• StrictlyVC: March 24, 2015

    Hi, everyone! (Web visitors, click here for an easier-to-read version of this morning’s email newsletter.)

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    Top News in the A.M.

    Here are the many companies that presented yesterday at Y Combinator‘s first (of two) demo days. Mattermark, the venture analysis company, looks at 10 of the fastest growing startups in the batch here.

    Facebook has reportedly been talking with at least half a dozen media companies about hosting their content inside Facebook.

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    Did Pinterest Just Change the Game?

    In tech, employees often join startups with the idea that they might become millionaires if those companies go public or are sold. But even experienced startup veterans often underestimate the costs involved in exiting one’s stake. Purchasing equity that has appreciated can run into the hundreds of thousands of dollars — if not millions — and most startup documents only give employees 90 days to exercise their fully vested options once they move on.

    Pinterest is rejecting that age-old program. According to Fortune, the digital scrapbooking company has told employees that if they’ve been an employee for at least two years and leave the company — or are let go — they’ll have up to seven years to exercise their vested options.

    Presumably, Pinterest is trying to attract the best and brightest by offering them more freedom than a typical startup payment package would allow.

    Whether other startups follow suit anytime soon remains to be seen. There are plenty of reasons things work they way they do, after all, including that it’s often in a startup’s best interests to be able to reclaim equity if an employee can’t purchase his or her shares within 90 days of his or her exit. Machiavellian as it may seem, companies might also want to retain their leverage over talented employees to keep them right where they are.

    And there are other arguments to preserve the status quo. For example, you could imagine companies’ unwillingness to provide financial information to a lot of former employees who might be entitled to it under the law, yet who might have gone on to work at a competing company.

    There are also plenty of secondary buyers capable of providing employees with some liquidity.

    Of course, anyone who has been through a secondary sale can attest that they involve plenty of pros and cons. Demand and supply have to align. Many buyers want information rights that can give them assurance about the startups in which they’re investing, yet many companies don’t want to provide that information. Secondary buyers also tend to drive a very hard bargain because they know it’s not a liquid market.

    Our bet? As more companies take their time in going public and those golden handcuffs become more onerous for employees, something is going to give. Trying to maintain the same kinds of controls won’t remain feasible forever.

    Pinterest employees who wait to exercise their shares may face a much bigger tax bill years from now. But they’ll also have much more time to line up a secondary buyer or otherwise plan to raise the capital to buy their shares and deal with that tax hit.

    It’s going to be very hard for other startups to compete with that kind of advantage. Over time, it might prove impossible.

    —–

    New Fundings

    Aeglea Biotherapeutics, a two-year-old, Austin, Tex.-based biopharmaceutical company that’s developing therapies targeting tumor metabolism, has raised $44 million in Series B funding led by earlier backers Lilly Ventures and Novartis Venture Fund, with participation by earlier backer UT Horizon Fund and new investors OrbiMed, Jennison Associates, Venrock, RA Capital Management, Rock Springs CapitalAlly Bridge Group and Cowen Investments.

    Augmented Pixels, a 4.5-year-old, Palo Alto, Ca.-based company that produces sales platforms for real estate and retail customers using virtual and augmented reality technology, has raised $1 million in seed funding led by The Hive, a three-year-old, Palo Alto, Ca.-based incubator and accelerator

    BitReserve, a two-year-old, San Francisco-based company seeking to use bitcoin to transfer funds across borders and minimize exchange fees, now counts Mexican billionaire Ricardo Salinas-Pliego, the chair and CEO of Grupo Salinas, as its biggest investor, according to the startup. It hasn’t disclosed how much Salinas-Pliego, the fourth richest person in Mexico, has committed to the company. BitReserve was founded by CNet cofounder Halsey Minor, who famously ran into financial trouble after the 2008 financial crisis.

    Cadre, a six-month-old, New York-based startup that aims to connect institutional investors with opportunities in gateway markets, has just raised $18.3 million from Thrive Capital and General Catalyst Partners, with participation from some of New York real estate’s biggest players, including former Vornado Realty Trust CEO Michael Fascitelli. The company was founded by Jared and Joshua Kushner. (As readers will know, Joshua also cofounded Thrive Capital.) The Real Deal has much more here.

    Coding, a 15-month-old, Shenzhen-based company whose cloud-based tools are used by developers to access and manage their projects, has raised roughly $10 million in Series B funding led by Lightspeed Venture Partners, with participation from IDG Capital.

    Cyanogen, the five-year-old, Palo Alto, Ca.-based custom Android software developer, has raised $80 million in Series C funding led byPremji Invest. Other new investors include Twitter VenturesQualcomm, Telefónica Ventures, Smartfren Telecom, Index VenturesAccess Industries and individual investors Rupert Murdoch and Vivi Nevo. Earlier backers Andreessen Horowitz, Benchmark, Redpoint Ventures and Tencent Holdings also participated in the round. The company has now raised $110 million altogether.

    Day1 Solutions, a three-year-old, McLean, Va.-based cloud services startup, has raised $2 million in funding from 10 unnamed investors.

    Dragonfly Technology, an eight-month-old, Bay Area company that’s operating in stealth mode (but relates to consumer electronics), has raised $4.5 million in funding, according to an SEC filing. Backers include iD Ventures America and the Tokyo-based investment firm UTEC.The company looks to be targeting $6 million altogether, shows the filing.

    Flower Orthopedics, a three-year-old, Horsham, Pa.-based company that designs and manufactures bone-fixation implants and instruments, has raised $4.5 million in Series C funding from undisclosed investors.

    Improbable, a three-year-old, London-based company that has developed an operating environment that makes building simulated worlds possible, just raised $20 million in funding from Andreessen Horowitz. Chris Dixon, who joins the board, writes about the investment here.

    Keywee, a two-year-old, New York-based company that analyzes marketing content and finds qualified audiences for it, has raised $9.1 million in Series A funding led by Innovation Endeavors and Marker, with participation from The New York Times Company and UpWest Labs.

    Lendio, a nine-year-old, South Jordan, Ut.-based small business lending marketplace, has raised a $20.5 million in funding led by the private equity firm Napier Park, with participation from Blumberg Capital, North Hill Ventures, Pivot Investment Partners and prior investors Tribeca Venture Partners, Runa Capital and Highway 12 Ventures. The company has now raised $33 million altogether.

    M.Gemi, a new, Boston-based e-commerce company that features new, limited edition styles of Italian shoes every week, has raised $14 million in seed and Series A funding General Catalyst Partners, Forerunner Ventures and Breakaway Ventures. The company was founded by Ben Fischman, founder of the flash sale fashion site Ruelala. Business Insider has more here.

    Mojio, a 2.5-year-old, Vancouver, Canada-based connected car platform, has raised $8 million in Series A funding led by Telekom Capital, the investment arm of Deutsche Telekom. Other participants in the round include Relay Ventures, the Business Development Bank of Canada, and AOL co-founder Steve Case. The company previously raised a $2.3 million seed round. TechCrunch has more here.

    Rubrik, a year-old, Palo Alto, Ca.-based company that offers live data access for recovery and application development, has raised $10 million in Series A funding led by Lightspeed Venture Partners, with participation from numerous high-profile individual investors, including Veritas’s founding CEO Mark Leslie.

    SecurityScorecard, a two-year-old, New York-based security risk assessment service for cloud-based information systems, has raised $12.5 million in Series A financing led by Sequoia Capital, with participation from earlier backers Boldstart and Evolution Equity Partners. The company has now raised a total of $14.7 million.

    Slack, the two-year-old, San Francisco-based company whose software helps people collaborate at work, is talking with investors about a new round that would value the company at more than $2 billion, according to Bloomberg. In October, the company raised $120 million in a round of financing co-led by Kleiner Perkins Caufield & Byers and Google Ventures that valued the company at $1.12 billion.

    ZipMatch, a two-year-old, Taguig, Philippines-based online property portal, has raised $2.5 million in Series A funding led by Monk Hill Ventures, with participation from earlier backer 500 Startups. The company had previously raised $1 million in funding. TechCrunch has more here.

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    New Funds

    Accel Partners has raised its fourth India-focused fund with $305 million in commitments. Like the firm’s earlier funds, Accel India IV will focus on early-stage ventures, though a spokesman tells us it will also invest in “select” growth equity opportunities. Accel is among India’s most active investors, with bets that include the 7.5-year-old e-commerce giant Flipkart. The appeal, says the firm: India is one of the world’s fastest-growing economies, nearly doubling its GDP between 2003 and 2013; it has a large, growing middle class that’s expected to include 100 million households by 2020; and it’s home to 576 million people who are under the age of 25 (compared with the U.S., which is home to 106 million people aged 24 or younger).

    Andreessen Horowitz, the six-year-old, Sand Hill Road firm, has raised a separate new venture fund called PinAH with $36.7 million in commitments, according to an SEC filing. (The firm hasn’t responded to questions about it; likely it has something to do with the firm’s investment in Pinterest, which is in the process of raising half a billion dollars.)

    Golden Gate Ventures, a 3.5-year-old, Singapore-based seed-stage fund, has raised its second fund, closing on $50 million, up from the $10 million it had been investing with its debut fund. The firm looks for investment opportunities in Southeast Asia; it will also reportedly begin shopping for startups in other parts of Asia, including in Hong Kong and Taiwan.

    Jerusalem Venture Partners, the 23-year-old, Jerusalem-based venture firm, has a new limited partner: Alibaba Group has joined the firm’s seventh fund as an LP, kicking in $15 million, says a source to the Wall Street Journal. Alibaba is reportedly interested in cyber security related deal flow, for which JVP is well-known. Apparently, it’s also interested in the firm’s storage and networks bets given that such technologies could ultimately help Alibaba reduce its operational costs.

    Joe Montana, the famous former football player, is close to wrapping up a new investment fund of between $20 million and $25 million, he tells Business Insider. The new fund will be called Liquid Two and won’t feature a specific area of focus, he says.

    Joint Polish Investment Fund Management, a new, Warsaw, Poland-based venture capital fund, has closed its debut fund with $42 million. It’s the first institutional venture capital fund operating out of Poland that is completely dedicated to life-science investments, says the outfit, which will fund early- and mid-stage companies with a close relationship to Poland.

    SVB Financial is raising what sounds like a late-stage venture fund, called the Venture Overage Fund. According to an SEC filing, it hasn’t begun fundraising yet, but it’s targeting $275 million for the effort.

    —–

    IPOs

    Blueprint Medicines, a seven-year-old, Cambridge, Ma.-based preclinical biotech developing kinase inhibitors for cancer and genetic diseases, has publicly filed to raise up to $100 million in an IPO. The company first filed confidentially last month. Its biggest shareholders are Third Rock Ventures, which owns 41.8 percent of the company, and Beacon Bioventures, which owns 13.43 percent.

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    Exits

    Edocr, an eight-year-old, Manchester, England-based document sharing company, has been acquired by Accusoft, a privately held, 24-year-old, Tampa, Fl.-based software business for document, content and imaging needs. TechCrunch has more here.

    Viralheat, a four-year-old, San Mateo, Ca.-based maker of enterprise-content marketing and social-media management software, has been acquired by the Chicago-based media intelligence company Cision for an undisclosed sum. Viralheat had raised at least $4.3 million from investors, shows Crunchbase. Its backers include Mayfield Fund and Idealab.

    —–

    People

    CNBC is taking viewers inside the $70 million, Beverly Hills manse of “Minecraft” creator Markus Persson. (Appointments include a $200,000 wall filled with 25 types of candy.) More here.

    Ruth Porat, currently CFO at Morgan Stanley, will join Google‘s management team as CFO in May. Porat joined Morgan Stanley in 1987. She replaces Patrick Pichette, who has served as Google’s CFO since 2008 and who announced earlier this month that he was planning to retire this year.

    —–

    Jobs

    Johns Hopkins University is looking to hire an associate director to help enable to commercialization of the school’s technologies. The job is in Baltimore.

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    Essential Reads

    Yesterday, payments startup Square introduced a tweak to its cash-transfer app allowing it to profit when businesses use the service.

    Twitter‘s quiet push into venture capital has officially begun.

    —–

    Detours

    Life in the age of irrational parenting.

    When Elon Musk lived on $1 a day.

    A pretty serious marketing fail.

    —–

    Retail Therapy

    The Blackphone, for encrypted communications.

  • Did Pinterest Just Change the Game?

    pinterestIn tech, employees often join startups with the idea that they might become millionaires if those companies go public or are sold. But even experienced startup veterans often underestimate the costs involved in exiting one’s stake. Purchasing equity that has appreciated can run into the hundreds of thousands of dollars — if not millions — and most startup documents only give employees 90 days to exercise their fully vested options once they move on.

    Pinterest is rejecting that age-old program. According to Fortune, the digital scrapbooking company recently told employees that if they’ve been an employee for at least two years and leave the company — or are let go — they’ll have up to seven years to exercise their vested options.

    Presumably, Pinterest is trying to attract the best and brightest by offering them more freedom than a typical startup payment package would allow.

    Whether other startups follow suit anytime soon remains to be seen. There are plenty of reasons things work they way they do, including that it’s often in a startup’s best interests to be able to reclaim equity if an employee can’t purchase his or her shares within 90 days of his or her exit. Machiavellian as it may seem, companies might also want to retain their leverage over talented employees to keep them right where they are.

    And there are other arguments to preserve the status quo. For example, you could imagine companies’ unwillingness to provide financial information to a lot of former employees who might be entitled to it under the law, yet who might have gone on to work at a competing company.

    There are also plenty of secondary buyers capable of providing employees with some liquidity.

    Of course, anyone who has been through a secondary sale can attest that they involve plenty of pros and cons. Demand and supply have to align. Many buyers want information rights that can give them assurance about the startups in which they’re investing, yet many companies don’t want to provide that information. Secondary buyers also tend to drive a very hard bargain because they know it’s not a liquid market.

    Our bet? As more companies take their time in going public and those golden handcuffs become more onerous for employees, something is going to give. Trying to maintain the same kinds of controls won’t remain feasible forever.

    Pinterest employees who wait to exercise their shares may face a much bigger tax bill years from now. But they’ll also have much more time to line up a secondary buyer or otherwise plan to raise the capital to buy their shares and deal with that tax hit.

    It’s going to be very hard for other startups to compete with that kind of advantage. Over time, it might prove impossible.

  • StrictlyVC: March 23, 2015

    Hi, everyone, welcome back! Hope you had a wonderful weekend. We were pretty busy, so no column this a.m. (By the way, web visitors, here’s an easier-to-read version of this email here.)

    —–

    Top News in the A.M.

    Tina Huang, a former engineer at Twitter, has filed a class action lawsuit against the company, claiming its “black box” promotion process unlawfully favors men. Huang’s filing follows that of former Facebook product manager Chia Hong, who filed a lawsuit against Facebook last Monday for sexual discrimination and harassment.

    —–

    New Fundings

    850 Sports News Digest, a seven-month-old, London-based sports news service that delivers its content via iOS and Android apps, has raised $500,000 in seed funding from iBus Media Network. TechCrunch has more here.

    AchieveIt Online, a 4.5-year-old, Atlanta, Ga.-based company whose cloud-based software service helps businesses track their performance and operational goals, has raised $2 million in Series D funding led by earlier investor BIP Capital. The company has raised at least $5.6 million to date, shows Crunchbase.

    Binti, a year-old, San Francisco-based company that aims to help simplify child adoptions by streamlining paperwork and increasing transparency throughout the process, has raised $2.7 million from investors, shows an SEC filing that names only the company’s executives, including CEO Felicia Curcuru and president Julia Chou (alums of McKinsey & Co. and Google, respectively).

    Corsa Technology, a two-year-old, Ottawa, Ontario-based company focused programmable SDN switching, has raised $16.5 million in Series B funding led by Roadmap Capital, with participation from earlier backers, including Celtic House Venture Partners and BDC Capital.

    EZCater, a four-year-old, Boston-based online platform that makes it easy for businesses to order food from local caterers and restaurants, has raised $11.7 million from investors, including Breton Capital Management, shows an SEC filing. The company had previously raised $6.8 million from investors, shows Crunchbase. Its earlier backers include Sidecar Ventures and LaunchPad Ventures.

    Graphic India, a four-year-old, Singapore-based company focused on creating leading characters, comics and stories for the Indian youth market via mobile and digital platforms, has raised $2.8 million in seed funding from earlier backer CA Media, which is the Asian investment arm of The Chernin Group, and the New York-based media investment group Start Media. Numerous angel investors also participated in the round, which brings the company’s funding to $5.3 million, shows Crunchbase.

    LendingHome, a two-year-old, San Francisco-based online platform that allows both individuals and institutions to invest in residential real estate loans, has raised $70 million in fresh funding, shows an SEC filing that lists Ribbit Capital‘s Micky Malka and Renren CEO Joseph Chen, among others, as directors. The round comes just eight months after the company closed on $28 million in funding led by Foundation Capital. LendingHome has now raised roughly $103 million to date, show SEC filings.

    Life on Air, a three year-old, San Francisco-based company that recently created the live-streaming app Meerkat, has raised $12 million in Series B funding led by Greylock Partners, with participation from unknown angel investors. The company has now raised roughly $16.2 million since its founding, including from Aleph, Ooga Labs, and Entree Capital. TechCrunch has more here.

    OrthoSensor, a five-year-old, Dania Beach, Fl.-based medical device company that makes sensor-assisted surgery tools, has raised $19 million in Series C funding led by Bridger Healthcare and The Tullis Growth Fund. The company has now raised at least $72 million to date, shows Crunchbase

    Pear Therapeutics, a two-year-old, Boston-based company that’s combining mobile health apps with supplements, medical foods, and pharmaceuticals to improve the treatment of addiction and other mental illnesses, has raised an undisclosed amount of funding led by 5AM Ventures, with other, undisclosed investors participating.

    Slidejoy, a year-old, New York-based Android application that pays users daily for having relevant articles, deals and ads displayed on their lockscreen, has raised $1.2 million from angel investors, shows an SEC filing.

    Smatoos, a four-year-old, Seoul-based education startup whose English learning service, BeNative Pro, launched earlier this year, has raised $2.7 million in Series B funding from Korea Investment Partners, Mirae Asset Venture Investment, and Partners Investment. The company has now raised $6 million altogether. Tech in Asia has more here.

    Uber, the 5.5-year-old, San Francisco-based car-booking company, has taken a strategic investment from the digital arm of the media giant Times of India to boost its visibility in India. TechCrunch has the story here.

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    New Funds

    Bertram Capital, a nine-year-old, San Mateo, Ca.-based private equity firm that targets lower middle market companies, has formed a holding company called CG Acquisitions to invest in businesses that create and manage digital content for e-commerce applications. Bertram launched the platform last week; a new SEC filing shows the fund has $47.9 million to invest.

    Infosys, the 34-year-old, Bangalore-based technology consulting company, made its first startup investment last month. Now, it reportedly wants to plug roughly $125 million into startups in Silicon Valley, Israel and India. The Economic Times has more here.

    Westly Group, the 15-year-old, Menlo Park, Ca.-based venture firm founded by former eBay executive turned California controller Steve Westly, is planning to start raising its fourth fund this year in the range of $150 million to $200 million, he tells VentureWire. The firm raised its third fund — a $160 million pool designed to invest largely in clean tech companies — in 2013, its second fund of $127 million in 2009, and its debut fund of $16 million in 2000. That first fund was backed solely by Westly. The firm’s subsequent funds have reportedly featured meaningful capital contributions from the firm’s principals. Its outside investors include E.ON, SK Group, and Citi.

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    IPOs

    Apigee, an 11-year-old, San Jose, Ca.-based company whose software is used to manage web applications, has filed plans to raise up to $86.3 million in an IPO. Its S-1 is here.

    SteadyMed, a 10-year-old, Tel Aviv-based medical technology company, has raised nearly $40 million in its initial public offering. The company sold 4.7 million shares at a price of $8.50 per share (down from the $12 to $14 range at which it originally hoped to sell the shares). More here.

    —–

    People

    Silicon Valley “techies” are reportedly snapping up real-estate in L.A. Says one 25-year-old entrepreneur to CBS, “I have a yard with a pool and a beautiful home for less than what I would pay for an equivalent-sized condo in San Francisco.”

    Y Combinator head Sam Altman agrees with other recent complaints that early stage startups are often overvalued. But yesterday, on Twitter, he blamed investors — not founders — for those frothy valuations.

    King Digital, the company behind the mobile gaming sensation “Candy Crush Saga,” is the target of a class-action lawsuit that claims it deliberately hid a significant decline in users ahead of its IPO last year. Mashable has the story here.

    On Saturday, the judge in the discrimination and harassment case of Ellen Pao vs. Kleiner Perkins Caufield & Byers denied a motion by Kleiner to rule out punitive damages for Pao. Here’s why.

    Matt Swann, long an Amazon VP and its general manager of payments, has left the company and headed off to Citigroup, reports TechCrunch. The move came shortly after Amazon shut down its beta version of Wallet — a Square competitor — in January.

    Fascinating early posts from tech founders who’ve changed the world.

    —–

    Job Listings

    Equinix, the publicly traded data center giant, is looking for a director of corporate development. The job is in Redwood Shores, Ca.

    Spring Lake Equity Partners, a growth-stage venture firm, is looking for an analyst. The job is in Boston.

    Westly Group, the venture firm, is looking to hire a new managing director to focus on consumer investments. The job is in Menlo Park, Ca.

    —–

    Data

    The financial tech startups that are unbundling banking — an infographic courtesy of CB Insights.

    —–

    Essential Reads

    Last month, China’s two biggest taxi hailing rivals, Kuaidi and Didi, decided to merge, creating a powerhouse that has Uber looking to merge with a Chinese ally of its own. More here.

    Meanwhile, China’s internet boom is reportedly starting to fade, undermined by poor earnings at Chinese technology companies.

    —–

    Detours

    Inside the Mercedes robo-car.

    An artist without a memory.

    When the 13-year-old picks a $14 million condo.

    —–

    Retail Therapy

    Aspen’s priciest listing.

    Pathogens, embroidered.

  • StrictlyVC: March 20, 2015

    Hi, everyone! Hope you’re having a wonderful Friday. See you in a few days.:)

    ——

    Top News in the A.M.

    Details from an anti-trust investigation into Google have emerged and they suggest the company specifically worked to keep competitors out of its top search results.

    Amazon just received permission from the FAA to start testing its delivery drones in the US.

    —–

    In Kleiner Case, Question of Discrimination Moves Front and Center

    Yesterday, Paul Gompers, a Harvard Business School professor, testified that Kleiner Perkins has one of the best records in venture capital when it comes to the number of female investors it employs. Gompers had taken the stand as an expert witness of behalf of Kleiner, which is currently fighting a suit brought against it by former junior partner Ellen Pao, who says she endured gender discrimination at the firm and was retaliated against when she complained about it.

    While Gompers’s testimony cast Kleiner in a flattering light, it’s likely that his statements – and those of others – won’t prove nearly as important to the case as those of Matt Murphy, a general partner at Kleiner who finished his testimony yesterday shortly before Gompers was sworn in. The reason: retaliation claims are often easier to prove than discrimination claims, and several things surfaced in Murphy’s testimony that may give jurors pause. Among them, Murphy, who worked closely with Pao, said that he didn’t begin taking extensive notes about Pao’s performance until days after she filed her lawsuit against the firm in May 2012. Murphy also acknowledged that Pao was given 60 days to save her job in July 2012. (She was asked to leave at the end of that period.)

    In two days on the stand, Murphy denied any hint that Kleiner retaliated against Pao after she filed her very public suit. Murphy said he’d experienced “various episodes of friction” with Pao over the years and had long viewed her as “overly opinionated.” Asked by jurors what he meant, he said that Pao sometimes drew conclusions about investments too quickly and without enough information. He added that it can be “common with junior partners, because you’re associated with whether an investment gets done” rather than “whether it should have been made.”

    Murphy also suggested that Pao lasted as long as she did at Kleiner only because of general partner John Doerr, who Pao had served as chief of staff in her first years at the firm. “John was very protective of Ellen and she felt protected, and that was a dynamic that persisted for some time.”

    Still, jurors had plenty of pointed questions for Murphy, including whether the 60-day performance plan that Pao was put on in July 2012 was “fair.” At the time, Pao was asked to improve on several fronts, including to be sought out as a team member, be a good networker, and to demonstrate so-called thought leadership.

    “It’s not that we’d expect definitively that you’d see black and white [change] in 60 days [given that] she had all these issues for six years,” said Murphy. “But we wanted to give her very concrete feedback and see how she responded. Did she suddenly start sourcing more ventures, be collaborative, work more with [general partner] Mike Abbott, go down the list of things we talked about? Was there a real change and did you see — was it visible — that she was behaving differently, trying harder, being proactive – all those kinds of things? If we’d seen those things after 30, 45, 60 days, we obviously would have extended it, but we did not see meaningful change in her behavior.”

    Murphy’s testimony seemingly led Kleiner into tricky terrain. For example, though Murphy described the objectives set forth in Pao’s performance plan as “concrete,” jurors might see them as subjective. “How do you prove you had a better attitude?” says Gary Phelan, an employment attorney with the East Coast firm Mitchell & Sheahan and the chair of the Connecticut Bar Association’s labor employment section.

    In situations like Pao’s, says Phelan, “The employer is both the accused and the judge of whether you’re trying hard enough.”

    Murphy also argued that Pao was difficult and didn’t understand her role as a junior partner, but her reviews leading into 2012 contained both positive and negative feedback, as did other partners’ reviews. More, her compensation remained stable. For example, in 2010, Pao earned $362,250, with an additional bonus of $150,624 (or roughly $513,000 altogether). In 2011, Pao was paid a base salary of $380,000 base salary, with a bonus of $136,800 (or roughly $517,000).

    Speaking generally, notes Phelan, “If you were rated an exemplary employee, then you complain, and the next thing you know, you’re getting a poor review, that’s evidence of retaliation.”

    The biggest problem for Kleiner could boil down to timing. Says Phelan: “When after somebody complains about something, and all of a sudden, there’s a paper trail where [the employer] is resurrecting things from the past, that in itself is enough to show retaliation — even if maybe the employer should have been [taking notes] before.”

    Sometimes, he adds, employers “kind of tolerate things for a long time.”

    —–

    New Fundings

    Maple, a year-old, New York-based food delivery startup, has raised $22 million in Series A funding led by Greenoaks Capital, with participation from Thrive Capital, Primary Ventures, David Chang of the Momofuku empire, and Bonobos CEO and founder Andy Dunn. The company had previously raised $4 million in seed funding. Fortune has the story here.

    Modernizing Medicine, a five-year-old, Boca Raton, Fl.-based company that makes a cloud-based, specialty-specific electronic medical record system with a library of built-in medical content that’s designed to save physicians time, has raised an undisclosed amount of funding from IBM. The company had previously raised $48.6 million from investors, includingSummit Partners, Pentland Group, and Sands Capital Ventures. More here.

    ProtonMail, a 1.5-year-old, Geneva, Switzerland-based secure email service, has raised $2 million in funding from CRV and the Swiss startup accelerator Fongit. The company had previously raised $550,000 in a crowdfunding campaign. TechCrunch has more here.

    Quid, a five-year-old, San Francisco-based company that uses semantic analysis to analyze and visually depict where its customers’ financial resources are being spent online, has raised $39 million in Series D funding led by Liberty Interactive Corporation, with participation from ARTIS Ventures, Buchanan Investments, Subtraction Capital, Tiger Partners, and Thomas H. Lee Limited Family Partnership II, along with company executives. The company as now raised $63 million altogether, shows Crunchbase.

    Rover.com, the four-year-old, Seattle-based pet-sitting marketplace, has raised $25 million in a new funding led by Technology Crossover Ventures, with participation from earlier backers Foundry GroupMadrona Venture Group, Menlo Ventures and Petco.

    Svelte Medical Systems, an eight-year-old, New Providence, N.J.-based company that makes drug-eluting coronary stent systems, has raised $16 million in funding led by CNF Investments, with participation from Gary and Mary West Health Investment Fund and New Science Ventures.

    Thirstie, a year-old, New York-based on-demand alcohol delivery startup, has raised $1.1 million in seed funding from numerous individuals. More here.

    —–

    Exits

    Clinical Ink, an eight-year-old, Winston Salem, N.C.-based company that automates data-gathering during clinical trials of new medical technologies, has merged in an all-stock transaction with CentrosHealth, which collects data on patients via a mobile application. Clinical Ink has raised at least $4.3 million from investors, including FCA Venture Partners, shows Crunchbase. CentroHealth was founded by the Boston-based venture firm MPM Capital. Xconomy has more here.

    Deep Forest Media, a 2.5-year-old, Palo Alto, Ca.-based automated ad-buying platform, has been acquire by the Japanese ecommerce giant Rakuten to make use of Rakuten’s e-commerce data, reports Ad Age. Deep Forest had raised money from Handmade, a mobile-only seed fund, and the incubator and venture fund The Hive.

    Giphy, the two-year-old platform that makes it easy to search and share GIFs and which raised $17 million in Series B funding in January, has acquired two-year-old Nutmeg, a GIF messaging app. The terms of the deal were not disclosed. TechCrunch has more here.

    X01, a two-year-old, U.K.-based cardiovascular drug startup, has been acquired by Johnson & Johnson for an undisclosed amount. The company had been founded by and backed by Index Ventures and represents the first exit from its (debut) €150 million life sciences fund, closed in 2012. AltAssets has a bit more here.

    —–

    People

    Daniel Gulati has joined Comcast Ventures as principal, working out of its New York office. Gulati, who originally joined Comcast as an EIR last May, will focus on seed and early-stage investments in consumer internet companies. Gulati previously worked at the Boston Consulting Group and cofounded a venture-backed online marketplace for fashion designers called FashionStake that Fab acquired in early 2012.

    Christopher Payne, most recently head of eBay North America and a former VP at both Microsoft and Amazon, is taking over as CEO of the popular dating app Tinder. Recode has more here.

    David Recordon, who has worked as one of Facebook’s engineering directors since 2009, is joining the White House in a newly created role as its director of information technology.

    Facebook COO Sheryl Sandberg and investor Marc Andreessen recently launched a pilot “boot camp” program for promising women and racially diverse candidates that helps teach them what it means to be on a board. Bloomberg has more here.

    —–

    Essential Reads

    A new Apple TV set-top box is reportedly coming to Apple stores this summer.

    —–

    Detours

    To the man who has been taking my Wall Street Journal.”

    Classic pop songs: Where are they now?

    Here’s why the International Space Station has that weird shape.

    —–

    Retail Therapy

    Tony Montana’s home is for sale.

  • In Kleiner Case, Question of Retaliation Moves Front and Center

    Matt MurphyYesterday, Paul Gompers, a Harvard Business School professor, testified that Kleiner Perkins has one of the best records in venture capital when it comes to the number of female investors it employs. Gompers had taken the stand as an expert witness of behalf of Kleiner, which is currently fighting a suit brought against it by former junior partner Ellen Pao, who says she endured gender discrimination at the firm and was retaliated against when she complained about it.

    While Gompers’s testimony cast Kleiner in a flattering light, it’s likely that his statements – and those of numerous others – will prove far less important to the case than those of Matt Murphy, a general partner at Kleiner who finished his testimony yesterday shortly before Gompers was sworn in. The reason: retaliation claims are often easier to prove than discrimination claims, and several things surfaced in Murphy’s testimony that may give jurors pause. Among them, Murphy, who worked closely with Pao, said that he didn’t begin taking extensive notes about Pao’s performance until days after she filed her lawsuit against the firm in May 2012. Murphy also acknowledged that Pao was given 60 days to save her job in July 2012. (She was asked to leave at the end of that period.)

    In two days on the stand, Murphy denied any hint that Kleiner retaliated against Pao after she filed her very public suit. Murphy said he’d experienced “various episodes of friction” with Pao over the years and had long viewed her as “overly opinionated.” Asked by jurors what he meant, he said that Pao sometimes drew conclusions about investments too quickly and without enough information. He added that it can be “common with junior partners, because you’re associated with whether an investment gets done” rather than “whether it should have been made.”

    Murphy also suggested that Pao lasted as long as she did at Kleiner only because of general partner John Doerr, who Pao had served as chief of staff in her first years at the firm. “John was very protective of Ellen and she felt protected, and that was a dynamic that persisted for some time.”

    Still, jurors had plenty of pointed questions for Murphy, including whether the 60-day performance plan that Pao was put on in July 2012 was “fair.” At the time, Pao was asked to improve on several fronts, including to be sought out as a team member, be a good networker, and to demonstrate so-called thought leadership.

    “It’s not that we’d expect definitively that you’d see black and white [change] in 60 days [given that] she had all these issues for six years,” said Murphy. “But we wanted to give her very concrete feedback and see how she responded. Did she suddenly start sourcing more ventures, be collaborative, work more with [general partner] Mike Abbott, go down the list of things we talked about? Was there a real change and did you see — was it visible — that she was behaving differently, trying harder, being proactive – all those kinds of things? If we’d seen those things after 30, 45, 60 days, we obviously would have extended it, but we did not see meaningful change in her behavior.”

    Murphy’s testimony seemingly led Kleiner into tricky terrain. For example, though Murphy described the objectives set forth in Pao’s performance plan as “concrete,” jurors might see them as subjective. “How do you prove you had a better attitude?” says Gary Phelan, an employment attorney with the East Coast firm Mitchell & Sheahan and the chair of the Connecticut Bar Association’s labor employment section.

    In situations like Pao’s, says Phelan, “The employer is both the accused and the judge of whether you’re trying hard enough.”

    Murphy also argued that Pao was difficult and didn’t understand her role as a junior partner, but her reviews leading into 2012 contained both positive and negative feedback, as did other partners’ reviews. Her compensation remained stable, too. For example, in 2010, Pao earned $362,250, with an additional bonus of $150,624 (or roughly $513,000 altogether). In 2011, Pao was paid a base salary of $380,000 base salary, with a bonus of $136,800 (or roughly $517,000).

    Speaking generally, notes Phelan, “If you were rated an exemplary employee, then you complain, and the next thing you know, you’re getting a poor review, that’s evidence of retaliation.”

    The biggest problem for Kleiner could boil down to timing. Says Phelan: “When after somebody complains about something, and all of a sudden, there’s a paper trail where [the employer] is resurrecting things from the past, that in itself is enough to show retaliation — even if maybe the employer should have been [taking notes] before.”

    Sometimes, Phelan adds, employers “kind of tolerate things for a long time.”

  • StrictlyVC: March 19, 2015

    Hi, happy Thursday, everyone!

    In yesterday’s issue, we let you know that we now have a slightly larger venue for our next INSIDER event so we can accommodate more of you.

    Relatedly, we’d like to thank two new blue-chip sponsors that are partnering with us on the evening: Amazon Web Services, the cloud computing arm of everyone’s favorite global online retailer, and Personal Capital, the digital wealth management founded by former Intuit and PayPal CEO Bill Harris.

    We’re proud to be working with both brands.

    Now on to the news!

    —–

    Top News in the A.M.

    Yahoo is pulling the plug on its China operations.

    Move over, Apple Watch? Swiss watchmaker TAG Heuer is teaming up with Google and Intel to create a luxury smartwatch. Its CEO just called it the “biggest announcement ever” in his 40-year industry career.

    Greylock Partners is in talks to invest in the live broadcasting app Meerkat, reports The Information. More here.

    —–

    An IPO Survey Hints at Trouble

    This morning, the law firm Fenwick & West published its most recent report on the state of the IPO market. Its “2014 IPO Survey” doesn’t hold many surprises, but it does underscore an important point: Public market investors have grown more discriminating than they were in the late ’90s — and that’s bad news for the many late-stage companies that are being assigned bubble-era valuations.

    Let’s start with the number of IPOs in the U.S. across all industries last year. Sixty-eight life sciences companies went public (up from 41 in 2013). Meanwhile, 38 U.S.-based tech companies went public, which is almost exactly how many went public in 2013 when 37 IPO’d. (For some context, in 1999, 308 U.S. tech companies went public.)

    Life sciences offerings were on average smaller than technology deals, reports Fenwick, and they faced more pricing uncertainty. Of the life sciences deals in the first half and second half of 2014, approximately 44 percent and 52 percent priced below the bottom end of their expected range, compared with 15 percent and 27 percent of tech deals.

    Then again, they went public much faster, says Fenwick, which reports that of the tech companies that priced in the second half of last year, roughly two-thirds were on file for more than five months before pricing.

    Either way, the trend, post offering, was downward. According to Fenwick, those tech companies to go public in the first half of last year saw their shares fall by an average of 16.2 percent by the time their lock-up periods had expired. On average, shares of life sciences companies to go public in the first half of last year were down 1.3 percent by the end of their lock-up periods.

    Castlight Health, the cloud-based health-care tech company whose shares soared 149 percent on its opening day roughly a year ago, probably factors meaningfully into the above figures. Almost immediately after its IPO, its stock began to spiral. Today, those shares, originally priced at $16, are trading at $9.

    Still, the second half of the year looked much the same. In fact, first-day pricing appears to have grown even more rational, with tech stocks falling an average of 3 percent by the time their lock-up periods had ended, and life sciences shares dropping by 1.5 percent.

    That lack of drama is good for the public market investors, who are plainly approaching new offerings more carefully than they did during the go-go days of the late ’90s Internet boom and bust.

    It’s bad news for the many still-private tech companies have been raising money at exuberant valuations. (They can’t all be the next Uber.)

    You can download Fenwick’s full report here.

    —–

    New Fundings

    1More, a two-year-old, Shenzhen, China-based maker of high-performance earbuds, has raised $15 million in Series B funding led by GGV Capital. Xiaomi is a co-investor in the company.

    CafeX Communications, a two-year-old New York-based startup whose service allows apps and websites to include plugin-less video chat and screen sharing, has raised an undisclosed amount of funding from Intel Capital. The company had previously raised $19.6 million from investors, including Illuminate Ventures.

    Conversa Health, a two-year-old, San Rafael, Ca.-based company that operates a personalized patient relationship management platform, has raised $2.5 million in seed funding from unnamed health care angel investors. VentureBeat has more here.

    Degreed, a three-year-old, San Francisco-based free service that scores and validates a user’s lifelong education from accredited and non-accredited sources, has raised $7 million in Series A funding led by Signal Peak Ventures. The company had previously raised $1.8 million.

    Draft, an eight-month-old, New York-based daily fantasy sports app, has raised $3.5 million in Series A funding led by Upfront Ventures, with participation from Advancit Capital, BoxGroup, the Chernin Group, and QueensBridge Venture Partners. Recode has the story here.

    Fundbox, a three-year-old, San Francisco-based company whose data analytics software aims to accelerate cash flow and clear invoices for small businesses, has raised $40 million in Series B financing led by General Catalyst Partners, with participation from NyCa Investment Partners and earlier backer Khosla Ventures. The company also announced a new credit facility in partnership with Silicon Valley Bank and other institutions. The company had previously raised $17.5 million from investors.

    Ginkgo Bioworks, a 6.5-year-old Boston-based company that genetically programs microbes to produce molecules used in flavors, fragrances, cosmetics and nutritional ingredients, has raised $9 million in Series A funding from Felicis Ventures, OS Fund, Data Collective, iGlobe Partners and Vast Ventures. The company was the first biotechnology startup to go the Y Combinator accelerator, graduating last summer. Venture Capital Dispatch has more here.

    Healthfinch, a 5.5-year-old, Madison, Wi.-based company whose software helps simplify health organizations’ prescription refill process, has raised $1.5 million in funding led by Jumpstart Ventures, with participation from Chicago Ventures, OCA Ventures and Wisconsin entrepreneur and investor Mark Bakken.

    Hungama, a 10-year-old, Sri Lanka-based company that aggregates, develops, publishes and distributes Bollywood and South-Asian entertainment content, is reportedly in “advanced talks” with investors — including previous backers Intel Capital and Bessemer Venture Parters— to raise more than $100 million in fresh funding. TechCrunch has more here.

    Hypori, a four-year-old, Austin, Tx.-based mobile data security company, has raised $6.7 million in Series A-1 funding from multiple investors, including Green Visor Capital. The company has now raised $13.8 million altogether. Austin Business Journal has more here.

    Joyable, a 15-month-old, San Francisco-based company whose online tools aims to help users overcome social anxiety, has raised $2.1 million in seed funding from Thrive Capital, Harrison Metal, and angel investors, including Benchmark co-founder Andy Rachleff.

    Nimbus Therapeutics, an 6.5-year-old, Cambridge, Ma.-based company that has developed an oral drug designed to disrupt a common condition called nonalcoholic fatty liver disease, has raised $43 million in Series B funding led by Pfizer Venture Investments and Lightstone Ventures. Earlier backers Atlas Venture, SR One, Lilly Ventures, and Bill Gates also joined the round, which brings the company’s total funding to roughly $67 million. Xconomy has more here.

    Petkit, a 1.5-year-old, Shanghai, China-based company whose wearable device for dogs lets owns record and analyze behavioral data and track their pet’s location, has raised an undisclosed amount of Series A funding from GGV Capital.

    Reevoo, a 10-year-old, London-based online customer reviews company used by global brands for insights into how their products are perceived, has raised an undisclosed amount of capital that brings its total funding to £6.5 million ($9.6 million). MMC Ventures led the round and was joined by Talis Capital, Eden Ventures and Banexi Ventures.

    Remitly, a four-year-old, Seattle-based mobile payments service that enables users to make person-to-person international money transfers from the U.S., has raised $12.5 million in Series B funding led by DFJ, with participation from DN Capital and earlier backers QED Investors and Trilogy Equity Partners. The company has now raised $23 million altogether, shows Crunchbase.

    Sentisis, a three-year-old, Madrid, Spain-based natural language processing startup whose tools analyze information from social networks, has raised $1.3 million in Series A funding led by Axon Partners Group and the Fundación José Manuel Entrecanales. Earlier investors, including Startcaps Ventures and 500 Startups, also participated in the round. The company had previously raised roughly $500,000. TechCrunch has more here.

    Shuddle, a year-old, San Francisco-based car-share service and app that’s zeroing in on minors and seniors, has raised $9.6 million in Series A funding led by RRE Ventures, with participation from earlier backers Comcast Ventures, Forerunner Ventures, Accel Partners, and numerous angel investors. The company, whose service has only been available in the Bay Area to date, has now raised $12 million altogether.

    Twin Prime, a 3.5-year-old, Redwood City, Calif.-based company whose technology promises to speed mobile data delivery, has raised $9.5 million in Series A funding led by DFJ and True Ventures, with participation from Milliways Ventures and Moment Ventures.

    Vidder, a six-year-old, Campbell, Ca.-based cybersecurity company whose software mitigates network-based attacks by making servers invisible to everyone except authorized users, has raised $12 million in Series B funding led by LDV Partners, with participation from Presidio Ventures and earlier backers Onset Ventures and Voyager Capital.

    Zimi, a Nanjing, China-based company that makes a portable battery charger for the smartphone maker Xiaomi, has raised $15 million in Series B funding led by GGV Capital.

    —–

    New Funds

    AppWorks, a 5.5-year-old, Taipei, Taiwan-based accelerator program, has raised a new, $50 million multistage venture fund to invest in mobile commerce and connected device startups. The accelerator’s investors include National Development Fund, Cathay Life, Phison Electronics,UDN Group, CID Group, FarEastTone Telecommunications, Fubon Life, China Trust Ventures, and CDIB Capital. Its previous fund closed with $11 million in 2012. TechCrunch has more here.

    Vivo Capital, an 18-year-old, Palo Alto-based healthcare investment firm that focuses on later-stage medical companies in the U.S. and China, has raised a new, $750 million fund — twice the size of the $375 million it raised for its last fund in late 2011. (According to VentureSource, it’s one of the largest health-care venture funds ever.) In addition to Palo Alto, Vivo has offices in Shanghai, Beijing, and Chengdu, China.

    —–

    IPOs

    GoDaddy has set a price range for its IPO. More here.

    —–

    Exits

    OverDrive, a 29-year-old, Cleveland, Oh.-based e-book and audiobook marketplace, has been acquired for $410 million by the Japanese e-commerce giant Rakuten, which has been looking to boost its digital content business. TechCrunch has much more here.

    SurfEasy, a four-year-old, Toronto-based company whose virtual private network (VPN) app lets users browse the web more securely, has been acquired by Opera, maker of the popular Opera web browser. Terms of the deal were not disclosed. SurfEasy had raised one undisclosed amount of funding, according to Crunchbase.

    Yieldex, an eight-year-old, New York-based ad tech platform, has been acquired by a better-financed ad tech company in New York, eight-year-old AppNexus, in a cash-and-stock deal reportedly worth about $100 million. Yieldex had raised $18.5 million from investors, including Triangle Peak Partners, Hearst Ventures, Sequel Venture Partners, First Round Capital, and Woodside Fund. AppNexus has raised roughly $310 million over the years, including from WPP, Technology Crossover Ventures, Venrock, Tribeca Venture Partners, Microsoft, First Round Capital, Kodiak Venture Partners, and Khosla Ventures. Venture Capital Dispatch explains what’s going on here.

    —–

    People

    A former Facebook product manager who was fired from the company is suing it for gender discrimination, racial discrimination, and sexual harassment—and she’s using attorney Theresa Lawless, who is currently representing Ellen Pao is her case against Kleiner Perkins Caufield & Byers. According to her suit, Chia Hong, who spent several years at Facebook, was “belittled at work” and asked to complete tasks that were not part of her job description, such as “organize parties and serve drinks to male colleagues.” She also says that she was “replaced by a less qualified, less experienced male” after being terminated. Wired has more here.

    Madrona Venture Group has announced that it has three new strategic directors to work its portfolio company founders and executives. They are: John McAdam, Sujal Patel and Steve Singh, who’ve been the CEOs of publicly traded F5 Networks, Isilon Systems (acquired by EMC) and Concur (acquired by SAP), respectively. More here.

    —–

    Jobs

    GE Ventures is looking to hire an associate to specialize in advanced manufacturing. The job is in Chicago.

    —–

    Essential Reads

    The fuzzy, insane math that’s creating so many billion-dollar tech companies.

    Forget passwords. Yesterday, Alibaba Group’s Jack Ma Monday showed off a new facial recognition tool that’s intended for use with the Alipay mobile payments service.

    —–

    Detours

    A guide to (avoiding the) most offensive gestures around the world.

    Your personality could be making you fat.

    —–

    Retail Therapy

    Pinocchio party picks.

  • An IPO Survey Hints at Trouble

    nowhere to runThis morning, the law firm Fenwick & West published its most recent report on the state of the IPO market. Its “2014 IPO Survey” doesn’t hold many surprises, but it does underscore an important point: Public market investors have grown more discriminating than they were in the late ’90s — and that’s bad news for the many late-stage companies that are being assigned bubble-era valuations.

    Let’s start with the number of IPOs in the U.S. across all industries last year. Sixty-eight life sciences companies went public (up from 41 in 2013). Meanwhile, 38 U.S.-based tech companies went public, which is almost exactly how many went public in 2013 when 37 IPO’d. (For some context, in 1999, 308 U.S. tech companies went public.)

    Life sciences offerings were on average smaller than technology deals, reports Fenwick, and they faced more pricing uncertainty. Of the life sciences deals in the first half and second half of 2014, approximately 44 percent and 52 percent priced below the bottom end of their expected range, compared with 15 percent and 27 percent of tech deals.

    Then again, they went public much faster, says Fenwick, which reports that of the tech companies that priced in the second half of last year, roughly two-thirds were on file for more than five months before pricing.

    Either way, the trend, post offering, was downward. According to Fenwick, those tech companies to go public in the first half of last year saw their shares fall by an average of 16.2 percent by the time their lock-up periods had expired. On average, shares of life sciences companies to go public in the first half of last year were down 1.3 percent by the end of their lock-up periods.

    Castlight Health, the cloud-based health-care tech company whose shares soared 149 percent on its opening day roughly a year ago, probably factors meaningfully into the above figures. Almost immediately after its IPO, its stock began to spiral. Today, those shares, originally priced at $16, are trading at $9.

    Still, the second half of the year looked much the same. In fact, first-day pricing appears to have grown even more rational, with tech stocks falling an average of 3 percent by the time their lock-up periods had ended, and life sciences shares dropping by 1.5 percent.

    That lack of drama is good for the public market investors, who are plainly approaching new offerings more carefully than they did during the go-go days of the late ’90s Internet boom and bust.

    It’s bad news for the many still-private tech companies have been raising money at exuberant valuations. (They can’t all be the next Uber.)

    You can download Fenwick’s full report here.

  • StrictlyVC: March 18, 2015

    Hi, everyone. Before we jump into the news, we want to take a moment to thank the many of you who’ve bought tickets to our May event in San Francisco! We’re so excited, we wish it were sooner. Apparently, so does one mystery attendee, who we’re told turned up last Friday night, thinking the program was March 13 and not May 13. (Don’t feel bad. We once showed up at the airport the wrong weekend.)

    In fact, because of interest in the event, we’ve moved it to a new, larger home, courtesy of the very fine folks at Galvanize, an airy, modern work space in downtown San Francisco. (You can check out lots of photos here.)

    If you have already purchased a ticket, expect a separate email about the venue change. (It’s just four blocks from the gallery where we’d originally planned to host things.) If you have not purchased a ticket, we hope you’ll get one soon. It’s going to be fun. Our speaker lineup, if you’ve missed it, is right here.

    —–

    Top News in the A.M.

    French police reportedly raided Uber’s offices on Monday as part of an investigation into the company’s low-cost UberPop carpooling service. They grabbed documents, emails, and smartphones on their way out, too. The Verge has more here.

    —–

    For Jeff Clavier of SoftTech VC, a New Partner, and Some Déjà Vu

    Beginning next month, the Bay Area venture firm SoftTech VC will undergo a management change, with partner Charles Hudson beginning a transition out of the firm to start his own fund, and a new venture partner, Andy McLoughlin, who cofounded the enterprise collaboration startup Huddle, joining full time to focus on business-to-business opportunities.

    For SoftTech founder Jeff Clavier, it must feel like a bit of déjà vu. It was 11 years ago, working for the venture arm of Reuters, that Clavier decided to gamble on himself and strike out on his own. SoftTech has since grown from a one-man operation into a well-regarded early-stage investment firm with more than 160 investments to its name and four funds, including an $85 million pool that it closed on last year.

    As the firm has evolved, so has its mandate. “Something like 500 companies now ping us ever quarter, and we invest in four or five,” Clavier says of the firm, whose average check size today is $750,000. Not only does SoftTech “have the luxury of trying to get the right level of signals before we invest,” he adds, but the firm’s LPs expect it.

    That evolution has made it harder for Hudson to chase the nascent ideas about which he’s most passionate, acknowledges Clavier, who recruited Hudson into SoftTech as a venture partner in 2010 and promoted him to partner in 2013. In fact, says Clavier, Hudson decided several months ago to raise his own, “pre-seed” fund, an effort that Clavier says he fully supports. (Owing to SEC rules, Hudson can’t talk yet about that fund, but we’ve learned that its brand, for now at least, is Precursor VC.)

    It will be a gradual move out of SoftTech for Hudson, who is expected to manage his startups through the end of the current fund’s investing period, in the summer of 2016.

    In the meantime, notes Clavier, McLoughlin brings SoftTech far more expertise in enterprise startups as it looks to shift more of its capital from business-to-consumer startups to businesses catering to other businesses.

    Not only has McLoughlin been scaling his own enterprise business first-hand at Huddle (which remains privately held), but he has made more than 35 investments as an angel investor over the last five years, many of them on exactly the types of companies that SoftTech has grown more interested in funding. Among those bets is Apiary, a San Francisco-based company whose tools help companies build, test, monitor, and document web APIs; and PipeDrive, a maker of sales pipeline software that’s based in Menlo Park, Ca.

    “Charles and I had in mind to bring in a new investment professional [who], on the one side is a SaaS cofounder who has seen different levels [of growth] over many years, and [on the other], is someone who can help set up sales, marketing, and customer success [for our startups],” says Clavier.

    “From that standpoint — and many others — Andy is a score.”

    —–

    New Fundings

    Advanced Catheter Therapies, a 6.5-year-old, Chattanooga, Tn.-based medical device company with a portfolio of catheter technologies, has raised $4.5 million in Series B funding from TAM Ventures, the venture arm of Toray Industries, a chemical company in Tokyo. The company has raised at least $9.9 million to date, shows Crunchbase.

    BBOXX, a five-year-old, London-based company that designs and constructs solar kiosks in rural communities throughout Africa, has raised $3 million in Series B funding from Bamboo Finance and the DOEN Foundation. The company has now raised $4.9 million altogether, shows Crunchbase, including from Khosla Ventures.

    Clearpath Robotics, a 5.5-year-old, Kitchener, Ontario-based startup offering light industrial bots, has raised $11.2 million in funding led by RRE Ventures, with participation from iNovia Capital. Venture Capital Dispatch has more here.

    Clue, a two-year-old, Berlin-based fertility cycle tracking app, has raised $2 million in new funding, including from LVMH Moët Hennessy – Louis Vuitton and numerous angel investors. The company has raised $3 million to date.

    Collective Health, a 1.5-year-old, San Mateo, Ca.-based company that automates self-insurance for small businesses, has raised $38 million in Series B funding led by Founders Fund and New Enterprise Associates, with participation from Formation 8, Redpoint VenturesRRE Ventures, Subtraction Capital and Rock Health. The company previously raised two undisclosed amounts of funding.

    Darktrace, a two-year-old, U.K.-based cyber security startup backed by Autonomy founder Mike Lynch’s Invoke Capital, has raised $18 million in new funding at a valuation of $80 million from Invoke, Talis CapitalHoxton Ventures and unnamed private individuals. TechCrunch has the story here.

    DoorDash, a two-year-old, Palo Alto, Ca.-based on-demand delivery service for local restaurants, has raised around $35 million in new funding at a valuation of nearly $600 million led by Kleiner Perkins Caufield & Byers, reports Fortune. The company has now raised $54.7 million altogether, including from Sequoia Capital, CRV, Khosla VenturesPejman Mar Ventures and Ted Zagat.

    Drivestream, a 13-year-old, Sterling, Va.-based company that helps businesses integrate cloud applications, has raised $5 million in funding from the new venture arm of India-based enterprise company Wipro.

    FiftyThree, a four-year-old, New York-based company that makes mobile tools like Paper — an app that enables users to sketch, write, draw, outline and color on the iPad — has raised $30 million in new funding led by New Enterprise Associates. The company has now raised $45.1 million altogether, including from Thrive Capital and entrepreneur Jack Dorsey. Xconomy has more here.

    Health Catalyst, a seven-year-old, Salt Lake City, Ut.-based company focused around healthcare data warehousing services, has raised $70 million in new funding led by earlier investor Norwest Venture Partners, with participation from other insiders, including Sequoia Capital, Kaiser Permanente Ventures, Sorenson Capital, CHV Capital and Partners HealthCare. New investors Sands Capital Ventures, Tenaya CapitalEpic Ventures and Leavitt Equity Partners also participated. The company has now raised $170 million altogether.

    Help Scout, a four-year-old, Boston-based maker of customer support software, has raised $6 million in Series A funding led by Foundry Group, with participation from CommonAngels Ventures. The company had previously raised about $1.2 million in seed funding.

    Honest Dollar, a five-month-old, Austin, Tx.-based financial services startup that aims to make it easier for small businesses to offer retirement benefits to their employees, has raised $3 million in seed financing led by Expansive Ventures, with Core Innovation Capital and Formation 8 also participating. TechCrunch has more here.

    Initiafy, a three-year-old, Dublin, Ireland-based job training platform specifically designed for contractors and short-term workers, has raised $1.5 million in seed funding, including from Delta Partners Group, ACT Venture Capital, and angel investor Leslie Buckley. The company has raised two seed rounds previously. More here.

    InsideSales.com, an 11-year-old, Provo, Utah-based cloud-based sales acceleration platform, has raised $60 million in funding led by Salesforce Ventures, with participation from Microsoft and earlier backers Polaris Partners, Kleiner Perkins Caufield & Byers, Hummer Winblad Venture Partners, U.S. Venture Partners, and Zetta Venture Partners. The company has now raised $143 million, shows Crunchbase.

    nCino, a three-year-old, Wilmington, N.C.-based company whose web-based operating technology serves banks and financial-services companies, has added an undisclosed amount of funding to its Series B round from Salesforce Ventures. Last month, the company had closed its Series B with $29 million led by Insight Venture Partners, with participation from earlier backers Wellington Management, former Morgan Stanley chairman and CEO John Mack and Promontory Financial Group founder and CEO Gene Ludwig. Forbes wrote about the company last month.

    Playbuzz, a 2.5-year-old, New York-based company behind a free authoring platform that enables any editor or contributor to author a new item on their topic of choice, then embed the item on their site, has raised $16 million in Series B financing led by 83North, with additional investment from Saban Capital and earlier backers Carmel Ventures and FirstTime Ventures. The company, founded in Tel Aviv, had previously raised $3.8 million from investors.

    Red Rock Biofuels, a 3.5-year-old, Fort Collins, Co.-based renewable biofuels company, has raised an undisclosed amount of new funding from Flagship Ventures. Xconomy has more here.

    Uxin, a four-year-old, Beijing, China-based online auction platform for used cars in China, has raised $170 million from a syndicate of investors, including the search engine company Baidu, the private equity group KKR, and Coatue Management. Dealbook has more here.

    —–

    People

    Sean Cook, who announced last week he was leaving Twitter after five years, is planning to join messaging startup Layer as head of product, reports Recode.

    Apple CEO Tim Cook talks with Fast Company about the company and his friendship with Steve Jobs, whose office has apparently been left untouched since his death in 2011. “I haven’t decided about what we’ll do there. But I wanted to keep his office exactly like it was. I was in there with Laurene [Powell Jobs, Steve’s wife] the other day because there are still drawings on the board from the kids.”

    General partner Randy Komisar of Kleiner Perkins Caufield & Byers took the stand yesterday in the Ellen Pao trial, denying that he ever made romantic gestures toward Pao and testifying that Pao had a tendency to “politic behind my back.” Komisar also called Pao’s behind-the-scenes complaints about Komisar’s seat on the board of the now-public company, RPX (a company Pao has said she convinced Kleiner to fund), a “betrayal” and “unforgivable.” Venture Capital Dispatch has more here.

    Yesterday, to the surprise of his many customers, Tesla co-founder and CEO Elon Musk said at a conference that when true driverless technology hits the road, society will need to “outlaw driving cars” because error-prone humans will be deemed too dangerous. Hours later, Musk tweeted: “Tesla is strongly in favor of people being allowed to drive their cars and always will be. Hopefully, that is obvious. However, when self-driving cars become safer than human-driven cars, the public may outlaw the latter. Hopefully not.”

    Oke Okaro, Bloomberg’s head of mobile, has left the company to pursue a new venture, though no one knows yet exactly what that is. Business Insider has the story here.

    —–

    Jobs

    Google Capital, the growth equity unit of the search giant, is looking to hire an associate. The job is in Mountain View, Ca.

    —–

    Data

    Pitchbook has run some numbers, and says that of the 32 funds that closed funds in the range of $250 million and $500 million in 2007, the best performing of the bunch — based on net IRR — are ARCH Venture Fund VII, Shasta Ventures II, The Column Group Fund I, and Third Rock Ventures Fund I. The 32 funds have distributed, on average, $143.31 million.

    A growing discrepancy between public and private valuations of enterprise software companies is exposing late-stage investors to greater risks, suggests new research from Barclays. Venture Capital Dispatch has more here.

    Y Combinator says it has now funded 842 companies to date, and those startups have raised upwards of $3 billion in investment and have a collective market cap of more than $30 billion. TechCrunch has the rundown here.

    —–

    Essential Reads

    You can now send money on Facebook. Here’s what’s in it for Mark Zuckerberg & Co.

    Why the pricing strategy for the Apple Watch is “insanely smart.”

    A bill introduced recently by a California state senator could end the University of California‘s ability to keep private how its individual venture investments are doing.

    —–

    Detours

    Here’s everything that’s hiding in your cup of coffee.

    Welcome to Seoul, the world capital of plastic surgery.

    —–

    Retail Therapy

    Rethinking the Land Rover Defender.

  • For Jeff Clavier of SoftTech VC, a New Partner and Some Deja Vu

    Jeff ClavierBeginning next month, the Bay Area venture firm SoftTech VC will undergo a management change, with partner Charles Hudson beginning a transition out of the firm to start his own fund, and a new venture partner, Andy McLoughlin, who cofounded the enterprise collaboration startup Huddle, joining full time to focus on business-to-business opportunities.

    For SoftTech founder Jeff Clavier, it must feel like a bit of déjà vu. It was 11 years ago, working for the venture arm of Reuters, that Clavier decided to gamble on himself and strike out on his own. SoftTech has since grown from a one-man operation into a well-regarded early-stage investment firm with more than 160 investments to its name and four funds, including an $85 million pool that it closed on last year.

    As the firm has evolved, so has its mandate. “Something like 500 companies now ping us every quarter, and we invest in four or five,” Clavier says of the firm, whose average check size today is $750,000. Not only does SoftTech “have the luxury of trying to get the right level of signals before we invest,” he adds, but the firm’s LPs expect it.

    That evolution has made it harder for Hudson to chase the nascent ideas about which he’s most passionate, acknowledges Clavier, who recruited Hudson into SoftTech as a venture partner in 2010 and promoted him to partner in 2013. In fact, says Clavier, Hudson decided several months ago to raise his own, “pre-seed” fund, an effort that Clavier says he fully supports. (Owing to SEC rules, Hudson can’t talk yet about that fund, but we’ve learned that its brand, for now at least, is Precursor VC.)

    It will be a gradual move out of SoftTech for Hudson, who is expected to manage his startups through the end of the current fund’s investing period, in the summer of 2016.

    In the meantime, notes Clavier, McLoughlin brings SoftTech far more expertise in enterprise startups as it looks to shift more of its capital from business-to-consumer startups to businesses catering to other businesses.

    Not only has McLoughlin been scaling his own enterprise business first-hand at Huddle (which remains privately held), but he has made more than 35 investments as an angel investor over the last five years, many of them on exactly the types of companies that SoftTech has grown more interested in funding. Among those bets is Apiary, a San Francisco-based company whose tools help companies build, test, monitor, and document web APIs; and PipeDrive, a maker of sales pipeline software that’s based in Menlo Park, Ca.

    “Charles and I had in mind to bring in a new investment professional [who], on the one side is a SaaS cofounder who has seen different levels [of growth] over many years, and [on the other], is someone who can help set up sales, marketing, and customer success [for our startups],” says Clavier.

    “From that standpoint — and many others — Andy is a score.”

  • StrictlyVC: March 17, 2015

    Happy St. Patrick’s Day, everyone! (Web visitors, click here for an easier-to-read version of what you see below. To sign up for the newsletter, click here.)

    —–

    Top News in the A.M.

    Apple is planning to offer online television service by this fall.

    Pinterest said yesterday that it has raised $367 million at a lofty $11 billion valuation. It isn’t done fundraising, either. The company, which isn’t disclosing its newest backers, could raise as much as $211 million more before the round closes, the company tells the WSJ.

    —–

    Mary Meeker Goes to Bat for Kleiner Perkins — and Ellen Pao

    In a San Francisco courtroom yesterday, Mary Meeker, the star investment analyst turned general partner at Kleiner Perkins Caufield & Byers, took the stand, testifying that she has not experienced discrimination at Kleiner and calling the firm the “best place to be a woman in the business.”

    Kleiner is currently fighting charges of gender discrimination and retaliation by former junior partner Ellen Pao, and Meeker was called as a witness for its defense. In addition to testifying that she had never personally experienced discrimination at the firm, Meeker said she has not been excluded from Kleiner Perkins events because of her gender. She also said she hasn’t observed any gender discrimination at the firm.

    Meeker likely left an impression on jurors, particularly given her impressive career, from her early days at Morgan Stanley to her 19-year rise within the powerful investment bank, where she ultimately became the head of its global technology research practice.

    “I had a pretty good track record of finding things before others could see them,” said Meeker, pointing to companies she’d covered from almost their outset, including Microsoft, America Online, Google, Netscape, and Alibaba. In fact, Meeker said yesterday, Kleiner had “recruited me off and on for about a decade for a whole host of things.” (She finally joined the firm in December 2010.)

    Defense attorney Lynn Hermle had asked Meeker about her background to highlight the contrast between Meeker’s experience and that of Pao, who says she was denied the opportunity to advance at the firm because of her gender. Pao, who at 45 is roughly 10 years younger than Meeker, has enjoyed an impressive but far less celebrated career, including as a law firm associate, as a business development executive at numerous tech companies, and today, as the interim CEO of the site Reddit.

    Still, Meeker didn’t make as ideal a witness for Kleiner as she might have, volunteering information about Pao’s investing instincts and politely pushing against some of defense attorney Lynn Hermle’s attempts to show Pao in a poor light.

    Hermle, for example, asked Meeker to contrast her experience with Chi-Hua Chien — a former Kleiner investor who was promoted to a more senior role — with that of Pao, who was not promoted at the same time.

    Meeker called Chien “very bright, very intense” and someone who would “sort of get on the edge of his seat and jump up a bit and get really enthusiastic about the business.” Asked afterward to describe Pao in meetings, Meeker called Pao “certainly more passive, but I think thoughtful.”

    She also prefaced her comments by explaining that she had far less interaction with Pao, saying, “I was in a lot of meetings with Chi-Hua – I’d say every week. . . . With Ellen, we worked on a couple of things together.”

    One of those things was the news app Flipboard, which Kleiner’s early-stage fund had backed and whose later-stage, digital growth fund, which Meeker oversees, was also considering funding. (It passed at the time, said Meeker. “It was a little early. The company didn’t have revenue at that point.”)

    Pao also brought Climate Corp. to Meeker’s attention, Meeker said yesterday, occasionally facing Pao – who was seated 50 feet away — as if they were still colleagues. “It’s a company that has done quite well,” said Meeker. “It was acquired by Monsanto. Its founder is quite good, but the company focuses on offering insurance to farmers based on weather trends, which wasn’t an area where I thought any of us had particular expertise because we weren’t in the farming business.” (Climate Corp. went on to raise $107 million from investors; it sold for $930 million in October 2013, seven years after it was founded.)

    Hermle separately asked Meeker if Pao had ever come to Meeker and asked her to mentor her. “Not that I recall,” said Meeker.

    Meeker could have left it at that, but she added, “Bear in mind, I was the new kid on the block in 2011 and we were investing at a very rapid pace in a different area of investments than were core.”

    Hermle pushed the point. “So you were available?”

    “I think I’m around, though I can’t say I’m the most available person at all times,” answered Meeker.

    —–

    New Fundings

    Altocloud, a two-year-old, Mountain View, Ca.-based company whose customer care software helps businesses connect with their customers, has raised $2 million in funding led by Delta Partners, Digicel Group and ACT Venture Capital, with participation from Enterprise Ireland and Western Development Commission. The company has now raised $3 million altogether.

    Birst, a 10-year-old, San Francisco-based business analytics vendor, has just raised $65 million in new funding led by Wellington Management, with participation from earlier backers Sequoia Capital, Hummer Winblad Venture Partners, DAG Ventures and Northgate Capital. The company has raised $156 million altogether. Venture Capital Dispatch has much more here.

    CyPhy Works, a 6.5-year-old, Danvers, Ma.-based maker of unmanned aerial vehicles, has raised an undisclosed amount of funding from Motorola Solutions. The company has previously raised at least $10 million from investors, including General Catalyst Partners, Felicis Ventures, and Lux Capital.

    Dataminr, the six-year-old, New York-based company that analyzes tweets and other information streams to create alerts for traders, reporters and government agencies, has raised $130 million in a deal that values that company at roughly $700 million, reports the WSJ. Dataminr’s new investors include Fidelity Investments, which led the round, Wellington Management, Credit Suisse, Goldman Sachs, and Glynn Capital Management. Earlier venture backers Venrock and Institutional Venture Partners also participated in the funding, which brings Dataminr’s total funding to $180 million.

    DraftKings, the four-year-old, Boston-based daily fantasy sports site through which users can legally wager real money, is raising a new round of venture capital funding at a valuation of at least $1 billion, reports Fortune. According to Crunchbase, the company has already raised at least $75 million from investors, including Atlas Venture, GGV CapitalRedpoint Ventures and The Raine Group.

    Glooko, a 4.5-year-old, Palo Alto, Ca.-based company that has developed a diabetes management platform, has raised $16.5 million in Series B funding from Canaan Partners and Medtronic, along with previous investors The Social + Capital Partnership and Samsung Ventures.

    Orbital Insight, a two-year-old, Mountain View, CA-based geospatial company that’s using data science to extract insight from satellite images, has raised $8.7 million in Series A funding led by Sequoia Capital, with participation from Bloomberg Beta, Google Ventures. Earlier backers citizen.vc and Lux Capital, which provided the company with an undisclosed amount of funding last year, also joined the round.

    Peatix, a four-year-old, Japan-based mobile event and ticketing startup, has raised $5 million in Series B funding led by the Tokyo-based firm Digital Garage, with participation from Singapore Press Holdings, the Japanese media firm Sunny Side Up, and earlier backers Fidelity Growth Partners Japan and Draper Nexus. The company has now raised $9.6 million altogether. Tech in Asia has more here.

    Petcube, a nearly three-year-old, San Francisco-based company whose gadget and mobile community app helps pet owners connect remotely with their pets, has raised $1.1 million in seed funding co-led by AVentures Capital and Almaz Capital, with participation from SOSVentures and individual investors.

    RedOwl Analytics, a 3.5-year-old, Baltimore, Md.-based company whose software helps organizations analyze their internal corporate data streams, has raised an undisclosed amount of funding from Blackstone Group to fund development the company’s insider-risk detection platform. RedOwl had previously raised at least $7.5 million from investors, includingConversion Ventures and Scout Capital, shows Crunchbase.

    Retty, a four-year-old, Tokyo-based social site that helps people navigate Japan’s restaurants, has raised $8.24 million in Series C funding led by Fidelity Growth Partners Japan, with participation from earlier backers Gree Ventures and Mizuho Capital. Tech In Asia has more here.

    TableSafe, a five-year-old, Seattle-based company that has developed a payments technology and bill-paying device for restaurants, has raised $4.5 million from undisclosed investors that brings its total funding to $15 million. The company’s earlier backers include Swiftsure Capital.

    Tachyon, a months-old, Bay Area-based memory-centric storage system, has raised $7.5 million in Series A funding from Andreessen Horowitz. Venture Capital Dispatch has much more here.

    —–

    New Funds

    The tech half of the Cambridge, Ma.-based venture capital firm Atlas Venture has closed its first fund with $200 million under a placeholder name, FKA Atlas Venture, for “formerly known as.” Now the outfit is offering $50,000 in a crowdsourcing competition to whomever comes up with the best name for the firm. (Half the money will go to the winner. Half will go to a nonprofit that’s part of a particular Boston-area philanthropy network; the winner gets to choose which one.) Our favorite suggestion so far, by Cendana Capital founder Michael Kim, is The Dome Fund.

    Dutch businessman Ben Verwaayen, the former head of British Telecom and Alcatel-Lucent, is looking to raise more than 200 million euros ($212 million) for his new, London-based fund management group, Keen Ventures. The Financial Times has much more here.

    —–

    IPOs

    Cidara Therapeutics, a 1.5-year-old, San Diego-based company that’s developing novel therapies for fungal infections, filed on Friday to raise up to $69 million in an IPO. The company had just raised has raised $42 million in Series B funding from undisclosed investors last month, bringing the total amount it has raised to $74 million, according to Crunchbase. The company’s backers include 5AM Ventures, which owns 22.1 percent of the company, along with Aisling Capital, Frazier Healthcare, InterWest Partners and Seachaid Pharmaceuticals.

    —–

    Exits

    Careerify, a six-year-old, Toronto-based startup that makes online recruiting software, has been acquired by LinkedIn for undisclosed terms. TechCrunch has more here.

    FreeCharge, a five-year-old, Mumbai, India-based company that provides users coupons for charging their mobile plans, is in talks to sell to e-commerce juggernaut Snapdeal for more than $400 million, the WSJ reports. The negotiations are reportedly in the “advanced” stages. FreeCharge has raised at least $113 million from investors, shows Crunchbase. Its backers include Sofina, ru-Net Holdings, Sequoia Capital, Tybourne, and Valiant Capital Partners.

    Lookback, a two-year-old, Stockholm-based company that makes a user testing feedback app, has acquired a U.K.-based startup called Reissued that makes a popular screencasting app called QuickCast. TechCrunch has more here.

    Patreon and Subbable, two subscription-based funding site for artists, have joined forces. TechCrunch has more here.

    —–

    People

    Brent Callinicos is stepping down as Uber‘s CFO. Callinicos joined the company in 2013 from Google, where he was treasurer and chief accountant. The Wall Street Journal has more here about the move, which is widely seen as Callinicos making way for a public company CFO. Here are the related emails that were sent out to investors about his departure if you’re interested.

    Polaris Partners is announcing two new principals this morning: Paulina Hill and Dan Lombard. Hill joined Polaris Partners in 2011 and has been working as a senior associate. She already sits on three boards for Polaris. Lombard has just joined the firm from H.I.G. Growth Partners. Boston Business Journal has more here.

    —–

    Essential Reads

    Next week, at its developer conference, Facebook is expected to announce a tool to help mobile app developers measure whether an ad caused people to download an app, according to The Information.

    Delivering on a partnership announced last summer, eBay is launching high-end auctions with Sotheby’s.

    —–

    Detours

    Just as you suspected: Inactive kids grow up to be middle age couch potatoes.

    Florida man.

    In honor of today: 15 reasons everyone should visit Ireland.

    —–

    Retail Therapy

    Cuddle Clones!


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