StrictlyVC: June 23, 2015

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.

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Top News in the A.M.

Facebook knocked Wal-Mart out of the top 10 most highly valued companies in the world yesterday.

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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.

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New Fundings

>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 CapitalAccel 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 GroupAtlas Venture, Notion Capital, and XAnge Private Equity. More here.

DigitalGenius, a two-year-old, New York-based automated customer-service platform, has raised $3 million in funding led by Metamorphic Ventures, with participation from Lerer-Hippeau Ventures, Lowercase Capital, RRE Ventures and Lumia Capital.

Dollar Shave Club, the three-year-old, Venice, Ca.-based online seller of razors and other men’s grooming products, has raised $75 million in fresh funding less than a year after announcing its last, $50 million, round. Investors include Dragoneer, a growth-stage investment firm, as well as earlier backers Venrock, Technology Crossover Ventures, and Forerunner Ventures.

Dropoff, a year-old, Austin, Tex.-based on-demand, same-day delivery platform for businesses, has raised $7 million in Series A funding led by Greycroft Partners, with participation from Correlation Ventures, Texas Atlantic Capital, and Wild Basin Investments. More here.

Enigma, a four-year-old, New York-based data discovery and analytics company, has raised $28.2 million in Series B funding led by New Enterprise Associates, with participation from Two Sigma Ventures, New York City Investment Fund, and earlier backers American Express VenturesComcast Ventures and The New York Times Company.

Envoy, a San Francisco, Ca.-based maker of sign-in software for office visitors to register and check-in via an iPad-based system, has raised $15 million in Series A funding from Andreessen Horowitz. The company had previously raised $1.5 million in seed funding from angel investors, including Marc Benioff, Alexis Ohanian, Garry Tan and Semil Shah (a StrictlyVC advisory board member). More here.

eWings, a two-year-old, Berlin-based maker of flight-booking software, has raised $1.2 million in funding led by High-Tech Grunderfonds, with participation from FSF Beteiligungs and Kima Ventures. More here.

Grand Rounds, a four-year-old, San Francisco-based company whose service gives employees access to healthcare advice and treatment from professionals in the U.S. regardless of where they live, is being valued at roughly $750 million as part of a new financing round, according to TechCrunch. The company has so far raised $51 million, shows Crunchbase. Its backers include Harrison MetalVenrock, and Greylock Partners.

Heal, a six-month-old, Santa Monica, Ca.-based startup providing on-demand primary healthcare services (it was cofounded by serial entrepreneur Nick Desai), has raised $5 million in seed funding from Slow Ventures, March Capital, and Pritzker Group.

Jelli, a seven-year-old, San Mateo, Ca.-based platform for the audio advertising market, has raised $21 million in Series B funding from iHeartMediaUniversal Music Group, and earlier backers Relay Ventures, Intel Capital, and First Round Capital.

Koubei, an 11-year-old Hangzhou, China-based “dormant brand” under Alibaba Group Holding, is being revived by Alibaba and its affiliate Ant Financial, which are investing nearly $1 billion in a 50/50 joint venture under the Koubei name that they hope can tap China’s fast-growing local services market. (Instead of on-demand, they call the industry online-to-offline, or O2O.) The WSJ has much more here.

Olapic, a 4.5-year-old, New York-based startup that helps brands leverage user-generated images, has raised $15 million in Series B funding led by Felix Capital, with participation from Unilever Ventures, Fung Capital,Longworth Venture Partners, and serial entrepreneur Michael Lazerow.

OneSource Virtual, a 25-year-old, Irving, Tex.-based company that offers business process cloud-sourcing services, has raised $150 million in new equity funding led by Technology Crossover Ventures, with participation from earlier backer Halyard Capital. More here.

Portworx, a seven-month-old, Redwood City, Ca.-based company that’s creating software-defined infrastructure for “containerized” applications, has raised $8.5 million in funding led by Mayfield Fund.

Senet, a six-year-old, Hudson, N.H.-based network services provider for low-cost, long-range Internet of Things applications, has raised $18 million in Series A funding from investors, including Fisk Ventures, Milestone Venture Partners, City Light Capital, and Harbor Light Capital Partners. More here.

Snowflake, a three-year-old, San Mateo, Ca.-based data warehousing services company, has raised $45 million in Series C funding led by Altimeter Group, with participation from return backers Redpoint Ventures, Sutter Hill Ventures, and Wing Ventures.

Transphorm, an eight-year-old, Goleta, Ca.-based semiconductor company focused on power conversion technology, has raised $70 million in new funding led by KKR, with participation from earlier backers Kleiner Perkins Caufield & Byers, Foundation Capital, Google Ventures, Soros Quantum Strategic Partners, INCJ and Fujitsu.

Uber, the six-year-old, San Francisco-based ride-hailing company, is raising money from Chinese fund manager Hillhouse Capital Group, and the deal nvolves purchasing bonds that will convert into shares at a discount to Uber’s IPO price. The WSJ has the story here.

Yotpo, a four-year-old, Tel Aviv, Israel-based startup that allows companies to generate social reviews for their e-commerce websites or products, has raised $15 million in funding led by Marker, with participation from Innovation Endeavors, Vintage Investment Partners, Blumberg Capital and Access Industries. The company has now raised around $28 million altogether, shows Crunchbase.

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New Funds

New Leaf Venture Partners, a 10-year-old, New York-based, early-stage firm focused on life sciences, has raised a $200 million growth equity fund, says VentureWire.

Whitecap Venture Partners, a Toronto-based firm that began as the venture arm of a family office, has held a final close on its third fund, having received $100 million in commitments from its first outside LPs, including Kensington Venture Fund, Bank of Montreal, and several high net-worth families. Whitecap focuses on three verticals: information technology, med tech, and food tech.

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People

Slack founder Stewart Butterfield lashed out at the Wall Street Journal Sunday night, after an editorial in the paper said last week’s killing of nine people at a famous church in Charleston, South Carolina, was caused by a “problem that defies explanation.” Noting that the “problem” is systemic racism, Butterfield wrote in a series of angry tweets that “[a]cknowledging that we still have a very, very long way to go is literally the least anyone could do.”More here.

According to Twitter, there’s no way cofounder Jack Dorsey becomes its permanent CEO unless he quits his other company, Square.

Less than three months into the job as interim chief executive of Jay Z’s Swedish music streaming service, Tidal, Peter Tonstad has been fired. The company, privately owned by Jay Z and a consortium of artists, will be run by executives in New York and Oslo until a new CEO is in place, a company spokesperson tells the WSJ.

Where in the world Uber is hiring, and for what jobs (from our friends at Silk).

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Jobs

Breakout Labs, a Thiel Foundation venture fund, is looking to hire a portfolio manager. A background in science, health care or engineering is a plus. The job is in San Francisco.

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Essential Reads

Six massive shifts coming soon to power markets near you.

Same-day delivery company Instacart announced Monday that it had started to reclassify some of its giant workforce as part-time employees. More here.

According to recent market research, Facebook is on track to deliver two thirds as many video views in 2015 as YouTube does — two trillion versus YouTube’s three trillion. VentureBeat has more here.

North Dakota looks poised for a transformation thanks to the burgeoning drone industry.

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Detours

The difference between a supercar and hypercar (should it come up).

Nine ways to spot a liar.

The town that banned Wi-Fi.

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Retail Therapy

The You and Me Ping Pong Table. (You’d probably win some points for using this as a conference table.)


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