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.
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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.
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.”
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.
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.)
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.
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.”
Tencent, one of China’s biggest Internet companies, is looking for a corporate M&A director in Palo Alto, Ca.
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.
Patagonia, the outdoor gear company, is even cooler than you think.
Classic Macs turned into modern furniture.
“Well, that is surprising,” said this cat.
Wintercroft Halloween masks. Made by you. Sure to terrify the children in your life.