StrictlyVC: October 8, 2014

It is Wednesday! All right, all right. Hope you have a great morning, everyone.

(Web visitors, here’s an easier-to-read version of today’s email, which went out around 7 a.m. PST.)

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Top News in the A.M

Twitter announced yesterday that it’s suing the U.S. government, saying that restrictions on what it can say publicly about the government’s requests for user data violate its First Amendment rights.

It’s a contagion: Now software giant Symantec is thinking about breaking itself into two, too.

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Peter Thiel: Apple is No Longer a Tech Company — and Neither is Google

eter Thiel has been overturning the furniture at nearly every stop of a ongoing tour to promote his new book, Zero to One. An appearance yesterday morning at a conference in Half Moon Bay, south of San Francisco, was no different.

In a half-hour sit-down that showcased Thiel’s talent for saying the unexpected, Thiel compared Apple to Coca Cola, saying Apple is no longer a technology company but a hugely successful marketing company. He then suggested that Google – challenged as it seems to be in putting the roughly $60 billion on its balance sheet to work – is also deluding itself in its continued belief that it’s a technology company.

“These companies end up building up cash because they are out of ideas relative to size of company,” said Thiel, characterizing both Apple and Google as “in denial.” That happens when “your brand is still as a tech company . . . But as soon as you start buying back your shares, a complete admission of failure as a technology company is complete.”

(Apple began paying shareholders dividends two years ago. Thiel gives Google “at least a decade” to begin providing shareholders with a dividend, given the company’s stock structure, which has further cemented the control of founders Larry Page and Sergey Brin over time.)

Thiel’s comments are sure to stir up discussion in tech circles, particularly after the excitement that Apple in particular has generated around its newest iPhones; its Apple Watch, expected early next year; and its highly anticipated mobile payment platform, which is reportedly being released in two weeks as part of Apple’s newest iOS update.

The observations took yesterday’s crowd by surprise, too. Earlier in the sit-down, Thiel had talked at length of being a “big fan” of founder-led businesses, including Google. “I think those that are not have a tremendous problem,” he said. He also called Apple the “paradigmatic” “zero to one” kind of company whose breakthrough technologies have repeatedly changed the world.

Still, times change and Apple no longer has Steve Jobs at the helm. And while Thiel said he didn’t “want to take pot shots at [Apple CEO] Tim Cook” given the “impossibly big” shoes he has had to fill, Thiel suggested that Apple’s future now depends very much on how close smart phones are “to their final form,” as Apple seem unlikely to create anything revolutionary going forward. “If there isn’t much more to do with [the advancement of] smart phones, it’ll be like marketing Coke and Pepsi and will produce [a lot revenue for Apple] for years to come,” said Thiel.

As for Google, Thiel acknowledged that the company is “still trying a lot of things,” an understatement if ever there was one. But he called it “striking that even a company like Google . . . is building up more and more cash.”

Google’s former CEO and now executive chairman Eric Schmidt “was used to getting attacked from investors [for] spending money on flaking things,” said Thiel, but at least Schmidt was spending. Given that the company has done so little with its cash hoard despite a zero-interest rate environment, it’s hard to imagine it capable of much beyond iterating on its core search monopoly, suggested Thiel.

In fact, Thiel told the audience, “If you’re investing in Google, you’re probably hoping at some point that they’ll admit that they’re no longer a tech company and buy back your shares at a higher price.”

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New Fundings

Atopix Therapeutics, a 1.5-year-old, Abingdon, England-based biopharmaceutical company that’s developing so-called antagonists for allergic disease, has raised an undisclosed amount of funding from new investor SR One, the corporate venture capital arm of GlaxoSmithKline. Atopix had raised £3.7 million in Series A funding last year led by MPM Capital, SV Life Sciences and Wellington Partners, with additional participation by Bessemer Venture Partners and Red Abbey.

Avidity NanoMedicines, a two-year-old, La Jolla, Ca.-based company that’s developing cancer therapies, has raised $6 million in a convertible note co-led by Fidelity Biosciences and TPG Biotech. Other participants in the funding include Brace Pharmaceuticals, Partner Fund Management, and earlier investor Alethea Capital Management.

Azuqua, a 3.5-year-old, Seattle-based company whose software helps businesses create processes that integrate multiple software-as-a-service applications, has raised $5 million from Ignition Partners. Xconomy has more here.

Cardiac Dimensions, a 13-year-old, Kirkland, Wa.-based medical device company that’s focused on treating functional mitral regurgitation, a condition seen in heart-failure patients, has added $8.5 million to a $20 million round it raised earlier this year, including from Lumira Capital and M.H. Carnegie & Co. The new capital comes from Arboretum Ventures. The company has now raised $44.9 million altogether, shows Crunchbase.

Cloudcade, a 10-month-old, San Francisco-based mobile gaming startup with a tablet-first approach toward deployment, has raised $1.55 million in seed funding from IDG Capital Partners.

Comply365, a seven-year-old, Beloit, Wi.-based mobile enterprise software company, has raised $12 million in Series A funding led by Columbus, Oh.-based Drive Capital. The company had previously raised $2 million in seed funding, shows Crunchbase. Xconomy has more on what piqued Drive’s interest here.

Crowdfunder, a 2.5-year-old, L.A.-based crowd funding platform that helps connect entrepreneurs and investors, has raised a $3.5 million in Series A funding from Bridge 37 Ventures, Ideas & Capital Venture Capital, Capital Nuts, and Tim Draper. The company had raised $1 million in seed funding from numerous sources back in February, including 500 Startups and K5 Ventures and raised an earlier $400,000 seed round in 2012.

Depict, a year-old, San Francisco-based online platform for art that invites users to explore digital work by new artists, has raised $1.6 million in funding from investors that include Bruce Gibney of Founders Fund, Jim Pallotta of Raptor Ventures and Thomas Andrae of 3M New Ventures.

Frankly, a 3.5-year-old, San Francisco-based private mobile-messaging service, has raised $12.8 million in funding from JJR Private Capital, Stanford University’s StartX Fund and SK Planet.

HangIt, a months-old, New York-based company whose mobile marketing platform company is slated to launch later this year, has raised $6.2 million in seed funding from Atlanta-based Vesta Labs, where the company was incubated.

Justworks, a two-year-old, New York-based low-cost payroll and benefits platform, has raised $6 million in Series A funding from Index Ventures and Thrive Capital. The company has raised $7 million altogether.

LeadGenius, a three-year-old, Berkeley, Ca.-based maker of cloud-based sales software that helps generate and convert leads, has raised $6 million in Series A funding led by Sierra Ventures. Other participants in the round include Fuel Capital, FundersClub, Initialized Capital, Kapor CapitalScott Banister and earlier backers 500 Startups, Bee Partners, CRCMScrum Ventures and Sam Altman. (The company had raised three rounds of undisclosed amounts of capital prior, shows Crunchbase.)

Interana, a two-year-old, Menlo Park, Ca.-based company whose data-analytics software helps determine how users are interacting with software and services in a corporate network, has raised $8.2 million in Series A funding, including from Battery Ventures, Data Collective, Fuel CapitalSV Angel, and Y Combinator.

Morsel, a new, Chicago-based social community for culinary enthusiasts, has raised $800,000 in seed funding from GrubHub cofounder Matt Maloney, Chicago Ventures, Merrick Ventures, and other Chicago and San Francisco angels. GigaOm has more here.

Product Hunt, a 10-month-old community board where people can up vote tech products, has official announced that it raised $6.1 million in a Series A funding led by Andreessen Horowitz. Other investors to participate include Reddit co-founder Alexis Ohanian, A-Grade Investments, betaworks, Cowboy Ventures, CrunchFund, Greylock Partners, Ludlow Ventures, Slow Ventures, SV Angel, TradecraftNaval Ravikant, Nir Eyal, Abdur Chowdhury, and Andrew Chen. The new funding brings Product Hunt’s total investment to date to $7.1 million. TechCrunch had reported last month that the startup was zeroing in on $6 million.

Segment, a three-year-old, San Francico-based company whose software collects customer data, then funnels it into a variety of analytics and marketing tools, has raised $15 million in Series A funding led by Accel Partners, with participation from Kleiner Perkins Caufield & Byers and e.ventures. The company, previously called Segment.io, has now raised $17.6 million altogether. VentureBeat has more here.

SolidFire, a four-year-old, Boulder, Co.-based company that builds scale-out, high-performance storage systems for cloud service customers, has raised $82 million in new funding led by Greenspring Associates, Silicon Valley Bank and an unnamed sovereign-wealth fund. Earlier investors Novak Biddle Venture Partners, Samsung Ventures and Valhalla Partners also joined the round, which brings the company’s total funding to $150 million.

SolidX Partners, a months-old, New York-based financial services firm that provides swaps to hedge funds, family offices and other institutional investors, has raised $3 million in seed funding led by Liberty City Ventures, with participation from Red Sea Ventures, Red Swan Ventures, and individual investors Stanley Shopkorn and Jim Pallotta.

Stellar Loyalty, a months-old, Foster City, Ca.-based company that makes cloud-based, customer loyalty applications, has raised $5 million in Series A funding led by InterWest Partners.

Synlogic, a year-old, Boston-based next-generation synthetic biology company that’s developing microbes as therapeutics, has added $5 million to a $29.4 million Series A round that the company closed earlier this year from Atlas Venture and New Enterprise Associates. Its new backer is the Bill & Melinda Gates Foundation.

Uniplaces, a two-year-old, U.K.-based online booking platform focused on student accommodations, has raised $3.5 million in Series A funding led by earlier investor Octopus Investments, which had funded the company with £700,000 last November. Numerous other angel investors also participated in the round. TechCrunch has more here.

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New Funds

Formation 8, the two-year-old, San Francisco-based venture capital firm co-founded by Palantir co-founder Joe Lonsdale, is targeting $500 million for its second fund, shows an SEC filing first flagged by VentureBeat. The firm closed its debut fund in the spring of 2013 with $448 million and has backed more than 30 companies (that it has disclosed) since, including BuildZoom, a 2.5-year-old, San Francisco-based online marketplace for remodeling and construction services.

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IPOs

AutoGenomics, a 15-year-old, Vista, Ca.-based commercial-stage molecular diagnostics company that has twice before tried to go public and pulled its filing (in 2008 and in 2013), has filed again, with plans to raise up to $60 million. The company appears to be backed exclusively by non-institutional investors. Its S-1 is here.

Histogenics, a 14-year-old, Waltham, Ma.-based regenerative medicine company focused on the musculoskeletal segment of the marketplace, hasfiled to raise up to $65 million in an IPO. Two of its biggest outside shareholders are Sofinnova Ventures, which owns 27 percent of the company, and Split Rock Partners, which owns 18 percent.

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Exits

Ducksboard, a three-year-old, Barcelona-based maker of real-time dashboards for tracking business metrics from a broad set of application sources, has been acquired by the privately held software analytics company New Relic. Ducksboard had raised roughly $750,000 in seed funding, shows Crunchbase. Its investors include the Spanish venture firms Kibo Ventures and Cabiedes & Partners.

Evolv, a seven-year-old, San Francisco-based big data company that helps solve workforce issues by analyzing employee performance data, has been acquired by the publicly traded company Cornerstone OnDemand for $42.5 million in cash. Evolv appears to have raised exactly that amount from investors across four rounds, per Crunchbase data. Its investors include GGV Capital, Khosla Ventures, Lightspeed Venture Partners and VantagePoint Capital Partners.

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People

Remember how we all thought Google+ was going the way of the dodo bird? That is incorrect, says Google’s new head of social media, David Besbris.

Vanity Fair takes a deep dive into Microsoft, writing of cofounder Bill Gates and longtime CEO Steve Ballmer that people “liken the relationship . . .to a marriage. ‘It is like couples that get divorced and hook up again,’ says someone who knows both men. ‘Trying to explain the relationship from the outside is a waste of chronology.’”

Kyle Lui has joined the global venture firm DCM as a principal in its Menlo Park, Ca. office. Lui was most recently a director of product management at Salesforce. He was also the cofounder and CEO of the enterprise perks management startup ChoicePass, which was acquired in 2012 by Salesforce.

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Jobs

Kaiser Permanente is looking to hire a director into its corporate venture arm, which focuses on IT, healthcare services, medical devices and diagnostics startups. The job is in Oakland, Ca.

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Data

At the start of the year, 36 companies were listed in the WSJ’s “billion dollar startup club.” Now there are 62, says the outlet.

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Essential Reads

Facebook has built something that sounds like a clone of Secret but is not, says its product manager, Josh Miller.

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Detours

According to a new study, we really, really love it when others write to express their deep affection for us.

The quiet rise of the satellite spy agency.

This morning’s lunar eclipse in photos.

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Retail Therapy

Sure, the Coolest Cooler is cool, but is it as cool as an IcyBreeze portable cooler and air conditioner? (Really, is it? Serious question.)

Dress Pant Jogger Pants. We like the idea, Tony Conrad.


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