Access Venture Partners and Crunchfund. TechCrunch has an interesting look at the deal, and its backstory, here.
Storyful, a 3.5-year-old, Dublin, Ireland-based company that finds news on social media, has been acquired for $25 million by News Corp, which says it will operate Storyful as a standalone business. Storyful had raised one round of funding, in December 2011, from theAIB Start-Up Accelerator Fund, which is managed by ACT Venture Capital. The amount wasn’t disclosed publicly.
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Job Listings
Microsoft is looking for a corporate development manager in Seattle. This person will help lead small and medium-size deals, as well as help evaluate larger transactions, meaning there’s plenty of deal structuring, negotiating of terms sheets, etc. Microsoft’s corporate development managers also interface with the investment banking, venture capital, and startup communities and conduct special projects that make it easier to identify new business opportunities.
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Data
CB Insights has published a list of the top early-stage VCs in Midwest tech startups, based on follow-on investment rates. In descending order, the top five are: Detroit Venture Partners, Pritzker Group Venture Capital, Apex Venture Partners, Chicago Ventures, and Illinois Ventures. You can read more here.
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Essential Reads
“On the day [Steve] Jobs announced the iPhone, the director of the Android team, Andy Rubin, was six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show. He reacted exactly as DeSalvo predicted. Rubin was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast. ‘Holy crap,’ he said to one of his colleagues in the car. ‘I guess we’re not going to ship that phone.’”
A professor of robotics discusses the “robot smog” that could pollute cities of the future.
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Detours
Minutes from the Dunley Family Emergency Christmas Celebration Planning Committee Meeting.
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Retail Therapy
On Indiegogo, you can now buy a $65 mind-reading dog translator thatjust might work. We’re just kidding. You might as hold the money out a moving car window and let it go.
You work hard. Sometimes. You deserve a comb that’s made from high-grade titanium, has a black titanium finish, and comes in a custom Italian leather sleeve. You deserve a comb that has the muscular name of Octovo Ti. Did we mention that this comb costs $150? Wait, why are you taking out your plastic comb? It is not “just fine.” Did we mention that quantities are limited. Hello?
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