Happy last day of July, everyone! Hope you’re in for a wonderful weekend. Investor-writer Semil Shah continues to guide the vessel that is StrictlyVC while Connie takes some time offline to perfect her pool game. If you’d like to reach out to Semil, you can often find him on Twitter.
Top News in the A.M.
LinkedIn reported second quarter earnings yesterday and sales were up — but not because of a recovery in its core business. The WSJ has more here.
Apple is moving into San Francisco, starting with 76,000 square feet in the city’s South of Market neighborhood.
Musings on LPs and Direct Investments
By Semil Shah
In the few years I’ve been able to meet and learn from limited partners or LPs (those who invest in VC funds), I have noticed an increasing desire to co-invest alongside their general partners. This makes perfect sense. If I was an LP, I’d want to co-invest, as well. Yet, in the process of doing this over the past few years, I’ve found myself repeating some warnings to LPs who have grown eager to do co-invest at the very early stages of seed.
Typically, I cite three key warnings:
One, oftentimes the founders want to meet all potential investors who will be on their cap table. Even though a VC can offer syndication to the founder, that founder may not welcome the introduction and prefer to control the process him/herself. LPs can certainly ask for insight into a GP’s processes, policies, and histories around creating co-investment opportunities, but they cannot be guaranteed. Furthermore, what if a GP has two or three LPs interested in co-investing but there’s room for only one or two. How is the GP supposed to decide?
Two, when there is a real co-investment opportunity for an LP, sometimes the LP doesn’t have the proper resources at hand (domain knowledge, or network, etc.) to independently vet and diligence the specific deal in a few days. If the LP is a family office, they may have enjoy the latitude to quickly stress-test their network and then make a yes/no call; if the LP is a fund of funds managing other institutions’ money, they may have an incentive to seek these types of deals out given their fund economics, regardless of engaging in proper diligence.
And, three, whenever someone is the recipient of an investment opportunity, one should ask: “Why I am so lucky?” In a competitive deal, I often have to fight just to wedge in, and I am not always successful. These are the investments LPs would love to participate in directly as a co-investor, but such opportunities rarely surface. Yes, there are companies that go unnoticed for months or years before breaking out and becoming a sensation, but those aren’t a monthly occurrence.
Again, if I was an LP, I would want to co-invest. After all, LPs are looking for outsize returns, just like the rest of us. More, if an LP doesn’t get in at seed, the bigger VC firms won’t create room for the LP down the road. Still, I’d welcome more conversation and debate around this topic, both from GPs and LPs alike, so that we can all learn more about best practices learned and minefields to avoid. Dangling the opportunity to co-invest may help ink a commitment, but in practice, all that glitters may not be gold.
Behalf, a 3.5-year-old, New York-based online lending startup that makes short-term loans to small businesses, has raised $119 million in equity and a credit facility. Victory Park Capital has provided the credit line; MissionOG led the Series B round, with participation from Maverick Ventures and earlier backers Spark Capital and Sequoia Capital. Venture Capital Dispatch has more here.
Catawiki, the seven-year-old Amsterdam-based online auction house, has raised $75 million in Series C funding led by Lead Edge Capital, with participation from Accel Partners and Project A Ventures. Several Booking.com executives, including former CMO Arthur Kosten, also joined the round. VentureBeat has more here.
Future Home, a 2.5-year-old, Rogaland, Norway-based maker of a connected home app, has raised $1.4 million in seed funding led by Ståle Kyllingstad from IKM Invest, with participation from iPark, Ålgård Holding, and other individual investors. ArcticStartup has more here.
Jiuxian, a six-year-old, Beijing, China-based alcoholic beverage e-commerce company, has raised $80 million in new funding from undisclosed Chinese investors, according to Chinese media reports. The company had previously raised $150 million from investors, including Rich Land Capital, Oriental Fortune Capital and Sequoia Capital. More here.
Light, a two-year-old, Palo Alto, Ca.-based company behind a high-quality smartphone camera, has raised $25 million in Series B funding led byFormation 8 Hardware Fund. Additional participants in the round include StepStone Group, Bessemer Venture Partners, CRV, Foxconn’s FIH Mobile, former Motorola Mobility CEO Sanjay Jha and CrunchFund. The company has now raised at least $35 million to date. VentureBeat has more here.
Tripfactory, a 1.5-year-old, Bangalore, India-based online marketplace that offers customized trip planning and packages to users, has raised an undisclosed amount of Series A funding from Aarin Capital Partners. The Economic Times has more here.
TytoCare, a four-year-old, Israel-based telehealth platform that enables patients to perform home medical examinations and consult with a remote clinician, has raised $11 million in Series B funding led by Cambia Health Solutions. Others of its backers include OrbiMed Advisors, Walgreens, Fosun Pharma and LionBird. More here.
Ubox, a five-year-old, Beijing, China-based vending machine company with growing market share, has collected $85 million from the Carlyle Group in exchange for an undisclosed stake. TechNode has more here.
WEVR, a 6.5-year-old, L.A.-based virtual reality community and technology platform, has received $10 million from HTC — the smartphone maker that more recently branced into wearable devices and the virtual reality category — in exchange for a 15 percent stake in the company. More here.
Foundry Group, the 10-year-old, Boulder, Co.-based venture firm, has closed its fifth fund with $225 million, the same size of its last two early-stage funds, which were raised in 2012 and 2010, respectively.
NewSchools Venture Fund has launched an ed tech accelerator with a focus on science learning. TechCrunch has more here.
S3 Ventures, an eight-year-old, Austin, Tex.-based venture firm, is looking to hire a pre-MBA associate.
CB Insights looks at the venture firms that are consistently involved in the largest tech exits.
Google is quietly distributing a new version of its Glass wearable computer aimed at businesses.
Pinterest just became the first Silicon Valley company to publicly establish its diversity goals.
Uber is set to pour $1 billion into India, placing its business development efforts in the country on a par with China and signaling an escalation of its rivalry with domestic ride-sharing Ola.
Unwrapping the “Happy Birthday” legal dispute.
Tom Cruise’s 10 greatest movie stunts, reviewed by a stuntman.
The really big one. (Gulp.)
Cool camera bag.