Monthly Archives: October 2014

StrictlyVC: October 31, 2014

Happy Halloween, everyone! We hope you have a positively ghoulish Friday. [Cue the maniacal laughter.]

Web visitors, you can find an easier-to-read version of this, today’s newsletter, here.

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Top News in the A.M.

The details about that funding round for Slack just came out and they’re stunning. According to a new report by the WSJ, Slack — which is less than two years old — has raised $120 million in a mega-round of financing that values the company at $1.2 billion. Kleiner Perkins Caufield & Byers and Google Ventures led the deal.

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The NVCA’s Newest Weapon: Bobby Franklin

Last year, Bobby Franklin became president and CEO of the National Venture Capital Association in Washington, D.C. On Tuesday, over croque-monsieurs in San Francisco, we talked about the battles he’s been trying to win since for VCs and, increasingly, he says, entrepreneurs.

To say that Franklin’s job is complicated is kind of understating things. Still, we gather that Franklin — formerly executive VP of a wireless communications lobbying group — is up to the challenge. Our chat with him has been edited for length.

You officially started the job in August of last year. What was first on your agenda?

My priority in coming into an association that’s been around for 40 years has been to take it to the next level, including moving our office up to Capitol Hill to be more engaged with policymakers. As close as we’ll be, I can imagine inviting entrepreneurs to our office as well as congressional staff who can come by and meet some of [these founders] so they can better understand who they’re working for.

Part of the vision that we talk about as I’ve taken over is directing all the focus on the entrepreneurial ecosystem. If policies that we’re working on with policymakers are explained to them in terms of how they can help the entrepreneurial ecosystem [versus how they can help wealthy venture capitalists], we’ll obviously have a more receptive audience.

We’re guessing most entrepreneurs aren’t aware or have time for the NVCA. How do you get them involved?

I don’t think you manufacture this. I think you have to earn the right to speak for them. An important issue to our members is immigration. But really, that’s most important to the entrepreneurs [at risk of being turned away from the U.S.], so we’re working on policies that benefit those entrepreneurs. You do a really good job of representing them and over time I think you earn the right to engage them more. If they see that you’re actually doing something for them, it draws them into ecosystem.

What are your next steps regarding immigration? Less than a month ago, President Obama announced he’d delay using his executive authority to reform immigration laws.

In a mid-term election year, it’s not surprising that it wouldn’t be able to make it across the goal line. They talked about doing it before the end of the summer, then [the administration] said, “Folks on our side of the aisle don’t want us to do anything before the midterm election and we respect that,” so part of what we’re looking for in a lame-duck session is what could be accomplished. Obviously you’re not going to get comprehensive immigration reform passed, but if the White House could make progress and help push this issue along, it’s not a bad place to be.

There are ways [the administration] can mess things up, too, if they do it the wrong way [as through executive order] and they further alienate both sides. Let’s say the Republicans make gains next week in the election and the Senate flips and goes Republican, which, right now, oddsmakers believe will happen; Republicans will clearly have an interest in putting their stamp on something bigger in the next couple of years.

What we do is ensure the White House, as well as Congress, understands the importance to the entrepreneurial ecosystem [of immigrants]. If we want this golden goose here in our country to keep producing new companies and creating new jobs and positively contributing to the economy, we have to recognize what’s important to it, and immigration is one of those things. Almost half of the companies that are founded have foreign-born entrepreneurs.

There will be a lot of investors reading this interview. Is there more they could be doing to help you?

Once there’s a clear path to getting immigration reform across the goal line, I think there will be opportunities for us to reach out to the broader VC communities to say, “Now is the time to write letters, to have portfolio companies reach out, to maybe reach out to VCs in other districts like Texas, Arizona, and Florida,” where there may be resistance to comprehensive reform. There’s often these two groups that talk past each other. We’re talking about the benefits of legal immigration; they’re talking about the downside of illegal immigration. They aren’t two sides of the same coin; they’re totally different coins.

What’s the second biggest priority for the NVCA right now after immigration reform?

Members are very interested in seeing patent reform moved forward because they’ve experienced the so-called troll problem. However, we have a very diverse membership. Some say, “Why do we even need a patent to begin with?” And there are others who, but for the patent, there wouldn’t be a company. So we have this diversity of interests and views, and ones of our roles, working in policy, is to find the right voice from a startup perspective and say to policymakers, “It isn’t just about this bill or nothing: you have to understand the implications of what you’re considering on the young, very small startup companies.”

If your own constituents can’t agree on how to move forward, what do you propose to Congress? Does that recent Supreme court ruling make your job any easier? I’m talking about the ruling that made it such that if a big company sues a little company over a broadly worded patent, the little company can stand up to its claims, because there’s a much better chance now that it can recoup its legal fees.

If you’re a small company trying to protect yourself against a large company, you may want to avail yourself of the tools at your disposal so you go after a large company But cases are not slam dunks, and you’ve put yourself in the position of having to pay somebody else’s legal fees that you can’t afford. Some of these things that sound like solutions to a part of the problem create unintended consequences.

A lot of times in Washington, [lawmakers] are very busy and focused on lots of different issues and when someone talks about the patent issue, a particular member of Congress or a Senator knows that they’ll be “for” patent reform, but they don’t know much else. And they know there’s a patent troll problem and they want to be a part of passing legislation that solves that problem. Our job is to say, “We understand this is the issue and this is your position, but you need to understand that what’s on the table could have an [unintended] impact on other parts of the entrepreneurial ecosystem and that they have to take a second [try] at this — that the first solution is from someone who doesn’t care about these small startup companies.”

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New Fundings

Cytovance Biologics, an 11-year-old, Oklahoma City, Ok.-based biopharmaceutical contract manufacturer that specializes in the production of therapeutic proteins and antibodies from mammalian cell culture and microbial cell cultures, has secured a $20 million credit facility from Monroe Capital.

Digital Lumens, a six-year-old, Boston-based maker of “intelligent” LED lighting solutions, has raised $23 million in Series C funding from Nokia Growth Partners, Aster Capital, and Goldman Sachs, with participation from earlier investors Flybridge Capital Partners, Black Coral Capital, and Stata Ventures. The company has now raised $49.3 million, shows Crunchbase.

Gogoro, a three-year-old, Taiwan-based energy management startup founded by former HTC executive Horace Luke, is raising $100 million in new venture funding, Luke tells Recode. The company had previously raised $50 million from HTC Chairwoman Cher Wang and Samuel Yin, the Taiwanese billionaire founder of Ruentex Group.

Jongla, a five-year-old, Helsinki, Finland-based cross-platform instant messaging app, has raised the equivalent of $4.3 million in Series B funding from JSH Capital, Ingman Finance, Kontino Invest and Holdington. The company has now raised $7.7 million altogether, shows Crunchbase.

Minted, a seven-year-old, San Francisco-based e-commerce design startup that helps users create storefronts, has raised $38 million in Series D funding led by Norwest Venture Partners, with participation from Technology Crossover Ventures. The company has now raised $89.1 million altogether, shows Crunchbase. Others of its backers include Benchmark, Allen & Co., Menlo Ventures, IDG Ventures and high-wattage angels, including Julia Hartz, Marissa Mayer, and Jeremy Stoppelman.

NerVve Technologies, a two-year-old, Buffalo, N.Y.-based whose technology help users gather information from videos and images by quickly searching pixels as if they were text, has raised $5 million in Series A-1 funding from the publicly traded company HC2 Holdings. The company had raised an undisclosed amount of funding prior, including from In-Q-Tel.

Print Syndicate, a two-year-old, Columbus, Oh.-based e-commerce company turns turns social media trends into designs on printed objects like tee shirts and other apparel, phone cases, pillows, tote bags, and blankets, has raised $4.3 million in Series A funding led by Data Point Capital, with participation from Lightbank, Vegas Tech Fund, CNF Investments and TechColumbus.

Valooto, a year-old, Jerusalem, Israel-based maker of collaborative sales engagement software, has raised $1.5 million in seed funding from JVP Media Labs.

VivaReal, a five-year-old, Brazilian real estate portal, has raised $41.7 million in Series C funding led by Spark Capital — the firm’s first investment in Brazil. The company has now raised $70.9 million altogether, including from Monashees Capital, Kaszek Ventures, Valiant Capital and Dragoneer Investment Group.

VytronUS, an eight-year-old, Sunnyvale, Ca.-based company that makes medical devices that treat cardiac arrhythmias, has raised $31.6 million in Series B funding led by Apple Tree Partners, with participation fromBioStar Ventures, Windham Venture Partners, Abbott Labs and earlier investor New Enterprise Associates. The company has now raised $66.4 million altogether, shows Crunchbase.

uBeam, a nearly three-year-old, L.A.-based company that beams electricity through the air to charge portable electronics wirelessly, has raised $10 million in Series A funding led by Upfront Ventures. The company has now raised $13.2 million altogether, shows Crunchbase. Its other investors include Founders Fund, Andreessen Horowitz,CrunchFund, Ludlow Ventures, and numerous high-profile individuals, including Marissa Mayer, Tony Hsieh, Troy Carter, Shawn Fanning and Mark Cuban.

Zoomcar, a 1.5-year-old, Bangalore, India-based vehicle-rental startup, has raised $8 million in funding led by Sequoia Capital. Other participants in the round included earlier backers Empire Angels, FundersClub,Basset Investment Group, funds advised by Triangle Growth Partners, and a number of prominent angel investors. The company had previously raised $2 million, including from former U.S. Treasury Secretary Larry Summers. Venture Capital Dispatch has more on the company — and broader opportunities around urban transportation that VCs see in emerging markets — here.

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New Funds

Montage Ventures, a year-old, Menlo Park, Ca.-based seed-stage firm, has raised $11.3 million toward its first fund, according to an SEC filing that shows a target of $17.5 million. Montage has already begun investing the fund. Two of its recent investments include Glamsquad, a 10-month-old, New York-based on-demand beauty services business that raised $7 million in Series A funding last week led by SoftBank Capital; and Olset, a 1.5-year-old, San Francisco-based hotel-booking service for business users that raised $1.1 million in seed funding led by Montage back in May.

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Exits

Metalogix International, a six-year-old, Washington, D.C.-based company that makes software management tools, is being acquired by the U.K. private equity firm Permira for undisclosed terms. Metalogix was backed by Insight Venture Partners and Bessemer Venture Partners, which are fully exiting their stakes.

Topera, a four-year-old, San Diego-based company that makes diagnostic catheter and electrophysiological mapping software for use in ablation procedures, is being acquired by Abbott Laboratories for $250 million in upfront cash and further milestone-based payments. According to Crunchbase, Topera had raised at least $31.5 million in funding, including from New Enterprise Associates.

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People

Ha. Actor Seth Rogen is set to portray Steve Wozniak opposite Christian Bale as Steve Jobs in Sony’s Steve Jobs biopic. Variety has the details here.

Longtime Google executive and former Android boss Andy Rubin is leaving Google, The Information reported late yesterday. Its sources say his departure may have owed to the structure of his team, which he was seeking to change. Google says Rubin will be starting a incubator for hardware startups and that James Kuffner will run the robotics unit that Rubin has been overseeing. “I want to wish Andy all the best with what’s next,” Google CEO Larry Page said in a statement. “With Android he created something truly remarkable— with a billion-plus happy users. Thank you.” The WSJ has much more here.

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Job Listings

American Express is looking to hire a director for its corporate development and mergers and acquisitions team. The job is in New York.

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Essential Reads

Amazon exec: We priced the Fire phone wrong.

Uber’s data could be a treasure trove for cites. But they’re wasting the chance to get it, argues the Washington Post.

Business Insider on the main difference between Harvard and Stanford.

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Detours

What your zip code says about you.

Frank Bourassa became the most prolific counterfeiter in U.S. history, with $200 million in fake bills. How he got away with it all is even crazier.

Ten hours of walking as a man in New York City.

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Retail Therapy

Pigeon Mask. (Maybe next year, though we love that it’s recommended for “even a formal, official working day!”)


The NVCA’s Newest Weapon: Bobby Franklin

bobby franklinLast year, Bobby Franklin became president and CEO of the National Venture Capital Association in Washington, D.C. On Tuesday, over croque-monsieurs in San Francisco, we talked about the battles he’s been trying to win since for VCs and, increasingly, he says, entrepreneurs.

To say that Franklin’s job is complicated is kind of understating things. Still, we gather that Franklin — formerly an executive VP at a wireless communications lobbying group — is up to the challenge. Our chat with him has been edited for length.

You officially started the job in August of last year. What was first on your agenda?

My priority in coming into an association that’s been around for 40 years has been to take it to the next level, including moving our office up to Capitol Hill to be more engaged with policymakers. As close as we’ll be, I can imagine inviting entrepreneurs to our office as well as congressional staff who can come by and meet some of [these founders] so they can better understand who they’re working for.

Part of the vision that we talk about as I’ve taken over is directing all the focus on the entrepreneurial ecosystem. If policies that we’re working on with policymakers are explained to them in terms of how they can help the entrepreneurial ecosystem [versus how they can help wealthy venture capitalists], we’ll obviously have a more receptive audience.

We’re guessing most entrepreneurs aren’t aware or have time for the NVCA. How do you get them involved?

I don’t think you manufacture this. I think you have to earn the right to speak for them. An important issue to our members is immigration. But really, that’s most important to the entrepreneurs [at risk of being turned away from the U.S.], so we’re working on policies that benefit those entrepreneurs. You do a really good job of representing them and over time I think you earn the right to engage them more. If they see that you’re actually doing something for them, it draws them into ecosystem.

What are your next steps regarding immigration? Less than a month ago, President Obama announced he’d delay using his executive authority to reform immigration laws.

In a mid-term election year, it’s not surprising that it wouldn’t be able to make it across the goal line. They talked about doing it before the end of the summer, then [the administration] said, “Folks on our side of the aisle don’t want us to do anything before the midterm election and we respect that,” so part of what we’re looking for in a lame-duck session is what could be accomplished. Obviously you’re not going to get comprehensive immigration reform passed, but if the White House could make progress and help push this issue along, it’s not a bad place to be.

There are ways [the administration] can mess things up, too, if they do it the wrong way [as through executive order] and they further alienate both sides. Let’s say the Republicans make gains next week in the election and the Senate flips and goes Republican, which, right now, oddsmakers believe will happen; Republicans will clearly have an interest in putting their stamp on something bigger in the next couple of years.

What we do is ensure the White House, as well as Congress, understands the importance to the entrepreneurial ecosystem [of immigrants]. If we want this golden goose here in our country to keep producing new companies and creating new jobs and positively contributing to the economy, we have to recognize what’s important to it, and immigration is one of those things. Almost half of the companies that are founded have foreign-born entrepreneurs.

There will be a lot of investors reading this interview. Is there more they could be doing to help you?

Once there’s a clear path to getting immigration reform across the goal line, I think there will be opportunities for us to reach out to the broader VC communities to say, “Now is the time to write letters, to have portfolio companies reach out, to maybe reach out to VCs in other districts like Texas, Arizona, and Florida,” where there may be resistance to comprehensive reform. There’s often these two groups that talk past each other. We’re talking about the benefits of legal immigration; they’re talking about the downside of illegal immigration. They aren’t two sides of the same coin; they’re totally different coins.

What’s the second biggest priority for the NVCA right now after immigration reform?

Members are very interested in seeing patent reform moved forward because they’ve experienced the so-called troll problem. However, we have a very diverse membership. Some say, “Why do we even need a patent to begin with?” And there are others who, but for the patent, there wouldn’t be a company. So we have this diversity of interests and views, and ones of our roles, working in policy, is to find the right voice from a startup perspective and say to policymakers, “It isn’t just about this bill or nothing: you have to understand the implications of what you’re considering on the young, very small startup companies.”

If your own constituents can’t agree on how to move forward, what do you propose to Congress? Does that recent Supreme court ruling make your job any easier? I’m talking about the ruling that made it such that if a big company sues a little company over a broadly worded patent, the little company can stand up to its claims, because there’s a much better chance now that it can recoup its legal fees.

If you’re a small company trying to protect yourself against a large company, you may want to avail yourself of the tools at your disposal so you go after a large company But cases are not slam dunks, and you’ve put yourself in the position of having to pay somebody else’s legal fees that you can’t afford. Some of these things that sound like solutions to a part of the problem create unintended consequences.

A lot of times in Washington, [lawmakers] are very busy and focused on lots of different issues and when someone talks about the patent issue, a particular member of Congress or a Senator knows that they’ll be “for” patent reform, but they don’t know much else. And they know there’s a patent troll problem and they want to be a part of passing legislation that solves that problem. Our job is to say, “We understand this is the issue and this is your position, but you need to understand that what’s on the table could have an [unintended] impact on other parts of the entrepreneurial ecosystem and that they have to take a second [try] at this — that the first solution is from someone who doesn’t care about these small startup companies.”


StrictlyVC: October 30, 2014

GIANTS. GIANTS. GIANTS.

(Web visitors, here’s an easier-to-read version of today’s email.)

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Top News in the A.M.

Apple CEO Tim Cook has publicly acknowledged that he is gay, saying in a powerful BusinessWeek op-ed this morning that, “I don’t consider myself an activist, but I realize how much I’ve benefited from the sacrifice of others. So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it’s worth the trade-off with my own privacy.”

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Yik Yak: The Startup in Twitter’s Rearview Mirror

Yik Yak, an app that acts like a local bulletin board, allowing users within a 1.5-mile range to post to it anonymously, hasn’t received nearly as much press as other anonymous apps, including Whisper and Secret. It’s seeing much more user pick-up, though. As of last night, Yik Yak was the 27th most downloaded free app in the U.S., right behind Twitter, according to app analytics company App Annie. It was also the sixth most downloaded social media app. Twitter was ranked fifth.

The year-old, Atlanta-based company is almost exclusively a college-based phenomenon for now – and very much by design. Indeed, in August, Yik Yak hired 140 campus “representatives” to plaster universities with its marketing materials, a campaign that appears to have been very effective, though Yik Yak doesn’t disclose user numbers.

The question is whether the app makes sense beyond college campuses. Yesterday, StrictlyVC talked with Cameron Lester of Azure Capital, one of the company’s backers, about it. Our conversation has been edited for length.

You found Yik Yak early on. How?

We found it through outbound research. Anyone who spends time with millennials can see their growing lack of interest in the traditional Facebook experience and gravitation to mobile social; as we were forming a thesis around [what’s next], Yik Yak appeared on our radar. We reached out to one of the company’s seed investors who we know and we ended up participating in its [$1.5 million] seed round. When the company was raising a more formal amount — its $10 million Series A, which came together quickly — DCM led the round and we participated in it, investing well above our pro rata.

Yik Yak is taking off on college campuses. Why is that, and can it grow beyond universities, or is that a big enough market?

The advantages to [a college body] are numerous. Yik Yak isn’t offensive relative to some other social media apps that include photos, because from an anonymity perspective, photos create a big problem. The fact that it’s location based, bringing together users in a 1.5-mile radius, also provides a lot of contextual value, particularly if you have a demographic in that range that has a lot of affinity like college students. Yik Yak also [plays into] a big backlash against this concept of [a trackable] online identity. People want the same level of privacy online that they enjoy offline.

In the meantime, we’re already starting to see Yik Yak bleed out into other places. This summer, for example, when people got off campus, networks sprung up on Wall Street, with Goldman Sachs interns bantering with Merrill Lynch interns. The same thing happened on Capitol Hill, with Democratic and Republican interns. And in summer, the user base was a fraction of what it is today.

Yik Yak recently made it possible to peek into other Yik Yak feeds anywhere in the world. That would seem to have a lot of really interesting applications, including for journalists who right now rely heavily on Twitter for breaking news.

Yes, you can now place a pointer on a map of the world and go to Moscow, Hong Kong, Dubai or elsewhere to see what’s going on. It’s pretty crazy. You can’t participate but you can see what’s happening. Basically, American college kids are [introducing it everywhere]. The company’s next phase of growth is urban areas around the globe.

How will the company make money?

Step one is to get to critical mass. But Yik Yak is uniquely positioned to monetize around local affinity. We’re living in sharing economy and all kinds of local services would love access to this kind of user base. You can also imagine sponsorships, local advertising through a model like Sponsored Tweets . . . That the audience is especially local and can be segmented provides unique revenue opportunities.

Yik Yak has already been involved in cases of bullying. To keep the app out of the hands of high school students, who began using it to abuse one another earlier this year, the company had to draw a geofence around nearly every high school and middle school in the country. Do you worry about the liabilities or risk to your brand?

Back in the spring, I had two middle school students – one just went to high school – and all that [bullying] stuff [in high schools] was going down and my reaction was: No way. Then my son came home and said, “They told us about this app that we shouldn’t use.” Then I was really thinking: No. But these founders are white hat guys; they’ve wanted to build something big and useful and benign from the beginning, and they’ve been very proactive about getting bullying and any kind of comments that shouldn’t be there off the system. I think if anything, we’re on the back side of this. I feel like if there was a risk, that’s already been largely alleviated and what we have to do is more of the same.

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New Fundings

AdPushup, a 1.5-year-old, New Delhi, India-based company whose A/B testing platform built for web publishers enables them to create and test different ad placements to optimize their ad revenue, has raised $632,000 in seed funding from Kima Ventures and a long list of angel investors, including SlideShare cofounder Amit Ranjan.

Affinivax, a new, Cambridge, Ma.-based biotechnology company dedicated to developing vaccines, including for Streptococcus pneumoniae (pneumococcus), has launched with $4 million in funding from the Bill & Melinda Gates Foundation, a commitment that includes additional investments based on the achievement of future milestones.

Aileron Therapeutics, a nine-year-old, Hardwick, Ma.-based company that develops a class of drugs called stapled peptides, has added $33 million to its Series E round, bringing total funding for the round to $48 million. The new infusion was co-led by AJU IB Investment Co. and two undisclosed private investment groups, and it included participation from earlier investors Apple Tree Partners, Excel Venture Management, Lilly Ventures, Novartis Venture Funds, Roche Venture Fund and SR One.

Avisa Pharma, a four-year-old, Albuquerque, New Mexico-based company that’s developing a breathalyzer that can quickly detect the presence of serious lung pathogens, has raised $3.7 million in equity, according to a new SEC filing. The company had previously raised $5 million. MedCity News has more here.

Bitstrips, a seven-year-old, Ontario-based company that makes a personalized comic strip app, has raised $8 million in Series B funding from Kleiner Perkins Caufield & Byers and earlier investor Horizons Ventures. The company has now raised $11 million to date, shows Crunchbase.

Capriza, a 3.5-year-old, Palo Alto, Ca.-based company whose technology enables non-technical users to abstract portions of complex applications and make them work on mobile devices, has raised $27 million in Series C funding from earlier investors Andreessen Horowitz and CRV and new investors Tenaya Capital, Harmony Partners and Allen & Co. The company has now raised just north of $50 million. Venture Capital Dispatch has the story here.

Clarify, a four-month-old, Austin, Tx.-based company that’s building search and analytics software for audio and video files, has raised $1 million in seed funding from Projector Ventures and Silverton Partners, as well as early, unnamed Facebook employees. The company also raised $315,000 in debt this summer, shows Crunchbase.

DeNovo Sciences, a four-year-old, Plymouth, Mi.-based company with a system that detects primarily breast and colon cancer from blood samples, has closed on a Series A round of $2 million from undisclosed sources. The company had won $500,000 in the 2012 Accelerate Michigan Innovation Competition.

Keen Home, a 1.5-year-old, New York-based company that’s making connected vent covers that allow users to you control what rooms get heat or cooling based on their needs, has raised $1.52 million in seed funding. The round was led by RMR Capital, with participation from R/GA Ventures, Bullet Time Ventures, NYU Innovation Venture Fund,Rugged Ventures, Galvanize Ventures, Brand Foundry Ventures,American Family Ventures and Comporium. GigaOm has more here.

Krimmeni Technologies, a seven-year-old, Austin, Tx.-based company that’s developing secure communication technologies for cloud-based data centers and the Internet of Things market, has raised $11.7 million in Series A funding from Pelion Venture Partners and Third Point Ventures. The company has now raised $13.9 million to date, shows Crunchbase.

LiquidSpace, a four-year-old, Palo Alto, Ca.-based online marketplace that helps individuals find and reserve available office and meeting spaces, has raised $14 million in Series C funding led by Roth Capital. Other participants in the round include Black Diamond Ventures, Lucas Venture Group, Shasta Ventures, Avison Young, GPT Group and Steelcase.

Peraso Technologies, a six-year-old, Toronto-based semiconductor company that specializes in wireless chip sets, has raised $20 million in new funding led by Roadmap Capital, with participation from earlier investors Celtic House Venture Partners, Ontario Emerging Technologies Fund, and VentureLink Funds. The company has raised $37.2 million to date, shows Crunchbase.

Personal Capital, a five-year-old, Redwood City, Ca.-based digital wealth management firm, has raised 50 million in Series D funding led by the private equity group Corsair Capital. BBVA Ventures and USAA also participated in the round, alongside earlier investors Crosslink Capital,Institutional Venture Partners and Venrock. The company has now raised $104.3 million altogether, shows Crunchbase.

ProspectWise, an 11-month-old, Santa Monica, Ca.-based crowdsourcing platform that enables smartphone users to survey brick and mortar businesses and collect information about their point-of-sale systems and more, has raised an undisclosed amount of funding from CrossCut Ventures and Launchpad LA, with participation from unnamed angel investors.

Respicardia, an eight-year-old, Minnetonka, Minn.-based maker of an implantable sleep apnea device, has raised $20 million in funding from the Italian medical-device company Sorin Group, which also obtained European distribution rights as part of the deal. Respicardia has now raised $32 million altogether, shows Crunchbase.

User Replay, a two-year-old, London-based startup that offers software akin to a black-box recorder to help e-commerce sites track user behavior, has raised $3.2 million in Series A funding led by Episode 1, with participation from earlier investors EC1 Capital, FSE Group, and unnamed angel investors. The company has now raised $5.9 million altogether. TechCrunch has more here.

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New Funds

Autodesk has just announced that it plans to invest up to $100 million in what it deems to be the most promising 3D printer companies. GigaOm has more here.

North Bridge Venture Partners, the 20-year-old venture firm with offices in Palo Alto, Ca., and Waltham, Ma., is looking to raise $200 million for its eighth fund, shows an SEC filing that states the first sale has yet to occur. The target is far smaller than the firm’s last, $530 million fund, closed in 2008, which may be a reflection of what’s expected to be a smaller team moving forward. Back in March, Fortune reported that firm founders Ed Anderson and Rich D’Amore would not be general partners in this eighth fund, and neither would Jeff McCarthy, who has been a partner with the firm since 1998.

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People

At a WSJ conference in Laguna Beach earlier this week, Whisper CEO Michael Heyward talked extensively about allegations by the Guardian that Whisper has been violating users’ trust. Here’s a bit of that sit-down.

Not everyone at Google is thrilled to have Sundar Pichai as Larry’s Page’s second banana, reports Business Insider, writing: “Sundar rose very fast within Google, and the egos of several members of Google’s SVP team who have been around a long time are bruised. ‘Most of Google remembers him in a much more junior role,’ one source says. ‘For some of the old-timers, reporting to the guy that used to be four levels below you is a challenging thing.'”

Luke Wood, president of Beats Electronics, has purchased an $8.55 million historic home in Los Angeles’ Silver Lake neighborhood that was originally listed for $7.5 million. Curbed has the details, and photos, here.

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Job Listings

HP is hiring a corporate development associate in Palo Alto, Ca.

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Data

Mobile is eating the world. (It’s worth a look at this new slideshow byBenedict Evans if you’ve missed it.)

CircleUp, the San Francisco-based online marketplace for private investing in consumer companies, has just released a public tool that lets anyone see average valuations, growth rates, and other data for thousands of private consumer companies across 15 categories that have sought to raise capital on CircleUp over the past two years. The link is here.

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Essential Reads

Introducing Microsoft Health.

How Facebook could end up controlling everything you watch and read online.

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Detours

Wow. This is insanity.

Last-minute tech tips for making your Halloween nice and creepy.

OK Go’s amazing new video, created with Japanese director Morihiro Harano.

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Retail Therapy

The Windrunner, for the coming months. We’ll take one in black.


Yik Yak: The Startup in Twitter’s Rearview Mirror

yik-yak-appYik Yak, an app that acts like a local bulletin board, allowing users within a 1.5-mile range to post to it anonymously, hasn’t received nearly as much press as other anonymous apps, including Whisper and Secret. It’s seeing much more user pick-up, though. As of last night, Yik Yak was the 27th most downloaded free app in the U.S., right behind Twitter, according to app analytics company App Annie. It was also the sixth most downloaded social media app. Twitter was ranked fifth.

The year-old, Atlanta-based company is almost exclusively a college-based phenomenon for now – and very much by design. Indeed, in August, Yik Yak hired 140 campus “representatives” to plaster universities with its marketing materials, a campaign that appears to have been very effective, though Yik Yak doesn’t disclose user numbers.

The question is whether the app makes sense beyond college campuses. Yesterday, StrictlyVC talked with Cameron Lester of Azure Capital, one of the company’s backers, about it. Our conversation has been edited for length.

You found Yik Yak early on. How?

We found it through outbound research. Anyone who spends time with millennials can see their growing lack of interest in the traditional Facebook experience and gravitation to mobile social; as we were forming a thesis around [what’s next], Yik Yak appeared on our radar. We reached out to one of the company’s seed investors who we know and we ended up participating in its [$1.5 million] seed round. When the company was raising a more formal amount — its $10 million Series A, which came together quickly — DCM led the round and we participated in it, investing well above our pro rata.

Yik Yak is taking off on college campuses. Why is that, and can it grow beyond universities, or is that a big enough market?

The advantages to [a college body] are numerous. Yik Yak isn’t offensive relative to some other social media apps that include photos, because from an anonymity perspective, photos create a big problem. The fact that it’s location based, bringing together users in a 1.5-mile radius, also provides a lot of contextual value, particularly if you have a demographic in that range that has a lot of affinity like college students. Yik Yak also [plays into] a big backlash against this concept of [a trackable] online identity. People want the same level of privacy online that they enjoy offline.

In the meantime, we’re already starting to see Yik Yak bleed out into other places. This summer, for example, when people got off campus, networks sprung up on Wall Street, with Goldman Sachs interns bantering with Merrill Lynch interns. The same thing happened on Capitol Hill, with Democratic and Republican interns. And in summer, the user base was a fraction of what it is today.

Yik Yak recently made it possible to peek into other Yik Yak feeds anywhere in the world. That would seem to have a lot of really interesting applications, including for journalists who right now rely heavily on Twitter for breaking news.

Yes, you can now place a pointer on a map of the world and go to Moscow, Hong Kong, Dubai or elsewhere to see what’s going on. It’s pretty crazy. You can’t participate but you can see what’s happening. Basically, American college kids are [introducing it everywhere]. The company’s next phase of growth is urban areas around the globe.

How will the company make money?

Step one is to get to critical mass. But Yik Yak is uniquely positioned to monetize around local affinity. We’re living in sharing economy and all kinds of local services would love access to this kind of user base. You can also imagine sponsorships, local advertising through a model like Sponsored Tweets . . . That the audience is especially local and can be segmented provides unique revenue opportunities.

Yik Yak has already been involved in cases of bullying. To keep the app out of the hands of high school students, who began using it to abuse one another earlier this year, the company had to draw a geofence around nearly every high school and middle school in the country. Do you worry about the liabilities or risk to your brand?

Back in the spring, I had two middle school students – one just went to high school – and all that [bullying] stuff [in high schools] was going down and my reaction was: No way. Then my son came home and said, “They told us about this app that we shouldn’t use.” Then I was really thinking: No. But these founders are white hat guys; they’ve wanted to build something big and useful and benign from the beginning, and they’ve been very proactive about getting bullying and any kind of comments that shouldn’t be there off the system. I think if anything, we’re on the back side of this. I feel like if there was a risk, that’s already been largely alleviated and what we have to do is more of the same.


StrictlyVC: October 29, 2014

Hi, happy Wednesday morning, everyone. We ran out of time for a column but have some good content coming your way. In the meantime, we’re holding our breath until this World Series ends. What a game last night! (Web visitors, this version of today’s email is a little easier to read.)

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Top News in the A.M.

The FTC is suing AT&T because the carrier throttles speeds of its unlimited data customers, a policy that the FTC describes as “deceptive” and “unfair.”

Facebook reported solid third-quarter earnings yesterday, but it managed to spook Wall Street, warning that 2015 would be a major “investment” year for the company.

A spectacular explosion last night marked the first failure of NASA’s commercial rocket program.

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Sponsored Post

Techweek Los Angeles is coming up November 20-21 in Techweek’s purpose-built tent on Santa Monica Pier. Come see JustFab CEO Adam Goldenberg, FundersClub CEO Alex Mittal and Myspace cofounder Chris DeWolfe speak among dozens of other entrepreneurs and investors, then watch as more than 50 startups battle in front of the conference’s top judges and you. Registration information is here.

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New Fundings

Abacus Labs, a year-old, New York-based expense-reporting software company, has raised $3.5 million in seed funding led by Bessemer Venture Partners and General Catalyst Partners. Other participants in the round include CrunchFund, FundersClub, Google VenturesHomebrew, Sherpalo Ventures and a long list of individual investors, including Naval Ravikant, Paul Buchheit, and the entertainer Nas.

Blink, a new, Chinese-based photo-sharing startup that has been called China’s answer to Snapchat, has raised $20 million in Series A funding led by Tencent, with participation from Innovation Works and Sequoia Capital. The outlet E27 has more here.

Bright.md, a 10-month-old, Portland, Or.-based company that sells healthcare SaaS products to improve communication between physicians and patients, has raised $1 million in seed financing from Seven Peaks Ventures, Portland Seed Fund and Oregon Angel Fund.

Cardlytics, a six-year-old, Atlanta, Ga.-based company that helps advertisers use bank purchasing data to target consumers, has raised $70 million in Series F funding led by the hedge fund Discovery Capital. The company has now raised just more than $170 million altogether, including from Groupe Aeroplan, Canaan Partners, ITC Holdings, Kinetic Ventures, Polaris Venture Partners, and TTV Capital. Venture Capital Dispatch has more on the company and its IPO plans here.

Curioos, a 3.5-year-old, New York-based curated online marketplace for digital art, has raised $1.9 million from an unnamed family office.

Enlitic, a three-month-old, San Francisco-based company that aims to use machine learning to help doctors make medical diagnoses, has raised $2 million in funding led by Amplify Partners, with participation from Data Collective. VentureBeat has more here.

Fleksy, a 3.5-year-old, San Francisco-based company whose typing technology makes typing on touchscreen devices fast and easy, has raised $2 million in new funding, including from Digital Garage, Eniac VenturesHighland Capital Partners, Middleland Capital and Militello Capital. The company has now raised $7.3 million to date, shows Crunchbase.

Freightos, a two-year-old, Hong Kong-based startup that automates the routing and pricing of international freight shipments, has added $3 million to its Series A financing from Annox Capital, bringing the round to $7.6 million. The company’s other investors include Aleph VC, Israel Cleantech Ventures, and the crowdfunding platform OurCrowd. Freightos has now raised $9.3 million altogether.

Lenda, a two-year-old, San Francisco-based online loan provider, has raised $1.54 million from Structure Capital, Winklevoss Capital, China Growth Capital, Tom Fallows, Naval Ravikant, Scott and Cyan Bannister, and Jared Kopf. The company had previously raised around $500,000 across a couple of rounds, shows Crunchbase.

Olacabs, a four-year-old, Mumbai, India-based Uber-like car-for-hire service, has raised $210 million in new funding led by SoftBank. The company has now raised nearly $277 million altogether. TechCrunch has more here.

Paragon Bioservices, a 24-year-old, Baltimore, Md.-based contract-research and manufacturing company, has raised $13 million in Series A funding from NewSpring Capital and Camden Partners.

Poynt, a year-old, Palo Alto, Ca.-based “future-proofed” payment terminal company created by Osama Bedier, the former head of Google Wallet, has raised an undisclosed amount of Series A funding. Matrix Partnersled the round, with participation from Webb Investment Network, Nyca Partners, and angel investors. TechCrunch takes a look at the company — which rolls out of stealth mode today — here.

QualiSystems, a 10-year-old, Israel-based infrastructure automation company, has raised $8 million in funding led by the venture arm of an (unnamed) cloud company, along with Evergreen Venture PartnersGemini Israel Ventures, and Fishman Investments. The company has raised $26.3 million to date, shows Crunchbase.

RhodeCode, a year-old, San Francisco-based company behind an enterprise-grade code collaboration platform, has raised $3.5 million in funding from DFJ Esprit and Earlybird Venture Capital.

Seedling, an eight-year-old, Irvine, Ca.-based startup that sells party supplies, crafts, toys and more online, has merged with competitor P.S. XO and the combined entity has raised $7 million in funding from UpFront Ventures and Greycroft Partners. TechCrunch has more here.

Seen, a two-year-old, New York-based company that captures and ranks real-time events via media that it then delivers to users, has raised $1.3 million in funding co-led by Horizons Ventures and KEC Ventures. Other investors in the round include Scott and Cyan Banister, Matt RolandsonSam Tripodi, Andrew Rasiej, Cantora Records, Thatcher Bell, and earlier investor BoxGroup.

Spotcap, a two-month-old, Madrid-based online lender that offers credit lines of as much as 50,000 euros to businesses in Spain, has raised $16.5 million from a group of investors led by billionaire Len Blavatnik’s Access Industries, with participation from Holtzbrinck Ventures. Rocket Internet, the Germany technology company that went public earlier this month, incubated Spotcap. Bloomberg has more here.

Strava, a five-year-old, San Francisco-based maker of a popular mobile app for cyclists and other athletes who want to track and share their fitness activities, has raised $18.5 million in Series D funding led by Sequoia Capital, with participation from earlier investors Sigma West and Madrone Capital Partners. As part of the investment, Sequoia’s Michael Moritz is joining the company as an advisor. Recode has more here.

TrepScore, a seven-month-old, Santa Monica, Ca.-based data management software startup for entrepreneurs and investors, has raised an undisclosed amount of funding from Bullet Time Ventures and Business Rockstars.

Vestaron, a 13-year-old, Kalamazoo, Mi.-based company that makes environmentally friendly insecticides, has added $4 million from Anterra Capital in the Netherlands to a previously announced $10 million Series C round. Others of the company’s investors include Moonray InvestorsRabo Private Equity, Cultivian Sandbox Ventures, Southwest Michigan First Life Science Venture Fund, Open Prairie VenturesPangaea Ventures, and Michigan Accelerator Fund. According to Crunchbase, the company has now raised $24.2 million altogether.

Vida, a new, San Francisco-based company whose mobile app connects consumers with coaches and doctors to improve their health, has raised $5 million in Series A funding from Aspect Ventures, Khosla Ventures, AME Cloud Ventures, Signia Venture Partners, The Valley Fund, Kevin Scott, Skip Battle, Lorrie Norrington and Yahoo Chairman Maynard Webb. The company was founded by Stephanie Tilenius, who has spent much of her recent career in the payments and commerce business at Google, eBay and PayPal and was mostly recently an entrepreneur-in-residence at Kleiner Perkins Caufield & Byers. Silicon Valley Business Journal has much more here.

Wealthfront, the three-year-old, Palo Alto, Ca.-based online wealth management firm, has raised $64 million in new funding led by new investor Spark Capital Growth. Other participants in the round include Dragoneer Investment Group and earlier investors Index VenturesDAG Ventures, Greylock Partners, Ribbit Capital and the Social+Capital Partnership. (If this sounds familiar, it’s because yesterday we referred you to an earlier TechCrunch report that pegged the company’s new funding at roughly $70 million.)

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New Funds

Advent Life Sciences, a four-year-old, London-based, early-stage biotech investment firm, has raised $235 million for its second fund, capital it raised from funds of funds, pension funds and family offices. The company closed its debut fund with $158 million in 2011. Xconomy has much more here.

BlueChilli, an eight-year-old, Sydney, Australia-based venture fund and accelerator program, has raised its first, $10 million venture firm — money the firm plans to use to seed-fund companies that have passed through its accelerator. Business Insider has more here.

The city of Dubai plans to invest $1.22 billion over five years to help establish itself as a capital for innovation, reports Arabian Business. The plan aims to boost the number of companies in the content, knowledge, technology, education, development and research sectors to 10,000 in its so-called Internet City and Media City business districts, and to grow the number of people who work inside them to 100,000.

Mosley Ventures, a new, Atlanta-based seed-stage firm that will be targeting technology startups in Atlanta and the Southeast, has raised $2 million in funding from the three-year-old, Atlanta-based email marketing company MailChimp, via its investment group Karman Line Ventures. The deal represents MailChimp’s first investment in a venture fund. Mosley Ventures, founded by Atlanta super angel Sig Mosley, is in the process of trying to raise a $30 million debut fund, reports the Atlanta Business Chronicle.

OCA Ventures, the 15-year-old, Chicago, Il.-based seed and early-stage firm, is looking to raise up to $100 million for its third fund, shows a new SEC filing that states no money has been raised just yet. The firm closed its second fund with $50.1 million in 2008.

United Ventures, a Milan, Italy-based venture firm, has closed its debut fund with at $80 million, it announced yesterday. The firm was created last year through a merger of two venture firms: Annapurna Ventures, a seed-stage firm founded by former Google exec Massimiliano Magrini, and Jupiter Venture Capital, a firm that was founded by Paolo Gesess, formerly the CEO of a finance company. Some of United’s LPs include Fondo Italiano di Investimento, Fondazione Banco di SardegnaFondazione Cassa di Risparmio di Lucca, Banca Sella and Banca Patrimoni.

Wells Fargo & Co. is launching a $10 million clean-tech incubator that will be co-administered by the Energy Department’s National Renewable Energy Laboratory. The Denver Business Journal has much more here.

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IPOs

Jaguar Animal Health, a 1.5-year-old, San Francisco-based company that’s developing proprietary pharmaceuticals, food additives, and nutraceuticals for animals, revealed in a new SEC filing that it plans to price its IPO shares at between $7 to $9 a share, giving it a market cap of roughly $80 million at the midpoint of that estimated price range. Jaguar’s largest shareholders are Napo Pharmaceuticals, which owns 54.6 percent of the company, and BVCF, the China-based life sciences investor, which owns 31.7 percent.

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Exits

iViZ Techno Solutions, a Sudbury, Ma.-based cloud-based application security testing company that had raised at least $1.6 million in funding from IDG Ventures India, has been acquired by Cigital, a portfolio company of the middle-market private equity firm LLR Partners. Terms were not disclosed.

Torando Labs, a two-year-old, New York-based company behind an opinion-sharping app called Gelato, has been acquired for an undisclosed sum by online publisher BuzzFeed to anchor its new data engineering unit. TechCrunch has more here.

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People

Jody Allen, the sister and long-time confidante of billionaire Paul Allen, is leaving the CEO post at Vulcan, Allen’s investment, real estate and philanthropic organization, reports Geekwire, whose sources describe a growing rift between the siblings.

Matt Cohler, the venture capitalist, is joining the board of the popular mobile dating app Tinder in exchange for an equity stake for his firm, Benchmark. It’s a decidedly “unusual investment configuration,” reports Recode.

—–

Jobs

Softbank Internet & Media is looking for a corporate development analyst to help it oversee its investment activities. The job is in San Carlos, Ca.

—–

Essential Reads

Google’s X research lab is working on magnetic nanoparticles that aim to attach themselves to cells, proteins or other molecules and detect signs of cancer and other diseases.

—–

Detours

Highlights from the 2014 World Beard and Moustache Championships.

A GoPro ad shows a lion’s lethal hunt from its perspective.

Thirty-five author-on-author put-downs.

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Retail Therapy

The Beer Hammer. Does it make sense? It does not. But its designer will burn your name into the handle, free of charge.


StrictlyVC: October 28, 2014

Happy Tuesday, everyone! Busy morning.

Reminder: The Giant’s game is on at 5 p.m. PST tonight, people. Don’t miss it; this could be the game.

(Psst, web visitors, here’s an easy-to-read version of today’s email.)

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Top News in the A.M.

The FCC is working on a plan to give online video companies all the same regulatory perks that cable companies get.

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Secondaries Are Back

In recent years, the secondary market has gone from hot to not and back again. And it looks poised to pick up steam going forward, as an unsteady public market forces more startups to push out their IPOs.

In the last two weeks alone, two investment firms that help cash out inside shares of privately held companies have closed new funds. The first, Founders Circle Capital, raised $195 million across two funds, beating its $125 million target. Another, Akkadian Ventures, just today closed on a $75 million fund; it was targeting $50 million.

A third firm, the new brokerage Battery East, officially swung open its doors last month with the aim of getting employees shares into the hands of growth-hungry institutional investors.

The outfits – all in San Francisco — each face the same challenge: Getting on the good side of startup CFOs, who typically have strict rules that limit share sales by employees. Toward that end, they’re actively working to differentiate themselves.

Battery East, for example, boasts of its connections to both Wall Street and Silicon Valley. The firm was founded by Barrett Cohn, a former adviser at Maveron, and Michael Sobel, a former BlackRock executive. And they recently hired Howard Caro, the former general counsel of Founders Fund, and Duncan Niederauer, who recently retired as head of the NYSE.

“We’re in close dialogue with large mutual funds, who [will] tell us there are three or four companies they have their eye on,” says Cohn. Battery East’s network also includes “folks who are looking for help, like the CFO who wants to run a tender offer, or the C-suite person who is moving on and needs help, or venture firms that are doing portfolio restructuring – especially guys who have companies that are way up and to the right.”

Battery East is “definitely seeing an uptick in demand and we think it will grow as the market does what it’s been doing of late, combined with blue chips that aren’t blue chips anymore,” says Cohn. “I don’t have a number to put on [that increased demand], but in just the next six months, more than a billion dollars of institutional buy-side demand is coming online from mutual funds, hedge funds” and others.

One major prong of Battery East’s strategy involves running auctions that “help companies advocate for employees better by running a real process around [the sale of their shares].”

Two-year-old Founders Circle Capital, meanwhile, doesn’t involve third parties at all, instead buying the shares directly based on their 409A valuations from startups’ management teams. (So far, the firm has assembled stakes in Ebates, Dollar Shave Club, Good Technology, Kabam, Lumos Labs, and Ticketfly, among others.)

“You’ve got great companies that are growing quickly and making the strategic decision to stay private longer,” says cofounder Chris Albinson, who previously co-founded Panorama Capital and was a general partner at JP Morgan Partners. Yet “they’re also dealing with this pressure valve of 400 employees working hard for a long period.”

Albinson compares building a “world-class company” to a marathon, saying that Founders Circle is “like the water station at mile 21, giving people what they need for that final push.”

Three-year-old Akkadian Ventures sees itself much the same way, says its founder Ben Black, who similarly touts Akkadian’s ability to buy directly from a startup, which helps ensure that the startup knows and trusts everyone on its cap table, even after its shares have traded hands.

Again, though, there are differences. Unlike Founders Circle, for example, Akkadian also offers “option exercise loans.” (Black describes these as fairly modest in size.) Akkadian also facilitates co-investments in some cases when its LPs want access to more of a particular portfolio company. One arrangement included a co-investment in the ad tech company Rocket Fuel, which enjoyed a hugely successful IPO in 2013, though its shares are trading down dramatically today.

“We’re not trying to time the market,” says Black. At the same time, he adds that in the last six months, Akkadian is seeing more companies that might have forbade insider sales beginning to rethink some of those rules.

“Companies see that liquidity can be a powerful tool in the war for talent,” says Black. “You can’t [compete] when companies are providing secondary liquidity to their employees and your company is not.”

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New Fundings

Adsquare, a two-year-old, Berlin-based ad tech company that helps advertisers target groups of people based on their location, has raised $4.3 million in Series A funding led by the German venture firm Target Partners, with participation from existing investors. The company has now raised $5.7 million altogether, including from Frühphasenfonds Brandenburg, Berlin Ventures and numerous angel investors. TechCrunch has more here.

Alchemist Accelerator, a two-year-old, Menlo Park, Ca.-based program dedicated to enterprise startups, said Siemens has joined Cisco Systems, Draper Fisher Jurvetson, Foundation Capital, Khosla Ventures, Salesforce, Sapphire Ventures and US Venture Partners as a backer. The amount of the investment is not disclosed. Alchemist is six-month program whose classes are limited to 13 teams that each receive $28,000 in funding. It was founded by Stanford University professor Ravi Belani.

BigPanda, a two-year-old, Mountain View, Ca.-based company that automates processes involved with IT incident management, has raised $7 million in Series A funding from Mayfield and Sequoia Capital, which previously led a $1.5 million seed round.

Blendle, a six-month-old, Netherlands-based news startup that allows readers to browse and read the articles of major newspaper and magazine publishers in the Netherlands and Belgium, has raised $3.8 million from the New York Times and German publisher Axel Springer.

Credorax, a six-year-old, Southborough, Ma.-based small startup that enables online payment processing for a range of online merchants, has raised $40 million from Columbus Nova Technology Partners and earlier investor Blumberg Capital. The company has now raised $130 million altogether, including from FTV Capital. TechCrunch has the story here.

Harvest Power, a six-year-old, Waltham, Ma.-based company that uses organic waste to generate power and produce compost, has raised $20 million in new funding from earlier investors Generation Investment Management, Industry Ventures and True North Venture Partners. The company had previously raised $204.5 million over 10 rounds, shows Crunchbase.

IMatchative, a two-year-old, San Francisco-based company whose cloud-based platform tries matching hedge funds and institutional investors, has raised $20 million in Series B funding led by Wells Fargo & Company;Control Empresarial de Capitales, controlled by Carlos Slim; David Bonderman, founding partner of TPG Capital; and Andy Redleaf, CEO of Whitebox. Earlier investor Jeff Ubben, founder of Value Act Capital, also invested in the round.

Limeade, an eight-year-old, Bellevue, Wa.-based SaaS platform that helps employers implement wellness and employee-engagement programs, has raised $25 million from Oak HC/FT, a new $500 million growth equity fund led by the healthcare information services and financial services technology team of Oak Investment Partners. Limeade has now raised $34 million altogether, shows Crunchbase.

Peach, new, Berkeley, Ca.-based flash-sales app for top designer brands, has received $500,000 in funding from IDG Capital Partners.

ScoreBig, a five-year-old, L.A.-based online marketplace for live-event tickets, has raised $24 million in Series D funding led by Hearst Ventures, with other, unnamed earlier investors participating. The company had previously raised at least $31.5 million, including from Bain Capital Ventures and Checketts Partners Investment Fund, shows Crunchbase.

Segmint, a seven-year-old, Akron, Oh.-based company whose digital marketing software anticipates customer needs and spending to deliver targeted online advertising campaigns, has raised $9 million in funding from an unnamed financial technologies company. The company had previously raised $8.5 million from mostly undisclosed sources, shows Crunchbase. VentureBeat has more here.

Snapdeal, the four-year-old, New Delhi, India-based online retailing giant, has raised $627 million in new funding from Japan’s SoftBank Corp., bringing Snapdeal’s total funding to at least $1.06 billion, shows Crunchbase. The deal is among several outsize investments made recently by Softbank, which last year acquired Sprint for $21.6 billion and earlier this month disclosed that it was buying a minority stake in Legendary Entertainment for $250 million.

Socure, a two-year-old, New York-based Manhattan-based company focused on behavioral biometrics — it validates a person’s identity by analyzing their largely public track record of Internet usage — has raised $2.5 million in Series A funding led by ff Venture Capital, with participation from Founder Collective and Two Sigma Ventures.

SwiftStack, a three-year-old, San Francisco-based company that’s commercializing part of the open-source cloud software OpenStack, has raised $16 million in Series B funding led by OpenView Venture Partners, with earlier investors Mayfield Fund, Storm Ventures and UMC Capital also participating. The company has now raised $23.6 million to date.

Telogis, a 13-year-old, Aliso Viejo, Ca.-based company whose software gives organizations access to real-time information on the location and status of their mobile assets on a single dashboard, has raised an undisclosed amount of funding from GM Ventures. The company had previously raised at least $95 million from investors, including Fontinalis Partners, Cross Creek Advisors, and Kleiner Perkins Caufield & Byers. (It has twice before raised undisclosed amounts of funding.)

Wealthfront, the three-year-old, Palo Alto, Ca.-based online wealth management firm, has $70 million in new funding from as-yet-unknown backers, reports TechCrunch. Not including new monies, the company has raised $65.5 million to date, shows Crunchbase. Its current investors include Benchmark, SK Ventures, Science Inc., DAG Ventures, and a long list of renowned individuals, including Mark and Ali Pincus, Adam D’Angelo, and Ben Horowitz.

WeSwap, a four-year-old, London-based person-to-person currency exchange company, has raised $7.5 million in Series A funding led by IW Capital, with participation from EC1 Capital.

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New Funds

Akkadian Ventures, a three-year-old, San Francisco-based firm that purchases stock in private companies from entrepreneurs, early employees, and angel investors, has closed on $75 million for its third fund, blowing past a target of $50 million, says the firm. Akkadian’s second fund closed in 2012 with $22 million; its proof-of-concept fund was a $5 million vehicle. Akkadian is managed by founder and managing director Ben Black; managing director Mike Gridley, who joined the firm last year from Industry Ventures; and venture partner Rob Bailey, who was most recently CEO of the venture-backed company DataSift.

Green House Ventures, a Gurgaon, India-based accelerator, has struck a partnership with World Innovation Lab (WiL), the new venture firm of Gen Isayama (who was long a partner at DCM) to help bridge the gap between India and both the U.S. and Japanese market. GHV Accelerator is designed to help startups get faster to Series A funding. Now, Palo Alto, Ca.-based WiL will help provide its startups with both growth capital (likely between $5 million and $30 million over time), along with resources and connections to help the companies take off in Silicon Valley and elsewhere.

Ludlow Ventures, a five-year-old, Detroit-based investment firm, has closed on a $15 million micro fund after nearly a year of fundraising, according to Crain’s Detroit Business. The outfit, run by Jonathon Triest, is backed by limited partners that include Karen Davidson, the widow of former Detroit Pistons owner Bill Davidson, and Marc Weiser, managing director of Ann Arbor-based RPM Ventures. The firm has already assembled stakes in a long list of well-known brands, including the investor platform AngelList; Product Hunt, a 10-month-old community board where people can up vote tech products; and Boxbee, a 2.5-year-old, San Francisco-startup that delivers boxes to its customers, then takes way whatever they want to store.

Storm Ventures, the 17-year-old, Menlo Park, Ca.-based early-stage venture fund, has raised more than $100 million so far for a fifth, $150 million fund that the firm is targeting, reports VentureWire. Storm has had a number of solid exits lately, notes the report. Its portfolio company Metacloud, which provides private-cloud services to its customers, was acquired last month by Cisco Systems for a reported 7x return for the firm. Storm was also the largest shareholder in MobileIron, a software company that made its debut on Nasdaq in June. MobileIron was cofounded by Storm managing director Tae Hea Nahm, who StrictlyVC interviewed last spring. (We talked about why he goes cool-hunting in Korea.)

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Exits

Cityvox, a 14-year-old, Paris-based reviews site that focuses on restaurants and nightlife, has been acquired by Yelp, which is building up its local listings in Europe. Terms of the deal weren’t disclosed. Cityvox had raised an undisclosed amount of funding, including from entrepreneur-investor Fabrice Grinda. TechCrunch has more here.

Fasspay, a payment service provider based in Malaysia, has been acquired by Soft Space, a Southeast Asian white-label mobile point-of-sale platform maker. Terms of the deal weren’t disclosed and the companies’ funding situations are unknown. TechCrunch has more here.

Nimbuzz, an eight-year-old, Netherlands-based messaging company that has found traction in recent years in India, Southeast Asia and the Middle East, has sold 70 percent of its business for $175 million to New Call Telecom, a four-year-old, U.K.-based company that sells low-cost fixed line and broadband services. Nimbuzz had previously raised at least $25 million, including from HV Holtzbrinck Ventures, Naspers, and Mangrove Capital Partners, shows Crunchbase. The Economic Times has more here.

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People

Ken Coleman, the black, 69-year-old former Silicon Graphics executive who is today a special adviser at Andreessen Horowitz, still shudders when the police lights flash, he tells USA Today. “When I’m stopped I want to say, ‘I’m not what you think, I’ve got an MBA, I live in Los Altos Hills, I own a home in Maui.’ I want to say that . . . Because I know through experience that person might have an image of what I might be and view me as dangerous. And to not feel that way would be foolish.”

Uh oh. Lyft just lost another employee, reports Bloomberg. This time it’s Ryan Fujiu, its director of product, who joined the San Francisco-based ride-sharing company in January from About.me, where he was head of growth. The company declined to comment on Fujiu’s departure, but Bloomberg notes that he’s the latest in a spate of departures, including former COO Travis VanderZanden (who left in August and recently joined Uber); Steve Schnell, Lyft’s former VP of operations; and Art Henry, the company’s former VP of data engineering.

Despite investments like SolarCity and Tesla Motors, Nancy Pfund of DBL Investors “isn’t a household name. Yet over the last decade, she has quietly built a reputation as the go-to venture capitalist for companies looking to make a social impact,” reports Dealbook.

Andy White, an investment partner who was largely responsible for driving the strategy of Vegas Tech Fund, the venture firm of Zappos CEO Tony Hsieh, has been “let go” from the fund, reports PandoDaily. More here.

Fred Wilson of Union Square Ventures takes a stab at explaining cryptocurrency “sidechains,” which investor Chris Dixon of Andreessen Horowitz calls “probably the biggest breakthrough in cryptocurrency research since Bitcoin itself.”

—–

Jobs

Tencent, one of China’s biggest Internet companies, is looking for a corporate M&A director in Palo Alto, Ca.

—–

Essential Reads

Twitter reported its third quarter earnings yesterday, showing slower user growth and widening losses. But sales more than doubled to $361.3 million, topping the $351 million average analyst projection compiled by Bloomberg.

YouTube CEO Susan Wojcicki wants to sell you YouTube video subscriptions.

Jack Ma, co-founder and chairman of Alibaba, is “very interested” in partnering Alipay with Apple‘s new mobile payments system, Apple Pay, he said yesterday.

—–

Detours

Patagonia, the outdoor gear company, is even cooler than you think.

Classic Macs turned into modern furniture.

“Well, that is surprising,” said this cat.

—–

Retail Therapy

Wintercroft Halloween masks. Made by you. Sure to terrify the children in your life.


Secondaries Are Back

raining_moneyIn recent years, the secondary market has gone from hot to not and back again. And it looks poised to pick up steam going forward, as an unsteady public market forces more startups to push out their IPOs.

In the last two weeks alone, two investment firms that help cash out inside shares of privately held companies have closed new funds. The first, Founders Circle Capital, raised $195 million across two funds, beating its $125 million target. Another, Akkadian Ventures, just today closed on a $75 million fund; it was targeting $50 million.

A third firm, the new brokerage Battery East, officially swung open its doors last month with the aim of getting employees shares into the hands of growth-hungry institutional investors.

The outfits – all in San Francisco — each face the same challenge: Getting on the good side of startup CFOs, who typically have strict rules that limit share sales by employees. Toward that end, they’re actively working to differentiate themselves.

Battery East, for example, boasts of its connections to both Wall Street and Silicon Valley. The firm was founded by Barrett Cohn, a former adviser at Maveron, and Michael Sobel, a former BlackRock executive. And they recently hired Howard Caro, the former general counsel of Founders Fund, and Duncan Niederauer, who recently retired as head of the NYSE.

“We’re in close dialogue with large mutual funds, who [will] tell us there are three or four companies they have their eye on,” says Cohn. Battery East’s network also includes “folks who are looking for help, like the CFO who wants to run a tender offer, or the C-suite person who is moving on and needs help, or venture firms that are doing portfolio restructuring – especially guys who have companies that are way up and to the right.”

Battery East is “definitely seeing an uptick in demand and we think it will grow as the market does what it’s been doing of late, combined with blue chips that aren’t blue chips anymore,” says Cohn. “I don’t have a number to put on [that increased demand], but in just the next six months, more than a billion dollars of institutional buy-side demand is coming online from mutual funds, hedge funds” and others.

One major prong of Battery East’s strategy involves running auctions that “help companies advocate for employees better by running a real process around [the sale of their shares].”

Two-year-old Founders Circle Capital, meanwhile, doesn’t involve third parties at all, instead buying the shares directly based on their 409A valuations from startups’ management teams. (So far, the firm has assembled stakes in Ebates, Dollar Shave Club, Good Technology, Kabam, Lumos Labs, and Ticketfly, among others.)

“You’ve got great companies that are growing quickly and making the strategic decision to stay private longer,” says cofounder Chris Albinson, who previously co-founded Panorama Capital and was a general partner at JP Morgan Partners. Yet “they’re also dealing with this pressure valve of 400 employees working hard for a long period.”

Albinson compares building a “world-class company” to a marathon, saying that Founders Circle is “like the water station at mile 21, giving people what they need for that final push.”

Three-year-old Akkadian Ventures sees itself much the same way, says its founder Ben Black, who similarly touts Akkadian’s ability to buy directly from a startup, which helps ensure that the startup knows and trusts everyone on its cap table, even after its shares have traded hands.

There are differences, however. Unlike Founders Circle, for example, Akkadian also offers “option exercise loans.” (Black describes these as fairly modest in size.) Akkadian also facilitates co-investments in some cases when its LPs want access to more of a particular portfolio company. One arrangement included a co-investment in the ad tech company Rocket Fuel, which enjoyed a highly successful IPO in 2013, though its shares are trading down dramatically today.

“We’re not trying to time the market,” says Black. But he adds that in the last six months, Akkadian is seeing more companies that might have forbade insider sales beginning to rethink some of those rules.

“Companies see that liquidity can be a powerful tool in the war for talent,” says Black. “You can’t [compete] when companies are providing secondary liquidity to their employees and your company is not.”

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


StrictlyVC: October 27, 2014

Hi, and good morning, everyone! Hope you had a terrific weekend. Go Giants! (Hey, web visitors, here’s an easier-to-read version of today’s email.)

—–

Top News in the A.M.

The FCC “leapt into data security litigation” on Friday, levying a $10 million fine against two telecom companies that “allegedly stored personally identifiable customer data online without firewalls, encryption or password protection,” reports the Washington Post.

E-commerce sites are offering consumers different prices based on their operating system, browser history and device, shows new research.

—–

Gil Penchina Is Coming for You

Gil Penchina is a former eBay and Wikia executive. He’s also a longtime angel investor who has enjoyed cash-on-cash returns of 6x over the last 15 years, he says.

But the latest feather in Penchina’s cap is his place within AngelList’s universe of so-called Syndicates, which are essentially pop-up funds that allow angel investors to syndicate their investments in exchange for 15 percent of any upside. (AngelList collects another 5 percent. There are no management fees.)

Since the program was rolled out by AngelList roughly a year ago, Penchina has attracted 1,300 accredited investors who’ve committed to collectively plug up to $4.6 million into each deal he wants to make. Those numbers make his the largest Syndicate on the platform. They also give him the firepower, theoretically, of a mid-size venture fund.

Penchina, who has already invested “between $5 million and $10 million” in startups through his syndicate, says he’s just getting started, too. We caught up yesterday. Our chat has been edited for length.

You don’t have an office. You have no institutional investors. And yet you have a stunning amount of capital at your disposal suddenly.

Yes. We only started nine months ago, and [our commitments are up] to $4.6 million per deal, which is slightly frightening when you’re used to writing $25,000 checks [from your personal bank account]. We’ve now led two A rounds, for [the sales prospecting company] Datanyze and Contactually [a relationship marketing platform], and we’re trying to do more [lead investing].

We’ve also launched a SaaS syndicate, a bitcoin syndicate, an [Internet of Things] syndicate, and we’re launching a [financial technology] syndicate. And we’ve launched a late-stage syndicate for B and C rounds and we’re in the registration and comment period with regulatory authorities for a venture debt syndicate, which will be interesting once that’s up and running. Notionally, we want to [represent] every vertical, and every asset class – from bridge rounds to A and B and C rounds — so if investors want a more narrow thesis, they can invest in it. If they want a broader thesis, they can in invest in my main syndicate and get a more diversified pool of investments.

Wow. How much have investors committed to these vertical syndicates?

The SaaS syndicate has [commitments of] $1.8 million, the late-stage syndicate has $1.1 million, bitcoin has $700,000. All of these ideas are getting some traction. Ultimately, I’m trying to build Fidelity, with fund managers who specialize in certain sectors.

Who are all these investors?

We get a mix. When you democratize and reduce friction, everyone shows up. CEOs, dentists, young guys who are making their first investment. Six months ago, we had 200 investors. Today we have 1,300. If things continue [apace], we’ll have 10,000 investors in a year’s time.

And who’s the “we” when you refer to your syndicates?

There are two managers per syndicate. They aren’t full time but rather executives in each particular vertical. One is a chief revenue officer, another is a product executive, another is the CEO of a bitcoin company.

We also have 30 volunteers, from associates at venture firms, to executives who think these syndicates are a great way to learn about other industries, to people who want to work in venture and think [helping us] is a great training ground.

These managers and volunteers are essentially scouts? Do you promise them a percentage of your carry if they bring you something you eventually decide to fund?

It isn’t that structured. We aren’t making management fees, though, so I [will] share the carry with [everyone who helps me]. We want everyone’s interests aligned, so that if there’s a mediocre deal, we don’t do it.

By the way, we’re always looking for new recruits, if you can let your readers know.

How would you describe your pacing, and what size checks are you writing right now?

We did smaller deals at first, a couple hundred thousand dollars here and there to see how it works. Then we moved from $200,000 to $500,000 and now we’re writing checks of $1 million. Six months ago, we’d do a deal every two months and in October, we’ve already done three deals, two of which were $1 million, so the pace seems to be getting faster every month.

The public market has been been volatile. Meanwhile, unlike a traditional fund’s investors, Syndicate investors can opt out of deals or opt out entirely. You must be seeing some kind of pullback.

I’m not. The market was up last week; it was down the week before. You have to remember that AngelList is growing at a rapid rate itself, so every day, new people are joining the crowd, and a rising tide raises all boats. Even if my boat is a little leaky, I don’t notice it because I’m [moving up] and not down.

You’ve said before that the beauty of AngelList for an investor like yourself is not having to deal with attorneys and LPs. AngelList sets up the funds; it handles customer accounting. But AngelList has a lot of out-of-pocket fees as a result, something like $12,000 per fund, cofounder Naval Ravikant told me last year. Do you worry that it’s not sustainable, given that AngelList is not yet producing revenue?

No. Putting together an LLC is a bunch of legal docs. Costs are higher now because there are probably 75 different permutations of deal structures or term sheets, but at some point, they’ll have a template for every one of the damn things and it will be cheap. More and more of this will get automated – reporting, tax [considerations]. I’m really not sure why anyone would start a micro fund in 2014 when they could start a Syndicate for zero dollars instead and not spend a lot of time doing the annual accounting or figuring out the legal structure of this stuff.

—-

New Fundings

Capshare, a three-year-old, Sandy, Ut.-based online cap table management system, has raised $1 million in funding led by Draper Associates, with participation from Kickstart Seed Fund and individual investors, including Skullcandy CEO Jeremy Andrus.

D3 Banking, a seven-year-old, an Omaha, Neb.-based company that makes financial management software for regional and community financial institutions, has raised $7 million in funding from Route 66 Ventures.

Enjoy, a new, Menlo Park Ca.-based e-commerce startup from Apple’s ex-retail chief Ron Johnson, has raised $30 million in funding led by Oak Investment Partners and Kleiner Perkins Caufield & Byers, with participation from Andreessen Horowitz. The company, operating in stealth mode, aims to help shoppers develop a connection with new products, Johnson told the WSJ last week. More here.

LedgerX, an 11-month-old, New York-based company that says it’s building the “the first regulated, compliant derivatives exchange” for cryptocurrencies, has raised an undisclosed amount of funding from Google Ventures and Lightspeed Venture Partners, reports VentureWire. The company had previously raised at least $1.5 million in seed funding from Crypto Currency Partners and entrepreneur Eric Kagen, shows Crunchbase.

GovX, a three-year-old, La Jolla, Ca.-based e-commerce platform for active duty, reserve and retired members of the U.S. Armed Forces and related government agencies, has raised $7.9 million from investors, according to an SEC filing that shows a $10 million target.

Moka5, a nine-year-old, Redwood City, Ca.-based company that develops and markets virtual computer technology, has raised $16.3 million in new funding, according to an SEC filing that shows a $23.4 million target. The company had previously raised at least $43 million in equity and debt, including from Khosla Ventures and Highland Capital Partners.

Payoff, a five-year-old, Costa Mesa, Ca.-based startup that makes loans to people looking to pay off credit card debt, has raised $12 million in new funding, shows an SEC filing that lists Mohamed El-Erian, the former CEO and co-CIO of PIMCO, as a director. The company had previously raised $16.9 million, show earlier fundings. Its backers include Great Oaks Venture Capital, FirstMark Capital, and Anthemis Group.

Syros Pharmaceuticals, a 1.5-year-old, Watertown, Ma.-based company looking to develop gene control therapies in cancer and other diseases, has raised $53 million in Series B funding led by a large, Boston-based public investment firm, with participation from Polaris Partners, Aisling Capital, and Redmile Group. Earlier investors Flagship Ventures, ARCH Venture Partners, WuXi PharmaTech Corporate Venture Fund, and Alexandria Venture Investments also joined the round, which brings the company’s total funding to $83 million.

Wysada, a 1.5-year-old, Amman, Jordan-based online home furnishings store, has raised $5 million in Series A funding by Badia Impact Fund, a venture capital fund owned by Silicon Badia. Strategic investors from the Kingdom of Saudi Arabia and the Gulf Cooperation Council (GCC) also participated alongside earlier investors. TechCrunch has more here.

—–

New Funds

Pantera Capital, the 11-year-old, San Francisco-based firm founded by Tiger Management veteran Dan Morehead, is raising an “indefinite” amount for a venture capital fund, shows a new SEC filing that shows Pantera has already raised $10.4 million for the effort. Until 2011, Pantera was a macro hedge fund but in recent years, the firm has narrowed its focused around bitcoin and now advertises itself as an “investment firm focused exclusively on bitcoin, other digital currencies and companies in the space.” Its investors include Ribbit Capital, Benchmark, and Fortress Investment Group.

—–

IPOs

Roku, the 12-year-old, Saratoga, Ca.-based streaming TV startup, is working on plans to confidentially file for an IPO, the WSJ reported late last week. Roku has raised at least $128 million over the years, shows Crunchbase. Its investors include Luminari Capital, BSkyB, Menlo Ventures, Globespan Capital Partners, News Corp and Hearst Ventures.

—–

Exits

Revolv, a two-year-old, Boulder, Co.-based smart-home automation device maker, has been acquired by Google-owned Nest Labs for undisclosed terms. Nest co-founder and VP of engineering Matt Rogers told Recode of the deal: “We are not fans of yet another hub that people should have to worry about. It’s a great team, an unbelievable team. There’s a certain amount of expertise in home wireless communications that doesn’t exist outside of these 10 people in the world.”

Stitcher, a six-year-old, San Francisco-based online radio service, was acquired by Paris-based Deezer for undisclosed terms. According to Crunchbase, Stitcher had raised $18.7 million from investors, including Great Oaks Venture Capital, New Enterprise Associates, BenchmarkNew Atlantic Ventures, and SV Angel. TechCrunch has more here.

—–

People

Alan Eustace, 57, a senior vice president of Google, parachuted from a balloon near the top of the stratosphere on Friday, falling faster than the speed of sound and breaking the world altitude record set just two years ago. The New York Times has his story here. “It was amazing,” Eustace tells the outlet. “It was beautiful. You could see the darkness of space and you could see the layers of atmosphere, which I had never seen before.”

Google CEO Larry Page is transferring leadership of core Google products to Sundar Pichai, reports Recode. Pichai will now have purview over research, search, maps, Google+, commerce and ads and infrastructure and maintain responsibility for Android, Chrome and Google Apps.

—–

Job Listings

Noosphere Ventures is looking for an analyst. The job is in Menlo Park, Ca.

—–

Essential Reads

Rite Aid and CVS have moved to disable what are called NFC (near field communications) terminals in their stores, meaning they will no longer support either Apple Pay or Google Wallet. The reason: They’re participating instead in Merchant Customer Exchange (MCX), a retailer group that’s thumbing its nose at the tech giants and developing its own mobile payments system known as CurrentC. (TechCrunch has a nice piece on that “clunky attempt” here.)

Machine-learning maestro Michael Jordan on the delusions of big data.

“The Uber experience is just so much easier for African-Americans . . . When I need a car, it comes. It takes me to my destination. It’s amazing that I have to pay a premium for that experience, but it’s worth it.”

—–

Detours

The “advanced” seven-minute workout.

Jim Carrey does his best Matthew McConaughey.

—–

Retail Therapy

Ejection seats.

Chic pet beds.


Gil Penchina is Coming for You

Gil+Penchina+TechCrunch+Disrupt+SF+2014+Day+L4UGljNri2BlGil Penchina is a former eBay and Wikia executive. He’s also a longtime angel investor who has enjoyed cash-on-cash returns of 6x over the last 15 years, he says.

But the latest feather in Penchina’s cap is his place within AngelList’s universe of so-called Syndicates, which are essentially pop-up funds that allow angel investors to syndicate their investments in exchange for 15 percent of any upside. (AngelList collects another 5 percent. There are no management fees.)

Since the program was rolled out by AngelList roughly a year ago, Penchina has attracted 1,300 accredited investors who’ve committed to collectively plug up to $4.6 million into each deal he wants to make. Those numbers make his the largest Syndicate on the platform. They also give him the firepower, theoretically, of a mid-size venture fund.

Penchina, who has already invested “between $5 million and $10 million” in startups through his syndicate, says he’s just getting started. We caught up yesterday. Our chat has been edited for length.

You don’t have an office. You have no institutional investors. And yet you have a stunning amount of capital at your disposal suddenly.

Yes. We only started nine months ago, and [our commitments are up] to $4.6 million per deal, which is slightly frightening when you’re used to writing $25,000 checks [from your personal bank account]. We’ve now led two A rounds, for [the sales prospecting company] Datanyze and *Contactually [a relationship marketing platform], and we’re trying to do more [lead investing].

We’ve also launched a SaaS syndicate, a bitcoin syndicate, an [Internet of Things] syndicate, and we’re launching a [financial technology] syndicate. And we’ve launched a late-stage syndicate for B and C rounds and we’re in the registration and comment period with regulatory authorities for a venture debt syndicate, which will be interesting once that’s up and running. Notionally, we want to [represent] every vertical, and every asset class – from bridge rounds to A and B and C rounds — so if investors want a more narrow thesis, they can invest in it. If they want a broader thesis, they can in invest in my main syndicate and get a more diversified pool of investments.

Wow. How much have investors committed to these vertical syndicates?

The SaaS syndicate has [commitments of] $1.8 million, the late-stage syndicate has $1.1 million, bitcoin has $700,000. All of these ideas are getting some traction. Ultimately, I’m trying to build Fidelity, with fund managers who specialize in certain sectors.

Who are all these investors?

We get a mix. When you democratize and reduce friction, everyone shows up. CEOs, dentists, young guys who are making their first investment. Six months ago, we had 200 investors. Today we have 1,300. If things continue [apace], we’ll have 10,000 investors in a year’s time.

And who’s the “we” when you refer to your syndicates?

There are two managers per syndicate. They aren’t full time but rather executives in each particular vertical. One is a chief revenue officer, another is a product executive, another is the CEO of a bitcoin company.

We also have 30 volunteers, from associates at venture firms, to executives who think these syndicates are a great way to learn about other industries, to people who want to work in venture and think [helping us] is a great training ground.

These managers and volunteers are essentially scouts? Do you promise them a percentage of your carry if they bring you something you eventually decide to fund?

It isn’t that structured. We aren’t making management fees, though, so I [will] share the carry with [everyone who helps me]. We want everyone’s interests aligned, so that if there’s a mediocre deal, we don’t do it.

By the way, we’re always looking for new recruits, if you can let your readers know.

How would you describe your pacing, and what size checks are you writing right now?

We did smaller deals at first, a couple hundred thousand dollars here and there to see how it works. Then we moved from $200,000 to $500,000 and now we’re writing checks of $1 million. Six months ago, we’d do a deal every two months and in October, we’ve already done three deals, two of which were $1 million, so the pace seems to be getting faster every month.

The public market has been been volatile. Meanwhile, unlike a traditional fund’s investors, Syndicate investors can opt out of deals or opt out entirely. You must be seeing some kind of pullback.

I’m not. The market was up last week; it was down the week before. You have to remember that AngelList is growing at a rapid rate itself, so every day, new people are joining the crowd, and a rising tide raises all boats. Even if my boat is a little leaky, I don’t notice it because I’m [moving up] and not down.

You’ve said before that the beauty of AngelList for an investor like yourself is not having to deal with attorneys and LPs. AngelList sets up the funds; it handles customer accounting. But AngelList has a lot of out-of-pocket fees as a result, something like $12,000 per fund, cofounder Naval Ravikant told me last year. Do you worry that it’s not sustainable, given that AngelList is not yet producing revenue?

No. Putting together an LLC is a bunch of legal docs. Costs are higher now because there are probably 75 different permutations of deal structures or term sheets, but at some point, they’ll have a template for every one of the damn things and it will be cheap. More and more of this will get automated – reporting, tax [considerations]. I’m really not sure why anyone would start a micro fund in 2014 when they could start a Syndicate for zero dollars instead and not spend a lot of time doing the annual accounting or figuring out the legal structure of this stuff.

*The original version of this story misidentified Penchina’s investment as in Contractually, a different startup.

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


StrictlyVC: October 24, 2014

Good Friday morning, readers! We hope you’re in for a terrific weekend. Also, if you missed StrictlyVC yesterday (a few of you told us it landed in your spam boxes), you can check it out here.

—–

Top News in the A.M.

Airbnb is discussing a new round that could total more than $50 million and value the company at $13 billion, reports the WSJ, which says the company wouldn’t use the cash for itself but rather to allow investors to buy employee shares. The round hasn’t yet closed and the funding amount and valuation could still change, says the report.

The last legal hope of television streaming service Aereo was dashed yesterday.

Amazon‘s quarterly earnings report yesterday has Wall Street spooked. Bloomberg BusinessWeek has more here.

—–

Bill Gurley: Earlier Warnings are Making an Impact

Venture capitalist Bill Gurley appeared on CNBC’s “Squawk Alley” show earlier this week to clarify some of the comments he’d made in mid-September to the Wall Street Journal – comments that Gurley thinks were misconstrued in follow-on reports that confused risk with valuations. “I was talking about risk and I didn’t say a word about valuations,” said Gurley. “I don’t see radically insane valuations.”

Gurley went on to say that the pubic market is right now “more discerning” than the late-stage venture market, where investors are “cram[ming] almost unnecessary levels of capital into these private companies.” Gurley also told CNBC that he believes his earlier warning in the Journal is having a “positive” impact on the private market. Here’s Gurley, in his own words:

“It’s a four or five-year trend . . . of late-stage companies raising rounds that are larger than historic IPO rounds, and because there’s no capital intensity – we’re not buying stores, we’re not building factories – when you take that amount of capital and try and put it to use, the only way to do that is to increase your burn rate.

“The problem is this growth-at-all-costs mentality causes almost a subsidization of survival. It’s almost easier to execute unprofitably than profitably. So if I say, ‘Hey, go grow a company to $100 million,’ and one company is told they have to be profitable and the other is told they can lose $30 million, it’s much easier to do the latter. So I think we end up with more companies with higher revenue rates where their business models still may be open to question . . .

“I think the public markets are being more discerning than the late-stage private markets in terms of trying to figure out whether a company has a potential long-term business model and has the ability to generate profitability over the long term.

“[In fact,] I think having that conversation a couple of weeks ago has had two positive impacts. One, I’m starting to hear more and more people tell me at board meetings, ‘Hey, we’re talking about this; we’re thinking more about this. We’re going to be smarter going forward.’

“Second, in the public markets, you’re seeing some discernment. In the same week, [you’ll see] two companies go public and two delay because of ‘market conditions.’”

—–

New Fundings

51Talk, a three-year-old, Beijing-based online English language education service, has raised $55 million in Series C funding led by Sequoia Capitalsays China Money Network. Other participants included earlier investorsDCM and Shunwei Capital founded by Lei Jun, founder of the smartphone maker Xiaomi.

Blockstream, a 10-month-old, Quebec-based company at work on a new way of transferring assets across multiple block chains (which work like digital spreadsheets shared by everyone in a decentralized network), has raised $15.8 million in funding, shows an SEC filing that was flagged by Coindesk. The filing names Reid Hoffman of Greylock Partners as a director. Talking with Coindesk, Blockstream’s CEO Austin Hill said the round is still open and that the company will provide more details once it’s complete.

Charlie, a 2.5-year-old, Chicago-based mobile app that promises to arm users with important information about their contacts right when they need it (like before a big meeting), has raised $1.75 million in seed funding led by Lightbank, with participation from Confluence Capital Partners, Hyde Park Venture Partners and several individuals.

DormChat, an Hoboken, N.J.-based geolocal communication service for college students, has raised an undisclosed amount of seed funding from ff Venture Capital.

Ello, the year-old, Burlington, Vt.-based social network that promises to keep advertising off its site, has raised $5.5 million in funding from Foundry Group, Bullet Time Ventures and FreshTracks Capital. Betabeat has more here.

ExecOnline, a 2.5-year-old, New York-based company that partners with schools to develop online executive education programs, has raised $5 million in Series A funding led by Osage Venture Partners, with Kaplan Ventures, Militello Capital, New Atlantic Ventures and others participating. The company has now raised $6.9 million to date, shows Crunchbase.

Fountain, a year-old, San Francisco-based company whose on-demand question-and-answer app addresses gardening and home-improvement questions (for now), has raised $4 million in Series A funding led by Shasta Ventures, with participation from First Round Capital. TechCrunch has more on the company — cofounded by Mint founder Aaron Patzerhere.

KouDai, a Beijing-based mobile e-commerce platform that recommends targeted products to users, has raised a whopping $350 million in Series C funding led by the Internet giant Tencent Holdings, according to China Money Network. Other investors in the round include Tiger Global Management and DST Global. The three investors also previously backed the now-public Chinese e-commerce platform JD.com. KouDai, which means “pockets” in Chinese, counts Chengwei Venture FundMatrix Partners, and Warburg Pincus among its earlier investors.

Luxe Valet, a year-old, San Francisco-based on-demand valet service, has raised $5.5 million in seed funding from Google Ventures, Sherpa Ventures, Redpoint Ventures, Lightspeed Venture Partners, Upfront Ventures, Foundation Capital, BoxGroup, Slow Ventures, Data Collective, Eniac Ventures, Rothenberg Ventures and others. VentureBeat has much more here.

Mogl, a four-year-old, San Diego-based loyalty rewards app, has raised $11 million in funding from Austin Ventures, Avalon VenturesCorrelation Ventures and Sigma West. The company has now raised at least $21.7 million to date, shows Crunchbase.

Oneflare, a 2.5-year-old, Sydney, Australia-based local services marketplace, has raised $1 million AUD (about $876,000), bringing its total funding so far to $1.5 million AUD (about $1.3 million). Investors include Equity Venture Partners, Sydney Seed Fund and The Strategy Group. TechCrunch has more here.

Phreesia, a nine-year-old, New York-based healthcare point-of-service platform, has raised $30 million in new funding led by LLR Partners, with participation from HLM Venture Partners and Ascension Ventures. The company has raised $72.7 million altogether, shows Crunchbase.

Portal Instruments, a new Cambridge, Ma.-based company that’s developing a computerized needle-free drug delivery system, has raised $11 million in Series A funding led by Sanofi, PBJ Capital, and a major, unnamed medical device company.

Slack, the five-year-old, San Francisco-based enterprise collaboration platform, is reportedly raising a new round of funding at a valuation of between $800 million and $1 billion, just six months after raising nearly $43 million. (To date, the company has raised $60 million.) Sequoia Capital and Kleiner Perkins Caufield & Byers are involved in the newest funding, says one report from TechCrunch. The company’s earlier investors include Andreessen Horowitz, Accel Partners, and The Social+Capital Partnership. More here.

Soft Machines, an eight-year-old, Santa Clara, Ca.-based semiconductor company, has raised $125 million in funding, including from two former senior Intel executives (Albert Yu and Richard Wirt); well-known chip entrepreneur and investor Gordon Campbell; Samsung VenturesAdvanced Micro Devices; and Mubadala, the Abu Dhabi investors backing chip manufacturer Globalfoundries. The WSJ has the story here.

Spring.me, a 1.5-year-old, Sydney, Australia-based social network that was previously known as Formspring, has raised $5 million in debt and equity, including from Right Click Capital, Tank Stream VenturesNextec Strategic Capital, and Rubicon Project founder Craig Roah. TechCrunch has more on how and why the company is rebranding itself.

TaskEasy, a three-year-old, Salt Lake City, Ut.-based company that provides on-demand exterior home services like leaf raking, said it has raised $7 million in Series A funding from Access Venture PartnersGrotech Ventures and KickStart Seed Fund. The company has raised $9.6 million to date, shows Crunchbase.

Telcare, a six-year-old, Bethesda, Md.-based company that develops cellular-enabled glucose monitors and a cloud-based companion system, has raised $32.5 million in Series C funding led by Norwest Venture Partners, with Mosaic Health Solutions and earlier investors Sequoia Capital and Qualcomm participating. The company has now raised $63.5 million altogether, shows Crunchbase.

Vestorly, a 2.5-year-old, New York-based content marketing platform for financial services professionals, has raised more than $2 million in seed funding from AlphaPrime Ventures, Formation 8, and Gaspar Global Ventures.

Zignal Labs, a three-year-old, San Francisco-based real-time media monitoring and analytics company, has raised $10.7 million in Series B funding from earlier investors, including Figtree Partners, Ross Investment Associates and company co-founder Jim Hornthal. The company has now raised $14.9 million altogether, shows Crunchbase.

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New Funds

Founders Circle Capital, a 2.5-year-old, San Francisco-based firm that buys back stock from founders, executives, employees and early backers, has raised $195 million across two funds, beating a target of $125 million, says the firm. More here.

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People

Microsoft co-founder Paul Allen is pledging at least $100 million to help fight the spread of Ebola, reports USA Today. The funding will go to the State Department to develop medevac containment units to evacuate health professionals from West Africa and to offer training, medical workers and equipment in Liberia, one of the nations hardest hit by the Ebola epidemic. (This video about the epidemic in Liberia should win an award. H/T: Matt Mireles.)

Nicolas Debock has joined Balderton Capital as a principal. He’ll focus largely on fintech, consumer-to-consumer marketplaces and SaaS. Prior to joining Balderton, Debock worked at XAnge, a Paris-based venture firm. He has also worked as the head of startup-relationships at La Poste, the French postal service, and at the IT and management consultancy Logica.

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Job Listings

Google is newly looking for a corporate development strategy manager.

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Data

Total funding to on-demand mobile services startups has hit $1.46 billion in the last four quarters, says CB Insights, which says nearly 20 deals per quarter in 2014 have been money invested into “Uber for X” type companies. More here.

A New York venture capital and funding report, by AlleyWatch.

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Essential Reads

Facebook introduces its first product that allows you to ditch your real name.

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Detours

Inside the crazy, and big, business of pet body shaming.

When introverts should avoid coffee.

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Retail Therapy

Holy smokes.