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!)


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.


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.


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.


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.



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.



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.



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.”



MacWorld rolls into its second day in San Francisco.


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.)



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.


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.



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.


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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