StrictlyVC: May 2, 2014

It’s Friday! We’ll see you back here next week, when we have some great interviews lined up. In the meantime, hope you have a fabulous weekend, everyone.

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Top News in the A.M.

Major U.S. technology companies are done quietly complying with federal investigators’ demands for e-mail records and other online data, they say.

Activists are now suing the city of San Francisco over those Google buses. More here.

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Ted Driscoll on VC Bias in Healthcare Investing

Ted Driscoll of Claremont Creek Ventures has been embroiled in the world of digital healthcare a lot longer than most of his industry peers. Before becoming a VC nine years ago, Driscoll, who has a PhD in digital imaging from Stanford, spent decades as a founder and executive at five diagnostics and imaging companies. Maybe it’s no wonder then that Driscoll has strong opinions about where investors who are newer to the digital health scene should be focusing their attention.

You’ve written about confirmation bias and how “humans are good at ignoring stuff they don’t agree with.” Does that apply to healthcare investing, too, in your view?

I think it’s one of the curses of venture capital. VCs come in with preconceived notions and it causes them to not necessarily look at the world in the future but to look at the past.

Meaning what, more specifically?We’re in the midst of a revolution in medicine and we don’t see it. It’s becoming all digital — not just electronic records being captured and stored but diagnostic decisions that are being based on much larger data sets than doctors can fit in their heads. They need tools that find information in the data and that’s a new thing for doctors. In my memory, the guys who went to med school weren’t the computer science types, but now they need computer familiarity to cope with the huge datasets that confront them.And you think VCs aren’t funding enough of those tools?

My personal opinion is that the most value is created by technologies that can change a doctor’s decision-making. I’m not so interested in things that tell me how many paces I took yesterday; I am interested in the wearable that monitors someone with congestive heart failure and alerts him when he needs to go to hospital. I’m interested in the cheek swab that’s going to tell a doctor that a depressed patient is going to respond to Prozac and not Celexa, so the doctor can make an informed decision rather than rely on trial and error.

No doubt I’ll miss a Facebook along the way but I’m not seeing healthcare applications for consumers that work that well. Frankly, the many acquaintances of mine with Fitbits or Fuelbands stopped wearing them after three months.

You note that doctors loath to adopt new technologies. How, or when, do we get past that hurdle?

Doctors are quite aware of malpractice issues, so they tend to not want to change until they know something is going to work and not have unexpected side effects. Another issue is the way reimbursement works. Certain tests might be valuable, but because a doctor knows he or she won’t be reimbursed until the following year [they might hesitate to use that test] or else exaggerate the patient’s condition to ensure they’re reimbursed for the treatment [more quickly]. Our reimbursement system is total anarchy, with different practices across every state. Is there a reimbursement code for this? Does Medicare reimburse that? Worse, it changes from year to year.

The good news: as the medical community begins to understand this whole world of information under the surface that can help them, and lots of tests are getting approved [by the FDA], that information is getting back to reimbursers, and they’re coming around. Five years ago, I wouldn’t have invested in a genetic test. Now, I have.

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New Fundings

Augment, a 2.5-year-old, Paris-based company whose mobile app allows users to visualize products in augmented reality, has received $1.5 million in funding from individual investors. The company has raised $1.8 million to date.

 

CertiVox, a six-year-old, London-based security company that sells information security infrastructure-as-a-service, has raised $8 million in Series B funding from NTT Docomo Ventures. Earlier investor Octopus Investments also participated in the round, which brings the company’s total funding to $17 million.

Data Elite, a months-old, San Francisco-based incubator for data science startups, introduced its first class of seven companies yesterday, each of which has raised $150,000. Learn more about them here. Data Elite was founded by Tasso Argyros, co-founder of data-analytics company Aster Data Systems, and Stamos Venios, an M&A veteran, and is backed by Andreessen HorowitzFormation8Social + Capital Partnership and investor Ron Conway, among others.

EnergySavvy, a 4.5-year-old, Seattle-based company whose online tools help utilities operate energy-efficiency programs, has raised $7 million in new funding led byPrelude Ventures, which was joined by earlier investors, including Pivotal Investments. The company has raised $12.9 million altogether, shows Crunchbase.

Enterome Bioscience, a two-year-old Paris-based company that’s developing biomarkers for medical conditions relating to metabolic and bowel diseases, has raised $16.8 million in Series B funding led by its existing investorsSeventureLundbeckfond Ventures, and Omnes Capital.

Halo Neuroscience, a 1.5-year-old, New York-based company whose wearable headband device purports to “boost brain function,” has raised $1.5 million in seed funding led by Marc Andreessen of Andreessen Horowitz and Jeff Clavier of SoftTech VC. More here.

Intent HQ, a nearly four-year-old, London-based company whose software creates a so-called interest profile of every Website visitor based on both his or her social profile, along with what that person reads and clicks on, has raised $8 million in funding led by Oxford Capital. Earlier investor Edge Performance VCT also participated.

Kamcord, a 2.5-year-old, San Francisco-based company whose application allows users to record and share mobile games they’ve played via Facebook, Twitter, YouTube, and email providers, has raised $7.1 million led by TransLink Capital. Other participants in the round included new investors SV AngelDeNAKLab and M&Y Growth Partners, and earlier investors Innovation WorksXG Ventures and Mark Williamson. Kamcord has raised $9.6 million to date, shows Crunchbase.

Lecorpio, a 7.5-year-old, Fremont, Ca.-based maker of cloud-based intellectual property management and analytics software, has raised $10 million in Series B funding led by the family office M2O Inc.

MakeSpace, a year-old, New York-based full-service storage company, has raised $8 million in Series A funding led by Upfront Ventures, with participation from Founders Fund and O’Reilly AlphaTech Ventures. Earlier investors Lowercase CapitalHigh Peaks Venture Partners and Collaborative Fund  also participated in the round, which brings the company’s total funding to $10.1 million.

MediaREDEF, a years-old, New York-based daily email, site, and soon-to-be app, has raised $2.25 million in seed funding led by Bloomberg Beta. Other participants in the round include The Chernin GroupGreycroft Partners, and high profile individual investors like Jeffrey KatzenbergMark CubanTroy Carter and James Murdoch. Re/code has more here.

Pubmark, a two-year-old, Cambridge, Ma.-based startup that helps publishers and authors sell their books online and is better known as BookBub, has raised $3.8 million in Series A funding led by NextView Ventures and Founder Collective. Other participants in the round included Avalon Ventures and Bloomberg Beta.

PunchTab, a three-year-old, Palo Alto, Ca.-based company that sells customer-engagement technology, has raised $6.25 million in new funding led by earlier investorMohr Davidow Ventures. The company has now raised $11.5 million to date, shows Crunchbase.

Shop.Ca, a three-year-old, Toronto-based online shopping website, has raised $31 million in Series B funding led by Shaw Ventures and other, undisclosed financial institutions. Earlier investors, including Torstar and Difference Capital, also participated in the funding.

Tresorit, a three-year-old, Budapest, Hungary-based maker of cloud-based, secure file synchronizing and collaboration software that enables business users to share confidential data, has raised $3 million in Series A funding led by Euroventures, as well as earlier backers, including individual investors Andreas Kemi and Marton Szoke. The company has raised $5 million to date.

Waggl, a months-old,San Francisco-based startup that makes polling software, has raised $1.1 million in seed financing from numerous individual investors, including Robert Hohman, the former president of Hotwire and founder of Glassdoor.

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New Funds

Highway1,
 a year-old San Francisco-based incubator for hardware startups, announced yesterday that its fall 2014 program is now open to new applicants. It also announced that companies that pass through the program will now receive $50,000 each, up from $20,000. StrictlyVC had profiled Highway1 last month.
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IPOs
ProteinSimple, a 10-year-old, Santa Clara, Ca.-based company whose tools analyze proteins that can be used as drugs or biomarkers, is looking to raise $86 million in an IPO,  shows paperwork it filed yesterday for an IPO. ProteinSImple, which changed its name from Cell Biosciences in 2011, is principally owned by Domain Associates, which owns 11.6 percent of the company; Essex Woodlands Health Ventures, which owns 14.6 percent; LVP Life Science Ventures, which owns 8.1 percent; Novo A/S, which owns 12.1 percent; and Wellcome Trust Investments, which owns 19.6 percent.
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Exits

Awe.sm, a four-year-old, San Francisco-based company whose software helps measures the performance of social marketing campaigns, has been acquired by Unified, a New York-based cloud technology company. No terms were disclosed. Awe.sm had raised $5.3 million from investors, including Upfront VenturesNeu Venture Capital, and Foundry Group.

CrowdStream, a three-year-old, New York company that had developed an “at-event engagement platform,” was acquired yesterday by RadioIO, a publicly traded company. Terms of the deal weren’t announced.

SpaceClaim, a nine-year-old, Concord, Ma.-based direct modeling software company, has been acquired by Ansys, a publicly traded developer of advanced simulation software for engineers for $85 million in cash. SpaceClaim had raised $50 million over the years, including from Needham Capital PartnersBorealis VenturesNorth Bridge Venture Partners, and Kodiak Venture Partners.

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People

Venture capitalist Vinod Khosla is reportedly refusing to come to court to testify about blocking public access to a popular surf spot. Vinod Khosla is being sued by the Surfrider Foundation over the closing of Martin’s Beach, just south of Half Moon Bay, where Khosla acquired land in 2008.

John Melas-Kyriazi is the newest associate of Spark Capital in Boston. The Boston-native was formerly the CFO of the Palo Alto, Calif-based startup StartX, a venture capital fundformed out of a partnership between Stanford University and the Stanford Hospital & Clinics. It’s worth noting that Spark Capital is among those firms that believe strongly in the apprenticeship model. General Partner Mo Koyfman had joined the firm as a principal in the latter half of 2008. (He was promoted in 2012.)  More recently, Spark promoted Andrew Parker to the role of general partner. Parker has been with Spark since 2010, joining the firm as an associate; he was promoted to principal less than a year later and made a GP last October.

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Esssential Reads

Foursquare has split itself in two.

Amazon‘s smartphone revealed . . . to look a lot like every other smartphone.

Don’t cry, Twitter. The Atlantic has predicted certain doom for many before you.

Founders with kids.

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Detours

Foursquare has split itself in two.

Amazon‘s smartphone revealed . . . to look a lot like every other smartphone.

Don’t cry, Twitter. The Atlantic has predicted certain doom for many before you.

Founders with kids.

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Retail Therapy

Go zero to 60 miles per hour in 3.7 seconds and look fine doing it.

An entire collection of gear inspired by the carpet from The Shining’s Overlook Hotel.

Tony Stark’s house is for sale, people.



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