Monthly Archives: March 2014

StrictlyVC: March 31, 2014

Hi, good Monday morning, everyone. No column today; StrictlyVC had family in town this weekend. But we’ll see you back here tomorrow with more good stuff. In the meantime, enjoy the intel below!

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Top News in the A.M.

Why bitcoin can no longer work as a virtual currency, according to Georgetown Law professor Adam Levitin.

dropcam_300x250_learn

New Fundings

Alignable, a two-year-old, Waltham, Ma.-based social network for local business owners, has raised $3.5 million in a partial close, shows an SEC filingSaturn Partners, a Boston-based venture capital firm, is among the company’s backers.

BandPage, a 3.5-year-old, San Francisco-based platform that helps musicians easily create websites that keep their fans informed, has raised $8.5 million in fresh funding, according to an SEC filing that lists a target of $9.2 million. Earlier investors in the company include Mohr Davidow PartnersWalden Venture CapitalNorthgate Capital and GGV Capital. The company has raised nearly $27 million to date, shows Crunchbase.

Breakout Labs, a 2.5-year-old, San Francisco-based nonprofit that’s financed by the Thiel Foundation and uses tax-free grants of up to $350,000 to jumpstart science companies, has a new partner. According to the San Francisco Business Times, NetScientific, a U.K.-based biomedical and health care tech investor, is pledging up to $250,000 in next-stage funding for Breakout Labs’ companies, beginning with a San Francisco-based diagnostics company called CytoValeMore here.

Capital Teas, a 6.5-year-old, Annapolis, Md.-based specialty tea company that sells online and through retail stores, has raised $5 million in Series A funding led by Pear Tree Partners in Massachusetts.

ClearStory Data, a three-year-old, Palo Alto, Ca.-based company whose tools are designed to allow users to conduct their own big data exploration, has raised $21 million in Series B funding led by DAG Ventures, with earlier investors Andreessen HorowitzGoogle VenturesKhosla Ventures and Kleiner Perkins Caufield & Byers participating. The round brings ClearStory Data’s total funding to $31.5 million.

Crossbar, a four-year-old, Santa Clara, Ca.-based memory technology company, has raised $25 million in Series C funding from new investors SAIF PartnersKorea Investment PartnersCBC-Capital and Tao Venture Capital Partners, along with earlier investors Artiman VenturesKleiner Perkins Caufield & ByersNorthern Light Venture Capital and the University of Michigan. The company has raised roughly $45 million to date.

Fluentify, a year-old, London-based videoconferencing language learning platform, has raised $410,000 in seed financing led by Stefano Marsaglia, former chairman of Barclays global financial institutions group and current co-head of Mediobanca investment bank. The company has raised $500,000 altogether, reports TechCrunch.

FTBpro, a three-year-old, London-based fan generated media platform for online soccer, has raised $18 million in new funding, including from Dawn Capital, an unnamed Asia-based media investor and earlier investors Battery Ventures and Gemini Israel Ventures. The company has raised $28.3 million altogether, according to Crunchbase. The company says that more than 1,700 contributors publish their analysis on the site and that millions of sports fans comment on their posts.

Handshake, a four-year-old New York-based maker of a sales order management app, has raised $8 million in Series A funding led byEmergence Capital Partners. Other participants in the round included BOLDstart VenturesPoint Nine Capital and seed backers MHS CapitalHigh Peaks Venture Partners and SoftTechVC. The company has raised $9.5 million to date.

Intime Retail, a 16-year-old, Beijing-based investment holding company that operates department stores throughout China, has agreed to sell a 35 percent stake in its business to Alibaba for $692 million; the two will form a joint initiative to focus on offline-to-online retail opportunities.

Kitchensurfing, a year-old, New York-based marketplace for private chefs to offer their services for in-home meals, has raised $15 million in Series B funding led by Tiger Global Management, with participation from earlier investors Union Square Ventures and Spark Capital. The company, which has raised $19.5 million to date, is a rare early-stage investment for Tiger Global, notes Fortune’s Erin Griffith in a piece about the new funding.

Lookback, a months-old Stockholm-based platform that enables developers to record onscreen activity to better understand bugs or other glitches, has raised $2.2 million in seed funding led by European investor LakestarIndex Ventures and numerous angels also participated in the round, says TechCrunch.

Sigfox, a 4.5-year-old, Labège, France-based cellular network that says it’s fully dedicated to low-throughput communication for connected objects, has raised $21 million in new funding from previous investors, including Intel CapitalPartechIxo Private Equity and Elaia Partners. New investors Idinvest Partners and BPIfrance also participated. GigaOm has more here. According to Crunchbase, the company has raised roughly $32 million to date.

Soar, a months-old, Los Altos, Ca.-based still-stealth company founded by Osman Rashid — who previously cofounded both Kno and Chegg — has raised $2 million in equity, shows an SEC filing. Kno, an e-learning startup, was acquired by Intel last November in what GigaOm characterized as a crash landing. Chegg, an online textbook rental company, went public last November.

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IPOs

Aerohive Networks, a 7.5-year-old, Sunnyvale, Ca.-based maker of Wi-Fi equipment and network management software, enjoyed a lukewarm reception by public market investors on Friday, its first day on the New York Stock Exchange. The company had sold 7.5 million shares for $10 a piece Thursday night; on Friday, shares sagged to $8.81 before closing the day at $9.99. The company’s biggest venture backers are Northern Light Venture CapitalLightspeed Venture PartnersNew Enterprise AssociatesKleiner Perkins Caufield & Byers, and DAG Ventures.

Everyday Health Media, a 14-year-old, New York-based operator of dozens of health-related websites, also closed slightly below its opening price on Friday, ending the day at $13.50 a piece from the shares’ offering price of $14. EveryDay Health had raised about $70 million over the years. According to its S-1, WF Holding Co. is its biggest shareholder, with 30 percent of the company. Meanwhile, Rho Ventures owns 25 percent; Scale Venture Partners owns roughly 8 percent; and Foundation Capital and NeoCarta Ventures hold stakes of around 6 percent. Asked by the WSJ if he was disappointed by the company’s first day performance, CEO Ben Wolin suggested the outlet “check the price in a couple of years.” But analysts worry such tepid receptions could signal a cooling off of what’s been the best start to new stock offerings since the dot-com boom of 2000, says a USA Today report.

Ulmart, a Russia-based e-commerce company that saw sales of $1.2 billion last year, is close to appointing advisers for a London IPO next year, says The Telegraph. The Amazon-style marketplace, which sells everything from consumer electronics to furniture, has overtaken the Russian search engine Yandex as Russia’s largest Internet business and is currently valued at between $2.5 billion and $3 billion, says the report.

Videology, a seven-year-old, Baltimore, Md.-based video advertising platform, hit revenue of $200 million last year and is “preparing” for a possible IPO next year, its CEO, Scott Ferber, tells Business Insider. The company has raised roughly $135 million to date, including from New Enterprise AssociatesValhalla PartnersQED InvestorsComcast VenturesPinnacle Ventures, and Catalyst Investors.

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People

Hedge fund titan Steven Cohen, head of the troubled hedge fund SAC Capital, has increased his stake in game maker Zynga to 5.3 percent, according to a regulatory filing flagged by Bloomberg. The stake is more than double the 2.2. percent SAC held at the end of last year. Zynga, whose shares closed at $4.42 on Friday, are up 16 percent this year.

Brendan Eich, a cofounder of the nonprofit Web organization Mozilla, was named its newest CEO last week, and his appointment isn’t sitting well with a lot of people. Three Mozilla board members resigned in protest, including venture capitalist John Lilly (himself a former Mozilla CEO), reports the WSJ. The trio had reportedly wanted Mozilla to a bring aboard a CEO from outside the organization. Meanwhile, some employees are also publicly protesting Eich’s appointment, noting that Mozilla “stands for openness and empowerment,” and that Eich had supported Proposition 8, which would have kept same sex couples in California from receiving the same rights as all other married couples.

Antoine Leblond, a longtime Windows executive, is leaving Microsoft after nearly 25 years at the company, reports Re/code. Leblond spent much of his career working closely with former Microsoft executive Steven Sinofsky, who left Microsoft in late 2012 and who is now partner at Andreessen Horowitz and an advisor to the cloud storage company Box, among other things.

After it was discovered that Box cofounder Aaron Levie owns just 4 percent of the online storage company — a pittance compared to Box’s venture investors — someone anonymously asked on Quora how Levie feels after “watching DFJ and USVP laugh to the bank after 10 years of sweat, blood, and tears.” Levie, who is widely known to have a healthy sense of humor, quickly took to the question-and-answer platform to answer: “So far, I have yet to bleed while building Box (well, one time I was late to a meeting and cut myself shaving). And honestly, if anyone is regularly bleeding while building a software company, I would have some serious questions about their strategy and if they’re executing properly. Definitely lots of tears and sweat though. Start your company because you want to change the world, and the rest is gravy.”

CNet cofounder Halsey Minor has again slashed the price of his Pacific Heights mansion in San Francisco. (Separately, it looks like Minor is getting into bitcoin; at least, he’s listed as a director of Bitreserve, a year-old bitcoin trading platform, on this SEC filing.)

In a “60 Minutes” episode that aired last night, super entrepreneur Elon Musk, the CEO of SpaceX and Tesla Motors, spoke candidly about his trajectory, which hasn’t exactly been a straight shot to the moon. “I remember waking up the Sunday before Christmas in 2008, and thinking to myself, ‘Man, I never thought I was someone who could ever be capable of a nervous breakdown,'” said Musk. “I felt this is the closest I’ve ever come, because it seemed…pretty dark.” Watch here.

Facebook CEO Mark Zuckerberg could try delivering Internet access to the developing world though aerial drones or, like Google, though fleets of balloons. He’s betting on drones, and he outlined why last week. GigaOm has the story.

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Happenings

This Saturday, the two-day IN3 conference kicks off in Dublin, Ireland. If you happen to be in the area, you can catch 40 early-, mid-, and late-stage med tech startups that are either looking for funding or, in some cases, to strike strategic partnerships.

Nokia is planning to hold a press event this week in San Francisco, alongside Microsoft‘s Build developers conference. More here.

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Job Listings

IAC is looking for an associate director/director in its M&A group. The job is in New York.

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Data

VCs are increasingly enthusiastic about ways to disrupt the commercial real estate market. At least two companies, Realty Mogul and RealCrowd, announced funding last week and according to CB Insights, investors plugged $429 million into 102 related deals last year — the majority of them seed-stage financings. Here’s a breakout of what’s going on.

Pitchbook‘s daily benchmark looks at the performance of the 23 U.S. fund-of-funds that raised between $250 million and $500 million and closed in 2007 and finds that their IRR right now is 7.98 percent. The top performers based on IRR are: Drum Special Situation Partners II,Hamilton Lane Private Equity Fund VI, and RCP Fund IV.

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Essential Reads

What’s it like for a fast-growing start-up to have Sequoia Capital as a major investor? Forbes, which interviewed many of its founders, just published the first part of its “start-up confidential” guide to working with the storied firm.

Neurosurgeons in the Netherlands are revealing that they successfully implanted a 3D printer skull to treat a 22-year old suffering from a bone disorder. The procedure took place three months ago; the patient has made a full recovery.

Big data’s challenge: Gain new insight without making the same old statistical mistakes.

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Detours

London is now home to 67 billionaires, beating out other cities as the top European destination for the superrich.

A campaign to “cancel” Colbert.

Secret rooms.

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Retail Therapy

The must-have corporate status symbol.

The “greatest hoodie ever made.” (And no longer on back order.)

AirDroids is developing a miniature helicopter drone that can carry a GoPro camera and follow a user by tracking the smartphone in his or her pocket. It isn’t the tech used in this amazing video (which was shot by a DIY helicopter and manually piloted), but the footage suggests very cool possibilities!

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StrictlyVC: March 28, 2014

Hey, hey, it’s Friday; time to partay. Have a great weekend, everyone, and we’ll see you back here next week with some new profiles, along with what may be the most interesting company that most of you don’t know. (Truly!)

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Top News in the A.M.

On Tuesday, the I.R.S. announced it would treat bitcoin as a property rather than a currency. Last night, Steven Englander, the chief foreign exchange strategist for Citigroup, sent out a note saying he believes the move might nudge virtual currencies toward becoming mainstream payment systems. Dealbook has more here.

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Bubba Murarka: We’e Underinvested as an Industry in Android

DFJ’s newest managing director, Bubba Murarka, knows a thing or two about mobile. He has numerous bets on mobile companies, both personal and professional; he blogs and closely follows the writings of top mobile analysts, including Horace Dediu; and, oh, yeah, he was the first product manager at Facebook to get behind Android. (StrictlyVC previously wrote about Murarka’s background, including his seven years at Microsoft, here.)

If you want to know about mobile trends, in short, you could do worse than talk with Murarka, which we did last week. Some outtakes from that conversation follow.

You’ve written that it’s no longer about iOS versus Android but which Android “versions” and “flavors” startups should get behind. Do you think the best days of the iOS are behind it?

There are two different ways to frame it – that it’s a zero sum game and only iOS or Android can win, or that both are important parts of the mobile ecosystem. I subscribe to the latter. But we’re underinvested as an industry in the Android portion of the ecosystem. Four out of five phones sold have Android on them. It’s an insanely big switch, and Android will be leaping to more and more types of devices. Google announced [last] week its new wearable platform. That means all wearables could conceivably run Android. Google announced at CES the Open Automotive Alliance, so they are porting the Android to the car. You can imagine over time that Android will be the defacto, default OS for everything. And in that world, you need to start — as a venture industry and startup community — making more bets on Android.

What’s the hold-up?

I think it’s harder in the Bay Area. I can count the number of Android phones I see carried in a day by entrepreneurs – it’s usually none. And I think it’s hard to imagine something that you don’t use every day. I do think there’s an underrepresented opportunity that startups are beginning to go after, but I’d say it’s still way less than 50 percent, which, to me, would seem reasonable.

You have a giant phone. Is this the future of smartphones? As importantly, where do you carry it?

I have a man purse. [Laughs]. No, it fits in my pocket. I have an Android phone and an iOS phone and got the [Samsung Galaxy] Note [to see how I’d use it]. And since getting it, I’m using my iPad a lot less because I don’t mind watching video on it.

If you look at where data consumption happens on mobile, more than 50 percent is video, so in that world, this bigger screen makes a lot of sense. [Taking into account] socioeconomic situations in other countries, where maybe they can’t afford to buy a phone and a tablet but one device, this also starts to make a lot more sense. You also get really crazy [good] battery life.

You’ve written about subscription opportunities over smart phones. What do you see coming?

Right now, people are pretty much subscribing to either storage or to music. I think communication apps are probably [going to become bigger and more capable of charging subscribers, too] like WhatsApp’s 99 cent [per year] model.

It wouldn’t surprise me to see others like game companies adopt that same kind of subscription model. So instead of offering in-app purchases, [they could] start to offer a dollar-per-month unlimited in-app purchasing. That creates a much more sustainable, predictable model. What happens if you just give everything to a user for 99 cents a month?

What about mobile multitasking? Do you see opportunities for startups to make that easier to do?

Android actually allows it. I can use two apps at the same time on my Note, though it’s a little clunky. There are rumors already about iOS 8 having some inner-app communication functionality, too, so I think there will be new ways to do it.

An opportunity I see specifically isn’t for a company to build an app themselves but rather to build their app to be embedded in other apps. Like, it would be interesting to me if Microsoft never shipped Office for iPad or iOS devices but rather shipped the Office Document Viewer; all of sudden, every app [would have] access to viewing and editing [in] a Microsoft Office doc, so now you [could] multitask within an application.

If you think about common problems that every app needs to solve, an interesting company is Layer [a communications platform that can be added to any mobile app by adding fewer than 10 lines of code]. It doesn’t have its own standalone messaging app; it’s messaging for other apps, all happening in the context of other apps. And that’s intensely powerful.

dropcam_300x250_learn

New Fundings

Indix, a three-year-old Chennai, India-based big data startup that’s indexing more than one billion consumer products, has raised $8.5 million in Series A funding from Avalon Ventures and Nexus Venture Partners. The company has raised $14.4 million altogether, according to DealCurry.

NeuMoDx Molecular, a year-old, Ann Arbor, Mi.-based molecular diagnostics company, has raised $10.5 million, according to an SEC filing that shows the company is targeting $21 million.

RealCrowd, a year-old, San Francisco-based online real estate platform that enables accredited investors to syndicate and invest in commercial real estate, has raised $1.6 million in funding from a long line of investors, including Y CombinatorDCVCPaul BucheitInitialized Ventures,Andreessen HorowitzMaverick Venture PartnersGeneral Catalyst Partners and private real estate operators.

Realty Mogul, a 1.5-year-old, Beverly Hills, Ca.-based online real estate platform that enables accredited investors to pool money and buy shares of investment properties, has raised a $9 million in Series A funding led by Canaan Partners. The WSJ has a good overview of the company here. It also writes on RealCrowd (see above), which is competing for the same users, here.

Reflexion Health, a 1.5-year-old, San Diego-based company that has developed a physical therapy digital health program, just closed $7.5 million in financing from the Gary and Mary West Health Investment Fund. The company has raised $11.8 million to date.

RuiYi, a 6.5-year-old, La Jolla, California-based developer of biologic therapeutics for China’s patients and healthcare system, has raised $15 million in series B financing from earlier investors 5AM VenturesVersant VenturesApposite CapitalSR One, which is the healthcare venture capital fund of GlaxoSmithKline; Merck Serono Ventures, which is the venture fund of Merck Serono, and Aravis SA.

Split, a months-old company whose location-based app helps people avoid potentially awkward encounters with people they’d rather not see, has raised a $1 million seed investment from a long line of investors, including Chris Burch, founder of the women’s apparel company C. Wonder. (You might recall another app that we wrote about last week, Cloak, that does the same thing.)

Sprig, a year-old, San Francisco-based food delivery service that delivers healthy meals to San Francisco customers’ doors, has raised $10 million in Series A funding from Greylock Partners, with Battery Ventures andAccel Partners participating. The company — whose executive chef, Nate Keller, was long the executive chef at Google — has raised $12 million altogether, reports Techcrunch.

TapValue, a 1.5-year-old, Paris-based ad platform that delivers ads to offline shoppers “on the right device at the right time and place,” has raised $2.2 million from an unnamed venture firm and numerous angel investors, the company tells TechCrunch.

ThreatMetrix, an 8.5-year-old, San Jose, Ca.-based maker of advanced fraud prevention software and services, has raised $20 million in Series E funding led by Adams Street Partners. All of the company’s earlier investors — which includes August CapitalUS Venture PartnersTenaya Capital, and Technology Venture Partners — also joined the round. The company has raised roughly $56 million to date, shows Crunchbase.

TrueVault, a months-old, Mountain View, Ca.-based HIPAA-compliant database as a service, has closed on $2.5 million in seed funding. Investors in the company, a recent Y Combinator graduate, include FundersClubPaul BuchheitGeneral Catalyst PartnersMaverick Venture PartnersKhosla Ventures, and the founders of the nonprofit Immunity Project.

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New Funds

Andreessen Horowitz, the five-year-old, Sand Hill Road firm, has officially closed its fourth fund with $1.5 billion in commitments, the firm announced yesterday in a blog post authored by managing partner Scott Kupor. The money comes in the form of a $1 billion early-stage fund and a $500 million later-stage fund for follow-on rounds, notes Fortune. To date, Andreessen Horowitz has raised $4.2 billion from its investors.

DFJ Growth, the late-stage arm of 29-year-old, Menlo Park, Ca.-basedDFJ, has closed its second fund with $405.3 million in commitments, according to an SEC filing first flagged by peHUB. Firm co-founder John Fisher is listed on the filing, along with Mark Bailey, Randall Glein and Barry Schuler.

The New Mexico State Investment Council has approved another $40 million for venture capital investments in local companies, reports the Albuquerque Journal. The capital will be invested out of the 6.5-year-old New Mexico Co-Investment Fund, which launched with $110 million and is managed by Sun Mountain Capital. A managing partner from Sun Capital, Brian Birk, tells the outlet that Sun has “been making, on average, about one investment per quarter from the co-investment fund…We’ll likely invest in about 10 more companies from this tranche of capital.”

SharesPost Investment Management has launched SharesPost 100, a fund that allows anyone to invest as little as $2,500 in what it promises are some of the best growth-stage private technology companies. The question, says the WSJ, is whether there’s room in the market for yet another late-stage investors. More here.

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IPOs

Aerohive Networks, a 7.5-year-old, Sunnyvale, Ca.-based developer of Wi-Fi equipment and network-management software, priced its IPO offering of 7.5 million shares at $10 per share yesterday, raising $75 million before beginning to trade this morning on the New York Stock Exchange. The company has raised more than $100 million from venture capitalists over the years; its biggest shareholders are Northern Light Venture Capital, which owned 21.8 percent of the company heading into the offering and sold off shares that bring its position to 18.1 percent; Lightspeed Venture Partners, which owned 20.3 percent and now 16.8 percent; New Enterprise Associates, which owned 13 percent and now 10.7; Kleiner Perkins Caufield & Byers, which owned 11.0 and now 9.1; and DAG Ventures, which owned 8.3 and now 6.9 percent.

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Exits

Readmill, a three-year-old, Berlin-based social and shareable reading platform is being acquired by Dropbox, says TechCrunch. Sources tell the outlet Dropbox is paying $8 million in mostly stock and that Readmill’s founders will move to San Francisco, where Dropbox is based.

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People

Anand Chandrasekaran, a search product leader at Yahoo who reportedly led the effort to integrate Yelp into Yahoo search, is leaving the company. He isn’t yet saying, and no one has leaked, what his plans are, says Re/code.

Rick Levin, Yale’s ex-president and now the new CEO of Coursera, tells Quartz why he isn’t worried that most of the people who take online courses drop out. “I think what’s much more relevant than completion rates is how many people that complete the first assignment actually finish the course. That’s 44%. The number that’s been circulated doesn’t do justice to what the actual process is.”

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Happenings

MacWorld rolls into its second day in San Francisco.

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Job Listings

Fontinalis Partners, a venture capital fund that invests in next-generation mobility, is looking for an associate with a few years of experience to join its team in Detroit. (StrictlyVC met with a couple of the firm’s partners recently; they’re assembling an interesting portfolio.)

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Data

Indian women are beginning to fuel e-shopping in the country, says the Times of India. Using information supplied to it by Accel Partners, it reports that women-led sales are projected to account for 35 percent of the overall Indian e-commerce market — estimated at $8.5 billion — by 2016. Accel points to mobile phone penetration as the driver. Last year, the Indian e-commerce market hit $2 billion, with female shoppers accounting for $511 million, or 26 percent of all sales.

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Essential Reads

Reuters takes a look at the growing number of venture-backed deals that Tiger Global has been leading in Silicon Valley.

That ‘Class C’ Google stock split is finally happening. Here’s what it means.

Veteran reporter George Anders walks readers through how Sequoia Capital judged one “baffling” startup when virtually nothing about its future was obvious.

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Detours

New York City’s population has hit a record high.

Get married; you’ll have fewer heart problems.

“[W]e need to modify the cult of overwork, in child rearing as well as in careers, to make room for highly educated women and their husbands to be more active citizens,” writes Marcia Angell, a senior lecturer at the Harvard Medical School, in the New York Review of Books.

Bane Cat.

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Retail Therapy

Aircraft-grade aluminum, stainless steel clip, sandblasted anodized finish. Pens, for tough guys.

Black skull candles.

Nothing says, “Hilarity awaits you,” quite like a moustache door mat.

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Bubba Murarka: “We’re Underinvested as an Industry in Android”

bubba_lifestyle_001DFJ’s newest managing director, Bubba Murarka, knows a thing or two about mobile. He has numerous bets on mobile companies, both personal and professional; he blogs and closely follows the writings of top mobile analysts, including Horace Dediu; and, oh, yeah, he was the first product manager at Facebook to get behind Android. (StrictlyVC previously wrote about Murarka’s background, including his seven years at Microsoft, here.)

If you want to know about mobile trends, in short, you could do worse than talk with Murarka, which we did last week. Some outtakes from that conversation follow.

You’ve written that it’s no longer about iOS versus Android but which Android “versions” and “flavors” startups should get behind. Do you think the best days of the iOS are behind it?

There are two different ways to frame it – that it’s a zero sum game and only iOS or Android can win, or that both are important parts of the mobile ecosystem. I subscribe to the latter. But we’re underinvested as an industry in the Android portion of the ecosystem. Four out of five phones sold have Android on them. It’s an insanely big switch, and Android will be leaping to more and more types of devices. Google announced [last] week its new wearable platform. That means all wearables could conceivably run Android. Google announced at CES the Open Automotive Alliance, so they are porting the Android to the car. You can imagine over time that Android will be the defacto, default OS for everything. And in that world, you need to start — as a venture industry and startup community — making more bets on Android.

What’s the hold-up?

I think it’s harder in the Bay Area. I can count the number of Android phones I see carried in a day by entrepreneurs – it’s usually none. And I think it’s hard to imagine something that you don’t use every day. I do think there’s an underrepresented opportunity that startups are beginning to go after, but I’d say it’s still way less than 50 percent, which, to me, would seem reasonable.

You have a giant phone. Is this the future of smartphones? As importantly, where do you carry it?

I have a man purse. [Laughs]. No, it fits in my pocket. I have an Android phone and an iOS phone and got the [Samsung Galaxy] Note [to see how I’d use it]. And since getting it, I’m using my iPad a lot less because I don’t mind watching video on it.

If you look at where data consumption happens on mobile, more than 50 percent is video, so in that world, this bigger screen makes a lot of sense. [Taking into account] socioeconomic situations in other countries, where maybe they can’t afford to buy a phone and a tablet but one device, this also starts to make a lot more sense. You also get really crazy [good] battery life.

You’ve written about subscription opportunities over smart phones. What do you see coming?

Right now, people are pretty much subscribing to either storage or to music. I think communication apps are probably [going to become bigger and more capable of charging subscribers, too] like WhatsApp’s 99 cent [per year] model.

It wouldn’t surprise me to see others like game companies adopt that same kind of subscription model. So instead of offering in-app purchases, [they could] start to offer a dollar-per-month unlimited in-app purchasing. That creates a much more sustainable, predictable model. What happens if you just give everything to a user for 99 cents a month?

What about mobile multitasking? Do you see opportunities for startups to make that easier to do?

Android actually allows it. I can use two apps at the same time on my Note, though it’s a little clunky. There are rumors already about iOS 8 having some inner-app communication functionality, too, so I think there will be new ways to do it.

An opportunity I see specifically isn’t for a company to build an app themselves but rather to build their app to be embedded in other apps. Like, it would be interesting to me if Microsoft never shipped Office for iPad or iOS devices but rather shipped the Office Document Viewer; all of sudden, every app [would have] access to viewing and editing [in] a Microsoft Office doc, so now you [could] multitask within an application.

If you think about common problems that every app needs to solve, an interesting company is Layer [a communications platform that can be added to any mobile app by adding fewer than 10 lines of code]. It doesn’t have its own standalone messaging app; it’s messaging for other apps, all happening in the context of other apps. And that’s intensely powerful.


StrictlyVC: March 27, 2014

Good Thursday morning, everyone!

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Top News in the A.M.

Twitter is turning into Facebook.

Pew has released a new “State of the News Media” report. Among its findings: 30 percent of U.S. adults get some of their news through Facebook, 10 percent through YouTube (which may be the biggest surprise), and 8 percent from Twitter.

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Chamath Palihapitiya: Don’t Get Left Behind (Again): Buy Bitcoin

Chamath Palihapitiya, a former Facebook executive who opened his own investment firm, Social+Capital Partnership, in 2011, wants all of us to get rich on bitcoin. Such was his repeated message yesterday during a sit-down with reporter Brad Stone at a packed bitcoin conference in San Francisco. In fact, he argued that everyone should have “1 percent” of their assets in the digital currency, so that when it appreciates even more wildly, most people won’t be left even further behind economically.

Of course, Palihapitiya has plenty of reasons to be evangelizing the importance of bitcoin. In fact, he has around 100,000 of them. (That’s roughly how many bitcoin Palihapitiya said he controls, and at a cost basis of less than $100. One bitcoin is worth $522 as of this morning.)

For readers who might have missed the discussion and want a better idea of Palihapitiya’s thinking, below are some of the arguments he made yesterday.

On investing directly in the currency, versus investing in mining hardware companies and the like:

“My background is in [electrical engineering], [some of the mining entrepreneurs I’d met with] didn’t even know what the [term] ‘tape out’ was…you know, I didn’t want to spend $20 million to $40 million to tape out a chip that could be obsolete by the time they got it out of the fab.

All along, I’ve been specific that I think bitcoin as a store of value has immense more ability to appreciate than any company necessarily. It doesn’t mean that investing in a company is bad; it just means that, if given the choice – and I have that flexibility [with Social+Capital] – I chose to just invest in the bitcoin.”

On how owning bitcoin “effects change,” which is partly the mission, Palihapitiya has said, of Social+Capital:

“It’s progressing a set of financial changes that fundamentally empower a distributed class and disadvantages entrenched interests, and from that perspective, I think we should absolutely want that type of thing to win. So when I specifically buy bitcoin, what I’m thinking to myself is: I’m using my own personal capital to hopefully prop up and support something that would rip apart the existing financial system, and if it does, God bless it.

What will happen is [that] individuals on the right side of history, on the right side of justice, will benefit. Individuals will be able to get access to capital easier…to transact cheaper..and not get cheated. Example: for those of us who are not white and weren’t born here, who send money back to a third world country, you will know there are thugs who stand outside these money depots and will basically charge you like a cover charge to go inside and get your [cash]. So when I send money to Sri Lanka, my uncle or my cousin may only get $70 because he has to [pay] just to get through the front door. And that’s bulls__t.”

On whether he’s optimistic about alternatives to bitcoin, like the payment service Ripple:

“No. That’s kind of like saying, ‘You’ve had a taste of the Internet; [now] I’d like you to go back to these AOL chat rooms.’ It’s like, who cares. Let’s focus our energy on the thing that’s [most likely to make it] …Fundamentally, people are just arbitraging a trend. I think it’s fine if some people can speculate and make some money off it. Whatever. But the overwhelming majority of our money and time and intellectual horsepower should be allocated to bitcoin … because it has the chance.”

On whether there were growth patterns at Facebook that Palihapitiya is seeing replicated with bitcoin:

“Absolutely. One of the projects I worked on very early on [at Facebook] was our platform, and we had a way of looking at our platform API usage to kind of think about what was happening in the ecosystem as a corollary to what would happen to our user growth. And [at Social + Capital] we’ve been doing a lot of that same analysis here, and we see a lot of similar patterns [with bitcoin], and we think that’s really constructive. When you look at bitcoin and its distributed use [and the numbers of developers writing to it], it’s really impressive.”

On future plans:

“I’d like to buy more…Honestly, it’s probably the single biggest high beta investment opportunity of all. That’s why I really think it should be owned by as many people as possible, because if we look back, 30 years [from now] and these things are a million [dollars] a coin, I think it would be better if many people had shared in that appreciation instead of a few. That’s why I’m evangelical about it … We should all participate in this upside. Because I think it’s going to happen, and what shouldn’t happen is that a few should control all [of it].”

dropcam_300x250_learn

New Fundings

AppGyver, a three-year-old, San Francisco-based HTML5-centric development platform for quickly building mobile apps, has raised $2.5 million in funding led by Initial Capital of London, with participation fromOpen Ocean Capital, based in Helsinki.

BlueVine, a year-old, Palo Alto-based small business financing startup that just launched its beta service, has raised $4 million in new funding led by Lightspeed Venture PartnersGreylock ILCorrelation VenturesKreos Capital, and Kima Ventures.

Circle Internet Financial, a year-old, Boston-based company that’s trying to increase the mainstream adoption of digital currencies like Bitcoin through its payment platform for consumers and merchants, has raised $17 million in Series B funding investors that include Breyer CapitalAccel PartnersGeneral Catalyst PartnersPantera Capital, and Barry Silbert, founder and CEO of SecondMarket. Oak Investment Partners also participated in the funding, which brings the company’s total capital to $26 million.

Embrane, a five-year-old, Santa Clara, Ca.-based company that provides application-centric network services to its customers, has raised $14 million in Series C funding led by Cisco. The round also includes new investor Presidio Ventures and earlier investors Lightspeed Venture PartnersNew Enterprise Associates and North Bridge Venture Partners. The company has raised $41 million to date.

Everest Edusys, a three-year-old, Chennai, India-based venture focused on experiential science education for children from all income levels, has raised Series A funding of Rs 5.7 crore led by Lok Capital, with Chennai Angels participating. The Times of India says the capital will be used to set up state-of-the-art science labs in schools across Tamil Nadu, Karnataka and Kerala, as part of Everest’s plans to take science to poorer communities.

FlexMinder, a three-year-old, Seattle-based company that automates the healthcare reimbursement process, has raised $1.2 million in funding, including from WRF CapitalFounders Co-opAOARudy Gadre and Walt Winshall. The company has raised about $2.8 million altogether, shows Crunchbase.

GoCoin, a nine-month-old Singapore-based international payment platform for digital currencies, has raised $1.5 million in Series A funding led by Bitcoin Shop and former Facebook COO Owen Van NattaCrypto Currency Partners also participated in the round, along with individual investors Andrew Frame, who founded Ooma; TV producer David Neuman; and others.

High Fidelity, a year-old, San Francisco-based stealth virtual reality startup from Second Life founder Philip Rosedale, just raised $2.5 million, shows a new SEC filing. The round appears to bring the company’s funding to $6.45 million, per Crunchbase’s records. Its investors to date include True VenturesGoogle VenturesKapor Capital, and Linden Lab (the company behind Second Life).

HourlyNerd, a year-old, Boston-based company that connects MBA students and alumni to companies that need temporary or occasional help, has raised an undisclosed Series A round of financing. As part of the deal, says the Boston Herald, Dan Nova of Highland Capital Partners will join the board of directors, and Bill Helman of Greylock Partners will be named a key adviser. Last year, HourlyNerd raised $750,000 in seed funding, including from billionaire Mark Cuban.

LanzaTech, an 8.5-year-old, Roselle, Il.-based gas fermentation technology business that was was launched in Auckland, New Zealand, has raised $60 million in Series D funding led by Mitsui & Co, with participation from Siemens Venture Capital, and CICC Capital. Earlier investors also joined the round, including Khosla VenturesQiming Venture PartnersK1W1 and the Malaysian Life Sciences Capital Fund. The company has raised $119 million to date, shows Crunchbase.

LeanData, a two-year-old, Sunnyvale, Ca.-based startup focused on lead management software, has raised $5.1 million in Series A funding led by Shasta Ventures. Other participants in the round included Felicis VenturesCorrelation Ventures and the Funders Club.

LiveSafe, a two-year-old, Arlington, Va.-based mobile safety technology that connects users with safety officials through a real-time, two-way communication system, has received $6.5 million in Series A funding led by IAC.

Ometria, a year-old, London-based ecommerce intelligence startup, has received $1.5 million in seed funding from a long line of individual investors, including Huddle co-founders Alastair Mitchell and Andy McLoughlin.

Payward, a 2.5-year-old, San Francisco-based company that runs an alternative coin exchange called Kraken, has raised $5 million in Series A funding led by the European venture firm Hummingbird Ventures. Other investors include SecondMarket founder Barry Silbert. Kraken’s platform, writes TechCrunch, supports margin trading, advanced ordering, fast deposits and withdrawals through a partnership with the German online bank Fidor Bank.

scPharmaceuticals, a year-old, Lexington, Ma.-based company that’s developing pharmaceutical products for subcutaneous delivery, has raised $16 million in Series A funding co-led by 5AM Ventures and Lundbeckfond Ventures.

SmartAsset, a two-year-old, New York-based technology platform that promises to provide instant, personalized answers to complex financial questions, has raised $5.2 million in Series A funding led by Javelin Venture Partners, with participation from SV Angel and individual investors.

TakeLessons, a 7.5-year-old, San Diego-based online marketplace for finding private instructors, has raised $7 million in Series C funding led by Lightbank, with participation from earlier investors Crosslink Capital,SoftTech VC, and Triangle Peak Partners. New investor Moore Venture Partners, also participated in the round, which brings the company’s total funding to $11.8 million, shows Crunchbase.

TinderBox, a 3.5-year-old, Indianapolis, In.-based maker of sales workflow software, has raised $3 million in Series C funding led by Allos Ventures, with participation from Hyde Park Venture Partners and existing investors. The company has raised $4.3 million to date.

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New Funds

TV Capital, a 16-year-old, financial-tech-focused, growth equity firm with offices in San Francisco and New York, has closed a $700 million fourth fund, FTV IV. The firm says it was initially targeting $500 million. Among its newest portfolio companies is World First UK Limited, a London-based maker of foreign exchange, international payment and hedging software, which closed a minority growth investment led by FTV, with participation from Industry Ventures and StepStone Group, last November.

Noesis Energy, a 4.5-year-old, Austin, Tex.-based company whose software helps commercial and industrial customers measure and compare energy consumption, has raised a $30 million fund to to help finance the energy efficiency projects of its customers, reports TechCrunch. Noesis will be writing checks ranging from $300,000 to $1 million. The company isn’t yet disclosing who is behind its new debt vehicle. Noesis, which is backed by Austin Ventures and Black Coral Capital, has itself raised $20.5 million in two rounds of funding since its launch.

Nyca Partners, a new venture firm founded by former Visa president Hans Morris, has sprung up to invest in financial technology startups, reports peHUB. Morris, who is investing his own money for now, expects to invest $10 million to $15 million a year in startups focused on merchant payments services, alternative credit networks and tools, and financial services infrastructure. Nyca already has five startups in its portfolio through both direct investments and equity that Morris has received as a board member. They include Lending ClubCardWorksGlobal AnalyticsAffirm and one stealth company. Before Visa, Morris spent 27 years at Citigroup and its predecessor companies in numerous operating and management roles, including as CFO.

—–

IPOs

King got crushed yesterday — though it could have been worse. The company behind the game “Candy Crush Saga” debuted on the New York Stock Exchange yesterday with its shares priced at $22.50 a piece. They closed the day at $19.

Spotify could take itself public some time in the fall of 2014, reports Quartz, saying the six-year-old music-streaming company has “participated in informal chats with some of the investment banks likely to fight for a role in a potential IPO” and that it “may start holding formal meetings as early as next month in anticipation of an offering in autumn.”

TubeMogul, a 6.5-year-old, Emeryville, Ca.-based video ad platform, filed its S-1 yesterday, disclosing plans to raise up to $75 million in an IPO . TubeMogul has raised more than $50 million in funding. Its biggest shareholders include Trinity Ventures (which owns 26.5 percent of the company prior to the IPO), Foundation Capital (22.7 percent), andNorthgate Capital.

—–

Exits

It’s official. Social score startup Klout has been acquired by Lithium Technologies, a provider of social customer experience solutions for the enterprise, in a deal valued at nearly $200 million, reports Fortune.

—–

People

Forbes released its annual Midas List of top venture capitalists yesterday. Sequoia Capital’s Jim Goetz nabbed the top spot, after WhatsApp’s sale to Facebook for $19 billion. In descending order, Forbes ranked Marc Andreessen of Andreessen Horowitz second, Benchmark’s Peter Fenton third, Peter Thiel of Founders Fund fourth, Jim Breyer of Accel Partners fifth, Sequoia’s Doug Leone sixth, Greylock Partners’ Reid Hoffman seventh, Steve Anderson of Baseline Ventures eighth, Paul Madera of Meritech Capital Partners ninth, and Scott Sandell of New Enterprise Associates tenth. TechCrunch breaks down the list a bit more here.

Venture capitalist Tim Draper says he is getting “close” to collecting the necessary 800,000 signatures needed to get his “Six Californias” measure before state voters in 2014 — even while his own internal polling shows Silicon Valley is opposed to the idea of splitting the state into six parts. “It’s bizarre,” he tells the San Francisco Chronicle.

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Happenings

It’s the second and final day of the Ad: Tech conference in San Francisco. Learn more here.

—–

Job Listings

Apple has re-posted a listing for a corporate development analyst to help evaluate and execute on acquisitions and partnerships.

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Essential Reads

Gamers and developers do not approve of Oculus VR‘s sale to Facebook, with some would-be Oculus developers pledging to cancel their orders for the company’s latest development kits. (Oculus VR’s earliest supporters on Kickstarter aren’t too excited about the outcome, either, evidently.)

Which is more terrifying: Facebook or Google?

Sequoia Capital “doesn’t display its heritage with the well-heeled pride you might find at other top-tier venture firms, let alone the likes of JPMorgan or KKR. At Sequoia the historic IPO filings are crammed into drab, drugstore-quality frames. Sequoia partners don’t enjoy luxurious private offices; instead they toil at stand-up desks in a big open hall. Conference rooms are adorned with cheap plastic wastebaskets. It’s as if Sequoia’s partners haven’t fully realized that they might be rich.”

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Detours

Eight things you never knew your iPhone’s headphones could do.

musical experiment that turns happy songs into sad ones and vice versa.

The least valuable college degrees.

—–

Retail Therapy

 

Go old school with this cool Bell Bullitt motorcycle helmet.

 

A tricycle, for grown-ups.

—–

To sign up for StrictlyVC, click here. To advertise, click here.

 


Chamath Palihapitiya: Don’t Be Left Behind (Again); Buy Bitcoin

Chamath PalihapitiyaChamath Palihapitiya, a former Facebook executive who opened his own investment firm, Social+Capital Partnership, in 2011, wants all of us to get rich on bitcoin. Such was his repeated message yesterday during a sit-down with reporter Brad Stone at a packed bitcoin conference in San Francisco. In fact, he argued that everyone should have “1 percent” of their assets in the digital currency, so that when it appreciates even more wildly, most people won’t be left further behind economically.

Of course, Palihapitiya has plenty of reasons to be evangelizing the importance of bitcoin. In fact, he has around 100,000 of them. (That’s roughly how many bitcoin Palihapitiya said he controls, and at a cost basis of less than $100. One bitcoin is worth $522 as of this morning.)

For readers who might have missed the discussion and want a better idea of Palihapitiya’s thinking, below are some of the arguments he made yesterday.

On investing directly in the currency, versus investing in mining hardware companies and the like:

“My background is in [electrical engineering], [some of the mining entrepreneurs I’d met with] didn’t even know what the [term] ‘tape out’ was…you know, I didn’t want to spend $20 million to $40 million to tape out a chip that could be obsolete by the time they got it out of the fab.

All along, I’ve been specific that I think bitcoin as a store of value has immense more ability to appreciate than any company necessarily. It doesn’t mean that investing in a company is bad; it just means that, if given the choice – and I have that flexibility [with Social+Capital] – I chose to just invest in the bitcoin.”

On how owning bitcoin “effects change,” which is partly the mission, Palihapitiya has said, of Social+Capital:

“It’s progressing a set of financial changes that fundamentally empower a distributed class and disadvantages entrenched interests, and from that perspective, I think we should absolutely want that type of thing to win. So when I specifically buy bitcoin, what I’m thinking to myself is: I’m using my own personal capital to hopefully prop up and support something that would rip apart the existing financial system, and if it does, God bless it.

What will happen is [that] individuals on the right side of history, on the right side of justice, will benefit. Individuals will be able to get access to capital easier…to transact cheaper..and not get cheated. Example: for those of us who are not white and weren’t born here, who send money back to a third world country, you will know there are thugs who stand outside these money depots and will basically charge you like a cover charge to go inside and get your [cash]. So when I send money to Sri Lanka, my uncle or my cousin may only get $70 because he has to [pay] just to get through the front door. And that’s bulls__t.”

On whether he’s optimistic about alternatives to bitcoin, like the payment service Ripple:

“No. That’s kind of like saying, ‘You’ve had a taste of the Internet; [now] I’d like you to go back to these AOL chat rooms.’ It’s like, who cares. Let’s focus our energy on the thing that’s [most likely to make it] …Fundamentally, people are just arbitraging a trend. I think it’s fine if some people can speculate and make some money off it. Whatever. But the overwhelming majority of our money and time and intellectual horsepower should be allocated to bitcoin … because it has the chance.”

On whether there were growth patterns at Facebook that Palihapitiya is seeing replicated with bitcoin:

“Absolutely. One of the projects I worked on very early on [at Facebook] was our platform, and we had a way of looking at our platform API usage to kind of think about what was happening in the ecosystem as a corollary to what would happen to our user growth. And [at Social + Capital] we’ve been doing a lot of that same analysis here, and we see a lot of similar patterns [with bitcoin], and we think that’s really constructive. When you look at bitcoin and its distributed use [and the numbers of developers writing to it], it’s really impressive.”

On future plans:

“I’d like to buy more…Honestly, it’s probably the single biggest high beta investment opportunity of all. That’s why I really think it should be owned by as many people as possible, because if we look back, 30 years [from now] and these things are a million [dollars] a coin, I think it would be better if many people had shared in that appreciation instead of a few. That’s why I’m evangelical about it … We should all participate in this upside. Because I think it’s going to happen, and what shouldn’t happen is that a few should control all [of it].”

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


StrictlyVC: March 26, 2014

Good morning, everyone! Is it really just Wednesday? Crikey.

—–

Top News in the A.M.

Facebook’s deal to buy the virtual reality headset maker Oculus VR for $2 billion happened “relatively quickly and the negotiations were hammered out over the last five days during the industry’s Game Developer Conference in San Francisco,” reports TechCrunch.

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Riding the Hardware Wave, Lemnos Labs Raises a $20 Million Fund

Lemnos Labs, a hardware accelerator in San Francisco, is taking the wraps off a new, $20 million fund this morning. It’s quite an accomplishment. Three years ago, when founders Jeremy Conrad and Helen Zelman pitched investors on the idea of a hardware incubator, they were brushed off time and again.

Then the pair, both M.I.T.-trained mechanical engineers, sat down with AngelList’s Naval Ravikant. “We got in front of him, and he said, ‘I love this, and I’m going to introduce you to other people,’” recalls Conrad. “And of course, because it’s Naval, it was like a 15-minute long discussion so he could get to another meeting.”

It was long enough. After raising $1.85 million from investors to launch Lemnos Labs, Conrad and Zelman have spent the last two years investing $50,000 to $100,000 in promising teams, the first 10 of which have gone on to raise over $35 million in funding. One is Airware, which makes logic boards, sensors and actuators for drones; another is Local Motion, a company whose device helps enterprises manage their fleet of vehicles. Andreessen Horowitz led the funding of both.

I recently stopped by Lemnos’ new 8,000-square warehouse — a former fish factory — to learn from Conrad what’s next.

You have a new fund, and a new partner, Eric Klein, a former entrepreneur-in-residence who you promoted in February. Have the three of you begun investing the new fund?

We started investing a few months ago, and we’ve made three investments, one of which is still stealth. The first, Ceres, is a drone company that monitors crops. The other is 6Sensor, which is building a handheld device that you can use to test food for gluten and that will eventually test dairy, shellfish, and peanuts.

You’ll be writing bigger checks, in the range of $100,000 to $250,000. What kinds of companies will you back?

We focus on five areas. About 20 percent is in aerospace: we’ve already [backed] three drone-related companies and a satellite company. Watching the growth in those areas over the last two years has been phenomenal. Robotics is also a big focus area for us, as is the “Internet of things,” transportation, and general consumer electronics.

Is there any hardware sector you’d actively avoid investing in because it’s overdone?

One area that’s pretty overheated right now is wearables, and wearables that are narrowly focused. Also, fashion tech. There’s some stuff that’s interesting, but we’ve seen a bunch of applications for things like clothes that light up.

A couple of years into this, what patterns are you starting to see? What’s a common mistake young hardware startups make?

One mistake centers on brand, interestingly. This is [advice dating back to] Proctor & Gamble, but brand is everything, and if you pick the wrong brand, and it’s too small of a target market, you can’t get the traction you need to get further funding.

Take Jawbone, which is almost a meaningless brand but [has come to represent] quality. It has this huge market because basically everybody can buy from it. But startups often make branding choices early on that limit their market size. If you go to a venture capitalist and say, “Every skater in the world want this,” the investor’s question is going to be: “Okay, but are there enough skaters in the world to [rationalize this investment]?

Also, there’s almost this mythology that you do this prototype, and it goes to China and gets manufactured. People always undervalue how much on-the-ground work you need to do in China to ensure your product meets your quality standards and that you’ve done the right testing.

How are you helping them solve those issues?

We have a set of contract manufacturers who we feel work well with startups. We also make [our startups] do a product requirements document, which gets really into the details of not just design for manufacturability but also design for usability. We have a company, Bia, that does a sports watch for female triathletes, and at the end of the day, it has to go into salt water and to survive cold and heat. It’s very different than 6Sensors, which will go in a pocket or purse. There’s no expectation that I can dunk [its product] in salt water for 45 minutes and that it will still work.

How have you gone about forming the kinds of relationships with investors that help ensure your companies get seen?

It’s just good old-fashioned hustle. I spent a year going to every event I could possibly attend and hustling everyone and convincing them that we’re interesting enough to visit. After you get traction, you get more introductions. And after Airware’s funding happened, a couple of VCs who hadn’t responded to emails were definitely like, “I don’t know how I missed [your note], I’d love to come by.” [Laughs.]

dropcam_300x250_learn

New Fundings

Ahonya.com, an 18-month-old, Ghana-based online shopping platform, has raised an undisclosed amount of seed funding led by Rio Technology Partners, a Dubai-based investment firm. Rio was joined by the Nairobi-based Savannah Fund, along with other unnamed investors.

Assay Depot, a seven-year-old, San DIego-based marketplace for scientific services, has raised $3 million in Series B financing led by Bootstrap Venture Fund. The company has raised $6.5 million altogether, shows Crunchbase.

Axonics Modulation Technologies, an Irvine, Ca.-based developer of implantable neuromodulation technology, has raised a $32.6 million Series A round. Edmond de Rothschild Investment Partners of Paris, was the lead investor. Other participants in the round included Geneva-based NeoMed Management; Beijing-based Legend Capital, a venture capital arm of Legend Holdings; and a select group of private individuals.

CircleUp, a three-year-old, San Francisco-based equity-based crowdfunding platform, has raised $14 million in Series B funding led byCanaan Partners, with additional investment from Google Ventures,Union Square VenturesMaveron and Rose Park Advisors. The company has raised $23 million altogether.

Clio, a 6.5-year-old, Vancouver-based legal practice management software has raised $18 million in Series C funding led by Bessemer Venture Partners with participation from Acton Capital PartnersPoint Nine Capital, and new investor Version One Ventures.

EnVerv, a five-year-old, San Jose, Ca.-based fabless semiconductor company, has raised $15.4 million in Series C funding from Cassiopeia Capital PartnersCiscoUMC Capital and existing investors Benchmark CapitalNEA and Walden International. The company has raised $27.4 million altogether, shows Crunchbase.

Forter, a new, Tel Aviv, Israeli-based startup that real-time fraud prevention software, has raised $3 million in Series A funding from Sequoia Capital.

LiquidHub, a 14-year-old, Wayne Pa.-based systems integration and technology consulting company, has raised $53 million in Series B funding led by ChrysCapital. The company has raised $75 million altogether, shows Crunchbase, including from PPM America Capital PartnersNewSpring Capital, and Credit Suisse.

Locish, a year-old, Athens, Greece-based Q&A mobile app, has raised $820,000 in seed funding led by the Athens venture firm Odyssey Jeremy Partners. The Athens-based seed-stage firm OpenFund also participated, along with unnamed individual investors from Silicon Valley.

NeuroPhage Pharmaceuticals, a 7.5-year-old, Cambridge, Ma.-based biotechnology company, has raised $17 million in Series D financing from (undisclosed) existing and new investors to advance its newest drug, which aims to treat a wide range of neurodegenerative diseases like Alzheimer’s disease, Parkinson’s disease, and Huntington’s disease.

Nuji, a 2.5-year-old, London-based fashion and lifestyle e-commerce site, has raised $2 million in seed funding from early-stage investors The Accelerator GroupSamos InvestmentsSeedcamp and various undisclosed angel investors.

RelateIQ, a 2.5-year-old, Palo Alto-based big-data startup, has raised a $40 million Series C round led by Redpoint Ventures, with Kleiner Perkins Caufield & ByersFelicis Ventures, and News Corp participating. RelateIQ helps businesses and employees track client relationships by analyzing numerous communication streams in real-time.

Tactile, a new, Redwood City, Ca.-based enterprise company that aims to automatically synchronize email, calendar, tasks, Salesforce data, LinkedIn contacts, Twitter and other functions for salespeople, has raised $11.2 million in Series A funding from Redpoint Ventures and Accel Partners.

TouchBistro, a 2.5-year-old, Toronto-based point-of-sale application for restaurants, has raised a second tranche of seed funding from Walden Venture Capital and Kensington Capital. The company, which raised its first round from Relay Ventures, has now raised roughly $6 million to date.

Vend, a 5.5-year-old, Auckland, New Zealand-based Web-based point-of-sale and retail management software company, has raised $20 million in Series B funding from Peter Thiel’s Valar Ventures, as well as the Australian venture firm Square Peg Capitalreports TechCrunch. Vend has now raised about $30 million altogether.

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New Funds

OneVentures, a seven-year-old, Sydney, Australia-based firm that makes early-stage bets on technology companies based in Australia, has begun raising a second, $100 million fund, according to Financial Review of Australia. The firm looks for companies that are already making $5 million to $15 million in annual revenues, with a proven ­business and active customers.

The University of New Mexico is looking to raise a $1 million fund to invest up to $100,000 in startup companies working to take UNM inventions to market, reports the Albuquerque Journal. The UNM Foundation and the directing board of the Science and Technology Corp., which manages UNM’s technology commercialization, agreed to create the fund if regents approve it.

—–

IPOs

Ariosa Diagnostics, a six-year-old, San Jose, Ca.-based molecular diagnostics company whose DNA test detects common fetal trisomies as early as 10 weeks with a simple blood draw, has filed with the SEC to raise up to $69 million in an IPO. The company raised a $52.7 million round fromVenrockDomain Associates, and Meritech Capital Partners in 2012; they now own 39.1 percent, 24 percent, and 9.4 percent of the company, respectively, shows Ariosa’s prospectus. Another entity, FMR, owns another 6.5 percent of the company.

King Digital Entertainment, the mobile and social game developer, largely due to the wild success of Candy Crush Saga, has raised $500 million by offering 22.2 million shares (30 percent of them insider shares) at $22.50, the midpoint of it price range, says Renaissance Capital. The company’s fully diluted market cap as of last night was $7.5 billion, with enterprise value of $6.9 billion, making it the highest valued pure-play game developer in the world, with an enterprise value only 14 percent below Electronic Arts, notes Renaissance. Apax Partners owns 48.2 percent of King; Index Ventures owns another 8.3 percent.

—–

Exits

Edison Ventures announced yesterday that it has exited JTH Holding, the parent company of Virginia Beach, Va.-based Liberty Tax Service, of Virginia Beach, Va. Edison had invested $3.3 million in Liberty Tax before it listed on the Nasdaq in the summer of 2012; the investment generated a return of “just under 14x” for Edison.

Facebook announced yesterday that it’s acquiring the virtual reality technology company Oculus VR for $2 billion, including $400 million in cash and roughly 23 million shares of Facebook common stock. The agreement also provides for an additional $300 million earn-out in cash and stock based on certain milestones. Facebook CEO Mark Zuckerberg explained the unexpected move in a Facebook post, writing, “After games, we’re going to make Oculus a platform for many other experiences. Imagine enjoying a courtside seat at a game, studying in a classroom of students and teachers all over the world or consulting with a doctor face to face — just by putting on goggles in your home.” Oculus had raised $93.4 million from Spark CapitalMatrix PartnersFounders FundFormation 8Big Ventures, and Andreessen Horowitz.

KnowledgePath, a 3.5-year-old, Boston-based firm that focuses on integrating companies’ e-commerce storefronts with the back-end systems, was acquired yesterday by DMI, a Bethesda, Md.-based enterprise mobility company. The purchase price was $22 million, reports Fortune.

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People

Frank FrankovskyFacebook’s vice president of hardware design and supply chain optimization, who helped oversee the development and growth of the company’s custom server effort, has left the company to form an optical storage startup. GigaOm has the story.

David Karp, the founder and chief executive of Tumblr, sold his company to Yahoo for $1.1 billion last year and now he’s plugging some of his proceeds into New York-based startups, reports the WSJ. He recently invested $500,000 in Sherpaa, whose app connects employees to physicians; another investment is Superpedestrian, whose device helps turn regular bikes into hybrid electric ones. Lest other entrepreneurs get the wrong idea, Karp tells the outlet that he’s “not trying to become an angel investor. And I have no aspiration to become a venture capitalist. But insofar as I can give to this community, to support my friends, I’m very happy to.”

Uri Levine, a cofounder of the map software startup Waze, which sold to Google for $1.1 billion last year, has started a new company called FeeX in New York. According to Bloomberg, the company’s mission is shedding light on hidden financial fees, which cost Americans roughly $600 billion annually and can eat up as much as 30 percent of a person’s retirement savings. More here.

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Happenings

If you want more news and views about bitcoin, you’re in luck. CoinSummit rolls into it second and final day this morning in San Francisco. You can find the agenda here and watch a live stream of the event here.

Also, Money2020, a five-day conference “dedicated to innovations in money,” announced yesterday that it has lined up Cameron and Tyler Winklevoss as keynote speakers. You can learn more about the event, held in Las Vegas in early November, here.

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Data

Bloomberg Beta, the venture fund that counts Bloomberg as its sole LP, recently teamed up with data platform Mattermark for an interesting project: to predict who, based on geography, work experience, and proximity to other startups and founders (among other things), might be inclined to start a company at some point in their lives. As Mattermark co-founder and CEO Danielle Morrill writes about the effort: “The goal of the project was to use big data, machine learning, and public sources of data to answer the following question: Who are the people who have not yet started a venture-backed company, who are most likely to start one?”

Whether or not you believe it possible to target future founders — or if it’s even worthwhile to try — Mattermark’s research, which spanned 1.5 million people connected to tech startups, produced some unexpected findings, says Morrill. Among them: that only 15 percent of venture-backed founders have a computer science degree and that working for the same company for a long time, even a decade, in no way diminishes one’s likelihood of becoming a founder.

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Essential Reads

Late last week, TechCrunch founder Michael Arrington wrote that he was “nearly certain” Google once hacked into his email to root out the source of a Google-related piece he’d written. Now Google is responding to the allegation directly.

Caught in what seems like an unending economic crisis, a growing number of Greeks are taking matters into their own hands and starting their own companies, reports the New York Times.

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Detours

Base jumping off One World Trade Center.

Fun with old album sleeves.

A new use for unmanned aerial vehicles: pulling out baby teeth.

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Retail Therapy

Emoji-inspired slippers.

For just $3,000, your very own “social media concierge” will make your wedding as nauseatingly public as possible. Services include “live tweeting the wedding and reception,” “curating a unique wedding hashtag,” and gently encouraging guests to “utilize the hashtag and handles” before posting all their selfies to social media. It is your special day, after all.

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Random Update

Yesterday, StrictlyVC suggested that you to treat yourself to a slingshot. Do not do this if you live in New Jersey, where they are considered unlawful weapons and “the penalty is imprisonment for not more than 18 months,” per one of our favorite attorney readers. (He adds that you can buy a crossbow as long as you’re 18, no license or permit necessary!)


Riding the Hardware Wave, Lemnos Labs Raises $20 Million Fund

Lemnos teamLemnos Labs, a hardware accelerator in San Francisco, is taking the wraps off a new, $20 million fund this morning. It’s quite an accomplishment. Three years ago, when founders Jeremy Conrad and Helen Zelman pitched investors on the idea of a hardware incubator, they were brushed off time and again.

Then the pair, both M.I.T.-trained mechanical engineers, sat down with AngelList’s Naval Ravikant. “We got in front of him, and he said, ‘I love this, and I’m going to introduce you to other people,’” recalls Conrad. “And of course, because it’s Naval, it was like a 15-minute long discussion so he could get to another meeting.”

It was long enough. After raising $1.85 million from investors to launch Lemnos Labs, Conrad and Zelman have spent the last two years investing $50,000 to $100,000 in promising teams, the first 10 of which have gone on to raise over $35 million in funding. One is Airware, which makes logic boards, sensors and actuators for drones; another is Local Motion, a company whose device helps enterprises manage their fleet of vehicles. Andreessen Horowitz led the funding of both.

I recently stopped by Lemnos’ new 8,000-square warehouse — a former fish factory — to learn from Conrad what’s next.

You have a new fund, and a new partner, Eric Klein, a former entrepreneur-in-residence who you promoted in February. Have the three of you begun investing the new fund?

We started investing a few months ago, and we’ve made three investments, one of which is still stealth. The first, Ceres, is a drone company that monitors crops. The other is 6Sensor, which is building a handheld device that you can use to test food for gluten and that will eventually test dairy, shellfish, and peanuts.

You’ll be writing bigger checks, in the range of $100,000 to $250,000. What kinds of companies will you back?

We focus on five areas. About 20 percent is in aerospace: we’ve already [backed] three drone-related companies and a satellite company. Watching the growth in those areas over the last two years has been phenomenal. Robotics is also a big focus area for us, as is the “Internet of things,” transportation, and general consumer electronics.

Is there any hardware sector you’d actively avoid investing in because it’s overdone?

One area that’s pretty overheated right now is wearables, and wearables that are narrowly focused. Also, fashion tech. There’s some stuff that’s interesting, but we’ve seen a bunch of applications for things like clothes that light up.

A couple of years into this, what patterns are you starting to see? What’s a common mistake young hardware startups make?

One mistake centers on brand, interestingly. This is [advice dating back to] Proctor & Gamble, but brand is everything, and if you pick the wrong brand, and it’s too small of a target market, you can’t get the traction you need to get further funding.

Take Jawbone, which is almost a meaningless brand but [has come to represent] quality. It has this huge market because basically everybody can buy from it. But startups often make branding choices early on that limit their market size. If you go to a venture capitalist and say, “Every skater in the world want this,” the investor’s question is going to be: “Okay, but are there enough skaters in the world to [rationalize this investment]?

Also, there’s almost this mythology that you do this prototype, and it goes to China and gets manufactured. People always undervalue how much on-the-ground work you need to do in China to ensure your product meets your quality standards and that you’ve done the right testing.

How are you helping them solve those issues?

We have a set of contract manufacturers who we feel work well with startups. We also make [our startups] do a product requirements document, which gets really into the details of not just design for manufacturability but also design for usability. We have a company, Bia, that does a sports watch for female triathletes, and at the end of the day, it has to go into salt water and to survive cold and heat. It’s very different than 6Sensors, which will go in a pocket or purse. There’s no expectation that I can dunk [its product] in salt water for 45 minutes and that it will still work.

How have you gone about forming the kinds of relationships with investors that help ensure your companies get seen?

It’s just good old-fashioned hustle. I spent a year going to every event I could possibly attend and hustling everyone and convincing them that we’re interesting enough to visit. After you get traction, you get more introductions. And after Airware’s funding happened, a couple of VCs who hadn’t responded to emails were definitely like, “I don’t know how I missed [your note], I’d love to come by.” [Laughs.]

(Image of Helen Zelman, Eric Klein, and Jeremy Conrad, pictured left to right, courtesy of Lemnos Labs.)


StrictlyVC: March 25, 2014

Good morning! Slightly abbreviated issue today as StrictlyVC is running behind on all kinds of things. Hope you have a great Tuesday, though, and we’ll see you back here tomorrow.:)

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Top News in the A.M.

The Obama administration is reportedly preparing to unveil a new legislative proposal that would end the N.S.A.’s systematic collection of data about Americans’ calling habits and allow it to obtain specific records only with permission from a judge, using a new kind of court order.

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An Early Bet on Box Looks to Pay Big Dividends

A few weeks ago, I talked shop with DFJ managing director Josh Stein about everything from Bitcoin (he’s bearish on the digital currency) to which firms are doing the most “fringe” investing (Khosla Ventures, Founders Fund, Google).

Naturally, one of the topics we covered was Stein’s very early investment in the online storage company Box. It was a “very risky bet,” as he said at the time. Lucky for DFJ, as it turns out.

When yesterday afternoon Box publicly revealed its plans to raise up to $250 million in an IPO, many were surprised by the size of DFJ’s stake. Its 25.5 percent of the company is nearly twice the size stake of Box’s next-biggest shareholder, U.S. Venture Partners, which owns 13 percent. It also dwarfs the ownership positions of Box cofounders Aaron Levie and Dylan Smith, who respectively own 4.1 percent and 1.8 percent.

Altogether, Box has raised $414 million, including its most recent, $100 million, round, which closed in December at what Levie told reporters was a $2 billion valuation. None of the firms that led Box’s later rounds are listed on its S-1; meanwhile, DFJ, which invested a total of $30 million in the company, could clear roughly $500 million if Box maintains its current valuation.

When I’d asked Stein what he saw in Levie and Smith seven-plus years ago, he told me that DFJ always looks for two things: “Markets that have the potential to be big, and entrepreneurs who are passionate and driven and kind of unreasonable. They aren’t willing to accept the conventional wisdom. They’re doing things that by their nature are very hard, and most people will tell them they’re wrong, and they’re so committed in their vision that they bull through that.”

Even though Box had just thousands of users at the time, Stein saw a big market opportunity. It “struck us as a product that could be very horizontal – not just for salespeople or doctors but for everybody,” he said.

Also, Levie and Smith were appropriately unreasonable. They were “obviously sharp, bright, and hard-working,” Stein observed, noting that when presented with questions they couldn’t immediately answer, they’d often provide long, thoughtful responses within a few hours.

But Stein also based his investment thesis on something that firm cofounder Tim Draper told him when he first joined the firm. Draper had told Stein to “think why something could work, rather than why it couldn’t.”

Why not, indeed.

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New Fundings

Amplidata, a six-year-old, Lochristi, Belgium-based storage technology company, has raised $11 million in funding led by Intel Capital. Earlier investors including Endeavor VisionHummingbird VenturesQuantum Corp. and Swisscom Ventures also participated in the round. The company appears to have raised roughly $34 million to date.

Clever, a two-year-old, San Francisco-based startup that’s been developing a standardized API that makes it easy for K-12 schools to more effectively use their data and for developers to access and build applications on top of it, has raised $10.3 million in Series A funding led by Sequoia Capital. Y Combinator founder Paul Graham, Y Combinator president Sam Altman and investment banker Deborah Quazzo also participated in the round, which brings Clever’s total funding to $13.3 million.

Demandbase, a 7.5-year-old, San Francisco-based company that develops B2B marketing services, has raised $15 million in new funding led by Greenspring Associates, with participation from Scale Venture PartnersSigmaWestAltos VenturesCostanoa Ventures and Adobe Systems. The company has raised roughly $33 million to date, shows Crunchbase.

Hired, a nearly two-year-old, San Francisco-based startup aiming to make hiring employees and finding a job easier and more efficient, has raised $15 million in Series A funding led by Crosslink Capital and Sierra Ventures, with participation from SoftTech VC and Sherpa Ventures. The company, which recently changed its name from DeveloperAuction, has raised roughly $17.7 million altogether, including from New Enterprise AssociatesGoogle Ventures, and Haystack.

Hortonworks, a 2.5-year-old, Sunnyvale, Ca.-based Hadoop vendor, has raised a fresh round of $100 million, led by BlackRock and Passport Capital. Earlier investors DragoneerTenaya CapitalBenchmarkIndex Ventures and Yahoo also participated in round, which brings Hortonworks’ total venture funding to $198 million. (As GigaOm notes, the raise comes roughly one week after its largest competitor, Cloudera, announced a new, $160 million, round of its own.)

KinDex Pharmaceuticals, a 10-year-old, Seattle-based biotechnology company that’s developing drugs for people with diabetes, among other things, has raised $5 million in funding led by Polaris Partners, which was joined by numerous individuals. The company hopes to double the size of the round by year end, its CEO, Jeffrey Bland, tells Xconomy in this profile of the company.

Pley, a year-old, San Jose, Ca.-based company that provides subscription services to education toys, has raised $6.75 million in Series A funding led by Allegro Venture Partners, with participation from Floodgate,Correlation VenturesMaven Ventures and Western Technology Investments.

Sonendo, a nearly eight-year-old, Laguna Hills, Ca.-based company developing a tool for use in root-canal procedures at the dentist’s office, has obtained $10 million in debt financing from the specialty financing firmOxford Finance. The money follows a $27 million venture round closed last summer from backers that include OrbiMed AdvisorsThemes Investment PartnersFjord Ventures and NeoMed Management.

Souq.com, the 8.5-year-old, Dubai-based company that is oft-characterized as the Arab world’s answer to Amazon, has raised $75 million in funding from South African media giant Naspers, at a valuation of more than $500 million. The deal is the biggest publicized in the Internet space in the Arab world since Yahoo bought the Arabic Web portal Maktoob in 2009 for $165 million, reports the WSJ. The company has raised $150 million altogether, it says.

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IPOs

Box, the eight-year-old, Los Altos, Ca.-based online storage company, has filed its long-anticipated S-1, but revelations that the company’s losses are outpacing its revenue has competitors feeling nervous. “While news of Box’s official filing for IPO brings a lot of excitement to our market, the public release of their financials raises a lot of concern,” says Egnyte CEO Vineet Jain to VentureBeat. “It is public knowledge now that Box has claimed over $360 million in deficits to date, with no solid roadmap to profitability. This seems to have become a trend lately where companies are being rewarded with huge valuations for simply having a large customer list.”

GrubHub, the 10-year-old, Chicago-based online delivery services company, said in an amended prospectus yesterday that it expects to price its IPO of roughly 7 million shares at $20 to $22 per share, valuing the company at up to $1.72 billion. Reuters has more.

Vice Media Group, a 20-year-old, New York-based media company known for melding online journalism with punk culture, is poised to double revenue to $1 billion by 2016 and may pursue an IPO, co-founder Shane Smith said yesterday in an interview with Bloomberg TV. “We’d be stupid not to test what the market would bear,” said Smith. “There’s a lot of money sloshing around in the system, obviously valuations are high.” The company raised $70 million last summer from Fox Interactive Media.

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Exits

Cyvera, a 2.5-year-old Tel Aviv, Israel-based security startup, has been acquired by the publicly traded network security firm Palo Alto Networks for roughly $200 million. Cyvera had raised $11 million in funding in August from Blumberg CapitalBattery Ventures, and individuals Ehud Weinstein and Ofir Shalvi.

It’s official, kind of. Maker Studios, a 4.5-year-old, Culver City, Ca.-based company that develops and publishes YouTube entertainment videos, is being acquired by media giant Disney for $500 million or more, a source tells Reuters, two weeks after Re/code sources suggested it would. The sale will be by far the biggest bet by a traditional media company in a company built on top of YouTube. Maker has raised around $70 million to date, including from Greycroft PartnersUpfront VenturesTime Warner Investments, and Northgate Capital.

StatSoft, a 30-year-old, Tulsa, Ok.-based company that specializes in analytics and data visualization software, is being acquired by Dell for undisclosed terms, in an ongoing effort to boost Dell’s software and services, reports ZDNet.

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People

A House of Representatives committee has launched an inquiry into whether former Vice President Al Gore attempted to “inappropriately influence” the use of federal grant dollars to acquire electric buses in Long Beach, Ca., in favor of a company in which Kleiner Perkins Caufield & Byers has an interest. (Gore became a partner at Kleiner in 2008.)

Rick Levin, who served as the president of Yale University, has just joined the Mountain View, Ca.-based online course company Coursera as CEO, reports Re/code. It’s a huge coup for the company and seemingly a perfect fit for Levin, a Stanford grad who received his PhD from Yale and went on to become the longest-serving president in the Ivy League. (He served from 1993 through the end of the 2012 academic school year.) With Levin’s appointment, Coursera, co-CEOs Andrew Ng and Daphne Koller, both professors on leave from Stanford, will take different operational roles.

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Job Listings

Union Square Ventures is looking for an analyst, a two-year stint that managing director Fred Wilson likens to a “USV MBA.” The deadline toapply is April. (H/T: Mattermark)

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Essential Reads

Google has tied up with talian eyewear maker Luxottica SpA, owner of the Ray-Ban and Oakley sunglass brands, which will design, develop and distribute new versions of Google Glass, reports the WSJ.

On the heels of the news that secondaries specialist Paul Capital is winding down operations after failing to find a buyer for its business, Fortune’s Dan Primack criticized the firm — which has laid off most of its staff — for continuing to collect management fees. Paul Capital didn’t respond to Primack’s requests for comment, but it’s now defending itself in an interview with peHUB editor Chris Witkowsky, arguing that “some of [its stakes] don’t require a lot of attention, but some do.”

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Detours

Truly amazing tree houses.

A little girl and her dog: A photo series.

“Homeland” actor James Rebhorn, who passed away last week after an extended battle with skin cancer, wrote his own obituary before passing and it’s beautiful.

A recent study has shown that if American parents read one more long-form think piece about parenting they will go ape ___.

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Retail Therapy

An update on the piggy bank.

Cassette tape tables.

Channel your inner eight-year-old; buy yourself a slingshot!

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An Early Bet on Box Looks to Pay Huge Dividends

Aaron Levie and Dylan SmithA few weeks ago, I talked shop with DFJ managing director Josh Stein about everything from Bitcoin (he’s bearish on the digital currency) to which firms are doing the most “fringe” investing (Khosla Ventures, Founders Fund, Google).

Naturally, one of the topics we covered was Stein’s very early investment in the online storage company Box. It was a “very risky bet,” as he said at the time.  Lucky for DFJ, as it turns out.

When earlier today Box publicly revealed its plans to raise up to $250 million in an IPO, many were surprised by the size of DFJ’s stake. Its 25.5 percent of the company is nearly twice the size stake of Box’s next-biggest shareholder, U.S. Venture Partners, which owns 13 percent. It also dwarfs the ownership positions of  Box cofounders Aaron Levie and Dylan Smith, who respectively own 4.1 percent and 1.8 percent.

Altogether, Box has raised $414 million, including its most recent, $100 million, round, which closed in December at what Levie told reporters was a $2 billion valuation. Almost none of the firms that led Box’s later rounds are listed on its S-1; meanwhile, DFJ, which invested a total of $30 million in the company, could clear roughly $500 million if Box maintains its current valuation holds up.

When I’d asked Stein what he saw in Levie and Smith seven-plus years ago, he told me that DFJ always looks for two things: “Markets that have the potential to be big, and entrepreneurs who are passionate and driven and kind of unreasonable. They aren’t willing to accept the conventional wisdom. They’re doing things that by their nature are very hard, and most people will tell them they’re wrong, and they’re so committed in their vision that they bull through that.”

Even though Box  had just thousands of users at the time, Stein saw a big market opportunity.  It “struck us as a product that could be very horizontal – not just for salespeople or doctors but for everybody,” he said.

Also, Levie and Smith were appropriately unreasonable. They were “obviously sharp, bright, and hard-working,” Stein observed, noting that when presented with questions they couldn’t immediately answer, they’d often provide long, thoughtful responses within a few hours.

But Stein also based his investment thesis on something that firm cofounder Tim Draper told him when he first joined the firm. Draper had told Stein to “think why something could work, rather than why it couldn’t.”

Why not, indeed.


StrictlyVC: March 24, 2014

Hello, and happy Monday!

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Top News in the A.M.

Move over, AmazonCisco Systems say it plans to begin offering “cloud” computing service to corporate customers, pledging to spend $1 billion over the next two years to enter the market, reports the Wall Street Journal.

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Bubba Muraka: DFJ’s Latest Whiz

Steve Jurvetson has always been DFJ’s boy wonder, a polymath whose interests range from nanoscience to space travel and who received his electrical engineering degree from Stanford in two-and-a-half years (then he nabbed his master’s, then an MBA).

Now, the Sand Hill Road venture firm appears to have found a new whiz in Bubba Muraka, who was brought on as a managing director last May and has some pretty impressive credentials of his own.

The son of a scientist and an engineer, Muraka grew up in San Jose and Cupertino before heading off to Cal Poly in San Luis Obispo, “mostly because I wanted to go somewhere my parents couldn’t drive to see me by surprise,” he tells me over coffee at San Francisco’s Epicenter Café.

As he was graduating, Microsoft recruited him to Seattle, where in 2001, Muraka was among a group of graduates to invent one of the earliest versions of social networking, an online application called Three Degrees. Eighteen months after Muraka arrived at Microsoft, however, his group was reorganized, its resources cut, and Muraka headed back to Cal Poly and earned his master’s degree.

Again, Microsoft came knocking, this time offering Muraka the chance to run all product for Bing in the Bay Area. He happily stayed another three years. But by 2008, like a lot of top talent, Muraka — who speaks fast and smiles often — found himself at Facebook, where he talked his way into a business development role. He wanted to learn something new. What he discovered was how to handily outmaneuver traditional biz dev people. “I’d built Web software and desktop software and I understood the product and the engineering side of things,” he says. “The business person would have to bring in the engineer or product manager and I’d just start negotiating directly with that person and all of a sudden, we’d have an awesome deal for Facebook. It was sort of like a superpower.”

It became too rote, in fact, so in early 2011, Muraka asked to switch to product management. With the move, he became the third product manager at Facebook to focus on mobile, and the first to zero in on Android specifically, eventually leading more than 50 people in the creation of Facebook’s Android app. (Given Android’s adoption, it’s probably the most-used interface for Facebook at this point.)

Whether all of that experience will translate into success at DFJ is an open question, though it’s easy to see how it might.

Muraka, for example, recently led the Series A round of CircleCI, a “continuous integration platform” that basically takes code sitting on a developer’s GitHub repository and quickly runs tests on it on Amazon’s Web services, pushing out what’s working to end users. The company has plenty of competitors, including CloudBees and Semaphore. But CircleCI has “built the best product out there,” says Muraka, “and as one of the few VCs who has written and shipped desktop, Web, and mobile software, I think I uniquely get it. I really see the power of the future they’ve created.”

In the meantime, Muraka, a nut for all things mobile, can’t resist developing a still-stealth mobile company in parallel. “The agreement I had with DFJ was that I’d finish the company building, so I’m chairman but I got out of an operational role at the end of 2013.” Muraka replaced himself as CEO with a former COO of Virgin Mobile. “So, it’s like, going to be a thing,” he says excitedly.

I ask the newly minted VC if his startup has raised any capital. “None so far,” he says with a slight smirk. “We’re still debating.” (Smart guy.)

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New Fundings

Actifio, a five-year-old, Boston-based data storage company, has raised $100 million at a $1 billion, reports Dealbook. The round was led by Tiger Global Management, which participation from earlier investorsAndreessen HorowitzGreylock PartnersNorth Bridge Venture Partners, and other venture capital firms. Actifio’s newest round brings its total funding to roughly $212 million. Dealbook takes a look at its place in the data storage universe.

Avazu, a 4.5-year-old, Shanghai-based programmatic ad platform, has raised $48 million in Series A financing led by Gaorong Capital. Other investors include “domestic and international companies, as well as an experienced U.S. Internet-focused private equity fund,” according to a release.

CounterTack, a 6.5-year-old, Waltham, Ma.-based threat detection software company, has raised an additional $3 million in funding that pushes its Series B round to $15 million. The funding comes from Siemens Venture Capital; CounterTack’s other investors, including Goldman SachsFairhaven Capital, and OnPoint Technologies, have provided the company with $25 million in funding altogether.

Kolltan Pharmaceuticals, a 6.5-year-old, New Haven, Cn.-based drug developer focused on treatments across breast, lung, and ovarian cancers, has raised $60 million in fresh funding, according to a Form D first flagged by Med City News. The Yale spin-off has raised roughly $150 million to date, including from Purdue PharmaHBM BioCapitalCeltic Therapeutics ManagementTichenor Ventures and Osage University Partners.

Leju Holdings, a six-year-old, Beijing-based online-to-offline real estate services and advertising platform, has agreed to sell China’s Tencent Holdings 15 percent of its business for $180 million. The move underscores Tencent’s designs on broadening its services to better compete with Alibaba Group Holding. Leju offers services including mobile apps and payment mechanisms for real-estate buyers and property agents. Earlier this month, it filed with the SEC to go public.

Off-Grid Electric, a two-year-old, Arusha,Tanzania-based company providing solar lighting services in Africa, has raised $7 million in funding from SolarCityVulcan Capital, and Omidyar Network. VentureBeat has much more here.

Procured Health, a two-year-old, Chicago-based company whose software aims to help control hospital supply spend, has raised $4 million in Series A funding. FCA Venture Partners out of Nashville, Tn., led the round. The company has raised $5.1 million altogether, including from Bessemer Venture PartnersZimmerman Ventures, and Fidelity Biosciences.

Vicarious, a four-year-old, San Francisco-based artificial intelligence company that aims to create a machine that can think like humans, has raised $40 million in fresh funding led by Formation 8. Other investors in the round included Tesla and SpaceX CEO Elon Musk, Facebook CEO Mark Zuckerberg, actor Ashton Kutcher, Box CEO Aaron Levie, Y Combinator president Sam Altman, Braintree founder Bryan JohnsonKhosla VenturesGood Ventures FoundationFelicis VenturesInitialized CapitalOpen Field CapitalZarco Investment GroupMetaplanet Holdings and Founders Fund. Vicarious received $15 million in a first round in 2012. Last month, the WSJ took an extensive look at the company, which has now raised $60 million altogether.

WelVU, a 15-month-old, Portland, Oregon-based whose software allows doctors and nurses to create and send interactive presentations to patients with such information as their vital signs, scheduling, X-rays, blood results, and notes, has raised $1.25 million in seed financing from undisclosed sources. VentureBeat has more here.

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IPOs

Globoforce Group, a 17-year-old, Southborough, Ma.-based software firm, cancelled its planned IPO late last week, citing unfavorable market conditions. PitchBook, the research firm, says the move also suggests that large financial institutions are becoming picky about which stocks to back.

Hold on to your hats. The IPO of “Candy Crush Saga” maker King Digital is slated for Wednesday.

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Exits

Berkeley Design Automation, a 13-year-old, Santa Clara, Ca.-based company focused on nanometer analog, mixed-signal, and RF circuit verification, has been acquired by publicly traded Mentor Graphics for undisclosed terms. Berkeley Design Automation had raised roughly $20 million over the years, including from Bessemer Venture PartnersPanasonicWoodside Fund, and Western Technology Investment.

YourBus, a three-year-old, Bangalore, India-based GPS-based bus tracking and analytics platform, has been acquired by the e-commerce and online travel company IbiboGroup for undisclosed terms. IbiboGroup is a joint venture between the South Africa-based media and Internet company Naspers and Tencent.

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People

Business Insider has produced one of its famous “lists of the most important people in Silicon Valley.” Here’s who they came up with, laid out on one page.

Mark Fasciano, a managing director at Canrock Ventures, a four-year-old venture firm in Brookville, New York, is embroiled in a controversy over whether Canrock violated conflict-of-interest rules by investing taxpayer dollars in five startups in which it has stakes — four of them reportedly founded by Fasciano. In 2012, Canrock was among seven venture firms chosen by New York State to invest a total of $35 million in federal funds in tech startups across the state. Newsday has more here.

Sara Haider, a mobile engineer and technical lead at Twitter for four-plus years, is leaving for the anonymous social startup Secret, where she’ll be responsible for launching an Android version of the app. Twitter’s VP of analytics and business intelligence, Cayley Torgeson, is also leaving the company, which Re/code’s sources characterize as a big loss for the company. As Re/code notes, Torgeson is in charge of Twitter’s internal analytics. “In a nutshell, he’s the guy who can tell top brass if Twitter is ‘working’ or not.”

Venture capitalist Vinod Khosla is reportedly coming to the aid of the publicly traded, advanced biofuel producer Kior, which he personally incubated and that last week warned that liquidity constraints could force a default or even a bankruptcy filing. Khosla and Bill Gates poured $100 million into Kior just last fall; now, “final terms and conditions are currently being negotiated” for a $25 million loan from Khosla, a Kior spokeswoman told The Deal.

Larry Page, CEO of Google, gave stock in his company valued at roughly $177 million to charity in February, according to SEC documents discovered by the Chronicle of Philanthropy. The outlet’s conclusion: that Page is “much more charitable than he let on in a TED conference conversation with interviewer Charlie Rose [last] week.”

LinkedIn CEO Jeff Weiner now tops Glassdoor’s list of the 50 highest-rated CEOs, per employee feedback on the jobs site. Weiner steals the slot from Facebook‘s Mark Zuckerberg, who apparently fell all the way to ninth place. Qualcomm CEO Paul Jacobs and Intuit CEO Brad Smith are also well-liked by employees, judging by the list. Vator has more here.

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Happenings

Y Combinator is hosting its bi-annual Demo Day on Tuesday in Mountain View, Ca., from 10 am. to 5 pm PST.

The CoinSummit conference also kicks off tomorrow in San Francisco and features an all-star line-up, including Marc AndreessenMicky Malka of Ribbit Capital, and Jeremy Liew of Lightspeed Venture Partners, among others. If you can’t make it, you can watch a live stream here.

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Job Listings

Here, a Nokia business unit that brings together Nokia’s mapping and location assets under one brand, is looking for a head of business development in Sunnyvale, Ca.

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Data

Ad agencies have become active startup investors; four ad agencies alone have participated in 52 financing deals worth more than $500 million since 2011. CB Insights looks at who has been funding what.

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Essential Reads

Over the weekend, PandoDaily dug up shocking court documents relating to an ongoing civil suit involving seven tech giants and the many employees whose wages they’ve being accused of conspiring to curb.

A big fight is beginning to brew over who owns car data, reports The Recorder. (Subscription required.) Last week, Senator Bill Monning of Carmel, Ca., introduced legislation that would give drivers control of their vehicle-generated data — from their locations to their driving habits to even, potentially, their musical preferences. And car makers, tech developers, and privacy advocates are watching closely to see what happens. The data will “implicate the privacy interests of people both inside and outside the car,” Nate Cardozo, staff attorney for the Electronic Frontier Foundation, told the outlet. “This is definitely new ground.”

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Detours

The overprotected kid.

Silicon Valley’s brutal ageism.

Airbnb’s first pitch deck.

The best part of Google co-founder Sergey Brin’s first resume.

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Retail Therapy

Boxed card sets from Thornwillow Press.

Bill Murray pillows.

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