StrictlyVC: January 14, 2014

110611_2084620_176987_imageHappy Tuesday!

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Top News in the A.M.

Shooting for the moon: A quick look at just a handful of Google’s recent acquisitions and what they mean.

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For Nest Investor Shasta Ventures, Persistence Pays

Google’s plans to acquire the smart home appliance maker Nest Labs for $3.2 billion in cash should translate into a tidy return for the half dozen firms that invested $80 million in the three-year-old company. Kleiner Perkins may have the most reason to kick up its heels, having led Nest’s $4 million Series A round in early 2011. (The deal, rumored to give Kleiner a 20x gross return, might well convince its limited partners that Kleiner has recovered its mojo.)

But the deal is also a personal victory for venture capitalist Rob Coneybeer of 10-year-old Shasta Ventures, who was introduced to Nest founder Tony Fadell eight years ago by fellow VC Stewart Alsop. (“He thought we’d like each other,” explains Coneybeer, who is a mechanical engineer by training and shares Fadell’s love of gadgets.)

Once acquainted with Fadell, Coneybeer spent as much time with him as he could in the hope that one day they could work together. Last night, I talked with a clearly elated Coneybeer about his relationship with Fadell and his subsequent investment in Nest; what follows is a lightly edited transcript.

Where does your story with Fadell start?

I’ve been interested in mobile and hardware and investing in the Internet of things for a while, and when Tony left Apple, I kept in touch with him as he was investigating different ideas, including devices that use batteries to get recharged and what happens to those devices if you connect them to the Internet. So he’d been thinking about things, and we’d get together every two to four weeks to talk.

When did it turn into more than that?

Tony had gotten to know myself and some of my partners, and he’d developed relationships with a couple of different firms … When Tony became difficult to reach, I realized he might be starting something, and I basically pursued him and said, “I’d love to find out what you’re up to,” and I offered to sign an NDA. And he said, “You’d do that?” And I said, “Yeah, I never sign NDAs, but to learn what you’re up to, I would, absolutely.” A week or two later, he walked me through what he was up to, and I met the core team he’d pulled together.

He went with us and with Kleiner [for Nest’s A round]. He’d known [Kleiner partner] Randy [Komisar] for a long time, and Randy has great experience in bringing consumer electronics to market [including as a founding director at Tivo].

What was Shasta’s value-add to the company?

It was a good personal fit. And having built [Shasta] around consumer and expertise around hardware companies, we were able to make great introductions, including to Best Buy and Lowe’s and other channel partners. We also helped with recruiting, in closing key candidates. Beyond that, it’s hard to provide a laundry list; Nest has such an accomplished team.

Kleiner led the Series A round, but you say Shasta was a “significant participant.” Can you talk about what kind of return you’ll see from Nest’s sale? TechCrunch sources say it will return “almost all” of your second, $250 million fund, closed in 2008.

I can only tell you that [the return will be] very, very, significant. I’m sorry I can’t be more specific, but you can write “very” three times.

Is Nest your biggest exit personally? I recall that before Shasta, as a partner at New Enterprise Associates, you led an investment in the fiber optic switching company Xros, acquired by Nortel.

That was $3.25 billion, so this is my second three-billion-dollar outcome. It does feel really good to build something from scratch [Shasta] and work really hard for 10 years to build a brand and to [be a part of] a product and outcome that people are really excited about. It feels like things are finally coming together.

Are you even a teeny bit disappointed? I know you thought Nest could become a formidable standalone hardware business.

I’ll just say that Google is acquiring the best hardware team on the planet. In terms of designing high-quality, durable, consumer hardware, you can’t name a better team.

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New Fundings

Certain, a 20-year-old, San Francisco-based maker of event management software, has raised $17.8 million in funding, according to an SEC filing. The company previously raised $11 million, in 2011, says VentureBeat.

ChargeBee, a three-year-old, Chennai, India-based startup that helps companies manage their subscription billings, has raised roughly $800,000 in a Series A funding from Accel Partners. The company has raised $1.17 million altogether, including a $ 370,000 seed round closed in 2012.

Chrome River Technologies, a six-year-old, L.A.-based company that makes expense management and supplier invoice processing software, has raised $17 million in Series C funding. The round was led by Bain Capital Ventures and included existing investors First Analysis and Argentum. The company has now raised $20 million to date.

Elastifile, a young, Herzliya, Israel-based solid-stage storage company, has raised $8 million in Series A funding from Battery Ventures and Lightspeed Venture Partners. (GigaOm notes that Elastifile’s cofounder Shahar Frank was cofounder of XtremIO, a solid-state storage player purchased by EMC in 2012 for $430 million.)

Evaneos, a four-year-old, Paris-based online platform that helps design their travel and book their trips, has closed $6 million in funding led by XAnge Private Equity, with participation from ISAI. The company had previous raised $1 million in funding from ISAI.

Iceotope, a two-year-old, Yorkshire, England-based IT cooling specialist, has raised more than $10 million in Series A financing, the company disclosed yesterday. Aster Capital, a venture capital firm specializing in clean tech, led the round, along with the high-tech investment firm Ombu Group in the U.K.

Invoca, a six-year-old, Santa Barbara, Calif.-based call marketing company formerly known as RingRevenue, has raised $20 million in Series C funding from Accel Partners, Upfront Ventures and Rincon Venture Partners. The company has now raised more than $30 million.

Ivantis, a six-year-old, Irvine, Calif.-base maker of stents that are used to lower eye pressure for glaucoma patients, has added $14 million to its Series B round, which now totals $46.5 million. Investors include Vertex Ventures, GBS Ventures, Ascension Ventures,EDBI, MemorialCare Innovation Fund, New Enterprise Associates and Delphi Ventures. The company has raised more than $63 million to date, according to Crunchbase.

Kontagent, a six-year-old, San Francisco-based mobile analytics firm that caters to game developers, has raised a fresh $4.8 million in funding, shows an SEC filing. The company has now raised roughly $17 million to date, including from Maverick Capital, Battery Ventures, and Altos Ventures.

Madison Vaccines, a 1.5-year-old, Madison, Wisconsin-based clinical stage biopharmaceutical company focused on treating prostate cancer, has raised $8 million in Series A financing from Madison-based Venture Investors, Wisconsin Alumni Research Foundation, the State of Wisconsin Investment Board, Madison-based Venture Management and others.

Nutanix, a four-year-old, San Jose, Calif.-based converged infrastructure market player, has raised $101 million in financing co-led by Riverwood Capital and SAP Ventures. Morgan Stanley Expansion Capital and Greenspring Associates also participated in the round, alongside existing investors Lightspeed Venture Partners,Khosla Ventures and Battery Ventures. The company has now raised a total of $172.2 million.

Oyster, a two-year-old, New York-based company that provides customers access to more than 100,000 books for $10 a month, has raised $14 million in a new round of financing led by Highland Capital Partners. Existing investor Founders Fund also participated in the financing, which brings Oyster’s total funding to $17 million. The New York Times has more on the company here.

Sonian, a six-year-old, Newton, Mass.-based that manages a hosted information archive program, has raised $8 million in Series C funding from existing investors OpenView Venture Partners, Summerhill Venture Partners and Prism Venture Partners. The round brings Sonian’s total funding to $21.6 million.

Turn, a 10-year-old, San Francisco-based advertising platform company, has raised $80 million in Series E funding led byBlackRock and Fidelity Investments, reports TechCrunch. Other investors in the deal included new backers ClearBridge Investments,Firsthand Technology Value Fund, Northport Investments, andPine River Capital Management and previous investors Norwest Venture Partners, Trident Capital, Shasta Ventures, and Focus Ventures. The company has raised a grand total of more than $135 million.

uTest, a six-year-old, Framingham, Mass.-based mobile app testing service, has raised $43 million in Series E round of funding led by Goldman Sachs. Previous investors also participated, includingQuestMark Partners, Scale Venture Partners, Longworth Venture Partners, Mass Ventures, Egan-Managed Capital and Mesco Ltd. The company has now raised 80 million to date.

Volusion, a 14-year-old, Austin, Tex.-based company that helps merchants create e-commerce stores online, has raised $35 million in debt financing from Silicon Valley Bank, says TechCrunch. It’s the company’s first outside funding.

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New Funds

In October, the five-year-old, New York-based venture firm ff Venture Capital became the first to embrace the SEC’s new general solicitation rules, announcing, quite publicly, that it planned to raise between $50 million and $70 million for its third fund, ff Rose Venture Capital Fund. Today, the firm is announcing it has closed the fund with $52 million, including from New York State’s Empire State Development (Innovate NY Fund), Goldman Sachs, and the New Jersey Economic Development Authority. The firm’s last fund, a $27 million vehicle called ff Silver, closed in 2010.

Spur Capital, a 13-year-old, Bartletsville, Ok.-based fund of funds, is in the process of raising its fourth, venture-focused fund, shows anSEC filing. The outfit, which began fundraising in 2012, has so far raised $31 million; it is targeting as much as $150 million, shows the filing.

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People

Matt Mullenweg, founder of venture-backed Automattic (WordPress’s parent company) announced yesterday that he is taking up the CEO reigns, two days after turning the ripe old age of 30. Writes Mullenweg on his own blog, “[I]t’s obvious that no one in their twenties should run a company. They think they know everything…”

Yesterday, Facebook CEO (and early adopter) Mark Zuckerberg found a terrifying spider in his bathroom and turned to the new photo app Jelly for help.

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IPOs

With 91 percent of the last three months’ IPOs posting positive returns, we probably shouldn’t be surprised that 13 companies submitted initial IPO filings last week.

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Exits

Branch, a 2.5-year-old, New York-based link-sharing service, is being acquired by Facebook for roughly $15 million, says The Verge. Branch’s nine-person will reportedly remain in New York and will form a new team at Facebook company called “Conversations,” whose goal will be to help users “connect around their interests.” Branch had raised $2 million in seed funding in 2012, including from SV Angel,Lerer Ventures, Obvious Corporation, betaworks, BoxGroup and numerous individuals, including David Tisch.

ideeli, a six-year-old, New York-based online retail site that features limited-time sale events, was acquired yesterday by Groupon for $43 million in cash. ideeli had raised roughly $107 million over the years, including from betaworks, Next World Capital, Constellation Ventures, Kodiak Venture Partners, Cue Ball, Credit Suisse andStarVest Partners.

The Winamp media player and Shoutcast, an Internet radio service, have been sold to the digital audio business Radionomy by AOL, in a cash and stock deal worth $5 million to $10 million, reports TechCrunch. AOL has taken a 12 percent stake in Radionomy in the process. AOL paid roughly $80 million in 1999 for Nullsoft, owner of AOL.

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Happenings

Woodside Capital is hosting its M&A Silicon Valley Gathering tomorrow and Thursday, an event in which it brings together “150 of the smartest, most creative people we know from software and internet services.” Learn more about the Los Altos Hills, Calif.-event here.

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Job Listings

Triangle Peak Partners is looking for a venture capital analyst to join its Palo Alto, Calif.-based office, though be warned: the firm says this is an “internship for current Stanford students or very recent graduates and is for a specific project. Please do not apply if you have several years work experience or are looking for a role as a venture capitalist.” Qualifications include familiarity with financial statements, capitalization tables and venture funding processes.

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Data

In the fourth quarter of last year, venture capital firms raised $4.9 billion, up 12 percent over the third quarter of 2013. For the year, VC firms raised a total of $16.6 billion.

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Essential Reads

Four reasons Google just bought a thermostat company.

Ever wonder where filmmakers get the fake code that flashes across the movie screen during features like “Iron Man”? A British programmer is on it.

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Detours

A fluffy, cuddly baby polar bear takes his first steps. (C’mon, you have time for this.)

Looking for a place in L.A.? After failing to sell his Bel Air abode for $7.5 million, then $6.9 million, digital media mogul Jay Penske has re-listed it, this time for $7.3 million.

The New York Times peeks into The Battery, San Francisco’s newish members-only social club. “While the noise level suggested a nightclub, the crowd did not. There was as much gray hair as blond, iron-coaxed curls; the occasional stiletto heel clacked alongside silent New Balance sneakers and practical flat boots. ‘A lot of the people here look like they should be in bed by 10 p.m.,'” said one guest of the club to the outlet.

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Retail Therapy

What looks like a Nest but sounds a speaker? We’ll give you one guess.

Hagerty Insurance just released a list of the top 10 cars they expect to be owned by “collectors” down the road. (StrictlyVC would like to collect the M5.)

Thanks to meaningful advances in the retail industry, you can now slip on a Snuggie, curl up on in your Fombag, and call it a day. Hallelujah!

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Correction: Yesterday, in Retail Therapy, StrictlyVC featured the Hypermach Sonicstar, a supersonic jet concept that might not come to pass. (We’d found and posted an old story about it, thinking it was new.) We apologize, especially to those readers who may own a Gulf V, which we cruelly derided.

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