Good Thursday morning, everyone! (Web visitors, here’s an easier-to-read version of today’s email.)
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Top News in the A.M.
Billionaire investor Carl Icahn to Apple CEO Tim Cook: It’d be really terrific if you repurchased “a lot more” of your “dramatically undervalued” stock and soon.
You may need to wait to buy that new, larger iPad, says the WSJ.
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Planning for the End of a Bubble
With so much talk lately of bubbles and burn rates, venture capitalists seem to be hoping for the best but planning for the worst. None will tell you with certainty that we’re at the top of the market, but they say they’re trying to be as prudent as ever — just in case.
Investor Stewart Alsop, for example, whose firm is in the process of raising a third, $100 million, fund, says the way his firm is planning for the end of today’s go-go cycle is by “not investing in momentum businesses right now.”
It’s not an entirely new trend for Alsop-Louie Partners, which has always stuck to atypical and very early-stage investments, and that’s largely because Alsop remembers the last bubble so well. “I was at [New Enterprise Associates] and we’d raised a new fund in 2000 and invested in telecom companies through that fall,” he recalls. “The idea was that these were real companies, buying real stuff.”
When it became apparent that the telecoms’ endless growth possibilities weren’t so endless (they eventually built up an oversupply of capacity), they tanked, and NEA — along with many other firms — had to write off almost all of their investments. The lesson for Alsop: “That venture capital isn’t based on what happens in the next 12 months.”
Venky Ganesan of Menlo Ventures says his firm is also being cautious. For one thing, Menlo is taking a good long look these days at whether the unit economics of the startups it meets with make sense. The firm is also focused on business models that aren’t dependent on the availability of cheap capital, and it’s “orienting toward more seed and Series A rounds so we don’t have a timing issue,” says Ganesan.
Ganesan says he doesn’t believe we’re in a bubble, citing some of Menlo’s portfolio companies like Uber, which are “growing revenue at a pace we haven’t seen in our history.” Even still, he says, by funding companies that will “go to market in 18 to 24 months,” Menlo is essentially buying itself time to better understand “whether this is a bubble or a long-term secular trend,” he says.
It’s an approach to which Greg Gretsch of Sigma West can relate. Gretsch says he doesn’t know whether or not we’re “in a bubble and headed for a crash” and that “anyone who says they know is a fool.” But he sees plenty of companies whose “business model is the ever-decreasing cost of capital that’s freely available” and says Sigma has been steering far clear of them.
Like Alsop, Gretsch suggests that his firm is mostly sticking to its knitting, meaning “focusing on companies that have a fundamental business with real customers who are buying.” He adds that while most of Sigma’s portfolio companies are spending their revenue on growth at the moment, “a large percentage [of them] could cut back to profitability if they had to. We don’t have any [portfolio companies] that will hit the wall hard” if the winds change.
That’s not to say that Sigma West is insulated from what’s happening around it. Says Gretsch: “The challenge in this market is that everything is expensive and you have to make sure you’re not making investments to keep up with the Joneses. We hear a lot of, ‘Our competitor has this great space and employee perks and they look better to [outsiders].’ And it’s like, yeah, those things would be optimal from a cultural standpoint, but those competitors are spending a ton.”
Gretsch says he tries to be sympathetic to his startups, but he’s not taking anything for granted right now. He points to a Chicago-based portfolio company that’s doubling its workforce every year and recently asked his opinion about whether it should move into a big new building whose landlord wanted a 10-year-lease, or into several smaller satellite offices that required shorter commitments but could come at a cultural cost.
He nudged the company toward the satellite offices.
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New Funds
10 Minutes With, a 1.5-year-old, London-based startup behind a career matchmaking platform for graduates, has raised $4 million from a group of undisclosed investors. The company had previously raised $400,000 in seed funding, says TechCrunch.
Avaamo, an eight-month-old, Los Altos, Ca.-based company behind a new, secure mobile message app designed specifically for the mobile workforce, has raised $6.3 million in seed funding led by WI Harper Group, with Rembrandt Ventures Partners, Streamlined Ventures,Eleven Two Capital and Ovo Fund participating. (Scott Irwin of Rembrandt tells StrictlyVC that this firm was particularly excited about Avaamo’s founders, both former TIBCO execs, adding that “for the U.S. and Europe, [the opportunity Avaamo is addressing is] primarily a compliance issue. For Asia, it’s more about a mobile workforce that changes jobs frequently and could take sensitive information with them.”)
Fortuna Retail, the year-old, Gurgaon, India-based company behindGemPundit.com, an online store for gemstones, has raised an undisclosed amount in seed funding from angel investors, including Anand Kumar, partner of the Mumbai-based law firm Sand Hill Counsel. VCCircle has more here.
GrownOut, a year-old, Gurgaon-based online recruiting company, has raised an undisclosed amount of Series A funding from Matrix Partners, with earlier investor OutBox Ventures participating. Livemint has more here.
Jukely, a two-year-old, New York-based startup that sells access to a wide number of local concerts for $25 a month, has raised $2.4 million in seed funding co-led by Northzone and 14W. Other participants in the round include AngelList’s fund Maiden Lane, Bullet Time Ventures, Amol Sarva, Larry Marcus, Hany Nada, Paul Sethi, David Lerner, andCharles Goldstuck, among others. The company had previously raised $900,000 in seed funding, shows Crunchbase.
LightCyber, a three-year-old, Ramat Gan, Israel-based cybersecurity startup, has raised $10 million in a new funding led by Battery Ventures, with participation from earlier investors Glilot Capital Partners and Check Point Software cofounder Marius Nacht. The company has raised $11.5 million to date, shows Crunchbase.
Move Guides, a three-year-old, London startup whose cloud software helps companies manage the relocation of their employees, has raised $8.2 million in Series A funding led by New Enterprise Associates, with participation from earlier investor Notion Capital and individual investors. The company has raised $10.6 million to date.
MyHealthDirect, a nine-year-old, Nashville, Tn.-based scheduling platform used by hospitals, health systems, and managed care organizations, has raised $8 million in funding from Ares Capital Corporation, along with earlier investors Chrysalis Ventures and Arboretum Ventures. The company has raised at least $22.9 million to date, shows Crunchbase.
Nepris, a year-old, Austin, Tx.-based online platform that brings together curriculum and industry experts to engage students, has raised $550,000 in seed funding from NewSchools Venture Fund and numerous angel investors. EdSurge has more here.
Perkville, a 4.5-year-old, Oakland, Ca.-based company whose cloud-based software enables businesses to create customer rewards programs, has raised $2.4 million in Series A funding led by Moneta Ventures, with participation from MDO Holdings, Keiretsu Forum, Sand Hill Angels,Xandex Ventures, Fifth Era, and members of the Berkeley Angel Network. The company has now raised $3.4 million altogether.
PillPack, a 1.5-year-old, Manchester, N.H.-based online pharmacy that aims to simplify medication management, has raised $8.75 million in new funding led by Accel Partners, with participation from earlier investor Atlas Venture. The company has raised roughly $13 million to date, including from Founder Collective and Techstars.
Regen Energy, a nine-year-old, Toronto-based company that designs, develops, and markets wireless energy management tools, including controllers, has raised $12 million in Series B funding led by new investors including an unnamed U.S utility company, Export Development Canada, and EnerTech Capital. Earlier investors BDC Capital and NGEN Partners also joined the round, which brings the company’s total funding to $25 million, shows Crunchbase.
ROLI, a five-year-old, London-based maker of a new musical instrument akin to a digital piano, has added $3.7 million to what is now a $12.8 million Series A round. The new capital comes from Hong Kong-basedHorizons Ventures. The company’s earlier investors include Universal Music Group, Index Ventures, FirstMark Capital, and Balderton Capital.
TagCommander, a four-year-old, Paris-based cloud service that helps users manage meta tags in their website pages and mobile apps, has raised about $8.3 million in Series B funding led by Hi Inov, the venture arm of Dentressangle Initiatives, with participation from XAnge Private Equity and Bpifrance’s Digital Ambition Fund.
TheGrid, a three-year-old, San Francisco-based company whose software can automatically create websites out of any content, has raised $3.1 million from investors, including former Facebook VP Greg Badros, and former Disney VP John Pleasants.
Thync, a three-year-old, Los Gatos, Ca.-based company that makes a neurosignaling, mood-changing wearable, has raised $13 million in Series A funding led by Khosla Ventures. BusinessWeek takes its prototype device for a spin here.
Truecaller, a five-year-old, Stockholm-based mobile phone directory and called ID app that lets people search for other mobile users by name or number, has raised $60 million in Series C led by Atomico, Kleiner Perkins Caufield & Byers, and Sequoia Capital. TechCrunch has more here.
Vive, a two-year-old, Berlin-based anonymous video chatting site, has raised $1.5 million funding round from a number of prominent Eurpoean angels.
Zenedge, a two-year-old, San Jose, Ca.-based company that detects distributed denial-of service attacks, SQL injections of malicious code commands and other cyber attacks with the goal of thwarting them before they do damage, has raised $3.5 million in funding, including from Needham & Company Chairman Andrew Malik. Venture Capital Dispatch has more here.
Zomato, a six-year-old, Gurgaon, India-based online restaurant has reportedly entered into talks with numerous private equity and strategic investors to raise about $200 million by December, a development that could push its valuation into the billion-dollar-plus club, says the Economic Times. Zomato has thus far raised $53.8 million from Sequoia Capital and Info Edge, shows Crunchbase. More here.
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New Funds
OpenView Venture Partners, the eight-year-old, Boston-based venture firm that backs expansion-stage companies, has closed its fourth fund with $250 million, up slightly from its $206 million predecessor.
Wellington Management, the 86 year-old mutual fund manager, is reportedly raising a $500 million fund expressly to back privately held companies. Fortune has the story here.
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People
The 100 “coolest” nerds in New York, per Business Insider.
Marc Andreessen and his wife, Laura Arrillaga-Andreessen, are giving $500,000 to three non-profits that were created to increase the ranks of women and blacks and Hispanics in the high-tech industry: Code2040, Girls Who Code and Hack the Hood. “Laura and I basically set out to identify three groups doing an effective job,” Andreessen tells USA Today. “These grants are intended to boost their capabilities and help them scale for the next several years.”
Carol Gallagher, the former CEO of Calistoga Pharmaceuticals (acquired by Gilead Sciences in 2011), has joined New Enterprise Associates as a partner on its life sciences team.
Last night, entrepreneur Elon Musk took the stage at the Vanity Fair New Establishment Summit, telling interviewer Walter Isaacson that artificial intelligence is advancing faster than almost anyone realizes, and that it might eventually wipe us out, too. Said Musk, “Particularly if [the machine is] involved in recursive self-improvement … and its utility function is something that’s detrimental to humanity, then it will have a very bad effect.” Here’s video of the sit-down.
Vivian Schiller, a high-profile NBC and NPR exec whom Twitter hired to run its news unit, is leaving the company after barely a year into the job. Recode has the story. Schiller joined Twitter at the behest of Ali Rowghani and Chloe Sladden, Twitter’s former COO and media head, respectively. Both have left the company in the last five months.
Last Friday, we told you that retiring Oracle CEO Larry Ellison is hostinga Republican fundraiser for Senator Rand Paul at his Woodside, Ca. home this coming Wednesday. What we didn’t know is that at the very same time, on the same street in Woodside — Manzanita Way — venture capitalist John Doerr will be on a fundraising mission for Democrats, hosting former President Bill Clinton along with Democratic SenatorsBarbara Boxer of California, Mark Begich of Alaska, Michael Bennet of Colorado and Ron Wyden of Oregon at his own home. The San Francisco Chronicle has the story.
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Jobs
JPMorgan Chase is looking to add a business analyst to its Global Technology Strategy and Partnerships group. The job is in New York.
Osage University Partners, which invests exclusively in startups that are commercializing university research, is looking for an associate to work in Philadelphia.
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Data
Sixty U.S. venture firms raised $6.1 billion in new commitments during the third quarter of 2014, a 26 percent decrease compared to the number of funds raised during the second quarter of 2014 and a 21 percent decline by dollar commitments, according to newly released figures fromThomson Reuters and the National Venture Capital Association. The silver lining: the amount committed to U.S. venture capital funds during the first nine months of this year has already eclipsed all of last year.
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Essential Reads
Snapchat is turning on the revenue spigot soon. Specifically, CEO Evan Spiegel said yesterday to expect ads in the company’s “Stories” feature.
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Detours
How “normal” is your drinking?
Why Marvel works: a scholarly investigation.
What kids around the world eat for breakfast.
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Retail Therapy
Well, this daybed has late-stage startup office written all over it.
