Monthly Archives: May 2014

StrictlyVC: May 30, 2014

Good morning, dear readers. We’re having delivery issues again suddenly (sigh). If your spam folder ate your issue of StrictlyVC yesterday, here it is.

Hope you have a wonderful weekend!

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Top News in the A.M.

Europe’s highest court recently decided that its citizens could ask search engines to delete search results about themselves. Now Google has set up a way for people to make such requests, reports Re/code. Its “right to be forgotten” form is here.

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NatureBox shows why VCs are Tripping Over Each Other to Back Food-Delivery Startups

Venture capitalists have seemingly gone bananas over food startups. According to VentureSource, in the last 14 months, 15 companies that deliver restaurant meals have been funded; meanwhile another 11 startups that sell general food products were funded last year – an industry record.

Are investors overdoing it? Perhaps, though a peek into the business ofNatureBox, a two-year-old, San Carlos, Ca.-based snack-delivery company that has raised $28 million to date, highlights the opportunity they’re chasing. Earlier this week, I spoke with CEO Gautam Gupta, a former investor with General Catalyst (which is among NatureBox’s backers), about his 60-person company. Our chat has been edited for length.

How fast is NatureBox growing?

I started the company with a friend of mine from college two-and-a-half years ago. That first year, we shipped 50,000 [boxes of snacks to customers]. Last year, we shipped a million and we’re on track to triple that this year.

Who, and where, are your customers?

We have customers in all 50 states. We do skew toward a female audience. The largest segment is moms looking to find healthier options for their family and school lunches. Half of our customers are on the coasts; the other 50 percent are in the Midwest, where people don’t have access to Whole Foods or Trader Joe’s.

How much are they paying for their Naturebox deliveries?

We have three different offerings, so $20, $30, or $50 a month [based on how much you’re ordering]. You can choose the items yourself, from 120 different options in our catalog, or we can select them for you.

From where are you shipping the products?

We work directly with almond and fruit growers across the country to source the ingredients. We then have a network of contract manufacturers who work on the product across the country and who send the product to our two fulfillment centers in California. We’re also about to launch an Indiana-based fulfillment center, which is a big undertaking for us and will enable us to get our boxes to our East Coast and Midwest customers much faster.

What convinced you that this was a big opportunity?

The traditional model, through retail stores, really involves a fight for shelf space, with [food companies] having to develop products based on the retail calendar. What we’ve done is take a product development cycle that’s one to three years and condensed it to the point where an idea can be made into a product that’s in customers’ hands in two or three months. More, as soon as it reaches that customer, we’re getting feedback about what they like and don’t like to eat and what makes products more or less successful — data that drives the business [forward].

What have you learned about your customers so far?

We’ve learned how important the aspect of familiarity is to a new product. We have four or five flavors of wheat fig bars available to customers on our site, for example, because the taste is very similar to Fig Newton [cookies], though our products are made of whole grain and without any fructose syrup.

You spent eight years, working at General Catalyst. Do you think VCs are beginning to plug too much money into me-too food startups?

From an investors’ standpoint, the industry we’re going after is a trillion dollar market. It’s one of the last industries to be disrupted by the Internet.

Will you be back in the market in 2014?

We’ve had a lot of folks reaching out to us and have a lot of options. We’re kind of heads down, building the business, but if it continues to grow and we’re in a good position, it’s [possible].

dropcam_300x250_learn

New Fundings

GrabTaxi, a young, Singapore-based taxi-calling app, has raised $15 million in Series B funding led by GGV CapitalQunar also participated in the round, along with earlier investor Vertex Venture Holdings, which had led GrabTaxi’s $10 million-plus Series A round.

Grove Labs, a year-old, Somerville, Ma.-based company that’s planning to sell indoor gardening kits to consumers so they might grow their own, fresh food year round, has raised $2.05 million in seed funding, reports the WSJUpfront Ventures led the round, along with Felicis Ventures and Gary Vaynerchuk’s Vayner RSE. Other participants in the funding includedGalvanize VenturesTimothy Ferriss, and Ferriss’s AngelList syndicate.

Hipmunk, a four-year-old, San Francisco-based startup whose travel search site and apps aim to help people book their travel faster and more efficiently, has raised $20 million in Series C funding from Oak Investment Partners. The company has now received $40.2 million from investors, including Webb Investment NetworkIgnition PartnersInstitutional Venture PartnersSV Angel and numerous individuals, among them Rich BartonErik BlachfordPaul Buchheit, and Matt Mullenweg.

Lucid Software, a five-year-old, Draper, Ut.-based company that makes a suite of graphical web applications and design apps, has raised $5 million in fresh funding led by Kickstart Seed FundGrayhawk Capital also participated in the round, which brings the company’s total funding to $6 million, shows Crunchbase.

Nix Hydra, a two-year-old, L.A.-based female-focused mobile gaming startup, has raised $5 million from Foundry Group, with participation from Buddy Media co-founder Mike Lazerow and other individuals. The company had previously raised $615,000 from seed investors.

Qeexo, a 20-month-old, San Jose, Ca.-based mobile software startup that enables devices to respond differently based on which part of the finger is being used for input, has raised $2.3 million in Series A funding led by Sierra Ventures.

RiskIQ, a five-year-old, San Francisco-based startup whose software continuously analyzes its customers’ web and mobile assets to detect malware, fraud and brand infringements, has raised $25 million in Series B funding led by Battery Ventures, with Summit Partners participating. The company has raised roughly $35 million to date.

Survios, a year-old, L.A.-based technology platform that’s bringing full body motion technology into virtual reality games and other immersive tech, has raised $4 million in Series A funding led by Shasta Ventures. Other participants in the round included Felicis Ventures and World Innovation Lab.

Tarsa Therapeutics, a five-year-old, Philadelphia, Pa.-based company that makes an oral calcitonin tablet to treat postmenopausal osteoporosis, has raised $7 million as a second tranche of a Series B round that Tarsa announced in May 2012. All of Tarsa’s earlier investors participated in the financing, including Foresite CapitalMVM Life Science Partners,Quaker Partners and Novo A/S. The company has raised at least $111 million to date, shows Crunchbase.

Trifacta, a 2.5-year-old, San Francisco-based company that’s developing productivity platforms that make raw data easier to analyze, has raised $25 million in funding led by Ignition Partners. Earlier investors Greylock Partners and Accel Partners also participated in the round. The company had raised $12 million just six months ago led by Greylock and Accel. Altogether, investors, including XSeed Capital and Data Collective, have provided the company with $41.3 million.

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New Funds

Double M Partners, a 2.5-year-old, L.A.-based firm, has raised $8 million for a new, second fund, according to an SEC filing that shows a $10 million target. Double M invests in Southern California-based Internet, media and communications startups. One of the outfit’s newest portfolio companies is Connectivity, a Burbank, Ca.-based business intelligence software company that raised $6.4 million in Series A funding in April, including from Rincon Venture Partners and Greycroft Partners. Double M was founded by former investment banker Mark Mullen (thus the “double M”).

Epidarex Capital, an early-stage life science and health tech venture fund with offices in the U.K.; Bethesda, Md.; and Tokyo, Japan, has closed on approximately $80 million for a new fund dedicated to U.K. startups, particularly university spin-outs. The firm’s LPs include King’s College LondonEli Lilly and Co.European Investment FundScottish Enterprise and Strathclyde Pension Fund. The Telegraph has much more here.

There’s a new SEC filing for a San Francisco-based fund called Palma Investments that has raised roughly $70 million from 10 parties and has ties to David Lee of SV Angel, who’s listed as the managing member of the fund. Asked for information about the filing, which lists a UPS office as its street address, Lee said he couldn’t comment. Most likely, the fund is a side vehicle that SV Angel used to lead Pinterest‘s $200 million Series F round earlier this month.

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Exits

Cognitive Match, a five-year-old, New York-based display ad and predictive targeting platform, is being acquired by direct competitor Magnetic, a nearly six-year-old, New York-based company, for undisclosed terms. Cognitive raised a total of $10.2 million from investors, including Dawn CapitalMeridian Venture Partners, and Seraphin Partners. Magnetic has raised $15.3 million from investors, including NYC SeedNeu Venture CapitalEdison VenturesIA VenturesCharles River Ventures, and Founder Collective.

HelloWallet, a five-year-old, Washington, D.C.-based web and mobile app that provides financial and holistic help for employees based on their salary and benefits package, has been acquired by the research company Morningstar for $52.5 million, reports InTheCapital. HelloWallet had raised $16.2 million from investors, including RevolutionTD FundGrotech and Morningstar itself.

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People

Former Microsoft CEO Steve Ballmer has won the bidding for the NBA’s L.A. Clippers franchise with a $2 billion offer, elbowing out two groups, including one that included media mogul David Geffen. The sale agreement stipulates that Ballmer not move the team to Seattle.

Foursquare’s chief operator officer, Evan Cohen, as well as its longtime head of business development, Holger Luedorf, are leaving the company in the coming weeks, reports Re/code. Cohen says he was “running low on gas, frankly, and it made sense for me to hand the baton off to a fresh new executive.” Matrix Partners’s entrepreneur-in-residence Jeffrey Glueck will become the company’s new COO.

Wael Ghonim, an Egyptian-born Google employee who helped spark the country’s uprising in 2011, has joined Google Ventures as an entrepreneur-in-residence. The 33-year-old joined the unit late last year but Google waited on him to work out “visa issues” before going public with his role. Fortune has much more here.

Harmonix, a 19-year-old, Cambridge, Ma.-based game maker has laid off 37 employees as part of a restructuring, reports VentureBeat. Harmonix, best known for its games “Rock Band” and “Guitar Hero,” is also replacing CEO Alex Rigopulos with Steve Janiak, the company’s head of publishing and business operations. Rigopulos will take up the title of chief creative officer.

Popular technology reporter Mike Isaac is leaving Re/code for the New York Times, he announced yesterday, a move that will involve not only jumping to a new outlet, but also relocating from the Bay Area to Brooklyn. Isaac, says the Times, will be allowed to keep his Charmin bear avatar on Twitter.

Earlier this week, investor Vinod Khosla lost a battle in his ongoing fight with the Surfrider Foundation over whether the public is owed access to Martin’s Beach, outside a $40 million property in San Mateo, Ca., that Khosla owns. On Wednesday, legislation aimed at upholding access to California beaches passed the California State Senate floor and is now headed to the Assembly. If it passes the Legislature, Khosla will have until Jan. 1, 2016, to broker a deal. The state could otherwise use eminent domain to acquire a portion of the property to reopen or create a new public access road. The San Mateo Daily Journal has more here.

Mark Zuckerberg and wife Priscilla Chan announced yesterday in the San Jose Mercury News that they’re making a “$120 million commitment to support efforts to improve education for underserved communities in the Bay Area.” In his editorial, Zuckerberg suggested that, contrary to a recent New Yorker piece, his $100 million gift to the Newark, N.J. school system is beginning to show results. “For our next project,” writes Zuckerberg, “we’re investing in our local community.”

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Job Listings

Gilt Groupe is looking for a business development director in New York.

Proofpoint is looking for a vice president of business development in Sunnyvale, Ca.

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Data

Venture capital finally outperformed the DJIA, Nasdaq and S&P 500 in the fourth quarter of last year, according to the National Venture Capital Association‘s newest performance index. Even better, 10-year venture returns (9.7 percent) slightly outpaced the indices, which returned 7.2 percent (DJIA), 7.6 percent (Nasdaq) and 7.4 percent (S&P 500). Venture funds are still trailing the public exchanges over the last 1-, 3-, and 5-year periods. (Sniff.) More here.

The 20 most valuable enterprise tech companies in the world — for now.

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Essential Reads

A smartwatch is coming from Microsoft, unexpectedly.

At long last, someone has produced a great calendar app for Android and the Web, reports The Verge.

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Detours

Twenty-seven of the best Google doodles.

How to tell someone’s age, when all you know is her name.

America’s ‘It’ School? It’s 2,700 miles from Harvard.

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Retail Therapy

Wireless headphones.

Smart soccer balls.

You can never have too much storage, are we right?

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NatureBox Shows Why VCs Are Rushing to Back Food-Delivery Companies

naturebox_121912-070.1363818457Venture capitalists have seemingly gone bananas over food startups. According to VentureSource, in the last 14 months, 15 companies that deliver restaurant meals have been funded; meanwhile another 11 startups that sell general food products were funded last year – an industry record.

Are investors overdoing it? Perhaps, though a peek into the business of NatureBox, a two-year-old, San Carlos, Ca.-based snack-delivery company that has raised $28 million to date, highlights the opportunity they’re chasing. Earlier this week, I spoke with CEO Gautam Gupta, a former investor with General Catalyst (which is among NatureBox’s backers), about his 60-person company. Our chat has been edited for length.

How fast is NatureBox growing?

I started the company with a friend of mine from college two-and-a-half years ago. That first year, we shipped 50,000 [boxes of snacks to customers]. Last year, we shipped a million and we’re on track to triple that this year.

Who, and where, are your customers?

We have customers in all 50 states. We do skew toward a female audience. The largest segment is moms looking to find healthier options for their family and school lunches. Half of our customers are on the coasts; the other 50 percent are in the Midwest, where people don’t have access to Whole Foods or Trader Joe’s.

How much are they paying for their Naturebox deliveries?

We have three different offerings, so $20, $30, or $50 a month [based on how much you’re ordering]. You can choose the items yourself from 120 different options in our catalog, or we can select them for you.

From where are you shipping the products?

We work directly with almond and fruit growers across the country to source the ingredients. We then have a network of contract manufacturers who work on the product across the country and who send the product to our two fulfillment centers in California. We’re also about to launch an Indiana-based fulfillment center, which is a big undertaking for us and will enable us to get our boxes to our East Coast and Midwest customers much faster.

What convinced you that this was a big opportunity?

The traditional model, through retail stores, really involves a fight for shelf space, with [food companies] having to develop products based on the retail calendar. What we’ve done is take a product development cycle that’s one to three years and condensed it to the point where an idea can be made into a product that’s in customers’ hands in two or three months. More, as soon as it reaches that customer, we’re getting feedback about what they like and don’t like to eat and what makes products more or less successful — data that drives the business [forward].

What have you learned about your customers so far?

We’ve learned how important the aspect of familiarity is to a new product. We have four or five flavors of wheat fig bars available to customers on our site, for example, because the taste is very similar to Fig Newton [cookies], though our products are made of whole grain and without any fructose syrup.

You spent eight years working at General Catalyst. Do you think VCs are beginning to plug too much money into me-too food startups?

From an investors’ standpoint, the industry we’re going after is a trillion dollar market. It’s one of the last industries to be disrupted by the Internet.

Will you be back in the market in 2014?

We’ve had a lot of folks reaching out to us and have a lot of options. We’re kind of heads down, building the business, but if it continues to grow and we’re in a good position, it’s [possible].

Before you go, which is better, life as a VC or as an entrepreneur?

I started with General Catalyst when I was in college, and it was the only real job I had before starting NatureBox . . . I’ve now learned that building a company is so much of a team sport, versus investing, which is more about being an individual contributor. I’m definitely learning a lot, but I also really love the aspect of being able to do something and see the impact of that and really playing in the game. This job is a lot more fun.

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StrictlyVC: May 29, 2014

Good Thursday morning! (By the way, is StrictlyVC the only one who didn’t go to the Bruno Mars show in Oakland last night? FOMO is real, people.)

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Top News in the A.M.

Ten things you might have missed at the second day of the Code conference.

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Wearable That Relies on Your Heartbeat Nears Series A Close

If things go its way, you may be hearing more about Bionym, if not using its product. The spin-off from the University of Toronto has been developing a wristband that distinguishes wearers by their heartbeat. The big idea: there’s no reason to use keys and pass codes and credit cards when we can be identified instead through our unique electrocardiography.

A lot of pieces have to fall into place for the wristband, called the Nymi, to work out. But because the potential also seems substantial, I asked company president Andrew D’Souza to walk me through what’s happening as the company prepares to dot the i’s and cross the t’s on a Series A round that it’s closing.

I know the company’s founders studied biometrics and cryptography at the University of Toronto. What’s the core technology here?

It’s a set of algorithms that helps identify you based on your unique ECG. This was a tech licensing company initially, but we realized the way this functionality should be put out in the world is through a wearable wristband.

Which still hasn’t been produced yet, is that right?

We’ll start the production efforts over the summer and expect to ship the first 10,000 [units] next fall.

How confident are you of that?

It’s a fair question. [The successful production of the Nymi] was the biggest risk for me in joining the company [last year]. But we bought in James Elson, who led the complete product development cycle for the AirHog, the best-selling radio-controlled helicopter in the world. He has shipped about 8 million units, spent a third of his career in China, and has all kinds of relationships and knows what to ask.

How is the Nymi designed, loosely?

It’s basically a polymer wrapped around a hard plastic puck that houses the electronics, like a Fitbit, which also has an enclosed puck. Jawbone’s UP band and Nike’s FueldBand use flex circuits, which introduce more manufacturing risk.

Something like 2.7 million people have already purchased wearable bands, most of them fitness trackers – and most of them Fitbits. Is there any concern over asking people to put another piece of hardware around their wrist?

No, we think the wearable market is where mobile was in the ’90s. Most of the devices sold so far have a single use case – like tracking steps, or notifying me when I get texts. Going forward, we’ll see platforms emerge. When Apple announces its iWatch, [it’s likely to be] a health-focused platform. Android Wear, [Google’s software platform for wearables] will [center] on context-aware, location-based services. We think there’s also an opportunity for an [identity-centric] personalized platform, and that there’s a market of people who will prefer it.

What about all the peripherals you’ll need for Nymi to work?

We’ve had phenomenal interest from Fortune 100 companies about building applications integrations into some of their products. We have an open SDK, so in the same way that people build apps on iPhones, we’re giving early access to key partners [to create related apps]. Essentially, we want to allow people to bypass whatever credential they use and use Bionym as a proxy for it, from laptops and smart phones to payment companies to home security.

More than 7,000 developers have signed up for the SDK – from college students to major corporations. That’s what we’re most excited about.

You’re accepting pre-orders at your site. Will you sell exclusively through the site or will people be able to order the Nymi through major retailers?

Amazon is essentially ready to start selling and other major retailers have reached out about listing us. But we’ve been hesitant to go to physical or digital retail until we know exactly why people are ordering our devices and who they are.

dropcam_300x250_learn

New Fundings

51Fanli, an eight-year-old, Shanghai-based rebate shopping guide platform, has raised $20 million in Series B funding led by SIG China, according to Chinese media reports. The company had previously raised $10 million in Series A funding from Qiming Venture Partners and Steamboat Ventures.

Apixio, a five-year-old, San Mateo, Ca.-based company that extracts and analyzes clinical unstructured and coded data for healthcare industry clients, has raised a $13.5 million Series C round from Bain Capital Ventures, along with numerous unnamed individual investors. The company has raised at least $22.6 million altogether, shows Crunchbase.

ARMO BioSciences, a 1.5-year-old, Redwood City, Ca.-based clinical-stage biotechnology company that’s trying to turn a drug licensed from Merck & Co. into a cancer treatment, has raised $30 million in Series B funding by NanoDimension. Earlier investors Kleiner Perkins Caufield & ByersOrbiMed and DAG Ventures also participated in the round, which brings the company’s total funding to $50 million.

Bindo, a six-month-old, New York-based company that’s come up with an iPad point-of-sale system and associated cloud-based payment platform for small merchants, has raised $1.8 million in seed funding co-led by Gary VaynerchukEast Ventures, and Metamorphic Ventures.

Coupang, a four-year-old, Seoul-based e-commerce company that offers goods ranging from fashion to produce, has raised $100 million in financing led by Sequoia Capital Global Equities and Sequoia Heritage, with participation by earlier investors Greenoaks Capital Management, Rose Park Advisors’ Disruptive Innovation Fund and LaunchTime. Others of the company’s earlier investors include Maverick CapitalAltos VenturesBill AckmanClay Christensenand others. The company is now valued at $1 billion-plus, it says. The company’s CEO tells Dealbook that more than 70 percent of its transactions are done on mobile devices.

Datalogix, a five-year-old, Westminster, Co.-based company that sells offline purchase data to giant publishers, has closed a $45 million round led by Wellington Management Company. Earlier investor investor Institutional Venture Partners joined the round, investing more than pro rata. The round is “incremental to the recently announced investment in Datalogix by Jim Breyer’s Breyer Capital,” says the company. (In April, the WSJ reported that Breyer had invested “a significant” amount in the company.) Datalogix has raised at least $111 million to date, shows Crunchbase.

ExtraHop, a seven-year-old, Seattle-based app management system, has raised raised $41 million in Series C funding led by Technology Crossover Ventures. Other participants in the round include earlier investors Meritech Capital Partners and Madrona Venture Group.

HackerOne, a 19-month-old, Bay Area-based security firm whose platform makes it easy for companies to report their bug tracking and process their flaw reports, has raised $9 million in funding led by Benchmark. TechCrunch has much more on the startup, which has ties to Facebook and Microsoft, here.

Matrixx Software, a 24-year-old, Mountain View, Ca.-based developer of online charging and subscriber policy management software, has raised an undisclosed amount of new funding led by Telstra Ventures. Earlier investors Swisscom VenturesInnovacomGreylock PartnersAdams Street Partners and Tugboat Ventures also participated in the round. Previously, the company had raised at least $33.6 million, shows Crunchbase.

MedCPU, a six-year-old, New York-based company whose real-time clinical decision support tool rides atop most hospital and ambulatory electronic medical records and “reads” the complete clinical information to deliver clinical care advice, has raised $9.3 million in Series B funding from investors that include Merck Global Health Innovation FundEaston Capital Investment Group and New Richmond Ventures. The company has raised at least $10.9 million to date, shows Crunchbase.

Message Bus, a nearly four-year-old, San Francisco-based application service that enables messaging across different email and mobile infrastructures, has raised $4 million in funding led by previous investor True Ventures. Other earlier investors North Bridge Venture Partnersand Ignition Partners also participated in the round, which brings the company’s total funding to $18 million, it says.

Neuway Pharma, a months-old, Bonn, Germany-based company that focuses on the preclinical and clinical development of therapeutics for treating orphan brain diseases, has raised $3.6 million in Series A financing led by Wellington Partners. The company is the first spin-off of the Life Science Inkubator in Bonn.

Newlans, an 11-year-old, Acton, Ma.-based fabless semiconductor company that makes a reconfigurable broadband analog signal processing architecture, has raised $5 million from Verizon Ventures to complete its Series B financing round. Intel Capital, with the participation of Paladin Capital and Lockheed Martin, had led the Series B, which initially closed with $15 million in February. The company has raised at least $23.9 million to date.

PatientPay, a nearly six-year-old, Durham, N.C.-based patient billing and payment services company, has raised $2.5 million in funding led by Mosaik Partners, a new, San Francisco-based firm that just held a first close on $15 million for its debut fund. PatientPay has raised $6 million to date.

Rodin Therapeutics, a year-old, Cambridge, Ma.-based biotechnology company that’s focused on creating therapeutics for neurological disorders, has raised $12.9 million in Series A funding led by earlier investors Atlas Venture and Johnson & Johnson Development Corporation. The company raised an undisclosed amount of seed funding from both firms last summer.

Standard Treasury, a year-old, San Francisco-based company that offers standard APIs that make it easier for businesses to transact with their banks, has raised $2.7 million in seed funding. Investors in the round include RRE VenturesIndex VenturesData CollectiveSV AngelY CombinatorJay Mandelbaum, a former chief operating officer of JP Morgan; and Gmail creator Paul Bucheit. The WSJ has much more here.

Swipely, a 4.5-year-old, Providence. R.I.-based company whose online software works with point-of-sale systems and terminals used by independent businesses to manage their credit card processing, reward programs and more, has raised $20 million in Series C funding. The Pritzker Group led the round; previous investors Shasta Ventures and First Round Capital also participated. The company has now raised $40.5 million altogether, shows Crunchbase.

XLV Diagnostics, a three-year-old, Thunder Bay, Ontario-based company that makes low-cost, next-generation digital mammography machines, has raised $3 million in Series A funding from the Boston-based Bernard M. Gordon Charitable Remainder Unitrust. The company had previously raised $600,000 in funding from the regional development organization FedNor and the Northern Ontario Heritage Fund.

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New Funds

Omron, a Japan-based manufacturer of control equipment, factory automation systems, electronic components, automotive electronics, ticket vending machines and medical equipment, is earmarking an estimated 3 billion yen ($29.1 million) for agricultural and life sciences startups over the next three years, reports the Nikkei.

Spark Capital, the nine-year-old, Boston-based venture capital firm, closed its first-ever growth capital fund yesterday with $375 million that was raised over “several” months. (Spark is also investing from a $450 million early-stage fund closed last year.) The head of the new fund is Jeremy Philips, formerly a managing partner of Occam Partners, as well as an executive at News Corporation. He tells Dealbook more about his team’s plans, including that they will be aiming to invest slugs of $15 million and $30 million in companies that already have roughly $1 billion in revenue but aren’t yet ready to go public. Bijan Sabet, a partner at Spark, tells Dealbook: “We’re planning on helping companies scale, whether they’re existing companies of Spark or not.”

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IPOs

Only two companies have set terms for upcoming IPOs in the past week, notes Renaissance Capital, calling it a reflection of “both fallen tech and biotech valuations and the typically lower volume around a holiday week.” More here.

Twitter’s shares rose nearly 11 percent yesterday, to $33.77, after Nomura Equity raised its rating to buy from neutral, with a price target of 43. Investors Business Daily notes that the shares are still 55 percent off their peak price of $74, reached roughly one month after the company’s November IPO.

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Exits

Apple finally announced yesterday that it has acquired the subscription streaming music service Beats Music, and Beats Electronics, which makes Beats headphones, speakers and audio software. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple, Iovine in a full-time capacity, Dr. Dre, whose real name is Andre Young, for “as much as it takes,” he said yesterday. Apple is acquiring the two companies for a total of $3 billion, including $400 million that will vest over time. The Beats brand will remain separate from Apple’s, and Apple will offer both Beats’s streaming music service and premium headphones, reports the New York Times.

Distimo, a five-year-old, Netherlands-based app analytics and data company, has been acquired by its direct competitor, App Annie, which has been looking to expand into Europe. As part of the transaction, App Annie announced a fresh $17 million in funding yesterday from earlier investors IDG Capital PartnersGreycroft Partners and Sequoia Capital; the company has now raised $39 million altogether. Distimo had raised an undisclosed amount of funding from Wellington Partners.

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People

Highly disturbing emails written by Snapchat cofounder Evan Spiegel during his (not-so-distant) college years were leaked to the media yesterday. Spiegel quickly issued an apology for the “idiotic emails,” saying they “don’t reflect my views toward women.” The media world has seemed to let the issue go.

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Job Listings

Spark Capital is hiring a team of six to eight people for its new growth fund. (See “New Funds.”) Time to invite a partner or two out for coffee?

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Happenings

VentureBeat’s MobileBeat conference is coming up in July in San Francisco. You can register for it here.

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Data

Mary Meeker‘s Internet trends presentation, 2014. (The gist: There’s no tech bubble. Also, people love using the Internet from their phones, and that’s only growing faster.)

What startup founders typically pay themselves, or should, according to their venture investors.

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Essential Reads

As promised Google has disclosed its diversity record, and it’s not good. Among the data released: 79 percent of the company’s leadership positions are occupied by men, 72 percent of whom are white.

—–

Detours

No, really? The Ice Diet?

What a hiring manager scans for when reviewing resumes.

Sixty years of nuclear energy (slide show).

—–

Retail Therapy

Inflatable hot tub, you look right up our alley.

Topanga Canyon, a “limited-edition, trail-foraged fragrance that takes you on a springtime hike through the coastal mountains of California,” and you only need your nostrils to get there.


Wearable that Relies on Your Heartbeat Nears Series A Close

bionym_nymi_colors_stackedIf things go its way, you may soon be hearing more about Bionym, if not using its product. The spin-off from the University of Toronto has been developing a wristband that distinguishes wearers by their heartbeat. The big idea: there’s no reason to use keys and pass codes and credit cards when we can be identified instead through our unique electrocardiography.

A lot of pieces have to fall into place for the wristband, called the Nymi, to work out. But because the potential also seems substantial, I asked company president Andrew D’Souza to walk me through what’s happening as the company prepares to dot the i’s and cross the t’s on a Series A round that it’s closing.

I know the company’s founders studied biometrics and cryptography at the University of Toronto. What’s the core technology here?

It’s a set of algorithms that helps identify you based on your unique ECG. This was a tech licensing company initially, but we realized the way this functionality should be put out in the world is through a wearable wristband.

Which still hasn’t been produced yet, is that right?

We’ll start the production efforts over the summer and expect to ship the first 10,000 [units] next fall.

How confident are you of that?

It’s a fair question. [The successful production of the Nymi] was the biggest risk for me in joining the company [last year]. But we bought in James Elson, who led the complete product development cycle for the AirHog, the best-selling radio-controlled helicopter in the world. He has shipped about 8 million units, spent a third of his career in China, and has all kinds of relationships and knows what to ask.

How is the Nymi designed, loosely?

It’s basically a polymer wrapped around a hard plastic puck that houses the electronics, like a Fitbit, which also has an enclosed puck. Jawbone’s UP band and Nike’s FueldBand use flex circuits, which introduce more manufacturing risk.

Something like 2.7 million people have already purchased wearable bands, most of them fitness trackers – and most of them Fitbits. Is there any concern over asking people to put another piece of hardware around their wrist?

No, we think the wearable market is where mobile was in the ’90s. Most of the devices sold so far have a single use case – like tracking steps, or notifying me when I get texts. Going forward, we’ll see platforms emerge. When Apple announces its iWatch, [it’s likely to be] a health-focused platform. Android Wear, [Google’s software platform for wearables] will [center] on context-aware, location-based services. We think there’s also an opportunity for an [identity-centric] personalized platform, and that there’s a market of people who will prefer it.

What about all the peripherals you’ll need for Nymi to work?

We’ve had phenomenal interest from Fortune 100 companies about building applications integrations into some of their products. We have an open SDK, so in the same way that people build apps on iPhones, we’re giving early access to key partners [to create related apps]. Essentially, we want to allow people to bypass whatever credential they use and use Bionym as a proxy for it, from laptops and smart phones to payment companies to home security.

More than 7,000 developers have signed up for the SDK – from college students to major corporations. That’s what we’re most excited about.

You’re accepting pre-orders at your site. Will you sell exclusively through the site or will people be able to order the Nymi through major retailers?

Amazon is essentially ready to start selling and other major retailers have reached out about listing us. But we’ve been hesitant to go to physical or digital retail until we know exactly why people are ordering our devices and who they are.

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


StrictlyVC: May 28, 2014

Is it Friday yet? (Kidding!) Hope you have a great Wednesday, everyone.

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Top News in the A.M.

Alibaba just made a huge investment in an overseas postal agency.

Federal Trade Communication report released yesterday is providing an unusual window into the system of commercial surveillance.

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Cybersecurity VC David Cowan on Hackers, Valuations, and What’s Hot Now

When the news emerged last week that Defense.net, a cloud service that defends data centers and applications from cyber attacks, was selling to publicly traded F5 Networks, some were surprised it was being swept up so soon. Its founder, Barrett Lyon, had started two other cyber security companies; it had been incubated at Bessemer Venture Partners just last year. Could it be that the market – spending for which is expected to hit $77 billion this year – is peaking right now?

Longtime cybersecurity investor David Cowan, a general partner at Bessemer’s Palo Alto, Ca., insists that’s far from the case. Rather, in a call yesterday, he said that Defense.net’s business is “an expensive one to build. There’s a reason there aren’t a lot of companies out there that provide this kind of business. I would have been happy to keep going, but I can understand why the team found it attractive to take a strategic multiple when it was offered.”

Here’s some more from that conversation yesterday, edited for length:

A lot of businesses complain that it costs more to safeguard their systems than deal with a breach. What are you seeing?

I wouldn’t say that companies would rather spend to remedy the breach rather than prevent it, but [there’s now an] awareness that breaches are inevitable, so part of any cyber plan has to be preparations for dealing with a breach. There are startups out there today that all they do is sell breach-response services to help companies prepare for that inevitability, though those aren’t particularly interesting to me because [they] don’t use a lot of technology to do it.

As we connect more things to the Internet, more things become vulnerable to attack, including heart monitors and other medical devices. Is that an area that interests Bessemer? Do you have a vertical approach?

We generally don’t have a vertical approach, but having said that, I do think the medical device vertical is pretty interesting. There’s a vast sea of medical devices out there and hospitals that are running on old Windows machines, many of which are no longer even supported by Microsoft. And those connected machines are likely swamps for malware. And nobody has any visibility into them. Companies that are going after I that . . . it’s an interesting vertical.

What’s one thing you’re seeing in cybersecurity right now that wasn’t possible until recently?

I invested in this company, Internet Identity, because they enable companies to do what no one has done before, which is to collaborate on cyber defense.

There’s a lot of collusion by attackers in the form of exchanges, [including] people buying and selling [personally identifiable information]. As a result, it’s easy for someone to ramp up quickly as a cyberattacker. But until 18 months ago, no one ever talked openly about security infrastructure outside of their company or government agency. It was viewed as terribly private and intimate.

Since then, there’s been a really a big shift in people’s understanding that the private and the public sector all need to work together to share cyberintelligence, so that if an attacker is identified in one place, all doors [will be] closed [to that person] in buildings everywhere. That requires a lot of technology . . .and that’s what Internet Identity has developed and built. It now supports 30 federal agencies and at least three of the world’s six most valuable technology companies, and everyone who joins the exchange gets the benefit of all that intelligence in real time on their own network. It’s kind of like the social network of cyber; you share and you get back [a lot], and once someone joins the exchange, he or she naturally wants to invites lots of friends into the exchange as well.

You say Defense.net’s sale wasn’t related to valuations. What’s happening out there, though?

There’s been a huge increase in the value and multiples for companies selling cloud services to enterprises [in recent years]. With a huge pullback this year in the public market, I think it’s fair to expect that the private markets will have to respond accordingly . . .generally, when the [public] market goes up, it’s a matter of weeks before the private market does the same. When it goes down, it’s a matter of months [before private markets follow suit].

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New Fundings

Acquia, a seven-year-old, Burlington, Ma.-based startup whose software enables companies to build and maintain their Drupal-based websites, has raised $50 million in new funding, led by New Enterprise AssociatesSplit Rock Partners and existing investors North Bridge Venture PartnersSigma PartnersInvestor Growth Capital, and Tenaya Capital also participated in the round, which brings the company’s total funding to $118.6 million.

Aver Informatics, a four-year-old, Green Bay, Wi.-based company whose data management tools help hospitals and other health care providers simplify the process of billing insurance companies, has raised $8.5 million from Drive Capital and GE Ventures. The company has raised $11 million to date, shows Crunchbase.

DemystData, a four-year-old, New York-based software company that sells predictive analytics to financial services clients, has raised $5 million in Series A funding from a string of investors, including Arbor VenturesSingTel Innov8Notion CapitalP2P Equity Partners and Wonga founder Errol Damelin.

Distil Networks, a three-year-old, Arlington, Va.-based com pay whose cloud-based service protects from scraping and malicious bots, has raised $10 million in Series A funding led by Foundry Group and Bullet Time Ventures. Other participants in the round included ff Venture CapitalIDEA Fund Partners and Militello Capital. The company has raised $14 million to date.

Ecwid, a 5.5-year-old, Ulyanovsk, Russia-based e-commerce platform that helps small businesses create online stores, has raised $5 million in Series B funding led by iTech Capital, with participation from earlier investor Runa Capital.

Fundrise, a two-year-old, Washington, D.C.-based company that helps any resident (and not just accredited investors) invest in properties in their local market, has raised more than $31 million in its first round of funding led by Renren, the China-based social networking company. Other investors in the round include Collaborative Fund; L.A. developer Rising Realty Partners; the Ackman-Ziff Real Estate Group; executives of Silverstein Properties; and Richard Boyle, former chief of Loopnet, an online commercial real estate listing service.

Fyusion, a year-old, San Francisco-based stealth startup developing advanced 3D image processing technologies, has raised $3.35 million in funding led by New Enterprise Associates and UTEC, with participation from angel investors including Sun Microsystems co-founder Andreas Bechtolsheim and James Joaquin, the former CEO of Ofoto & Xoom.

Infinit, a two-year-old, Paris-based company whose app uses peer-to-peer technology to boost unlimited-size file sharing between two users, has raised $1.8 million in funding from Alven Capital and 360 Capital Partners. The company has raised $2.2 million altogether.

Jobaline, a 1.5-year-old, Kirkland, Wa.-based bilingual, digital marketplace for hourly jobs, has raised $7 million in Series B funding led by Trilogy Equity PartnersFounders Co-opMadrona Venture Group and angel investors also participated in the round, which brings Jobaline’s total funding to roughly $11.3 million.

Lua Technologies, a three-year-old, New York-based mobile workplace collaboration software company, has raised a $7.5 million Series A funding round led by Abundance Partners. Individual investors Strauss Zelnick and Aaron Stone also participated in the round. The company has raised $10 million to date, shows Crunchbase.

Need, a 15-month-old, Dallas, Tex.-based online magazine and retailer for men “who hate to shop,” says TechCrunch, has raised $500,000 in seed funding from individual investors. The company has raised $615,000 altogether, shows Crunchbase.

Spark Therapeutics, a nine-month-old, Philadelphia, Pa.-based gene therapy company focused on helping people with rare, degenerative eye diseases, has raised $72.8 million in Series B funding led by Sofinnova VenturesBrookside CapitalDeerfieldRock Springs CapitalT. Rowe PriceWellington Management, and two undisclosed dedicated health-care funds. The company’s total funding to date is $122.8 million. (The Children’s Hospital of Philadelphia, which spun out Spark last fall, committed $50 million to the venture at the time.)

SunFunder, a two-year-old, San Francisco-based crowdfunding platform for financing solar energy projects in rural villages, has raised a Series A round of undisclosed size led personally by investor Vinod Khosal, though as VentureWire notes, it recently filed paperwork showing it had raised $2.2 million of a $2.7 million round.

Thatgamecompany, an eight-year-old, L.A.-based video game development studio that has created three games for the Playstation Network, including an award-winning game called “Journey,” has raised $7 million in funding led by the China-based private equity firm Capital Today. Other participants in the round, which brings the company’s total funding to $12.5 million, include Benchmark CapitalKleiner Perkins Caufield & Byers, and half a dozen other investors.

XCOR Aerospace, a 15-year-old, Mojave, Ca.-based maker of rocket-powered vehicles, propulsion systems and more, has raised $14.2 million in Series B funding led by Space Expedition Corporation of the Netherlands. The round also included many existing and new investors including board member Esther Dyson, Chicago Cubs co-owner Pete Ricketts, and numerous Silicon Valley entrepreneurs and early-stage investors.

—–

New Funds

San Francisco firm Mosaik Partners has held a $15 million close on its inaugural fund, reports VentureSource. Founding partner Miles Kilburn served as an EVP at Concord EFS, a payroll-processing company that merged with First Data in 2004. The firm’s other partner, Howard Mergelkamp, was a founding member of corporate ventures and advisory services at investment firm BlackRock. The firm’s LPs reportedly include investors from the payments and financial industries.

—–

IPOs

The IPO market is working as it should – for now, at least, argues PandoDaily.

—–

Exits

AngioScore, an 11-year-old, Fremont, Ca.-based company that makes scoring balloon catheters to treat cardiovascular and peripheral artery diseases, is being acquired for $230 million in cash and stock by medical device maker Spectranetics Corp. AngioScore had raised at least $30 million from investors, including Telegraph Hill PartnersPsilos Group,QuestMark PartnersPelion Venture PartnersCalifornia Technology Ventures, and Innomed Ventures. In 2011, the company also raised $11 million from Saints Capital in San Francisco (though StrictlyVC doesn’t know if those were primary or secondary shares).

Asia Pacific Telecom, the Taiwanese mobile telecom operator, is selling itself to Apple’s supplier Foxconn Technology Group for a reported $390 million; the latter reportedly wants to expand its presence in Taiwan’s fledgling 4G telecoms market. Reuters has more here.

AtheroMed, a 7.5-year-old, Menlo Park, Ca.-based company that develops treatments for peripheral arterial disease, including an FDA-approved atherectomy catheter system, is being acquired for $115 million by Volcano Corp., a publicly traded company best known for its imaging technology. AtheroMed had raised at least $37.7 million from investors, shows Crunchbase, including US Venture PartnersCanaan PartnersThe Vertical Group, and Kaiser Permanente Ventures.

Graphicly, a 4.5-year-old, Palo Alto, Ca.-based company whose online platform automates the self-publishing process by helping authors and publishers distribute and promote their digital content across various e-book marketplaces, is being acquired by its peer, Blurb, an indie book and magazine publishing platform. The move, says TechCrunch, is an acqui-hire. Graphicly had raised $10 million from investors, includingVenture51500 StartupsDundee Venture CapitalMercury Fund,Ecosystem VenturesTechstars, and Northstar Ventures.

—–

People

Investor Marc Andreessen talks with Fast Company about his love of Twitter (among other things). Says Andreessen: “I’m an introvert when it comes to face-to-face conversations. But something that lets you talk to 83,000 people while you’re wearing your boxer shorts and drinking a glass of Scotch? What could be better?”

Venture capitalist Brad Feld thinks VCs should recycle their management fees. He explains why here.

Reputation.com founder Michael Fertik goes to astonishing lengths to burnish his online image in this mockumentary, which has some very funny moments. (Mike Judge, take note.)

Paul Hsiao has joined Canvas Venture Fund, the early-stage venture capital firm that spun out of Morgenthaler Ventures last year, as a general partner and founding managing member. Hsiao joins the firm from New Enterprise Associates, where he spent the last decade, focusing mostly on enterprise software and marketplace companies.

—–

Job Listings

ORIX Corporate Capital is looking for someone at the principal level to lead its venture lending practice in Washington, D.C. The 13-year-old company provides senior and subordinated loans to mid-and-late stage venture-backed companies.

—–

Happenings

All kinds of interesting news is emerging from this week’s Re/code conference, and it’s barely gotten underway. (If you aren’t there, you can stay up to date on Twitter via the hashtag #codecon.)

—–

Data

CB Insights looks at which venture capital firms have the strongest mobile portfolio based on ITunes App Store rankings. Check out its findings here.

—–

Essential Reads

Google has finally built its own car from scratch. And it looks like a gondola with wheels.

—–

Detours

Is Thomas Piketty’s math wrong?

Manhattan’s Billionaires’ Row is spreading south.

Team building for the self-employed!

—–

Retail Therapy

Thirty-seven things to do this summer in the Bay Area. (A great list worth bookmarking. Written for men, but notwithstanding some questionable advice about summer shoes and haircuts, useful for everyone.)


Cybersecurity Investor David Cowan on Hackers, Valuations, and What’s Hot

David CowanWhen the news emerged last week that Defense.net, a cloud service that defends data centers and applications from cyber attacks, was selling to publicly traded F5 Networks, some were surprised it was being swept up so soon. Its founder, Barrett Lyon, had started two other cyber security companies; it had been incubated at Bessemer Venture Partners just last year. Could it be that the market – spending for which is expected to hit $77 billion this year – is peaking right now?

Longtime cybersecurity investor David Cowan, a general partner at Bessemer’s Palo Alto, Ca., insists that’s far from the case. Rather, in a call yesterday, he said that Defense.net’s business is “an expensive one to build. There’s a reason there aren’t a lot of companies out there that provide this kind of business. I would have been happy to keep going, but I can understand why the team found it attractive to take a strategic multiple when it was offered.”

Here’s some more from that conversation yesterday, edited for length:

A lot of businesses complain that it costs more to safeguard their systems than deal with a breach. What are you seeing?

I wouldn’t say that companies would rather spend to remedy the breach rather than prevent it, but [there’s now an] awareness that breaches are inevitable, so part of any cyber plan has to be preparations for dealing with a breach. There are startups out there today that all they do is sell breach-response services to help companies prepare for that inevitability, though those aren’t particularly interesting to me because [they] don’t use a lot of technology to do it.

As we connect more things to the Internet, more things become vulnerable to attack, including heart monitors and other medical devices. Is that an area that interests Bessemer? Do you have a vertical approach?

We generally don’t have a vertical approach, but having said that, I do think the medical device vertical is pretty interesting. There’s a vast sea of medical devices out there and hospitals that are running on old Windows machines, many of which are no longer even supported by Microsoft. And those connected machines are likely swamps for malware. And nobody has any visibility into them. Companies that are going after I that . . . it’s an interesting vertical.

What’s one thing you’re seeing in cybersecurity right now that wasn’t possible until recently?

I invested in this company, Internet Identity, because they enable companies to do what no one has done before, which is to collaborate on cyber defense.

There’s a lot of collusion by attackers in the form of exchanges, [including] people buying and selling [personally identifiable information]. As a result, it’s easy for someone to ramp up quickly as a cyberattacker. But until 18 months ago, no one ever talked openly about security infrastructure outside of their company or government agency. It was viewed as terribly private and intimate.

Since then, there’s been a really a big shift in people’s understanding that the private and the public sector all need to work together to share cyberintelligence, so that if an attacker is identified in one place, all doors [will be] closed [to that person] in buildings everywhere. That requires a lot of technology . . .and that’s what Internet Identity has developed and built. It now supports 30 federal agencies and at least three of the world’s six most valuable technology companies, and everyone who joins the exchange gets the benefit of all that intelligence in real time on their own network. It’s kind of like the social network of cyber; you share and you get back [a lot], and once someone joins the exchange, he or she naturally wants to invites lots of friends into the exchange as well.

You say Defense.net’s sale wasn’t related to valuations. What’s happening out there, though?

There’s been a huge increase in the value and multiples for companies selling cloud services to enterprises [in recent years]. With a huge pullback this year in the public market, I think it’s fair to expect that the private markets will have to respond accordingly . . .generally, when the [public] market goes up, it’s a matter of weeks before the private market does the same. When it goes down, it’s a matter of months [before private markets follow suit].

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


StrictlyVC: May 27, 2014

Good Tuesday morning, everyone! Hope you had a terrific Memorial Day weekend.

—–

Top News in the A.M.

Owners of Apple devices across Australia are having them digitally held for ransom by hackers demanding payment before they will relinquish control.

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The Ideas Guy: Jim Scheinman

Micro VC Jim Scheinman of Maven Ventures is usually noodling on a new business idea, he tells me over coffee at The Battery, a private social club in San Francisco where various tanned VCs are seated opposite pale entrepreneurs in spacious black leather booths.

One of these ideas was “a payment platform the social web” that Scheinman dreamed up in 2007, but because he doesn’t code, he “found two guys who were basically going to build it with me.” Scheinman says he became the company’s acting COO and first seed investor. That startup, Jambool, was acquired by Google in 2010 for a reported $70 million. (It had raised $6 million.)

Tango, a messaging company with more than 200 million users and roughly $367 million in venture backing, was also “in part, kind of my idea,” says Scheinman, an early investor in the company who says that, among other things, he came up with Tango’s name, its viral marketing strategy, and some of its early employees.

Scheinman’s newest notion is turning his current “sub $10 million fund” into a new $50 million to $100 million second fund in the next year or so with his same LPs plus an institutional investor or two. The question is whether Silicon Valley is ready for this particular idea.

A native New Yorker, Scheinman traces his investment background back the baseball cards he sold with his brother in high school. Within a few years, the two were running a multimillion-dollar business that employed 50 people, but Scheinman wanted more out of life, so not long after graduating from college at Duke University, he headed to UC Davis for a law degree, and afterward, to one startup and then another.

It was at his second startup — San Francisco-based Friendster, one of the earliest social networks — that he met married programmers Michael and Xochi Birch. As Scheinman tells it, he was looking for acquisition targets for Friendster, but he was so impressed with the Birches that he instead convinced them to make him their third employee — first at their startup BirthdayAlarm and then at Bebo.com, a social network that AOL acquired for $850 million in cash in 2008.

The sale made both Birches wealthy. (Indeed, they own and operate The Battery.) It also gave Scheinman the freedom to become an angel investor as well as raise a small fund once his angel investments began to pan out. “I’m happy to make people money and get a dinner or a thank you, but I thought, ‘Why not pool some of that money and take 20 percent?'”

Scheinman has plainly taken his role as a VC seriously. He currently backs about six companies each year, writing checks to nascent startups ranging between $100,000 and $150,000 and very occasionally investing in a Series A or B round, such as with the investing platform AngelList and Banjo, a real-time content discovery company.

Scheinman has also created a low-flying incubator that works with up to six startups that each receive a $250,000 convertible note, six to nine months of office space, ongoing help from Scheinman, and access to 20 mentors, including startup CEO coach Dave Kashen and Andy Johns, who has been a user growth manager at Quora, Twitter, Facebook and now Wealthfront. (Scheinman says the idea is to create or identify nascent consumer startups and help them scale massively. The mentors and Scheinman’s LPs receive a collective 3 percent in each startup; Scheinman gets another 3 percent.)

Scheinman claims his formula is working. On the VC side, he says he was able to take “70x” his original investment off the table earlier this year when Alibaba led a $280 million round in Tango. (He claims he still maintains most of his ownership in the company, too.)

Meanwhile, a company he incubated, Epic, a year-old, all-you-can-read e-book service for kids, has raised $1.4 million from investors, including TomorrowVentures, Webb Investment Network and Menlo Ventures.

Scheinman says the Epic concept was his, adding that he’s always happy to share his ideas, particularly if they can turn into high-growth businesses. “The way I work is I talk with everyone about an idea, because you never know who it will resonate with or who is doing something similar.”

(When I reach out to a couple of entrepreneurs who Scheinman has worked with in the past, one doesn’t respond to a Memorial Day email; another characterizes Scheinman as very helpful in the early days of his company and says Scheinman has a great consumer touch but differs with his portrayal of some of his specific contributions.)

I ask Scheinman how he would scale his operation to fit the demands of a bigger fund. In addition to bringing aboard a second GP and two associates, he says he’d lead more deals, rather than hand so many off to his network. “Most of the companies [Maven] has incubated have gone on to raise $1 million to $1.5 million. Maybe I do that check or do $1 million and bring in one other syndicate.”

Scheinman adds that he’s “not running these businesses. But I know the problems they’re going to face and I can help them avoid some of them.”

“My value proposition is simple,” he continues. “If you want to build a hyper-growth consumer business and you think I can be helpful to you, you should let me in.”

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New Fundings

Crown Bioscience, a 7.5-year-old, Santa Clara, Ca.-based company that helps pharmaceutical companies improve the productivity of their drug development, has raised $26.6 million in Series D financing led byLilly Asia Ventures. The company has raised $55.4 million altogether in recent years, including from OrbiMed AdvisorsQiMing Venture PartnersCID Group, and Argonaut Private Equity.

Flipkart, the nearly seven-year-old, Bangalore City, India-based e-commerce giant, has raised $210 million in new funding led by DST Global, with returning investors Tiger GlobalNaspers, and Iconiq Capital also participating. The announcement comes on the heels of last week’s news that Flipkart will acquire online fashion retailer Myntra in a deal reportedly worth $300 million. Flipkart has now raised $750 million altogether.

Perfint Healthcare, a nine-year-old, Chennai, India-based maker of image-guided medical devices for oncology and pain care, is looking to raise $40 million to $50 million in Series E funding now that its oncology equipment has received FDA approval, says the Business Standard. So far, the company has raised $32.7 million across four rounds of venture funding, including from IDG VenturesAccel India Ventures, and Norwest Venture Partners.

PolicyBazaar, a 5.5-year-old, Gurgaon-based online insurance policy aggregator, has raised roughly $20 million in Series C funding led by Tiger Global Managementsays Techcircle.in. In April 2013, PolicyBazaar had raised $5 million in its third round of funding, led by Inventus Capital PartnersIntel Capital is also an investor.

Skycatch, a 1.5-year-old, San Francisco-based company whose aerial drones can be used in the mining, construction and agriculture industries, has raised $13.2 million in funding, including convertible debt, according to an SEC filing. The company’s investors include Avalon Ventures,Google VenturesffVC, and Sherpalo Ventures.

Toppr, a year-old, Mumbai, India-based online test preparation startup, has raised $2 million in seed funding from SAIF Partners and Helion Ventures. The Economic Times has more here.

Twist Bioscience, a 1.5-year-old, San Francisco-based company that focuses on synthetic DNA production to produce specialty chemical compounds and drugs, has raised $26 million led by Nick and Joby Pritzker, through their family’s firm Tao Invest. Other participants in the round included ARCH Venture PartnersPaladin Capital GroupYuri Milner and additional strategic corporate and venture investors. The company has raised $35.1 million altogether.

Uber, the five-year-old, San Francisco-based on-demand car service, is now weighing investor bids that value the company near or above $17 billion, reports the WSJ. That’s too rich for some, adds the report, saying that General Atlantic passed after considering a deal at $14 billion.

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New Funds

Indonesian telecommunications firm Indosat is joining forces with the Japanese telecommunications giant SoftBank to create SB ISAT, a $50 million venture capital fund targeting Indonesian startups, reports TechinAsia. Indosat president and CEO Alexander Rusli said that the company, together with SoftBank, will provide commercial, infrastructure and strategic support to promising Indonesian technology startups.

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IPOs

Clarus Therapeutics, an 11-year-old, Northbrook, Il., based pharmaceutical company focused on men’s health (it makes an oral testosterone that the FDA is weighing), has filed paperwork to go public and raise up to $86 million. The company’s biggest shareholders are Thomas McNerney & Partners, the healthcare venture firm, which owns 58.8 percent of the company; H.I.G. BioVentures, which owns 24.5 percent; and ProQuest Investments, which owns 16.2 percent.

Datalogix Holdings, a 12-year-old, Westminster, Co.-based company that sells offline purchasing data to marketers, is plotting a possible IPO later this year, according to the WSJ. The company has raised $41.5 million in recent years, including from Jim Breyer’s Breyer CapitalCostanoa Venture CapitalSequel Venture PartnersInstitutional Venture Partners, and General Catalyst Partners.

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Exits

Check, a seven-year-old, Palo Alto, Ca.-based app that lets users pay bills, as well as monitor their bills, is being acquired by Intuit for $360 million in cash and other considerations, the companies are announcing this morning. Check had raised $47 million from investors, including Morgenthaler VenturesPitango Venture Capital, and Menlo Ventures.

Defense.Net, a 15-month-old, Belmont, Ca.-based cloud service that defends data centers and applications from certain kinds of cyber attacks, has been acquired by publicly traded F5 Networks for an undisclosed sum. Defense.Net had raised $9.5 million in equity and debt led by Bessemer Ventures Partners. Other investors included Atel Ventures and Comerica. (Defense.net, cofounded by serial entrepreneur Barrett Lyon, was reportedly incubated in the Menlo Park, Ca., office of Bessemer.)

Dropcam, the connected camera startup that streams video footage to users’ phones and computers, is reportedly being sized up by Google, four months after Google’s $3.2 billion acquisition of Nest Labs. Dropcam’s CEO, Greg Duffy, hinted to StrictlyVC last fall that the company had eventual plans to compete in the home security market; in an apparent step in that direction, Dropcam revealed earlier this month that it will make people-detection software available to subscribers this summer.

Kakao, the company behind the hugely popular South Korean messaging service KakaoTalk, is buying Daum, a large, publicly traded South Korean Internet portal, in a reverse takeover that values Kakao at 3.1 trillion won ($3 billion), reports Bloomberg. Daum will be renamed Daum Kakao. The new company will be listed in October. You can learn more here.

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People

Former Microsoft CEO Steve Ballmer is reportedly interested in buying the L.A. Clippers, with TMZ Sports reporting that Ballmer was set to meet with Shelly Sterling (the estranged wife of Donald Sterling) on Sunday to discuss the NBA team.

Another billionaire tech mogul is being accused of trying to cut off public access to a beach for the sake of his own peace and privacy. This time, it’s Dave Duffield, co-founder of Workday and founder of PeopleSoft, and the beach is in Lake Tahoe. The Reno Gazette-Journal has more here.

Tony Fadell, cofounder of the connected home products company Nest, can’t stand the phrase “the Internet of things,” calling it meaningless and “just a term to get stock prices moving . . .’The Internet of things’ is a term made by the industry to try to get people buzzing about something that there’s no definition of.”

Rap Genius cofounder Mahbod Moghadam resigned from both the company and its board of directors over the weekend, after leaving misogynistic annotations on an online manifesto by 22-year-old Elliot Rodgers, who killed six people on Friday near the campus of University of California, Santa Barbara. Much more here.

The Google Ventures team is reportedly investigating London as the site of its first branch outside the U.S. The Sunday Times has more here.

On Friday, during the final day of Stanford University School of Medicine’s Big Data in Biomedicine Conference, venture capitalist Vinod Khosla delivered a keynote speech arguing that data will eventually replace 80 to 90 percent of the decisions doctors make. Unsurprisingly, it didn’t sit well with some physicians in the audience, reports the San Francisco Chronicle. “I don’t agree with 80 percent of your remarks,” one clinician told Khosla. His response: “Humans are not good when 500 variables affect a disease. We can handle three to five to seven, maybe,” he said. “We are guided too much by opinions, not by statistical science.”

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Job Listings

Commonfund Capital, the 26-year-old, Wilton, Ct.-based investment firm, is looking for an associate director to focus on venture capital and growth equity deals.

Maven Ventures in Los Gatos, Ca., is looking for a full-time associate.

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Happenings

The Code Conference kicks off today in Rancho Palo Verdes, Ca.

The Apple Worldwide Developers Conference comes to San Francisco next week.

—–

Essential Reads

Should investor and Rap Genius advocate Ben Horowitz have done something sooner about cofounder Mahbod Moghadam, who has a history of behaving badly?

—–

Detours

A new ad for iPad featuring the conductor and composer Esa-Pekka Salonen may come as a pleasant shock.

Amazing street art.

Dissecting the “Mad Men” mid-season finale. (So, what happened there in that last scene?)

—–

Retail Therapy

Boosted Boards, for people who want to look cool but don’t want to go to the trouble of actually skateboarding anymore.

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VC Jim Scheinman Has Business Ideas for Days; Here’s His Latest

Jim Scheinman.photoMicro VC Jim Scheinman of Maven Ventures is usually noodling on a new business idea, he tells me over coffee at The Battery, a private social club in San Francisco where various tanned VCs are seated opposite pale entrepreneurs in spacious black leather booths.

One of these ideas was “a payment platform for the social web” that Scheinman dreamed up in 2007, but because he doesn’t code, he “found two guys who were basically going to build it with me.” Scheinman says he became the company’s acting COO and first seed investor. That startup, Jambool, was acquired by Google in 2010 for a reported $70 million. (It had raised $6 million.)

Tango, a messaging company with more than 200 million users and roughly $367 million in venture backing, was also “in part, kind of my idea,” says Scheinman, an early investor in the company who says that, among other things, he came up with Tango’s name, its viral marketing strategy, and some of its early employees.

Scheinman’s newest notion is turning his current “sub $10 million fund” into a new $50 million to $100 million second fund in the next year or so with his same LPs plus an institutional investor or two. The question is whether Silicon Valley is ready for this particular idea.

A native New Yorker, Scheinman traces his investment background back the baseball cards he sold with his brother in high school. Within a few years, the two were running a multimillion-dollar business that employed 50 people, but Scheinman wanted more out of life, so not long after graduating from college at Duke University, he headed to UC Davis for a law degree, and afterward, to one startup and then another.

It was at his second startup — San Francisco-based Friendster, one of the earliest social networks — that he met married programmers Michael and Xochi Birch. As Scheinman tells it, he was looking for acquisition targets for Friendster, but he was so impressed with the Birches that he instead convinced them to make him their third employee — first at their startup BirthdayAlarm and then at Bebo.com, a social network that AOL acquired for $850 million in cash in 2008.

The sale made both Birches wealthy. (Indeed, they own and operate The Battery.) It also gave Scheinman the freedom to become an angel investor as well as raise a small fund once his angel investments began to pan out. “I’m happy to make people money and get a dinner or a thank you, but I thought, ‘Why not pool some of that money and take 20 percent?'”

Scheinman has plainly taken his role as a VC seriously. He currently backs about six companies each year, writing checks to nascent startups ranging between $100,000 and $150,000 and very occasionally investing in a Series A or B round, such as with the investing platform AngelList and Banjo, a real-time content discovery company.

Scheinman has also created a low-flying incubator that works with up to six startups that each receive a $250,000 convertible note, six to nine months of office space, ongoing help from Scheinman, and access to 20 mentors, including startup CEO coach Dave Kashen and Andy Johns, who has been a user growth manager at Quora, Twitter, Facebook and now Wealthfront. (Scheinman says the idea is to create or identify nascent consumer startups and help them scale massively. The mentors and Scheinman’s LPs receive a collective 3 percent in each startup; Scheinman gets another 3 percent.)

Scheinman claims his formula is working. On the VC side, he says he was able to take “70x” his original investment off the table earlier this year when Alibaba led a $280 million round in Tango. (He claims he still maintains most of his ownership in the company, too.)

Meanwhile, a company he incubated, Epic, a year-old, all-you-can-read e-book service for kids, has raised $1.4 million from investors, including TomorrowVentures, Webb Investment Network and Menlo Ventures.

Scheinman says the Epic concept was his, adding that he’s always happy to share his ideas, particularly if they can turn into high-growth businesses. “The way I work is I talk with everyone about an idea, because you never know who it will resonate with or who is doing something similar.”

(When I reach out to a couple of entrepreneurs who Scheinman has worked with in the past, one doesn’t respond to a Memorial Day email; another characterizes Scheinman as very helpful in the early days of his company and says Scheinman has a great consumer touch but differs with his portrayal of some of his specific contributions.)

I ask Scheinman how he would scale his operation to fit the demands of a bigger fund. In addition to bringing aboard a second GP and two associates, he says he’d lead more deals, rather than hand so many off to his network. “Most of the companies [Maven] has incubated have gone on to raise $1 million to $1.5 million. Maybe I do that check or do $1 million and bring in one other syndicate.”

Scheinman adds that he’s “not running these businesses. But I know the problems they’re going to face and I can help them avoid some of them.”

“My value proposition is simple,” he continues. “If you want to build a hyper-growth consumer business and you think I can be helpful to you, you should let me in.”

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StrictlyVC: May 23, 2014

Good morning! Apparently, yesterday’s email was routed into some of your spam boxes. If you missed our interview with the savvy CEO of Ozon (Russia’s Amazon), here it is.

Also, apologies for not running a column this morning. Yesterday was busier than usual. StrictlyVC has also been steeling herself for an end-of-the-school-year field trip with hundreds of children today. (If the newsletter isn’t in your inbox on Tuesday, please send help.)

Wishing you a wonderful Memorial Day weekend!

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Top News in the A.M.

Alibaba is considering making an investment in the advertising technology firm AppNexusaccording to The Information.

Google is closing in on a $1 billion deal for Skybox Imaging, a satellite company that specializes in recording very detailed landscape pictures and video, says TechCrunch.

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New Fundings

Assurex Health, a 7.5-year-old, Mason, Oh.-based company whose tests help clinicians to determine the best drugs for patients with chronic medical conditions, has raised $32 million, including $7 million in equity fromCincyTechCincinnati Children’s Hospital Medical Center and Cincinnati-based Allos Ventures, and a $25 million loan from Silicon Valley Bank. The company has now raised $73.1 million altogether, shows Crunchbase.

BitLit Media, a 1.5-year-old, Vancouver-based company whose app allows users to purchase an ebook of a print book they own, has raised an undisclosed amount of seed funding from BDC CapitalThree Angels Capital, a venture fund started by the founder of e-book company Kobo; and unnamed angel investors.

Brandwatch, a 6.5-year-old, Brighton, England-based social media analytics company, has raised $22 million in new funding led by Highland Capital Partners Europe. Earlier investor Nauta Capital also participated in the round, which brings Bandwatch’s total funding to $28 million.

Clariture Health, a nine-month-old, Nashville, Tn.-based health-care marketing service, has raised $1 million in seed funding from the Nashville investment firm The Martin Cos.

Dejero Labs, a 5.5-year-old, Kitchener, Ontario-based next-generation broadcast technology company, has raised $4.5 million from the Toronto-based investment firm Best Funds.

DoorDash, a year-old, Palo Alto, Ca.-based on-demand food-delivery startup with ambitions to evolve beyond food, has raised a $17.3 million Series A round led by Sequoia Capital. Earlier investors Khosla VenturesCharles River VenturesPejman Mar Ventures, and Ted Zagat also participated in the financing, which brings DoorDash’s total funding to $19.7 million. TechCrunch has more here.

Factorli, a new, Las Vegas-based hardware incubator that looks to rival Highway1 in its ambitions to become a go-to place for hardware startups needing help in launching, has raised $10 million in Series A funding from the Vegas Tech Fund and Zappos CEO Tony Hsieh. Factorli was founded by Jen McCabe, who has been running the day-to-day operations of the Vegas Tech Fund and who previously worked at the Hsieh-backed consumer robotics startup Romotive.

Fanatix, a 2.5-year-old, U.K.-based mobile-first sports social network, has raised $500,000 in new angel financing ahead of a planned Series A round of funding in the fourth quarter of this year reports Forbes. The company has so far raised $3.5 million altogether.

Filament Labs, a year-old, Austin, Tx.-based patient-engagement platform, has raised $1 million in seed funding led by Mercury Fund.

iRhythm Technologies, a 7.5-year-old, San Francisco-based company that makes a lightweight heart monitor that can be worn continuously for weeks, has raised $17 million in Series E round funding led byNovo A/S. Earlier investor Norwest Venture Partners also participated in the funding, which brings the total capital raised by the company to roughly $122 million, shows Crunchbase.

Yoyo Holdings, a year-old, London-based company behind a mobile payment and customer-loyalty app, has raised $5 million in seed funding led by Imperial InnovationsFirestartr and a number of angel investors filled out the rest of the round.

Malauzai Software, a four-year-old, Austin, Tx.-based maker of mobile banking apps that are designed expressly for the customers of community financial institutions, has raised $6.48 million in Series C funding led by Wellington Management Company. Malauzai has raised $11.8 million altogether.

Nurix, a five-year-old, San Francisco-based company that develops small molecule inhibitors to treat degenerative diseases, has raised $25.1 million from earlier investors Column Group and Third Rock Ventures. The company has raised roughly $28 million to date.

Revolights, a 2.5-year-old, Emeryville, Ca.-bmaker of “smart” ring-shaped LEDs that attach to a bicycle’s wheels to lighten a rider’s path and make the bike more visible at night, has raised $1 million in Series A co-led bySierra Angels and Sacramento Angels. The round includes a $300,000 commitment that Revolights snagged from Robert Herjavec of Herjavec Group after appearing on the show “Shark Tank.”

Skyonic, a nine-year-old, Austin-based developer of carbon-capture technologies, has raised $12.5 million in funding from the energy deliver company Enbridge and previous backer ConocoPhilips. Skyonic has raised $187 million altogether to date, including from BP VenturesNorthwater CapitalEnergy Technology VenturesBlueCap Partners, and Cenovus Energy.

TheFamily, a year-old, Paris-based accelerator designed to support nascent technology companies, has raised $1 million from Index Venturesand angel investors.

TVTY, a 4.5-year-old, Paris-based company whose software tools help advertisers time their campaigns based on what’s happening on TV, has raised $4.5 million from Partech Ventures360 Capital Partners and business angels. The company has raised $6.8 million altogether.

Uber, the nearly five-year-old, San Francisco-based company whose mobile app makes it easy to connect with a driver for hire, is talking with investors about a round of roughly $500 million that could value the company at more than $12 billion, reports the WSJ. Possible investors, says the report, include BlackRockGeneral AtlanticTechnology Crossover Ventures, and hedge funds. Uber has so far raised roughly $300 million from investors.

Venus Concept, a 4.5-year-old, Toronto-based company that sells aesthetic medical devices for skin tightening and cellulite reduction, has raised $10 million from Longitude Capital.

Vive Unique, a 2.5-year-old, London-based booking site for handpicked home rentals around the world (it also handles insurance, property management, housekeeping, etc.) has raised roughly $5.9 million from Smedvig Capital.

WholeWorldBand, a 5.5-year-old company whose music platform and mobile app combines audio and video to create a virtual studio where musicians can connect and complete unfinished tracks, has raised $8.4 million in Series A funding led by Balderton Capital and International Investment & Underwriting (IIU).

Ximalaya, a 1.5-year-old, Shanghai-based podcast sharing service, has raised $11.5 million in Series A funding from Kleiner Perkins Caufield & ByersSIG Asia Investment and Sierra Venturesreports TechNode.

money-ears

New Fundings

Highland Capital Partners Europe has closed its debut fund, hitting its hard cap of 250 million euros. TechCrunch has all the details hereFergal Mullen, a veteran of Highland Capital Partners in the U.S., launched the European business in 2007.

Legend Capital, the 13-year-old, Beijing-based independent venture arm of the Chinese conglomerate Legend Holdings, has raised a new, $500 million fund in less than six months, reports VentureSource. Legend is part of a broader upswing in fundraising for China-based firms, notes the report, with China-based firms raising $1.07 billion in the first quarter — up 35 percent from the first quarter of 2013.

The Sapling Fund, a new, Columbus, Oh.-based early-stage venture firm, announced yesterday that it has launched a $50 million fund, led by two general partners (Abe Nixon and Jon Puz) and a venture advisor (Chris Payton), all of whom had previously cofounded an earlier business called Karma Capital, a separate investment and advisory firm. The firm says it intends to “leveraging relationships from Silicon Valley, to Harvard Business School, to Wall Street” to make smart investments in promising startups.

——

IPOs

JD.com shares rose 10 percent in their debut yesterday after pricing the year’s third-largest U.S. initial public offering. The strong support indicates renewed interest in Internet stocks and China e-commerce firms in particular, suggests Investors Business Daily.

—–

Exits

Get Maid, a two-year-old, New York-based home cleaning service, has been acquired by Homejoy, a nearly two-year-old, San Francisco-based home cleaning company. Terms of the deal aren’t being disclosed, but in December, Homejoy had raised $38 million in Series B funding from Google VenturesRedpoint Ventures, and First Round Capital, among others. GetMaid had raised $500,000 through an accelerator and angel investors.

Springpad, a 5.5-year-old, Charlestown, Ma.-based company that makes a productivity app, is planning to close its doors, reports The Verge. The company, whose momentum was dwarfed by the success of break-out companies like Evernote, has raised more than $7 million from investors, including Fairhaven Capital Partners.

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People

Ethan Beard, the former Facebook and Google executive, has joined the board of Parchment, an 11-year-old, Scottsdale, Az.-based company that digitally delivers transcripts and other academic credentials and has raised roughly $45 million from investors. Beard is currently an EIR at Greylock Partners (which is not a Parchment investor).

Venture capitalist Fred Destin talks with the WSJ about returning to London as Accel‘s newest partner — and how he plans to get up to speed on the scene. “The only way in which you prepare is to go meet tens or hundreds of people,” says Destin. “I’m planning to hit London and Berlin hard. That’s my strategy: Coffee shops and entrepreneurs.”

Charles Hudson, a partner at SoftTech VCtells Xconomy that things are a little different, now that SoftTech is managing an $85 million fund, up from its second, $55 million fund. ““We had companies in 2010 that come in our office, they need $500,000, they need a little bit more help on the prototype. It’s early. [In those days,] we probably would have written that check and supported that company. Now I tell them, what you really should do is get $500,000 in angel money, build that prototype, make some progress, and then come back to us when you’re looking to raise that $1.5 million to $2 million seed round.”

Norm Meritt has joined the New York City startup ShopKeep as co-CEO, according to the WSJJason Richelson, the company’s founder and CEO, said that after six years of running the company, which sells customer care and point-of-sales technology to retailers (so they can operate more like Apple stores), he needed help in scaling the company. Meritt comes to ShopKeep from iQor, a business process outsourcing services company that he joined in 2003 and where he was appointed CEO in 2012.

Naveen Selvadurai, who cofounded Foursquare and left in 2012 in what he has characterized as a “surprise” ouster, is joining Expa, the startup studio created by Uber and StumbleUpon founder Garrett Camp. Selvadurai will run the New York operations for the organization, which is cofounding companies and investing $500,000 and $1 million in each for a 20 percent stake. You can learn much more here.

Wen Tan, a partner at fund of funds FLAG Capital Management, says LPs’ views on Asia have changed noticeably over the last five years. “In the immediate aftermath of the global financial crisis, Asia was seen as a bulwark against the broader global downturn. In reality, if you look at median Asia Pacific private equity returns over the past decade, total value to paid-in [capital] has generally been no better than the U.S. and Europe. A small subset of sophisticated limited partners is recognizing that one needs a relatively concentrated portfolio of outperformers rather than having a broad portfolio of ‘index’ private equity funds.”

In case you missed it, the Winklevoss twins have a new gig, as satellite radio hosts for what’s being characterizes as a “short-term” SiriusXM radio program titled, yes, “Winklevoss Radio.” Salon has more here. According to a blog post written by Cameron Winklevoss, the show will focus on high-tech and feature an long list of high-wattage guests, including Virgin Group’s Richard Branson, “Silicon Valley” creator Mike Judge, and Joe Lonsdale of Formation 8. The first show aired yesterday.

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Job Listings

MHS Capital in San Francisco is looking for an associate. (Led by Mark Sugarman, the fund was nearing a final close on a $75 million fund as of a few weeks ago.)

—–

Happenings

Street Fight (Summit West). It’s coming.

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Data

With password security top of mind — especially after eBay’s warnings to users on Wednesday to change their passwords — Datafox decided to map out the enterprise password management landscape to find the providers it thinks will be around 20 years from now. (Click the graphic to enlarge.)

New numbers released by the firm Canalys earlier this week show Fitbit devices accounted for nearly 50 percent of the world’s 2.7 million wearable band shipments in the first quarter of 2014.

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Essential Reads

The trouble with IBM.

Forget net neutrality; what about Amazon neutrality?

—–

Detours

At the Fire Lab in Missoula, Montana, researchers are finding that fire is a mysterious phenomenon, and the physics behind it is often counterintuitive.

Is work your happy place?

A friendly reminder to wear sunscreen.

—–

Retail Therapy

The Osmo gaming platform. It’ll make you feel like a slightly less terrible parent.

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StrictlyVC: May 22, 2014

Happy Thursday morning, everyone!

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Top News in the A.M.

Facebook announced today that it is changing a privacy setting for new users, making their “friends” the default audience for all posts, rather than the general public.

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With $150 Million in Fresh Funding, Can the Amazon of Russia Deliver?

Dipping into a flourless cake at a French bistro in San Francisco, Maelle Gavet has reason to be in a celebratory mood. The French-born CEO of Ozon, considered the Amazon of Russia, has in the last few weeks sealed up $150 million in fresh backing from investors — money that helped Ozon secure a minority stake last week in LitRes, the leader in Russia’s small but fast-growing e-book market.

The achievements aren’t minor for the company, which Gavet has been leading for the last three years, after a Boston Consulting Group job led her to it. Founded in 1998 as an online bookstore, Ozon had barely issued a press release about its first $3 million round, from the Moscow-based PE firm Baring Vostock, when the dot.com industry imploded. Over the next decade, the company churned through employees, including CEOs, managing to survive but barely until Index Ventures stepped in to lead an $18 million round in the company in 2007. It gave Ozon a needed lifeline. But Ozon has really begun to click on Gavet’s watch.

Gavet’s biggest, and likely smartest, gamble to date has been to invest heavily in Ozon’s own private shipping company, O-Courier, which is making it possible not only for Ozon to fulfill its orders but also to serve as a back-end provider for a growing number of third parties that now rely on its increasingly sophisticated logistics network to deliver their own goods.

She has also been pouring resources into other subsidiaries, including a travel business, Ozon.travel; a shoe business à la Zappos called Sapato.ru; and Ozon Solutions, which offers turnkey solutions to brands that want to sell online but don’t want to pull together retail storefronts themselves.

Ozon, which employs 2,300, is far from profitable because of how much it’s investing in growth. But with roughly half of Russia’s 140 million inhabitants now online, and 20 percent of those 70 million shopping online, the company’s efforts are beginning to pay off. Last year, revenue hit $750 million, up from roughly $500 million in 2012 (which was itself up from $165 million in 2010).

Of course, Ozon still has its share of obstacles, some of which must seem insurmountable to American investors, who passed on Ozon’s newest round of funding. Ozon’s newest backers instead are Sistema and Mobile TeleSystems, two of Russia’s largest publicly traded holding companies, which invested in Ozon last month at a $700 million valuation. (They now own a 20 percent stake in the business.)

Not only are there the obvious geographic, cultural, and economic challenges to navigate (enormous country, terrible roads, cash culture, fewer people than Nigeria and a relatively tiny urban elite with money to spend), but business is utterly entangled with politics, too.

There’s the Ukranian crisis, for one thing, a situation that Gavet says has impacted Ozon indirectly but meaningfully. First, the Russian ruble devalued fairly quickly, making its import contracts far more expensive. Worried banks proceeded to cut customers’ credit lines, and “with retailers everywhere,” notes Gavet, “a lot of your working capital is through credit lines with the banks.” Soon, some European and American investors who Ozon had been talking with about its fundraising “stopped returning our calls,” Gavet tells me with a shrug.

There’s also the little problem of Pavel Durov, the country’s most visible Internet founder, who just fled the country because of the Kremlin’s steady inroads into the ownership of his company, VKontakte, Russia’s leading social network. How could investors not worry that some oligarch will steal her company, too, I ask her over lunch.

“If you look at Yandex [the Russia-based search engine that went public in 2011 on Nasdaq], it’s doing fine,” she says. The Russian Internet company Mail.ru., which went public on the London Stock Exchange in 2010, “is also doing fine. You have a lot of American investors in both of these companies,” she adds, noting that Ozon’s earlier shareholders include some U.S. investors, as well, including Cisco and Intel. (Ozon has raised $271 million altogether, including a $100 million round led by Japan’s Rakuten in 2011.)

“You can always [hypothesize] over whether the government is going to be interested at some point. But if you look at the facts, there is no issue,” she says. “I do think there are industries that are considered to be strategic by any government; I’m not sure that online retail has ever been one of them,” she adds with a laugh.

money-ears

New Fundings

Drizly, a two-year-old, Cherborn, Ma.-based on-demand alcohol delivery company, has raised $2.5 million in fresh funding led by earlier investor Continental InvestorsVayner RSESuffolk Equity, and other previous investors also participated. The company has raised $7.3 million altogether, including from Atlas VentureFairhaven Capital Partners,Reynolds & Company Venture PartnersBreakaway Ventures, and many individual investors.

Evergage, a 3.5-year-old, Somerville, Ma.-based software platform whose detailed analytics help its companies better engage with customers, has raised $4 million in Series A funding led by G20 Ventures. Other, earlier investors to participated included Point Judith Capital and Advanced Technology Ventures. Evergage, which has raised roughly $6.3 million altogether, was originally called Apptegic.

Load DynamiX, a 6.5-year-old, Santa Clara, C.-based maker of testing and analytics products for data centers, has raised $12 million in financing led by HighBar Partners. Founded as SwiftTest, the company, renamed HighBar last year, has raised $19.3 million altogether, including from Core Capital PartnersMiramar Venture PartnersBenhamou Global VenturesKinetic Ventures, and Azure Capital Partners.

Lysogene, a 4.5-year-old, Paris-based biotech company focused on intracerebral gene therapy aimed at treating neuro-degenerative diseases, has raised 16.5 million euros ($22.6 million) in Series A funding led by earlier investor Sofinnova PartnersBpifrance and Novo Seeds also participated in the round.

Mimosa Networks, a two-year-old, Campbell, Ca.-based company that builds outdoor gigabit wireless platforms, has raised $20 million in Series C funding led by earlier investor New Enterprise Associates. Another earlier investor, Oak Investment Partners, also participated in the round, which brings the company’s total funding to $38 million.

Roli, a five-year-old, London-based whose new kind of musical instrument, the Seaboard Grand, reimagines the piano, has raised $12.8 million in Series A funding led by Balderton Capital. Other participants in the funding included FirstMark CapitalIndex Ventures and Universal Music. The WSJ has more on the company and its oddly compelling product here.

SimpliSafe, a 7.5-year-old, Cambridge, Ma.-based company that makes a portable, wireless home security system, has raised $57 million in funding from Sequoia Capital after what TechCrunch had last month described as an intense bidding war. The company was started by HBS graduates Chad and Eleanor Laurans after several of their friends’ homes were robbed.

Smartling, a five-year-old, New York-based translation technology company, has raised $25 million in Series D funding led by Iconiq Capital Partners. The company has now raised roughly $63 million from investors, including Tenaya CapitalHarmony PartnersVenrockU.S. Venture PartnersIDG VenturesFirst Round Capital and Felicis Ventures.

Storehouse, a year-old, San Franciso-based company behind a visual storytelling app, has raised $7 million in Series A funding led by
Sherpa Ventures. Earlier seed investors True VenturesLerer Ventures,Designer Fund and unnamed angel investors also participated in the round. The WSJ has more on the company here.

Treasury Intelligence Solutions, a 4.5-year-old, Walldorf, Germany-based cloud-based international payment service, has raised 4 million euros ($5.4 million) in Series B financing led by new investor ZobitoTarget Partners also participated.

X.ai, a new, New York City-based company that has built and maintains an artificial intelligence-powered personal assistant, has raised $2.1 million in seed funding led by IA VenturesSoftbank VC and Lerer Ventures.

—–

IPOs

JD.com, the Beijing-based e-commerce company, priced its shares at $19 yesterday, higher than its initially proposed range of $16 to $18 per share. The pricing reflects a big appetite for tapping China’s growth, but a miscalculation could impact Alibaba’s impending IPO, notes TechCrunch.

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Exits

Intelligent Healthcare, a 24-year-old, Santa Monica, Ca.-based SaaS company that provides patient data integration and analysis services to physician groups, hospitals and health plans, has been acquired by 15-year-old ZirMed of Louisville, Ky., which makes revenue cycle management software. Terms of the deal weren’t disclosed. Intelligent Healthcare doesn’t appear to have outside investors. ZirMed is backed by Sequoia Capital, which first provided the company with an undisclosed amount of funding in 2010.

It’s official. India’s online fashion retailer Myntra has been acquired by India’s biggest e-commerce company, Flipkart, for an undisclosed amount that various outlets are pegging at roughly $300 million.

ThreatGRID, a four-year-old, New York-based malware analysis and sandboxing technology company, is being acquired by Cisco for undisclosed terms. ThreatGrid had raised an undisclosed amount of funding from In-Q-Tel, the investment arm of the CIA, and individual investors. You can find more on the deal here.

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People

Investor Marc Andreessen talks with the Washington Post, including about the many businesses bitcoin has the potential to disrupt: “Digital stocks. Digital equities. Digital fundraising for companies. Digital bonds. Digital contracts, digital keys, digital title, who owns what — digital title to your house, to your car. . . And if I sell you my car, automatically you get title, and you get the key that lets you operate the car, and it’s all digital, and it’s all unique, and it can’t be cracked. You’ve got digital voting, digital contracts, digital signatures. You’ve got unique pieces of digital content. If you guys wanted to know exactly who had every piece of content you ever made, you can track that. It’s this long list.”

Venture capitalist Fred Destin, who left Boston-based Atlas Venture recently after a decade with the firm, is now a London-based partner atAccel Partners.

Cisco’s longtime “chief futurist” Dave Evans has left to launch a stealth startup.

E-commerce company Fab is laying off up to 90 New York-based employees today in a fourth wave of layoffs reports Re/code. The move shrinks Fab’s global staff to 200, down from roughly 700 at its peak.

Speaking of Atlas Venture, Dave Grayzel is now a partner on its life sciences investing team. Since 2010, Grayzel has been a managing director for the Atlas Venture Development Corp., which focuses on acquiring drug assets and partnering with pharmaceutical companies to commercialize them. Grayzel had spent the previous eight years as a VP at Infinity Pharmaceuticals.

Palmer Luckey and the company he cofounded, Oculus VRare being sued by Zenimax Media and its subsidiary id Software, where Oculus VR chief technical officer John Carmack once worked. The claim: that they stole and misappropriated “trade secrets relating to virtual reality technology” dating back to Carmack’s employment at id Software. The immediate response: “There is not a line of Zenimax code or any of its technology in any Oculus products.”

Venture capitalist Emily Melton has rejoined DFJ as a partner. Melton began her career in VC as an analyst at DFJ in 2000. In 2009, she left the firm as a partner to join Mayfield Fund, where she stayed just two years, turning to angel investing and advising part-time and, in 2013, working as a venture partner for U.S. Venture Partners for roughly six months. Melton focuses on consumer and mobile technology, healthcare technologies and marketplaces.

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Data

In the first quarter of 2014, Apple reportedly accounted for the largest share of smartphones for three of the top four U.S. mobile carriers: 52 percent at AT&T, 51 percent at Verizon Wireless, and 36 percent at Sprint, while taking the second place spot behind Samsung on the more value-oriented T-Mobile/Metro PCS with 24 percent. More here.

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Essential Reads

“Someone out there likes anonymous money,” reports Wired. “In only a month, the little-known bitcoin alternative known as Darkcoin has rocketed nearly tenfold in value–from around 75 cents a coin to almost seven dollars. Its selling point: Darkcoin offers far greater anonymity than bitcoin, mixing up users’ transactions so that it’s incredibly difficult to trace a payment to a person.”

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Detours

Best commencement speeches ever, via Huckberry.

Food service jobs of the tech industry’s rich and famous.

A new Bentley video that was shot, somewhat amazingly, on an iPhone 5S, and edited on an iPad Air — inside a Bentley.

Heather Havrilesky on how to write.

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Retail Therapy

A 3D machine that makes pancakes, people.

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