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Maveron’s Dan Levitan: This Time Is Not “Different”
Dan Levitan, the former investment banker who founded Maveron with Starbucks founder Howard Schultz, is having a pretty good run as a venture capitalist. His 16-year-old firm has backed a long line of consumer-facing startups that have become household brands, including eBay, Groupon, Cranium, Shutterfly and Zulily, the daily deals website for moms whose late 2013 IPO transformed an early, $5 million check from Maveron into a windfall for the firm and its investors (though Zulily’s stock has more recently been sinking).
That long string of winners has convinced Maveron’s institutional backers to provide it with nearly $1 billion over the years, including a $140 million fifth fund that the firm closed last year. Still, Levitan — who has a big personality and tells the sorts of unguarded personal anecdotes that readers love and public relations pros abhor – readily admits that Maveron has lost its way a couple of times before getting back on track.
StrictlyVC talked with him last week in a fun chat, shortened here for length (and per the request of his watchful communications advisor).
You’re in Seattle, but you’ve had a team in San Francisco for a few years. Do you spend time down here, too?
I’m down at least every two weeks. Increasingly, we’ll be down there more. We’ve had some successes up here in Seattle, but as we’ve moved to a more-focused consumer-only strategy, we realize we have to be more successful in San Francisco.
A “more-focused” consumer strategy? Maveron has always been focused on consumer startups, hasn’t it?
We’ve always been consumer only, but we kind of justified [a] business-to-business-to-consumer [strategy] for the first 10 years, [meaning we’d back] products and services that sell into consumer businesses. We called it “powering consumer services,” and it was a mockery of a parody of a tragedy of a sham, so we decided to focus on consumer very narrowly and invest only in end-user consumer brands. It’s worked much better, including because we’re presented with more [of these types of startups]; we have a greater pool of companies facing similar problems, which helps our entrepreneurs; and our LPs are getting more consistent returns.
Many people think of Maveron as a Series A investor, but it also makes seed-stage bets. How do you approach both types of investments, and what size investments are you making at these very different stages?
Our seed bets are small — $100,000 to $250,000 – and we make one to two a month. Our [San Francisco-based partner] Rebecca Kaden leads the seed effort, but it’s a completely different process than our core investment effort. There are six of us on the investment team and if any two of us wants to do a seed deal, we will. It’s designed to get to know entrepreneurs and spaces we might not be familiar with, so sometimes after a day or two, we’ll say, “Fine, we’re in for $100,000.”
If we make a core investment, it’s a more focused effort. We typically write checks of $2 million to $8 million for between 15 and 25 percent of the company. [Before we invest], basically one partner has to decide that they like it and want to champion it and they get the colleague who is most appropriate to work with them on it. Then everyone on our team meets every entrepreneur we’re going to back in a Series A deal.
Does majority rule?
[Not necessarily.] Someone might like [a deal] and, after issues are pointed out, says, “I can handle it.” Ultimately, I think something that’s obvious doesn’t particularly relate to great VC returns. There have been a few times in the last 16 years when we’ve funded something that was a no-brainer and it worked well for us. But most of the time, it’s not a no-brainer. Our goal is to give people the latitude to make some non-consensus bets.
A few of Maveron’s portfolio companies have gone public in the last 18 months or so, including the sandwich chain Potbelly, Zulily, and the pet health insurance company Trupanion. What do you think of the broader trend of entrepreneurs pushing out their IPOs and staying private longer?
I think entrepreneurs are being thoughtful that as long as late-stage [investors] value their companies at or above public market prices, why not take advantage of it? I don’t think the dichotomy between late-stage and public valuations is sustainable, though. Over some period of time, that [gap], which is so stark today, will close, either because public companies become more expensive or late-stage companies [grow less so].
What are you seeing in terms of valuations?
In general, it’s a good time to be an entrepreneur. We’ve seeing valuations based much more on greed than fear, which we’ve seen before.
I’m humbled by how much we all benefit by the up cycles, but I promise that everyone who says this time is different is wrong.
Asseta, a two-year-old, San Francisco-based marketplace for capital equipment and other spare parts, has raised $1 million in seed funding from Red Swan Ventures, Zpark Venture, FundersClub, Gil Penchina, Jeff Epstein, Winklevoss Capital, Sandy Kory and a new micro VC group called Mission and Market. The company has previously raised several rounds of seed funding, shows Crunchbase, including from Y Combinator, whose program it passed through in early 2013.
Audvisor, a new, Cupertino, Ca.-based smartphone app that provides users advice in the form of three-minute long audio clips from more than 100 contributors (including VC Heidi Roizen), has raised $1.4 million in seed funding from angel investors. TechCrunch has more here.
Blue Pillar, a nine-year-old, Frederick, Md.-based company that makes distributed energy asset management software, has raised $14 million in funding led by EnerTech Capital, with participation from Maryland Venture Fund and earlier backers Allos Ventures, Arsenal Venture Partners and Claremont Creek Ventures. The company has now raised roughly $25 million altogether, shows Crunchbase.
Cyanogen, a nearly five-year-old, Palo Alto, Ca.-based company that develops an Android-based interface for smartphones that lets users customize their devices and content, is close to an agreement on a new $110 million round of financing, reports Bloomberg. PremjiInvest, the investment vehicle of Wipro Chairman Azim Premji, will be among the investors in the new funding, say Bloomberg’s sources. According to Crunchbase, the company has raised $30 million thus far, including from Tencent Holdings, Andreessen Horowitz, Redpoint Ventures, andBenchmark.
Daktari Diagnostics, a seven-year-old, Cambridge, Ma.-based company that makes diagnostic products for clinicians and patients, has raised $15.5 million in Series D funding led by Eastern Capital and Merck Global Health Innovation Fund, with participation from earlier backers Norwich Ventures and Partners Innovation Fund. The company has now raised at least $52.1 million altogether, shows Crunchbase.
Dianping, a 12-year-old, Shanghai, China-based Yelp-like review website, has raised a whopping $850 million in Series E funding from Temasek Holdings and FountainVest Partners, according to China Money Network. The news follows the January close of $700 million in Series D funding for Dianping’s biggest rival, Meituan, backed by Alibaba. (By the way, if this funding sounds familiar, it might be because we mentioned last month that the company was talking with investors.)
Glispa, a seven-year-old, Berlin-based mobile advertising company, has raised $77 million in funding from Market Tech Holdings, a U.K.-based firm that focuses on property and e-commerce investments. The round is Glipsa’s first. TechCrunch has more here.
IdentityMind Global, a six-year-old, Palo Alto, Ca.-based online fraud prevention platform, has raised an undisclosed amount of funding led by the private equity firm Lakewood & Company, with participation from SBT Venture Capital, the China-based investment firm Cybernaut, and Benhamou Global Ventures.
NetBase, an 11-year-old, Mountain View, Ca.-based social media analytics company, has raised $24 million in Series E funding led by Spring Lake Equity Partners, with participation from earlier backers Thomvest Ventures, Altos Ventures, and WestSummit Capital. The company has now raised at least $75.6 million from investors, shows Crunchbase.
Reltio, a nearly four-year-old, Palo Alto, Ca.-based maker of data analysis software that it describes as simple enough to be used by businesspeople, has raised $10 million in Series A funding from Crosslink Capital and .406 Ventures.
Sakti3, an eight-year-old, Ann Arbor, Michigan-based firm thats developing solid state battery technology, has raised $15 million in funding from Dyson, the British company known for its expensive and powerful vacuums. The company has now raised $28.2 million altogether, including from Khosla Ventures, General Motors Ventures, Beringea, and Itochu Technology Ventures. TechCrunch has more here.
Obvious Ventures, the venture capital firm started by Twitter and Medium co-founder Ev Williams, has raised $77.7 million for its inaugural fund, Obvious Ventures I, according to an SEC filing that was first flagged by TechCrunch.
Balanced, a five-year-old, San Francisco-based payments platform for peer-to-peer marketplace businesses, is closing shop after failing to gain enough traction to justify further investment in the company. Balanced, a Y-Combinator alum, had raised at least $3.4 million in venture funding, including from Andreessen Horowitz, SV Angel, CollabFund, Airbnb CEO Brian Chesky, actor Ashton Kutcher, and former Reddit CEOYishan Wong. TechCrunch has the story here.
MobPartner, an eight-year-old, Paris-based ad tech company, has been acquired for $58 million in cash and stock by Cheetah Mobile, a China-based software company. MobPartner reportedly raised just $3.5 million from the French venture funds Alven Capital and Newfund. TechCrunch has more here.
TheFind, a nine-year-old, Mountain View, Ca.-based company with a search engine that indexes products across thousands of e-commerce sites, has been acquired by Facebook for undisclosed terms. Says a post at TheFind’s site: Key members of our team are joining the company and will be working hard to integrate our technology to make the ads you see on Facebook every day better and more relevant to you. Unfortunately, this means we will be taking our search engine offline in the next few weeks.” According to Crunchbase, the company had raised $26 million over the years from Bain Capital Ventures, Lightspeed Venture Partners, Redpoint Ventures, and Cambrian Ventures.
The District of Columbia has agreed to fund between 5,000 and 10,000 square feet of office space for venture capital firms on the campus of Howard University. The idea is to make it easier for startups to tap the investors for funding (as well as to attract more students to Howard, presumably). VCs interested in the space must invest in mid-to-late stage startups in Washington and be willing to make at least a three-year commitment to the space. DCInno has more here.
Oscar winning director Alex Gibney debuted a new documentary about Apple cofounder Steve Jobs at this week’s South by Southwest Festival and it does not portray him in a flattering light.
People keep asking venture capitalist Bill Gurley if he’s expecting bad things on the horizon. His answer — still — is yes. “I do think you’ll see some dead unicorns this year,” he told a crowd at the South by Southwest festival this past weekend. Fortune has more here.
Kleiner Perkins Caufield & Byers begins its case against former junior partner Ellen Pao this morning in a San Francisco courtroom. (“I think juries love a little bit of fireworks,” local employment attorney Kathleen Lucas told The Recorder on Friday. We suspect they will get them again this week.)
Business Insider takes a look at the “fabulous life” of Snapchat CEO Evan Spiegel, the youngest billionaire in the world.
Emily White, a former Instagram executive, has left her role as chief operating officer of Snapchat less than two years after joining the messaging startup. According to Recode, the move was precipitated by Evan Spiegel’s realization that he wants to be a more hands-on CEO. White is the third top executive to leave the company in the last two months.
New Science Ventures, a young, early-stage venture firm that invests in life sciences startups, is looking for an associate. The job is in New York.
Lesser and major luminaries in the tech world are demanding that tradesmen working on their homes sign nondisclosure agreements.
Why bankers are leaving finance for no-salary tech jobs.
The long story behind Gigaom’s abrupt demise.
Eighteen reminders that Vladimir Putin doesn’t mess around.
Breathtaking timelapse videos of North America.
“I am not Khaleesi, Mother of Dragons, on ‘Game of Thrones.’ But I am your mother.”