StrictlyVC: April 6, 2015

Hi, everyone! Welcome back. Hope you had a terrific break. (Pst, web visitors, this is a little easier to read than what you see below.)

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Top News in the A.M.

Twitter and YouTube have been blocked again in Turkey.

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Hummer Winblad Reboots

Like many venture firms founded before the last tech boom, the San Francisco-based outfit Hummer Winblad Venture Partners seemed, for a time, to be staring death in the face owing to the market’s implosion, uneven returns, and a drawn-out lawsuit with two major record labels over its 2000 investment in the now defunct file-swapping service Napster.

The 26-year-old firm made it through the to the other side, though, and today, it’s in remarkably good shape, newly rebranding itself as HWVP and, this morning, launching a snazzy new site to mark the occasion.

The changes are more than cosmetic. HWVP is, like other firms of its vintage, a lot smaller than it used to be. The firm once employed a deep bench of managing directors and associates. Now it employs three managing directors: Mitchell Kertzman, a serial CEO (Liberate Technologies, Sybase, Powersoft Corp.) who joined the firm 12 years ago; Lars Leckie, who joined the firm a decade ago and was promoted to managing director in 2011; and Steven Kishi, who has spent the last 20 years bouncing between Hummer Winblad and various operating roles. (Most recently, Kishi was VP of product management at the cloud services company Altiscale.)

Even firm cofounders John Hummer and Ann Winblad are no longer “managing directors” but are listed at the new site instead as “founding partners.”

The amount of capital that HWVP has to invest is far less, too. The firm closed its sixth fund with $201 million in late 2007, down from the $424 million it had raised for its fifth fund in 2000.

Leckie suggests the firm will look to close its next fund with between $105 million and $150 million. (Leckie declines to discuss HWVP’s specific fundraising plans, but he offers that he believes that “small, focused funds do the best by their investors,” saying he thinks that “$35 million to $50 million” per partner is ideal.)

The firm’s prospects would seem pretty promising. Though forced to retrench, HWVP has never veered from its core thesis of investing in enterprise software companies. And while it missed the consumer wave as a result, its bets look pretty prescient right now. For example, the firm was the first investor in the 11-year-old, SaaS-based sales platform InsideSales, which last month raised $60 million at a valuation north of $1 billion. (The company has raised $200 million altogether.)

That bet alone will “return our [sixth] fund,” says Leckie, who says that HWVP owns “two times what everyone else owns” of the company.

HWVP is also among the earliest investors in Five9, MuleSoft, and Birst, among others. Five9, a San Ramon, Ca.-based call center company, went public last year. (Its market cap is $272 million, as of this writing.) MuleSoft, the San Francisco-based integration platform for connecting enterprise applications in the cloud, has raised well over $100 million from investors, closing its last round of $50 million last year at a post-money valuation of $800 million. Meanwhile, Birst, a San Francisco-based business intelligence and analytics business, just raised $65 million in Series F funding last month, bringing its total funding to $156 million. (Leckie declined to discuss its valuation.)

Of course, mark-ups are one thing. Actual exits are another. It remains to be seen whether HWVP will see the profits it’s expecting, particularly given the widening gap between the number of richly valued late-stage, still-private companies and those going public.

Perhaps unsurprisingly, Leckie is highly optimistic about the firm’s odds. “We’re having a kick ass first quarter,” he tells StrictlyVC. “Valuations will fall where they fall. But it is a very good time to be quietly investing in enterprise and SaaS infrastructure.”

Luckily for HWVP, it’s been doing it for years.

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New Fundings

Caribou Biosciences, a four-year-old, Berkeley, Ca.-based biotech startup focused on precise gene editing, has raised $11 million in Series A funding from the Swiss drug giant Novartis, along with Fidelity Biosciences, Novartis, Mission Bay Capital, 5 Prime Ventures, and an undisclosed strategic partner. Xconomy has more here.

DraftKings, the four-year-old, Boston-based online fantasy sports business that lets fans play with real money, is raising $250 million fromWalt Disney Co. at a roughly $900 million valuation, reports the WSJ. In return, DraftKings has committed to spend more than $500 million in advertising on ESPN’s platforms in coming years, says the report. The company had previously raised roughly $75 million from investors, including The Raine Group, Redpoint Ventures, GGV Capital and Atlas Venture.

Educents, a two-year-old, Oakland, Ca.-based online marketplace for educational products, has raised $2.9 million in seed funding led bySoftTech VC, with participation from Crosslink Capital, Deep Fork Capital, Kapor Capital and Learn Capital. Individual backers, including angel investor Joanne Wilson, also joined the round.

Mojix, an 11-year-old, L.A.-based developer of wide area sensor networks, has raised $14 million in Series D funding led by OMERS Ventures, with participation from Mercury Ventures and earlier backers Oak Investment Partners, Red Rock Ventures, and InnoCal Venture Capital.

PicnicHealth, a nine-month-old, San Francisco-based company whose subscription-based service helps chronically ill patients track and store their medical records, has raised $2 million in seed funding, including from The Social+Capital Partnership, Great Oaks Venture Capital, Slow Ventures, Standford’s StartX Fund, and a long list of individual investors, including Y Combinator partner Paul Buchheit and former Facebook executive Sam Lessin. TechCrunch has more here.

SeatGeek, a nearly six-year-old, New York-based ticket search engine that aggregates listings for live sports, concert, and theater events, has raised $62 million in Series C funding led by Technology Crossover Ventures, with participation from earlier backers Accel Partners, Causeway Media Partners, Mousse Partners and QueensBridge Venture Partners. The company has now raised at least $103 million to date, shows Crunchbase.

Shyp, the two-year-old, San Francisco-based shipping service whose users can photograph items they want to ship, after which the service picks up the items, packs them, and delivers them, has raised roughly $50 million at a valuation of $250 million, reports TechCrunch. According to the outlet’s sources, Kleiner Perkins Caufield & Byers may be leading the round. To date, the company has raised $12.1 million, including from Homebrew, Winklevoss Capital, and SherpaVentures.

Swiggy, an eight-month-old, Bangalore, India-based food ordering and delivery app, has reportedly raised $2 million in funding from Accel Partners and SAIF Partners.

Upstart, a three-year-old, Palo Alto, Ca.-based lending platform that provides loans to individuals based on variety of less traditional signals, has tightened its relationship with Victory Park Capital, the Chicago-based asset management firm. Last summer, Victory Park announced it would invest $100 million in Upstart loans over a two-year period; this morning, the companies are announcing that Victory Park will increase its investment in Upstart loans to $500 million.

VarageSale, a 2.5-year-old, Toronto, Ontario-based online marketplace that’s focused around local communities and competes with Craigslist, has raised $34 million in funding from Sequoia Capital and Lightspeed Venture Partners. Bloomberg has more here.

Zebra Medical Vision, a year-old, Israel-based startup building a database of anonymous medical images, has raised $8 million in funding led by Khosla Ventures. Venture Capital Dispatch has more here.

ZenPayroll, a three-year-old, San Francisco-based company whose cloud-based software system automates tax calculations and payroll payments for small and mid-size businesses, has raised $60 million in Series B funding led by Google Capital. Other participants in the round include Emergence Capital Partners, Ribbit Capital, General Catalyst Partners, Kleiner Perkins Caufield & Byers, and Google Ventures. The company has now raised $86.1 million altogether.

Zenefits, the two-year-old, San Francisco-based HR and benefits software provider, is beginning conversations with investors about a new financing round that could value the company at more than $3 billion, reports The Information. The company raised its most recent round last summer — $66.5 million in Series B funding from Andreessen Horowitz and Institutional Venture Partners — at a $500 million pre-money valuation. (Zenefits founder and CEO Parker Conrad will be the first speaker at StrictlyVC’s event next month. Tickets are available here.)

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New Fundings

Freestyle Capital, a six-year-old, San Francisco-based early-stage venture firm, has closed its third fund with $57 million. The firm, founded by serial entrepreneurs and longtime business partners Josh Felser and Dave Samuel, have also named Jenny Lefcourt as their third partner, roughly a year after Lefcourt joined the firm as an investor. She previously cofounded WeddingChannel.com, acquired by TheKnot in 2006; the wedding photo company Bella Pictures, acquired by a St. Louis-based photography service called CPI; and an e-commerce company, Markkit. Freestyle says it plans to use the fund to invest in up to 14 companies a year. It has now raised $126 million altogether.

Founder’s Co-op, a seven-year-old, Seattle-based seed-stage venture fund founded by longtime business partners Andy Sack and Chris DeVore, has raised a new, $20 million fund, up from its last, $8 million, fund closed in 2012. Investors include the Oregon Growth Board. Geekwire has more here.

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IPOs

Collegium Pharmaceutical, a 13-year-old, Canton, Ma.-based pain therapeutics company that has developed an opioid pain medication designed to deter abuse, has filed to go public — just one month after raising $50 million in funding. That last outside round was led by TPG Biotech. The company has raised $77.5 million altogether. According to its S-1, its biggest shareholders include Longitude Capital Partners, which owns 22.4 percent of the company; Skyline Venture Partners, which owns 20 percent; Frazier Healthcare, which owns 12.4; TPG, which owns 8.7 percent; Boston Millennia Partners, which owns 7.8 percent; and RA Capital Management, which owns 6.1 percent.

Infraredx, a 17-year-old, Burlington, Ma.-based ultrasound diagnostic company that filed to go public last December and hoped to raise as much as $55 million in its offering, has withdrawn those plans, citing “unfavorable market conditions.”

Virtu Financial, an electronic trading firm that’s partly owned by Silver Lake Partners, said it expects to raise up to $314 million in an IPO. It planned to go public roughly a year ago but postponed that attempt amid a furor over high-frequency trading fueled by Michael Lewis’s book Flash Boys. Reuters has more here.

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Exits

Buttercoin, a two-year-old, Palo Alto, Ca.-based bitcoin exchange startup, is shutting down, saying it was unable to raise follow-on funding owing to a “dip in bitcoin interest among Silicon Valley investors.” TechCrunch has the story here. Buttercoin had raised at least $1.3 million, including from Y Combinator, Google Ventures, Floodgate, Initialized Capital, and Rothenberg Ventures.

OnLive, a 7.5-year-old, Mountain View, Ca.-based streaming games company that was long troubled, is shutting down its service and selling its patents to Sony. Ars Technica has the story here. OnLive, founded by serial entrepreneur Steve Perlman, had raised at least $56.5 million from investors over the years, shows Crunchbase. Backers included HTC CorpTime Warner, Autodesk, Maverick Capital, and Lauder Partners.

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People

Meet Jay Edelson, the class-action lawyer who Silicon Valley loves to hate.

Lazlo Block, the head of people operations at Google, on why 399 out of every 400 people who apply for jobs at the company do not make the cut.

According to the SEC, longtime friends Ifty Ahmed and Amit Kanodia illegally profited from insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres. Ahmed is a general partner at Oak Investment Partners, where he has reportedly just been placed on leave of absence. Kanodia is a managing partner at Lincoln Ventures.

“You have this needle that you have to thread, and sometimes it feels like there’s no hole in the needle,” says Reddit‘s interim CEO Ellen Pao in her first interview since the conclusion of her case against Kleiner Perkins Caufield & Byers. “From what I’ve heard from women, they do feel like there’s no way to win.”

Jim Tananbaum, the venture capitalist whom Bloomberg dubbed “the Google bus of Burning Man,” has resigned from the festival’s board of directors. More here.

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Job Listings

Madrona Venture Group, the Seattle-based early stage VC firm, is looking to add an associate to its team. Email resumes to david (at) madrona (dot) com.

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Data

The mobile ad market is set to surpass $100 billion next year, according toeMarketer.

Gulp. According to new data out from Thomson Reuters and the National Venture Capital Association, just 17 venture-backed IPOs raised $1.4 billion during the first quarter of this year, a 54 percent decrease, by number of offerings, from the first quarter of 2014 and a 58 percent drop in terms of dollars. Only two of those offerings were information technology companies, including the biggest IPO of the quarter, Box, the cloud platform services company. Two others were non-tech related. The rest were life sciences companies.

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Essential Reads

Remember that Pinterest-specific fund that Andreessen Horowitz recently raised? It’s one of many one-off funds that VCs are forming to take direct stakes in single startups. The WSJ has more here.

America remains deeply ambivalent about using new medical treatments to live radically longer lives. That’s not stopping tech titans from chasing them anyway.

Meerkat, the live broadcasting app, isn’t alone is seeing its popularity plunge. The explosive usage of its Twitter-owned competitor, Periscope, is petering out, too.

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Detours

An office transformed by Post-It notes.

The salary required to be “middle class” in each state.

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Retail Therapy

McLaren’s latest creation.



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