StrictlyVC: April 21, 2014

It’s Monday and StrictlyVC is alone with the children’s Easter candy at last. I’m just kidding! (I’m not kidding.) Have a great morning, everyone, and welcome back.

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Top News in the A.M.

Wal-Mart is launching a money-transfer service this week that will allow customers to transfer money to and from more than 4,000 stores around the globe. The company has suggested it’s not trying to compete with other online payments providers (for now).

Nearly two-thirds of New York City apartments recently listed on Airbnbwere being offered in violation of the law, a new analysis by state authorities has found. More, says the study, middlemen are now very much part of the picture, with more than 200 of the offerings coming from just five “hosts.”

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Same Companies, Different Impressions

Venture capitalists are a lucky lot. Their work is prestigious, the pay can be exceptional, and they’re educated daily by smart entrepreneurs.

One job hazard, however, is missed opportunities. For example, many in Silicon Valley passed on Uber, one of the fastest-growing companies on the planet. (To his credit, Uber’s hard-charging CEO, Travis Kalanick, appears to have talked to everyone before the company raised its first round.)

You might wonder now how so savvy investors missed Uber’s potential, but the reality is that finding the Next New Thing is a lot harder than it looks. Indeed, last week at the “demo day” of the incubator program AngelPad in San Francisco, one could find many skilled investors making radically different calculations about the same companies.

PeopleGoal, a New York-based startup whose performance management software aims to wring the best out of employees, captured the attention of Josh Breinlinger, a venture partner at Sigma West who was among the earliest employees of the freelance marketplace ODesk. “That’s one of two that really stood out to me,” he said after the companies’ presentations.

Hiveary, an infrastructure monitoring platform, and TapFwd, a big data mobile ad platform, were more interesting to Niko Bonatsos, a principal at General Catalyst Partners who said he liked the technology behind both, as well as that both seemed like they were addressing “real problems in hot markets.” Of Hiveary, in particular, Bonatsos said, “If you talk to enterprise [software developers and IT departments who collaborate to speed the deployment of new applications and services], they will describe that they need a solution for this problem.”

Meanwhile, Paintzen, a marketplace for home and office painting, stood out the most to Manu Kumar, the founder of the seed-stage venture firm K9 Ventures, one of the earliest investors in the ride-share service Lyft. “It just feels like an industry that’s ripe for disruption,” said Kumar, who especially liked the team’s argument that it can eventually expand into other verticals, including flooring, cabinets, and windows. “If they can go after those other areas, they can scale,” said Kumar.

Breinlinger made the same point separately. “If Paintzen can do the same thing they’ve done for painting for other home services, I think it becomes really interesting,” he said.

But Bonatsos was less impressed with Paintzen. “It sounds interesting. They make [arranging a paint job] very easy. I don’t know how big the market is, though. It’s one and done; it’s not frequency. How often do you paint your house?”

Asked about the other verticals that Paintzen wants to pursue, Bonatsos said that “to me, that’s not a good sign” that Paintzen is pursuing a big-enough market from the get-go. “The numbers [the founders] gave out – [a] $10 billion [market] for painting in the top metro areas. Well, let’s say they capture $1 billion out of the $10 billion, and their piece is 30 percent. It’s a $300 million market for them. That’s interesting,” said Bonatsos, “But it’s not like, ‘Oh, my God.’”

(For a full tearsheet of AngelPad’s newest batch of startups, click here.)

DOD

New Fundings

AdRoll, a seven-year-old, San Francisco-based ad retargeting company, has raised $70 million in new funding led by earlier investor Foundation Capital. New investors Institutional Venture PartnersNorthgate CapitalPerformance Equity and Glenmede also participated in the round, alongside earlier investors Merus CapitalAccel Partners and Peter Thiel. The company has raised $89 million to date.

Advanced Cardiac Therapeutics, a 6.5-year-old, Laguna Beach, Ca.-based medical device company that makes advanced irrigated cardiac ablation systems, has raised a new round of financing led by New Enterprise Associates and earlier investor NBGI Ventures, which led a $5 million Series B or the company in 2010. The size of the newest round isn’t being disclosed publicly, but as VentureWire notes, a recent filingshows the company was targeting $8 million.

Airbnb, the 5.5-year-old, San Francisco-based short-term home rentals marketplace, has raised $450 million in fresh capital in a deal that values Airbnb at $10 billion, says the WSJ. The private equity firm TPG, along with Dragoneer Investment Group, are expected to invest roughly $75 million apiece in the company, according to the report. Meanwhile, earlier investor Sequoia Capital is expected to invest about $85 million. More here.

Arrail Dental Clinic, a 16-year-old Beijing-based dental care company, has received $70 million series C financing led by the Chinese private equity fund New Horizon CapitalPrometheus CapitalCommon FundElite Capital and earlier investors GL CapitalKPCB China and Qiming Ventures also participated in the round. Arrail Dental had previously raised roughly $40 million in funding. It plans to use its new funding to open more clinics and make acquisitions.

Beckon, a 2.5-year-old, San Mateo, Ca.-based marketing analytics software company, has raised $8 million in Series A funding from Canaan Partners and earlier investor August Capital. The company has raised $10 million altogether. (StrictlyVC talked with Beckon founder Jenny Zeszut for a column last week.)

Birchbox, a 3.5-year-old, New York-based startup that sells curated monthly boxes of beauty samples for $10 each, has raised $60 million in Series B funding led by Viking Global Investors, with participation from First Round CapitalAccel PartnersAspect Partners, and Consigliere Brand Capital. To date, shows Crunchbase, the company has raised about $72 million altogether.

Enplug, a 1.5-year-old, Culver City, Ca.-based company that sells its digital, customizable, interactive signs to business customers like restaurants to help them better engage with their customers, has raised $2.5 million in seed funding. The money comes from a long list of individual investors, including Oaktree Capital co-founder Larry Keele and Idealab founder Bill Gross.

FloDesign Sonics, a four-year-old, Wilbraham, Ma.-based company whose acoustic separation technology is being applied to improving the production of protein-based drugs but has potential applications in industries as wide ranging as oil and gas and food and beverage, has raised $10 million in Series A funding. The round was led by Bright Capital and included Ventry Industries, along with individual investors like Jonathan Fleming of Oxford Biosciences

Inbenta Technologies, a nine-year-old, Sunnyvale, Ca.-based company that specializes in artificial intelligence and natural-language processing, has raised $2 million in Series A funding led by Amérigo Chile Early Stage and Growth, an international network of venture capital funds.

LendingClub, a seven-year-old, San Francisco-based, online peer-to-peer financing company, has raised a fresh $115 million in debt and equity to purchase Springstone Financial, which is in the very different business of providing loans to people seeking elective medical and dental procedures. LendingClub raised the money from T. Rowe PriceWellington Management CompanyBlackRock and Sands Capital. To meet Springstone’s asking price of $140 million, LendingClub chipped in $25 million in stock. LendingClub has raised $285 million in equity to date, shows Crunchbase. Its earliest investors include Amidzad PartnersCanaan PartnersNorwest Venture Partners, and Morgenthaler Ventures.

M87, a 1.5-year-old, Austin-based company whose software helps smartphones secure the best available voice and data service, has raised $3 million in Series A funding from Qualcomm Ventures and 21Vianet Group, the largest Internet data center services provider in China.

Nervana Systems, a months-old, San Diego-based company that develops custom hardware for machine learning algorithms, has raised $600,000 in seed financing from angel investors including Ali and Hadi PartoviSam AltmanScott BanisterOwen Van NattaRuchi Sanghviand SV Angels.

Nora Therapeutics, a 3.5-year-old, Palo Alto, Ca.-based company that’s developing a drug designed to improve pregnancy outcomes, has raised $18 million in Series B funding led by Novo A/S. Earlier investors also participated in the round, including Burrill & CompanyProspect Venture PartnersRho Ventures, and Vivo Capital.

Preact, an 18-month-old, San Francisco-based company, cloud-based service that aims to help subscription software companies reduce churn and acquire new customers, has raised $4.6 million in Series A funding led by Trinity Ventures. Earlier investors Atlas VenturesKarlin Ventures,Bee Partners and Lion Wells Capital also participated in the new funding.

PumpUp, a two-year-old, Kitchener, Canada-based fitness-oriented mobile app that incorporates virtual training and social networking, has raised an undisclosed amount of funding from Toronto-based Innovation Grade Ventures.

TaxiForSure, a three-year-old, Bangalore-based online taxi services aggregator, is in the final stages of raising a $10 million round led by Bessemer Venture Partnerssays the Economic Times. TaxiForSure has raised a total of about $14 million to date, including from Accel PartnersHelion Venture Partners, and Blume Ventures.

Urgent.ly, a year-old, Washington, D.C.-area startup whose service connects users with available roadside assistance, has received $510,000 in funding from the Center for Innovative Technology’s CIT GAP Funds. Tech Cocktail DC has more here.

Vidapp, a months-old, Berkeley, Ca.-based video-looping app (a ala Vine) has raised $1.2 million in seed funding, including from DBO CapitalOrrick Venture FundStorm VenturesTenex Capital Fund and individual investors.

Work4 Labs, a 3.5-year-old company that has offices in San Francisco and Paris and helps employers reach and recruit prospective hires via social networks, has raised $7 million in Series B funding led by Serena Capital led the round. Earlier investor Matrix Partners also participated in the round.

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New Funds

Fuel Capital, a year-old, San Francisco-based, early-stage venture capital firm, has raised a debut fund of $25.5 million, judging by an SEC filing. Fuel Capital has been actively investing since at least March of last year, with bets that include Homejoy, an online platform that connects customers with cleaning services; the cosmetics brand Julep; and Secret, the suddenly popular app that lets users upload anonymous posts. Fuel Capital was cofounded by Chris Howard, who led the seed-stage investment program at Ignition Partners, and Brad Silverberg, who cofounded Ignition.

Matrix Partners, the 37-year-old, Cambridge, Ma.-based venture capital firm, announced its new, $350 million, Matrix Partners China III on Friday. The fund is the same size as Matrix Partners China II, closed in 2011. Matrix Partners China was founded in 2008. Among its most recent investments is Kuailexue, a China-based startup that’s building a mobile-first Q&A platform for students around smartphones. China-based firms are once again very attractive LPs, according to Dow Jones VentureSource data; they raised $1.07 billion in the first quarter of this — a 35 percent increase over the same period last year.

Spectrum Equity, the 20-year-old growth equity firm with offices in Boston and Menlo Park, is looking to raise $800 million for its newest fund and may collect closer to $1 billion, according to VentureWire sources. The firm, which prefers to write checks of between $25 million to $100 million, closed its last fund in 2010 with $680 million. Spectrum’s portfolio includes the newly public food ordering service GrubHub and the online learning company Lynda.com, among the many other “information economy” startups on which Spectrum solely focuses. More here.

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IPOs

ContraFect, a 5.5-year-old, Yonkers, N.Y-based biotechnology company that’s developing products to fight life-threatening, drug-resistant infectious diseases, has filed the paperwork to raise up to $23 million in an IPO. Among its biggest shareholders are Alpha Spring Limited, which owns 13.3 percent of the company’s shares; Liberty Charitable Remainder Trust, which owns 9.3 percent; and River Charitable Remainder Trust, which owns 5.2 percent.

Zafgen, an 8.5-year-old, Cambridge, Ma-based biopharmaceutical maker developing a twice-weekly injection to treat obesity, is looking to raise $86.3 million in an IPO, shows an SEC filing. Among the company’s biggest shareholders are Atlas Venture, which owns 35.6 percent of the company; Third Rock Ventures, which owns 35.4 percent; Alta Partners, which owns 7.4 percent; and Fidelity Investments, which owns 6 percent.

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Exits

Campus Special, a nine-year-old, Atlanta-based student deal platform, has been acquired by the textbook rental site Chegg for $17 million in cash and stock and will be rebranded Chegg Campus Deals. Chegg, which went public last November with its stock priced at $12.50 per share, has lost more than half its value since, with its stock trading at $5.50 per share as of the market’s close on Friday.

Classbadges, a 21-month-old, Oakland, Ca.-based company whose online tool helps teachers award students for accomplishments, has been acquired by the bootsrapped, two-year-old, Kirkland, Wa.-based ed tech startup EdStart for an undisclosed sum. Per the terms of the acquisition, Classbadges co-founder and CEO, Esther Wojcicki (mother to Susan Wojcicki of YouTube fame and Anne Wojcicki of 23andme), will join the board of EdStart. EdStart acquired another company, the student response system ExitTicket, just last month.

Dropbox, the 6.5-year-old, San Francisco-based online storage company, has acquired a pair of startups: the photo-sharing company Loom and the document-sharing startup Hackpadreports the WSJ. Loom will shut down its service and be folded into Dropbox’s recently released cloud-based storage service Carousel. (It had raised $1.4 million in backing from investors including Google VenturesTencent HoldingsGreat Oaks Venture CapitalOverbrook Entertainment and individuals.) HackPad had passed through Y Combinator in 2012 and raised money from some individual investors, including Shana Fisher, managing partner of High Line Venture Partners.

Kite.io, a 15-month-old, San Francisco-based company, has been acquired by the mobile app search engine Quixey, for an undisclosed amount, though TechCrunch portrays it as a more of an acqui-hire. Kite.io doesn’t appear to have raised venture capital. Four-and-a-half-year-old Quixey, on the other hand, has raised roughly $75 million from investors, including AlibabaInnovation Endeavors, and Translink Capital.

Nautical Technologies, a parking and transportation technology company that’s a division of Toronto-based Apps Network Appliances, has been acquired by QuickPay — which is rebranding the combined company as LocoMobi Inc. More here.

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People

The Guardian looks at the technology industry’s highest profile executives and what they take home.

President Obama will hit the Mountain View headquarters of Y Combinator, the hot technology startup funder and incubator, as part of a May 8 fundraiser that will now be co-hosted by the company’s president, Sam Altman, and Yahoo CEO Marissa Mayersays the SF Chronicle. (Mayer was planning to host the event at her Palo Alto home, but the venue has been changed to accommodate demand for tickets.)

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Job Listings

LinkedIn is looking for a business development manager to help it grow and managing its strategic partnerships. The job is in Mountain View, Ca.

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Happenings

Come see smart people argue over the future of mobile on Wednesday evening in San Francisco.

The Bloomberg Enterprise Technology Summit kicks off Thursday morning at the Bowery Hotel in New York. Learn more here.

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Data

Pitchbook has taken a look at 2007 vintage U.S. venture funds with software investments in their portfolios. Out of 118 funds, the top performers of the bunch are Avalon Ventures VIIIEmergence Capital Partners Fund IIFlagship Ventures Fund 2007, and Foundry Venture Capital 2007. Collectively, the funds have a median IRR of 9.28 percent; the top quartile “hurdle rate” is 16.28 percent.

And here, a ranking of the leading 25 syndicates on AngelList.

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Essential Reads

Facebook will take the wraps off its plans for a mobile ad network at its “F8″ developer conference in San Francisco at the end of the month, reports Re/code.

According to the Finnish outlet After Dawn, Google is working on a $100 Nexus smartphone for budget-conscious consumers.

Mutual funds are moonlighting more and more as venture capitalists. And little wonder: Henry Ellengoben, who oversees T. Rowe Price’s New Horizons Fund, managed his way to a 49.1 percent return last year; the S&P 500 returned 32.4 percent.

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Detours

Twenty-six animals that need to stop being so darn cute.

Help with folding a pocket square, tying a windsor knot, and distinguishing between herringbone and glen plaid.

Watch a baby-faced Sergey Brin pretend not to know much about search technology on national television, circa 2000.

How Americans die. (Sorry.)

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Retail Therapy

The latest custom Porsche from Singer Design.

Pizza Cake. Because, you know what? There are a lot of game changers in this world but too few pizza game changers.

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