Hello, dear readers, hope your Tuesday is off to a fine start! (Web visitors, this version of today’s email is easier to read than what you see below.)
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Top News in the A.M.
Ireland announced today that it’s changing its tax code and, in the process, closing one of the world’s most famous corporate-tax loopholes.
If you thought that Dropbox was hacked last night, think again, says the company. “Recent news articles claiming that Dropbox was hacked aren’t true. Your stuff is safe. The usernames and passwords referenced in these articles were stolen from unrelated services, not Dropbox.”
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Why You Can Probably Forget About Going Public in 2014
You may have noticed: The market has been hitting the skids as investors grow nervous over a broadening array of concerns from Ebola to expected interest rate hikes. In fact, as of the market’s close yesterday, U.S. stock indexes had fallen nearly 10 percent since the beginning of last week — nearly enough to constitute an official correction.
Things aren’t looking so great for recent tech issuers, either. Despite their highly celebrated IPOs, the shares of Yodlee, Wayfair, Hubspot and even Alibaba are down from their first day “pops,” and that “doesn’t work for IPO investors,” notes Kathleen Smith, a principal of Renaissance Capital, which manages an exchange-traded fund that tracks recent IPOs. “All these IPOs are not showing post first-day performance, which makes it hard for [other, still-private companies] to come out.”
The IPO market is tied to the whims of the stock market, of course, but there are specific reasons that new tech stocks are sinking, says Smith. First and foremost, she says, the issue is linked to who, exactly, is acquiring new shares. “All this year, we’ve had a different set of buyers. It’s not the individual investors or small cap managers who, 10 years ago, might have talked up the stocks they were buying. They aren’t big commission generators for Wall Street, so it’s harder for them to get allocations,” she says.
Smith thinks new issuers have been pricing their shares too richly, too. “It’s all about price discovery,” she says. “Public market investors aren’t tolerating excessive valuations. If companies think they come out at high valuations and watch their shares continue to rise, well, we’re not in that kind of market.”
There’s also the so-called Alibaba effect to consider, notes John Fitzgibbon, founder of the research firm I.P.O. Scoop, which tracks IPOs. He compares the anticipation that surrounded the Chinese e-commerce giant’s September 19 IPO to what happened when both Facebook and Google went public, saying that in all three cases, public market investors have struggled with what next to get excited about. “The circus has left town,” says Fitzgibbon. “Alibaba was a one-day event. And now we’re back to the reality of the stock market, which is performing under the shadow of the [broader] stock market.”
Fitzgibbon characterizes the market’s recent gyrations as a “healthy, sobering pullback.” Stocks are “bought on hype, held in greed and sold in fear. That’s your cycle,” he says, while declining to speculate about whether investors are likely to buy, hold, or continue to sell in the immediate future.
Smith sounds more convinced that continued trouble lay ahead. “Private investors must be feeling nervous,” she says. “I know Box has talked about coming public. I see big companies in the pipeline. And a lot of them, I wonder about.”
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New Fundings
2nd Watch, a four-year-old, Seattle-based cloud IT operations company that helps its users leverage Amazon Web Services, has raised $10 million in C1 funding, roughly 10 months after closing its $23 million Series C round last year. Top Tier Capital Partners led the new funding, with participation from earlier investors Columbia Capital and Madrona Venture Group. The company has now raised $37.6 million altogether.
C-B4, a six-year-old, Herzliya, Israel-based predictive analytics company, has raised $6 million in funding from Sequoia Capital. Geektime has more here.
CarTrade, a five-year-old, Mumbai, India-based online marketplace for new and used cars, has raised roughly $30 million in new funding led byWarburg Pincus, with earlier investors Canaan Partners and Tiger Global participating. Tech in Asia has more here.
Checkr, a six-month-old, San Francisco-based startup that expedites background checks on new hires and delivers them in bulk to businesses, has raised $9 million in funding led by Accel Partners, with Khosla Ventures, SV Angel, Data Collective, Google Ventures, and a long list of notable individual investors participating. Venture Capital Dispatch has more here.
EcoVent, a two-year-old, Boston-based startup whose wireless vents open or close based on the real temperature and humidity conditions of a room, has raised $2.2 million in a seed round via an AngelList Syndicate. The company has now raised $3.3 million to date, including from Tony Chen, Stewart Alsop, and TechStars, shows Crunchbase.
Footmarks, a two-year-old, Bellevue, Wa.-based mobile retail app that delivers personalized content, including about deals and sales, to in-store customers, has raised $1.85 million in seed funding. Shawn Englund, the founder and former CEO of Learn Live Technologies, led the round. The company has raised $1.9 million to date.
Fullbridge, a four-year-old, Cambridge, Ma.-based accelerated business education program, has raised $5 million in new funding from undisclosed high-net-worth individuals, along with earlier backer GSV Capital. The company has now raised $12.5 million to date, shows Crunchbase.
Invitae, a two-year-old, San Francisco-based company whose genetic tests screen for hereditary disorders, has raised $120 million from a long list of new investors, including The Broe Group, Decheng Capital, Deerfield Management, OrbiMed, Perceptive Advisors, Rock Springs Capital and Wellington Management Company. Earlier investors Casdin Capital, Genesys Capital, Genomic Health, Randy Scott, Redmile Group and Thomas McNerney & Partners also joined the round. The company has now raised $207 million altogether.
Loggly, a five-year-old, San Francisco-based company whose cloud-based log management software helps its customers track machine-based events in their IT infrastructure, has raised $15 million in Series C funding led by Harmony Partners, with previous investors participating. The company has now raised $43.3 million altogether, including from Matrix Partners, Trinity Ventures, Data Collective, True Ventures, and Cisco.
Magic Leap, a three-year-old, Hollywood, Fla.-based still-stealth company that says its hardware and software will deliver “cinematic reality,” is raising up to $500 million in a new round that looks to involve a consortium of investors, including Google and Andreesseen Horowitz, sources tell Recode. The company disclosed back in February that it had raised $50 million from undisclosed investors for its “proprietary human computing interface technology.”
Melotic, a months-old, Hong Kong-based cryptocurrency technology company, has raised $1.2 million in seed funding led by Ceyuan Ventures, a China-based venture firm. Other investors to participate in the round include Lightspeed China; Barry Silbert’s Bitcoin Opportunity Corp.; 500 Startups; and Marc Van Der Chijs, co-founder of the popular Chinese video sharing website Tudou.com.
Pluto.TV, a months-old, L.A.-based web-video aggregator that organizes streams into about 100 channels, such as music, news, and sports, has raised $500,000 from satellite broadcaster BSkyB. The company had raised an earlier round of funding, including from United Talent Agency CEO Jeremy Zimmer and Terry Semel’s Windsor Media. Variety has more here.
Raze Therapeutics, a new, Cambridge, Ma.-based biotechnology company that’s developing oncology therapeutics that target metabolic pathways to prevent tumors from surviving and growing, has raised $24 million in Series A funding from Atlas Venture, MPM Capital Management, MS Ventures, Partners Innovation Fund, Astellas Venture Management, and Novartis.
Speakr, a four-year-old, L.A. based service that connects brands with influential people on social-media networks and was formerly known as twtMob, has raised $2.9 million in seed funding led by Toba Capital, with participation from Allegro Venture Partners and individual investors. The company has now raised $3.8 million to date.
VerbalizeIt, a three-year-old, New York-based language translation startup, has raised $830,000 in seed funding from FG Angels, the angel syndicate of Foundry Group; Galvanize Ventures; and individuals, including Daniel Saul and Walter Winshall. The company had earlier raised $1.4 million in funding from Bullet Time Ventures and others. Venture Capital Dispatch has the story here.
Vyu, a 10-month-old, L.A.-based social content app that helps users follow and share their favorite TV shows and to discover new ones, has raised $825,000 in seed funding led by Jabbar Internet Group, with other, unnamed investors participating.
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New Funds
Life.Sreda, a two-year-old, Moscow-based venture firm focused on financial technology startups (from seed- to later-stage), is raising a $100 million second fund as it plans to shift the vast majority of its investments to U.S. and European startups, reports VentureWire. The firm’s newest investments include Scorista.ru, a Russian online credit assessment service for micro finance institutions that raised an undisclosed amount of seed funding last month, and SumUp, a Dublin, Ireland-based mobile point-of-sale company that raised $13 million in Series C funding in August.
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IPOs
Good Technology, the mobile security startup, is postponing its IPObecause of worsening market conditions.
As of last week, a couple of Bay Area biotech companies were planning to test the IPO market this week. We’re guessing that will change; stay tuned.
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Exits
Cloudscaling, an eight-year-old, San Francisco-based cloud-computing startup, is being acquired by EMC Corp. for less than $50 million, reports Bloomberg. Cloudscaling had raised $14 million from investors, including Trinity Ventures, Juniper Networks, and Seagate Technology, shows Crunchbase.
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People
Ben Bayat has joined the Oakland, Ca.-based venture firm Illuminate Ventures as a senior associate. Bayat, who will focus on enterprise cloud and mobile opportunities, was previously head of West Coast sales for IBM’s networking clients. He also recently nabbed his MBA from the UC Berkeley Haas School of Business.
Looks like Microsoft cofounder Bill Gates and his family may be spending more time in Southern California. Reports say Gates, whose daughter jumps horses competitively, just acquired a 229-acre horse ranch in San Diego.
Dorian Satoshi Nakamoto, the man Newsweek claimed was the apparent founder of Bitcoin, is raising money in order to sue Newsweek over the piece.
Google‘s executive chairman Eric Schmidt tells EU policy makers in Berlin that Google is no monopoly, oh no. “If you are looking to buy something, perhaps a tent for camping, you might go to Google or Bing or Yahoo or Qwant, the new French search engine. But more likely you’ll go directly to Zalando or Amazon . . . last year almost a third of people looking to buy something started on Amazon — that’s more than twice the number who went straight to Google.”
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Jobs
Qualcomm Ventures is looking for a financial analyst. The job is in San Diego.
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Data
CB Insights just released its third quarter venture capital activity report. You can click through to read its many findings here. (Note: to download the entire 114 pages, you have to be a subscriber.)
Meanwhile, Gil Dibner, a partner at DFJ Espirit in London, has pulled together some third-quarter data about venture capital in Europe and Israel. (“I decided that I wasn’t happy with any of the available data sources on venture capital deals” about either place, he writes.) Here’s what he found.
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Essential Reads
Google is introducing a new Express membership, similar to Amazon Prime, that costs $95 per year or $10 per month.
There’s Product Hunt. Now there is Closed Club, too (though we kind of prefer Product Grunt).
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Detours
Why private donations aren’t helping America’s poor.
Airplanes, computers, and the human factor, in this month’s Vanity Fair.
Life lessons from Larry David.
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Retail Therapy
Halloween is fast approaching. Time to buy a costume for your dog. (This one is also terribleamazing.)