Hi, everyone, hope you had a terrific weekend! Ours was nice, though after being shaken awake by an earthquake early yesterday, we’ll tell you that we’ve never loved good old Monday morning more.
—–
Top News in the A.M.
Sony’s PlayStation Network was forced offline for much of yesterday by a cyberattack in what appears to be a campaign against several online gaming services. The BBC has more here.
It’s perfectly okay that the White House’s cybersecurity czar can’t code, says the White House, defending a recent interview of Michael Daniel in Gov Info Security. “Anyone who has worked with Michael Daniel recognizes that he is a master of the substance and technology undergirding U.S. cyber policy,” a spokeswoman tells the Washington Post.
—-
Micky Malka Doubles Down: “I Don’t Believe in Diversification”
In a crowded market, venture capitalists tend to talk up particular investment angles to differentiate themselves from their peers. When Ribbit Capital founder Micky Malka talks financial services, though, it isn’t for marketing purposes. Malka has been living and breathing finance since co-founding his first company in 1993, a broker dealer that evolved into an online financial services portal and sold in 2000, just before the bubble burst, to the Spanish bank Banco Santander.
LPs clearly like his credentials. Ribbit, in Palo Alto, closed its first fund with $100 million last year and officially closed on a second, $125 million fund last week. I chatted with Malka on Friday to learn more about what those investors — including Silicon Valley Bank, the Spain-based lender Banco Bilbao VIzcaya Argentaria, and individuals from the financial services world — find so compelling about what Malka is doing.
You’re Venezuelan and spent most of your life in South America. When did you come to the U.S. and why?
I came here seven years ago this month. I’d started all kinds of consumer financial services companies in Europe and Latin America and did very well for myself, but I felt like I was playing in the AAA leagues and that Silicon Valley was the majors.
You came to be an entrepreneur, though, not an investor.
Yes, I moved with my family to build another company, again around consumer financial services – around mobile payments. Bling Nation was right on the vision but so wrong on the strategy, wrong on the protocols. It took us a couple of years to figure it out, though. At that point, we went to our VCs and said, “It’s not working and we have two options. We can return your money and lose our own personal money that we’d put in. Or you can give us six months to figure it out.” To my surprise, the investors said, “We backed you guys, not the idea. Take six months to figure it out.” It was really big [of them]. We launched a company called Lemon, a financial app, and we sold it last year to a public company.
Had you had it with startups at that point? Why form Ribbit?
I’d listen to this guy say, “I’m doing this lending business in the U.K.,” and I’d say, “I’d love to be involved.” Then I’d learn of a new financial advisor in the U.S., and I’d think that was interesting. I realized there was an investment thesis going on that was broader than what people were thinking about. Also, I’ve started companies on four continents, and there aren’t many VCs who really know financial services in different jurisdictions. It’s a very particular DNA around which to start a firm.
So much is happening on the financial services front right now. Where in the cycle are we?
Financial services innovate when there’s a new channel and when users or clients are tired of existing brands. Well, people aren’t wearing their Goldman Sachs or Citibank hats anymore. Meanwhile, mobile has taken off dramatically, and banks and insurance companies don’t think in mobile terms. I’m not saying the brands we know will disappear, but who will be the Capital One or Charles Schwab of this generation? It’s early, and there are a lot of unique innovators in different subsets of the universe.
Where are you investing your capital geographically?
Our mandate is global. We look for opportunities in seven markets: The U.S. and Canada, Brazil, the U.K., Germany, South Africa, Turkey, and India, which are all markets where there are entrepreneurs and investment partners who I’ve known for 15 years.
Where have you made some of your biggest bets to date?
We’re the largest bitcoin VC in world. Let Marc [Andreessen] be Marc [in being so public about bitcoin]; we’ve been investing since 2012. Back then, there were no bitcoin entrepreneurs so we had to buy bitcoin directly. Later, we found our first entrepreneurs, including at [bitcoin exchange service] Coinbase [which Ribbit backed last year]. We’ve now made five investments in bitcoin [startups]: Two here in the U.S., one in Hong Kong, one in Brazil and one in Slovenia.
You made 10 investments out of your first fund, and you’ve made six from your second fund, only one of which, Wealthfront, has been announced. Are you still focused narrowly on consumer-facing financial startups?
Yes. We’ve done lending businesses, personal finance, wealth management, accounting and invoicing, and bitcoin, and now we’re going to add insurance, which we’ve spent the last year researching. We just see too many opportunities that we like.
What size checks are you writing?
We make very concentrated bets. Our checks are usually between $3 million to $4 million and $20 million. When we find what we like, we have a lot of conviction. I don’t believe in diversification.
—–
New Fundings
Aldea Pharmaceuticals, a three-year-old, Redwood City, Ca.-based company whose therapeutics aim to treat aldehyde metabolism disorders, has raised $24 million in Series B funding, including from RusnanoMedInvest and WuXi PharmaTech Corporate Ventures. All previous investors, including Canaan Partners and Correlation Ventures, also participated in the round. The company has raised $42 million to dates, shows Crunchbase.
Bearch, a 1.5-old, Austin, Tx.-based startup that has developed an anonymous photo-sharing app for college students called Unseen, has raised $2.1 million in seed funding, reports Austin Business Journal. The company’s investors include Rackspace co-founder Dirk Elmendorf, Indeed.com CEO Rony Kahan, and other angel investors.
Delivery Agent, a nine-year-old, San Francisco-based company whose technology that lets viewers make purchases from television shows and ads, has raised $8 million in fresh funding, shows an SEC filing. The company has previously raised roughly $140 million over 10 rounds, shows Crunchbase, from investors including Grazia Equity, Intel Capital, Liberty Global Ventures, Bessemer Venture Partners, and Samsung Ventures.
DraftKings, a three-year-old, Boston-based daily fantasy sports business, has raised $41 million in Series C funding led by Raine Group, with earlier investors Redpoint Ventures, GGV Capital and Atlas Venture participating. The company has now raised $76.4 million, shows Crunchbase. The WSJ has more here.
Dynamic Signal, a four-year-old, San Bruno, Ca.-based social marketing company, has raised $12 million in Series C funding led by investor Rembrandt Venture Partners. Earlier investors Venrock, Trinity Ventures, Time Warner Ventures and Cox Enterprises also participated in the round, which brings the company’s total funding to just over $33 million.
Groupize, a five-year-old, Gloucester, Ma.-based company that helps users book group hotel reservations, has raised $2 million in Series A funding from Golden Seeds and Thayer Ventures. The company has raised $4 million to date, including from Launchpad Venture Group, shows Crunchbase.
LTG Exam Prep Platform, a two-year-old, Cambridge, Ma.-based startup whose mobile platform helps students study for standardized tests, has raised $3 million in Series A funding, including from Atlas Venture, ZhenFund, Honglin Technology Group, Tal Education Group, and numerous individual investors.
Playlist Media, a San Francisco-based company, has raised $515,000 in debt, as part of a round that’s targeting $2.5 million, shows an SEC filing. Playlist appears to be the newest iteration of Project Playlist, a startup that had raised at least $23 million from investors before threats by music labels drove it to sell off its assets for a nominal amount. Playlist Media’s CEO is Bobby Davidorf, who’d joined Project Playist as CFO in 2009; he went on to lead the company as CEO for several years.
TinyOwl Technology, a months-old Mumbai, India-based startup behind a location-based mobile app for food ordering, has raised $3 million in Series A funding from Sequoia Capital and Nexus Venture Partners, reports VCCircle. More here.
XSteach, a six-year-old, Guangzhou, China-based online education and training platform (course offerings include classes on Photoshop, Dreamweaver, and 3D animation), has raised $30 million in Series B funding from Legend Capital and Northern Light Venture Capital, reports China Money Network. The company reportedly raised $2.4 million in Series A funding last year.
—–
New Funds
Alsop Louie Partners, the eight-year-old, San Francisco-based early-stage venture firm, has raised $54.4 million for a third, $100 million fund that the firm began raising a year ago, shows an SEC filing. Alsop Louie, whose areas of focus include security-related companies, closed on a $98.6 million second fund in 2010. One of the company’s newest portfolio companies is Wickr, whose mobile application helps users send messages with photos and other attachments on Android and iOS devices. StrictlyVC had breakfast with firm cofounder Stewart Alsop last fall to discuss the firm’s “kid VCs.”
—–
Exits
Gecko Design, an 18-year-old, Los Gatos, Ca.-based product design firm that has made products for wearable device company Fitbit and high-end furniture maker Herman Miller, among others, has been acquired by Google for undisclosed terms. The company and all of its “geckos” will join Google’s X lab, says the company. Bloomberg has more here.
Moonshark, a small mobile game publishing start-up that was backed in part by Creative Artists Agency, has been acquired by the interactive and creative agency Hitcents (which came up with the digital typewriter that become the most downloaded app in 16 countries last week). Terms of the deal weren’t disclosed. The L.A. Times has much more here.
Reverse Medical, a seven-year-old, Irvine, Ca.-based startup whose medical devices treat vascular disease, has been acquired by the Irish medical-technology giant Covidien for undisclosed financial terms. Reverse Medical had raised $15.5 million from investors, including Emergent Medical Partners, NBGI Ventures, BioStar Ventures, Early Stage Partners, Wexford Capital, and Medfocus.
StarStreet, a five-year-old, Cambridge, Ma.-based daily fantasy sports site, has been acquired by a bigger competitor, DraftKings, which itself just raised $41 million in fresh funding. (See New Fundings.) Terms of the deal weren’t disclosed. StarStreet, a TechStars alum, had raised at least $2.1 million from investors, including Ecosystem Ventures and SV Angel.
Zao, a three-year-old, L.A.-based social recruitment platform that offers rewards to employees for making job referrals, has been acquired by the recruitment company Amris (owned by The Internet Corporation Limited). TechCrunch has the story here. Terms of the deal remain undisclosed. Zao had raised $1.3 million seed round led by Oren Zeev, a former general partner at Apax Partners.
—–
People
Bryan Hsu is the newest associate at the late-stage venture firmInstitutional Venture Partners (which, it’s worth noting, tends to promote employees into more senior positions, rather than hire outside operators from brand-name companies). Hsu, a Dallas native, last worked as an investment banking analyst at Qatalyst Partners, the technology-focused boutique investment bank.
Looks like billionaire VC Vinod Khosla could lose his fight to keep surfers and others off property that he acquired several years ago in San Mateo County. Legislation that could mean greater public access to Martins Beach cleared its final legislative hurdle on Thursday and now awaits California Governor Jerry Brown’s signature.
The offices of Kleiner Perkins Caufield & Byers were ransacked in late July, reports Bloomberg, and six laptops, two monitors and a docking station were taken during the break-in. Among the items stolen were two password-protected laptops that contained social security numbers and financial-accounts data.
U.S. Chief Technology officer Todd Park is planning to step down by year-end, reports Fortune, which says Park’s next role will see him working from Silicon Valley, where he’ll be recruiting tech talent into government roles.
—–
Job Listings
Samsung is looking for a senior associate to work at its Open Innovation Center, which invests in startups, as well as helps incubate them. The job is in Mountain View, Ca.
Stanford Management Company is looking for an investment attorney.
—–
Essential Reads
Xiaomi Mi4 review: China’s iPhone killer is “unoriginal but amazing,” says The Verge.
Business Insider looks at the origins of UBeam and a lawsuit between its founders that has gone unreported until now.
—–
Detours
In tennis, the one-handed backhand has all but disappeared, but Stan Wawrinka may save it.
“From our humble beginnings selling jam to white people with way too much disposable income, to convincing those same diners that poached quail eggs is a totally normal thing to consume, Hirl has never been about getting bogged down in stasis.”
—–
Retail Therapy
The Sony Smart Tennis Sensor, compatible with most big-name rackets.
3D printed bobble heads. (Hey, why not?)