StrictlyVC: September 15, 2014

Good morning, everyone!  (Web visitors, for an easier-to-read version of today’s issue, click here.)

—–

Top News in the A.M.

It’s official: Microsoft has acquired “Minecraft” maker Mojang for $2.5 billion. Most employees will stay on for now; Mojang’s founders will not. The company has published a blog about the sale, explaining that Markus Persson (“Notch”), the 35-year-old creator of Minecraft and the majority shareholder of Mojang, “decided that he doesn’t want the responsibility of owning a company of such global significance. Over the past few years he’s made attempts to work on smaller projects, but the pressure of owning Minecraft became too much for him to handle. The only option was to sell Mojang. He’ll continue to do cool stuff though. Don’t worry about that.”

—–

Steve Blank: Washington Really Is Starting to Get It

Steve Blank, a renowned serial entrepreneur who teaches at Stanford, U.C. Berkeley, and Columbia, used to groan that the government just didn’t understand entrepreneurship, particularly as it pertains to tech and life sciences startups.

That’s quietly beginning to change, says Blank, who traces part of the shift to a surprise call in 2011 from the National Science Foundation, the second-largest research organization in the U.S., with a budget of $7 billion.

Early that same year, Blank — incorporating some ideas of startup advisors Alexander Osterwalder and Eric Ries – had devised a course called the Lean Launchpad that dispenses with traditional business school coursework and pushes students out of the building instead. The idea is to get each student or team of students to write a business hypothesis; test that hypothesis in the real world by asking dozens of potential users, purchasers and partners for feedback; then iterate on their business idea based on that input.

Initially, Blank wasn’t sure how the experiment would turn out. He blogged about the process each week, though, and while he was winning converts at Stanford where it was first introduced, the NSF was also quietly following along from Washington. Indeed, recalls Blank, seemingly out of the blue, “[Errol Arkilic, head of the NSF’s SBIR program] called me and said, ‘You’ve invented the scientific method for entrepreneurship. This is now understandable. You’ve cracked the code,’ Then he said, ‘How quickly can you prototype a class?’”

With the the help of numerous VCs and dozens of scientists, it took a year, Blank says. Since then, 400 teams of NSF-funded researchers have received nine weeks of training to help them evaluate their scientific discoveries for commercial potential. (Here’s one powerful testimonial by the chief of general surgery at UCSF, who says the course saved him from chasing down the wrong path.)

More, beginning next month, the National Institutes of Health — the country’s primary federal medical research agency, with an annual budget of $31 billion that it spreads across the country – will begin teaching eligible NIH grantees the exact same curriculum. And the Department of Energy is next in line, adds Blank.

I ask Blank how he feels about his class beginning to figure into how tens of billions of dollars in research grants (potentially) become allocated. Blank, who is the son of immigrants and takes a teaching salary of $1 dollar a year (“I made a lot of money and teaching is how I give back to the country,” he says), sounds optimistic.

“Instead of VCs having to guess about markets and channels and product market fit, and scientists who don’t know what the hell a customer is, these scientists can now articulate arguments based on layers of evidence. It’s much different than, ‘Let me tell you about my lab creation.'”

Adds Blank, “It’s an enrichment program to get public investment matched with private capital more efficiently. How can you argue with that?”

—–

New Fundings

AcuFocus, a 13-year-old, Irvine, Ca.-based medical device company whose corneal lenses allows patients to see near and intermediate objects more clearly, has raised $21 million in new funding from a group of undisclosed investors. The funding brings AcuFocus’s total funding to at least $86 million, shows Crunchbase.

Celoxica, an 18-year-old, London-based company that sells its low-latency trading platforms to trading firms, banks, and brokers, has raised £1.5 million ($2.4 million) from Beringea Growth Finance. Celoxica was established as a spinout of Oxford University; it has raised $34.4 million from investors over the years, shows Crunchbase.

Cloudyn, a three-year-old, Tel Aviv-based cloud monitoring company that helps its customers optimize their cloud use across different infrastructure providers, has raised $4 million in Series A funding led by Titanium Investments, with earlier investor RDSeed participating. To date, the company has raised $5.5 million, it says

Formation Data Systems, a two-year-old, Fremont, Ca.-based company whose site says simply that’s building a “converged data platform for web-scale computing,” has raised $15 million in funding, shows an SEC filing that lists CEO Mark Lewis, COO Andy Jenks, Imperva CEO Anthony Bettencourt, Carl Ledbetter of Pelion Venture Partners and Robert Schwartz of Third Point Ventures.

HouseLens, a 7.5-year-old, Nashville, Tn.-based company that produces full-motion walk-through video tours of real estate, has raised $1.5 million from investors, according to an SEC filing that shows a $2 million target. The company had previously raised $500,000 from investors, shows an earlier SEC filing.

Inrix, a 10-year-old, Kirkland, Wa.-based a provider of real-time traffic data (it takes into account accidents, construction and events, among other inputs), has nabbed $55 million in funding from Porsche Automobil Holding, which is taking a stake of roughly 10 percent in exchange for its capital. The company, whose earlier investors include Venrock, Bain Capital Ventures, August Capital, and Kleiner Perkins Caufield & Byers, has now raised $133 million altogether.

Kinnek, an 18-month-old, New York-based online marketplace that invites small businesses to list goods they need and for suppliers to provide competitive prices for them, has raised $10 million in Series A funding led by Matrix Partners. Earlier investors also participated in the round, including Sierra Ventures, Version One Ventures, TriplePoint Ventures, CrunchFund, and individual investors Richard Chen, Naval Ravikant, and Benjamin Ling. The company has raised $11.5 million altogether.

Milyoni, a five-year-old, Pleasanton, Ca.-based company that specializes in social video marketing for entertainment companies, brands, and artists, has raised $16.1 million in new funding, shows an SEC filing. The company, whose backers include Oak Investment Partners, ATA Ventures, and Thomvest Ventures, had previously raised $14 million over two rounds of funding.

Moment, a nine-year-old, Seattle-based company that makes portable lenses that work to enhance mobile phone pictures, has raised $1.5 million in debt, shows an SEC filing. Earlier this year, the company ran a successful Kickstarter campaign through which it raised roughly $450,000. Venture capitalist Hunter Walk interviewed Moment founder Marc Barros this past summer.

Needly, a four-year-old, Santa Monica, Ca.-based company whose RSS reader makes it easy to follow feeds, collaborate in small groups, and build drag-and-drop web sites, is looking to raise $1 million, shows an SEC filing. The company had raised $987,000 in seed funding last year, including from Upfront Ventures.

Omakase, a months-old, New York-based company that’s operating in stealth mode, has raised $2.4 million in a mix of debt and other securities, shows an SEC filing that lists a $4 million target. Will Gaybrick, a general partner at Thrive Capital, and Akshay Navle, a venture parter with High Peaks Venture Partners, are listed on the filing (both as “executive officers,” interestingly). Caleb Merkl, a longtime VP at The New Traditionalists, a New York-based company that makes handmade furniture, is also named in the filing. Omakase means “I’ll leave it to you” in Japanese.

Peaberry Software, a two-year-old, New York-based company whose product, Customer.io, allows users to send newsletters to segments of customers using data from their site, has raised roughly $775,000 in seed funding from 23 investors, shows an SEC filing.

Product Hunt, a 10-month-old, San Francisco-based aggregation site and email service that surfaces new tech products and startups, has raised $6 million in Series A funding led by Andreessen Horowitz, reports TechCrunch. The company had previously raised $1 million in seed funding from Y Combinator (Product Hunt was part of its summer batch), betaworks, Cowboy Ventures, CrunchFund, Google VenturesGreylock Partners, Ludlow Ventures, Slow Ventures, SV AngelTradecraft and Vayner/RSE, among a long list of individual investors. Apparently, the funding is small change compared with what at least one other recent Y Combinator alum is or has recently raised. See here.

Scholar Rock, a 1.5-year-old, Cambridge, Ma-based biotechnology company working a new type of biologic drug it calls niche activators, which affect disease-causing proteins in the body, has raised $20 million in Series A funding led by ARCH Venture Partners. Founding investorsPolaris Partners and Professor Timothy Springer of Boston Children’s Hospital also participated in the round, along with new investors EcoR1 Capital and The Kraft Group.

Snowball Finance (Xueqiu in Chinese), a four-year-old, Beijing, China-based financial media platform, has raised $40 million in Series C funding led by Renren, with participation from earlier investor Morningside Ventures, reports TechNode. The company had previously raised $13.2 million across two fundings, says the report.

TrustedCompany, a year-old, Kuala Lumpur-based open review community that helps consumers identify trustworthy e-commerce businesses in emerging markets, has raised $1 million in Series A funding led by Tengelmann Ventures, with participation from 500 Startups and returning investor Asia Venture Group. TechCrunch has the story here.

—–

New Funds

Govtech Fund, a new, San Francisco-based seed-stage fund focused on startups that sell into the government, has raised $23 million in funding, it’s announcing today. The firm is headed up by Ron Bouganim, a Code for America mentor and operator who has worked for numerous startups over the years. Talking with the outlet Government Technology, Bouganim says that he anticipates backing 15 to 20 startups with an average check size of $500,000 and that Govtech Fund has already made investments in four startups, including MindMixer, a company that makes it easy for local officials to poll residents about proposed actions.

MissionOG, an 18-month-old, Philadelphia-based venture firm, has raised $9 million as part of a fund that’s targeting up to $49 million, according to SEC filings that were turned up by Technically Media and confirmed by founding partner George Krautzel. To date, MissionOG has made five investments; its checks range in size from $250,000 to $2 million, according to Krautzel.

—–

IPOs

It looks like Alibaba‘s opening-day IPO shares will see a bump in price from $66 to just below $70, owing to intense demand for the e-commerce giant. Bloomberg has more here.

—–

People

Apple CEO Tim Cook speaks with Charlie Rose for the first time, telling him he sees Google, not Samsung, as Apple’s biggest competitor, and describing the Apple Watch as the “most personal device we’ve ever created.” Asked by Rose whether the iPhone 6 isn’t a “continuation of the iPhone,” Cook corrects him, calling it instead “a leapfrog.”

Venture capitalist Tim Draper‘s ballot initiative that would have asked voters to split California into six separate states failed to qualify for the ballot in 2016, the secretary of state’s office reported Friday. Draper had submitted 1.37 million signatures this summer in support of the measure. The AP has the story here.

The world of startup investing is headed for trouble, says venture capitalist Bill Gurley of Benchmark in a new Q&A with the WSJ. Among other things, Gurley tells the outlet: “I guarantee you two things: One, the average burn rate at the average venture-backed company in Silicon Valley is at an all-time high since ’99 and maybe in many industries higher than in ’99. And two, more humans in Silicon Valley are working for money-losing companies than have been in 15 years . . . In ’01 or ’09, you just wouldn’t go take a job at a company that’s burning $4 million a month. Today everyone does it without thinking.”

Mahboob Hossain has joined the California Public Employees’ Retirement System as a senior portfolio manager to oversee co-investments made alongside private equity fund managers, reports peHUB. Hossain previously spent more than seven years as a private equity portfolio manager at the California State Teachers’ Retirement System.

Investor Peter Thiel argues that you really do have to reinvent the wheel to win.

A new reality show will follow six entrepreneurs while they try to raise the capital they need to build a legal marijuana business in Denver. Really.

—–

Job Listings

Learn Capital, a San Mateo, Ca.-based venture firm focused on the global education sector, is looking for “venture fellows” for part-time and full time internships that begin on a rolling basis throughout the year and have varied durations.

Robert Bosch is looking for a senior associate of corporate development who can build relationships with Silicon Valley companies to support its next generation “connected car” and “connected mobility” experiences for its customers. The job is in Palo Alto, Ca.

—–

Data

The WSJ looks at which parts of the human body are garnering most capital from healthcare-focused VCs.

—–

Essential Reads

A tale of two very similar apps, one created by serial entrepreneur Kevin Rose, the other created by a former employee of Rose.

Wired’s Mat Honan pens a surprisingly touching requiem for the fast-disappearing iPod.

Did Apple just become a big bank?

—–

Detours

A boy lobbying to include his cat in his senior portrait. NBD.

Wonder Woman’s secret past.

—–

Retail Therapy

You know, it is possible to be too unself-conscious.


Leave a Reply

Your email address will not be published. Required fields are marked *

*