• StrictlyVC: January 22, 2015

    Hi, happy Thursday, everyone! (Web visitors, click here for an easy-to-read version of this email newsletter.)

    —–

    Top News in the A.M.

    Amazon is reportedly in talks to buy the stealth-mode Israeli startupAnnapurna Labs in order to give its data centers a boost. Sources quoted in the Israeli media place the value of the deal at about $350 million.

    —–

    China’s Economy is In the Dumps; Why Haven’t Internet Investors Noticed?

    China’s economic growth has slowed to a quarter-century low of 7.4 percent. You wouldn’t know it, though, looking at the gigantic rounds that China-based Internet companies are raising.

    Just this week, Apus Group, a six-month-old, Beijing-based Android app development firm, raised a whopping $100 million; Beibei.com, a nine-month-old, mother and baby-focused e-commerce site in Hangzhou, raised $100 million; and Meituan, a four-year-old group discount platform that’s headquartered in Beijing, pulled in $700 million. There was also that little announcement by the Chinese government late last week about the venture capital fund it’s establishing with $6.5 billion to support start-ups in emerging industries.

    The word “bubble” invariably comes to mind. But there’s something far different going on, insist those bullish about Chinese tech companies.

    Take Glenn Solomon, a managing director at the cross-border investment firm GGV Capital and a frequent visitor to China. Though he acknowledges that “China’s economic growth will inevitably slow as the law of large numbers takes effect,” he says two very different economies in China — old and new — explain the seeming disconnect between that slowing growth and all the money sloshing into tech startups.

    In China’s retail industry, for example, overexpansion has hurt large, established brick-and mortar-retailers who are seeing flat or slowing growth and retrenching. Meanwhile, Alibaba and other new e-commerce players are growing extremely rapidly, says Solomon, noting that “on the ground [in China], there are delivery trucks lining the streets.”

    That divergence is “pronounced and growing” across other industries, too, says Solomon. “Companies in the Xiaomi ecosystem focused on home automation are rapidly going direct to consumer, while traditional players in this area are seeing a slowdown.”

    Travel, mobile commerce, and companies whose apps aim to improve their users’ offline experience — among them the GGV-backed companies Tujia.com, a site similar to Airbnb that raised $100 million last June, and Didi Dache, a taxi app that closed on $700 million in December — are also trouncing weaker, traditional offline players, he says.

    There are yet other reasons to rationalize those big investment rounds, suggests Michael Feldman, an independent consultant based in Hong Kong who advises on cross-border technology investments from China to Israel.

    Feldman notes that unlike, say, Facebook, which only recently began reaching into new businesses, the “tentacles” of China Internet giants like Tencent Holdings and Alibaba stretch into everything from car service apps to their own mobile payment services, including Tencent’s Tenpay, and Alibaba’s Alipay.

    That growing reach is a scary prospect to startups and would-be entrepreneurs. “In almost anything you do online, you could potentially be competing with them,” notes Feldman.

    But in their race to compete with one another, such behemoths have also grown more acquisitive than they used to be — creating new and better M&A opportunities. “It used to be that they’d either copy your product or pay a team to join their company, then they’d destroy the competing company,” explains Feldman. “Now that they’re kind of globalizing, they’re beginning to behave differently.”

    China is also seeing its first generation of battle-tested tech entrepreneurs launch companies, which is emboldening investors to back them with big checks, notes Feldman. “Everyone knows the PayPal Mafia and Google Mafia and Facebook Mafia. China now has its own mafias,” including those to spin out of Alibaba, Tencent, Baidu and Xiaomi.

    If that development is leading to some froth, Feldman, like Solomon, doesn’t seem terribly concerned. As elsewhere, he suggests, China’s tech economy isn’t as closely tethered to the country’s broader economy as one might imagine.

    “Ultimately, it’s all about the adoption of mobile,” Feldman says. “It’s just totally changing society. It’s an unstoppable force at this point.”

    —–

    New Fundings

    Air, a 2.5-year-old, San Francisco-based startup that was formerly known as Yevvo and is building a live broadcasting service for mobile users, has raised nearly $4 million in Series A funding from undisclosed investors. TechCrunch has the story here.

    Alchemist Accelerator, a 2.5-year-old, San Francisco-based enterprise-focused accelerator, has raised $2.1 million in new funding led by Mayfield, with participation from Tyco International and earlier investors Cisco Systems.

    Beibei, a nine-month-old, Hangzhou City, China-based maternal and baby supplies e-commerce platform, has raised $100 million in Series C funding led by Capital Today and New Horizon Capital, with participation from Banyan Capital and IDG Capital. The round, which reportedly values the company at $1 billion, follows a $24.3 million Series A round raised by the company last summer.

    Brandfolder, a 2.5-year-old, Denver-based online platform that allows users to easily organize, share and update brand assets, has raised $2 million in funding from earlier investor Jeffrey Covington, as part of his new investment fund, White Cedar Enterprises. To date, the company has raised $3 million, including from TechStars and a group of angel investors. TechCrunch has more here.

    Button, a 1.5-year-old, New York-based company that enables smart connections between apps that drive installs, has raised $12 million in Series A funding led by Redpoint Ventures, with participation from Greycroft Partners, DCM, VaynerRSE, Slow Ventures, and former NBA Commissioner David Stern. VentureBeat has more here.

    Choozle, a 2.5-year-old, Denver-based, cloud-based platform for marketers looking to analyze their customers’ behavior, has raised $4.1 million in Series A funding led by earlier backer Great Oaks Venture Capital. The company has raised $3.1 million to date.

    Fastback Networks, a five-year-old, San Jose, Ca.-based mobile-network technology company, has raised $15 million in Series C funding led by Harmony Partners, with participation from Foundation Capital, Granite Ventures, Juniper Networks, and Matrix Partners. The company has now raised $30 million altogether.

    Green Biologics, a 12-year-old, Abingdon, England-based company whose fermentation technologies convert biomass into renewable fuels and chemicals, has raised $76 million in new funding. Earlier investors, co-led by Swire Pacific and Sofinnova Partners, led a $42 million equity piece of the funding, with Tennenbaum Capital Partners supplying nearly $34 million in debt.

    Handle, a three-year-old, Menlo Park, Ca.-based company whose productivity app combines emails and calendar functions with to-do lists, has raised $9.9 million from investors, says Venture Capital Dispatch. Menlo Ventures, where Handle founder Shawn Carolan is a managing director, provided $5.6 million; Silicon Valley Bank provided $2.5 million in debt; and a long list of angel investors, including Mitch Kapor, provided the company with another $1.8 million in seed funding.

    Interana, a two-year-old, Menlo Park, Ca.-based data analytics company, has raised $20 million in Series B funding led by Index Ventures, with participation from new investors AME Cloud Ventures, Harris Barton and Cloudera’s chief strategy officer, Mike Olson. Earlier investors Battery Ventures, Data Collective and Fuel Capital also invested in the round, which brings the company’s total funding to $28.2 million.

    Keaton Row, a four-year-od, New York-based fashion startup that pairs clients with stylists, has raised an undisclosed amount of funding led by Time Inc. Earlier backers Menlo Ventures, Rho Capital and Grape Arbor also joined the round. The company had previously raised $4.2 million across a couple of rounds.

    Kitchen Stories, a year-old, Berlin-based mobile cooking app, has raised $1.8 million in seed funding, including from Point Nine Capital and Bertelsmann Digital Media Investments, with participation from Cherry Ventures and numerous angel nesters.

    Kreditech, a three-year-old, Hamburg, Germany-based consumer finance startup that focuses on lending money to “unbanked” consumers with little or no credit rating, has landed a $200 million credit line from Victory Park Capital. The company is also preparing to raise a Series C round, reports TechCrunch. The company has raised $263 million to date, shows Crunchbase. Its investors include Point Nine Capital, Blumberg Capital, and Varde Partners.

    Persado, a 2.5-year-old, New York-based company whose “smart” software specializes in creating automated messages around calls to action, has raised $21 million in Series B funding led by StarVest Partners, with participation from Citi Ventures, American Express Ventures, and earlier backer Bain Capital Ventures. The company has now raised $36 million altogether, shows Crunchbase.

    Pluribus Networks, a five-year-old, Palo Alto, Ca.-based software-defined networking (SDN) startup, has raised $50 million in new funding led by Temasek Holdings, with participation from Ericsson, Newtech, and earlier backers New Enterprise Associates, Menlo Ventures, Mohr Davidow Ventures and AME Cloud Ventures. GigaOm has more here.

    Raise, a 1.5-year-old, Chicago-based offering a marketplace where consumers can buy and sell their unused gift cards, has raised $56 million in Series B funding led by New Enterprise Associates, with participation from earlier backers Bessemer Venture Partners, the Pritzker Organization, Listen Ventures and angel investors. The funding brings the company’s total outside investment to $81 million.

    The parent company of StockRadars, a 3.5-year-old, Bangkok, Thailand-based company whose products aim to demystify investing in Asia’s stock markets, has raised roughly $800,000 in Series A funding from Japan’s CyberAgent Ventures and East Ventures, reports TechCrunch.

    True Link Financial, a two-year-old, San Francisco-based startup whose prepaid Visa card promises to protect older adults from scams and fraud, has raised $3.4 million from a group of investors including earlier backer Cambia Health Solutions. The company had raised an undisclosed amount of funding prior, including from Y Combinator, whose accelerator program it passed through in 2013.

    Uber, the six-year-old, car-booking company, has raised $1.6 billion in convertible debt from Goldman Sachs’s wealth management clients, Bloomberg reported yesterday. The new round of financing comes just months after the company raised $1.2 billion from investors, including New Enterprise Associates, Lone Pine Capital, Valiant Capital Partners, and Qatar Investment Authority. The company is now reportedly valued at $41.2 billion.

    XOR Data Exchange, a year-old, Austin, Tx.-based company that facilitates cross-industry data sharing through permission-based controls and audits, has raised $1.8 million investment round led by Chicago Ventures and KGC Capital.

    —–

    New Funds

    University of North Carolina officials announced the formation of the Carolina Research Venture Fund yesterday, a seed-stage pool that will begin investing $5 million in non-state funds to start. “It takes a little money for that initial seed stage, so we wanted to go ahead and get this going,” board member Sallie Shuping-Russell, who’s also a managing director at BlackRock, told a local outlet yesterday. The fund reportedly aims to bridge the funding gap that local startups often face before attracting the attention of venture capital firms across the state and country.

    —–

    Exits

    Temasek Holdings, Singapore government’s global investment arm, is acquiring Mumbai-based venture lender SVB India Finance, an arm of Nasdaq-listed SVB Financial Group, for $46.4 million, reports the Economic Times. The deal creates the country’s second homegrown and independent venture debt player after Delhi-based Trifecta Capital, which recently started raising its debut fund.

    ZeroPaper, a two-year-old, Brazilian startup that offers cloud-based accounting services to small businesses, has been acquired by the accounting software giant Intuit for undisclosed terms as the latter looks to raise its profile in international and emerging markets. ZeroPaper had raised just $200,000 from investors, including Brazil’s 21212 Digital Accelerator in Rio de Janeiro.

    —–

    People

    eBay is cutting 2,400 positions as it continues to lose marketshare to increasing competition from e-commerce upstarts. The Financial Post has more here.

    Wilson Sonsini lawyer turned Y Combinator partner Carolynn Levy is helping to revolutionize startup investing. Here’s how. (H/T: Quibb)

    Laurene Powell and Adrian Fenty took an island shopping trip during a Caribbean vacation, and the Daily Mail was on it!

    —–

    Jobs

    Sapphire Ventures (f.k.a SAP Ventures) is looking for a pre-MBA associate. The job is in Palo Alto, Ca.

    —–

    Essential Reads

    Google’s next telecom move: Becoming a wireless carrier.

    Satya Nadella’s plan to make you care about Microsoft.

    Drones: the tech-savvy trafficker’s new drug mule.

    —–

    Detours

    Postcards from Cuba.

    The strange science of Twitter and heart disease.

    Seven surprising things that can help you stop worrying.

    —–

    Retail Therapy

    Wirelessly lock and unlock your Mac with this.

    Leatherman laughs at your Fitbit activity and sleep tracker.

    Connie

    ,

  • China’s Economy Has Hit the Skids; Why Haven’t Internet Investors Noticed?

    China-PBOCChina’s economic growth has slowed to a quarter-century low of 7.4 percent. You wouldn’t know it, though, looking at the gigantic rounds that China-based Internet companies are raising.

    Just this week, Apus Group, a six-month-old, Beijing-based Android app development firm, raised a whopping $100 million; Beibei.com, a nine-month-old, mother and baby-focused e-commerce site in Hangzhou, raised $100 million; and Meituan, a four-year-old group discount platform that’s headquartered in Beijing, pulled in $700 million. There was also that little announcement by the Chinese government late last week about the venture capital fund it’s establishing with $6.5 billion to support start-ups in emerging industries.

    The word “bubble” invariably comes to mind. But there’s something far different going on, insist those bullish about Chinese tech companies.

    Take Glenn Solomon, a managing director at the cross-border investment firm GGV Capital and a frequent visitor to China. Though he acknowledges that “China’s economic growth will inevitably slow as the law of large numbers takes effect,” he says two very different economies in China — old and new — explain the seeming disconnect between that slowing growth and all the money sloshing into tech startups.

    In China’s retail industry, for example, overexpansion has hurt large, established brick-and mortar-retailers who are seeing flat or slowing growth and retrenching. Meanwhile, Alibaba and other new e-commerce players are growing extremely rapidly, says Solomon, noting that “on the ground [in China], there are delivery trucks lining the streets.”

    That divergence is “pronounced and growing” across other industries, too, says Solomon. “Companies in the Xiaomi ecosystem focused on home automation are rapidly going direct to consumer, while traditional players in this area are seeing a slowdown.”

    Travel, mobile commerce, and companies whose apps aim to improve their users’ offline experience — among them the GGV-backed Tujia.com, a site similar to Airbnb that raised $100 million last June, and Didi Dache, a taxi app that closed on $700 million in December — are also trouncing weaker, traditional offline players, he says.

    Yet there are other reasons to rationalize those big investment rounds, suggests Michael Feldman, an independent consultant based in Hong Kong who advises on cross-border technology investments from China to Israel.

    Feldman notes that unlike, say, Facebook, which only recently began reaching into new businesses, the “tentacles” of China Internet giants like Tencent Holdings and Alibaba stretch into everything from car service apps to their own mobile payment services, including Tencent’s Tenpay, and Alibaba’s Alipay.

    That growing reach is a scary prospect to startups and would-be entrepreneurs. “In almost anything you do online, you could potentially be competing with them,” notes Feldman. But in their race to compete with one another, such behemoths have also grown more acquisitive than they used to be — creating once-scant M&A opportunities. “It used to be that they’d either copy your product or pay a team to join their company, then they’d destroy the competing company,” explains Feldman. “Now that they’re kind of globalizing, they’re beginning to behave differently.”

    China is also seeing its first generation of battle-tested tech entrepreneurs launch companies, which is emboldening investors to back them with big checks, notes Feldman. “Everyone knows the PayPal Mafia and Google Mafia and Facebook Mafia. China now has its own mafias,” including those to spin out of Alibaba, Tencent, Baidu and Xiaomi, among others.

    If that development is leading to some froth, Feldman, like Solomon, doesn’t seem terribly concerned. As in the U.S. and elsewhere, he suggests, China’s tech economy isn’t as closely tethered to the country’s broader economy as one might imagine.

    “Ultimately, it’s about the adoption of mobile,” Feldman says. “As in most of the world, it’s just totally changing society. At this point, the mobile revolution seems to be an unstoppable force.”

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

    Connie

    ,
    , , , , , , , , , , ,

  • StrictlyVC: January 21, 2015

    Hi, everyone! Hope your Wednesday is off to a great start. (Web visitors, you might click here for an easier to read version of this newsletter.)

    —–

    Top News in the A.M.

    This morning, Microsoft is detailing how its Windows 10 will run across PCs, phones, tablets, and even its Xbox One gaming console. The Verge has more here.

    Users of third-party WhatsApp clients have reportedly been banned from the service for 24 hours. “The company is apparently cracking down [on them] as a breach of the terms of service, and is justifying their actions under the premise of protecting user safety,” says the outlet 9to5.

    —–

    AngelPad Elbows 13 Young Startups Into the World

    The demo days of five-year-old AngelPad — an accelerator program run by married founders Thomas Korte and Carine Magescas – have become a hot ticket both in New York and San Francisco. Yesterday afternoon was no different. In downtown San Francisco, in a crowded co-working office space, 13 companies that had been groomed over the preceding four months pitched select investors, and they appeared to like what they heard.

    No doubt the investors were expecting big things. AngelPad works with two batches of roughly 12 companies twice a year – one on each coast—and nearly all of them have snagged seed funding from investors, with a handful of startups going on to raise tens of millions of dollars, including Vungle, Crittercism, and Postmates.

    AngelPad — which takes a 7 percent stake in each startup in exchange for $50,000 (plus another $4,000 per founder) — has even come close to a billion-dollar exit in MoPub, a mobile advertising startup that Twitter acquired for $350 million in stock in September 2013; the company was worth roughly $800 million when Twitter went public two months later.

    Whether AngelPad’s newest batch — its eighth — will prove as promising remains to be seen. But at least a handful of companies looked like strong contenders for follow-on funding.

    One of our favorites, for example, was CstorePro, a SaaS application that promises to help convenience store owners more easily track their sundry, disparate products, as well as assist them in buying what they need, in the right amounts, from the cheapest wholesalers.

    The company isn’t alone in the space. StoreTender and Retalix are just two other vendors trying to help owners streamline their store operations. The world of convenience stores is also highly fractured. According to the research group IBISWorld, roughly 68.2 percent of convenience-store operators employ less than five people. Still, there’s seemingly money to be made. According to IBIS, as of 2012, the U.S. convenience store and truck stop industry included about 120,000 stores with combined annual revenue of about $355 billion.

    A second company that piqued our interest is Allay, an easy-to-use online HR and benefits platform for the country’s 500,000 insurance brokers — many of whom are getting knocked around by the fast-growing health insurance broker Zenefits. Given those brokers stand to lose $32.5 billion in yearly commissions, you can bet there’s a big opportunity in helping them figure out a better way to pair buyers and sellers of health care, and quickly.

    We also really liked HelloSponsor, an online platform that helps brand advertisers find, buy, and track sponsorships at scale. Roughly $3 billion is spent yearly on consumer events, and anyone who has tried to raise money for one can tell you that it’s a pain in the neck. The big question is whether sponsors will be as eager to scour opportunities on the platform – including by industry and geography – as event organizers will be eager to be found.

    Of course, you’re the investors! If you’d like to take a look at the full list of companies that presented yesterday to form an opinion for yourself, you can find a tear sheet here. AngelPad has also made it simple to meet with any or all of them. Just click here.

    —–

    New Fundings

    AppsFlyer, a nearly four-year-old, Tel Aviv, Israel-based mobile ad analytics company, has raised $20 million in a Series B funding led by Fidelity Growth Partners Europe, with participation from earlier investors Magma Venture Partners and Pitango Venture Capital. The company has now raised $28 million to date.

    The Black Tux, a three-year-old, Santa Monica, Ca.-based tuxedo and suit rental service, has raised roughly $10 million in new funding led by First Round Capital, reports Dealbook. The company had previously raised $2.6 million in seed funding from a long list of investors, including RRE Ventures, Founder Collective, and Menlo Ventures.

    Bloom Energy, the 14-year-old, Sunnyvale, Ca.-based maker of fuel cells, is raising $160 million in the form of convertible notes, reports Venture Capital Dispatch, which says $130 million had been raised as of one month ago (though it isn’t clear from whom). The company has already attracted more than $1.2 billion in equity from investors since it was founded.

    Dig Inn, a 2.5-year-old, New York-based company that has developed an online ordering platform for restaurants, has raised $15 million in Series C funding led by Wexford Capital.

    Farm Hill, a 1.5-year-old, Redwood City, Ca.-based healthy meal delivery service, has raised $1 million in seed financing led by Eagle Cliff Partners, with participation from Liberty City Ventures and Stanford StartX Fund.

    Jibo, a 2.5-year-old, Cambridge, Ma.-based company behind a “social” robot for the home that features two high-resolution cameras, a 360-degree microphone, and the capacity to personalize experiences based on the identity of a user, has raised $25.3 million in Series A funding led byRRE Ventures, with participation from Flybridge Capital Partners, Two Sigma Investments, Formation 8 and Samsung Ventures. Earlier backers CRV, Fairhaven Capital Partners and Osage Venture Partners also joined the round. The company has now raised $33.9 million altogether. Venture Capital Dispatch has more here.

    LendingRobot, a 2.5-year-old, Bellevue, Wa.-based automated investment service for online lending, has raised $3 million in Series A funding led by the European venture firm Runa Capital. The company had previously raised an undisclosed amount of seed funding. TechCrunch has more on how the company works here.

    Pillow Homes (formerly Airenvy), a year-old, San Francisco-based online property management system that focuses on short-term rentals, has raised $2.65 million in seed financing led by Homebrew, with participation from Sherpa Ventures and Tim Draper.

    Ravello Systems, a four-year-old, Palo Alto, Ca.-based company whose SaaS-based application enables developers to use “the public cloud” to develop and test their applications, has raised $28 million in fresh funding led by Qualcomm Ventures and SanDisk Ventures. Earlier and new investors Sequoia Capital, Bessemer Venture Partners, Norwest Venture Partners and Vintage Investment Partners also joined the round, which brings the company’s total funding to $54 million.

    RealMatch, an eight-year-old, New York-based maker of recruitment advertising and job-board software, has raised $8 million in Series C-1 funding led by Edison Partners, with participation from Carmel Ventures and Orix Ventures. The company has now raised $22.7 million altogether, shows Crunchbase.

    Motif Investing, a 4.5-year-old, San Mateo, Ca.-based company whose site allows users to create, share and invest in baskets of stocks around common themes, has raised $40 million from the Beijing-based social media giant Renren. The company has now raised more than $120 million from investors, including Ignition Partners, Norwest Venture Partners and Foundation Capital. The WSJ has more on Renren’s interest in Motif and in backing financial tech startups more broadly here.

    Regenxbio, a six-year-old, Washington, D.C.-based gene therapy company, has raised $30 million in Series C funding led by Venrock and Brookside Capital, with participation from Deerfield Management and an unnamed new investor. The company’s earlier backers, FoxKiser and Fidelity BioSciences, also participated in the round.

    Ringly, a 1.5-year-old, New York-based maker of smart jewelry for women, including high-tech rings that alert wearers when someone phones or texts them, has raised $5.1 million in Series A funding led by Andreessen Horowitz, with participation from Highline Ventures and Silas Capital. Earlier backers First Round Capital, The Social+Capital Partnership, Mesa+, Brooklyn Bridge Ventures and PCH International also joined the round, which brings Ringly’s total funding to $6.1 million.

    Shazam Entertainment, the 13-year-old, New York-based music discovery company that uses audio-recognition technology to help people identify songs on the radio or television, has raised $30 million from investors in a round that values the company at $1 billion. The investors’ names aren’t being disclosed, but Shazam’s prior backers include billionaire Carlos Slim, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and DN Capital. Bloomberg has more here.

    SpaceX, the 13-year-old, Hawthorne, Ca.-based space exploration startup, has confirmed that it has raised $1 billion in new funding in a round that includes Google, Fidelity, and earlier backers Founders Fund, DFJ, Valor Equity Partners and Capricorn Venture Partners. Google and Fidelity reportedly get an ownership stake of just less than 10 percent in exchange for their investment.

    Stack Exchange, a 6.5-year-old, New York-based network of community-driven question-and-answer sites (the company says it now has the world’s largest online repository of programming knowledge), has raised $40 million in new funding led by Andreessen Horowitz, with participation from earlier backers Bezos Expeditions, Index Ventures, Spark Capital and Union Square Ventures. The company has now raised $70 million altogether.

    Taykey, a six-year-old, New York-based maker of advertising software, just raised $15 million in fresh funding from Innovation Endeavors, MSR Capital and earlier backers, including Marker, Sequoia Capital, SoftBank Capital and Tenaya Capital. The company has now raised $32 million altogether.

    VMTurbo, a 4.5-year-old, Boston-based intelligent workload management software company, has raised $50 million in Series D funding led byICONIQ Capital, with participation from earlier backers Bain Capital, Globespan Capital Partners and Highland Capital Partners. The company had previously raised a $10 million round, and another, undisclosed round of funding.

    Work Market, a 4.5-year-old, New York-based marketplace for managing contractors and freelancers, has raised $20 million from earlier backers led by Union Square Ventures, with participation from Spark Capital, SoftBank Capital, Industry Ventures and Silicon Valley Bank.

    —–

    IPOs

    On the eve of Box‘s Wall Street debut, tech analysts debate its post-IPO future.

    —–

    Exits

    CloudOn, a 5.5-year-old, Mountain View, Ca.-based maker of mobile productivity tools, with an engineering hub in Herzliya, Israel, has just been acquired for undisclosed terms by the cloud-storage giant Dropbox, which is reportedly turning its new Israeli office into a base from which to aggressively hire in the region. CloudOn had raised $26 million from investors including The Social+Capital Partnership, TransLink Capital, Foundation Capital and Rembrandt Venture Partners. The WSJ has the story here.

    Equivio, a 10-year-old, Rockville, Md.-based text analytics service for legal e-discovery and other things, has been acquired by Microsoft. Terms of the deal weren’t disclosed, but WSJ sources pegged the price at around $200 million back in October.

    Kosei, a 10-month-old, San Francisco-based still-stealth startup that specializes in personalized recommendation systems that match mobile advertisements with the right consumers, has been acquired by Pinterest for undisclosed terms. Venture Capital Dispatch has more here.

    Semetric, a 6.5-year-old, London-based whose software provides analytics, recommendations, and targeting services to entertainment businesses, has been acquired by Apple as part of its plans to relaunch its Beats Music streaming music service this year, reports the Guardian, which notes the acquisition appears to have taken place last fall. Semetric had raised £3m of funding in January 2013 from Imperial Innovations Group and Pentech Ventures.

    —–

    People

    Longtime FTV Capital partners Ben Cukier and Eric Byunn have left the firm to launch their own growth-stage, financial-services focused, New York-based firm, called Centana Growth Partners. The outlet peHUB has more here.

    Jeremy Gordon, a former engineering VP with Twitter, has joinedRedpoint Ventures as the firm’s newest entrepreneur-in-residence, reports Re/code. Before leaving Twitter in October, Gordon led engineering for all of Twitter’s consumer products.

    Mike Randall, recruited from Facebook in June to join Snapchat as its vice president of business and marketing partnerships, has left the company, reports Recode. No word on why he’s out the door, but Randall isn’t the first Snapchat executive to leave after a brief stay, notes Recode. Last summer, the company also lost its VP of engineering, Peter Magnusson, just six months after he’d joined the company.

    Dharmesh Thakker, a former Intel Capital managing director, has joined Battery Ventures as a general partner. Thakker had joined Intel Capital in 2011 after working as an enterprise-focused venture capitalist at Advanced Technology Ventures.

    —–

    Jobs

    3i is looking to hire an associate in New York.

    Visa is looking to add a VP to its Innovation and Strategic Partnerships organization. The job is in San Francisco.

    —–

    Essential Reads

    A new Oxfam study has found that by next year, 1 percent of the world’s population will own more wealth than the other 99 percent, based on current trends.

    Apple is stepping up its lobbying efforts in Washington.

    —–

    Detours

    Before and after GIFs that show just how fake ad photography can be.

    A designer’s war on misleading parking signs.

    Closing your eyes helps you remember stuff.

    —–

    Retail Therapy

    Wine Yoke. It’s no joke.

    Connie

  • AngelPad Elbows 13 Young Startups Into the World

    AngelPad Demo DayThe demo days of five-year-old AngelPad — an accelerator program run by married founders Thomas Korte and Carine Magescas – have become a hot ticket both in New York and San Francisco. Yesterday afternoon was no different. In downtown San Francisco, in a crowded co-working office space, 13 companies that had been groomed over the preceding four months pitched select investors, and they appeared to like what they heard.

    No doubt the investors were expecting big things. AngelPad works with two batches of roughly 12 companies twice a year – one on each coast—and nearly all of them have snagged seed funding from investors, with a handful of startups going on to raise tens of millions of dollars, including Vungle, Crittercism, and Postmates.

    AngelPad — which takes a 7 percent stake in each startup in exchange for $50,000 (plus another $4,000 per founder) — has even come close to a billion-dollar exit in MoPub, a mobile advertising startup that Twitter acquired for $350 million in stock in September 2013; the company was worth roughly $800 million when Twitter went public two months later.

    Whether AngelPad’s newest batch — its eighth — will prove as promising remains to be seen. But at least a handful of companies looked like strong contenders for follow-on funding.

    One of our favorites, for example, was CstorePro, a SaaS application that promises to help convenience store owners more easily track their sundry, disparate products, as well as assist them in buying what they need, in the right amounts, from the cheapest wholesalers.

    The company isn’t alone in the space. StoreTender and Retalix are just two other vendors trying to help owners streamline their store operations. The world of convenience stores is also highly fractured — which could be a challenge or an opportunity, depending on your vantage point. According to the research group IBISWorld, roughly 68.2 percent of convenience-store operators employ less than five people. Still, there’s a giant market to pursue here. According to IBIS, as of 2012, the U.S. convenience store and truck stop industry included about 120,000 stores with combined annual revenue of about $355 billion.

    A second company that piqued our interest is Allay, an easy-to-use online HR and benefits platform for the country’s 500,000 insurance brokers — many of whom are getting knocked around by the fast-growing health insurance broker Zenefits. Given those brokers stand to lose $32.5 billion in yearly commissions, you can bet there’s a big opportunity in helping them figure out a better way to pair buyers and sellers of health care, and quickly.

    We also really liked HelloSponsor, an online platform that helps brand advertisers find, buy, and track sponsorships at scale. Roughly $3 billion is spent yearly on consumer events, and anyone who has tried to raise money for one can tell you that it’s a pain in the neck. The big question is whether sponsors will be as eager to scour opportunities on the platform – including by industry and geography – as event organizers will be eager to be found.

    Of course, you’re the investors! If you’d like to form your own opinions about the startups that presented yesterday, you can find the full list on a tear sheet here. AngelPad has also made it simple to meet with any or all of them. Just click here.

    Connie

    ,
    , , , , , , , , ,

  • StrictlyVC: January 20, 2015

    Happy Tuesday, everyone! Welcome back. (Web visitors, you might want to click here for an easier-to-read version of this morning’s emailed newsletter.)

    —–

    Top News in the A.M.

    Coinbase, the 2.5-year-old, San Francisco-based bitcoin wallet provider, has just raised $75 million in Series C funding, which is being billed as the largest round for a bitcoin company to date. DFJ led the funding, joined by earlier backers Andreessen Horowitz and Union Square Ventures. Other new backers notably include the New York Stock Exchange, the financial services firm USAA, the Spanish bank BBVA, and former Citigroup CEO Vikram Pandit. Dealbook has more here.

    Google is close to investing in SpaceX in a round that would value the rocket maker at more than $10 billion, reports The Information. You can read much more here about the potential tie-up and what appears to be driving it.

    —–

    Distelli Skips the Seed Round, Raising $2.8 Million in Series A Funding Instead

    In recent years, there’s been no shortage of chatter about seed funding, from the alleged benefits of seed rounds to their ballooning size. (Clinkle, anyone?)

    Distelli, a two-year-old infrastructure automation company that simplifies code deployment and server management for developers, decided to skip past it all to raise $2.8 million in Series A funding led by Andreessen Horowitz, a round that sees general partner Scott Weiss joining Distelli’s board.

    The decision makes sense given the broader context. Distelli was founded by Rahul Singh, the fourth engineer on the Amazon Web Services team. He spent nine years building the platform services and infrastructure that powers the cloud computing platform, and he’s accustomed to finding ways to move things forward as quickly as possible.

    In fact, Singh — who says Amazon’s developers push out new code every 11 seconds – not only credits Amazon’s growth with its own “move fast” culture, but he says Amazon inspired him to make it easy for any developer to iterate just as quickly. Toward that end, Distelli enables engineers to communicate with every server in their environment to learn what’s running on each of them, as well as update their code or roll it back, and track every change in the process.

    It isn’t a brand-new concept. Distelli, which is based in Seattle and employs six people (including two other former Amazon engineers), is going up against a number of competitors. Among them are Chef, a company that allows its users to automate how they build, deploy, and manage their infrastructure, and Puppet Labs, which also develops IT automation software. Both have raised many tens of millions of dollars in venture capital, too.

    Singh argues that Distelli has a much bigger vision than other startups and that Distelli’s biggest competition at the moment are the many software teams still building their own infrastructure automation systems internally.

    Still, says Singh, it was important to have someone like Weiss – who cofounded the email security company IronPort Systems back in 2001 – in Distelli’s camp as soon as possible.

    Indeed, skipping over seed funding had “little to do with equity and valuation,” he explains. “The real significance of doing an A round was that angel rounds often don’t include board seats and I want a great partner to execute because the opportunity is so huge.”

    As for the size of the round, which is modest by recent standards, Singh observes that “just as raising too little can be a problem, raising too much can be a problem, too. I wanted to ensure we raised enough money to reach our next set of goals and to achieve what we want in next 18 months — without getting complacent.”

    —–

    (Other) New Fundings

    Aoliday, a months-old, Shanghai, China-based travel site and mobile app that helps Chinese tourists arrange oversea trips, has raised $1.5 million in seed funding from Gobi Partners.

    Apus Group, a six-month-old, Beijing-based Android app development firm, has raised a whopping $100 million in Series B funding from the Chinese venture firms Chengwei Ventures, SIG Ventures, and Qiming Venture Partners, according to China Money Network. Earlier backersNorthern Light Venture Capital and Redpoint Ventures also participated in the round. The company had previously raised $16 million, says the report.

    Avalara, an 11-year-old, Bainbridge Island, Wa.-based provider of cloud-based software for sales tax and other transactional tax compliance, has raised $42 million in Series D-1 funding from Technology Crossover Ventures. The company has now raised $223.6 million to date.

    Car Throttle, a six-year-old, London-based viral content startup, has raised $1.6 million in new funding from Redalpine, with participation from Facebook’s VP of Global Partnerships, Blake Chandlee, along with earlier investor Passion Capital. The company has now raised $2.2 million altogether, shows Crunchbase.

    Citelighter, a four-year-old, New York-based company whose software platform helps students save, organize and cite information while writing their papers, has raised $2 million in Series Seed-2 funding led by Propel Baltimore Fund, with participation from Maryland Venture Fund, Gulf Ventures, New York Angels, Baltimore Angels and Blu Ventures. The company has now raised $4.5 million altogether.

    Dataiku, a two-year-old, Paris, France-based startup whose software helps data scientists and analysts perform machine learning on data, has raised $3.6 million in Series A funding led by Alven Capital and Serena Capital.

    EarlySense, a 10-year-old, Ramat Gan, Israel-based company that makes sensors that track vital signs and movement for medical purposes, has raised $20 million in Series F funding led by Samsung Ventures. Earlier backers JK&B Capital, Pitango Venture Capital, ProSeed and Welch Allyn also participated in the round. Venture Capital Dispatch has more here.

    eMoov, a four-year-old, London-based online real estate service, has raised $2.3 million in funding led by the London firm Episode 1.

    GoBalto, a 6.5-year-old, San Francisco-based clinical-trials software company, has raised $12 million in Series C funding led by new investor Mitsui Global Investment, with participation from Dolby Family Ventures. Earlier backers Aberdare Ventures, Qualcomm Life, West Health Investment Fund and EDBI also participated in the round. The company has now raised $37.6 million to date, shows Crunchbase.

    Meituan, a four-year-old, Beijing, China-based group discount platform, has raised $700 million in new funding at a valuation of $7 billion, according to a company announcement flagged by China Money Network. Details of the investors are not disclosed. The company had reportedly raised a giant round of $300 million in Series C financing led by General Atlantic just eight months ago. The company, which also counts Alibaba Group Holdings and Northern Light Venture Capital among its backers, raised its first round, a $20 million Series A from Sequoia Capital in 2010. It raised $50 million in Series B funding the following year.

    Palantir Technologies, the 11-year-old, Palo Alto, Ca.-based data-mining software company known for being among Silicon Valley’s most secretive, is raising yet another round of funding, according to WSJ sources. Palantir, which sells software to the U.S. government and Wall Street, raised $500 million last year alone and has raised roughly $1 billion altogether from investors, including In-Q-Tel, Founders Fund and Tiger Global Management.

    Planet Labs, a four-year-old, San Francisco-based company that plans to map the entire Earth with a fleet of imaging satellites, has raised $95 million in new funding, including $70 million in Series C funding led by Data Collective, and a $25 million debt facility from Western Technology Investment.

    Porch.com, a two-year-old, Seattle-based home-improvement startup, has raised $65 million in new funding at a $500 million valuation, reports Venture Capital Dispatch. Valor Equity Partners led the round with participation from new investors Battery Ventures, Founders Fund, Panorama Point Partners, home improvement expert Ty Pennington and other individual investors. Earlier backers Lowe’s Home Improvement and Capricorn Investment Group also joined the round, which brings the company’s total funding to roughly $100 million.

    PureLiFi, a three-year-old, Edinburgh, Scotland-based company that’s developing Li-Fi (light fidelity) and visible light communications technologies, has raised £1.5 million ($2.3 million) led by the Scotland-based angel group London & Scottish Investment Partners, with additional funding from the Scottish Investment Bank and Old College Capital, the venture investment arm of the University of Edinburgh, from which the company was spun out. TechCrunch has more here.

    Rubikloud, a 1.5-year-old, Toronto-based retail intelligence platform, has raised $7 million in Series A funding from TOM Group, a joint venture between Li’s Cheung Kong Holdings and Hutchison Whampoa; and Ule, a Chinese e-commerce platform launched by TOM Group and China Post. Access Industries also participated. The company has raised $8.5 million to date.

    ShopClues, a four-year-old, Gurgaon, India-based e-commerce marketplace, has raised $100 million (Rs 620 crore) in Series D funding led by Tiger Global Management, reports VC Circle. The company had previously raised money from Helion Venture Partners, Nexus Partners, and the Japanese investment firm Beenos The company has raised roughly $116 million to date, shows Crunchbase.

    Sparkcentral, a 3.5-year-old, San Francisco-based platform that aims to help larger companies more efficiently follow up on customer service and engagement over Twitter and Facebook, has raised $12 million in Series B funding led by Split Rock Partners. The company has now raised $17.6 million to date, shows Crunchbase.

    Visualead, a three-year-old, Tel Aviv, Israel-based startup that specializes in QR code technology, has raised an undisclosed amount of Series B funding from Alibaba Group Holdings. The round represents Alibaba’s first investment in an Israeli company, notes TechCrunch. Visualead had previously raised a total of $2.4 million.

    Windeln.de, a five-year-old, Munich, Germany-based online shopping site specializing in baby products, has raised €45 million ($52 million) in funding led by Goldman Sachs and Deutsche Bank, with participation from DN Capital.

    WorkAngel, a two-year-old, London-based mobile-first employee-reward platform, has raised $5 million in Series A funding from former Tesco CEO Terry Leahy, with participation from other individual investors, including Lord David Alliance.

    XueXiBao, an eight-month-old, Beijing, China-based app that helps middle and high school students find quick answers to questions, has raised $20 million in funding from SoftBank China Venture Capital and earlier backer GSR Ventures. TechNode has more here.

    —–

    New Funds

    HV Holtzbrinck Ventures has closed its sixth, early-stage fund with 285 million euros ($329.7 million). The pool was closed in less than four months, says the firm, which closed its last fund with 175 million euros in 2012.

    —–

    Exits

    Trophos, a Marseille, France-based biotechnology company, is being acquired by drug maker Roche Holding for up to 470 million euros ($543.2 million) to boost its neuromuscular disease business.

    Twitter announced this morning that it has agreed to acquire ZipDial, a Bangalore, India-based mobile business and brand platform, for undisclosed terms. TechCrunch reported a week ago that Twitter was in talks with the company.

    Smartphone giant Xiaomi has acquired 2.98 percent of Kingsoft, a maker of security, entertainment and enterprise products, for roughly $68 million, reports TechCrunch.

    —–

    People

    Prashant Fuloria, a veteran Internet product manager who joined Yahoo last year when it bought his former employer, the mobile analytics startup Flurry, will oversee all ad products at Yahoo, CEO Marissa Mayer announced last week.

    Game developer Zoe Quinn made headlines last year as the first target of Gamergate, an online movement of angry video game fans. Now, Quinn has launched an anti-harassment support network.

    Roughly 1,700 private jets are flying loads of billionaires and celebrities to Switzerland right now, including Bill Gates, Eric Schmidt, and Sheryl Sandberg.

    —–

    Job Listings

    Corigin Ventures in New York is looking for a paid intern.

    Signia Venture Partners in Menlo Park, Ca., is also looking for a paid intern.

    —–

    Data

    Fourth-quarter data on venture capital in Europe and Israel, organized and analyzed by Gil Dibner of DFJ Espirit.

    —–

    Essential Reads

    Here’s what helped Sony’s hackers break in: “Zero-Day” vulnerability.

    —–

    Detours

    Jeff Greene’s Beverly Hills estate, listed at $195 million, is believed to be the most expensive public listing in the U.S.

    The secret to smart groups: women.

    Someone in the Dover, Delaware police department is never going to live this one down.

    —–

    Retail Therapy

    Close the deal. Pull up in this.

    Connie

  • Distelli Skips the Seed Round to Land a Powerful Board Member

    Rahul SinghIn recent years, there’s been no shortage of chatter about seed funding, from the alleged benefits of seed rounds to their ballooning size. (Clinkle, anyone?)

    Distelli, a two-year-old infrastructure automation company that simplifies code deployment and server management for developers, decided to skip past it all to raise $2.8 million in Series A funding led by Andreessen Horowitz, a round that sees general partner Scott Weiss joining Distelli’s board.

    The decision makes sense given the broader context. Distelli was founded by Rahul Singh, the fourth engineer on the Amazon Web Services team. He spent nine years building the platform services and infrastructure that powers the cloud computing platform, and he’s accustomed to finding ways to move things forward as quickly as possible.

    In fact, Singh — who says Amazon’s developers push out new code every 11 seconds – not only credits Amazon’s growth with its own “move fast” culture, but he says Amazon inspired him to make it easy for any developer to iterate just as quickly. Toward that end, Distelli enables engineers to communicate with every server in their environment to learn what’s running on each of them, as well as update their code or roll it back, and track every change in the process.

    It isn’t a brand-new concept. Distelli, which is based in Seattle and employs six people (including two other former Amazon engineers), is going up against a number of competitors. Among them are Chef, a company that allows its users to automate how they build, deploy, and manage their infrastructure, and Puppet Labs, which also develops IT automation software. Both have raised many tens of millions of dollars in venture capital, too.

    Singh argues that Distelli has a much bigger vision than other startups and that Distelli’s biggest competition at the moment are the many software teams still building their own infrastructure automation systems internally.

    Still, says Singh, it was important to have someone like Weiss – who cofounded the email security company IronPort Systems back in 2001 – in Distelli’s camp as soon as possible.

    Indeed, skipping over seed funding had “little to do with equity and valuation,” he explains. “The real significance of doing an A round was that angel rounds often don’t include board seats and I want a great partner to execute because the opportunity is so huge.”

    As for the size of the round, which is modest by recent standards, Singh observes that “just as raising too little can be a problem, raising too much can be a problem, too. I wanted to ensure we raised enough money to reach our next set of goals and to achieve what we want in the next 18 months — without getting complacent.”

    Connie

    ,
    , ,

  • StrictlyVC: January 16, 2015

    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.

    —–

    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.

    —–

    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).

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    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.

    —–

    Retail Therapy

    Expose Smart Light for the iPhone.

    Connie

  • Fast Chat with the Inimitable Howard Lindzon

    Howard LindzonBy 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).

    Connie

    ,
    , ,

  • StrictlyVC: January 15, 2015

    Hi, everyone, happy Thursday! (Web visitors, this version of today’s email is easier to read.)

    —–

    Top News in the A.M.

    Blackberry says it hasn’t talked to Samsung about a possible acquisition, despite a press report to the contrary.

    RadioShack is preparing to file for bankruptcy protection as early as next month.

    Xiaomi has introduced its very own premium phablet, and it’s “ever so slightly slimmer and lighter than Apple’s offering,” notes Engadget.

    —–

    CircleUp Carves Out a Niche, as the AngelList of Private Equity

    CircleUp isn’t a household name. But the three-year-old, San Francisco-based crowdfunding site has become well-known to consumer and retail companies that are too small to interest private equity firms yet growing too fast for a bank loan. So far, 70 businesses with yearly revenue of between $1 million and $10 million have raised an average of $1 million from CircleUp investors, all of whom are “accredited,” and who, on average, write checks in the neighborhood of $30,000.

    Many of those backers — and there are more than 10,000 of them — are high-net-worth entrepreneurs or executives who’ve been in or around the consumer space, says CircleUp cofounder Rory Eakin. But the next largest group isn’t wealthy dentists looking to play venture capitalist, he says. It’s financial services pros. “We’re seeing hedge fund [investors], VCs, and other investment professionals who like making direct investments without the typical fund structure,” he says. “More family offices and [registered investment advisors] are coming on to the platform, too.”

    It’s a little like AngelList — though less risky, suggests Eakin, citing Kauffman Foundation findings that smaller consumer and retail product companies return 3.5x within four-and-a-half years on average. Eakin, whose company now employs 40 people, told us more last week in a conversation that’s been edited for length.

    You work with companies with at least $1 million in revenue. Why is that threshold meaningful?

    It means these companies have an established product in the market, with suppliers, distribution and customers — data [that] can help put CircleUp’s investors in a position to succeed.

    The companies offer investors equity in return for their capital. How much, typically?

    A company typically sells 10 to 30 percent in a round on CircleUp. Investors can own all or a portion of that amount based on how much they invest.

    How do you assess the companies that are applying for funding on your platform?

    We [pore over] proprietary data about the more than 6,000 companies that have applied, as well as look at third party data, to score a company on how it has performed relative to its category. For example, if your natural shampoo is growing at 100 percent a year, that’s interesting, but if the category is growing at 200 percent per year, you’re losing market share.

    If more than 6,000 companies have applied for funding on the platform, yet 70 have completed a round, you must be turning away most applicants. Why?

    We’ll pass for two or three reasons. The first is valuation. Consumer goods tend to be valued off revenue multiples, so it’s a cleaner metric than you see in tech, and it gives us [information] to pass on to companies that aren’t priced appropriately based on risk. We also look at the experience and background of the management team, as well as the brand itself. Assessing the latter is more art than science, but we’re doing things with data now that helps us screen for it more efficiently.

    Are you actively seeking out companies or is your deal flow mostly inbound?

    A lot of great companies apply, but we’ve also done a lot of work to expand our partnerships. We get a lot of companies from PE firms with nowhere to send smaller companies. We’re also networking actively with bankers, brokers, and lawyers to ensure that we have quality companies.

    We’ve also announced partnerships with General Mills, Proctor & Gamble, and Johnson & Johnson that are designed to help companies thrive after they raise money.

    How so?

    Largely, they meet with founders in an informal mentorship program where they talk about distribution and key functions of helping companies scale. It’s a win-win, because these strategics get to see what’s happening in the early stage of the market and they get exposure to these new products, while the [smaller] companies form relationships with [these potential investors, who might also acquire them].

    CircleUp is a broker-dealer, meaning you accept a commission for facilitating the transactions on your platform. Do you share publicly what that percentage is?

    It’s a small amount that’s competitively priced.

    What about fundraising? CircleUp announced its last round nearly a year ago. Are you talking with investors again?

    A [new round] isn’t on the roadmap. Our focus right now is on continuing to see opportunities and to reduce friction in the market. We knew the market wasn’t functioning as well as it could, but we didn’t appreciate just how painful things had been for these companies and investors.

    —–

    New Fundings

    Agrivida, a 12-year-old, Medford, Ma.-based tech company focused on animal nutrition, has raised $12 million in Series D funding led by Cultivian Sandbox Ventures. Other participants in the round include an affiliate of Maschhoff Family Foods, Middleland Capital, and the Sontag Family Trust, as well as earlier backers Kleiner Perkins Caufield & Byers, DAG Ventures, Bright Capital Partners, Gentry Venture Partners, Northgate Capital, and PrairieGold Venture Partners.

    BlockCypher, a year-old, San Mateo, Ca.-based block chain web services startup, has raised $3.1 million in seed funding, including from Foundation Capital, New Enterprise Associates, AME Cloud Ventures, venture capitalist Tim Draper, Upside Partnership, Streamlined Ventures and Fenox Venture Capital.

    Boxed, a 1.5-year-old, New York-based company that delivers wholesale club-like purchases to consumers’ front doors, has raised $25 million in Series B funding led by GGV Capital and Digital Sky Technologies. Other participants in the round include Founders Fund, AME Cloud Ventures, Vaizra Investments, and earlier backers First Round Capital,Greycroft Partners and Signia Venture Partners. The company has now raised $32.6 million altogether, shows Crunchbase.

    Bridj, a three-year-old, Cambridge, Ma.-based company that uses big data to predict traffic congestion, then deploys minibuses to more easily navigate around it, is raising a Series A round of $10 million to $15 million, according to BostInno, which reports that the round is expected to value Bridj at $60 million. To date, the startup has raised $5 million, including from Atlas Venture, NextView Ventures, Suffolk Equity, Freshtracks Capital, and angel investors.

    Forward Health Group, a 5.5-year-old, Madison, Wi.-based data and analytics software provider, has raised $5.7 million of venture capital led by Triple Tree Capital Partners. Wisconsin Investment Partners and BrightStar Wisconsin Foundation also participated in the round. The company has now raised $6 million altogether.

    Insite Software, a 12-year-old, Minneapolis, Mn.-based shipping platform used by manufacturers and distributors, has raised $15 million in growth equity from Volition Capital.

    Neo Technology, a 7.5-year-old, San Mateo, Ca.-based company behind a popular graph database called the Neo4j, has raised $20 million in Series C funding led by Creandum, with participation from Dawn Capital and current investors Fidelity Growth Partners Europe, Sunstone Capital and Conor Venture Partners. The company has now raised $44 million altogether. TechCrunch has more here.

    Obalon Therapeutics, a 6.5-year-old, San Diego-based company behind a gastric balloon technology for weight loss therapy, has received $20 million in Series D funding and a $10 million loan from Square 1 Bank. The Series D investors included Axon Ventures, Mirae Asset Venture Investment, Striker Asia Opportunities Fund, Domain Associates, InterWest Partners and Okapi Venture Capital. The company has now raised roughly $69 million altogether, shows Crunchbase.

    Skydio, a months-old, Menlo Park, Ca.-based drone technology startup whose computer vision and motion planning algorithms work in concert with mobile phones to help drones navigate their surroundings, has raised $3 million in seed funding led by Andreessen Horowitz, with participation from Accel Partners.

    Treasure Data, a three-year-old, Mountain View, Ca.-based data processing cloud service, has secured $15 million in Series B funding led by Scale Venture Partners, with participation from AME Cloud Ventures and the company’s earlier backers. The company has now raised $23 million altogether. GigaOm has more here.

    —–

    People

    Wesley Chan, a Google veteran who joined Google Ventures in 2009 and stepped down a year ago to become an entrepreneur-in-residence, has left the company altogether to join San Francisco-based Felicis Ventures as a managing partner. Felicis, launched nearly a decade ago, was founded by Aydin Senkut, another former Google executive.

    Serial entrepreneur Elon Musk has decided to donate $10 million to the Future of Life Institute, a Boston-based nonprofit that “works to mitigate existential risks facing humanity, particularly the risks from artificial intelligence,” as Wikipedia describes it. “Here are all these leading AI researchers saying that AI safety is important”, said Musk in a statement. “I agree with them.”

    Entrepreneur-investor Kevin Rose has left Google Ventures to run his five-month-old startup lab North Technologies full time. Recode has more on his move, and his company’s new $5 million in funding, here.

    Longtime VC Blaine Wesner is selling his 10,563 square-foot “floating box house,” in Austin, Tx. for “in the range of $20 million”, reports Curbed. Wesner joined Austin Ventures in 1990 and was a general partner for 15 years.

    Neetzan Zimmerman, who served as editor-in-chief of the secret-sharing app Whisper, has left the company, he confirmed to Capital New York yesterday. Zimmerman and other staff members were suspended from the company in late October, following a series of Guardian stories that reported Whisper doesn’t provide the anonymity for users that it promises them. Zimmerman, who reacted very publicly to the allegations (to the chagrin of Whisper CEO Michael Heyward), joined Whisper a year ago from Gawker, where he was a prized editor.

    —–

    Jobs

    SoftBank Internet & Media is looking to hire a strategy consultant. The job is in the Bay Area.

    —–

    Essential Reads

    Bitcoin may be down, but it isn’t doomed.

    MySpace still reaches 50 million people each month.

    A flattering behind-the-scenes look at Silicon Valley’s pay-it-forward culture.

    —–

    Detours

    Actor Tom Hanks on his two years at community college.

    Wired is “no longer a pirate ship” where “disgusting,” “embarrassing” countertop stains will be tolerated.

    How to make a crossbow out of office supplies. (Wired writers, this one is for you.)

    —–

    Retail Therapy

    The Porsche 911 Targa 4 GTS. We approve.

    Connie

  • CircleUp Carves Out a Niche, as the AngelList of Private Equity

    Rory-Eakin-CircleUpCircleUp isn’t a household name. But the three-year-old, San Francisco-based crowdfunding site has become well-known to consumer and retail companies that are too small to interest private equity firms yet growing too fast for a bank loan. So far, 70 businesses with yearly revenue of between $1 million and $10 million have raised an average of $1 million from CircleUp investors, all of whom are “accredited,” and who, on average, write checks in the neighborhood of $30,000.

    Many of those backers — and there are more than 10,000 of them — are high-net-worth entrepreneurs or executives who’ve been in or around the consumer space, says CircleUp cofounder Rory Eakin. But the next largest group isn’t wealthy dentists looking to play venture capitalist, he says. It’s financial services pros. “We’re seeing hedge fund [investors], VCs, and other investment professionals who like making direct investments without the typical fund structure,” he says. “More family offices and [registered investment advisors] are coming on to the platform, too.”

    It’s a little like AngelList — though less risky, suggests Eakin, citing Kauffman Foundation findings that smaller consumer and retail product companies return 3.5x within four-and-a-half years on average. Eakin, whose company now employs 40 people, told us more last week in a conversation that’s been edited for length.

    You work with companies with at least $1 million in revenue. Why is that threshold meaningful?

    It means these companies have an established product in the market, with suppliers, distribution and customers — data [that] can help put CircleUp’s investors in a position to succeed.

    The companies offer investors equity in return for their capital. How much, typically?

    A company typically sells 10 to 30 percent in a round on CircleUp. Investors can own all or a portion of that amount based on how much they invest.

    How do you assess the companies that are applying for funding on your platform?

    We [pore over] proprietary data about the more than 6,000 companies that have applied, as well as look at third party data, to score a company on how it has performed relative to its category. For example, if your natural shampoo is growing at 100 percent a year, that’s interesting, but if the category is growing at 200 percent per year, you’re losing market share.

    If more than 6,000 companies have applied for funding on the platform, yet 70 have completed a round, you must be turning away most applicants. Why?

    We’ll pass for two or three reasons. The first is valuation. Consumer goods tend to be valued off revenue multiples, so it’s a cleaner metric than you see in tech, and it gives us [information] to pass on to companies that aren’t priced appropriately based on risk. We also look at the experience and background of the management team, as well as the brand itself. Assessing the latter is more art than science, but we’re doing things with data now that helps us screen for it more efficiently.

    Are you actively seeking out companies or is your deal flow mostly inbound?

    A lot of great companies apply, but we’ve also done a lot of work to expand our partnerships. We get a lot of companies from PE firms with nowhere to send smaller companies. We’re also networking actively with bankers, brokers, and lawyers to ensure that we have quality companies.

    We’ve also announced partnerships with General Mills, Proctor & Gamble, and Johnson & Johnson that are designed to help companies thrive after they raise money.

    How so?

    Largely, they meet with founders in an informal mentorship program where they talk about distribution and key functions of helping companies scale. It’s a win-win, because these strategics get to see what’s happening in the early stage of the market and they get exposure to these new products, while the [smaller] companies form relationships with [these potential investors, who might also acquire them].

    CircleUp is a broker-dealer, meaning you accept a commission for facilitating the transactions on your platform. Do you share publicly what that percentage is?

    It’s a small amount that’s competitively priced.

    What about fundraising? CircleUp announced its last round nearly a year ago. Are you talking with investors again?

    A [new round] isn’t on the roadmap. Our focus right now is on continuing to see opportunities and to reduce friction in the market. We knew the market wasn’t functioning as well as it could, but we didn’t appreciate just how painful things had been for these companies and investors.

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

    Connie

    , ,
    , , , , ,

StrictlyVC on Twitter