Happy Tuesday, everyone. We have news! We’re hosting our next StrictlyVC event in San Francisco in late summer, and we’re thrilled to announce our terrific speaker line-up, which includes the straight-shooting Chamath Palihapitiya, founder of Social+Capital Partnership; legendary investor and DFJ cofounder Steve Jurvetson; serial entrepreneur and venture capitalist Tony Conrad of both About.me and True Ventures; and Matt Mullenweg, the founder and CEO of WordPress.com parent Automattic, valued at more than $1 billion during its last financing in 2014.
And there’s more!
It all happens Wednesday evening, September 16, at the sleek Autodesk Gallery at 1 Market Street. (Special thanks to the wonderful team at Bolt for helping us secure such a cool venue.) As always, we’ll also have yummy food and drinks for you. The full speaker list and agenda is here. To buy tickets, click here. Space is limited.
Top News in the A.M.
Facebook knocked Wal-Mart out of the top 10 most highly valued companies in the world yesterday.
L.A.’s Crosscut Ventures Rounds Up $75 Million
L.A.’s startup ecosystem has more money today, thanks to Crosscut Ventures, a local, seven-year-old outfit that just closed its third fund with $75 million – considerably more than the $50 million was looking to raise when it hit the fundraising trail at the beginning of 2014.
Crosscut’s newest pool — whose investors include The James Irvine Foundation, Top Tier Capital, and numerous family offices — is also roughly five times the size of the firm’s second fund, which closed with $16 million in 2012. (The outfit collected just $5.1 million for its first, proof-of-concept, fund in 2008.)
Is it Crosscut, or L.A., or a combination of the two? We recently asked cofounder Brian Garrett, who cofounded Crosscut with fellow managing directors Rick Smith and Brett Brewer — all of whom are joined in the newest fund by managing director Clinton Foy, previously a venture partner. Our conversation has been been edited here for length.
You’ve just raised a lot of money, considering where you started seven years ago. How do you explain it?
A lot of it has to do with the general momentum of L.A. ecosystem. When [local VC] Mark Suster announced [his firm, Upfront Ventures’s]$280 million fund last year and hosted its [invite-only] Upfront Summit [in February], I think everyone became more aware of what’s happening here. I don’t think they’d thought it was a long-term or a sustainable [shift] until then.
There’s also a lack of competition relative to the opportunity here, and, more specific to us, there aren’t a lot of micro venture firms that have four managing directors – two of whom have 15 years of venture experience. [Editor’s note: Garrett and Smith were previously partners at Palomar Ventures.]
What are your biggest hits to date?
We’ve had seven exits out of 18 investments in our first fund, four of which produced 9x returns, including [the e-commerce site] ShoeDazzle. We sold our stake when late-stage investors were buying. We had local market knowledge about how competitive that market was getting. We also sold [the digital ad company] Pulpo Media to the public company Entravision for a 9x return; we sold [the e-document repository] Docstoc to Intuit for a 9x – we were the first money in. We also made another secondary sale that hasn’t yet been announced.
We’ve had two liquidity events in our second fund, too, with the sale of Lettuce to Intuit for a 4x, and the sale of Gradient X to Amobee [a mobile ad company acquired by SingTel in 2012] for 2x our investment.
You mention ShoeDazzle, which you’d funded when it was valued at less than $10 million. Sounds like you were smart to get out when you did, though did you the miss out on the chance to invest in founder Brian Lee’s next startup, The Honest Company?
We did. We were at the tail end of fund one and didn’t have a lot of money left, and some sharp-elbowed Silicon Valley VCs took the whole round. We definitely should have gotten money into Honest Company.
How do you view secondary sales generally?
We look at them on a deal-by-by deal basis to evaluate whether to hold or sell. We have a stake now in a company whose valuation is similar to where ShoeDazzle’s was when we decided to sell, but we’re holding because we think it will be a multibillion-dollar company.
We look at the market landscape and who the buying audience will be and whether the next plateau of value creation is worth the risk it will take to achieve.
Where do you think it’s not worth the risk?
In ad tech, for example, we think you’re either first in a new category and you get a big exit via an acquisition from Google or Yahoo, or you’re in the walking dead zone, along with tons of other good, profitable ad tech businesses that no one wants to buy because it’s become so hard to defend any particular intellectual property or sustain a differentiation.
You were long juggling Crosscut with a startup you’d cofounded, a fashion and media platform called StyleSaint. Meanwhile, Brett was a senior VP of corporate development at the company Adknowledge. Are you both still doing double-time?
Brett and I are now full-time with the fund. Brett [quit Adknowledge] six months ago; I’ve been full time since August of last year, when I set out to raise the fund. I quickly realized I couldn’t wear both hats.
>Alert Media, a two-year-old, Austin, Tex.-based emergency communication platform for interactive mass notification, has raised $4.2 million in Series A funding led by Silverton Partners, with participation from ATX Ventures and Capital Factory.
Appuri, a three-year-old, Seattle, Wa.-based customer data platform, has raised $2 million in seed funding led by Divergent Ventures, with participation from Baseline Ventures and Vulcan Capital. More here.
AtScale, a 1.5-year-old, San Mateo, Ca.-based company whose software connects widely used business intelligence tools, has raised $7 million in Series A funding led by UMC Capital, with participation from AME Cloud Ventures, and earlier backers Storm Ventures and XSeed Capital. The company has now raised $9 million altogether. More here.
BlaBlaCar, a nine-year-old, Paris-based carpooling platform, is looking to raise fresh funding at a valuation of more than $1 billion, reports Bloomberg. The company has so far raised $110 million investors, including Lead Edge Capital, Accel Partners, and Index Ventures.
Casper, the 1.5-year-old, New York-based online mattress retailer, has raised $55 million in Series B venture funding, at a pre-money valuation of $555 million, according to Venture Capital Dispatch. Institutional Venture Partners led the round, joined by Scooter Braun, the Pritzker Family and celebrity investors. Earlier backers also participated, including Lerer Hippeau Ventures, New Enterprise Associates, Norwest Venture Partners, Slow Ventures, SV Angel, Vaizra Investments and Queensbridge Venture.
Coravin, a four-year-old, Burlington, Ma.-based company whose device allows users to access and pour bottles of wine without pulling the cork (so as not to disturb the wine’s aging process), has raised $13.6 million in Series C-1 funding led by Windham Venture Partners, with participation from Quadrille Capital. The company has now raised $41.8 million to date, shows Crunchbase.
Credit Karma, an eight-year-old, San Francisco-based platform that provides credit scores to users and serves as a portal for visitors to search and apply for various financial services, has raised $175 million at a $3.5 billion valuation from Tiger Global Management, Valinor Management and Viking Global Investors, reports TechCrunch. The company had previously raised $193 million over five rounds, shows Crunchbase. More here.
Currency Cloud, a three-year-old, London-based cross-border money transfer service, has raised $18 million in Series C funding led by Sapphire Ventures, with participation from Rakuten and earlier backers Anthemis Group, Atlas Venture, Notion Capital, and XAnge Private Equity. More here.