• L.A.’s Crosscut Ventures Rounds Up $75 Million

    Crosscut VenturesL.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.

    Connie

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  • StrictlyVC: June 22, 2015

    Good morning, everyone, and welcome back! Hope you wonderful dads out there had a great Father’s Day yesterday.

    —–

    Top News in the A.M.

    Hours after singer Taylor Swift criticized Apple in an open letter yesterday, the company said it will pay royalties to artists and record labels for music played during a free, three-month trial of its new streaming music service. The WSJ has more here.

    —–

    Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

    Last week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

    The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

    The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

    You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

    It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

    What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

    It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

    Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

    Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

    A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

    The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

    What’s the craziest business you’ve been pitched?

    Well, I did see bodyguards on demand. [Laughs.]

    Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

    I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

    [Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

    Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

    We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

    I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.

    —–

    New Fundings

    Advanced Cell Diagnostics, an eight-year-old, Hayward, Ca.-based molecular pathology company developing cell- and tissue-based diagnostic tests for personalized medicine, has raised $22 million in Series C funding led by Summit Partners, with participation from Kenson Ventures and return backers Morningside Ventures and New Leaf Venture Partners. The company has now raised $40.8 million altogether.

    Airbnb, the seven-year-old, San Francisco-based community marketplace for people to list and book personal spaces, is reportedly raising $1 billion in funding at a $24 billion valuation. According to Crunchbase, the company has already raised almost $800 million from investors, including SherpaCapital, TPG Growth, T. Rowe Price, Dragoneer Investment Group, Founders Fund, CrunchFund, and Sequoia Capital. The WSJ has the story here.

    Ant Financial, Alibaba’s Hangzhou, China-based online payments affiliate, has completed an undisclosed amount of fundraising that values the company at between $45 billion and $50 milion, according to the Financial Times. Ant Financial operates Alipay, the PayPal-like online payments company that handled $778 billion in the year ended June 2014, according to Alibaba. As the Financial Times notes, that’s three times the amount handled by PayPal over the same period. Ant Financial’s main shareholder is Jack Ma, Alibaba’s chairman. Dealbook delved into its business late last year. Much more here.

    Are You A Human, a four-year-old, Detroit, Mi.-based startup that enables anyone offering commerce, services, or ads online to know they are addressing a human (versus a bot), has raised $4.2 million in Series A funding led by Detroit Venture Partners, with participation from MDC Dream Ventures, Foundry Group Angels and NCT Ventures.

    Artesian Solutions, the nine-year-old, U.K.-based platform that provides companies with better intelligence on their B2B customers and future prospects, has raised $8 million in Series B funding led by Kreos Capital and previous investor Octopus Investments. The company has now raised at least $11.2 million altogether, shows Crunchbase.

    Bond Street, a 1.5-year-old, New York-based company that makes loans to small businesses, has raised $110 million in equity and debt capital led by Spark Capital and the Jefferies investment bank, with individual investors including Nathan Blecharczyk, co-Founder of Airbnb; David Chang, chef and owner, of Momofuku; and others. David Haber, co-founder of Bond Street, left Spark Capital to start the company. New York Business Journal has more here.

    Case Wallet, a 15-month-old, New York-based company behind a credit-card-size device used to securely store and send bitcoin, has raised $1.5 million in seed funding led by FuturePerfect Ventures, with participation from RRE Ventures, High Line Venture Partners and the Rochester Institute of Technology Fund.

    CropX, a nearly two-year-old, Tel Aviv, Israel and San Francisco-based startup whose sensors and app measure soil moisture and temperature levels to help farms adjust their irrigation systems, has raised $9 million in Series A funding. Finistere Ventures led the round, joined by Innovation Endeavors, GreenSoil Investments and the company’s earlier backers, including OurCrowd. Venture Capital Dispatch has more here.

    Cryptzone, a 13-year-old, Waltham, Ma.-based maker of context aware encryption software, has raised $15 million in Series B funding led by Kayne Partners, with participation from earlier backer Medina Capital. More here.

    Cure Forward, a year-old, Cambridge, Ma.-based company seeking to connect cancer patients with clinical trials, has raised $15 million in Series A funding from Apple Tree Partners. BetaBoston has more here.

    DIDiT, a two-year-old, New York-based mobile-first social platform that enables users to discover, connect and plan lifestyle experiences, has raised $2 million in seed funding led by BRaVe Ventures, with participation from numerous angel investors. More here.

    FreedomPop, a four-year-old, L.A.-based upstart freemium mobile carrier, has raised $30 million in funding led by European venture capital Partech Ventures, with participation from an unnamed strategic investors and previous backers DCM and Mangrove Capital. The company has now raised $49.3 million altogether, shows Crunchbase. Recode has more here.

    Knyttan, a two-year-old, London-based on-demand fashion startup, has raised £2 million ($1.6 million) in seed funding led by Connect Ventures, with participation from Felix Capital, Playfair Capital, and Ballpark Ventures. TechCrunch has more here.

    Komprise, a year-old, Campbell, Ca.-based company selling data management-as-a-service, has raised $6 million in Series A funding led by Canaan Partners. TechCrunch has more here.

    LiveIntent, a six-year-old, New York-based company that makes technology for in-email display advertising, raised $32.5 million in a funding round led by FTV Capital, with participation from Battery Ventures, First Round Capital and Shasta Ventures. The company has now raised $65.1 million altogether, shows Crunchbase. TechCrunch has more here.

    Mapbox, a five-year-old, Washington, D.C.-based mapping platform for developers that makes it easier for location to be core to any mobile or online application, has raised $52.4 million in Series B funding led by DFJ Growth, with participation from Thrive Capital, Pritzker Group, Promus Ventures and former Goldman Sachs Group co-president Jon Winkelried.

    Mayvenn, a 2.5-year-old, Oakland, Ca.-based e-commerce company that enables beauticians to sell hair extensions and other products without having to purchase, store or ship any inventory themselves, has raised $10 million in Series A funding led by Andreessen Horowitz, with participation from Trinity Ventures, Core Innovation Capital, Troy Carter’s Cross Culture Ventures, Impact America, and numerous individual investors, including Jimmy Iovine and Serena Williams.

    Moovo, a seven-month-old, Delhi, India-based on-demand logistics booking platform, has raised seed funding from YouWeCan Ventures and angel investors. YourStory has more here.

    Namely, a three-year-old, New York-based HR software platform that offers cloud-based applications has raised $45 million in Series C funding led bySequoia Capital, with participation from earlier backers Matrix Partners,True Ventures, Lerer Hippeau Ventures and Greenspring Global Partners. The company has now raised $77.8 million altogether, shows Crunchbase. Recode has more here.

    Oxford Sciences Innovation, a months-old, Oxford, England-based company that funds spinoffs from Oxford University’s tech and science departments, has raised an undisclosed amount of capital from Google Ventures’ European branch. The company is looking to raise upwards of $500 million altogether. More here.

    Sano, a three-year-old, San Francisco-based company making a wearable device that monitors metabolic activity, has raised $10.3 million in seed funding led by True Ventures and Intel Capital, with participation from Felicis Ventures, Elevation Capital, Floodgate, and Rock Health. TechCrunch hasmore here.

    Sense.ly, a two-year-old, San Francisco-based patient engagement and chronic disease monitoring platform centered around a virtual medical assistant, has raised $2.2 million in Series A funding. Backers include Launchpad Digital Health, Fenox Venture Capital and TA Ventures. The company has now raised $3.5 million altogether, shows Crunchbase.

    Smart Vision Labs, a two-year-old, New York-based company whose first device aims to make eye exams cheap and accessible worldwide, has raised $6.1 million in funding led by Techstars Ventures, with participation from Heritage Group, Connectivity Capital, and Red Sea Ventures. Forbes has much more here.

    Tamr, a 2.5-year-old, Cambridge, Ma.-based startup that helps companies understand and unify all of their disparate databases, has raised $25.2 million in Series B funding from Hewlett Packard Ventures, Thomson Reuters, MassMutual Ventures and other unnamed participants, with participation from earlier backers New Enterprise Associates and Google Ventures. The company has now raised $42.4 million altogether. More here.

    Tech In Asia, a four-year-old, Singapore-based news site that reports on Asia’s tech ecosystem, has raised $4 million in funding to turn the site into a community hub that includes a Crunchbase-like database and paid-for analytics service. Backers include SB ISAT Fund, Walden International, Marvelstone, and M&S Partners, along with individual investors. The company had previously raised $2.89 million over several small rounds, including from East Ventures, Fenox Venture Capital and Simile Venture Partners. TechCrunch has more here.

    Tidemark, a six-year-old, Redwood City, Ca.-based enterprise financial planning software company, has raised $25 million in funding from the management software vendor Workday, along with earlier backers Andreessen Horowitz, Greylock Partners and others. Tidemark has now raised $118.4 million altogether, shows Crunchbase. Recode has more here.

    Vox Mobile, a nine-year-old, Independence, Oh.-based company that helps businesses adapt their products to mobile platforms, has raised $6.7 million in a round led by TELUS Ventures, Mutual Capital Partners Funds, Edison Partners and Permal Capital. Forbes has more here.

    —–

    New Funds

    Arboretum Ventures, a 13-year-old, Ann Arbor, Mich.-based venture firm, is looking to raise $215 million for its fourth fund, shows an SEC filing that was filed last week and states the first sale has yet to occur.

    RezVen Partners, a new, Newport Beach, Ca.-based early-stage venture firm focused on software and digital and social media companies, has closed a new fund with $50 million in capital commitments. More here.

    —–

    Exits

    Campus, a two-year-old, San Francisco-based startup that rented out rooms in some 34 houses in the San Francisco Bay Area and New York, is no more — meaning its more than 150 residents need to find somewhere else to live before the official closure on August 31st. The company was founded by Thiel fellow Tom Currier and presumably raised money beyond the $100,000 that Peter Thiel gives budding entrepreneurs to drop out of school. Still, it managed never to disclose as much in various reports about the company (that StrictlyVC has read, anyway).  Business Insider has more here.

    —–

    People

    Politico published a meaty piece on businessman and former New York City mayor Mike Bloomberg, and among the many nuggets it holds is a breakdown of just how reliant Bloomberg Media is on those lucrative Bloomberg terminals: Per Politico: the company’s “many layers of ‘added value’ . . . the magazines, the TV channels, the specialized verticals . . . generally lose money. Lots of it. Businessweek, easily the most appealing product to consumers, reportedly burns almost $30 million a year. The TV operation has lost about $100 million a year for the past decade.”

    John Doerr says he “felt sick” when he first saw the gender discrimination charges brought against his firm, Kleiner Perkins, by former partner Ellen Pao. Last week, in an interview with Bloomberg TV, Doerr said, “I think it was an error to promote Ellen into an investing partner role. That didn’t work out for her. She was a really good chief of staff but not a good investor.” Video from that interview here.

    Alex Stamos, the world-renowned cybersecurity expert and vocal NSA critic who now commands Yahoo‘s team of “Paranoids” to protect the company from all manner of threats, says the “vast majority of people are not safe using the internet everyday.” Vice Media profiles him here.

    Facebook CEO Mark Zuckerberg with wife Priscilla Chan have donated $5 million to a scholarship program that helps young undocumented students attend college. Called TheDream.US, the program is geared toward students who come to the U.S. as children with no authorization and wish to pursue higher education. The program was cofounded in 2013 by Donald Graham, CEO of the Graham Holdings Company and a former Facebook director. USA Today has more here.

    —–

    Jobs

    Capital One Ventures is looking to hire a junior-level manager. The job is in San Francisco.

    —–

    Essential Reads

    Alipay is a phenomenon that’s difficult to fathom outside of China. Its president, Jingling Li, explains it to Fortune here.

    —–

    Detours

    Twenty-one amazing photos of Saturn.

    Why reading can make you happier.

    Here’s everyone you probably Googled last night during “True Detective.”

    —–

    Retail Therapy

    A vegetable-tanned English Bridle leather six-pack carrier, for your craft beers. (Warning: Bringing this to a party will get you punched in the face, or it should.)

    Connie

  • Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

    Ryan SarverLast week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

    The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

    The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

    You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

    It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

    What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

    It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

    Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

    Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

    A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

    The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

    What’s the craziest business you’ve been pitched?

    Well, I did see bodyguards on demand. [Laughs.]

    Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

    I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

    [Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

    Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

    We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

    I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.

    Connie

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  • StrictlyVC: June 17, 2015

    Hi, everyone, hope your Wednesday is off to a great start!

    Quick favor: if you’ve been discovering StrictlyVC in spam in recent weeks, could you shoot us a quick email? We’re working with our ESP this morning to get things resolved once and for all and could use your help.

    We also wanted to remind you that StrictlyVC will not be publishing tomorrow or Friday. (We have some major housekeeping to do before joining forces with TechCrunch.) We’ll see you back here Monday.:)

    —–

    Top News in the A.M.

    Amazon may soon pay normal people to deliver packages en route to their destinations as part of a crowdsourced delivery program. The WSJ has more here.

    A security flaw has left 600 million Samsung smartphones at risk of being hacked.

    Tesla Motors is getting a cash injection in the form of a loan worth up to $750 million from banks like Bank of America, JP Morgan Chase, and Deutsche Bank ,reports Business Insider. The capital might concern Tesla fans, but CEO Elon Musk has said the company needs “staggering” amounts of money to grow its operations, and Tesla has five years to pay back the money, says BI.

    Uh oh, Uber.

    —–

    The Case Against Anthony Noto (and Most Other CFOs) Becoming CEO

    Dick Costolo — who is stepping down as CEO of Twitter in July — has, at a couple of recent conferences, described Twitter CFO Anthony Noto as more than an “accountant” and said that Noto was not brought into the company “just be a CFO.”Yesterday, the Wall Street Journal even suggested that Noto has emerged as a front-runner to replace Costolo, describing Noto – a former tech banker at Goldman Sachs and a former CFO of the National Football League – as a “take-charge” executive, based on interviews with his supporters at the company.

    But promoting Noto to the top spot may not be such a great idea — not based on the experience of longtime executive recruiter Jon Holman, who says CFOs tend to make lousy CEOs. In fact, of the hundreds of C-level executives that Holman has placed over the last 30-plus years, he says he has “never” placed a CFO as a CEO – “nor would I recommend it to someone.”

    Holman “doesn’t know Noto at all,” he is quick to say. He adds that Noto could become the “second or third guy in history who has gone from CFO to CEO and been successful.” But he’s highly skeptical of the model for a variety of reasons.

    First, it’s likely that until April — when Noto was also put in charge of Twitter’s floundering marketing department — Noto has never managed anything near the roughly 4,000 employees that Twitter has around the world.

    “At Goldman, Noto was an analyst, meaning he was a domain expert who knows a huge amount about various industries,” observes Holman. “But he was never managing large numbers of people,  and the people he was managing [in the several years that Noto spent as co-head of the investment bank’s technology, media and telecommunications group] were analysts – not people in marketing, sales, finance, engineering . . .” notes Holman.

    More, says Holman, while CFOs generally sound like they know everything, they do not. “Because CFOs sit in on board meetings along with the CEO, they speak as if they understand the business.They understand the financials of the business. They know that, ‘We’re spending 33 percent of revenue on sales and marketing.’ But they’ve never run a sales organization, and their job has never been on the line if there’s a revenue shortfall,” he notes.

    Not last, CFOs tend to reign in spending and to generally take the most conservative path possible, notes Holman. That’s probably not ideal at Twitter, which has shied away from making dramatic changes to its platform — and been soundly criticized for it. “Most CEOs are outer directed, while CFOs are inner directed,” says Holman. Using a baseball analogy, he observes that “Most CEO types want to swing for the fences; CFOs want players to hit singles.”

    That’s not to say Twitter should rule out Noto completely, suggests Holman. In fact, he could make sense as CEO in the very short term.

    Among other reasons why a company like Twitter might bring in a CFO is if “you have investors who think the sky is falling, or, in this case, that it’s a big problem that Twitter isn’t converting tweets to revenue. CFOs generally speak in appropriate adult-like tones and can [massage] investors and assure them that a company will get it all figured out.”

    Another argument for promoting the CFO is when a company is just going to sell itself anyway, says Holman. In that case, “What you need is someone who understands how to sell a company, someone who will run a [sales] process, which Noto clearly knows how to do.”

    A third reason a CFO like Noto could make sense right now is “if there’s a perception that what a company needs to do is big-time pruning: laying people off, getting expenses under control, those kinds of things that CFOs tend to be really good at.”

    Of course, all of these scenarios would be a prelude to bringing in someone else, and Twitter already has an interim CEO lined up in co-founder Jack Dorsey.  Could we see the equivalent of two interim CEOs at the company?

    Twitter “can do whatever it wants,” says Holman. “Is it a clever strategy? Probably not.”

    —–

    New Fundings

    123ContactForm, a seven-year-old, Timisoara, Romania-based provider of web forms and surveys for companies and NGOs, has raised more than $1 million in funding from Catalyst Romania.

    Bluebridge, a four-year-old, Fishers, Ind.-based, cloud-based mobile app development and management platform, has raised $2 million in funding led by CultivationCapital and Allos Ventures, with participation from angel investors, including ExactTarget cofounder Scott Dorsey. The company had previously raised $2. 8 million in seed and debt financing.

    Boxful, a six-month-old, Hong Kong-based valet storage startup (it comes to take and store users’ surplus items), has raised $6.6 million in Series A funding from Great Eagle, Arocrest Capital, Tinghsin Group, Lonsdale Capital, Soundwill Holdings, Vega Properties and Carlton Holdings.

    Brightwheel, a year-old, San Francisco-based mobile platform for preschools and daycares that allows teachers to track attendance, record observations, and gain insights into daily activities while administrators can send paperless, automated tuition invoices, has raised $2.2 million in seed funding.  The round was led by RRE Ventures and Eniac Ventures, with participation from CrossLink Capital, Golden Venture Partners, Red Swan Ventures, and SherpaVentures.

    Cohesity, a two-year-old, Santa Clara, Ca.-based company that consolidates what are called “secondary” storage systems (meaning anything that doesn’t run a company’s production applications), has quietly raised $70 million across two funds, it says. The company, founded by Mohit Aron — who previously cofounded the “unicorn” storage company Nutanix — most recently raised $55 million in Series B funding led by Artis Ventures and Qualcomm, with participation from Accel Partners, Battery Ventures, Google Ventures andTrinity Ventures. Cohesity’s earlier, $15 million, Series A round was led by led by Sequoia Capital and Wing Venture Capital. Venture Capital Dispatch has the story here.

    Convene, a 5.5-year-old, New York-based conference and meeting company that promises to “orchestrate the perfect meeting” for its customers (it has access to more than 70 meeting rooms in New York and Washington, D.C.), has  raised $15.5 million in Series B funding led by Conversion Venture Capital, with participation from earlier backer Boathouse Capital. The company has now raised roughly $21 million altogether. More here.

    Crocus Technology, an 11-year-old, Santa Clara, Ca.-based maker of magnetic sensors and embedded memory products, has raised $21 million in new funding from NanoDimension, Innovation Capital, IdInvest Partners,Ventech, Sofinnova, CEA Investissement, Rusnano, Industrial Investor Group, and Kreos Capital. The company has now raised $194 million altogether.

    Doctor on Demand, a nearly three-year-old, San Francisco-based telemedicine company that connects patients via video with certified doctors, has raised $50 million in Series B funding led by Tenaya Capital, with participation from Qualcomm Ventures, Dignity Health, 23andMe’s Anne Wojcicki, and earlier backers Venrock, Shasta Ventures, and Sir Richard Branson. The company has now raised $74 million altogether. TechCrunch has more here.

    FACEIT, a three-year-old, London-based online gaming platform, disclosed yesterday that it raised $2 million in funding earlier this year led by United Ventures. More here.

    Iris.tv, a three-year-old,  L.A.-based company that makes personalized video recommendations to viewers who watch short clips online, has raised $5.3 million in Series A fundng from Sierra Wasatch, BDMI, Progress Venturesand individual backers, including Machinima founder Allen DeBevoise. Venture Capital Dispatch has much more here.

    Kezar Life Sciences, a months-old, South San Francisco, Ca.-based company focused on the development of drugs targeting protein homeostasis for autoimmune disorders, has raised $23 million in Series A funding fromMorningside Venture, Cormorant Asset Management, EcoR1 Capital, 9W Capital Management, Omega Funds, Aju IB Investment, and private investors.

    LeadPages, a 2.5-year-old, Minneapolis, Mn.-based company whose software enables businesses to create responsive mobile landing pages, launch pages, sales pages and other conversion pages, has raised $27 million in Series B funding led by Drive Capital, with participation from Foundry Group and Arthur Ventures. The company has now raised $38 million altogether. More here.

    Minio, an eight-month-old, Woodside, Ca.-based open source cloud storage product, has raised $3.3 million in seed funding led by Nexus Venture Partners and General Catalyst Partners, with participation from AME Cloud Ventures, Index Ventures, and numerous individual investors. TechCrunch has more here.

    Pixelligent Technologies, a 13-year-old, Baltimore, Md.-based advanced materials company that makes next-generation materials for applications in solid-state lighting, flat panel displays, optical components and film, has raised $3.4 million in new funding from undisclosed sources. The company has raised roughly $26 million altogether at this point. (It has also been awarded more then $12 million in U.S. grant programs.)

    ServiceTitan, a two-year-old, Glendale, Ca.-based mobile, cloud-based management platform for home service businesses, has raised $18 million in Series A funding led by Bessemer Venture Partners at a post-money valuation of $100 million. The company had previously raised an undisclosed amount of seed capital. Its other backers include Mucker Capital, I2BF Digital, and AMENALAV Group.

    Studitemps, a seven-year-old, Cologne, Germany-based company that places qualified students as temp workers,  has raised $12.4 million in Series C funding from Iris Capital, XAnge, Seventure and b-to-v.

    SQL Sentry, an 11-year-old, Charlotte, N.C.-based maker of software for SQL server database professionals, has raised $25 million in funding from Mainsail Partners. More here.

    Tumblbug, a four-year-old, Seoul-based Kickstarter-like crowdfunding platform for independent creators, has raised more than $1.5 million in Series A funding led by DCM Ventures, Naver and Strong Ventures.

    Tute Genomics, a three-year-old, Provo, Ut.-based company that sells cloud-based analytics, interpretation, and reporting for clinical sequencing, has raised $3.9 million in Series A1 funding from Intermountain Healthcare, Healthbox, and China-based Tencent Holdings. The company has raised now raised $7.7 million altogether.

    Vroom, a two-year-old, New York-based used car sales startup, has raised $19 million in venture funding and $35 million in debt funding from roughly 15 wealthy individuals, including former pro football player John Elway and former Autonation and Blockbuster CEO Steve Berrard. Fortune has the story here.

    —–

    New Funds

    Garage Technology Ventures in Palo Alto, Ca., and Startup Lab in Oslo, Norway, are launching a joint venture called Silicon Valley Catalyst to fund and grow emerging European tech companies. More here.

    Y Combinator is raising money to create a new venture fund, according to an SEC form flagged by Business Insider yesterday. The outfit isn’t talking yet about the vehicle, Y Combinator Continuity Fund I. But our former colleague, Jon Marino, reported back in March that Y Combinator was looking to raise several billion dollars for a fund to deploy in the later-stage rounds of its most promising portfolio companies, like Dropbox and Airbnb.

    —–

    People

    Brian McClendon, a Google engineering VP and 10-year company veteran of the company who was charge of Google Maps, is leaving to oversee Uber’s new Advanced Technologies Center out of Pittsburgh, reports Recode. McClendon is only the latest Googler to be poached by the popular car-service company. At a StrictlyVC event last month, Tom Fallows, another Uber exec recently poached by Google, remarked half-jokingly on stage that he was surprised in discovering on his first day that “one out of three people is a former Google colleague.”

    At the Bloomberg Technology conference yesterday, Mike Schur, an executive producer of TV shows, including “Parks & Recreation,” weighed in on whether or not there’s a tech bubble. “This feels like a very tense moment right now . . .” with “absurd” deals and valuations.” Schur added: “I think Hollywood really likes to satirize any subculture that’s more absurd and self-obsessed than we are.”  More here.

    —–

    Jobs

    Salesforce is looking to hire a senior corporate development manager. The job is in San Francisco.

    —–

    Essential Reads

    Microsoft announced an executive shake-up this morning. More here.

    Etsy, the newly public, Brooklyn-based online marketplace, anounced its own take on the crowdfunding model made popular by Kickstarter: Fund on Etsy. Now sellers can integrate fundraising directly into their virtual storefronts, as well as raise money for products they haven’t yet made. More here.

    —–

    Detours

    A new theory of distraction.

    An airport adventure for a lost toy.

    Nothing like having Arnold tell you to “turn left.”

    —–

    Retail Therapy

    BMW’s new, tech-laden 7-Series sedan, coming this fall. It isn’t cheap, but you’ll get what you pay for.

    Connie

  • The Case Against Anthony Noto, and Most Other CFOs, Becoming CEO

    Anthony NotoDick Costolo — who is stepping down as CEO of Twitter in July — has, at a couple of recent conferences, described Twitter CFO Anthony Noto as more than an “accountant” and said that Noto was not brought into the company “just be a CFO.”

    Yesterday, the Wall Street Journal even suggested that Noto has emerged as a front-runner to replace Costolo, describing Noto – a former tech banker at Goldman Sachs and a former CFO of the National Football League – as a “take-charge” executive, based on interviews with his supporters at the company.

    But promoting Noto to the top spot may not be such a great idea — not based on the experience of longtime executive recruiter Jon Holman, who says CFOs tend to make lousy CEOs. In fact, of the hundreds of C-level executives that Holman has placed over the last 30-plus years, he says he has “never” placed a CFO as a CEO – “nor would I recommend it to someone.”

    Holman “doesn’t know Noto at all,” he is quick to say. He adds that Noto could become the “second or third guy in history who has gone from CFO to CEO and been successful.” But he’s highly skeptical of the model for a variety of reasons.

    First, it’s likely that until April — when Noto was also put in charge of Twitter’s floundering marketing department — Noto has never managed anything near the roughly 4,000 employees that Twitter has around the world.

    “At Goldman, Noto was an analyst, meaning he was a domain expert who knows a huge amount about various industries,” observes Holman. “But he was never managing large numbers of people,  and the people he was managing [in the several years that Noto spent as co-head of the investment bank’s technology, media and telecommunications group] were analysts – not people in marketing, sales, finance, engineering . . .” notes Holman.

    More, says Holman, while CFOs generally sound like they know everything, they do not. “Because CFOs sit in on board meetings along with the CEO, they speak as if they understand the business.They understand the financials of the business. They know that, ‘We’re spending 33 percent of revenue on sales and marketing.’ But they’ve never run a sales organization, and their job has never been on the line if there’s a revenue shortfall,” he notes.

    Not last, CFOs tend to reign in spending and to generally take the most conservative path possible, notes Holman. That’s probably not ideal at Twitter, which has shied away from making dramatic changes to its platform — and been soundly criticized for it. “Most CEOs are outer directed, while CFOs are inner directed,” says Holman. Using a baseball analogy, he observes that “Most CEO types want to swing for the fences; CFOs want players to hit singles.”

    That’s not to say Twitter should rule out Noto completely, suggests Holman. In fact, he could make sense as CEO in the very short term.

    Among other reasons why a company like Twitter might bring in a CFO is if “you have investors who think the sky is falling, or, in this case, that it’s a big problem that Twitter isn’t converting tweets to revenue. CFOs generally speak in appropriate adult-like tones and can [massage] investors and assure them that a company will get it all figured out.”

    Another argument for promoting the CFO is when a company is just going to sell itself anyway, says Holman. In that case, “What you need is someone who understands how to sell a company, someone who will run a [sales] process, which Noto clearly knows how to do.”

    A third reason a CFO like Noto could make sense right now is “if there’s a perception that what a company needs to do is big-time pruning: laying people off, getting expenses under control, those kinds of things that CFOs tend to be really good at.”

    Of course, all of these scenarios would be a prelude to bringing in someone else, and Twitter already has an interim CEO lined up in co-founder Jack Dorsey.  Could we see the equivalent of two interim CEOs at the company?

    Twitter “can do whatever it wants,” says Holman. “Is it a clever strategy? Probably not.”

    Connie

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  • StrictlyVC: June 16, 2015

    Happy Tuesday, everyone!

    No column this a.m.

    —–

    Top News in the A.M.

    LastPass officials warned yesterday that attackers have compromised servers that run the company’s password management service and made off with cryptographically protected passwords and other sensitive user data. Ars Technica’s resident password expert said it’s nothing to sweat. (We went ahead and changed our master password anyway.)

    Remember how, last week, everyone thought Twitter president Adam Bain was the clear front runner to succeed Dick Costolo as CEO of the company? Scratch that. Now Twitter CFO Anthony Noto reportedly has pole position.

    —–

    New Fundings

    Ambassador, a five-year-old startup that helps companies manage their referral marketing programs, has raised $2.6 million in Series A funding led by Arthur Ventures, with additional investment from Zelkova Ventures, Ludlow Ventures, Social Starts and Matchstick Ventures. TechCrunch has more here.

    Actility, a five-year-old, Paris, France-based company that makes network software and managed information systems for the so-called Internet of Things market, has raised €22.5 million ($25 million) led by Ginko Ventures, the European investment arm of Foxconn. Other participants in the round include telcos Orange, Swisscom, and KPN, as well as previous investor Fonds Ecotechnologies, which is managed by Bpifrance Investissement, Idinvest Partners, and Truffle Capital.

    Azimo, a three-year-old, London-based digital money transfer service, has raised $20 million in Series B funding led by Frog Capital, with participation from MCI Investments and earlier backers, including e.ventures and Greycroft Partners. The company had previously raised $11 million in funding. More here.

    Beleza na Web, a seven-year-old, São Paulo, Brazil-based beauty e-commerce company, has raised $30 million in Series C funding from an undisclosed New York private equity firm. The company’s $5 million Series A round closed in 2011, with participation from Kaszek Ventures and Tiger Global Management. TechCrunch has more here.

    Connectifier, a three-year-old, Costa Mesa, Ca.-based next-gen job recruitment platform, has raised $6 million in funding led by True Ventures, with participation from Galeo-Ventures, Okapi Venture Capital, and angel investors Sean Ellis, Andrew Chen, Jonathan Downey, and James Hong. TechCrunch has much more about the company, founded by two former Google engineers, here.

    CyMedica Orthopedics, a 2.5-year-old, Scottsdale, Az.-based company that develops and commercializes products that target joint injuries, has raised $11.5 million in Series A funding from Research Corporation Technologies, California Technology Ventures, and Aphelion Capital.

    Dreamware, a three-year-old, Naples Fla.-based company whose software automates the listing process for a variety of industries (its flagship product is Car Lister, which lets people list and buy vehicles for sale), has raised $6.5 million in angel funding from undisclosed sources. Tech.Co has more here.

    enSilo, a 10-month-old, San Francisco-based cybersecurity startup, has raised $10 million in Series A funding led by Lightspeed Venture Partners, with participation from earlier backer Carmel Ventures.

    GitHub, a seven-year-old, San Francisco-based startup that helps companies and developers build software, is talking with investors about a new, $200 million round that would value the company at about $2 billion, reports Bloomberg. Roughly three years ago, the company raised $100 million in Series A funding from Andreessen Horowitz — a bet that (we think still) represents the venture firm’s biggest single bet. (Andreessen Horowitz has since plowed even more capital, across two rounds, into Tanium, an outfit that helps companies pinpoint security threats and manage their sprawling computer networks.)

    Hello, the three-year-old, San Francisco-based company behind the Sense sleep tracker, has raised $40 million in new funding led by Temasek Holdings, according to the Financial Times. The company, which had previously raised at least $10.5 million as part of an earlier round, and another $2.4 million through a Kickstarter campaign, is now valued at between $250 million and $300 million, sources tell TechCrunch. More here.

    HomeLane, a year-old, Bangalore, India-based company that boasts of integrated interior design and manufacturing capabilities that allow its customers to customize their homes, has raised $50 million in new funding from earlier investor Sequoia Capital and others, reports The Tech-Portal. Just earlier this year, Sequoia — with participation from Aarin Capital — had provided the company with $4.5 million in Series A funding.

    La Ruche qui dit oui, a four-year-old, Paris-based e-commerce platform where users group themselves to buy directly from their local farmers, has raised $9 million in Series B funding led by Union Square Ventures and Felix Capital, with participation from XAnge and Quadia. The company has now raised $13.1 million altogether. Techcrunch has much more here.

    Lavu, a five-year-old, Albuquerque, N.M.-based startup that provides iPad-centric point of sale systems for restaurants, has raised $15 million in its first outside funding, led by Aldrich Capital Partners. More here.

    Philo, a five-year-old, Cambridge, Ma.-based startup that’s helping cable and satellite TV providers re-engage college-age students with a live TV service that offers search, sharing and a network-based DVR, has raised $10 million in Series B funding led by earlier investor New Enterprise Associates. Other participants in the round include CBC New Media Group; HBO; Rho Ventures; XFUND; and Philo CEO Andrew McCollum. Crunchbase shows the company has now raised $18.8 million altogether. TechCrunch has more here.

    The Players Tribune, a 10-month-old, New York-based site founded by former New York Yankees shortstop Derek Jeter, where professional athletes create their own content (think first-person essays, tvideo content, podcasts and original photography), has raised $9.5 million in Series B funding. New Enterprise Associates led the round, with participation from earlier backers, including Thomas Tull of Legendary Entertainment. Business Insiderhas the story here.

    PolicyGenius, a two-year-old, Brooklyn, N.Y.-based online insurance broker, has raised $5.3 million in Series A funding led by Karlin Ventures and Susa Ventures, with participation from insurers Transamerica and AXA. Venture Capital Dispatch has more here.

    Sketchfab, a three-year-old, New York-based marketplace for 3D file sharing (users can create sharable 3D files, browse them, or buy them), has raised $7 million in Series A round led by FirstMark Capital, with participation from earlier backers TechStars, Balderton Capital, Partech Ventures andBorealis Ventures. The company has now raised $9 million altogether. TechCrunch has more here.

    SigOpt, an eight-month-old, San Francisco-based Y Combinator alum at work on an optimization technology, has raised $2 million in seed funding from Andreessen Horowitz and Data Collective. TechCrunch has more here.

    Wahanda, a seven-year-old, London-based salon-booking site, has raised €65 million ($73 million) in fresh funding from its sole outside investor, Japan’s Recruit Holdings, which now owns 80 percent of the company after buying outother investors last month. The company has also acquired ZenSoon, a beauty platform in France, for an undisclosed amount. TechCrunch has more here.

    Zymergen, a two-year-old, Emeryville, Ca.-based biotech startup that makes microbial DNA manipulating robots, has raised $42 million in Series A funding led by Data Collective, with participation from AME Cloud Ventures, DFJ, HVF, Innovation Endeavors, Obvious Ventures, True Ventures and Two Sigma Ventures. The company has now raised $44 million altogether. TechCrunch has much more here.

    —–

    New Funds

    Foundation Capital, a 20-year-old venture capital firm with offices on Sand Hill Road and more newly in San Francisco, is looking to raise up to $325 million for its eight fund, shows an SEC filing that states the first sale has yet to occur. Foundation’s last two funds were $750 million (closed in 2008) and $282 million (closed in 2013), respectively.

    Kleiner Perkins Caufield & Byers has launched a new $4 million seed fund called KPCB Edge — a carve-out from its $450 milion 16th fund, closed last year. Mike Abbott, who joined the firm as a general partner in 2011 after working as Twitter’s VP of engineering, is leading the effort, but three newer employees —  Anjney Midha, 23; Ruby Lee, 23; and Roneil Rumburg, 22 — will oversee its day-to-day operations. Venture Capital Dispatch has much more here.

    —–

    IPOs

    Fitbit, the eight-year-old, San Francisco-based maker of wearable fitness devices, has increased the target size of its IPO by a whopping 37 percent to $655.5 million, reports Bloomberg. The company is now offering 34.5 million Class A shares for $17 to $19 apiece, up from its original plans to sell 29.85 million shares at $14 to $16 apiece. As Bloomberg notes, Fitbit would be valued at about $3.9 billion at the high end of its new offering range. No doubt there’s a lot of demand for the offering; Fitbit will be one of alarmingly few tech companies that have gone public in 2015. As readers know, it’s also now facing two lawsuits that were recently filed against it by competitor Jawbone (and which will be expensive to battle, presumably).

    The investment bank Houlihan Lokey has confidentlaly filed for an IPO that’s expected later this year. The WSJ has the story here.

    —–

    People

    Evernote CEO Phil Libin is talking to candidates who could replace him as CEO and “may be close to something,” Libin said in an interview with The Information yesterday. (Subscription required.) “We’ve been looking for a professional CEO for a while,” Libin told the outlet, adding it would be “someone who is going to be better than me at it. . . I’m a product person.”

    Google is in talks with a developer to lease or buy a slice of 3 million square feet of offices and R&D space that’s being developed in San Francisco’s Hunters Point Shipyard, reports the San Francisco Business Times.  As the piece notes, the $8 billion redevelopment project, which also includes the former Candlestick Park site, is “drawing looks” from numerous Silicon Valley titans.

    Sounds like Google has yet again made VP Neal Mohan an offer he could not refuse; he says he’s staying put at the search giant and not departing for Dropbox, which was reportedly trying to woo him as its head of product. (Recode says additional compensation wasn’t involved as it was when Twitter tried recruiting Mohan from Google several years ago, but we’re not sure that rules out other enticements.)

    Zynga has acquired Superlabs, an incubator founded by Zynga CEO Mark Pincus before his return to Zynga in April. The deal cost Zynga just $1 but could “amount to a lot more depending on employee compensation packages and stock grants,” say Recode, noting that the “grants for Superlabs’ nine employees may include as much as 1.1 million shares of Zynga stock.” (That sounds like a big fat conflict of interest to us, but readers may recall that Pincus has a lot more voting power than anyone else.)

    —–

    Jobs

    Tribeca Venture Partners is hiring an associate. The job is in New York.

    A top venture firm (trust us on this) is looking for a senior director of marketing for its Menlo Park, Ca., office. Email resumes to vcmarketing2015 [at] gmail [dot] com.

    —–

    Data

    A data-driven argument against a bubble, care of Andreessen Howoritz. (This is worth zooming through.)

    —–

    Essential Reads

    Singapore rising: The plot to become the next big tech hub.

    —–

    Detours

    The real housewives of Westeros.

    An Antwerp townhouse with the world’s largest windows.

    Beautiful motorcycles.

    —–

    Retail Therapy

    The only “WALL ST” license plate issued in the state of New York is for sale right now on EBay. (It comes with a 13-year-old Mercedes S-Class with 89,000 miles on the odometer.) Buy it now!

    Connie

  • StrictlyVC: June 15, 2015

    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.]

    ——

    New Fundings

    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.

    Homesuite, a 1.5-year-old Palo Alto, Ca.-based furnished rental platform, has raised $2.3 million in seed funding from Battery Ventures, Bessemer Venture Partners and Foundation Capital, with participation from GrubHub cofounder Mike Evans and renowned investor Pierre Lamond.

    Karma Recycling, a two-year-old, New Delhi, India-based electronic waste management and electronics buy-back company, has raised an undisclosed amount of funding from IIMA CIIE’s Infuse Ventures, one of the only clean tech-focused funds in India, and the global sustainability practice Environmental Resources Management.

    Milestone Pharmaceuticals, a 10-year-old, Montreal-based developer of cardiovascular drug therapies, has raised $17 million in Series B funding led by Domain Associates, with participation from earlier backers Fonds de solidarité FTQ, Pappas Ventures, BDC Capital, GO Capital, and iNovia Capital. The company has now raised $30 million altogether, shows Crunchbase.

    Moonlighting, an eight-month-old, Charlottesville, Va.-based on-demand, mobile jobs marketplace, has raised $1.9 million in funding led by The McClatchy Company, New Richmond Ventures, the Baltimore Angels and Millennial Media founder Paul Palmieri.

    PowWow Energy, a 2.5-year-old, Sunnyvale, Ca.-based SaaS startup that mines farmers’ utility billing information to track pump behavior, has raised $3 million in funding from the state of California, as well as funding from theUniversity of California Santa Barbara and UC Davis. Angel investors provided the remaining $700,000. More here.

    TripleLift, a three-year-old, New York-based programmatic native technology company, has raised $10.5 million in Series B funding led by Edison Partners. The company has now raised $16.6 million altogether, shows Crunchbase. Its earlier backers include True Ventures, iNovia Capital, Laconia Capital and NextView Ventures.

    Winko Games, a months-old, Barcelona, Spain-based studio that’s creating “hardcore” games on mobile, has raised $1.4 million in seed funding. Backers included London Venture Partners, Initial Capital, and Kibo Ventures. The company is planning to release its first game in the fourth quarter of this year.

    Yesware, a five-year-old, Boston- and San Francisco-based company whose sales acceleration platform helps streamline responses to prospects and customers, has raised $13.3 million in funding led by Foundry Group, with participation from Battery Ventures, Google Ventures, Golden Venture Partners and IDG Ventures. The company has now raised $33 million to date, shows Crunchbase.

    Zane Benefits, a nine-year-old, Salt Lake City, Ut.-based maker of individual health insurance reimbursement software for small businesses, has raised $1.5 million in funding from Kickstart Seed Fund and Royal Street Investment and Innovation Center.

    Zhong, a two-year-old, Shanghai-based online insurance seller, has raised 5.78 billion yuan ($931.3 million) in its first round of fundraising, including from Morgan Stanley; China’s top domestic investment bank, China International Capital Corp; and private equity firm CDH Investments. Zhong was founded by Alibaba Group Holding’s executive chairman Jack Ma, Tencent Holdings chairman Pony Ma and Ping An Insurance Group chairman Ma Mingzhe.  Ant Financial, the finance affiliate of Alibaba, is the largest shareholder in the company with a 16 percent stake, reports Reuters.

    —–

    New Funds

    Entertainer and investor Snoop Dogg is looking to raise $25 million for his new venture fund, Casa Verde Capital, shows an SEC filing first flagged by Fortune’s Dan Primack. Among the outfit’s most recent investments: Eaze, a medical marijuana delivery service in California that raised $10 million in April led by DCM Ventures.

    —–

    IPOs

    Fitbit is just one of 10 companies expected to price on U.S. exchanges this week. Renaissance Capital has the whole list here.

    —–

    Exits

    Stratasys, the publicly traded 3D printing and manufacturing company, is spinning off Bold Machines, a 10-month-old unit focused on incubating new products made with 3D printing. Bre Pettis, the founder and former head of MakerBot, which Stratasys acquired in 2013 for $403 million, will leave Stratasys to lead Bold Machines. TechCrunch has more here, including analysis about what drove the move.

    —–

    People

    Yahoo hearts Katie Couric. According to Recode sources, it’s just signed a new contract raising her annual pay from $6 million to $10 million — not far from the $15 million per year she was reportedly paid as the anchor of CBS.

    Meet real estate “rock star” Ken DeLeon, who has “taken the Silicon Valley real estate world by storm with his ambition, marketing skills and breezy braggadocio,” reports the San Jose Mercury News. “People are kind of drawn to me. They want to be around me,” he tells the outlet. “I pretty much raised the bar for everybody, for the expectations of what a good agent should be.”

    Twitter president Adam Bain is reportedly the front runner to succeed Dick Costolo as the company’s next CEO. But venture capitalist John Doerr appears to have other ideas. In an interview last week with Bloomberg’s Emily Chang, Doerr said he thought that “Reed Hastings would be a good CEO at Twitter. I think Sundar [Pichai] at Google would be a great CEO at Twitter.” When asked about the full-time jobs of both, Doerr said, “I expect the CEO that’s recruited to Twitter will have a job.”

    “For a time, he lived on a 20-acre estate in Bedford, N.Y., overseen by a butler whom he paid $50,000 a year, and he hosted grand parties for 60 guests or more.” Today, entrepreneur Fabrice Grinda leads a simpler life, one in which he apparently drives his friends and mother crazy, judging from this New York Times profile.

    —–

    Jobs

    Obvious Ventures, the nearly year-old, San Francisco-based venture firm started by Twitter co-founder Ev Williams, is hiring a senior associate. The job is in San Francisco.

    —–

    Essential Reads

    Here’s what happens to your $10 after you pay for a month of Apple Music.

    Facebook is eating the $140 billion hardware market. Business Insider explains here.

    Parking apps are facing obstacles at every turn.
    —–

    Detours

    Getting rich quick and preserving creative autonomy? That’s the yuccie dream.

    The real science behind Jurassic World.

    The Cinder Cone.

    —–

    Retail Therapy

    Sushi-themed suitcase covers.

    Connie

  • How Stanford Management Co. Sees the World (Brace Yourself, Israel)

    John PowersLast 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.]

    Connie

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  • StrictlyVC: June 12, 2015

    Hello and happy Friday, everyone! Hope you have a super weekend.

    By the way, some of you mentioned finding yesterday’s newsletter in spam. We’re not sure why Gmail is giving us a hard time this week, but if you missed it, it’s here. (You can always email us about delivery issues or anything else and we’ll do our best to help.)

    —–

    Top News in the A.M.

    To the surprise of pretty much everyone — including those who’ve been asking for his head — Dick Costolo is stepping down from his role as CEO of Twitter after nearly nearly five years on the job. Company cofounder Jack Dorsey will serve as interim CEO — or maybe even as the company’s permanent CEO. He seemed to leave the door open to that possibility in an interview yesterday with Business Insder. The WSJ has letters from both men to Twitter employees here.

    Blackberry may be ditching its own operating system in favor of Android. More here.

    Uber is reportedly raising $1 billion expressly to take on its China-based rivals. The company suggests it’s further along in that fight than those rivals would have you believe, too. More here.

    —–

    A New Hardware Firm Emerges: Meet Root Ventures

    You may have noticed: Hardware investing is in vogue. Andy Rubin, creator the mobile operating system Android, recently launched Playground Global to advise device makers in exchange for equity. Formation 8 is raising a $100 million hardware-focused venture fund. That’s saying nothing of the seed-stage fund Bolt, which raised $25 million a few months ago, and the numerous accelerators now focused on backing hardware startups, including Haxlr8r, Lemnos Labs, and Highway1, which is an offshoot of the custom design manufacturing company PCH International.

    Now, the Bay Area has yet another entrant on the scene: San Francisco-based Root Ventures, which just closed its debut, hardware-focused fund with $31,415,927 (the first 10 digits of Pi), capital that it raised from a gaggle of high-net-worth investors along with the fund of funds manager Cendana Capital.

    Root Ventures is a single-GP fund founded by Avidan Ross, a trained engineer who was previously CTO of the private equity firm CIM Group. Ross isn’t widely known (yet) in press circles, but a growing number of venture capitalists and entrepreneurs have grown acquainted with him through the roughly 10 bets he has placed in recent years with the help of his friends’ capital.

    Some of Ross’s older bets include Wallaby Financial, a mobile finance company that was acquired by Bankrate in December for an undisclosed amount. Another is Skycatch, an aerial robotics platform that received its first check from Ross and which has gone on to raise $24.7 million altogether, including from Google Ventures. Ross also wrote the first check for Momentum Machines, a company whose robots turn raw ingredients into packaged hamburgers without human intervention. It just raised an undisclosed amount of follow-on financing from Founders Fund.

    “I don’t think people were investing in me based on my individual track record as an angel,” says Ross. “Those investing in me know me from a previous life [as CTO] of a pretty large investment firm where I built a lot of great relationships with people who trust my ability to invest in great technology.”

    Ross, who raised much of his new fund late last year, has so far made three investments on behalf of Root Ventures, where he plans to make concentrated bets and to write first checks in the range of $500,000.

    The most recent of his portfolio companies is operating in stealth mode, but it’s easy to see the appeal of the others. Mashgin — company Ross met through entrepreneur friends — has developed an automated checkout kiosk machine that employs computer vision to identify any object on a surface (down to the different-flavored Snapples, says Ross). The big idea: to create a far more seamless experience for shoppers.

    The company graduated late last year from Y Combinator and is about to announce a “significant” amount of follow-on funding, says Ross, who wrote its first check.

    Ross also invested in Prynt, which makes a smartphone case that prints out photos. He met the company during his honeymoon in China. The young company was operating out of the Haxlr8r accelerator in Shenzhen, “and I asked if I could take a three-hour break and visit with the companies. I immediately thought: ‘This is amazing.’”

    If you don’t understand why a printing up a digital photo might be interesting, Ross says Prynt’s opportunity goes “above and beyond printing out a polaroid. When you print a photo, you’re basically printing up the last frame of a 10 second video. With Prynt photos, you hand them to someone else, they point their phone at the photo, and the photo becomes alive [by featuring those full 10 seconds]. It’s like a Vine that only that person can watch. It creates privileged access.”

    Others must like it, too. Prynt recently raised $1.5 million in a Kickstarter campaign earlier this year.

    Ross says the company also just raised a “sizable seed round that’s unannounced. An earlier SEC filing suggests the amount is $2 million.

    —–

    New Fundings

    8tracks, a seven-year-old, San Francisco-based platform for music listeners to create their own playlists, has raised $2.5 million in debt funding from Silicon Valley Bank. The company has now raised $5.3 million altogether, shows Crunchbase. Its venture investors include SoftTech VC, Andreessen Horowitz, and Index Ventures.

    BloomThat, a two-year-old, San Francisco-based e-commerce florist, has raised $5.5 million in Series A funding led by Forerunner Ventures, with participation from SherpaVentures, Rothenberg Ventures and earlier backers First Round Capital and Vaizra Investments. The company has now raised $7.6 million altogether.

    Boxful, a six-month-old, Hong Kong-based startup that enables customers to store unwanted items in warehouses, has raised $6.6 million to develop its domestic business and expand into other parts of Asia. Investors include the real estate firms Great Eagle, Carlton Holdings and Soundwill Holdings, along with Chinese conglomerate Tinghsin Group and venture firms Arocrest Capital, Lonsdale Capital and Vega Properties. TechCrunch has more here.

    Convirza, a three-year-old, Draper, Ut.-based call marketing analytics platform, has raised more than $20 million in Series B funding led by an unnamed East Coast-based investment group. The company has raised nearly $25 million altogether. More here.

    Evrything, a four-year-old, Ontario-based platform that connects consumer products to the web and manages real-time data in the cloud to drive their applications, has raised $7.5 million in new funding from undisclosed sources. The company has now raised $14.5 million altogether, including from Cisco, Atomico, and Dawn Capital.

    GoGoVan, a two-year-old, Hong Kong-based on-demand logistics startup, has raised $10 million in Series B-plus funding, reports Tech In Asia. The round was led by former 91 Wireless CEO Hu Zemin, with participation from earlier backers, including Renren CEO Yizhou Chen.

    La Renon Healthcare, a seven-year-old, Ahmedabad, India-based pharmaceutical research, marketing and manufacturing company, has raised $16 million in Series A funding from Sequoia Capital. VC Circle has more here.

    Miura Systems, a U.K.-based company that makes point-of-sale devices, has raised $16 million in funding led by DFJ Esprit Secondaries, with participation from DFJ Esprit EIS funds. More here.

    Spire, a three-year-old, San Francisco, Ca.-based satellite-powered data company, has been awarded $2.9 million in grants from Scottish Enterprise, the international investment and trade promotion agency of the Scottish government. The funds follow $25 million in Series A funding that Spire raised last year from RRE Ventures, Moose Capital and others.

    —–

    People

    Serial entrepreneur Kevin Rose is merging his newest startup Watchville — a news aggregation app focused exclusively on wristwatches — with Hodinkee, a site for wristwatch enthusiasts. Hodnikee is based in Manhattan, and Rose, who is taking the full-time position of CEO of the company, is heading there to live, reports the New York Times.

    Investor Chris Sacca talked with Bloomberg’s Emily Chang yesterday, and they wound up talking about his hot tub at his California home near Lake Tahoe. (He calls it the Jam Tub.) According to Sacca, who has made a fortune owing to early and aggressive bets on Uber, Uber CEO Travis Kalanick used to spend “eight to ten hours” there at a time. “I’ve never seen a human with that kind of staying power in a hot tub,” Sacca said. He also told Chang that he invites entrepreneurs to his home to feed them and measure them up and wouldn’t invest in anyone who doesn’t get up to put their dishes in the sink.

    Sarah Tavel, a former VP at Bessemer Venture Partners who joined Pinterest as a product manager more than three years ago, is returning to VC as Greylock Partners’ first investment partner. More here.

    —–

    Essential Reads

    That recently disclosed hack of the federal Office of Personnel Management, the government’s human resources division, is a lot worse than first reported.

    No team? No idea? No problem. A new venture firm says it will fund you anyway.

    —–

    Detours

    A short history of Rupert Murdoch’s heirs apparent.

    Conversation resignation letter.

    Oh, those meddlng millennials’ parents!

    —–

    Retail Therapy

    Okay, fine, we’ll take one pair of these ridiculously cool sunglasses.

    Connie

  • Another Hardware Fund Emerges: Meet Root Ventures

    Root VenturesYou may have noticed: Hardware investing is in vogue. Andy Rubin, creator the mobile operating system Android, recently launched Playground Global to advise device makers in exchange for equity. Formation 8 is raising a $100 million hardware-focused venture fund. That’s saying nothing of the seed-stage fund Bolt, which raised $25 million a few months ago, and the numerous accelerators now focused on backing hardware startups, including Haxlr8r, Lemnos Labs, and Highway1, which is an offshoot of the custom design manufacturing company PCH International.

    Now, the Bay Area has yet another entrant on the scene: San Francisco-based Root Ventures, which just closed its debut, hardware-focused fund with $31,415,927 (the first 10 digits of Pi), capital that it raised from a gaggle of high-net-worth investors along with the fund of funds manager Cendana Capital.

    Root Ventures is a single-GP fund founded by Avidan Ross, a trained engineer who was previously CTO of the private equity firm CIM Group. Ross isn’t widely known (yet) in press circles, but a growing number of venture capitalists and entrepreneurs have grown acquainted with him through the roughly 10 bets he has placed in recent years with the help of his friends’ capital.

    Some of Ross’s older bets include Wallaby Financial, a mobile finance company that was acquired by Bankrate in December for an undisclosed amount. Another is Skycatch, an aerial robotics platform that received its first check from Ross and which has gone on to raise $24.7 million altogether, including from Google Ventures. Ross also wrote the first check for Momentum Machines, a company whose robots turn raw ingredients into packaged hamburgers without human intervention. It just raised an undisclosed amount of follow-on financing from Founders Fund.

    “I don’t think people were investing in me based on my individual track record as an angel,” says Ross. “Those investing in me know me from a previous life [as CTO] of a pretty large investment firm where I built a lot of great relationships with people who trust my ability to invest in great technology.”

    Ross, who raised much of his new fund late last year, has made three newer investments on behalf of Root Ventures, where he plans to make concentrated bets, and to write first checks in the range of $500,000.

    The most recent of its portfolio companies is operating in stealth mode, but it’s easy to see the appeal of the others. Mashgin — company Ross met through entrepreneur friends — has developed an automated checkout kiosk machine that employs computer vision to identify any object on a surface (down to the different-flavored Snapples, says Ross). The big idea: to create a far more seamless experience for shoppers.

    The company graduated late last year from Y Combinator and is about to announce a “significant” amount of follow-on funding, says Ross, who wrote its first check.

    Ross also invested in Prynt, which makes a smartphone case that prints out photos. He met the company during his honeymoon in China. The young company was operating out of the Haxlr8r accelerator in Shenzhen, “and I asked if I could take a three-hour break and visit with the companies. I immediately thought: ‘This is amazing.’”

    If you don’t understand why a printing up a digital photo might be interesting, Ross says Prynt’s opportunity goes “above and beyond printing out a polaroid. When you print a photo, you’re basically printing up the last frame of a 10 second video. With Prynt photos, you hand them to someone else, they point their phone at the photo, and the photo becomes alive [by featuring those full 10 seconds]. It’s like a Vine that only that person can watch. It creates privileged access.”

    Others must like it, too. Prynt recently raised $1.5 million in a Kickstarter campaign earlier this year.

    Ross says the company also just raised a “sizable seed round that’s unannounced. An earlier SEC filing suggests the amount is $2 million.

    Connie

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