Hi, good morning, all! (Web visitors, here’s an easier-to-read copy of this morning’s newsletter, which follows.)
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Top News in the A.M.
Twitter is about to nab Yahoo’s spot as the third-largest seller of online display advertising in the U.S., according to eMarketer.
Facebook‘s annual developer event wraps up today. Here’s a quick recap of what happened yesterday.
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Jason Lemkin on the “Slack” Effect
There’s no shortage of talk lately about frothy private company valuations, particularly when it comes to enterprise companies. Slack Technologies, the company behind the increasingly popular enterprise messaging platform, is the current poster child. Less than six months ago, Slack raised $120 million at a billion-dollar-plus valuation that many found stunning. Now, Bloomberg says it’s talking with investors about a round that would value it at more than $2 billion.
Very notably, Slack is growing at a torrid pace. As of mid February, it reportedly had 500,000 users, a number that had grown by 35 percent in just the first six weeks of this year. In fact, Jason Lemkin, a managing director at the early-stage, enterprise investment firm Storm Ventures, seems to think Slack is probably worth every penny at a $2 billion-plus valuation.
“No one is dumb in Silicon Valley,” he argues. “Early-stage investors are rolling the dice on hypergrowth and betting companies like Slack will be decacorns” worth more than $10 billion one day. “These crazy valuations, generally in [business-to-business companies], are associated with crazy growth.”
Lemkin notes, for example, that Slack is growing faster than the enterprise social network Yammer — and that Yammer grew faster than the online file sharing company Box. Both are success stories. Yammer, founded in 2008, sold to Microsoft for $1.2 billion in 2012. Box, founded in 2005, went public in January and is currently valued at nearly $2 billion.
But in both cases, their rates of adoption can’t touch what newer startups are seeing, says Lemkin. “[Today’s crop of leading enterprise startups are] growing their month-over-month revenue by mid-teen percentages. And after they hit a million dollars in revenue, that’s a lot of compounding.”
A variety of factors explain such accelerated growth, says Lemkin, including that the adoption of new business-to-business technologies often trails business-to-consumer adoption by three to five years. “That means lot of verticals are just getting ‘webified’ today, including doctors’ offices, e-discovery for regular people,” along with lots of other small and mid-size companies that are realizing what they can gain from the power and low-maintenance needs of hosted systems.
Lemkin also points to the growing piece of CIOs’ budgets that are being spent on SaaS products rather than traditional on-premises technology. Instead of buying their own servers and storage systems, companies are now buying both as a service — along with enterprise analytics, security, and more.
“You only need a few more percent of that roughly trillion dollars in enterprise budgets to create, say, 40 more Workdays,” says Lemkin, referring to the cloud-based HR and finance technology company that went public in 2012 and is now valued at more than $16 billion.
It’s not an outrageous estimate. Global SaaS software revenue is reportedly expected to reach $106 billion by next year, an increase of 21 percent of projected spending levels this year.
Indeed, while industry observers fret over soaring valuations, Lemkin says it’s those enterprise startups with monthly revenue growth in the single digits that should be doing some hand-wringing. While “you’d have gotten funded in days a couple of years ago, today, no one is going to take a meeting with you.”
Slack is “sort of [the standard that] everyone wants now,” he says.
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New Fundings
91App, a three-year-old Taipei, Taiwan-based startup that builds customized apps for brands and retailers, has raised $9 million in Series A funding led by AppWorks with participation by CID Group, NineYi Capital, and individual investors. Tech in Asia has more here.
BetterCloud, a three-year-old, New York-based company that makes a cloud-based directory management and enterprise security application, has raised $25 million in Series D funding led by Accel Partners, with participation from earlier backers FlyBridGe, Greycroft Partners, Tribeca Venture Partners, New Amsterdam Capital, and Millennium Technology Value Partners. The company has now raised roughly $47 million altogether, shows Crunchbase. TechCrunch has more here.
Beyond Pricing, a 15-month-old, San Francisco-based company whose revenue management tool optimizes and posts prices to Airbnb to help hosts maximize their revenue, has raised $1.5 million in seed funding led by Resolute Ventures.
FinancialForce, a 4.5-year-old, San Francisco-based company that builds cloud back-office applications for Salesforce’s Force.com platform, has raised $110 million in funding led by Technology Crossover Ventures, with participation from Salesforce Ventures. The company has now raised $220 million altogether. Forbes has much more here.
FusionOps, a 10-year-old, Sunnyvale, Ca.-based company whose cloud-based analytics application helps supply chain business users deliver dashboards, reports and analytics, has raised $12 million in new funding led by New Enterprise Associates. The companies earlier investors — all individuals — also joined the round, which brings the company’s total funding to $19 million. Venture Capital Dispatch has much more here.
GreenRoad Technologies, a nine-year-old, San Jose, Ca.-based maker of real-time driver performance and safety management software for fleets and other organizations, has raised $26 million in funding led by Israel Growth Partners, with participation from earlier investors Amadeus Capital Partners, Benchmark, DAG Ventures, Generation Investment Management and Virgin Green Fund.
Helpling, a 15-month-old, Berlin, Germany-based on-demand home cleaning startup, has raised $45 million in Series B round led by Lakestar,Kite Ventures, Rocket Internet and the investor-entrepreneur Lukasz Gadowski. The company had announced $17 million in Series A funding just four months ago, including from Gadowski, Point Nine Capital,Phenomen Ventures, and Mangrove Capital Partners.
iAngels, a two-year-old, Tel Aviv, Israel-based equity crowdfunding platform, has raised $2.25 million in seed funding led by Millhouse Capital.
InAuth, a five-year-old, Las Vegas-based maker of mobile fraud prevention and mobile application security software, has raised $20 million in Series A funding led by Bain Capital Ventures. The company had previously raised $835,000 in seed funding last year.
Mango Man Consumer Electronics, a two-year-old, Bangalore, India -based startup that makes home entertainment hardware like HDMI dongles, has raised $1.75 million in seed funding from Sequoia Capital and India Quotient Fund. The company has now raised $2 million altogether. TechCrunch has more here.
Roposo, a 2.5-year-old, Gurgaon, India-based company that helps users discover and shop for trending fashion items across the Internet, has raised $5 million in Series A funding led by Tiger Global Management, with participation from earlier backers India Quotient and Flipkart cofounder Binny Bansal. The company has now raised $6 million altogether, according to Crunchbase.
Silk Therapeutics, a two-year-old, Medford, Ma.-based company that makes skin-care products that target wrinkles, has raised $2 million in Series A-1 funding led by Kraft Group.
Tales2Go, a five-year-old, Bethesda, Md.-based startup that sells a Netflix-like monthly service for children’s audio books, has raised $2.4 million in Series A funding from its seed investors, including NewSchools Venture Fund and Maryland Venture Fund. The company has now raised $3.9 million altogether, shows Crunchbase.
TTTech Computertechnik, a 17-year-old, Vienna, Austria-based company that makes electronics for the automotive, aerospace and other industries, has raised $55 million in growth funding from GE Ventures, Infineon Technologies, and earlier backer Audi.
Tujia.com, a three-year-old, Beijing, China-based vacation-rental website similar to Airbnb, is reportedly in talks to raise more than $200 million from investors. In June of last year, the company raised $100 million from Lightspeed China Partners, GGV Capital and Qiming Venture Partners. To date, it has raised $164 million altogether.
Victor, a 4.5-year-old, London-based on-demand service that enables users to compare and book private jet travel via its site and iOS app, has raised $8 million from undisclosed investors. TechCrunch has more here.
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New Funds
Bespoke Management, a months-old, New York-based venture firm, is looking to raise up to $125 million for its first debut effort, shows an SEC filing. The firm is co-led by Docks Sutherland, a veteran of Morgan Stanley and Goldman Sachs and most recently a member of Blackstone Group’s M&A advisor group.
FLAG Capital Management, the 21-year-old, Stamford, Ct.-based fund of funds group, has raised $88 million toward its latest venture capital-focused fund, according to an SEC filing that shows fundraising began last year. The vehicle, FLAG Venture Partners IX, is targeting $175 million.
Ignition Partners, the 15-year-old, Bellevue, Wa.-based venture firm, is looking to raise a new, $200 million fund, shows an SEC filing that lists four partners: Frank Artale, John Connors, Robert Headley, and Nick Sturiale. (Longtime industry watchers will know Ignition was once far larger. It underwent a shake-up several years ago.)
Glynn Capital Management, a low-flying, 41-year-old, Menlo Park, Ca.-based investment firm that funds public and private technology growth companies, has raised $200 million for its fourth and newest fund, according to an SEC filing. As VentureWire notes, the fund is slightly larger than its predecessor, which closed at nearly $185 million, in 2012. (The fund before that closed with $111 million in 2010.)
Ribbit Capital, a two-year-old, Palo Alto, Ca.-based venture firm that invests solely in financial services companies, is looking to raise $220 million for its third fund, shows an SEC filing. The firm had closed its second fund with $125 million last year and its first fund with $100 million in 2013. StrictlyVC talked with founder Micky Malka about the firm and his credentials last summer.
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Exits
LearnVest, an eight-year-old, New York-based online financial-planning services company, has been acquired by the 160-year-old insurance company Northwestern Mutual Life Insurance Co. for undisclosed terms. According to Crunchbase, LearnVest had raised $69 million from investors, including Northwestern Mutual, Accel Partners, American Express Ventures, Conversion Capital, and Claritas Capital.
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People
The Benchmark “five” get a glowing profile in Forbes, where they discuss succession among other things. Says Bill Gurley, who has now been with the powerful venture firm the longest: Making way for fresh faces is “the biggest secret of Benchmark . . . When our founders were at the peak of their powers, they handed us the keys.”
Uber CEO Travis Kalanick and venture capitalist Chris Sacca — who owns 4 percent of Uber — are no longer on speaking terms, Sacca admits in an engaging Forbes profile about his rise to the top of the investing heap. Kalanick apparently grew frustrated over Sacca’s efforts to buy up secondary shares from other initial investors. Says Sacca, “I guess I wasn’t hearing what [Kalanick] was really saying, which was ‘Don’t f–king do it.’ ”
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Jobs
The NewSchools Venture Fund is looking for an associate partner to hire. The job is in Oakland, Ca.
PayNearMe, a venture-backed, cash-based payment platform for the underbanked, is looking for a director of business development. The job is in San Francisco.
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Essential Reads
Nextdoor, the social network for neighbors, is experiencing meteoric growth. It’s also reportedly becoming home to some racial profiling.
Twitter has launched its newly acquired, live-broadcasting app Periscope, a direct competitor to Meerkat. Its killer feature, says the Verge: replays.
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Detours
The 50 smartest private high schools in the U.S.
Hilariously honest ads, starring Ricky Gervais.
A Pacific Heights home in San Francisco has changed hands for nearly $24 million in the biggest sale of the year. (Now, to find out who bought it!)
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Retail Therapy
Clothes and boots and raincoats emblazoned with Big Macs. We’re lovin’ it(?).