Good Monday morning, everyone! Hope you had a wonderful weekend.
Before we jump into things, as some of you already know, a little “personal news” of mine emerged Friday afternoon; I’ve joined TechCrunch as Silicon Valley Editor.
The role will see me bolstering TC’s coverage of the money flowing into startups and I’m exceedingly happy about it. TechCrunch has a top-notch staff that I’m truly humbled to be joining. It’s also highly forward-thinking, as we’ve all seen in the past. Everyone at TC recognizes that this is a (now pretty big) community that’s important to me and valuable to you, and it’s very supportive of StrictlyVC’s continued growth, which I greatly appreciate. I think you will, too, given the extensive resources it will allow StrictlyVC to leverage.
Note that in preparation for this new role at TechCrunch, I’m taking off two days at week end, so no SVC Thursday or Friday.
Now back to our regularly scheduled programming.:)
Top News in the A.M.
China’s taxi app war is quickly growing more heated. Last week, we learned that Uber is raising $1 billion solely for its business in China. Now, Bloomberg is reporting that Didi Kuaidi — China’s largest taxi app company — is out to raise $1.5 billion at a $15 billion valuation.
Alibaba plans to launch an online video streaming service in China later this summer called TBO, or Tmall Box Office, with content bought from China and other countries as well as made in-house. The idea: to emulate Netflix and HBO. Reuters has more here.
That raid on the U.S. government’s personnel office likely included the theft of security-clearance information. Yikes. The breach, along with the Anthem data breach, reportedly pose indefinite threats of future harm, too.
How Stanford Management Co. Sees the World (Brace Yourself, Israel)
Last week, at the PreMoney Conference in San Francisco, veteran venture capitalist Heidi Roizen moderated a panel that asked institutional limited partners for their view of the world.
The speakers each had unique insights, but the audience may have been particularly attuned to one – John Powers, who served as president and CEO of Stanford Management Company for nine years. (He left his post last year and remains “unpotted,” as he put it.) As Roizen noted in introducing Powers, Stanford is among the world’s most sought-after investors given the power of its imprimatur — not to mention the $25 billion it has to manage, roughly 5 percent of which it invests in venture capital.
Luckily for attendees, Powers didn’t disappoint. In fact, he spoke candidly about a wide range of issues that may help capital-seeking venture firms better understand Stanford’s point of view, even while it’s likely to disappoint many of them. Here’s some of what he had to say:
On whether or not Stanford is likely to reinvest in a firm it has backed previously:
We’re looking at track record over time, and sticking pretty close to a roster of people who’ve been great VCs over a long period, because . . . there is a huge amount of persistence. It’s a brand business. It’s a business where the brand of the VC attracts the opportunity set. It’s sort of the only form of capital that I can think of that’s driven by brand attractiveness as opposed to price.
On when and whether Stanford will invest in a new venture fund:
We didn’t fund a lot of new venture funds over the course of my time there, but we did [invest] pretty steadily, every couple of years, in one or two new funds, [and] brandedness was the key. So what about this fund would lead us to think it can establish brandedness? That could come in the form of notorious founders. Andreessen Horowitz was branded day one because of the pedigrees of both Marc [Andreessen] and Ben [Horowitz]. The guys at Emergence Capital had a niche strategy that happened to be a large niche but was identifiable and you could see, okay, they can build a story around their early participation in and ownership of this view of the world. [We like that] as opposed to a general purpose, “We’re going to do a little software, a little semis and hardware, and a little consumer” venture fund. It was much harder for us to see [how the latter types of funds could] get escape trajectory.
On what Stanford worries about:
The one thing you have to remember in venture is that a few outcomes can totally transform a fund. So whatever you do analytically to think, ‘These guys are going to get branded’ or whatever, stumbling into the right deal can transform a fund.
That’s true, too, when you fire someone. If this guy’s long in the tooth, they’re not cutting it anymore, we’d like to fire them, you do that, [then] they come in with one home-run deal in the next fund and you look foolish in front of your board.
On why Stanford isn’t keen on investing internationally:
You’d invest internationally if you felt you were going to get better returns than domestically or if you felt that you were going to get something that diversified the stream of cash flows to you. So you go country by country.
In very large measure, the Israeli venture community is the 51st state of the U.S. venture community; I think you don’t get superior returns over time or haven’t in general, and you don’t get diversification away from investing in a cybersecurity company in the U.S. So you’d go to Israel if you felt like you couldn’t gain access to the best stuff in the U.S. Therefore you were sub-optimizing but doing the best you could by investing in a very vibrant entrepreneurial community over there – just recognizing that it’s probably [not] going to match up over time with what Sequoia can do for you over here.
China is very different. There are huge indigenous sources of demand, a massive reinvention of the economy; the streams of opportunity that you see there . . . may be emulative of, but not derivative of, what you get in the U.S. from a returns standpoint.
India has been a bit of a confusing hybrid, with not the same level of indigenous demand [as China], though that appears to be changing to some degree.
On being “cold-blooded”:
Speaking from my former seat at Stanford, you have to be pretty cold-blooded. Are we better off spending time trying to get a little better allocation out of Sequoia in the next fund than we are flying around the Far East or something? [The answer, thinks Stanford, is yes.]
Aledade, a year-old, Bethesda, Md.-based company that partners with primary care physicians to provide everything they need to create and run an Accountable Care Organization (ACO), has raised $30 million in Series B funding led by ARCH Venture Partners, with participation from earlier investor Venrock. Forbes has more here.
Codagenix, a four-year-old, Stonybrook, N.Y.-based software-based platform for vaccine design, has raised $2 million in Series A financing led by Topspin Partners. The company has now raised $3.8 million altogether.
Doppler Labs, a two-year-old, N.Y.-based wearable technology company, has raised an undisclosed amount of funding from Live Nation Entertainment,Universal Music Group and WME. Among its first products: the Active Listening System, an in-ear system that uses two wireless buds and an app to let users control and personalize their live audio environment. The company is also running a Kickstarter campaign. More here.