Happy Thursday, dear readers. Quick reminder that you can always reach me at firstname.lastname@example.org or on Twitter.
Top News in the A.M.
Forbes has published Jan Koum‘s rag-to-riches tale, which ended with him signing the WhatsApp deal on the door of his former welfare office.
Meanwhile, it turns out Google had offered to buy WhatsApp for $10 billion.
The Lesson of Jim Goetz: Great VCs Make Their Own Luck
People may be surprised that low-profile Jim Goetz of Sequoia Capital just landed the largest-ever acquisition of a venture-backed company. They shouldn’t be.
Researchers have shown that superstar investors are remarkably consistent over time. In fact, when it comes to predicting which startups will be successful, individual VCs are roughly five times more powerful as leading indicators than the firms for which they work, according to a studypublished last May by Harvard and Carnegie Mellon academics. (The study controlled for all kinds of deviations, including industry, investment amount, the amount of experience of the VC at the time of the investment, and the age of the startup itself.)
As one of the study’s authors, Matthew Rhodes-Kropf, told me when the study was first published, “The guys who know how to get big exits get big exits no matter where [they’re employed]. The guys who fail are pretty consistent about that, too.”
Goetz is clearly one of the guys in the first camp. An entrepreneur who later became a general partner at Accel Partners, Goetz scored numerous hits for the firm, including Perbit (sold to Juniper), Rhapsody (acquired by Brocade Communications), and Entrisphere (sold to Ericsson). Goetz was so good, in fact, that in 2004 Sequoia Capital hired him away from Accel.
Lucky Sequoia. Facebook’s $16 billion acquisition of WhatsApp could mean as much as $3.4 billion for Sequoia’s LPs, given that Sequoia invested a reported $60 million in the company across three separate rounds for an ownership stake of as much as 19 percent. And it’s just one of the big exits that Goetz has provided Sequoia. He led the firm’s investment in AdMob, which raised less than $50 million and was acquired by Google for $750 million just three months later; and he was also the force behind Jive Networks, Nimble Storage, and Palo Alto Networks, all of which have enjoyed successful public offerings.
Another Accel partner, Peter Fenton, has followed a remarkably similar trajectory as Goetz. At Accel, Fenton quietly amassed a portfolio of 10 startups, later helping to sell two of them — JBoss to Red Hat and Wily Technologies to Computer Associates — in hugely successful outcomes for Accel.
In mid-2006, Fenton was also headhunted by another VC firm – in this case, Benchmark Capital. At Benchmark, Fenton has continued to knock the ball out of the park. Two of his more prominent investments include Yelp (which went public in 2012); and New Relic, which was valued at $750 million in a funding round a year ago. In addition, Hortonworks and Zendesk are expected to go public in the near future. And did we mention Twitter? Fenton sits on its board, too, and will reportedly net hundreds of millions of dollars personally alongside Benchmark, which owned 6.7 percent of the company at the time of Twitter’s November IPO.
Goetz and Fenton aren’t lucky; they’re consistent. And their success may encourage more firms to poach star players, particularly if their LPs have anything to say about it. Brian O’Malley, a rising star at Battery Ventures, was recently lured over to Accel. With Goetz’s big deal, other firms are surely poring over other firms’ rosters in search of their own superstars.
Apprity, a year-old, Santa Clara, Ca.-based stealth cloud security company, has raised $8 million in Series A funding led by Norwest Venture Partners and Wing Ventures.
BeyondCore, a six-year-old, San Mateo, Ca.-based maker of automated analytics software, has raised $9 million in Series A funding led by Menlo Ventures.
Ionic Security, a 2.5-year-old, Atlanta, Ga.-based data security company, has raised $25.5 million in Series B funding led by Google Ventures and Jafco Ventures. Other participants in the round include the Webb Investment Network and earlier investors Kleiner Perkins Caufield & Byers, ff Venture Capital, Tech Operators and individual investors. The funding brings Ionic’s total capital raised to $38 million.
Kapitall, a six-year-old, New York-based an online investment platform that enables investors to research and analyze stocks, mutual funds and exchange traded funds, has raised $13 million in Series B funding, reports VentureWire. Linden Venture Fund led the Series B investment, joined byBendigo Partners, founded by Kapitall’s CEO, Jarrett Lilien. The company has raised about $25 million to date.
Nativeflow, a three-year-old, Tel Aviv, Israel-based mobile data protection company for enterprises, has raised $7.5 million in funding from Jerusalem Venture Partners and OurCrowd. The company has raised $15 million to date.
Sidecar, the four-year-old, New York-based car ride-sharing company, has raised $10 million led by Union Square Ventures. The funding, closed on last summer but announced yesterday, comes as Sidecar tries a new approach to fares: giving riders and drivers more say over their rides and fees based on car type, price, proximity, and the driver’s ratings. Sidecar has raised roughly $15 million to date, including from Innovation Venturesand Gabriel Investments.
Strevus, a two-year-old, San Francisco-based company that makes risk and compliance software for financial services institutions, has raised $6.5 million in Series A funding led by Blumberg Capital, with participation fromU.S. Venture Partners and previous undisclosed angel investors.
ThreatStream, a year-old, Redwood City, Ca.-based whose platform claims to be the first ever crowd-sourced cyber security intelligence solution that aggregates threat indicators from around the Internet and integrates them directly to an organization’s existing security infrastructure, has raised $4 million in Series A funding. Google Ventures led the round, with participation from Paladin Capital Group and individual investors.
ViSenze, a year-old, Singapore-based company that make so-called intelligent visual tools, has raised $3.5 million in Series A funding led by Rakuten Ventures, the corporate venture unit of Rakuten. New investors Walden International and UOB Venture Management also participated in the funding round. ViSenze, which spun off from the National University of Singapore, conducts rapid image extraction and recognition, adaptive machine learning and dynamic contextual analysis to render large scale, high performance visual search.
ZenPayroll, a three-year-old, San Francisco-based company that provides cloud-based payroll services to small- and medium-size businesses, has raised $20 million in Series A funding from General Catalyst Partners and Kleiner Perkins Caufield & Byers. In 2012, ZenPayroll raised $6.1 million in seed funding from a long line of individuals, including Dropbox co-founder Drew Houston and Box co-founder Aaron Levie.
We told you in January that 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, listed on an SEC filing as $100 million. They must be closing it up, because yesterday, the firm announced that it distributed more than $100 million in cash to investors last year. (The firm has raised roughly $350 million in its history.)
The hits came from Boulder Ventures Funds IV and V, and from portfolio companies BroadHop, Clarabridge, Linerate and Rally Software, specifically. BroadHop sold to Cisco for $75 million, giving Boulder Ventures a 4.3x return; Clarabridge was recapitalized by Summit Partners and General Catalyst Partners, providing Boulder with a 3.4x return; Linerate was told to F5, giving Boulder a 9.2x return; and Rally Software went public last April. Between the IPO and a secondary stock sale last July, Boulder saw an 8.5x return on its investment as of January’s end.
In separate news, yesterday in Sunnyvale, Ca, SK Telecom Americas, which represents the interests of Korea’s SK Telecom Co., launched its SKTA Innovation Accelerator to fund data center technologies. SKTA Innovation Accelerator will pair entrepreneurs with “strategic partners” and provide them with up to $1 million in combined funding, services and facilities. Learn more here.
A10 Networks, a 10-year-old, San Jose, Ca.-based maker of application delivery controllers, has registered with the SEC to raise up to $100 million in an IPO. The company’s principal shareholders include Summit Partners, which owns 19 percent of the company, and Mitsui & Co., which owns 12.8 percent. A10’s announcement follows that of Aerohive Networks, a wireless access point manufacturer that filed for a $75 million IPO last week.
The “Candy Crush” IPO is destined to be a heartbreaker, say numerous industry observers.
Sessions, a two-year-old, San Francisco-based personal coaching app, has been acquired by the health and fitness platform MyFitnessPal for undisclosed financial terms. Sessions had raised seed funding from Rock Health, Collaborative Fund, SV Angel and Australia’s Blackbird Ventures. MyFitnessPal, an 8.5-year-old, San Francisco-based company, has raised roughly $18 million over the years, including from Kleiner Perkins Caufield & Byers and Accel Partners.
Skyhook Wireless, an 11-year-old, Boston-based company that helps device makers and app developers determine location information based on a combination of Wi-Fi, GPS, cell towers and other signals, has been acquired by the cellular location company TruePosition for terms that aren’t being disclosed. Re/code has more about Skyhook, which has been involved in numerous lawsuits against Google over unfair competition and patent infringement.
WhatsApp, the 4.5-year-old, Santa Clara, Ca.-based cross-platform messaging company, has been acquired by Facebook for approximately $16 billion, including $4 billion in cash and approximately $12 billion worth of Facebook shares. The agreement also provides for an additional $3 billion in restricted stock units to be granted to WhatsApp’s founders and employees that will vest over four years after the deal closes. Sequoia Capital is the sole venture investor in WhatsApp and reportedly owns 19 percent of the company.
Uber VC John Doerr is nearly out of Google shares, but he’s been making a mint, selling them off. According to a new SEC filing, Doerr sold 11,774 shares of the stock on Tuesday, at an average price of $1,203.33, for a total value of $14.2 million. Doerr reportedly has just 340 shares in the company remaining, valued at roughly $400,000.
Tyler and Cameron Winklevoss have become such prominent advocates of Bitcoin that they’re taking their rebranding exercise to a whole new level with “Winkdex,” an index for Bitcoin price information. Forbes has more here.
General Assembly, a venture-backed educational company that offers startup classes on things like digital marketing, business fundamentals and tactics, and back-end web development, is offering up to 10 people a chance to explore the L.A. startup community — including meetings at NastyGal, FullScreen, YouTube Space, and The Honest Company. If you’re interested, register by Monday.
Private company valuations continue to soar, confirms a new survey out of the law firm Fenwick & West. According to its findings, 71 percent of the deals it saw in the fourth quarter were up rounds and just 16 percent were down rounds. Meanwhile, the average private company share price rose 57 percent, and the median share price increased 27 percent. Mark Boslet of peHUB has the details here.
Computer security giant Symantec is looking for a director of corporate development in Mountain View, Ca. More here.
Apple is patenting the ability to command your phone with a nod.
Big paydays on Wall Street often come under laser-like scrutiny, while Silicon Valley gets a pass on its own compensation excesses. Why the double standard?
Good news, fans of of “Matt Foley: Motivational Speaker”: Second City has just unearthed one of the first times it was performed by the sketch’s co-writers, Bob Odenkirk and Chris Farley.
Chris Chase of USA Today on the Russian hockey team’s performance yesterday: “Remember that Olympic ring that didn’t open at the Opening Ceremony? The hockey team losing in the quarters is like if four rings didn’t light up, then the one that did crashed to the ground, exploded and resulted in those cuddly mascots catching on fire. Russia’s collapse is the most disappointing Olympic result for a host nation in decades (if not ever).”
An electronic cigarette that’s also a Bluetooth headset for your phone (replete with completely amazing graphic). Who says innovation is dead?