StrictlyVC: December 15, 2014

Hi, good Monday morning, everyone!

Before we dive into the news, we’re extremely excited to announce StrictlyVC’s inaugural “Insider” series event on Thursday, February 12th, in the elegant gallery space of Next World Capital, the San Francisco-based expansion-stage firm with ties to Europe.

The early evening program will feature, among others, AngelList cofounder Naval Ravikant, Khosla Ventures partner Keith Rabois, and Strava CEO and cofounder Mark Gainey. We’ll also have yummy hors d’oeuvres and drinks and a very cool bonus for attendees that we’ll be able to disclose shortly.

Space is limited. Tickets are available on a first-come, first-serve basis right here. If you’re interested in co-sponsoring the event, let’s talk!

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Top News in the A.M.

Sony Pictures Entertainment warned media outlets yesterday against using the mountains of corporate data revealed by hackers who raided the studio’s computer systems.

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Erin Glenn, Alphaworks’s New CEO, on Waiting for the SEC

Any new CEO has a lot to contend with, like getting to know employees and clarifying the business’s strategy. Erin Glenn, who recently joined the New York-based crowdfunding platform Alphaworks, has to worry about something else, too: the SEC.

Launched by Betaworks in February of this year, Alphaworks is a white label platform that obtains stakes in companies via seven venture “sponsors” that leave open between $100,000 and $250,000 of certain startups’ rounds. The companies then sell the equity directly to their own “communities,” in turn making those customers even more loyal.

Glenn — who spent the previous four years as CFO of the gaming company Kixeye — sees a day when the model is used across numerous industries, but Alphaworks’s clients so far have been consumer-facing Internet companies with impassioned members.

Gimlet Media, a New York-based podcasting company, is a prime example. Earlier this fall, when the company was looking to top off roughly $1 million in venture funding, it agreed to crowdsource some of the round to its listeners. Alphaworks’s nine employees sprang into action, posting a deal page for Gimlet, reformatting its pitch deck, helping gather audio testimonials and, not last, helping coordinate media coverage to drive interest in the campaign.

The plan worked. Gimlet’s $200,000 crowdfunding campaign was fully subscribed within three hours. (In fact, the company wound up accepting $275,000.) Alphaworks is now represented on Gimlet’s cap table as a special purpose vehicle whose investors have delegated their voting, follow-on, and information rights to Alphaworks.

Still, not everyone who wanted to back Gimlet could — not even close, says Glenn, who estimates that just 25 percent of those who began the registration process were able to complete it. The others didn’t qualify as accredited investors. And until the SEC finalizes a key rule in the now two-year-old JOBS Act that was designed to let small businesses raise money from virtually anyone over the Internet, the non-accredited will remain locked out of the process. (As recently as last week, the agency’s chair, Mary Jo White, suggested it’s in no rush to make binding decisions about the rule, called Title III.)

“It’s frustrating,” says Glenn of the continued delays. “There’s a concern about ‘frothiness’ in the market right now. But in a hot market or a down market, the timing is always going to be difficult.”

In the meantime, Alphaworks has a uniquely challenging mandate. While other crowdfunding platforms cater to wealthy investors in search of investment opportunities, Alphaworks’s focus on turning a company’s fans into owners means it’s catering to very different end users. Not only do many of them lack the financial muscle required currently by the SEC, but some need to be educated on startup investing. (Indeed, Alphaworks, which is backed by $1.5 million from Betaworks, SV Angel, and Lerer Hippeau Ventures, has organized just four campaigns to date.)

Glenn — who says that Alphaworks is sticking to its original mission — isn’t discouraged. As far as she’s concerned, its patience today will pay big dividends later.

She notes, for example, that Gimlet saw nearly triple the demand for what it raised, taking into account the roughly 75 percent of registrants who were forced to abandon the process along the way. “That kind of demand is a strong signal for Gimlet to talk about,” says Glenn. “But it should also be a signal to the SEC. People want to participate in the growth of their favorite companies. They also want to be responsible for their own financial destiny.”

And Alphaworks, she suggests, will be waiting to help them.

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New Fundings

Beactica, an eight-year-old, Uppsala, Sweden-based drug discovery company, has raised an undisclosed amount of funding led by Almi Invest, with participation from other investors, including UNIONEN and Uppsala University Holding.

Carwow, a four-year-old, London-based online platform for buying new cars in the U.K., has raised £4.6 million ($7.2 million) in Series A funding led by Balderton Capital, with participation from Episode 1 Ventures and Samos Investments. The company had previously raised £1.3 million ($2 million) in February this year from the same group of investors.

Hi.Q, a 2.5-year-old, Mountain View, Ca.-based company whose app tests users’ health knowledge through quizzes and by competing with others, has raised $5.5 million in seed funding led by CRV, with participation from Greylock Partners, Menlo Ventures, First Round Capital, Rock Health and Western Technology Investments. Hi.Q was founded by Munjal Shah, who sold his last company, the visual search engine Like.com, to Google for a reported $100 million in 2010. Venture Capital Dispatch has more here.

iFit, a two-year-old, Taiwan-based online fitness and weight loss community, has raised a $3 million in Series A funding led by Cherubic Ventures, with participation from Yuan-jin Capital, Sino Strategy Group,Alan Chien, and Ming-zhe Ou, the former general manager of Lenovo Taiwan. The company had previously raised $900,000 in seed funding. TechCrunch has more here.

The parent company of Midea, a 46-year-old, Shenzhen, China-based home appliance firm, has sold a 1.29 percent stake in the business to the smartphone giant Xiaomi for roughly $205 million. TechCrunch has more here.

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New Funds

New York state is launching a $50 million fund to back to regional startups. The New York State Innovation Venture Capital Fund is expected to leverage at least $100 million in private capital to support high-growth areas, including advanced materials, clean technology, life sciences/biotechnology and information technology, reports Newsday.

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IPOs

Hortonworks, the big data software provider, saw its stock surge 65 percent on Friday after it raised $100 million in an IPO that topped its price range. (It sold 6.25 million shares at $16 each. It was expected to sell 6 million shares at between $12 and $14 each.) The stock closed trading on Friday at $26.48.

New Relic, the seven-year-old, San Francisco-based software analytics company, also saw its stock rise — nearly 48 percent, in fact — on Friday. More here.

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Exits

Aatalogix, a five-year-old, Westminster, Co.-based company that sells offline purchase data to giant publishers and that had raised a $45 million round in late May, is seeking a buyer, reports peHUB, which says the company is seeking bids of $1 billion. Datalogix has raised at least $111 million to date, shows Crunchbase. Its investors include Breyer CapitalInstitutional Venture Partners, General Catalyst Partners, Sequel Venture Partners and Costanoa Venture Capital.

Oculus VR, the Facebook-owned virtual-reality headset maker, is acquiring two startup companies: San Francisco-based Nimble VR, which had raised about $2.2 million from investors, including K9 Ventures,CrunchFund, and Intel Capital; and 13th Lab, a Swedish start-up that had raised just $700,000 from Creandum. Venture Capital Dispatch has more here.

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People

Business Insider’s Henry Blodget has posted the entirety of a recent interview with Amazon CEO Jeff Bezos, and it’s worth reading. Just one nugget from the sit-down is the revelation that Bezos, like many tech execs, actively limits how much technology his kids use. He tells Blodget: “I have three boys and a girl. The oldest is 14. He was the last person in his class to get a smartphone. He reminded me of this frequently. When the second-to-last person got a smartphone, he sent an email message to all of his classmates that said, ‘Then there was one.’”

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Job Listings

Motorola Solutions Venture Capital is in the market for an investment director. The job is in Schaumburg, Il.

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Essential Reads

The Washington Post looks at the vast lobbying network that the car-share service Uber is assembling.

The group claiming responsibility for the Sony Pictures Entertainment hack has offered to selectively refrain from releasing employees’ email correspondence provided that they, erm, write in and ask.

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Detours

An entire collection of classic cars, forgotten for 50 years.

What kids’ drawings reveal about their homes.

9 Kisses.”

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Retail Therapy

Visit the Paris-based industrial design-focused Museum of Arts et Métiers — through your smart phone.

The Mustachifier Baby Pacifier. It’s so wrong, but yet . . .


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