It’s Friday, dear readers! Hope you have a wonderful weekend.
Two quick things: We aren’t publishing Monday, in observance of Martin Luther King Jr. Day. (We’ll see you back here Tuesday, though.)
Also, today, we’re running one last (for now) guest columns by writer-investor Semil Shah, who recently chatted with entrepreneur-investor Howard Lindzon about some of Lindzon’s newest investments and more. Hope you enjoy it.
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Top News in the A.M.
An 18-year-old has been arrested in connection with the December denial of service attack of Sony Playstation and Xbox systems.
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Fast Chat with the Inimitable Howard Lindzon
By Semil Shah
Howard Lindzon is an active guy, and that’s just how he likes it. A serial entrepreneur, Lindzon is best known for creating two companies: WallStrip, an online video show that took a satirical approach to financial news and was acquired by CBS in 2007, and StockTwits, a venture-backed social network for traders and investors. But Lindzon is a very active investor, too, with dozens of angel investments to his name, including Buddy Media (acquired for nearly $700 million by Salesforce in 2012) and LifeLock (which staged a successful public offering).
Lindzon is also the cofounder of Social Leverage, a seed-stage investment fund that typically invests between $100,000 and $500,000 in companies. Among its investments is Kensho Technologies, whose data crunching software attracted funding from Goldman Sachs in November; ApplePie Capital, an online loan business focused on franchise funding (StrictlyVC profiled it here), and Robinhood, a new brokerage firm whose lets customers trade stocks without paying commission.
To learn more about Robinhood — and get Lindzon’s take on some other things — we chatted with him recently.
People love the idea of commission-free stock trades. Where does Robinhood go from here? How does it unseat established competitors?
[Founders] Baiju [Bhatt] and Vlad [Tenev] are super smart. They have just enough experience to attack the millennial market and not so much that they are scared of the industry walls. First, they had a great launch. I can’t imagine the complications of launching an app that has to work almost perfectly because the company is regulated and trying to establish the trust of its customers, whose money is moving through its system. They also had to keep their heads down and go through the long process of dealing with the SEC and FINRA and audits. But they’re fearless with respect to the past and dealing with hard problems.
The way they win in my opinion is by disrupting customer acquisition. Ameritrade and Etrade are public companies. Go look up what they spend a year on marketing. It’s insane. I also think it’s much easier for Robinhood to get into some form of “robo-advising” later on [meaning providing portfolio management online with minimal human intervention] than the other way around.
Many in the industry still associate you with Stocktwits and with angel investing. Fewer know about Social Leverage.
I started Social Leverage with Tom Peterson, who has been my pal and partner since graduate school at ASU. Originally, back in 2008, we started a holding company inspired by Betaworks that would invest in and operate startups, but we learned that we’re best-suited for just investing, using social leverage as a means for accelerating startups.
Right now, we’re raising our second fund and Gary Benitt has just joined as a GP. In 2010, we invested in Gary’s startup, [a maker of customer-service help desk applications called] Assistly, which was acquired [in 2011] by Salesforce [for $50 million in cash]. Gary just left Salesforce, and we’re thrilled to have his experience and passion for entrepreneurs and startups. He’s also in San Francisco, which is great.
Which raises another point: You live in San Diego and still manage to invest in great new companies. How? Aren’t most of these deals syndicated based on proximity?
Before San Diego, I lived in Phoenix for 20 years. I was the only in my peer group who was not doing real estate deals. Around 2004, an Apple Store opened across the street from my office, and the world I lived in — hedge fund, trading, with Windows and a Bloomberg [terminal] — changed. I just quit cold turkey, believing that the financial world would just go web and browser.
The trend away from the terminal and Windows in the financial world is five years behind the rest of the disruption – still. But with that switch, I started thinking differently about the world; I started thinking longer term about bigger trends. In 2006, I met the founders of Golfnow.com in Phoenix – they were the OpenTable for tee times – and I went pretty much all in. Comcast acquired them a few years later. I also met the founders of Lifelock, a Tempe [Arizona] company and again invested and wow, did they deliver. Long story short, it doesn’t matter where you live.
You’ve written about Silicon Valley’s insularity. If you could point to one thing the Bay Area is getting wrong right now, what would that be and why?
The Bay is doing very little wrong. The area is being swept up in the biggest boom of all time, so the only thing they might be getting wrong is diversification. Phoenix went on a long real estate boom from 1991 to 2008. That did not end well.
Semil Shah is a guest contributor to StrictlyVC. Shah is currently working as a venture advisor to two funds, Bullpen Capital (which focuses on post-seed rounds) and GGV Capital (a cross-border U.S.-Asia fund).
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New Fundings
Classpass, a 1.5-year-old, New York-based company that offers unlimited fitness classes at thousands of studios and boutique gyms for $99 a month, has raised $40 million in Series B led by General Catalyst Partners and Thrive Capital, with participation from angels and previous investors. The company has now raised $54 million altogether, shows Crunchbase.
Clinipace Worldwide, an 11-year-old, Morrisville, N.C.-based clinical-research services company, has raised $50 million in equity and debt led by Virgo Investment Group, with participation from other investors that included Crestline Investors, Morgan Stanley Expansion Capital, Hatteras Venture Partners, Harbert Venture Partners and Mario Family Funds. The company has raised at least $89.2 million to date, shows Crunchbase.
Sandstorm Development Group, a year-old, Palo Alto, Ca.-based developer of open-source software for running personal servers, has raised $1.3 million in seed funding led by Quest Venture Partners, with participation from angel investors. The company had previously raised roughly $60,000 on the crowdfunding site Indiegogo. GigaOm has more here.
Schweiger Dermatology, a five-year-old, New York-based dermatological practice offering state-of-the-art skin treatments across a growing number of clinics, has raised $12.4 million in Series A funding from SV Life Sciences.
Sense360, a four-month-old, L.A.-based company that’s still in stealth mode but centered around smartphone sensors, has reportedly raised $2.75 million in seed funding from FirstMark Capital, with participation from Founder Collective, Qualcomm Ventures, Metamorphic Ventures, Double M Capital, Telenav, David Tisch, among others.
Skully Helmets, a two-year-old, San Francisco-based company that makes augmented reality motorcycle helmets, has raised $1.5 million in funding, according to an SEC filing first flagged by TechCrunch. More here.
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New Funds
China plans to establish a government venture capital fund with 40 billion yuan ($6.5 billion) to support start-ups in emerging industries. Reuters has more here.
CTI Life Sciences, an eight-year-old, Montreal-based venture firm, has closed its second venture capital fund with C$134 million. Its LPs include Teralys Capital and BDC Capital.
TVC Capital, a nine-year-old, San Diego-based software-focused growth equity firm, has closed its third fund with $115 million in commitments after three months on the market, it tells VentureWire. Among its LPs is the fund of funds group Northgate Capital.
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IPOs
Box, the 10-year-old cloud storage and collaboration software and services company, has set its IPO date for Jan. 22. More here.
Entellus Medical, an 8.5-year-old, Plymouth, Mn.-based sinus device maker, has estimated that it will sell 4.375 million shares at a price range of between $15 and $17 per share in its IPO. At the midpoint of the estimated price range, the company would make $70 million from the offering and be valued at $278.4 million. Entellus’s biggest outside shareholders include Essex Woodlands Health Ventures, which owns 26 percent of the company; SV Life Sciences, which owns 23.9 percent; Split Rock Partners, which owns 21.2 percent; and Covidien Ventures, which owns 7.2 percent.
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Exits
Dispop, a two-year-old, New York-based online display advertising and retargeting specialist, has been acquired by Admedo, a venture-backed U.K.-based company that helps advertisers and agencies to manage their programmatic advertising in-house. Terms of the deal weren’t disclosed. Dispop had raised $725,000 in seed funding, including from Inimiti and Wekix VC. Admedo has raised $2.5 million from investors, including Sussex Place Ventures, Encore Capital, Playfair Capital and Kima Ventures.
EnVerv, a six-year-old, San Jose, Ca.-based smart-grid chip company, has been acquired by the publicly traded semiconductor supplier Semtech Corp. for an undisclosed amount. EnVerv had raised at least $27.4 million from investors, shows Crunchbase. Its backers included Benchmark, Cisco Systems, New Enterprise Associates and Walden International.
Rex Features, Europe’s largest independent photo press agency, and PremiumBeat, a stock music and sound effects service, have both been acquired by Shutterstock, which is paying $33 million and $32 million, respectively, for the companies. VentureBeat has more here.
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People
Tony Fadell of Nest Labs has just been tasked with fixing Google Glass.
Women who actively use social media are less stressed, finds a new Pew study, which, according to the WSJ, also cites a “cost of caring” for women on social media. “Awareness of close friends’ pain can increase stress for women. Women experienced increased stress when they learned through social media about the death of a friend’s child, partner or spouse, for instance. Women also experienced stress when they learned a friend had been hospitalized or hurt. In contrast, men only experienced stress when they learned through social media about two events their friends experienced: Getting demoted at work or getting arrested.”
The dating service Zoosk has laid off 15 percent of its employees this week following the exit of Zoosk’s founders from their leadership roles last month. TechCrunch has the story here.
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Job Listings
Publicly traded Castlight Health is looking for a manager to add to its corporate development team. The job is in San Francisco.
Prosper, the still-private peer-to-peer lender, is looking for a senior manager of corporate development. The job is in San Francisco.
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Data
Of the $26.8 billion venture capitalists invested in California companies last year — an 81 percent jump over 2013 — 41 percent of it landed in San Francisco — reportedly more than the next nine cities combined, including Palo Alto, Redwood City, Mountain View, and San Jose.
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Essential Reads
Eek. Hackers for sale, online.
“Pinfluencers” are getting paid. Pinterest itself, not so much.
SecondMarket tells the WSJ it saw more than $1.4 billion in transaction volume last year — four times what it saw it 2013 and a new record in its five-year history.
Vimeo has struck a deal with YouTube’s biggest content network, Disney-owned Maker Studios, that will see Maker creators sell content on Vimeo before they make it available for free—with ads—on YouTube. CNBC has more here.
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Detours
We know how you feel: The rise of affective computing.
This IT guy conquered his fear of rejection by getting rejected every day —on purpose.
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Retail Therapy
Expose Smart Light for the iPhone.