• Bill Gurley: Those Earlier Warnings are Making an Impact

    bill_gurleyVenture 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.’”

    Connie

    , , ,

  • StrictlyVC: October 23, 2014

    Happy Thursday, everyone! (Web visitors, here’s an easier-to-read version of this morning’s email here. You might also just go ahead and sign-up.)

    —–

    Top News in the A.M.

    Apple is more than doubling its stores in China, CEO Tim Cook announced this morning.

    —–

    Boris Wertz Raises a New, Much Bigger, Fund

    Version One Ventures, the Vancouver-based fund of entrepreneur-turned-investor Boris Wertz, is taking the wraps off a $35 million early-stage fund today. That’s nearly twice the size of Wertz’s $20 million debut fund, closed in early 2012. Northleaf Venture Catalyst Fund and BDC Capital are the new fund’s anchor investors.

    As you might imagine, the extra capital will allow Wertz to write bigger checks. In a call yesterday, he said he now plans to make initial investments of between $500,000 and $750,000, up from $250,000 to $300,000, a shift that should allow him to lead more deals. The bigger pool should also enable Wertz to pour more follow-on funding into Version One’s existing portfolio, which right now includes the online cosmetics company Julep; the business intelligence platform Mattermark; and Kinnek, an online platform that brings together small businesses with suppliers.

    All told, said Wertz, he plans to invest his second fund in 20 to 25 companies. I asked him what else he’s planning for, particularly amid what feel like big shifts in the market.

    Congratulations on the your new fund. That’s quite a jump up in size.

    Thank you. We set out to raise $30 million and probably could have raised $40 million but didn’t want to make it larger. I’m still the single investing partner, and we think a good benchmark is $30 million to $35 million per partner, which is what you see at comparable funds like Floodgate.

    You say the collective value of Version One’s portfolio is now $600 million. Recognizing it’s early days, have any companies exited yet?

    No, angel investments I made prior to [creating Version One] have [been acquired] like Flurry [sold to Yahoo], but one rocket ship in our portfolio – [a consumer marketplace] that has raised an A and B round – hasn’t even announced [itself publicly yet].

    More companies are waiting on their funding announcements. Why do you think that is?

    We have two companies in our portfolio that have raised [capital] and never announced. The entrepreneurs feel that they’re on to something and want to get solid traction and a head start before telling anybody else. It makes sense, especially if you have a product where you aren’t going to acquire users on StrictlyVC or TechCrunch and don’t need [the press] for branding purposes.

    You live in Vancouver but invest all around North America, including Silicon Valley. What are you seeing in terms of seed-stage valuations right now?

    Two-thirds to three-quarters of our deals are outside the Valley – in Seattle, Toronto, and New York. And those ecosystems have never gotten that crazy. But there’s definitely a little insecurity in the market, which is good, given that seed-stage valuations have continued to creep up over the last three or four years. I think we’re seeing a healthy correction of expectations on the part of both investors and entrepreneurs. Things can’t always go in one direction.

    When we last talked, in May, you were spending more time looking into digital healthcare, government “2.0” and bitcoin. Have you made any related bets yet?

    We have one digital healthcare investment, [Figure 1, a crowdsourced medical image library for health care professionals that VersionOne invested in last December], but the challenge in [backing another] is that it has blown up crazily in terms of valuations. Look at the on-demand doctor space. There are at least eight players, all of which were well-funded at crazy valuations. [The sector] ran away pretty quickly.

    As for bitcoin, we believe in the long-term potential, but we’re still forming an investing thesis around when is the right moment to invest.

    It must be challenging. I’m amazed by how many seriously smart people are divided over bitcoin.

    I’m in the middle. The technical platform is beautiful, and a decentralized system to record ownership makes a lot of sense for a lot of use cases. I think the real problem is that right now, there isn’t a killer use case. Payments in North America aren’t broken. I can use credit and debit cards or cash or PayPal. So people need to start focusing more on international payments and remittances, where bitcoin does make sense. The challenge is how to get into the markets that could use it the most – Brazil, Vietnam, Nigeria – and make it easy to spread. And there’s no clear path [to doing that], though we do believe some entrepreneurs will eventually figure it out.

    A prominent institutional LP recently said that right now could be an especially bad time to start investing a new fund based on traditional market cycles. Is that a concern of yours?

    Yes, there are cycles, but nobody can really predict them. You can only make your best investments given the environment and stay disciplined around valuations and your investment thesis and not get carried away by hype. The reality is that some vintages of funds will do better than others based on waves of new innovations or when valuations were really low. But it’s hard to predict beforehand and say 2014 or 2015 will be a terrible year for venture funds. Who knows? Timing and luck are involved in all of it, but if you focus on fundamentals and support your companies for the long term, you can hopefully smooth out your returns over time.

    LA_300x250_Billion

    New Fundings

    Boostable, a year-old, San Francisco-based company that makes advertising easier for sellers on marketplaces, has raised $3.2 million in Series A funding from Morado Ventures, Omidyar Network, and earlier investor SV Angel. The company, a Y Combinator alum, had previously raised $500,000. TechCrunch has more here.

    Flint, a three-year-old, Redwood City, Ca.-based mobile payment service, has raised $9.4 million in Series C funding led by Verizon Ventures, with participation from Peninsula Ventures and earlier backers Digicel, Storm Ventures and True Ventures. The company has now raised $20.4 million altogether, shows Crunchbase.

    Fortress Risk Management, a four-year-old, South Glastonbury, Ct.-based company that sells antifraud technology to community banks and credit unions, has raised $3.5 million from investors, including Advantage Capital Connecticut Partners, Black Dragon Capital and the Connecticut Department of Economic and Community Development.

    Gamma Medica, a 17-year-old, Salem, N.H.-based maker of an FDA-cleared dual-headed digital imaging system, has raised $6.5 million in growth capital financing from the specialty finance company Hercules Technology Growth Capital, along with $5 million from earlier investor Psilos Group. The company has raised at least $27.5 million to date, shows Crunchbase.

    Glamsquad, a 10-month-old, New York-based on-demand beauty services business, has raised $7 million in Series A funding led by SoftBank Capital, with AOL’s BBG Fund, Lerer Hippeau Ventures and Montage Ventures, participating. Business Insider has more here.

    HMicro, a six-year-old, Los Altos, Calif.-based semiconductor company that makes products for medical, industrial and connected home devices, has raised $5.5 million in Series B funding from investors, including Reddy Capital Partners and Seraph Group.

    iCapital Network, a 1.5-year-old, New York-based online marketplace that connects institutional investors with alternative investment fund managers, has raised $9.25 million in funding led by a consortium of partners led by Credit Suisse’s Private Fund Group.

    InSilixa, a 3.5-year-old, Sunnyvale, Calif.-based developer of a molecular diagnostics platform, has raised $13 million in funding from PointGuard Ventures and Morningside Group.

    Kespry, a year-old, Menlo Park, Ca.-based maker of drones for commercial applications, has raised $10 million in Series A financing led by Lightspeed Venture Partners. The company had previously raised an undisclosed amount of funding from Chmod Ventures.

    Moov, a year-old, Mountain View-based maker of a fitness tracker that can reconstruct users’ movements, helping them improve their form (theoretically), has raised $2 million in Series A funding led by the China-based venture firm Banyan Capital. Moov had earlier raised $1 million via a crowdfunding campaign. More here.

    Mozido, a nine-year-old, Austin, Tx.-based company aiming to provide mobile financial, retail and marketing services to the millions of people without established banking relationships, has raised a whopping $185 million as part of a planned $400 million Series B round. The funding comes from MasterCard, Wellington Management, H.R.H. Sheikh Nahyan of UAE, and Tiger Management chairman and CEO Julian Robertson. Mozido has raised roughly $265 million in capital over the last 12 months and $307 million altogether thus far, shows Crunchbase.

    Playstudios, a three-year-old, Las Vegas-based maker of casual games for social platforms, has raised $20 million in Series C funding led by Jafco Ventures. Other, unnamed earlier investors also participated. The company has raised at least $28.7 million to date, shows Crunchbase.

    Quartet Medicine, a year-old, Cambridge, Ma.-based company that aims to develop treatments for chronic pain and inflammation, has raised $17 million in Series A funding led by Atlas Venture, with Novartis Venture Funds, Pfizer Venture Investment and Partners Innovation Fund joining the round.

    Reputation Institute, a 17-year-old, New York-based research and advisory organization focused on corporate reputation, has raised an undisclosed amount of funding from earlier investor Catalyst Investors.

    Urban Airship, a five-year-old, Portland, Or.-based company that makes so-called mobile relationship management software that allows marketers to more easily delive messages to their connected customers, has raised $12.1 million in Series D funding from earlier investors True Ventures, Foundry Group, and August Capital. The company has now raised $58.7 million altogether.

    YieldMo, a two-year-old, New York-based mobile ad startup, has raised $10 million in funding led by Timer Warner Investments, with participation from earlier backers Google Ventures and Union Square Ventures. The company has raised $22.1 million altogether.

    YouAppi, a three-year-old, Ra’anana, Israel-based company that makes engagement, acquisition and retention software for publishers and mobile apps, has raised $3 million in Series A funding from Glilot Capital Partners, 2B Angels and Flint Capital. The company has now raised $5 million to date.

    —–

    New Funds

    Maverick Capital, the 21-year-old, New York-based hedge fund firm, plans to launch its first venture-capital fund on Jan. 1, according to WSJ. Maverick was founded by Lee Ainslie, one of numerous prominent “Tiger Cubs” who worked for Julian Robertson’s Tiger Management earlier in his career. Tiger, along with Coatue Management, are among a growing number of hedge funds to jump into active startup investing in recent years.

    —–

    People

    California’s privacy laws have saved Kleiner Perkins Caufield & Byers firm from having to release potentially embarrassing information about former partner Ajit Nazre, in a discrimination lawsuit by a former partner Ellen Pao, reports Reuters. A judge ruled KPCB will be able to keep private any other harassment complaints about Nazre, partly because producing such complaints would hurt the privacy rights of other Kleiner employees.

    Sean Jacobsohn has joined Norwest Venture Partners as a principal. Jacobsohn was previously a venture partner at Emergence Capital Partners and, earlier, a vice president at the cloud collaboration company Hightail. In related news, Norwest, on Sand Hill Road, is now opening a San Francisco office.

    Jon Sakoda, who joined New Enterprise Associates in 2006 and co-manages the firm’s seed investment program, has been promoted from partner to general partner at the firm. Before joining NEA, Sakoda had cofounded the enterprise instant messaging company IMlogic, acquired by Symantec Corporation. StrictlyVC had talked signaling risk with Sakoda over lunch last month.

    Facebook CEO Mark Zuckerberg famously assigns himself annual self-improvement goals. In 2010, it was to learn to Mandarin, and judging by a 30-minute question-and-answer session yesterday at Tsinghua University in Beijing — which Zuckerberg did entirely in Mandarin — that year paid off. (Unsurprisingly, there’s still room for improvement. The Asia editor ofForeign Policy later characterized Zuckerberg’s Mandarin as “roughly at the level of someone who studied for two years in college, which means he can communicate like an articulate seven year-old with a mouth full of marbles.)

    —–

    Job Listings

    Castlight Health, the six-year-old, newly public company whose online application provides employees with personalized shopping tools for healthcare benefits, is looking for a VP of corporate development in San Francisco. (It’s probably worth mentioning that the company’s shares have been dropping like a spent rocket since its March IPO, but think of the upside.)

    —–

    Essential Reads

    Have we reached peak Google?

    Wired delves into Twitter’s audacious plan to infiltrate all your apps.

    —–

    Detours

    The latest in luxury travel: Moving in.

    A 26-year-old woman from Sichuan Province in China spent an entire week at KFC lamenting her failed relationship. Said the woman, “I hadn’t planned on staying there long, I just wanted some chicken wings.”

    Don DeLillo, the author of “White Noise,” reviews Taylor Swift, the artist of “White Noise.”

    —–

    Retail Therapy

    Now you can be the most fashion-forward lumberjack in the forest.

    Hemingwrite. We will take two, please.

    Connie

    ,

  • Boris Wertz Raises a New, Much Bigger Fund

    Boris WertzVersion One Ventures, the Vancouver-based fund of entrepreneur-turned-investor Boris Wertz, is taking the wraps off a $35 million early-stage fund today. That’s nearly twice the size of Wertz’s $20 million debut fund, closed in early 2012. Northleaf Venture Catalyst Fund and BDC Capital are the new fund’s anchor investors.

    As you might imagine, the extra capital will allow Wertz to write bigger checks. In a call yesterday, he said he now plans to make initial investments of between $500,000 and $750,000, up from $250,000 to $300,000, a shift that should allow him to lead more deals. The bigger pool should also enable Wertz to pour more follow-on funding into Version One’s existing portfolio, which right now includes the online cosmetics company Julep; the business intelligence platform Mattermark; and Kinnek, an online platform that brings together small businesses with suppliers.

    All told, said Wertz, he plans to invest his second fund in 20 to 25 companies. I asked him what else he’s planning for, particularly amid what feel like big shifts in the market.

    Congratulations on the your new fund. That’s quite a jump up in size.

    Thank you. We set out to raise $30 million and probably could have raised $40 million but didn’t want to make it larger. I’m still the single investing partner, and we think a good benchmark is $30 million to $35 million per partner, which is what you see at comparable funds like Floodgate.

    You say the collective value of Version One’s portfolio is now $600 million. Recognizing it’s early days, have any companies exited yet?

    No, angel investments I made prior to [creating Version One] have [been acquired] like Flurry [sold to Yahoo], but one rocket ship in our portfolio – [a consumer marketplace] that has raised an A and B round – hasn’t even announced [its funding publicly].

    More companies are waiting on their funding announcements. Why do you think that is?

    We have two companies in our portfolio that have raised [capital] and never announced. The entrepreneurs feel that they’re on to something and want to get solid traction and a head start before telling anybody else. It makes sense, especially if you have a product where you aren’t going to acquire users on StrictlyVC or TechCrunch and don’t need [the press] for branding purposes.

    You live in Vancouver but invest all around North America, including Silicon Valley. What are you seeing in terms of seed-stage valuations right now?

    Two-thirds to three-quarters of our deals are outside the Valley – in Seattle, Toronto, and New York. And those ecosystems have never gotten that crazy. But there’s definitely a little insecurity in the market, which is good, given that seed-stage valuations have continued to creep up over the last three or four years. I think we’re seeing a healthy correction of expectations on the part of both investors and entrepreneurs. Things can’t always go in one direction.

    When we last talked, in May, you were spending more time looking into digital healthcare, government “2.0” and bitcoin. Have you made any related bets yet?

    We have one digital healthcare investment, [Figure 1, a crowdsourced medical image library for health care professionals that VersionOne invested in last December], but the challenge in [backing another] is that it has blown up crazily in terms of valuations. Look at the on-demand doctor space. There are at least eight players, all of which were well-funded at crazy valuations. [The sector] ran away pretty quickly.

    As for bitcoin, we believe in the long-term potential, but we’re still forming an investing thesis around when is the right moment to invest.

    It must be challenging. I’m amazed by how many seriously smart people are divided over bitcoin.

    I’m in the middle. The technical platform is beautiful, and a decentralized system to record ownership makes a lot of sense for a lot of use cases. I think the real problem is that right now, there isn’t a killer use case. Payments in North America aren’t broken. I can use credit and debit cards or cash or PayPal. So people need to start focusing more on international payments and remittances, where bitcoin does make sense. The challenge is how to get into the markets that could use it the most – Brazil, Vietnam, Nigeria – and make it easy to spread. And there’s no clear path [to doing that], though we do believe some entrepreneurs will eventually figure it out.

    A prominent institutional LP recently said that right now could be an especially bad time to start investing a new fund based on traditional market cycles. Is that a concern of yours?

    Yes, there are cycles, but nobody can really predict them. You can only make your best investments given the environment and stay disciplined around valuations and your investment thesis and not get carried away by hype. The reality is that some vintages of funds will do better than others based on waves of new innovations or when valuations were really low. But it’s hard to predict beforehand and say 2014 or 2015 will be a terrible year for venture funds. Who knows? Timing and luck are involved in all of it, but if you focus on fundamentals and support your companies for the long term, you can hopefully smooth out your returns over time.

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

    Connie

    ,
    , , , ,

  • StrictlyVC: October 22, 2014

    Good Wednesday morning, everyone! (Psst, web visitors, this version of our a.m. newsletter is easier on the eyes.)

    —–

    Top News in the A.M.

    Uber drivers are staging protests today in front of Uber offices across the U.S. and in London over fares driven so low the drivers say they’re actually losing money now.

    The good news: Yahoo reported strong third-quarter results yesterday, with revenue up 1 percent over the third quarter of 2013, thanks in part to mobile revenue that’s up 17 percent from a year ago. The bad news if you’re an antsy Yahoo shareholder: CEO Marissa Mayer said the company is still deciding how to use its $43 billion in holdings in the Alibaba Group and Yahoo Japan. More on the numbers here from the New York Times. And, here, a rare-earnings day interview that Mayer gave the WSJ.

    —–

    Spikes Security Raises $11 Million to Stuff Your Browser Elsewhere

    Branden Spikes didn’t set out to become an entrepreneur. Straight out of high school, he jumped instead into work as a security consultant, eventually working at Elon Musk’s first company, Zip2, then at PayPal, then SpaceX, where, as the Musk’s fourth employee and CIO, Spikes was tasked with keeping the computers of “extremely brilliant Ph.D.’s with access to sensitive IP” from being hacked.

    Spikes also needed to ensure his boss had unfettered access to the Web while operating in a safe environment. (“You can imagine Elon Musk trying to get online and having problems. I’d have found myself fired if I messed that one up,” says Spikes with a laugh.)

    Spikes’s big idea — one he decided to spin into a standalone business in 2012 — is a technology that runs browser software on a separate server, catching nasty bits of malicious code that could otherwise make their way onto users’ laptops. The technology then streams a video of the browser to users’ computers so seamlessly that they don’t know the software is running elsewhere.

    The concept, called browser isolation, isn’t entirely new, and Spikes’s company, Spikes Security, isn’t the only one to offer it. In addition to going up against Authentic8, a Mountain View, Ca.-based startup backed by Foundry Group, two of Spikes’s biggest competitors are Citrix and Microsoft.

    The other companies’ execution leaves much to be desired, though, say Spikes, who calls browser isolation “pretty technically challenging and, if not done properly, really problematic and burdensome for the IT people deploying it and the actual people browsing the web.”

    A growing number of customers appears to agree with Spikes. Spikes Security already has more than two dozen large enterprises as clients, some of which are running the software through Spike Security’s data center, some of which are opting to run the software in their own data centers for privacy reasons. All are “helping us stretch the product and develop the technology at the right pace,” says Spikes.

    Investors like the vision of the 27-person, Los Gatos, Ca.-based company, too. In fact, the startup — which had originally raised $2 million from Javelin Venture Partners, Spikes himself, and other angel investors – is today announcing $11 million in new funding from Javelin, Benhamou Global Ventures, and Lakewood & Company.

    Spikes says the money will go a long way toward helping the company meet growing demand — which is but one of numerous challenges he’s learning to tackle as a first-time entrepreneur.

    In fact, Spikes says he now understands his former boss much better. “For many years, I was puzzled by Elon’s actions and decisions and disagreements, about why $5,000 for this or that purchase wasn’t wise, or why hiring this guy would have been a mistake or why firing this person was a good idea. Now, I find I understand them a lot more.”

    —–

    New Fundings

    B2X Care Solutions, a seven-year-old, Atlanta, Ga.-based company that creates software for handset makers and carriers so their customers can identify, report and fix problems with their devices, has raised $15 million in Series B funding led by previous investor Earlybird Venture Capital. (Earlybird and Grazia Equity had provided the company with an undisclosed amount of funding in 2012.) In related news, the company acquired India-based The Service Solutions (TSS), a company that provides managed customer care services. TechCrunch has more here.

    Benu Networks, a four-year-old, Billerica, Ma.-based company whose real-time subscriber management platform is used by fixed and mobile operators, has raised $27.7 million in Series C funding. Liberty Global Ventures and Arris Group participated in the round alongside earlier investors Spark Capital, Sutter Hill Ventures and Comcast Ventures. The company has now raised $59.3 million altogether, shows Crunchbase.

    CareSync, a three-year-old, Wesley Chapel, Fl.-based care coordination company whose app enables users, their families, and their care teams access, filter, and share health information, has raised $4.25 million in Series A funding led by Tullis Health Investors, Clearwell Group, CDH Solutions, and CareSync founder and CEO, Travis Bond.

    Crowdcare, a 2.5-year-old, Toronto, Ontario-based company that helps companies deliver automated tech support via mobile apps to subscribers, has raised $3.5 million in funding led by Extreme Venture Partners, with participation from earlier investors, including Mantella Venture Partners. Crunchbase shows the company had raised an undisclosed amount of funding in 2012.

    DOZ, a year-old, San Francisco-based marketing-as-a-service startup, has raised $1.5 million from Nexus Ventures, the French public bank Bpifrance, 500 Startups, Kima Ventures, Structure Capital and individuals.

    KnowRe, a four-year-old, New York-based company developing adaptive digital learning platforms around mathematics, has raised $6.8 million led by earlier investor SoftBank Ventures Korea, with participation from KTB Network Co. Partners Investment, SparkLabs Global Ventures, and other unnamed new investors.

    Lytics, a two-year-old, Portland, Or.-based digital marketing startup that sells software-as-a-service to marketers, has raised $7 million in new funding led by Comcast Ventures, with participation from earlier investors Rembrandt Venture Partners and Voyager Capital. Lytics had previously raised $2.2 million in seed funding. Venture Capital Dispatch has much more on the company here.

    MedRobotics, a three-year-old, Raynham, Ma.-based surgical products company that makes a robot-assisted flexible endoscopic platform, has raised $20 million from earlier, unnamed shareholders.

    Moogsoft, a 2.5-year-old, San Francisco-based company whose software detects and repairs outages that its customers’ IT monitoring systems can’t see, has added $3 million to its Series B round, capital that comes from Cisco Investments and an undisclosed public company. The company had initially closed its Series B round in late July, with $11.3 million in funding led by Wing Venture Capital, which was joined by earlier backers, including Redpoint Ventures. The newest capital infusion brings Moogsoft’s total funding to more than $23 million, it says.

    Navera, a five-year-old, San Francisco-based company that sells a cloud-based service for engaging and educating consumers about health-care choices, has raised $8 million in Series B funding led by Mohr Davidow Ventures with earlier investor Emergence Capital Partners participating. The company has raised $13.5 million to date, shows Crunchbase.

    Orchard Platform, a year-old, New York-based startup that links institutional investors with dozens of peer-to-peer platforms, including Lending Club and Prosper, has raised $12 million in Series A funding led by Spark Capital and Canaan Partners, along with roughly half a dozen prominent individuals from the financial services industry. They include former Morgan Stanley CEO John Mack; former Visa president Hans Morris; Capital One cofounder Nigel Morris; and PayPal cofounder Max Levchin.

    SnapLogic, a five-year-old, San Mateo, Ca.-based company whose software integrates cloud applications with applications that run inside enterprises, has raised $20 million in Series D funding led by Ignition Partners. Pharus Capital Management and H. Barton Asset Management also joined the round, alongside earlier investors Andreessen Horowitz and Triangle Peak Partners. The company has now raised $60 million altogether, it says.

    Tipalti, a four-year-old, Agoura Hills, Ca.-based cloud-based service that automates mass payouts, has raised $13 million in Series B funding led by Wicklow Capital.

    Tokopedia, a five-year-old, Jakarta, Indonesia-based e-commerce marketplace that allows individual vendors to set up shop, has raised $100 million in funding led by SoftBank Internet and Media, with participation from Sequoia Capital and earlier investor SB Pan Asia Fund. The company has raised four previous rounds of undisclosed sizes, including from East Ventures, Softbank Ventures Korea, and CyberAgent Ventures, shows Crunchbase. TechCrunch has more here.

    Unum Therapeutics, a newly formed, Cambridge, Ma.-based company that hopes to develop cellular immunotherapies to treat cancer, has raised $12 million in funding led by Fidelity Biosciences and Atlas Venture, with participation from Sanofi-Genzyme BioVentures. The Boston Globe has more here.

    Viamet Pharmaceuticals, a nine-year-old, Durham, N.C.-based company that develops antifungal agents, has raised $60 million in Series D funding from Brandon Point Industries and Woodford Investment Management. In July, Viamet filed for an IPO to raise up to $75 million. It withdrew its registration to go public earlier this week. Its earlier investors include Novartis Venture Fund, Lilly Ventures, Hatteras Venture Partners, Intersouth Partners, Lurie Holdings and Astellas Venture Management.

    —–

    New Funds

    Carmel Ventures, a 14-year-old, Tel Aviv, Israel-based early-stage venture firm, has closed its fourth fund with $194 million, capital it will use to invest in enterprise software, data center infrastructure, big data, cyber security, fintech, digital media and consumer applications companies. Carmel says it began investing out of the new fund in January and has already assembled five portfolio companies, including the content site PlayBuzz and the social games company LuckyFish. The firm’s LPs include returning and new investors, including the search giant Baidu; Ping-An, a China-based insurance company; and Qihoo360, known for its antivirus software. The firm’s six partners are Shlomo Dovrat, Avi Zeevi, Ori Bendori, Ronen Nir, Daniel Cohen and Itzik Avidor.

    Tallwave Capital, a year-old, Scottsdale, Az.-based outfit has raised a $13.2 million seed fund, money it will invest in increments of between $125,000 and $400,000 in early-stage consumer and enterprise businesses. In a news release, the firm said it focuses on software-as-a-service, mobile applications, digital media, ad technology and e-commerce.

    —–

    Exits

    Firebase, a three-year-old, San Francisco-based backend service that helps developers build real-time apps for iOS, Android and the web (as well as sync and store their data), has been acquired by Google for undisclosed terms. Firebase had raised roughly $7 million across two founds, from investors that include Union Square Ventures, Flybridge Capital Partners, Data Collective, Expansion Venture Capital, New Enterprise Associates, and Greylock Partners. TechCrunch has more here.

    Macheen, a four-year-old, Austin, Tx.-based mobile cloud application service provider, has been acquired by the mobile-device security provider Good Technology. Terms of the deal weren’t disclosed. Macheen had raised $34.4 million altogether, including from GemVentures, Mercury Fund, North Bridge Venture Partners, and Mike Maples, Sr.

    Seegrid, an 11-year-old, Pittsburgh, Pa.-based company that makes camera-guided vehicles, has filed for Chapter 11 protection. The company had raised at least four debt rounds, show SEC filings. More here.

    —–

    People

    As part of his settlement last year with the state Coastal Commission over his wedding at Big Sur, entrepreneur-investor Sean Parker is working on mobile app that will help users find access to California’s sometimes hard-to-locate public beaches, reports the San Jose Mercury News. Parker is using the commission’s data to build the app, which will belong to the commission. Sarah Christie, a spokesperson for the commission, calls the relationship an “example of lemons turning to lemonade.”

    —–

    Job Listings

    Facebook is looking to hire a manager of mobile partnerships. The job is in Menlo Park, Ca.

    —–

    Essential Reads

    Google quietly bought a startup in May for $120 million, turning a third of the company’s 70 employees into millionaires. Business Insider takes a look at the biggest New York exit that no one knows about.

    —–

    Detours

    San Francisco has two more Michelin-ranked three-star restaurants than it did last week. Check out a full list of the city’s starred venues here.

    Ben Bradlee, the legendary Washington Post editor, passed away yesterday at age 93. The Post has published his life in pictures.

    —–

    Retail Therapy

    SkyMaul 2: Where America Buys His Stuff.

    Connie

  • Spikes Security Raises $11 Million to Stuff Your Browser Elsewhere

    browser_thumbBranden Spikes didn’t set out to become an entrepreneur. Straight out of high school, he jumped instead into work as a security consultant, eventually working at Elon Musk’s first company, Zip2, then at PayPal, then SpaceX, where, as the Musk’s fourth employee and CIO, Spikes was tasked with keeping the computers of “extremely brilliant Ph.D.’s with access to sensitive IP” from being hacked.

    Spikes also needed to ensure his boss had unfettered access to the Web while operating in a safe environment. (“You can imagine Elon Musk trying to get online and having problems. I’d have found myself fired if I messed that one up,” says Spikes with a laugh.)

    Spikes’s big idea — one he decided to spin into a standalone business in 2012 — is a technology that runs browser software on a separate server, catching nasty bits of malicious code that could otherwise make their way onto users’ laptops. The technology then streams a video of the browser to users’ computers so seamlessly that they don’t know the software is running elsewhere.

    The concept, called browser isolation, isn’t entirely new, and Spikes’s company, Spikes Security, isn’t the only one to offer it. In addition to going up against Authentic8, a Mountain View, Ca.-based startup backed by Foundry Group, two of Spikes’s biggest competitors are Citrix and Microsoft.

    The other companies’ execution leaves much to be desired, though, say Spikes, who calls browser isolation “pretty technically challenging and, if not done properly, really problematic and burdensome for the IT people deploying it and the actual people browsing the web.”

    A growing number of customers appears to agree with Spikes. Spikes Security already has more than two dozen large enterprises as clients, some of which are running the software through Spike Security’s data center, some of which are opting to run the software in their own data centers for privacy reasons. All are “helping us stretch the product and develop the technology at the right pace,” says Spikes.

    Investors like the vision of the 27-person, Los Gatos, Ca.-based company, too. In fact, the startup — which had originally raised $2 million from Javelin Venture Partners, Spikes himself, and other angel investors – is today announcing $11 million in new funding from Javelin, Benhamou Global Ventures, and Lakewood & Company.

    Spikes says the money will go a long way toward helping the company meet growing demand — which is but one of numerous challenges he’s learning to tackle as a first-time entrepreneur.

    In fact, Spikes says he now understands his former boss much better. “For many years, I was puzzled by Elon’s actions and decisions and disagreements, about why $5,000 for this or that purchase wasn’t wise, or why hiring this guy would have been a mistake or why firing this person was a good idea. Now, I find I understand them a lot more.”

    Connie

    , , , ,

  • StrictlyVC: October 21, 2014

    Hi, happy Tuesday, everyone! (Web visitors, you can click here for an easier-to-read version of today’s email newsletter.)

    —–

    Top News in the A.M.

    Apple reported blow-out fourth-quarter results yesterday.

    Verizon, meanwhile, posted its third-quarter results, narrowly missing earnings expectations but showing strong customer growth.

    Yahoo is set to reports its third-quarter results today.

    —–

    Oh No You Didn’t, Facebook

    Yesterday, Facebook sued DLA Piper along with three other firms and nine lawyers who represented Paul Ceglia, a New York man who emerged in 2010 with claims that he was entitled to at least 50 percent of Facebook.

    Given that it’s nearly 2015, Facebook’s move comes as something of a surprise. Ceglia’s suit against Facebook was dismissed back in March by a federal judge amid clear evidence that his claims to Facebook were based on a “recently created fabrication.” More, two years ago, Ceglia was arrested and charged with mail and wire fraud for allegedly falsifying the contract and creating bogus emails to support his case. (His criminal trial is now scheduled for May.)

    Facebook’s festering ire at the firms that represented Ceglia is understandable to a point. Ceglia’s lawsuit and the questions it raised were a huge distraction before Facebook went public in 2012.

    Industry observers are probably cheering on Facebook, too, partly in hopes that law firms will think harder about bringing frivolous lawsuits.

    Still, Facebook’s rationale for pursuing these firms at this late date sounds a little vengeful. “We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable,” Facebook General Counsel Colin Stretch said in a statement given to reporters yesterday. “DLA Piper and the other named law firms knew the case was based on forged documents, yet they pursued it anyway, and they should be held to account.”

    Stretch might just as well have said, “DLA Piper and the other named law firms deserve an atomic wedgie, and we’re going to give them one to remember.”

    DLA Piper sent StrictlyVC a comment about the suit today. Written by Peter Pantaleo, DLA Piper’s general counsel, the firm calls the lawsuit “entirely baseless” and “filed as a tactic to intimidate lawyers from bringing litigation against Facebook. DLA Piper, which was not part of this case at its outset or its conclusion, was involved for 78 days. Facebook and Mr. Zuckerberg claim that they were damaged in those 78 days, yet a mere 10 months after DLA Piper withdrew from the case and while the litigation was still pending, Facebook went to market with an initial public offering that valued the company at $100 billion. Today, Facebook is worth $200 billion and Mr. Zuckerberg is among the richest people in the world. We will defend this meritless litigation aggressively and we will prevail.”

    Either way, a 2011 conversation we had with a corporate litigation attorney about Ceglia suggests that Facebook’s case against DLA Piper and the others probably isn’t a slam dunk.

    Generally speaking, this attorney explained, lawyers have to “ensure that there’s a good faith basis for the claims that they file on behalf of their clients. That doesn’t mean that they have to think that they necessarily will prevail, but there has to be some kind of factual basis, in their view, to provide some support for the allegations.”

    Presumably, DLA Piper didn’t know when it took the case that Ceglia fabricated the evidence to support his claims.

    We’re also guessing it will be hard to argue that Ceglia’s lawyers used uniquely reckless judgment in taking on the Ceglia case. In 2010, for example, DLA Piper decided to represent CNet founder Halsey Minor in a Chapter 11 proceeding despite Minor’s long history of stiffing service providers.

    DLA Piper subsequently dropped Minor eight months after engaging with him, but you see the point: if it were so easy to sue a law firm over its ne’er-do-well customers, we wouldn’t have lawyers.

    Facebook says its lawsuit is a matter of principle. We think it sounds heavy-handed. It also seems very much like another distraction that the company doesn’t need.

    —–

    New Fundings

    Bitnet Technologies, a 10-month-old, San Francisco-based digital commerce platform provider for bitcoin payments, has raised $14.5 million in Series A funding led by Highland Capital Partners. Other investors include Rakuten, Webb Investment Network, Bitcoin Opportunity Corp., Stephens Investment Management, Commerce Ventures and Buchanan Capital Management. Bitnet’s team is largely from the payment gateway company CyberSource and from Visa, which acquired CyberSource in 2010 for $2 billion.

    Bowery, a year-old, New York-based enterprise startup focused on simplifying the process of setting up, managing, and sharing development environments, has raised $1.5 million in seed funding from Google Ventures, Bloomberg Beta, RRE Ventures, Homebrew, Betaworks, SV Angel, BOLDstart Ventures, Magnet Agency, Deep Fork Capital, and angel investors Naveen Selvadurai and Ryan Holmes. The company had earlier raised an undisclosed amount of seed funding from General Catalyst Partners and First Round Capital.

    CAA, the 39-year-old, L.A.-based sports and talent agency, has agreed to a deal with the private equity firm TPG that sees the latter’s stake in CAA grow from 35 percent to 53 percent in exchange for roughly $225 million. Deadline Hollywood has more here.

    CloudCannon, a two-year-old, San Francisco-based company behind an easy-to-use content management system designed to help web designers and their clients work together more easily, has raised $500,000 in seed funding from individual investors. TechCrunch has more here.

    GoCatch, a three-year-old, Sydney, Australia-based taxi booking and payments app, has raised roughly $4 million (in U.S. dollars), from investors that include Square Peg, a venture firm backed by billionaire James Packer, along with numerous wealthy Australian families such as the Kahlbetzers, the Liberman family, and the Millner family. The Australian outlet BRW has more here.

    GrabTaxi, a two-year-old, Malaysia-based mobile application that assigns available cabs to nearby commuters using mapping and location-sharing technology, has raised $65 million in new funding — its third round of 2014.Tiger Global Management led the round, with participation from new investor Hillhouse Capital and previous investors Vertex Ventures, GGV Capital, and the Chinese travel giant Qunar. The company has now raised “approximately $90 million,” says TechCrunch. (Here’s a Bloomberg piece from June that profiles GrabTaxi’s founder, former HBS student Anthony Tan.)

    Intel Capital, the 23-year-old, Santa Clara, Ca.-based global corporate venture arm of Intel, announced last night that it has invested $28 million across five Chinese companies, including makers of wearables and Internet of things devices and components. They are: EyeSmart Technology, LeWa Technology, Shenzhen Fibocom Industrial Development, Shanghai Ailiao Information Technology, andGuangdong Appscomm Digital Technology. The outlet peHUB has more here.

    La Belle Assiette, a 1.5-year-old, Paris-based online marketplace for customers seeking out private chefs, has raised $1.7 million in seed funding, including from BlaBlaCar cofounder Nicolas Brusson; three founders of l’Atelier des Chefs (Europe’s largest cooking classes company); and Kima Ventures. The company had previously raised $500,000 in seed funding.

    Magic Leap, a three-year-old, Hollywood, Fla.-based still-stealth company that says its hardware and software will deliver “cinematic reality,” has officially closed on $542 million in Series B funding. (Recode had reportedlast week that the company was zeroing in on a $500 million round.) Investors include Google, Kleiner Perkins Caufield & Byers,Andreessen Horowitz, Obvious Ventures, Qualcomm and Legendary Entertainment.

    Mirantis, a four-year-old, Mountain View, Ca.-based OpenStack cloud vendor, has raised $100 million in Series B funding led by Insight Venture Partners, with participation from August Capital and earlier investors Intel, WestSummit Capital, Ericsson and SAP. The company has now raised $120 million altogether. GigaOm has more here.

    NuCurrent, a five-year-old, Chicago-based company that makes high-efficiency antennas for wireless power applications, has raised $3.48 million in Series A funding from Independence Equity, Hyde Park Angels, Harvard Business School Angels, and undisclosed corporate investor and earlier backers.

    Sequenta, a six-year-old, San Francisco-based biotech company whose technology detects minimal residual diseases, has raised an undisclosed amount of funding from Celgene Corp. and other, undisclosed strategic investors. The company had previously raised at least $41.5 million, including from Index Ventures, Mohr Davidow Ventures, and Foresite Capital, shows Crunchbase.

    Snowflake Computing, a two-year-old, San Mateo, Ca.-based cloud-based data warehousing company, has raised $26 million in Series B funding led by Redpoint Ventures, with participation from Wing Ventures and earlier investor Sutter Hill Ventures. The company has now raised roughly $50 million altogether. GigaOm has more here.

    STAQ, a two-year-old, New York-based ad tech firm that sells a collection, reporting, and integrations system that helps users view their campaigns, inventory, and audience data, has raised $2.5 million in Series A funding led by Genacast Ventures and Core Capital, with participation from earlier investors Kinetic Ventures, Revel Partners and The Hive. The company had previously raised $1.1 million in seed funding.

    StackIQ, an eight-year-old, La Jolla-based supplier of IT-automation technology to large businesses, has raised $6 million in Series B funding from new investors Grayhawk Capital, Keshif Ventures, DLA Piper and OurCrowd, along with earlier investors Anthem Venture Partners andAvalon Ventures. The company has raised at least $7.8 million to date, shows Crunchbase.

    Vomaris Innovations, a 10-year-old, Tempe, Az.-based regenerative medical device company that develops a microcurrent field generating wound dressing, has raised $5 million in new funding, shows an SEC filing. The company had previously raised $5 million in equity and $200,000 in debt, show earlier filings.

    WeGoLook, a four-year-old, Oklahoma City-based company that dispatches in-person “lookers” to verify claims made by Internet sellers about their products (including cars), has raised $1.75 million in Series A funding led by i2E, which was joined by Seedstep Angels; the company’s founders; and other, undisclosed investors.

    ZipLine Medical, a nearly eight-year-old, Campbell, Ca.-based medical device company that’s developing noninvasive surgical skin closure devices, has added $5.7 million to its Series C round, which initially closed in January of this year. China Materialia, a Shanghai-based venture firm, led the newest funding. The company’s earlier Series C investors includedRA Capital Management, XSeed Capital and Claremont Creek Ventures. The company has now raised $16 million to date, shows Crunchbase.

    —–

    New Funds

    Google Ventures has upped the size of its inaugural European fund from $100 million to $125 million, its managing partner, Bill Maris, said yesterday. More here.

    OneVentures, a 7.5-year-old, Sydney, Australia-based firm that makes early-stage bets on technology companies based in Australia, has raised more than $60 million for a $100 million fund it began raising back in March. The firm’s focus is wide-ranging, including healthcare, education, mobile, media, cloud computing and data, sensors and robotics, and “food security.” It looks for companies that are already making $5 million to $15 million in annual revenue.

    PureTech, a 10-year-old, Boston-based operating company that specializes in seed and early-stage investment in novel therapeutics, medical devices, and research technologies, has raised $55 million in new funding led by the U.K. investment manager Invesco Perpetual. FierceBiotech has more here.

    —–

    IPOs

    Connecture, a 15-year-old, Brookfield, Wi.-based company whose enterprise software is used to build health-insurance exchanges, has filedto raise up to $86.3 million in a public offering. Some of its biggest outside shareholders include Chrysalis Ventures, which owns 28.5 percent of the company; SSM Partners, which owns 20.2 percent; and LiveOak Equity Partners, which owns 10.6 percent.

    Workiva, a six-year-old, Ames, Ia.-based cloud-based data analytics company that helps companies collect, manage, report and analyze critical business data in real time, has filed to go public. One of its biggest outside investors is Bluestem, a Midwest private equity firm.

    —–

    Exits

    Crunchbase, the AOL-owned database of tech companies and people, could very well be spun off into its own standalone company, said AOL CEO Tim Armstrong yesterday at a TechCrunch conference, adding that while AOL would remain a majority stakeholder in the business, AOL would consider either funding a spin-off itself or taking outside capital.More here.

    BrightRoll, the 8.5-year-old, San Francisco-based cross-platform digital video advertising service, is in talks to be acquired by Yahoo, reports TechCrunch, which says that “term sheets have been signed” and that the price will likely be in the neighborhood of $700 million. Brightroll has raised $40.2 million over the years, including from Adams Street Partners, Scale Venture Partners, Comerica Bank, True Ventures, Trident Capital, KPG Ventures, Michael Tanne, Fabrice Grinda, Auren Hoffman and Jeff Clavier.

    Videoplaza, a London-based video supply-side platform, is being acquired or an undisclosed sum by the video distribution and analytics platform Ooyala (itself now owned by Australian telco Telstra). More here.

    —–

    People

    At the London-based TechCrunch Disrupt conference yesterday, AOL CEO Tim Armstrong squelched recent rumors suggesting that Yahoo and AOL might merge, saying that of a 30- to 40-page presentation he’d just prepared for his board about AOL’s 2015 plans, “I don’t think Yahoo is mentioned once in that deck.”

    Venture capitalist Jim Breyer says startup founders should raise money right now if they can, given the volatility of the public markets. As he tells Bloomberg: “I encourage our best companies, which believe they don’t need to raise cash, to do so opportunistically.” Breyer points to the media company Legendary Entertainment — which raised $250 million at a multibillion-dollar valuation this month led by SoftBank, Fidelity Investments, and Morgan Stanley — as one portfolio company that agreed with his thinking, adding: “A company is better off with 18 months of cash in the bank.”

    Oracle billionaire Larry Ellison owns a $300 million Hawaiian paradise, and Business Insider takes readers on a tour of it.

    Maha Ibrahim, a general partner at Canaan Partners, tells the Silicon Valley Business Journal she spent a decade trying to ignore the topic of gender in venture capital, but no longer. “At Canaan, we have two female general partners. We have six female investor professionals (including GPs), and the great thing is that 20 percent of the companies that we’ve invested in . . . were founded by females. So diversity is really important to us, and we believe that it starts by leading by example. We might as well start doing it ourselves.”

    —–

    Happenings

    The Post.Seed Conference is coming up in San Francisco on December 2, and it will feature an impressive line-up of investors to speak on a wide range of early-stage financing issues, including Chris Dixon, Paul Martino, Keith Rabois, Naval Ravikant, Ryan Sarver, Semil Shah, Hunter Walk, Brandon Zeuner, and many others. (I’ll be there, too, moderating a panel.) You can sign up here.

    —–

    Essential Reads

    Humanity’s last great hope is venture capitalists, argues the WSJ.

    —–

    Detours

    Dating versus married: How text messages change over time.

    Hoverboards? We’re not there yet.

    A somewhat surprising look into a social network for doctors, where one popular post is “guess the diagnosis.” (Doctors: They’re funny and awful, just like us!)

    —–

    Retail Therapy

    James Bond’s Lotus Esprit Submarine. Elon Musk owns one. Now you can, too.

    Connie

    ,

  • Oh No You Didn’t, Facebook

    wedgieYesterday, Facebook sued DLA Piper along with three other firms and nine lawyers who represented Paul Ceglia, a New York man who emerged in 2010 with claims that he was entitled to at least 50 percent of Facebook.

    Given that it’s nearly 2015, Facebook’s move comes as something of a surprise. Ceglia’s suit against Facebook was dismissed back in March by a federal judge amid clear evidence that his claims to Facebook were based on a “recently created fabrication.” More, two years ago, Ceglia was arrested and charged with mail and wire fraud for allegedly falsifying the contract and creating bogus emails to support his case. (His criminal trial is now scheduled for May.)

    Facebook’s festering ire at the firms that represented Ceglia is understandable to a point. Ceglia’s lawsuit and the questions it raised were a huge distraction before Facebook went public in 2012.

    Industry observers are probably cheering on Facebook, too, partly in hopes that law firms will think harder about bringing frivolous lawsuits.

    Still, Facebook’s rationale for pursuing these firms at this late date sounds a little vengeful. “We said from the beginning that Paul Ceglia’s claim was a fraud and that we would seek to hold those responsible accountable,” Facebook General Counsel Colin Stretch said in a statement given to reporters yesterday. “DLA Piper and the other named law firms knew the case was based on forged documents, yet they pursued it anyway, and they should be held to account.”

    Stretch might just as well have said, “DLA Piper and the other named law firms deserve an atomic wedgie, and we’re going to give them one to remember.”

    DLA Piper sent StrictlyVC a comment about the suit today. Written by Peter Pantaleo, DLA Piper’s general counsel, the firm calls the lawsuit “entirely baseless” and “filed as a tactic to intimidate lawyers from bringing litigation against Facebook. DLA Piper, which was not part of this case at its outset or its conclusion, was involved for 78 days. Facebook and Mr. Zuckerberg claim that they were damaged in those 78 days, yet a mere 10 months after DLA Piper withdrew from the case and while the litigation was still pending, Facebook went to market with an initial public offering that valued the company at $100 billion. Today, Facebook is worth $200 billion and Mr. Zuckerberg is among the richest people in the world. We will defend this meritless litigation aggressively and we will prevail.”

    Either way, a 2011 conversation we had with a corporate litigation attorney about Ceglia suggests that Facebook’s case against DLA Piper and the other firms probably isn’t a slam dunk.

    Generally speaking, this attorney explained, lawyers have to “ensure that there’s a good faith basis for the claims that they file on behalf of their clients. That doesn’t mean that they have to think that they necessarily will prevail, but there has to be some kind of factual basis, in their view, to provide some support for the allegations.”

    Presumably, DLA Piper didn’t know when it took the case that Ceglia fabricated the evidence to support his claims.

    We’re also guessing it will be hard to argue that Ceglia’s lawyers used uniquely reckless judgment in taking on the Ceglia case. In 2010, for example, DLA Piper decided to represent CNet founder Halsey Minor in a Chapter 11 proceeding despite Minor’s long history of stiffing service providers.

    DLA Piper subsequently dropped Minor eight months after engaging with him, but you see the point: if it were so easy to sue a law firm over its ne’er-do-well customers, we wouldn’t have lawyers.

    Facebook says its lawsuit is a matter of principle. We think it sounds heavy-handed. It also seems very much like another distraction that the company doesn’t need.

    Updated to include a statement from DLA Piper.

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

    Connie

    , ,

  • StrictlyVC: October 20, 2014

    Good morning, everyone! Hope your Monday is off to a brilliant start. (Web visitors, here’s an easier-to-read version of today’s newsletter.)

    —–

    Top News in the A.M.

    Yahoo CEO Marissa Mayer will detail her plans to turn around the company tomorrow when it shares its third-quarter earnings, says the WSJ.

    —–

    David Pottruck on His New Book, His Bets, and Bitcoin

    The first time I met David Pottruck, it was 1999 and he was co-CEO of the high-flying discount brokerage Charles Schwab, a title he’d share for five years with founder Charles Schwab before becoming the sole CEO of the company in January 2003.

    Eighteen months later, the company — which Pottruck had pushed into the Internet age and that struggled after the dot com crash — ousted him in a decision that still stings, though Pottruck will tell you the company made the right decision.

    A new book by Pottruck captures much of that experience. It also features interviews with a dozen others who’ve led organizations through periods of dramatic change, including Intel President Renée James; eBay CEO John Donahoe; JetBlue CEO David Barger; and San Francisco Giants CEO Larry Baer. I caught up with Pottruck last week to learn more about the book (which hits bookstores today), and where he’s focusing his energy now.

    You spend a lot of time in New York these days. Have you moved there?

    I’m still in San Francisco, but I have an apartment in New York and I’ve been spending more and more time there for personal and business reasons.

    Tell us about your business interests. After leaving Schwab, you formed an investment firm called Red Eagle Ventures. How would you describe its mission?

    After I left Schwab, I decided the smartest thing to do was work for myself and invest in early-stage companies and see if I could add value as a mentor, as a coach to CEOs.

    Financial services CEOs?

    For a long time, I stayed away from financial services. I wanted to do other things, learn about new industries. So I spent a couple of years working on a startup airline called Eos Airlines that ultimately didn’t make it. The idea was to fly [a high-end service] from New York to London, but while people loved it, the economics were challenging and when oil spiked to $150 per barrel for a few months [it killed the business].

    Are you still interested in disrupting the airline industry?

    No, I’d never invest in another airline. It’s a terrible industry. It’s like Warren Buffett says, if you want a small fortune, start with a large fortune and invest in an airline.

    Where are you investing then?

    I realized I should look for something that I knew about and would enjoy, and I became a founding investor in and chairman of Hightower, a fast-growing, very profitable, seven-year-old wealth management firm. It now has 30 different locations around the U.S., around 300 employees, and almost $100 million in revenue. I’m also the chairman and a large investor in CorpU, a leadership development business that launched a few years ago and whose revenue is getting into double digit millions now.

    So you like making concentrated bets. Are you ever tempted to pick up the pace of your investing?

    No, negotiating term sheets, trying to dig into whether or not a business is something to get involved with or not – I hate every aspect of it. I’m an operator. Strategic, tactical, and leadership issues are what fascinate me. That’s what I like to think and write about.

    Your new book focuses on breakthrough change. How interested are you in the many changes happening in financial services? What do you make of bitcoin specifically?

    If you look at it, it’s like gold, whose value is in the eye of the beholder. Gold has very little real tangible value. It’s a shiny metal. But it goes up and down because it’s considered a store of value. Bitcoins are like that that. They’re simply digits, and if the public believes them to be a store of value, then I think they are. But in my mind, it’s an extremely risky currency, if you even want to call it that.

    People like the whole idea of a currency that’s not backed by a government, but governments play a key role in ensuring that currencies have a stable value. It doesn’t always work out that way, but bitcoin doesn’t have anybody doing that. I mean, who is accountable? The answer is nobody. Nobody has raised their hand to say, “I’m behind this.” I think it’s nuts.

    You spent 20 years at Schwab. Are you still in touch with Charles Schwab?

    I had an amazing career because Charles Schwab the man gave me that opportunity. He supported me and promoted me and got behind me when I made idiotic, adolescent mistakes. I wish my last days had ended differently, but the company needed different leadership at the time, and Chuck and I continue to have a very nice relationship.

    —–

    New Fundings

    Atavist, a four-year-old, Brooklyn-based digital startup and multiplatform book publishing company, has raised $2 million in debt, shows an SEC filing. The company had previously raised roughly $3.4 million in equity, show earlier filings.

    Cazena, a months-old, Acton, Ma.-based big data company founded by former Netezza executives, has raised $8 million in funding from Andreessen Horowitz and Northbridge Venture Partners. TechCrunch has more here.

    CinePapaya, a two-year-old, Lima, Peru-based movie ticketing company, has raised $2 million in funding from the Brazilian Internet conglomerate Movile. The company has raised at least $2.7 million to date, shows Crunchbase, which lists 500 Startups as one of its earlier investors. TechCrunch has more here.

    MediaHound, a three-year-old, Culver City, Ca.-based online platform that helps users discover, compare, and share film and TV content, has raised $4.5 million in Series A funding from undisclosed investors.

    Metail, a six-year-old, London-based online garment-fit visualization company, has raised $12 million in funding led by the garment manufacturer TAL Group. The company has raised $19.5 million altogether, shows Crunchbase, which lists New World Private Equity as an earlier backer.

    Nousdecor, a two-year-old, San Mateo, Ca.-based home decorating startup, has raised $2.1 million in seed funding led by Kathy Clark, daughter of legendary entrepreneur-investor Jim Clark and former wife of YouTube cofounder Chad Hurley. Recode has more here.

    Recurly, a four-year-old, San Francisco-based pay-as-you-go subscription billing platform, has raised $12 million in Series B funding led byDevonshire Investors (the private investment firm affiliated with Fidelity Investments), with participation from Greycroft Partners and earlier investors Polaris Partners and e.ventures. The company has now raised $19.6 million altogether.

    Urgent.ly, a year-old, Sterling, Va.-based company behind a roadside assistance app and service, has raised $1.2 million in seed funding led by Select Venture Partners, with earlier investors Blu Ventures and CIT Gap Funds participating. The company has raised $1.8 million to date. TECH Cocktail DC has more here.

    Viableware, a four-year-old, Kirkland, Wa.-based company that makes software and hardware, including a digital bill folder that accepts credit or debit cards at diners’ tables, has raised $2 million in equity and debt in a round that’s targeting $10 million, shows an SEC filing. The company had previously raised $7.5 million, shows Crunchbase.

    Xplenty, a 3.5-year-old, Tel Aviv, Israel-based big data cloud platform that promises to make data processing easier for a broader array of business professionals, has raised $3 million in Series A funding from Magma Ventures and the Russian venture capital firm Waarde Capital.

    —–

    IPOs

    Neothetics, a seven-year-old, San Diego-based specialty pharmaceutical company, has filed to raise up to $63.3 million in an IPO. Its biggest outside shareholders include Alta Partners, Domain Associates, and RMI Investments.

    Zayo Group Holdings, a seven-year-old, Denver-based dark fiber company, saw its shares, priced at $19 apiece, rise nearly 16 percent in their stock market debut Friday.

    —–

    People

    Investor Marc Andreessen announced on Twitter this morning that he’s stepping off the board of eBay in advance of its split from PayPal. Writes Andreessen: “After 6 years of service + completed decision to split, I’ve decided now is a good time to step off the eBay Board of Directors. It’s been an absolute privilege to serve with [CEO] John [Donahoe], [fellow board member] Pierre [Omidyar], and team, and I could not be more proud of what we’ve accomplished.”

    In other Marc Andreessen news, New York magazine has just published a must-read interview with him, in which he’s asked his perspective on everything from diversity in Silicon Valley to global income inequality to whether, given his growing power, anyone ever dares tell him his ideas are dumb. Andreessen’s response: “Every morning, I wake up and several dozen people have explained to me in detail how I’m an idiot on Twitter, which is actually fairly helpful.”

    Michael Arrington, Ron Conway, Ron Palmeri, Brian Pokorny, California’s Lieutenant Governor Gavin Newsom, and star quarterback-turned investor Joe Montana were among those spotted at a Bruno Mars concert last week to benefit UCSF Benioff Children’s Hospitals. You can check out some photos here, care of society photographer Drew Alitzer.

    Last week, Stephen Colbert complained on his show that Google has his height wrong, telling CEO Larry Page, “Fix it, or I will fix you, Page.” Google was up for the challenge.

    —–

    Jobs

    North Atlantic Capital, a venture firm focused on later-stage deals, is looking for an associate. The job is in Portland, Me.

    —–

    Essential Reads

    Inside Pinterest: The coming ad colossus that could dwarf Twitter and Facebook.

    Is Google starting to wield too much power in Washington?

    The first two industrial revolutions ultimately benefited everyone. The digital one may prove far more divisive, argues the Economist.

    —–

    Detours

    The fight over the Bahia 180,000-carat emerald.

    Scientific evidence that self-promoters underestimate how annoying they can be.

    Your definitive argument for a pet-friendly office.

    —–

    Retail Therapy

    A real light meter, for your iPhone photos.

    Laplock, the app that alerts you when someone unplugs your power cord.

    Connie

  • Former Schwab CEO Dave Pottruck on His New Book, His Bets, and Bitcoin

    david pottruckThe first time I met David Pottruck, it was 1999 and he was co-CEO of the high-flying discount brokerage Charles Schwab, a title he’d share for five years with founder Charles Schwab before becoming the sole CEO of the company in January 2003.

    Eighteen months later, the company — which Pottruck had pushed into the Internet age and that struggled after the dot com crash — ousted him in a decision that still stings, though Pottruck will tell you the company made the right decision.

    A new book by Pottruck captures the experience. It also features interviews with a dozen others who’ve led organizations through periods of dramatic change, including Intel’s president Renée James; eBay CEO John Donahoe; JetBlue CEO David Barger; and San Francisco Giants CEO Larry Baer. I caught up with Pottruck last week to learn more about the book (which hits bookstores today), and where he’s focusing his energy now.

    You spend a lot of time in New York these days. Have you moved there?

    I’m still in San Francisco, but I have an apartment in New York and I’ve been spending more and more time there for personal and business reasons.

    Tell us about your business interests. After leaving Schwab, you formed an investment firm called Red Eagle Ventures. How would you describe its mission?

    After I left Schwab, I decided the smartest thing to do was work for myself and invest in early-stage companies and see if I could add value as a mentor, as a coach to CEOs.

    Financial services CEOs?

    For a long time, I stayed away from financial services. I wanted to do other things, learn about new industries. So I spent a couple of years working on a startup airline called Eos Airlines that ultimately didn’t make it. The idea was to fly [a high-end service] from New York to London, but while people loved it, the economics were challenging and when oil spiked to $150 per barrel for a few months [it killed the business].

    Are you still interested in disrupting the airline industry?

    No, I’d never invest in another airline. It’s a terrible industry. It’s like Warren Buffett says, if you want a small fortune, start with a large fortune and invest in an airline.

    Where are you investing then?

    I realized I should look for something that I knew about and would enjoy, and I became a founding investor in and chairman of Hightower, a fast-growing, very profitable, seven-year-old wealth management firm. It now has 30 different locations around the U.S., around 300 employees, and almost $100 million in revenue. I’m also the chairman and a large investor in CorpU, a leadership development business that launched a few years ago and whose revenue is getting into double digit millions now.

    So you like making concentrated bets. Are you ever tempted to pick up the pace of your investing?

    No, negotiating term sheets, trying to dig into whether or not a business is something to get involved with or not – I hate every aspect of it. I’m an operator. Strategic, tactical, and leadership issues are what fascinate me. That’s what I like to think and write about.

    Your new book focuses on breakthrough change. How interested are you in the many changes happening in financial services? What do you make of bitcoin specifically?

    If you look at it, it’s like gold, whose value is in the eye of the beholder. Gold has very little real tangible value. It’s a shiny metal. But it goes up and down because it’s considered a store of value. Bitcoins are like that that. They’re simply digits, and if the public believes them to be a store of value, then I think they are. But in my mind, it’s an extremely risky currency, if you even want to call it that.

    People like the whole idea of a currency that’s not backed by a government, but governments play a key role in stabilizing currencies and ensuring they have a stable value. It doesn’t always work out that way, but bitcoin doesn’t have anybody doing that. I mean, who is accountable? The answer is nobody. Nobody has raised their hand to say, I’m behind this. I think it’s nuts.

    You spent 20 years at Schwab. Are you still in touch with Charles Schwab?

    I had an amazing career because Charles Schwab the man gave me that opportunity. He supported me and promoted me and got behind me when I made idiotic, adolescent mistakes. I wish my last days had ended differently, but the company needed different leadership at the time, and Chuck and I continue to have a very nice relationship.

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

    Connie

    ,

  • StrictlyVC: October 17, 2014

    Hi, everyone, no column today — busy Thursday — but we hope you have a terrific weekend! See you back here Monday. (Web visitors, for an easier-to-read version of today’s email, click here.)

    —–

    Top News in the A.M.

    Apple introduced the newest version of its flagship tablet yesterday, and with a Touch ID fingerprint sensor and a dramatically thinner form factor, it looks like a winner, reports the Verge.

    Yesterday, CBS announced its own, immediately available Hulu-like streaming video service, just one day after Time Warner’s HBO announced it would start selling a version of HBO via the Internet next year. Showtime, a CBS property, isn’t part of the package yet, but it’s coming, says the company.

    Google reported its third-quarter earnings yesterday, revealing a 20 percent jump in revenue to $16.5 billion. Still, analysts worry that its search advertising business is starting to slow and that it has yet to nail its mobile ad strategy.

    Users of the anonymous social media app Whisper might not be so anonymous after all. According to explosive allegations against the company in the Guardian yesterday, Whisper can and sometimes does track the location of users via GPS or their smartphone IP addresses, even when they’ve opted out of the service’s geolocation feature. Says the report: “When Guardian reporters visited Whisper last month, [Whisper’s editor in chief, Neetzan] Zimmerman and another executive said that when they wanted to establish the location of individual users who are among the 20 percent who have opted out of geolocation services, they simply asked their technical staff to obtain the ‘latitude and longitude’ of the phones they had used.” The Guardian also reports that Whisper’s “threshold” for turning over users’ identities to law enforcement officials is lower than at other tech companies. Zimmerman has called the report “a pack of vicious lies.” But the Guardian has published a second piece this morning reiterating that the “evidence is clear.”

    —–

    New Fundings

    Arago, a 19-year-old, Frankfurt, Germany-based company that develops artificial intelligence software to replace information-technology workers, has raised $55 million from KKR in exchange for a minority stake in its business. The WSJ has more here.

    Idibon, a two-year-old, San Francisco-based company whose software helps enterprises analyze natural language in emails and less structured data, has raised $5.5 million in Series A funding, including from Altpoint Ventures, Morningside Ventures, Samsung Corp., Inventec Corp., and earlier investor Khosla Ventures. The company has raised $6.9 million to date, shows Crunchbase.

    Limelight Health, a months-old, Redwood City, Ca.-based company that provides a mobile-based quote service for health insurance agents, has raised an undisclosed amount of seed funding from the accelerator program Launchpad Digital Health.

    Mailcloud, a year-old, London-based service that promises to organize users’ existing email accounts into easily digestible folders and timelines, has raised $1.8 million in seed funding led by Octopus Investments, with Bessemer Venture Partners, Kima Ventures, Seedcamp, and a long list of angel backers participating. The company has now raised $2.8 million altogether.

    MedAvail Technologies, an eight-year-old, Toronto-based startup that makes automated, drug-dispensing kiosks that can release medication with a pharmacist’s approval, has raised $30 million in Series C funding led by Pura Vida Investments, Deerfield Management Company andAdage Capital Management, with participation from earlier backers Redmile Group, Walgreens, and Alliance Boots. The company has now raised at least $37.1 million to date, shows Crunchbase.

    OneEnergy Renewables, a five-year-old, Seattle-based maker of distributed, utility-scale solar photovoltaic projects, has raised $5 million in Series B funding led by Ecosystem Integrity Fund, with participation from earlier investors, including members of the Seattle-based cleantech angel group, Element 8.

    Paintzen, a 1.5-year-old, New York-based on-demand painting services platform for homeowners and businesses, has raised $1.81 million in seed funding from Lerer Hippeau Ventures, Nextview Ventures, Quotidian Ventures, Angelpad and Barbara Corcoran. The company passed through the AngelPad accelerator program last spring.

    Technisys, an 18-year-old, Miami-based startup that powers Latin American banks delivering services to people via mobile, ATMs, and online, has raised $13 million in Series B funding from Intel Capital, Alta Venture, KaSZeK Ventures, Endeavor Catalyst and existing investor Holdinvest, which had previously invested $1 million in the company. Venture Capital Dispatch has the story here.

    Waterline Data Science, a 10-month-old, Mountain View, Ca.-based company that automates some of the work of finding data in Hadoop, has raised $7 million in funding from Menlo Ventures, which incubated the company, and Sigma West. Other investors include James Markarian, currently an entrepreneur in residence at Khosla Ventures; Anthony McCusker, a partner at Goodwin Proctor; and Deep Nishar, senior vice president of products and user experience at LinkedIn. Venture Capital Dispatch has more here.

    —–

    New Funds

    Canaan Partners, the 27-year-old, Menlo Park, Ca.-based venture firm, made it official yesterday, announcing that it has closed on $675 million for its 10th fund, beating its $600 million target — the same amount it raised for its ninth fund in 2012 — by a wide margin.

    Shenzhen Co-Win Venture Capital Investments, a 14-year-old, Shenzhen, China-based firm, has held a $75 million first close for its first U.S. dollar fund, according to China Money Network. The fund, whose LPs include Singapore’s Oversea-Chinese Banking Corp., is targeting a final close in the neighborhood of $150 million. The company manages nine other funds, mostly denominated in RMB.

    —–

    IPOs

    Atara Biotherapeutics, a two-year-old, Brisbane, Ca.-based company that’s developing therapies for muscle wasting conditions, kidney disease and cancer, made its debut on the Nasdaq yesterday and it wasn’t great but it wasn’t a disaster, either. After pricing the stock at $11 per share — below the $14 to $16 range that the company had initially estimated — Atara, which made $55 million from the IPO, saw its shares close at $10.65.

    Zayo Group Holdings, a seven-year-old, Denver-based dark fiber company, priced its IPO last night at $19 a share, below its expected $21 to $24 price range. It begins trading today. The WSJ has much more here about its prospects.

    You’ve already read that Box and Good Technology are likely delaying their public market debuts until next year because of current market conditions. Now others, including the online-dating site Zoosk and the Internet domain marketplace GoDaddy, are also contemplating pushing their deals into 2015, reports Bloomberg.

    —–

    People

    Yahoo’s new head of sales, Kevin Gentzel, is seen as an important hire for the company, and everyone is already gossiping about whether or not he’ll fit in.

    Bill Wafford has left Walgreen Co., where he led the company’s in-house venture capital and growth equity investment business, says Fortune. Wafford had joined the organization in 2009. Earlier in his career, he was a consultant at Archstone Consulting.

    —–

    Job Listings

    Yesterday, we told you that Google Capital is looking for an associate. Google’s Energy & Sustainability team is also looking for help, in the form of an electricity market specialist.

    —–

    Essential Reads

    Apple has built a SIM card that let’s users switch between AT&T, Sprint, and T-Mobile.

    Tagged, a social-networking site that has struggled to attract users and boost revenue since its founding a decade ago, is changing its name and trying a new approach, reports the WSJ. The company, now called if(we), plans to develop a variety of new mobile and social apps.

    —–

    Detours

    Can enough exercise make up for junk food?

    Threats to Americans, ranked by actual threat instead of media hype.

    Mountaintop cube lodge.

    An artist puts a Sharpie to good use.

    —–

    Retail Therapy

    The Ninja Suit. It “won’t make you better at karate. It won’t make you invisible at night. It doesn’t even come with any specially designed pockets for ninja vanish pyrotechnics.” But it will keep you warm and toasty. (Also, it comes in four colors.)

     

     

    Connie

StrictlyVC on Twitter