Monthly Archives: July 2014

StrictlyVC: July 31, 2014

Hi, good morning!

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Top News in the A.M.

Carmaker Tesla Motors and electronics giant Panasonic have just announced a deal to build a huge battery plant in the U.S. and they’re providing many more details about that agreement than they have previously.

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A New Holding Company Looks to Align Investors with Mature Startups

You can get away with a lot when your investors are wealthy individuals. Such is the case with Collaborative Fund, a three-year-old, New York-based venture fund focused on collaborative-consumption models and backed by some big wheels, including former Sequoia Capital general partner Tom McMurray, private equity veteran Doug Smith, and Jay Kim, a venture partner and investor in Collaborative who co-founded the video game developer Nexon Corp in 1994. (The bootstrapped company went public in 2011 on the Tokyo Stock Exchange and is now valued in the billions of dollars.)

Indeed, the same group of investors to back Collaborative are today rolling out a new, special purpose entity called Alignment Holdings that counts Collaborative founder Craig Shapiro as one general partner and Smith — who will be leading the outfit’s day-to-day affairs — the other. The idea, says Shapiro, is to work with companies that are producing real revenue, without forcing them to adhere to the constraints of a typical fund. “The life of most funds is 10 years, and you have a three- or four-year investment period after which you’re expected to harvest investments.” With Alignment, “We can invest in a business and hold it for 20 years or more.”

I talked with Shapiro yesterday about how Alignment works, who would use it, and why he’s suddenly involved with two very disparate funds.

What was the impetus for Alignment?

It kind of came together because we were seeing mission-driven founders not being excited about their current liquidity options. Some feel like selling their business would detract from their mission and that going public is arduous and expensive and makes them beholden to a quarterly result. This is targeting companies whose early-stage investors may be looking to exit. It’s almost like a leveraged buyout, where we say, “At this price, we’re going to purchase your preferred shares.”

Don’t secondary sales address this issue?

You’re seeing some people solve for that problem through secondary markets, but it can also be really distracting, deciding who gets to sell their shares and for how much. It’s why we chose to create vehicle that’s evergreen. While the purchase side is the same — we won’t be doing anything different than, say, a private equity firm that buys shares on the secondary market — the difference is that the private equity firm will expect [to receive several times their investment] within a few years. With us, companies have a significantly longer time period to [produce a return] through smaller chunks based on revenue. It’s more like a mortgage on your house.

Have you raised the capital yet? If not, how much are you targeting?

We’ve raised money; Jay [Kim] is our anchor investor, but it’s still open, so our attorneys have advised us to be cautious about what we share.

Does this kind of structure rule out syndicates?

We could partner with an entity that has a similar return profile, but yes, it wouldn’t work if we were working with a private equity or venture shop that’s hoping a company is going go public. If I’m a VC, I’m saying, “Reinvest everything so we can get to the IPO.” Alignment is targeting companies that don’t want to rush, that would rather buy [their shares] back from employees and shareholders and refinance the company.

What size checks will you be writing, what kind of return do you expect, and how long will these terms be?

The size of checks will vary pretty greatly, and we can structure [these arrangements] in different ways. If a company is throwing off a lot of cash, it can carry a larger debt component at a lower rate. If it isn’t throwing off a lot of cash, you can extend the life [of the loan] but have additional equity, so if the company has a liquidity event, Alignment gets some upside.

Do you expect that some of Collaborative’s portfolio companies [which include Kickstarter, Lyft, TaskRabbit, and Hampton Creek Foods] will eventually be candidates for Alignment? If so, would that be a conflict?

We’ve formed an external investment committee to deal with any conflicts. The truth, though, is that because Collaborative Fund is investing so early, it will likely be years before any of our companies would be ready for Alignment Holdings. But I think it would be a great thing.

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New Fundings

1006.tv, a five-year-old, Beijing-based mobile game media company, has raised $10 million in Series B funding led by Sequoia Capital, with ClearVue Partners participating. China Money Network reports that last year, the company raised “several million” dollars in Series A funding led by Matrix Partners, which had also provided the company with seed funding in 2011.

ABA English, a three-year-old, Barcelona-based online English-learning platform, has raised $3.4 million from the venture firm Nauta Capital.

Bluegrass Vascular Technologies, a four-year-old, Lexington, Ky.-based medical device maker focused on vascular access, has raised $4.5 million in Series A funding led by Targeted Technology Fund II, with unnamed individual investors participating. As part of the deal, Bluegrass will move to San Antonio, Tx., where Targeted Technology is based.

Cold Genesys, a nearly four-year-old, Newport Beach, Ca.-based company that’s been developing a drug to treat bladder cancer, has raised $13.57 million in Series A financing from Ally Bridge Group.

Dstillery, a six-year-old, New York-based ad tech company, has raised $24 million in Series C funding led by NewSpring Capital. Earlier backers U.S. Venture PartnersMenlo Ventures and Venrock also participated in the round, which brings the company’s total funding to $52 million, shows Crunchbase.

GetYourGuide, a five-year-old, Zurich-based compendium of tourism activities that works with more than 1,000 partners whose products it uploads, bookings it manages and payments it processes through a central system, has raised $25 million in new funding from two earlier investors, Spark Capital and Highland Capital Partners Europe. “I like this business because no one’s really aggregated this before,” says Spark Capital’s Alex Finkelstein to Dealbook. The company has now raised $45.5 million altogether.

Green Charge Networks, a five-year-old, Santa Clara, Ca.-based energy storage company, has raised $56 million in funding from the New York-based power producer K Road DG. Forbes has more here.

Moogsoft, 2.5-year-old, San Francisco-based company whose software detects and repairs outages that its customers’ IT monitoring systems can’t see, has raised $11.3 million in Series B funding led by Wing Venture Capital. Earlier investors, including Redpoint Ventures, also participated in the round, which brings the company’s total funding to $18 million.

PagerDuty, a five-year-old, San Francisco-based software-as-a-service company that helps IT ops resolve problems faster by sending them automatic alerts about errors, has raised $27.2 million in Series B funding by Bessemer Venture Partners. Earlier investors Andreessen HorowitzBaseline Ventures, and Harrison Metal also joined the round, which brings the company’s total funding to roughly $40 million.

SocialCops, a two-year-old, Delhi, India-based social analytics and reporting app that helps users report problems in their vicinity, like potholes, has raised $350,000 in seed funding from 500 StartupsRajan AnandanManoj Menon and other angels, reports DealCurry.

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IPOs

It isn’t just Mobileye. Five Israeli companies are going public in the U.S. this week in what Bloomberg calls a record week for new Israeli equity sales.

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Exits

Gyft, a two-year-old, Redwood City-based virtual gift card provider, is being acquired by payment giant First Data, PandoDaily reported yesterday. Terms of the transaction, expected to close next month, are not being disclosed. Gyft had raised $6 million in Series A funding, including from Karlin Ventures, Google VenturesA-Grade InvestmentsCanyon Creek CapitalThe Social+Capital Partnership, and individual investors David Sacks and Haas Portman.

Icebergs, a 1.5-year-old, Barcelona-based online collaboration service that helps users organize their research and projects, has been acquired by Pinterest for an undisclosed amount. Its two co-founders are relocating from Spain to San Francisco to join Pinterest, the company tells TechCrunch. Meanwhile, the Iceberg service will be shut down on September 1.

Sifteo, a five-year-old, San Francisco-based interactive game platform, has been acquired by 3D Robotics, the unmanned aerial vehicle company led by former Wired editor Chris Anderson. Terms of the deal were not disclosed, but Sifteo had raised $16 million from investors, including True VenturesFoundry Group, and Foundation Capital. 3D Robotics, meanwhile, has raised $35 million to date, including from some of those same investors. GigaOm has more here.

Snapchat, the mobile-messaging phenomenon, is talking with Alibaba about a new round of funding that could value the three-year-old company at $10 billion dollars, with a B. Bloomberg has the story here.

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People

Andrew Mason, the cofounder and ousted CEO of Groupon, is back with a new app that’s centered on really good walking tours. It isn’t so silly, says Bloomberg’s Brad Stone, nothing that the guided-tour industry “brings in tens of billions” of dollars a year. “People have an enormous hunger to have really compelling experiences in their cities,” Mason tells Stone, moments before a seagull poops on Mason’s head. (Really.)

Rob Glaser is once again the permanent CEO of RealNetworks, the digital media company he founded in 1994. Geekwire has more here.

Business Insider takes a look at what it’s like to be one of Google‘s most elite new employees.

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Job Listings

GE Ventures is looking for an associate to add to its incubations team, which develops and funds healthcare and energy startups. The job is in Menlo Park, Ca.

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Data

Venture capital firms put $15.59 billion into companies raising third rounds of financing or later through the first half of this year, according to Dow Jones VentureSource. If that pace holds, says the outlet, it will break break the record set in 2000.

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Essential Reads

Revenge of the ripoff: How Zalando became a $5 billion retailing sensation.

Replaced by robots: Jobs cuts in the tech industry have soared 68 percent year-over-year through June, according to new data from Challenger, Gray & Christmas. Losses are on pace for their biggest jump since 2009, says Business Insider.

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Detours

The case for exercising vigorously, at least five minutes a day.

Sleep habits of geniuses.

Kids acting up? Send them to summer camp in North Korea.

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Retail Therapy

Cabana-striped towels for the beach.

Christopher Nolan fans, “Interstellar” is coming. See the trailer here.


Alignment Holdings Looks to Align Investors with Mature Startups

alignment-holdings-logo-stacked-x2You can get away with a lot when your investors are wealthy individuals. Such is the case with Collaborative Fund, a three-year-old, New York-based venture fund focused on collaborative-consumption models and backed by some big wheels, including former Sequoia Capital general partner Tom McMurray, private equity veteran Doug Smith, and Jay Kim, a venture partner and investor in Collaborative who co-founded the video game developer Nexon Corp in 1994. (The bootstrapped company went public in 2011 on the Tokyo Stock Exchange and is now valued in the billions of dollars.)

Indeed, the same group of investors to back Collaborative are today rolling out a new, special purpose entity called Alignment Holdings that counts Collaborative founder Craig Shapiro as one general partner and Smith — who will be leading the outfit’s day-to-day affairs — the other. The idea, says Shapiro, is to work with companies that are producing real revenue, without forcing them to adhere to the constraints of a typical fund. “The life of most funds is 10 years, and you have a three- or four-year investment period after which you’re expected to harvest investments.” With Alignment, “We can invest in a business and hold it for 20 years or more.”

I talked with Shapiro yesterday about how Alignment works, who would use it, and why he’s suddenly involved with two very disparate funds.

What was the impetus for Alignment?

It kind of came together because we were seeing mission-driven founders not being excited about their current liquidity options. Some feel like selling their business would detract from their mission and that going public is arduous and expensive and makes them beholden to a quarterly result. This is targeting companies whose early-stage investors may be looking to exit. It’s almost like a leveraged buyout, where we say, “At this price, we’re going to purchase your preferred shares.”

Don’t secondary sales address this issue?

You’re seeing some people solve for that problem through secondary markets, but it can also be really distracting, deciding who gets to sell their shares and for how much. It’s why we chose to create vehicle that’s evergreen. While the purchase side is the same — we won’t be doing anything different than, say, a private equity firm that buys shares on the secondary market — the difference is that the private equity firm will expect [to receive several times their investment] within a few years. With us, companies have a significantly longer time period to [produce a return] through smaller chunks based on revenue. It’s more like a mortgage on your house.

Have you raised the capital yet? If not, how much are you targeting?

We’ve raised money; Jay [Kim] is our anchor investor, but it’s still open, so our attorneys have advised us to be cautious about what we share.

Does this kind of structure rule out syndicates?

We could partner with an entity that has a similar return profile, but yes, it wouldn’t work if we were working with a private equity or venture shop that’s hoping a company is going go public. If I’m a VC, I’m saying, “Reinvest everything so we can get to the IPO.” Alignment is targeting companies that don’t want to rush, that would rather buy [their shares] back from employees and shareholders and refinance the company.

What size checks will you be writing, what kind of return do you expect, and how long will these terms be?

The size of checks will vary pretty greatly, and we can structure [these arrangements] in different ways. If a company is throwing off a lot of cash, it can carry a larger debt component at a lower rate. If it isn’t throwing off a lot of cash, you can extend the life [of the loan] but have additional equity, so if the company has a liquidity event, Alignment gets some upside.

Do you expect that some of Collaborative’s portfolio companies [which include Kickstarter, Lyft, TaskRabbit, and Hampton Creek Foods] will eventually be candidates for Alignment? If so, would that be a conflict?

We’ve formed an external investment committee to deal with any conflicts. The truth, though, is that because Collaborative Fund is investing so early, it will likely be years before any of our companies would be ready for Alignment Holdings. But I think it would be a great thing.

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


StrictlyVC: July 30, 2014

It is Wednesday, people. Hope you have a great one!

(Web visitors: You can find an easier-to-read email version of today’s newsletter here. To receive it in your inbox, click here.)

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Top News in the A.M.

Twitter soundly beat Wall Street expectations yesterday, reporting 271 million monthly active users, second-quarter revenue of $312 million, and a two cent profit. CEO Dick Costolo tells Business Insider how the company did it.

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A New Venture Firm Bets on India

One of the biggest venture fundings ever was confirmed yesterday, a billion-dollar round for the India-based e-commerce company, Flipkart.

Vispi Daver and Murli Ravi hope it’s a good omen for their new venture capital firm, Unicorn Venture Capital — named not after a popular blog post, they say, but a mythological creature in East Asian culture associated with prosperity. Indeed, with a little luck, they’ll raise the $50 million they’re targeting for their debut fund, which they intend to invest in early-stage tech startups in India, Singapore and Southeast Asia.

Their backgrounds should help. Daver spent eight years at Sierra Venture Partners, where he led several deals in India-based companies, including Makemytrip, one of India’s largest online travel companies. (It went public on Nasdaq almost exactly four years ago.) Ravi, meanwhile, spent the last five years as the head of South Asia investments for JAFCO Asia in Singapore. I spoke with Daver earlier this week about the duo’s plans.

Murli is staying in Singapore while you move from the U.S. to India. What’s the competition like where you’re headed?

There are only about 40 people on the tech side of VC with early-stage investing experience in India and that’s probably across 10 groups, from indigenous funds to Sand Hill Road firms. It’s still very early there. MakeMyTrip is just one of three [India-based] venture-backed public tech companies, and the only one on Nasdaq.

Do LPs think it’s still too early? I’d read that $190 million was invested in early-stage tech firms in India last year, up 25 percent from 2012. But those are still small numbers.

No, the growth metrics are too exciting. Talk with any tech bellwether – Facebook, Google, Evernote, Dropbox, Salesforce – and they’ll tell you about downloads from India. Growth on the smart phone side has wowed everyone. Facebook already has 100 million users in India – the second biggest base of users after the U.S. If you take into consideration [other] app stats, the Philippines, Bangladesh, Vietnam – they’re all in the top 30 [in terms of users] and they’ll be in the top 10 soon, based on economic and population [trends].

How well do you and Murli know each other? Have you made investments together?

We’ve known each other for a year and looked at 75 companies together — two of which we’ve invested in and will grandfather into the new fund. We both grew up in Mumbai. He was one of those really smart kids who the Singaporean government sucks into the system, sending them to premier educational institutions and to a premier investment house after. [Before joining JAFCO, Ravi was a senior associate at Singapore’s sovereign wealth fund Temasek Holdings.]

Why does it make sense to operate from two different posts?

No tech company is focused on Singapore alone, where just five million people live, and similarly we think that Indian startups will be expanding into Southeast Asia and that having a presence there will be helpful. From a legal and regulatory perspective, it makes a lot of sense for India companies to [plant their] headquarters there. It’s very developed, with a government that works really well. There are also lots of positives in terms of easy living.

How do you feel personally about returning to India?

I’m excited. The environment in India is interesting. Entrepreneurship is generally in a lot of people’s blood. There weren’t as many professional jobs for the last generation, so a lot of people were entrepreneurs and it’s not a big convincing act to get people to [take the plunge]. It’s also the case the young developers are less and less different than their counterparts elsewhere. They’re using the same apps and learning the same ways to code. Big ideas can come out of India, too.

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New Fundings

Abodo, a 3.5-year-old, Madison, Wi.-based apartment listing service, has raised $1.25 million in Series A funding led by American Family Ventures. Other participants in the round included 4490 Ventures and Lakewest Venture Partners. The company has raised $1.3 million altogether, shows Crunchbase.

ChargePoint, a seven-year-old, Campbell, Ca.-based electric-vehicle charging network, has raised an undisclosed amount of Series E funding from Constellation Technology Ventures. Though the company isn’t breaking out the amount of the round, it says that it has now raised nearly $114 million, including from Braemar Energy VenturesKleiner Perkins Caufield & ByersSiemens Venture CapitalVoyager CapitalBMWand Rho Ventures.

Dianwoba, a 5.5-year-old, Hangzhou, China-based online-to-offline e-commerce company that guarantees same-day delivery service to customers of restaurants and shops, has raised $10 million in Series B financing from undisclosed sources, reports China Money Network. The company previously raised $2 million in Series A funding from Gobi Partners, says the report.

Epic Sciences, a six-year-old, San Diego-based company whose blood test can help physicians monitor a patient’s cancer, has raised $30 million in Series C funding from RusnanoMedInvest and Arcus Ventures. Earlier investors Domain AssociatesRoche Venture FundPfizer Venture Investments and numerous undisclosed individual investors also participated. MedCity News has more here.

EyeNetra, a three-year-old, Somerville, Ma.-based company whose device, the Netra-G, can measure the refractive error of the eye using a smartphone and a cheap pair of plastic binoculars that anyone can use, has raised $4 million in Series A funding, including from Khosla Ventures. MedCity News has more here.

Frameri, a 1.5-year-old, Cincinnati-based company that makes prescription eyewear with interchangeable lenses, has raised $750,000 in seed funding led by CincyTech. Numerous angel investors also participated in the round.

Jet, a new, Hoboken, N.J.-based e-commerce company founded by Marc Lore (former CEO of Diapers.com parent Quidsi), has raised $55 million in funding, Recode reports. Lore isn’t yet talking about the company yet, but Recode sources say it will “innovate around its logistics network.” The investment is being led by New Enterprise Associates, with additional investment from Accel PartnersMentorTech Ventures, and Bain Capital Ventures. Recode notes that all but Bain Capital were investors in Quidsi, which sold to Amazon in 2011 in a $545 million deal.

JuiceBox Games, a two-year-old, San Francisco-based mobile gaming company founded by three former Zynga employees, has raised $2.54 million seed funding led by Initial Capital, the company tells Venture Capital Dispatch. Other investors in the round include General CatalystIndex VenturesMaveron, and angel investors, among them Scott Dale (a former vice president of engineering at Zynga) and former Electronic Arts CEO John Riccitiello.

Kixer, a six-month-old, L.A.-based Los Angeles-based mobile ad tech company, has raised $1 million in a seed funding from TenOne Ten VenturesLowercase Capital, and numerous angel investors.

Knoa Software, an 11-year-old, New York-based maker of workforce optimization software, has $5.1 million in Series B funding from earlier investors Ascent VenturesGefinor CapitalAdvantage Capital Partners and Rand Capital. The company has raised at least $14.4 million to date, shows Crunchbase.

Ludi, a 1.5-year-old, Chicago-based company whose software helps hospitals track administrative expenses while managing the legal risks of regulatory compliance with physician agreements, has raised $1 million in Series A funding from the Martin Companies, a healthcare and technology focused firm in Nashville.

Mind Palette, the three-year-old, Tokyo-based company behind the photo sharing app Snapeee, has raised $4 million from Japanese venture firmGlobal Brain Corp. along with Japanese magazine publishing giant Kodansha.

Privlo, a four-year-old, L.A.-based startup that offers private real estate loans online, has raised $3.8 million in Series A funding from Spark Capital and QED Investors. VentureWire has more here.

Proteus Digital Health, an 18-year-old, Redwood City, Ca.-based company that makes digital health products, including wearable sensor-based tools, has raised $172 million in Series G funding from both earlier backers and new “respected institutional investors,” none of whom the company has named. Proteus, which has raised money from Oracle and Novartis in the past, has now raised at least $291 million altogether, shows Crunchbase.

Thermalin Diabetes, a five-year-old, Cleveland-based biomedical company has raised $5.9 million in Series B funding from undisclosed investors. The money comes on the heels of a $1.5 million Phase 2 SBIR grant that the company recently received for a rapid-acting insulin it has developed.

ThredUP, a 5.5-year-old, San Francisco-based online consignment marketplace, has raised $23 million in Series D funding, per an SEC filing first flagged by TechCrunch. The company has now raised $46 million to date, including from Highland Capital PartnersTrinity VenturesRed Point Ventures, and Upfront Ventures.

ZipZap, a four-year-old, San Francisco-based payment network that enables people to buy, sell or use digital currencies with cash or other payment options, has raised $1.1 million from Bitcoin Foundation board member Brock Pierce’s AngelList syndicate, 500 Startups, andBlumberg Capital. The round brings the company’s total funding to $2.7 million.

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New Funds

Accelerator Corp., an 11-year-old, Seattle and New York-based life science investment firm that invests in emerging biotechnology research, has held a first close of its fourth fund with $51.1 million. Investors includeAlexandria Venture InvestmentsARCH Venture PartnersWRF CapitalEli LillyHarris & Harris GroupJohnson & Johnson Development Corp.The Partnership Fund for New York City and Pfizer Venture Investments.

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Exits

Luvocracy, a three-year-old, San Francisco-based online community for consumers to discover cool products recommended by people whose style they trust, has been “acq-hired” by Walmart for undisclosed financial terms. Along with founder Nathan Stoll, a former Googler who also founded Aardvark, 16 employees from Luvocracy will now head over to Walmart’s R&D group, WalmartLabs. Luvocracy had raised $11 million in funding from Kleiner Perkins Caufield & ByersGoogle VenturesMarissa MayerAli PincusJim LanzoneTony RobbinsCrunchFundRPM Ventures and XG Ventures.

Madbits, a stealthy computer vision startup, has been acquired by Twitter. Terms of the deal weren’t disclosed. GigaOm has much more here.

Poptip, a two-year-old, New York-based startup that helps companies conduct social media surveys and analyze online conversations and other unstructured conversation data, has been acquired by the data analysis company Palantir Technologiesreports TechCrunch. Terms of the deal were not disclosed. Poptip had raised $2.4 million from investors, including Lerer Hippeau VenturesRSE VenturesSoftbank Capital, and BoxGroup. Palantir, meanwhile, has raised nearly $900 million from investors over its 10-year history, including a $107.5 million round last year that valued the company at $9 billion.

SecuSmart, a seven-year-old, Dusseldorf, Germany-based mobile security company known for its anti-eavesdropping software, has been acquired by BlackBerry. Terms of the deal weren’t disclosed. ZDNet has more here.

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People

Facebook board members Marc Andreessen and Peter Thiel converted class-B shares in Facebook to class-A shares, among other detailed transactions, show Form 4 filings with the SEC on Monday. AllFacebook has the nitty-gritty details if you’re curious.

David Cancel, the chief product officer of pre-IPO Hubspot, the Cambridge, Ma.-based digital marketing startup, is leaving the company in September, along with Elias Torres, an engineering vice president, reports BetaBoston. The two joined HubSpot in 2011 through the $20 million acquisition of their startup, Performable; they plan to work on a new startup together.

Trulia cofounder Sami Inkinen is rowing across the Pacific Ocean with his wife, meaning that he missed most of the negotiations involving the sale of his company to Zillow (though he stayed informed via satellite phone and email). Dealbook has the story here.

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Job Listings

Prosper, the San Francisco-based peer-to-peer lending marketplace company, is looking for a senior business development manager.

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Data

Tech.eu took a deep dive into all the available data on European tech company exits announced during the second quarter of this year. You can have a look here.

Bitcoin investment hit a new high in the second quarter, says CB Insights.

The news sharing service Nuzzel has built a new custom news page that shows the top news stories being shared by 1,000 investors on AngelList.

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Essential Reads

Just one day after Flipkart’s big funding announcement, Amazon has made an announcement of its own: it plans to invest $2 billion in its Indian marketplace, with Amazon founder Jeff Bezos saying that “India is on track to be our fastest country ever to a billion dollars in gross sales.”

Android has a fake ID problem.

Facebook wants to help other businesses sell things, so it’s done selling its own. (Also, erm, no one used Facebook Gifts.)

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Detours

Eleven things you should stop worrying about when traveling.

In search of the NBA’s next star.

Paying tribute to the strobe flash.

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Retail Therapy

The 1964 Ferrari 275 GTB/C Speciale by Scaglietti. One of three built, it goes on sale next month. (Bring your stock certificates. It’s going to cost a fortune.)

Fish-shaped ice cubes.


A New Venture Firm Bets on India

Vispi_Daver_400x400One of the biggest venture fundings ever was confirmed yesterday, a billion-dollar round for the India-based e-commerce company, Flipkart.

Vispi Daver and Murli Ravi hope it’s a good omen for their new venture capital firm, Unicorn Venture Capital — named not after a popular blog post, they say, but a mythological creature in East Asian culture associated with prosperity. Indeed, with a little luck, they’ll raise the $50 million they’re targeting for their debut fund, which they intend to invest in early-stage tech startups in India, Singapore and Southeast Asia.

Their backgrounds should help. Daver spent eight years at Sierra Venture Partners, where he led several deals in India-based companies, including Makemytrip, one of India’s largest online travel companies. (It went public on Nasdaq almost exactly four years ago.) Ravi, meanwhile, spent the last five years as the head of South Asia investments for JAFCO Asia in Singapore. I spoke with Daver earlier this week about the duo’s plans.

Murli is staying in Singapore while you move from the U.S. to India. What’s the competition like where you’re headed?

There are only about 40 people on the tech side of VC with early-stage investing experience in India and that’s probably across 10 groups, from indigenous funds to Sand Hill Road firms. It’s still very early there. MakeMyTrip is just one of three [India-based] venture-backed public tech companies, and the only one on Nasdaq.

Do LPs think it’s still too early? I’d read that $190 million was invested in early-stage tech firms in India last year, up 25 percent from 2012. But those are still small numbers.

No, the growth metrics are too exciting. Talk with any tech bellwether – Facebook, Google, Evernote, Dropbox, Salesforce – and they’ll tell you about downloads from India. Growth on the smart phone side has wowed everyone. Facebook already has 100 million users in India – the second biggest base of users after the U.S. If you take into consideration [other] app stats, the Philippines, Bangladesh, Vietnam – they’re all in the top 30 [in terms of users] and they’ll be in the top 10 soon, based on economic and population [trends].

How well do you and Murli know each other? Have you made investments together?

We’ve known each other for a year and looked at 75 companies together — two of which we’ve invested in and will grandfather into the new fund. We both grew up in Mumbai. He was one of those really smart kids who the Singaporean government sucks into the system, sending them to premier educational institutions and to a premier investment house after. [Before joining JAFCO, Ravi was a senior associate at Singapore’s sovereign wealth fund Temasek Holdings.]

Why does it make sense to operate from two different posts?

No tech company is focused on Singapore alone, where just five million people live, and similarly we think that Indian startups will be expanding into Southeast Asia and that having a presence there will be helpful. From a legal and regulatory perspective, it makes a lot of sense for India companies to [plant their] headquarters there. It’s very developed, with a government that works really well. There are also lots of positives in terms of easy living.

How do you feel personally about returning to India?

I’m excited. The environment in India is interesting. Entrepreneurship is generally in a lot of people’s blood. There weren’t as many professional jobs for the last generation, so a lot of people were entrepreneurs and it’s not a big convincing act to get people to [take the plunge]. It’s also the case the young developers are less and less different than their counterparts elsewhere. They’re using the same apps and learning the same ways to code. Big ideas can come out of India, too.

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


StrictlyVC: July 29, 2014

Happy Tuesday, everyone! (Web visitors, you can find an easier-to-read version of today’s newsletter here.)

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Top News in the A.M.

Twitter is reporting its second-quarter earnings today, and industry observers will be listening to learn whether the company has solved its growth problem. They might be disappointed, reports Recode.

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Meritech Capital Just Raised $500 Million; Here’s Why It Didn’t Raise More

Meritech Capital Partners has just finished raising a fifth, $500 million fund, the firm tells StrictlyVC.

That’s a lot of money, but the 15-year-old, Palo Alto, Ca.-based late-stage venture firm could have raised much more. Fully 38 of the firm’s portfolio companies have either been acquired or gone public since the second half of 2009. Among them: Facebook, which went public in 2012; the e-commerce company Zulily, which held its IPO last November; and the social networking network Yammer, acquired by Microsoft for $1.2 billion in cash in 2012. In fact, Meritech’s fourth, $425 million fund, closed just three years ago, has already reaped nearly as much as investors poured into it.

So why didn’t Meritech collect more than it did, especially when startups are eschewing public markets longer and raising more of their capital from private investors? Because the firm’s five partners think the trend is temporary and not part of a permanent restructuring. Yesterday, I talked about it with Meritech’s cofounder and managing director, Paul Madera.

You’ve had loads of exits over the last five years. What do you see happening over the next 6 to 12 months in terms of IPOs and M&A?

I think we’ll continue to have a strong IPO market – which also helps M&A. A healthy IPO market means valuations are generally stable and increasing, and since acquirers rely on having stability and ever more valuable currency, it makes them more comfortable about reaching out and making acquisitions. It will also continue to be a great time to harvest liquidity from our venture portfolio.

Interesting phrasing. Do you think it’s a better time for exits than new investments?

It’s a wonderful time to harvest and a time to be very careful with new investments. I say that as someone who invests in later-stage companies, where the value is running ahead of the economic opportunity. Valuations are just horrific. Now is just not a great time to put a lot of money into later-stage companies. Now is a time to be cautious and slow and careful.

How much have valuations jumped in the last year, would you say?

I think they may be two or three times where they were a year ago, with similar performance parameters. Of course, that doesn’t apply to everything out there. But it does apply to a narrower group of companies that tend to be within certain sectors where you can show tremendous growth very quickly and that are backed by great, brand-name early-stage firms.

Soaring valuations are obviously being driven, at least in part, by “outside” investors, including mutual funds and hedge funds. Do you have any sense that their days of offering sky-high valuations are numbered?

A lot of groups pulled back from March through early June given the downturn in the public markets, but they’re back investing at full speed once again right now. They’re in a new sector of investing. It used to be early-, mid-, and late-stage investing. Now there’s this pre-IPO stage that’s growing dramatically in terms of the money going in, and it’s the functional result of companies staying private longer, which these private IPOs allow them to do and that companies have gotten quite smart about. They’re hiring agents and advisors who will let them get [in front of] these groups in an efficient way, and they’re running processes that let them get the best valuation and terms.

Is this the new normal?

I think it’s [part of] a cycle, that it’s transitory, and that’s why we didn’t raise more money. I think some of these groups are doing, and will do, fine. But the last time we saw firms doing pre-IPO stuff was in 1999 and 2000. And they aren’t doing it anymore.

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New Fundings

Baifendian, a five-year-old, Beijing-based company that develops recommendation engines for e-commerce sites, has raised $25 million in Series C funding from undisclosed sources, according to China Money Network. Baifendian had previously raised at least $17.2 million, says the report. Its investors include Zhejiang Shinkansen Media InvestmentIDG Capital Partners, and Mingxin China Growth Fund.

BaubleBar, a 3.5-year-old, New York-based e-commerce company focused on “on-trend” fashion jewelry, has raised $10 million in fresh funding led by Chris Burch, co-founder of the Tory Burch company. Aspect VenturesTriplepoint VenturesComcast Ventures, along with earlier investors Accel Partners and Greycroft Partners, also participated in the round. The company has now raised $15.6 million altogether. Dealbook has more here.

Beyond Meat, a five-year-old, El Segundo, Ca.-based company that makes foods that look and taste like real meat but come from plants, has raised an undisclosed amount of Series D funding. New investors include DNS Capital, representing the interests of Gigi Pritzker Pucker and Michael Pucker; Taiwan’s Tsai Family, through its family office, WTT Investment; and S2G Ventures. Earlier investors Kleiner Perkins Caufield & ByersObvious CorporationBill GatesMorgan Creek Capital and Honest Tea founder Seth Goldman also participated in the round.

Bright Computing, a nearly five-year-old, San Jose, Ca.-based company that develops management software for clusters, grids and clouds for storage, big data and databases, has raised $14.5 million in Series B funding co-led by DFJ and DFJ EspritPrime Ventures and earlier investor ING Corporate Investments also participated.

ChoiceStream, a 13-year-old, Boston-based programmatic media-buying company, has raised $7.5 million in new funding led by New York-based Fred Alger Management. The company has raised at least $73.8 million over the years, shows Crunchbase.

Coub, a 2.5-year-old, Moscow-based company that enables users to create short-looped videos with sound, has raised $2.5 million fromVaizra Investment Funds. Last year, the company had raised $1 million in funding from Phenomen Ventures and Brother Ventures.

Decision Lens, a 12-year-old, Arlington, Va.-based company that makes prioritization and resource optimization software, has raised $4.4 million in new funding led by Vision Thinkers. It raised an additional $2.1 million in debt from undisclosed sources. Altogether, the company has raised at least $6.9 million, shows Crunchbase.

Easy Taxi, a three-year-old, Sao Paulo-based, Uber-like mobile application, has raised $40 million in Series D funding led by Phenomen Ventures, with participation from Tengelmann Ventures. The company has now raised $77 million to date, shows Crunchbase.

Exchange Corporation, a six-year-old, Tokyo-based peer-to-peer lending service has raised $3.3 million led by Arbor Ventures, with participation from CyberAgent Ventures and Recruit Strategic Partners. Earlier investors 500 Startups and Cherubic Ventures also participated in the round. The company is using the funding to launch a new service called Paidy that will enable consumers to buy items on credit from their phones, using just their name and email address.

Flipkart, the seven-year-old, Bangalore City, India-based e-commerce company, has confirmed an earlier report that it has raised $1 billion in new funding. The capital comes from existing investors Tiger GlobalDST GlobalAccel PartnersICONIQ CapitalMorgan Stanley Investment Management and Sofina. The company now raised a whopping $1.7 billion altogether.

Knowlarity, a two-year-old, Gurgaon, India-based cloud telephony startup, has raised roughly $15 million led by Mayfield Fundaccording to the Economic Times. Earlier investor Sequoia Capital also participated. The company had previously raised at least $2 million in angel funding, says the report.

Kontakt.io, a year-old, Krakow, Poland-based maker of Beacon hardware, backend, and software development services, has raised $2 million from Sunstone Capital. The company had previously raised $250,000 in seed funding. TechCrunch has much more here.

Kurbo Health, a year-old, Palo Alto, Ca.-based company that has developed a subscription-based app around a weight loss program and platform, has raised $5.8 million Series A funding led by Signia Venture Partners. Other participants in the round included Data CollectiveBessemer Venture Partners, and Promus Ventures, along with YouTube CEO Susan Wojcicki and Greg Badros, a former VP of engineering and product at Facebook.

Leanplum, a two-year-old, San Francisco-based mobile app analytics company, has raised $4.8 million in Series A funding from Shasta Ventures. According to Crunchbase, the startup had previously raised $825,000 in seed funding from TechStarsKima VenturesAlliance of AngelsVoiVoda Ventures and others.

PaxVax, a seven-year-old, Menlo Park, Ca.-based company that develops candidate oral vaccines for key infectious diseases, including influenza, has raised $62 million in debt and equity, including to acquire a typhoid vaccine. The $12 million equity portion of the round comes from Blue Haven Initiative and Ignition Growth. The company has now raised roughly $130 million altogether, shows Crunchbase.

SkyKick, a three-year-old, Seattle-based company whose software makes it easy for IT Partners to move their customers to Microsoft’s Office 365, has raised $3 million in funding from unnamed strategic investors and angel investors. Altogether, the company has now raised $7.2 million, all from undisclosed funding sources.

Spire, a two-year-old, San Francisco-based company whose satellites are roughly the size “of a good bottle of California red wine,” reports Venture Capital Dispatch, has raised $25 million in Series A funding to launch its fleet into space. The round was led by RRE VenturesMoose CapitalQuihoo and Mitsui & Co. Global Investment also participated.

ThetaRay, a year-old, Jerusalem-based company cyber securtity company, has raised $10 million in Series B funding from GEJerusalem Venture PartnersPoalim Capital Markets, a division of Bank Hapoalim, and other, unnamed, investors. The company had earlier raised an undisclosed amount of funding from GE and Jerusalem Venture Partners, shows Crunchbase.

Thinknum, a year-old, New York-based platform that helps investors and financial analysts value companies, has raised $1 million in seed funding led by Pejman Mar Ventures. Dealbook has much more here.

Voyat, a two-year-old, New York-based loyalty and e-commerce platform for hotels, has raised $1.8 million in seed funding from a long list of investors, including Metamorphic VenturesEniac VenturesBoxGroup, and SecondMarket founder Barry Silbert.

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New Funds

Former Microsoft executive Daniel Petre, along with Craig Blair, a former managing director of Expedia Australia, have officially launched a new venture firm called AirTree Ventures that aims to fund up to 15 Australia-based startups. The two were reported to be in the market back in March, with a $50 million target; they closed on $60 million. “We were surprised at how quickly it happened and how quickly we met the target,” Blair tells the outlet SmartCompany. “I think it is a function of investors realizing that technological disruption is not going away any time soon, we’re just starting, and that venture capital is not broken.”

Binary Capital, a new venture fund cofounded by Jonathan Teo and Justin Caldbeck, has officially closed its new fund with $125 million in capital, much less than they could have raised, the pair told numerous outlets yesterday. Recode has much more on the story here, as does Dealbook.

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People

A new University of California policy has opened the door for the university system to invest directly in companies, and a group of powerful VCs that includes Brook Byers of Kleiner Perkins Caufield & Byers and Fred Cohen of TPG Biotech will begin advising the school on how to identify startups beginning next month.

For two years, a mysterious mole at Cisco has been interfering in the life of Cisco senior VP Surya Panditi. Now Panditi is now going after him or her with both barrels.

Moshe Hogeg, the brains behind viral notification app Yo and CEO of Israeli communication startup Mobli, has launched a new app called Mirage that’s also a one-button messenger. Business insider has much more here.

Amy Schulman has joined Polaris Partners as a venture partner. Schulman, who will be based in Boston, was most recently general counsel at Pfizer. Before joining Pfizer, Schulman was a partner and co-leader of DLA Piper mass tort/class action practice. Schulman, notes the Boston Globe, is the first female partner at Polaris, where she will serve on several portfolio companies’ boards, as well as serve as CEO of Aris Therapeutics, a months-old Cambridge, Ma., company cofounded by Polaris partner Alan Crane.

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Job Listings

Lighter Capital in Seattle is looking for an associate. (We profiled Lighter Capital back in April, if you’re interested in learning more.)

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Data

Andreessen Horowitz partner Chris Dixon, tweeting last night about the ever-shrinking percentage of developers who make all the money off iOS apps: “Apple app store will pay out >$10B this year to devs. Problem isn’t total amount – it’s concentration at the top. You can’t starve the long tail and still have a healthy developer ecosystem. “

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Essential Reads

Airbnb is going after business travelers now, too.

This is what tech’s ugly gender gap really looks like. “The most common thing I hear from other women is: ‘Oh the stories I’ll tell once I’m far enough along that I don’t have to worry about being shamed.’”

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Detours

Who is your parents’ favorite kid? The Favorite Child Detector can quickly confirm your worst fears.

A new study suggests that friends share genetic similarities.

“I’m Ira Glass, and this is how I work.”

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Retail Therapy

Sixteen toys of summer. Almost all involve horsepower. One is literally a big wheel for adults. (Do not that buy that one.)


Meritech Capital Partners Just Raised $500 Million; Here’s Why It Didn’t Raise More

Paul MaderaMeritech Capital Partners has just closed on a fifth, $500 million fund.

That’s a lot of money, but the 15-year-old, Palo Alto, Ca.-based late-stage venture firm could have raised much more than that. Fully 38 of the firm’s portfolio companies have either been acquired or gone public since the second half of 2009. Among them: Facebook, which went public in 2012; the e-commerce company Zulily, which held its IPO last November; and the social networking network Yammer, acquired by Microsoft for $1.2 billion in cash in 2012. In fact, Meritech’s fourth, $425 million fund, closed just three years ago, has already reaped nearly as much as investors poured into it.

So why didn’t Meritech collect more than it did, especially when startups are eschewing public markets longer and raising more of their capital from private investors? Because the firm’s five partners think the trend is temporary and not part of a permanent restructuring. Yesterday, I talked about it with Meritech’s cofounder and managing director, Paul Madera.

You’ve had loads of exits over the last five years. What do you see happening over the next 6 to 12 months in terms of IPOs and M&A?

I think we’ll continue to have a strong IPO market – which also helps M&A. A healthy IPO market means valuations are generally stable and increasing, and since acquirers rely on having stability and ever more valuable currency, it makes them more comfortable about reaching out and making acquisitions. It will also continue to be a great time to harvest liquidity from our venture portfolio.

Interesting phrasing. Do you think it’s a better time for exits than new investments?

It’s a wonderful time to harvest and a time to be very careful with new investments. I say that as someone who invests in later-stage companies, where the value is running ahead of the economic opportunity. Valuations are just horrific. Now is just not a great time to put a lot of money into later-stage companies. Now is a time to be cautious and slow and careful.

How much have valuations jumped in the last year, would you say?

I think they may be two or three times where they were a year ago, with similar performance parameters. Of course, that doesn’t apply to everything out there. But it does apply to a narrower group of companies that tend to be within certain sectors where you can show tremendous growth very quickly and that are backed by great, brand-name early-stage firms.

Soaring valuations are obviously being driven, at least in part, by “outside” investors, including mutual funds and hedge funds. Do you have any sense that their days of offering sky-high valuations are numbered?

A lot of groups pulled back from March through early June given the downturn in the public markets, but they’re back investing at full speed once again right now. They’re in a new sector of investing. It used to be early-, mid-, and late-stage investing. Now there’s this pre-IPO stage that’s growing dramatically in terms of the money going in, and it’s the functional result of companies staying private longer, which these private IPOs allow them to do and that companies have gotten quite smart about. They’re hiring agents and advisors who will let them get [in front of] these groups in an efficient way, and they’re running processes that let’s them get the best valuation and terms.

Is this the new normal?

I think it’s [part of] a cycle, that it’s transitory, and that’s why we didn’t raise more money. I think some of these groups are doing, and will do, fine. But the last time we saw firms doing pre-IPO stuff was in 1999 and 2000. And they aren’t doing it anymore.

Correction: The original version of this story stated that Meritech’s fourth fund had been nearly returned to investors already, but it hasn’t yet distributed all of its returns as of this writing.

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


StrictlyVC: July 28, 2014

Hi, everyone, hope you had a terrific weekend.

Two quick things. First, it looks like up to a third of you didn’t receive Friday’s email, featuring Roy Bahat of Bloomberg Beta. You can check it out here if you like.

Also, StrictlyVC is going to be taking two weeks off beginning next Monday. Investor, operator, and longtime TechCrunch columnist Semil Shah will be publishing an abbreviated version of the newsletter in our absence (thank you, Semil!); he has some great interviews lined up for you, so stay tuned.

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Top News in the A.M.

Concept.io, the two-year-old, Mountain View, Ca.-based company behind Swell, a Pandora for talk radio, is on the cusp of being acquired by Apple for $30 million, Recode is reporting this morning. The company had raised $7.2 million altogether, including from DFJGoogle Ventures, and InterWest Partners. The company’s founder and CEO, Ram Ramkumar, sold his last company, SnapTell, to Amazon in 2009.

On the heels of reports last week, Zillow and Trulia have made it official; Zillow is acquiring Trulia for $3.5 billion in a stock-for-stock transaction, the company announced this morning. The deal is expected to close next year.

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The PhD VC

Some VCs scout out the best mobile apps. Shahin Farshchi tends to contemplate, well, harder stuff.

“I stay away from the rent-your couch or parking space [startups],” says Farshchi, who joined Lux Capital as a principal in 2006 and was made a partner last month. “I have a semiconductor background, so I spend time looking at technology in the hardware space, from materials that enable higher-performance electronics, to devices like transistors and memories, to systems and software to run on those systems.”

Given his education – including a PhD in electrical engineering from UCLA – it’s no wonder. I recently caught up with Farshchi over an egg-white brunch at the Creamery in Palo Alto, Ca. There, we talked more about his new job and how he plans to put his stamp on the industry.

First, let’s get readers up to speed on Lux Capital. Give us the broad brushstrokes.

Sure, we’ve been around for 14 years, and we’ve invested in more than 35 companies over three funds, including a $250 million fund we closed last year. Until recently, we focused on cutting checks in the millions [of dollars] as the Series A or B lead; over the last 12 months, we’ve also been experimenting with a seed-stage strategy to monitor companies closely and bring value to them [as a front-seat passenger], with the goal of converting those seed positions into Series A positions.

Our biggest check would be in the higher single digits, but we set aside $10 million to $15 million per company; we want to maintain double digital ownership of [any] billion dollar outcome.

You focus largely on chips, which aren’t really being built in the U.S. anymore. So what’s happening here that’s interesting to you?

It’s true that a lot of core technology is moving to Asia. A lot of fabless semiconductor companies, Qualcomm, Broadcom – all their manufacturing is taking place in Asia, and a lot of bleeding edge technology companies in semiconductors are Asian companies.

But there’s still a lot of innovation that needs to be done, and you’d be surprised by how much is happening here. One of my companies, Molecular Imprints, [an Austin, Tx.-based company] which makes a next-generation semiconductor manufacturing technology [called nanoimprint lithography], sold to Canon earlier this year.

How do these next-generation technologies get around or reduce the considerable expense — which is something like $100 million, right? — involved in designing a new chip?

I just invested in a stealth company that’s playing into this challenge — the $100 million upfront cost associated with building a new chip. If you’re a semiconductor company making a chip, it has to go into every single one of these smartphones [that we all use]. Otherwise, you aren’t going to make money. But not all products have the same requirements, so you wind up making a chip that’s okay for most of the devices out there but not optimized for anything [specific].

This stealth company is introducing software programmable silicon, where you can configure that portion that you need, so the chips become far less like Sunday papers of yore, where you threw out a lot of sections, and more like iPads, where you’re actually viewing and getting what you want.

This technology doesn’t already exist today?

It does, with field programmable data arrays. But they come at a huge expense in terms of area and power and make no sense unless you’re making a $10,000 chip that will go into a Cisco switch. But this [startup’s] technology is making it accessible for [a broader array of technologies].

It’s also much cheaper. Right now, it costs orders of magnitude more in terms of price and power and performance to make something programmable instead of hard-baking it, so it makes better sense to make things redundant versus having things programmable. But this technology makes things programmable without the huge cost and performance penalties.

Lux was founded in New York and only opened an office here a year or so ago, but it seems like the firm is succeeding in raising its profile on the West Coast. What’s that process been like?

For years, I was working out of my car and basically borrowing office space. We had a $100 million fund, so the economics didn’t support [a second office]. I basically spent all my time walking up and down the halls of Stanford, Caltech, UC Berkeley, UCLA. My first deals were all university spin-outs. Now, we have an office and we’ve become more broadly founder focused. That’s maybe why you’re hearing more about us.

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New Fundings

Birdi, a year-old, Brooklyn, Ny.-based company that makes a smart smoke detector that also gauges air quality, has raised $700,000 in new seed funding, including from Jason Calacanis and his AngelList syndicate; Kapor CapitalEric Ries; and John Galbraith. Venture Capital Dispatch has the story.

CrowdCurity, a year-old, San Mateo, Ca.-based crowdsourced marketplace that pairs site owners with security testers who can scrutinize the sites’ vulnerabilities, has raised $1 million in new funding led by earlier investors Tim Draper and Kima Ventures. Strategic investors, including Gerhard Eschelbeck, chief technology officer and senior vice president of Sophos; Fengmin Gong, co-founder of Cyphort; and 500 Startups, also participated. The company has now raised $1.5 million altogether, shows Crunchbase.

Emulate, a new, Cambridge, Ma.-based company that aims to prove that pharmaceutical companies and biotechs can use its thumbnail-sized microchips in preclinical drug tests (versus testing their drugs on animals or in petri dishes), has raised $12 million in Series A funding led by NanoDimensionCedars-Sinai Medical Center and Swiss billionaire Hansjorg Wyss, the founder of the Wyss Institute, are also participating in the round. Xconomy has much more here.

Epis, a 17-year-old, Portland, Or.-based company that makes an electricity market forecasting tool, has raised $2.7 million in equity and debt, according to an SEC filing that shows a $3.3 million target.

FanMode, a two-year-old, London-based social application for sports fans, who can communicate during matches and whose sentiments can then be broadcasted online and shown on stadium screens, has raised $2.4 million in seed funding from undisclosed angel investors.

Hobby, a new, still-stealth company by Tapulous founder Bart Decrem, has raised roughly $920,000 in funding for a new company called Hobby, shows an SEC filing first flagged by TechCrunch.

Home Chef, a year-old, Chicago-based ingredient and recipe delivery service, has raised an undisclosed amount of seed funding led by Guild Capital.

Intelomed, a nine-year-old, Wexley, Pa.-based medical device company that focuses on real-time, non-invasive cardiovascular system monitoring, has raised $3.85 million in funding from unnamed angel investors. The company has now raised $10.7 million to date, shows Crunchbase.

Marinanow, a two-year-old, Sardinia, Italy-based company that helps people book berths in marinas around Europe, has raised roughly $630,000 in seed funding from the European venture firm United Ventures. TechCrunch has more here.

NewsCastic, a year-old, Albuquerque, N.M.-based company that invites businesses to sponsor local news stories that are then made available to journalists as paying assignments, is in the process of raising a $500,000 round, shows an SEC filing.

SportsManias, a two-year-old, Miami-based mobile sports startup, has raised $3.5 million in Series A funding led by earlier investor Jorge Mas of Mas Equity Partners. The company has raised $4.5 million to date, says Forbes, which has more here.

Tracksmith, a year-old, Wellesley, Mass.-based “premium performance” running apparel company, has raised $1.6 million from Lerer Hippeau VenturesIndex Ventures, and numerous angel investors.

VidAngel, a year-old, Salt Lake City, Ut.-based company that’s creating a platform that combines tech and crowdsourcing to tag potentially offensive content in Web video, has raised $600,000 in seed funding, including from Alta VenturesKickstart Seed Fund and Stonewall Capital.

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New Funds

Bam Ventures, a five-month-old, L.A.-based seed-stage venture firm, is looking to raise $10 million for a debut fund, shows an SEC fiing. The firm was founded by Brian Lee, a co-founder of Legalzoom, Shoedazzle and The Honest Company. A second managing director listed on the filing is Richard Jun, who spent four-and-a-half years as the general counsel of Shoedazzle. The firm says it is focused on early-stage opportunities across a variety of sectors, with a particular focus on L.A.- and Southern California-based companies.

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IPOs

Ocular Therapeutix, an eight-year-old, Bedford, Ma.-based biopharmaceutical company that’s developing therapies for diseases and conditions of the eye, including a gel to treat glaucoma, saw its shares rise 1.5 percent on Friday, its first day of trading on the Nasdaq. The company sold 5 million shares at $13 per share.

This week, 22 U.S. IPOs are planned. Here’s a look at what’s coming.

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Exits

BookLamp, a seven-year-old, Boise, Id.-based book recommendation service, has been acquired by Apple for between $10 million and $15 million, reports TechCrunch.

—–

People

Y Combinator president Sam Altman talks to EconTalk host Russ Roberts about Y Combinator’s strategy for discovering, funding, and coaching startups and Silicon Valley’s attitude toward entrenched firms.

You might think so from the daily headlines, but Silicon Valley’s highest paid female executive is not Marissa MayerMeg Whitman, or Sheryl Sandberg.

Lyft president John Zimmer on the the company’s New York debut, regulation, and the taxi industry: “The Department of Financial Services reached out a few weeks ago. We met with them, and we thought the meeting went very well. But then, when we tried to reach back out, we weren’t hearing anything.”

—–

Job Listings

Dropbox is looking to add someone who is well-versed in mobile partnerships to its strategic partner development team. The job is in San Francisco.

—–

Data

Half of iOS developers and 64 percent of Android developers earn less than $500 in revenue per app per month, with just 1.6 percent of developers generating most of the app store revenue.

European startups raised more than $2.8 billion in the second quarter, the highest quarterly total since 2001, according to data from Dow Jones VentureSource.

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Essential Reads

Amazon is launching a Web store for 3D customizable products.

Psst, illicit drugs are part of Silicon Valley work culture.

SpaceX‘s lawsuit against the Air Force is gaining steam.

Bitcoin mining can be a giant pain in the arse. Here’s one would-be miner’s firsthand account.

—–

Detours

Twenty-five of the most beautiful doors around the world.

This is what people look like shooting out of a water slide. (It’s a summer thing.)

Rise and shine”: They’re going to force you to play baseball today.

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Retail Therapy

When drinking a glass of whisky is just too easy.

Tesla’s Model 3.


The PhD VC

ShahinSome VCs scout out the best mobile apps. Shahin Farshchi tends to contemplate, well, harder stuff.

“I stay away from the rent-your couch or parking space [startups],” says Farshchi, who joined Lux Capital as a principal in 2006 and was made a partner last month. “I have a semiconductor background, so I spend time looking at technology in the hardware space, from materials that enable higher-performance electronics, to devices like transistors and memories, to systems and software to run on those systems.”

Given his education – including a PhD in electrical engineering from UCLA – it’s no wonder. I recently caught up with Farshchi over an egg-white brunch at the Creamery in Palo Alto, Ca. There, we talked about his new job and how he plans to put his stamp on the industry.

First, let’s get readers up to speed on Lux Capital. Give us the broad brushstrokes.

Sure, we’ve been around for 14 years, and we’ve invested in more than 35 companies over three funds, including a $250 million fund we closed last year. Until recently, we focused on cutting checks in the millions [of dollars] as the Series A or B lead; over the last 12 months, we’ve also been experimenting with a seed-stage strategy to monitor companies closely and bring value to them [as a front-seat passenger], with the goal of converting those seed positions into Series A positions.

Our biggest check would be in the higher single digits, but we set aside $10 million to $15 million per company; we want to maintain double digital ownership of [any] billion dollar outcome.

You focus largely on chips, which aren’t really being built in the U.S. anymore. So what’s happening here that’s interesting to you?

It’s true that a lot of core technology is moving to Asia. A lot of fabless semiconductor companies, Qualcomm, Broadcom – all their manufacturing is taking place in Asia, and a lot of bleeding edge technology companies in semiconductors are Asian companies.

But there’s still a lot of innovation that needs to be done, and you’d be surprised by how much is happening here. One of my companies, Molecular Imprints, [an Austin, Tx.-based company] which makes a next-generation semiconductor manufacturing technology [called nanoimprint lithography], sold to Canon earlier this year.

How do these next-generation technologies get around or reduce the considerable expense — which is something like $100 million, right? — involved in designing a new chip?

I just invested in a stealth company that’s playing into this challenge — the $100 million upfront cost associated with building a new chip. If you’re a semiconductor company making a chip, it has to go into every single one of these smartphones [that we all use]. Otherwise, you aren’t going to make money. But not all products have the same requirements, so you wind up making a chip that’s okay for most of the devices out there but not optimized for anything [specific].

This stealth company is introducing software programmable silicon, where you can configure that portion that you need, so the chips become far less like Sunday papers of yore, where you threw out a lot of sections, and more like iPads, where you’re actually viewing and getting what you want.

This technology doesn’t already exist today?

It does, with field programmable data arrays. But they come at a huge expense in terms of area and power and make no sense unless you’re making a $10,000 chip that will go into a Cisco switch. But this [startup’s] technology is making it accessible for [a broader array of technologies].

It’s also much cheaper. Right now, it costs orders of magnitude more in terms of price and power and performance to make something programmable instead of hard-baking it, so it makes better sense to make things redundant versus having things programmable. But this technology makes things programmable without the huge cost and performance penalties.

Lux was founded in New York and only opened an office here a year or so ago, but it seems like the firm is succeeding in raising its profile on the West Coast. What’s that process been like?

For years, I was working out of my car and basically borrowing office space. We had a $100 million fund, so the economics didn’t support [a second office]. I basically spent all my time walking up and down the halls of Stanford, Caltech, UC Berkeley, UCLA. My first deals were all university spin-outs. Now, we have an office and we’ve become more broadly founder focused. That’s maybe why you’re hearing more about us.


StrictlyVC: July 25, 2014

Glorious Friday, we’re always so happy to see you. Have a wonderful weekend, everyone!

(Web visitors, you can find an easier-to-read email version of this morning’s newsletter here.)

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Top News in the A.M.

Google’s “right to be forgotten” requests from European citizens have come under fire by regulators. They say the company restricted the removal of Internet links to European sites only, reports Reuters.

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Bloomberg Beta’s Roy Bahat on Year One

In the spring of last year, former News Corp. executive Roy Bahat was hired to head up a newly created, $75 million tech fund with a single LP, the financial news giant Bloomberg. Since then, that outfit, Bloomberg Beta, has made 28 investments, and two of its companies have been acquired. One deal isn’t yet announced; the second, the machine learning startup Newsle, was snapped up last week by LinkedIn for an undisclosed amount.

While Bloomberg Beta appears to be off to a fast start, Bahat isn’t ready to break out the champagne just yet. He says instead that he’s “still getting used to the pacing” of venture capital. “It’s like a chess game, where every move is separated by a year to 18 months.”

That isn’t typical talk in the world of VC, where sugarcoating things is standard operating procedure. But telling it like it is seems to be among Bahat’s biggest differentiators in the competitive field of seed-stage startup investing. We caught up yesterday; our chat has been edited for length.

Broadly speaking, what you are you trying to do with Bloomberg Beta?

A lot of recent [investing] trends [center on] making progress with fewer dollars and funds that act more like individuals and less like institutions. We didn’t invent them but we like them and we’re taking them to their logical extreme. Our standard first check is $250,000. [The biggest check we’ll write is a] seven-figure check. We like to get involved really early and remain valuable and invest much more over time.

What’s the benefit of having Bloomberg as your LP?

We aren’t a strategic investor, but our LP cares about tech companies, so there’s plenty of value beyond the financial [muscle it gives us]. We can provide startups with technical feedback when they want it, validation with customers, customer trial runs. There are never companion deals, but if a startup wants a relationship with Bloomberg, [we can help].

Bloomberg Beta is a five-person operation. Does majority rule when it comes to what to fund?

If anyone on the team says yes to a deal – if they want to make an investment – we’ll do it. There’s no voting. At the seed stage, the risk of missing something is worse than the risk of investing in the wrong company. We know the best deals in particular tend to be controversial, so we wanted a process that sidesteps that.

Are you “thesis driven”? You’ve invested in numerous media companies, for example.

I’m not a huge believer in thesis-driven investing. The best founders teach you more about an industry than you can learn [by researching it].

I’m not a huge believer in boards for very young companies, either. I’d rather be on the private Github repository of a startup or be on Google Analytics than have them prepare a PowerPoint presentation every month or so and bloviate on the state of the industry. That’s going to be an unpopular view, but it’s my view.

You were the head of the game and entertainment business IGN at News Corp. Tell us more about your transition into VC.

It takes some getting used to. I think we’re trying to do things in a different way, and when you do that, there’s some chance that you create something special. There’s also a chance that you create something that blows up in your face. With a startup, if something isn’t working, you know three months [into it]. Here, maybe in five years I’ll have the data to know if what we’re doing works.

That’s refreshingly candid.

[Laughs.] Well, everyone wants you to be blunt and transparent until you’re in the room with them. I just met with someone and told him that his startup wasn’t right for us for XYZ reasons. He said, “Don’t you want to think about it for a few days and get back to me?” I said, “I could pretend to think about it and not email you for a week and then tell you. Or I can tell you right now.”

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New Fundings

Atox Bio, an 11-year-old, Ness Ziona, Israel-based company that develops therapeutics for severe infections, has raised $23 million in Series E funding led by SR One, with participation by Lundbeckfond Ventures and OrbiMed Israel. The Globes has more here.

CounterTack, a three-year-old, Waltham, Ma.-based firm that makes threat detection and response software, has held a final, final close on its $20 million Series B round, adding to two previous closings with additional funding from Alcatel-Lucent. Earlier investors in the round include Razor’s Edge VenturesGoldman SachsSiemensFairhaven Capital and OnPoint Technologies. The company has raised at least $36 million altogether.

Deem, a 14-year-old, San Francisco-based cloud and mobile commerce company based in San Francisco, has raised $50 million in funding led byHony Capital. The deal follows a recent recapitalization financing led by PointGuard Ventures, which was joined by mutual fund investors, Stern Aegis VenturesKeating Capital and Deem CEO Patrick Grady.

Fixed, a year-old, San Francisco-based mobile application that helps you fight your parking tickets by snapping a photo of the ticket with your mobile phone, has raised $1.2 million in seed funding, including from Y CombinatorMerus CapitalScott BanisterJohn CobbsMark RandolphMatt HumphriesEric Wu, and David King. TechCrunch has much more here.

Glow Digital Media, a 3.5-year-old, London-based social ad platform ad tech platform that helps marketers create, improve, and understand Facebook and Twitter ad campaigns, has raised $7 million in Series A funding from Notion Capital and White Star CapitalProject A Ventures and Avonmore Developments, which had provided the company with $1.3 million in seed funding, also participated in the round.

NextNav, a seven-year-old, Sunnyvale, Ca.-based company that’s focused on indoor-position services for both commercial and public safety applications, has raised $70 million in Series D funding led by New Enterprise Associates and Oak Investment Partners. Earlier investors Columbia CapitalTelcom Ventures, and Goldman Sachs, also participated. The company has now raised at least $100 million altogether, shows Crunchbase.

Intigua, a 3.5-year-old, Newton Lower Falls, Ma.-based container technology company, has $10 million in Series B funding led by Intel Capital. Earlier investors Bessemer Venture Partners and Cedar Fund also participated in the round, which brings the company’s total funding to $21 million.

Tyto Life, a two-year-old, Burlingame, Ca.-based company that’s focused on the Internet of Things but not talking publicly yet about its business, has raised $7 million, according to an SEC filing that shows an $8.1 million target. The company is headed by Sam Jadallah, a former partner at the venture firm Mohr Davidow Ventures.

iTOK, a 10-year-old, Lehi, Utah-based remote technology support company, has raised $18 million in Series B funding led by ABS Capital Partners, with participation from earlier investor Signal Peak Ventures.

PhysIQ, a nearly 10-year-old, Naperville, Il.-based spinout from Argonne National Laboratory that makes a chest strap that tracks patients’ health away from the hospital, has raised $4.6 million in Series A funding from the Chicago firm LionBird and several angel investors. Crain’s Chicago Business has more here.

Weimob, a year-old, China-based customer relationship management startup built on the messaging service WeChat, has $4.8 million in Series A funding from Meridian Capital China. TechNode has more here.

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New Funds

Garage Technology Ventures, a 16-year-old, Santa Clara, Ca.-based seed and early stage venture capital fund, has signed up two anchor investors for its latest fund, it says in a press release. The fund, whose target isn’t mentioned in the release, will be the firm’s fifth capital pool.

Lightspeed China Partners, the Shanghai-based Chinese venture firm whose mid-June SEC filing showed that it was back in the market and raising $260 million for its second fund, has now closed on that capital. The Lightspeed Venture Partners affiliate had closed its first fund with $168 million in January of last year.

Massachusetts Mutual Life Insurance Co., in Enfield, Ma., has a new, $100 million venture fund, reports the Hartford Business JournalMassMutual Ventures plans to invest in technologies that leverage the insurance giant’s life, retirement and asset-management businesses, and it’s being led by Doug Russell, a MassMutual senior VP; Eric Emmons, who previously headed Siemens Venture Capital North America; and Mark Goodman, who has launched two previous venture funds, Terawatt Ventures and Brookline Ventures, both in Cambridge, Ma.

Mitsubishi UFJ Capital, the venture capital arm of Mitsubishi UFJ, a major bank in Japan, is coming to the U.S., so to speak. In an interview with Tech in Asia, the firm’s senior VP Yoshihiko Kawamura says it will be establishing a fund that targets American startups after years of focusing instead on China-based investments. Says Kawamura, “This reflects our internal situation. Ten years ago, 15 years ago, China was booming, so we heavily invested in the mining sector, base metals. The major destination for production was China. But China is down now. So we are getting back to the U.S.”

Qualcomm Ventures, the venture arm of the San Diego-based wireless technology giant Qualcomm, has launched a new, $150 million strategic venture fund in China to fund Chinese companies working on mobile technology. More here.

—–

Exits

MyCityVenue, a three-year-old, London-based experiences and events platform, has been acquired by the three-year-old travel club Secret Escapes for undisclosed terms. MyCityVenture doesn’t appear to have raised funding; Secret Escapes has raised $12.9 million from Octopus,Atlas Venture, and Index Ventures. TechCrunch has the story here.

Twitch, a three-year-old, San Francisco-based social video game platform, has officially sold to Google for $1 billion. VentureBeat has more here. Twitch had raised $35 million from investors, including Bessemer Venture PartnersAlsop Louie PartnersWestSummit CapitalTake-Two Interactive SoftwareThrive Capital, and Draper Associates.

Zillow is in talks to acquire rival Trulia in a deal that could value Trulia at as much as $2 billion, reports Bloomberg. Talks between the pubicly traded companies are ongoing and may not lead to a deal, noted the Bloomberg report.

—–

People

Mike Cannon-Brookes and Scott Farquhar of the online collaboration tools maker Atlassian prove you don’t need to move to Silicon Valley to succeed. So writes the Financial Review of the Australia-based founders, whose company is currently valued at roughly $3.3 billion.

Aaron Krane, founder of the sports-centric mobile apps company Hitpost (acquired by Yahoo last fall), has joined Khosla Ventures as an entrepreneur-in-residence, reports TechCrunch.

Another day, another set of not-great diversity numbers. This time they’re from Pinterest, which is less white than Twitter and Google (it’s 50 percent Caucasian and 42 percent Asian) but just as male dominated. More here.

Yammer founder David Sacks announced yesterday that he’s leavingMicrosoft, almost exactly two years after it acquired his social networking company for $1.2 billion in cash.

SecondMarket founder Barry Silbert is stepping down as SecondMarket CEO to focus exclusively on Bitcoin.

Facebook CEO Mark Zuckerberg is now richer than Google co-foundersSergey Brin and Larry Page.

—–

Job Listings

Facebook is looking to add someone to its business development operations.

Square 1 Bank is hiring a venture banker in New York.

—–

Essential Reads

Google‘s new moonshot project: the human body.

It turns out all anyone needs to break into a friend’s apartment is an off switch for their conscience and an iPhone.

—–

Detours

guy walks into a bar. (H/T: Olivia Wilde.)

What a plagiarizing 12-year-old has in common with a U.S. Senator.

—–

Retail Therapy

The bikes of the Tour de France.

Brogamats: Yoga mats for dudes.


Bloomberg Beta’s Roy Bahat on Year One

roy-bahatIn the spring of last year, former News Corp. executive Roy Bahat was hired to head up a newly created, $75 million tech fund with a single LP, the financial news giant Bloomberg. Since then, that outfit, Bloomberg Beta, has made 28 investments, and two of its companies have been acquired. One deal isn’t yet announced; the second, the machine learning startup Newsle, was snapped up last week by LinkedIn for an undisclosed amount.

While Bloomberg Beta appears to be off to a fast start, Bahat isn’t ready to break out the champagne just yet. He says instead that he’s “still getting used to the pacing” of venture capital. “It’s like a chess game, where every move is separated by a year to 18 months.”

That isn’t typical talk in the world of VC, where sugarcoating things is standard operating procedure. But telling it like it is seems to be among Bahat’s biggest differentiators in the competitive field of seed-stage startup investing. We caught up yesterday; our chat has been edited for length.

Broadly speaking, what you are you trying to do with Bloomberg Beta?

A lot of recent [investing] trends [center on] making progress with fewer dollars and funds that act more like individuals and less like institutions. We didn’t invent them but we like them and we’re taking them to their logical extreme. Our standard first check is $250,000. [The biggest check we’ll write is a] seven-figure check. We like to get involved really early and remain valuable and invest much more over time.

What’s the benefit of having Bloomberg as your LP?

We aren’t a strategic investor, but our LP cares about tech companies, so there’s plenty of value beyond the financial [muscle it gives us]. We can provide startups with technical feedback when they want it, validation with customers, customer trial runs. There are never companion deals, but if a startup wants a relationship with Bloomberg, [we can help].

Bloomberg Beta is a five-person operation. Does majority rule when it comes to what to fund?

If anyone on the team says yes to a deal – if they want to make an investment – we’ll do it. There’s no voting. At the seed stage, the risk of missing something is worse than the risk of investing in the wrong company. We know the best deals in particular tend to be controversial, so we wanted a process that sidesteps that.

Are you “thesis driven”? You’ve invested in numerous media companies, for example.

I’m not a huge believer in thesis-driven investing. The best founders teach you more about an industry than you can learn [by researching it].

I’m not a huge believer in boards for very young companies, either. I’d rather be on the private Github repository of a startup or be on Google Analytics than have them prepare a PowerPoint presentation every month or so and bloviate on the state of the industry. That’s going to be an unpopular view, but it’s my view.

You were the head of the game and entertainment business IGN at News Corp. Tell us more about your transition into VC.

It takes some getting used to. I think we’re trying to do things in a different way, and when you do that, there’s some chance that you create something special. There’s also a chance that you create something that blows up in your face. With a startup, if something isn’t working, you know three months [into it]. Here, maybe in five years I’ll have the data to know if what we’re doing works.

That’s refreshingly candid.

[Laughs.] Well, everyone wants you to be blunt and transparent until you’re in the room with them. I just met with someone and told him that his startup wasn’t right for us for XYZ reasons. He said, “Don’t you want to think about it for a few days and get back to me?” I said, “I could pretend to think about it and not email you for a week and then tell you. Or I can tell you right now.”