StrictlyVC: February 26, 2015

Happy Thursday, everyone! (Web visitors, here’s an easier-to-read version of today’s email.)

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Top News in the A.M.

The Washington Post, on today’s net neutrality vote: “It’s easy to point to the coming FCC’s vote as another indication Silicon Valley’s time has come in Washington. But here’s the reality: The industry has already arrived.”

Susan Biglieri, who has served as the CFO of Kleiner Perkins Caufield & Byers since 2001, is set to testify to this morning in the Ellen Pao case. Topics she’s sure to touch on: partner compensation.

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Opendoor Raises $20 Million for Its Audacious Home-Buying Business

Opendoor, a year-old, San Francisco-based company, is on a mission to make residential real estate liquid by making it simple to buy and sell it online.

Investors are buying what it’s selling. This morning, the company is announcing $20 million in fresh funding led by GGV Capital, a round that brings the company’s total outside funding to $30 million.

Consumers are buying Opendoor’s pitch, too. The 20-person company is now buying one house per day – sight unseen — in its test market of Phoenix. Home owners need merely give it their address and some basic details, and using public market information about historical home sales and OpenDoor’s own proprietary data about market conditions, the company arrives at an offer price that’s just one to three points below what the seller might fetch on the open market roughly three months into the future. (That’s the average time, it says, required to sell a home in the U.S.)

The big question now is whether the whole operation is sustainable. Certainly, the risk and reward associated with what it’s trying to pull off is enormous.

Consider: After Opendoor acquires each home, it must ensure the home is up to code in order to resell it. The repairs alone can likely get complicated, as any homeowner can attest. But each home is also given numerous cosmetic upgrades that will give it so-called curb appeal. Think everything from new kitchen cabinets to light landscaping.

Opendoor can (and surely intends) to sell its homes at a premium, based on those upgrades. But it’s a lot of work, the kind that involves contractors and lawn maintenance workers, in addition to Opendoor’s growing team of developers. More, hanging on to that inventory in the meantime is a huge risk. Though the company’s equity certainly helps, as does a partnership with a bank that gives it debt to use, the housing market is highly sensitive to interest rates and other macroeconomic factors. In Phoenix, for example, where Opendoor has been testing out its service for the last several months, up to a quarter of the homes that are listed for sale are eventually taken back off the market.

CEO Eric Wu — a serial entrepreneur who cofounded Opendoor last year with investor-operator Keith Rabois — acknowledges the challenges, but he seems convinced that none are insurmountable. Partly, that owes to the progress Opendoor has made as a software company, whose platform can now (Wu says) seamlessly address everything from property assessments to quickly presenting offers to potential customers to handling the payment of the house to overseeing the infrastructure involved with holding and reselling it.

Wu also knows that there’s tremendous pain associated with home buying today, and where there is pain, there is opportunity.

In fact, Wu is already envisioning the day that Opendoor both buys homes, then resells others it owns to those same customers, creating one of those virtuous cycles that the digerati like to talk about.

“Longer term,” says Wu, “we’d love to have a path where we transact 5 to 35 percent of all homes. Once that occurs, this business really starts to evolve into us solving pain points for homeowners, from [allowing them to easily sell their homes] to helping them [purchase] another with high-quality renovations. We definitely think we can touch both buyers and sellers.”

The company could even get into the financing business eventually, Wu suggests. There’s “lot of headache and stress in securing mortgages today,” he notes. OpenDoor has enough work ahead of it right now, but it’s “something we’ll look at down the road,” he says.

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New Fundings

3D Robotics, the six-year-old, San Diego-based personal drone manufacturer co-founded by former Wired magazine editor Chris Anderson, has raised $50 million led by Qualcomm, reports VentureWire. The company has now raised $85 million in funding to date, including from Ooga Labs, True Ventures, Foundry Group, SK Ventures, O’Reilly AlphaTech Ventures, and Mayfield Fund.

Airtable, a two-year-old, San Francisco-based company that makes complex databases usable on users’ mobile phones, has raised $3 million in funding, including from Box Group, Caffeinated Capital, CrunchFundData Collective, Freestyle Capital, and numerous individual investors, including Bebo cofounder Michael Birch. TechCrunch has more here.

Ardusat, a young, Salt Lake City, Ut.-based education company focused on enhancing student engagement through hands-on experimentation, has raised $1 million in seed funding from Space Florida, Fresco CapitalSpire and other investors. The outlet edSurge has more here.

Branch Metrics, a nearly year-old, Palo Alto, Ca.-based software company focused on mobile deep linking (where pages inside of mobile apps are accessible immediately with the click of a link), has raised $15 million in Series A funding co-led by earlier investors New Enterprise Associates and Ben Narasin of TriplePoint Capital, with participation from Pejman Mar Ventures, Zach Coelius, and Cowboy Ventures. The company had previously raised $2.75 million from many of those same investors.

Chefs Feed, a three-year-old, San Francisco-based content platform that offers food suggestions from top chefs, has raised $4 million in Series A funding led by Artis Ventures, with participation from Haas PortmanStructure Capital, Subtraction Capital and individual investors. The company has now raised $8.2 million to date.

Comet Biorefining, a nearly six-year-old, Ontario-based maker of cellulosic glucose technology, has raised an undisclosed amount of funding led by Sofinnova Partners.

Coolan, a nearly two-year-old, San Mateo, Ca.-based company that employs analytics and artificial intelligence to predict server failure and avert data center outages, has raised an undisclosed amount of seed funding from investors, including Keshif Ventures, North Bridge Venture Partners, and The Social+Capital Partnership. More here.

Dtex Systems, a 15-year-old, San Jose, Ca.-based company whose software prevents cyber security breaches originating within an organization, has raised $15 million Series A funding co-led by Norwest Venture Partners and Wing Ventures.

Exablox, a 4.5-year-old, Mountain View, Ca.-based cloud storage provider, has raised $16 million in Series C funding from Dell Ventures. The company has now raised $38.5 million altogether, including from DCM, Norwest Venture Partners, and U.S. Venture Partners.

Getable, a five-year-old, San Francisco-based company whose mobile tools are used for ordering and tracking construction equipment, has raised $5 million in Series A funding led by The Social+Capital Partnership. The company has now raised $8.2 million altogether, shows Crunchbase.

IronSource, a 5.5-year-old Tel Aviv-based ad tech company, has raised $20 million roughly six months after raising an $85 million round from a syndicate of U.S. and China-based investors that the company describes as among the largest strategic partners in mainland China. The company is expected to go public later this year or early next year, says Forbes.

LocoMotive Labs, a 2.5-year-old company that makes play-based apps for children with special needs, has raised $4 million in Series A funding led by Softbank Ventures Korea and TAL Education Group, with participation from earlier backers K9 Ventures, Kapor CapitalNewSchools Venture Fund, D3Jubilee, and individual investors. The company has now raised $5.15 million altogether.

Luxe Valet, a nearly two-year-old, San Francisco-based on-demand valet startup, has raised $20 million in Series A funding co-led by Redpoint Ventures and Venrock Partners. The company has now raised $25.5 million to date, shows Crunchbase.

Lytro, a four-year-old, Mountain View, Ca.-based company whose cameras capture the entire light field around a picture, has reportedly raised $50 million in new funding led by GSV Capital, with participation from all of its earlier investors, which include Allen & Co., Greylock Partners, Andreessen Horowitz, New Enterprise Associates, and K9 Ventures. Unfortunately for between 25 and 50 of its 130 employees, Lytro is also about to “make some cuts in some areas so we can staff up in some new ones,” CEO Jason Rosenthal tells Recode. “Fifty million dollars is a nice big number,” he adds, “but it is not unlimited. We had to make some pretty tough decisions.”

Klipfolio, a 14-year-old, Ottawa, Ontario-based business intelligence company, has raised $6.2 million in Series A round led by Omers Ventures, with participation from the company’s seed investors, including BDC Capital, Mistral Venture Partners, Acadia Woods, BOLDstart Ventures, CommonAngels Ventures, and Fundfire. The company has now raised $7.7 million to date.

Orca Pharmaceuticals, a 2.5-year-old, Abingdon, England-based startup at work on developing oral drugs for chronic inflammatory diseases, has struck an agreement with the much larger British drug developer AstraZeneca to receive up to $122.5 million if it hits various milestones. The deal also gives AstraZeneca the option to buy Orca’s compounds at the end of the collaboration.

Pivot3, a 12-year-old, Austin-based vendor of hyper-converged infrastructure, has raised $45 million in funding from Argonaut Private Equity, S3 Ventures, InterWest Partners, and Wilson Sonsini Goodrich & Rosati. The company has now raised $184.8 million altogether, shows Crunchbase. Forbes has more here.

TopOPPS, a year-old, St. Louis, Missouri-based company that makes predictive analytics software for sales teams, has raised $2 million in funding led by Cultivation Capital. The company has now raised roughly $4 million, it says. More here.

SecureKey Technologies, a seven-year-old, Toronto-based maker of identity and authentication software, has raised $19 million in Series C funding led by Blue Sky Capital and earlier backer Rogers Venture Partners. The company has now raised $75.7 million altogether, shows Crunchbase.

Shark Punch, a four-year-old, game development studio with offices in San Francisco and Helsinki, has raised $1.2 million in seed funding led by London Venture Partners, with participation DN Capital, Reaktor Polte, and other investors.

Unify Square, a seven-year-old Bellevue, Wa.-based company that sells software, services and support for Microsoft Lync/Skype for Business (it was started by Microsoft veterans), has raised $8.2 million in Series B funding from individual investors with backgrounds at Yahoo, IBM and Ariba. The company has now raised $22.2 million altogether. GeekWire has more here.

Zimperium, a 4.5-year-old, San Francisco-based mobile security company that protects smartphones against advanced cyber attacks, has raised $12 million in new funding led by Australia’s Telstra, with participation from Japan’s TOYO Corp. and earlier backers Sierra Ventures, Lazarus Israel Opportunities Fund, and Samsung. The company has now raised $20 million altogether, shows Crunchbase.

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New Funds

MicroVentures, a 5.5-year-old, Austin, Tx.-based equity crowdfunding platform, is now enabling its investors to fund startups in the portfolio of the accelerator and seed-stage venture firm 500 Startups. Crowdfund Insider has more here.

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People

Chi-Hua Chien, who until last October served as an investing partner at Kleiner Perkins Caufield & Byers, took the stand yesterday in the gender discrimination and retaliation case of former Kleiner partner Ellen Pao, who has said she was systematically excluded from opportunities that were provided to men at the firm, including a ski trip to Vail and an all-male dinner party at the apartment of former Vice President Al Gore. Pao has stated in court papers that Chien didn’t invite women to the dinner because they “kill the buzz.” Said Chien yesterday, “I never said that or anything like that . . . The quotes in the lawsuit, the things she claimed I had said, the events she claimed I organized—it was very, very hurtful.” Some of the emails brought into testimony seemed to bolster Pao’s argument, however, including a note from Chien to Path CEO Dave Morin, in response to Morin’s request to add a woman to the Vail trip. “Why don’t we punt on her and find 2 guys who are awesome. We can add 4-8 women next year.” (There were no more ski trips after that.) More here and here.

Twitter CEO Dick Costolo talks with the New York Times about how he decides what’s abuse on the platform, and what he thinks constitutes free speech. Says Costolo: “One way of thinking about it is: I may have a right to say something, but I don’t have a right to stand in your living room and scream it into your ear five times in a row.”

Bob Grady has been appointed a partner at the San Francisco-based private equity firm Gryphon Investors. Grady previously spent five years at the Wyoming-based investment firm Cheyenne Capital, where he served as a general partner and managing director; he was also formerly a managing director and global head of venture and growth capital at The Carlyle Group. Grady is also a longtime Republican operative.

Venture capitalist Bill Gurley of Benchmark isn’t done warning the industry about its reckless behavior. Yesterday, he published half a dozen reasons that today’s late-stage private rounds are very different from an IPO — and why investors would be wise to curb their enthusiasm for them.

Yahoo CEO Marissa Mayer is upholding a long tradition at Yahoo of overpaying people to keep them from leaving, reports Business Insider. One of the outlet’s sources says a prized employee in the company’s ad sales group makes a stunning $2.5 million a year — up from the $450,000 he was making before Mayer arrived. Meanwhile, Jeff Bonforte, the senior vice president in charge of Yahoo’s communication products, is “rumored” to be making roughly $5 million a year, says BI.

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Jobs

Illumina Ventures, a corporate venture unit of the bioinformatics giant Illumina that’s focused on life sciences, is looking for a global head. The job is in San Diego.

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Essential Reads

One billion viewers and no profit; the WSJ takes a hard look at YouTube.

Google has created a computer that can teach itself dozens of games —and wins.

Gartner, the research firm, has predicted a third of all jobs will be lost to automation within a decade. Academics who used to dismiss such findings are starting to worry they’re true, too.

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Detours

Downhill biking through the Himalayas.

Examining pricey museum sleepovers.

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Retail Therapy

Mugs for mustachioed men.

Outlet snouts.



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