Monthly Archives: August 2015

StrictlyVC: August 31, 2015

Hi, welcome back, everyone!

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Top News in the A.M.

Google is abusing its dominant position to cross-sell its own products, India-based companies have complained to an India-based antitrust regulatory body — which is now formally bringing charges against Google.

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An Insider on Switching Firms

Last week, we sat down with venture capitalist Brian O’Malley of Accel Partners to talk about where he’s shopping now.

We also asked O’Malley — who was recruited into Accel from Battery Partners in 2013 — what it was like to transition between the heavyweight firms, and what he views as the biggest differences between them.

More from that candid chat follows. Our conversation has been edited lightly for length.

Founders sometimes feel “orphaned” when a cherished VC board member leaves to start his or her own fund or, in rarer cases, is recruited into a new firm. What happened to your portfolio companies when you changed firms?<

The simplest way to look at [these transitions] is that with the money comes the board seat, and the money is from the firm, not from Brian. So at the end of the day, it’s the firm’s call about whether you stay or go.

Sameer [Gandhi], who recruited me in, had [been recruited into Accel from Sequoia Partners back in 2008] and gone through a similar process, so I think there was a general attitude of: “Look, your entrepreneur relationships are the one thing you take with you, and your reputation is all you have, so let’s err on the side of doing right by the teams you’ve backed.” The thinking was, “If it takes these startups a year to get things figured out, that’s okay. At the end of the day, they chose Battery to work with you, and it’s kind of not fair [to abruptly end those ties].”

What did Battery think?

More here.

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New Fundings

Instabase, a six-month-old, San Francisco-based platform in the cloud for data, applications, and interactive computing, has raised $3.75 million in seed funding from Greylock Partners and New Enterprise Associates.

Mobcrush, a year-old, L.A.-based live-streaming service centered around mobile games, has quietly raised at least $10 million in new financing led by Kleiner Perkins Caufield & Byers, reports TechCrunch. More here.

Peleton Technology, a four-year-old, Menlo Park, Ca.-based developer of vehicle safety systems for trucking fleets, has raised $17 million in fresh funding co-led by DENSO International America and Intel Capital, with participation from Lockheed Martin. Just last month, the company raised an undisclosed amount of strategic funding from Nokia Growth Partners. That round had followed a $17 million Series A funding that included Magna InternationalCastrol innoVenturesVolvo Group Venture Capital, UPS Strategic Enterprise Fund, Birchmere Ventures, Sand Hill Angels, and Band of Angels.

Vivoom, a three-year-old, Cambridge, Ma.-based mobile marketing platform, has raised $4.65 million from investors, including CommonAngels Ventures, shows an SEC filing.

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New Funds

Xiaohong Chen, formerly a managing director in China for Tiger Global, looks to be raising her third venture capital fund under the brand H Capital. According to an SEC filing, she’s targeting $500 million this time, and the first sale has yet to occur. H Capital closed its second fund last year with $300 million, shows an earlier SEC filing.

Ryan Gembala — who spent more than a year in corporate development at Facebook and, before that, held numerous roles in business development, as well as with Azure Capital Partners, where he was an associate — is raising his own seed-stage fund. According to an SEC filing, it’s called Pathbreaker Ventures and it has already raised $3.4 million from 16 investors. The filing doesn’t list a target.

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IPOs

CytomX Theraputics, a seven-year-old, South San Francisco-based biotech company whose cancer immunotherapies aim to avoid healthy cells, plans to raise $100 million in an IPO, shows a new SEC filing. Its principal shareholders include Third Rock Ventures, which owns 30.8 percent of its shares; Canaan Partners, which owns 17.4 percent; Fidelity Management and Research Company, which owns 8.7 percent; and Roche Finance, which owns 6.8 percent. The San Francisco Business Times has more here.

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Exits

CytomX Theraputics, a seven-year-old, South San Francisco-based biotech company whose cancer immunotherapies aim to avoid healthy cells, plans to raise $100 million in an IPO, shows a new SEC filing. Its principal shareholders include Third Rock Ventures, which owns 30.8 percent of its shares; Canaan Partners, which owns 17.4 percent; Fidelity Management and Research Company, which owns 8.7 percent; and Roche Finance, which owns 6.8 percent. The San Francisco Business Times has more here.

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People

Two founders of startups acquired by Facebook are leaving the company, they announced separately last week. Josh Miller, CEO of Branch, is parting ways with the social network 20 months after his eight-person company was acquired. Ilya Sukhar, whose development platform, Parse, was acquired by Facebook in April 2013, is also moving on. Quartz has the story here.

Uber has hired two top vehicle security researchers: Charlie Miller, who had been working at Twitter and Chris Valasek, who worked at security firm IOActive. The pair attracted attention earlier this month after demonstrating they could hack into a moving Jeep. Reuters has the story here.

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Jobs

PayPal is looking to hire a corporate development associate. The job is in San Jose, Ca.

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Essential Reads

Netflix is losing more Hollywood movies. Recode has the story here.

If a growing number of state bills is any guide, the email addresses and search queries of U.S. schoolchildren are a hot commodity.

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Detours

Postcards from Silicon Valley, circa 1985-2000.

Spotify says age 42 is when many of its users rediscover current pop music.

What the most expensive house in America looks like.

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Retail Therapy

The beloved Jeep Grand Wagoneer is coming back. If you can’t wait, there’s always the vintage market (and it’s a good time to buy).

Winglights.

Turntable cassette player combo.




An Insider on Switching VC Firms

bpo lrgLast week, we sat down with venture capitalist Brian O’Malley of Accel Partners to talk about where he’s shopping now.

We also asked O’Malley — who was recruited into Accel from Battery Partners in 2013 — what it was like to transition between the heavyweight firms, and what he views as the biggest differences between them.

More from that candid chat follows. Our conversation has been edited lightly for length.

Founders sometimes feel “orphaned” when a cherished VC board member leaves to start his or her own fund or, in rarer cases, is recruited into a new firm. What happened to your portfolio companies when you changed firms?

The simplest way to look at [these transitions] is that with the money comes the board seat, and the money is from the firm, not from Brian. So at the end of the day, it’s the firm’s call about whether you stay or go.

Sameer [Gandhi], who recruited me in, had [been recruited into Accel from Sequoia Partners back in 2008] and gone through a similar process, so I think there was a general attitude of: “Look, your entrepreneur relationships are the one thing you take with you, and your reputation is all you have, so let’s err on the side of doing right by the teams you’ve backed.” The thinking was, “If it takes these startups a year to get things figured out, that’s okay. At the end of the day, they chose Battery to work with you, and it’s kind of not fair [to abruptly end those ties].”

What did Battery think?

More here.




StrictlyVC: August 28, 2015

Hi, happy Friday, dear readers!

Two quick things: TechCrunch Disrupt is coming up September 21 through September 23 and we’re super excited to be a part of it. We’ll be interviewing the Conways, along with other top VCs Aileen Lee, Jeremy Liew, Dana Settle, and Todd Chaffee. The full agenda was published yesterday; you can check it out here.

Also, as longtime readers know, we don’t publish many guest submissions (for a variety of reasons that probably wouldn’t interest you). We’re making an exception today, though, for a solid piece by Craig Hanson, cofounder of Next World Capital in San Francisco. Enjoy, and have a terrific weekend!

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Top News in the A.M.

Ian Rogers, who mapped out Apple’s online radio strategy, has resigned, just two months after the launch of its Beats1 radio service. The Financial Times has the scoop here.

Avid Life Media CEO Noel Biderman is stepping down, the company announced this morning. Avid Life Media, operates Ashley Madison. More here.

Apple‘s next big iPhone event happens September 9th.

Facebook has announced that on Monday, for the first time ever, one billion people logged on to the site.

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Market Tumult and the Marginal Productivity Trap

By Craig Hanson

The most disruptive aspect of capital market shifts isn’t simply that financing your business becomes easier or harder. It’s that the underlying math the market uses to value your company fundamentally changes. Public markets, venture capitalists and even employees evaluate you through a different framework. These shifts can be dramatic, with severe consequences for those still adhering to the prior paradigm. The market is reminding us of the potential for one of these systemic shifts now.

For the past couple years, investors of all stages have been chasing furiously after high-growth companies, and rewarding them with valuation multiples exponentially higher than the difference in their growth rate would otherwise imply. An almost single-minded obsession on growth rates has understandably driven companies to dramatically increase their sales and marketing spending, faster than historical norms, fueled by round sizes larger than historical norms.

The constraint, however – the gravitational impact of expansion economics – is that as more sales and marketing budget is spent in a period of time, the efficiency of that spend (in terms of qualified leads, sales prospects, sales, etc) naturally declines. This law of diminishing marginal productivity makes sense when you stop to think about it. When you move from the top 10 ROI marketing programs to the next 20 down the list, you’re investing in lower return programs. If you see 50 sales rep candidates in a quarter, and move from hiring the top 5 to hiring the top 20, you’re going to get lower productivity reps (assuming the manager is good at picking reps in the first place).

Despite this, in the recent environment, CEO’s have felt immense pressure, and a bit of economic rationale, in increasing sales and marketing spending even as the productivity of those dollars declines. In other words, even as it drives productivity and efficiency metrics down, some CEOs keep stepping on the gas. Why? There are 2 reasons: one bad and one (temporarily) good.

First the bad reason. Foremost, as some investors are pumping up round sizes, at all stages, much higher than normal, CEOs given this largesse naturally feel immense pressure to spend it. In too many cases, they have to increase spending dramatically in order to have any hope of reaching the herculean growth rates needed to justify the lofty valuation they just received. Shooting the moon is the only play in the book which has hope.

There is a second reason, which has slightly more economic rationale, but only temporarily.

More here . . .

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New Fundings

DreamBox Learning, a nine-year-old, Bellevue, Wa.-based company that makes elementary mathematics education software, has raised $10 million in Series B funding led by Owl Ventures, with participation from Tao Capital Partners. The company has now raised $45.6 million altogether, shows Crunchbase. More here.

Ele.me, a six-year-old, Shanghai, China-based online food ordering platform, has raised $90 million in fresh funding from the Shenzhen-listed Chinese shopping mall operator Beijing Hualian Department Store Co. In January, the company reportedly raised $350 million Series E funding led by CITIC Private Equity. More here.

iZettle, a five-year-old, London-based mobile payments company that’s expanding into small business loans, has raised $67 million in Series D funding led by earlier backers Intel Capital and Zouk Capital, with participation from other earlier investors Creandum, Dawn Capital, Index VenturesNorthzone and 83North. TechCrunch has more here.

Merus, a 12-year-old, Utrecht, the Netherlands-based cancer therapy developer, has raised €72.8 million ($80.5 million) in Series C funding co-led bySofinnova Ventures and Novo Ventures, with participation from earlier backers Johnson & Johnson Innovation, Pfizer Venture Investments, Bay City Capital, LSP Life Sciences Partners and Aglaia Oncology Fund. More here.

MimiVax, a three-year-old, Buffalo, N.Y.-based company that’s developing a cancer vaccine, has raised $1.55 million in venture funding from Buffalo Capital Partners. The company had earlier secured $2 million in government grants. Buffalo Business First has more here.

Narvar, a three-year-old, San Mateo, Ca.-based shipping and delivery platform, has raised $10 million in a round led by Accel Partners, with participation from Commerce Ventures, Crosscut Ventures and Freestyle Capital. TechCrunch has more here.

XL Hybrids, a seven-year-old, Boston, Ma.-based company whose hybrid electric powertrain for commercial fleet vehicles reduces fuel consumption by a reported 20 percent, has raised $10.5 million in Series C funding led by former Morgan Stanley executive Peter O’Brien. Venture Capital Dispatch has the story here.

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New Funds

Cross Valley Capital, a nine-month-old, Philadelphia, Pa.-based venture firm, has raised a $20 million seed fund, reports Dow Jones VentureWire. The firm, whose anchor LP is the Miami-based incuabor Rokk3r Labs, says it plans to invest in early-stage companies focused on digital health, hospitality, travel or logistics. More here.

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Exits

Motorola Mobility will absorb the mobile unit of Lenovo, the Beijing-based technology giant, with Motorola Mobility president Rick Osterloh leading the global smartphone business.

NumberFire, a five-year-old, New York-based predictive sports and advanced analytics platform that appears to have raised less than a million dollars in seed funding, has been acquired for undisclosed terms by the fantasy sports company FanDuel. More here.

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People

Google cofounder Sergey Brin (now president of newly minted Alphabet) has reportedly checked out a $49 million mansion in Alpine, N.J., a township whose other residents have included P. Diddy, Chris Rock, and Stevie Wonder. In case you’re remotely curious (and c’mon, you are a little bit), The New York Post saysthe “12-bedroom, 19-bathroom spread boasts an indoor basketball court, fitness center and a pool,” along with a “4,000-bottle wine cellar, movie theater, ballroom, formal dining room, dining terrace and three bars.” Oh, there’s also a “master suite with two spa bathrooms and dressing suites, and there’s also a fully equipped staff apartment.”

Kim Kardashian and Kanye West have reportedly settled up with YouTube cofounder Chad Hurley over a video of their 2013 engagement that he shot and then allegedly posting to MixBit, a collaborative video app owned by his newest company, Avos Systems. TMZ has the story about the reported $440,000 Hurley is paying in damages here.

Chris Lehane, who spent more than six years working in the Clinton White house and was the spokesman for former Vice President Al Gore in his 2000 presidential campaign, has joined Airbnb as its head of global policy and public affairs. The New York Times has more here.

Venture capitalist Tom Perkins — best known in recent years for putting hisfoot in his mouth — is back in the limelight, arguing in a full-page ad in the New York Times that presidential candidate Carly Fiorina is a visionary executive who helped revive Hewlett-Packard during her tenure as its CEO.

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Essential Reads

Snapchat is charging brands for video ads viewed less than a second, according to buyers.

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Detours

The art of the out-of-office reply.

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Retail Therapy

flag in a frame. For proud ‘Mericans.




Market Tumult and the Marginal Productivity Trap

productivity1By Craig Hanson

The most disruptive aspect of capital market shifts isn’t simply that financing your business becomes easier or harder. It’s that the underlying math the market uses to value your company fundamentally changes. Public markets, venture capitalists and even employees evaluate you through a different framework. These shifts can be dramatic, with severe consequences for those still adhering to the prior paradigm. The market is reminding us of the potential for one of these systemic shifts now.

For the past couple years, investors of all stages have been chasing furiously after high-growth companies, and rewarding them with valuation multiples exponentially higher than the difference in their growth rate would otherwise imply. An almost single-minded obsession on growth rates has understandably driven companies to dramatically increase their sales and marketing spending, faster than historical norms, fueled by round sizes larger than historical norms.

The constraint, however – the gravitational impact of expansion economics – is that as more sales and marketing budget is spent in a period of time, the efficiency of that spend (in terms of qualified leads, sales prospects, sales, etc) naturally declines. This law of diminishing marginal productivity makes sense when you stop to think about it. When you move from the top 10 ROI marketing programs to the next 20 down the list, you’re investing in lower return programs. If you see 50 sales rep candidates in a quarter, and move from hiring the top 5 to hiring the top 20, you’re going to get lower productivity reps (assuming the manager is good at picking reps in the first place).

Despite this, in the recent environment, CEO’s have felt immense pressure, and a bit of economic rationale, in increasing sales and marketing spending even as the productivity of those dollars declines. In other words, even as it drives productivity and efficiency metrics down, some CEOs keep stepping on the gas. Why? There are 2 reasons: one bad and one (temporarily) good.

First the bad reason. Foremost, as some investors are pumping up round sizes, at all stages, much higher than normal, CEOs given this largesse naturally feel immense pressure to spend it. In too many cases, they have to increase spending dramatically in order to have any hope of reaching the herculean growth rates needed to justify the lofty valuation they just received. Shooting the moon is the only play in the book which has hope.

There is a second reason, which has slightly more economic rationale, but only temporarily. CEOs may calculate the exponential increase in valuation multiple they receive for an extra 10% of annual growth, relative to the diminishing marginal impact of the sales and marketing money they’re spending. In essence, even though that next dollar spent on sales and marketing is getting you less and less revenue impact, that little bit of revenue impact is still getting you up the exponentially-increasing valuation multiple curve, enough to still justify it.

The problem with this calculus is this: The diminishing marginal productivity curve is fairly constant, and only increases or decreases over time with the structural effectiveness and size of your programs. This takes time and concerted effort to change. The valuation reward curve, however, is entirely market dependent, and can fluctuate on a dime. In other words, the extra premium you think the market will give you for all of that extra sales and marketing spend can go away. With the recent market drops, this is a shocking wake up call for some CEOs who thought the valuation-for-growth math was a constant.

Historically, this is exactly what happens to companies when market preferences shift. Those of us who’ve been through a couple cycles remember this full well, but many CEOs and even VCs today weren’t around the last time the math changed unexpectedly.

In most market stages, public and private market investors care about both growth and the cost of that growth. The metrics of your company’s growth tell the story of its effectiveness, and thus of its sustainability. It’s not just about the growth – it’s how you get there that matters in the long run.

By taking on mega-rounds, CEO’s should know that they’re doing three things: (1) narrowing their range of operational plan options, as going for broke is the only thing that can work; (2) putting increased pressure on their company to perform to match those expectations, because anything less will eventually create a negative spiral of down-rounds, underwater employee options, and employee defections; and (3) having to hit these high performance standards while slipping lower and lower down the marginal productivity curve.

Screen Shot 2015-08-28 at 6.47.41 AM

Worse yet, we see a lot of companies approach us looking for a round much larger than normal as a means to jack up the growth rate and improve the metrics. These are the companies I run from. It shows CEOs who don’t yet have the model working well, have usually achieved good but not exceptional growth, and yet want to spend their way even further down the marginal productivity curve.

In my view, there can be a place for large financing rounds. But that time is once you have the metrics humming, a well-returning place on the productivity curve, and the discipline to spend at a pace the company can soundly keep up with.

How are we handling this at our venture capital firm? Admittedly, as expansion stage investors (typically Series B,C,D), we get to rigorously analyze early performance of the company’s model. We pay attention to the productivity and efficiency, and then work our fingers to the bone helping CEOs improve this further as they ramp up the growth curve and move the marginal productivity curve forward over time. We respectfully pass on companies where the model isn’t working or where the CEO doesn’t know what has to be done to build a well-oiled model. Those CEOs who know how to read the metrics of their business and have an astute sense of how to turn it into a powerful platform as they ascend up the expansion stage have our respect and loyalty.

In most market environments, and perhaps now once again, markets care about both your growth and how you get there. CEOs who pay attention to the fundamental strength of their operating model will guide their companies well no matter what the macro markets do. They know that metrics matter.

As markets have reminded companies before and now once again, those who sacrifice metrics for growth shall eventually have neither.

Craig Hanson is the cofounder of Next World Capital, a San Francisco-based expansion-stage venture firm.




StrictlyVC: August 27, 2015

Hi, everyone, happy Thursday!

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Top News in the A.M.

China has cut its holdings of U.S. Treasuries to raise needed capital to support the yuan, reports Bloomberg.

Uber’s China arm has closed its $1 billion fundraising round early, reports Reuters. More here.

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VC Brian O’Malley on the Next Wave in “On Demand”

Brian O’Malley is good at his job. He’s good enough, in fact, that two years, ago, Accel Partners plucked him out of his former firm, Battery Ventures, so he could bat for its team instead.

As venture industry watchers know, these moves are rare, and they often pay off. Two famous examples include Sequoia Capital enticing Jim Goetz to leave Accel in 2004; Goetz has since led hugely profitable deals for Sequoia, including WhatsApp. Peter Fenton, also formerly of Accel, has similarly done a bang-up job for Benchmark, which lured him away in 2006.

Earlier this week, we sat down with O’Malley at Accel’s new San Francisco’s office to talk about switching firms, as well as why, despite a sudden cooling toward on-demand companies, he’s as bullish as ever about them.

We’re running one part of that chat today; stay tuned for the rest.

Across both Battery and Accel, you’ve backed numerous startups that meet on-demand needs, like HotelTonight, the sports ticketing app Gametime, and the food delivery app Sprig. Are you still interested in apps that meet last-minute needs?

At Accel, we’ve done three on-demand companies. We put a small piece in Sprig. We’ve backed the [Uber-for-kids startup] Shuddle. And we invested in Din [formerly called Forage], which is kind of like Blue Apron but that leverages the whole on-demand infrastructure, so you aren’t relying on all this packaging and UPS to get food across the country.

You mean Din is piggybacking off other on-demand startups?

If you think about it, Uber, Postmates, Sidecar — they all have APIs.

More here.

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New Fundings

Able, a 1.5-year-old, Austin, Tex.-based collaborative lender that connects entrepreneurs with capital, has raised $6 million in Series A funding co-led by Blumberg Capital and RPM Ventures, with participation from Peterson Partners and Expansion Ventures AngelList Syndicate. Silicon Hills has more here.

Augury, a four-year-old, New York-based company that diagnoses machines based on the sounds they emit, has raised $7 million in Series A funding led by Formation 8, with participation from Pritzker Group and earlier backers First Round Capital and Lerer Hippeau Ventures. Venture Capital Dispatch has more here.

Benson Hill Biosystems, a three-year-old, Raleigh, N.C.-based agricultural biotech company that helps customers identify strategies that increase gains in crop plants, has raised $7.3 million in Series A funding led by Middleland Capital, with participation from Mercury Fund, Prelude Ventures, Prolog Ventures, Alexandria Venture Investments, Cultivation CapitalTechAccel and earlier backers Missouri Technology Corporation and Biogenerator. More here.

Eko Communications, a three-year-old, Bangkok, Thailand-based enterprise messaging company, has raised $5.7 million in Series A funding led by the Shanghai, China-based investment firm Gobi Partners. TechCrunch has more here.

Lugg, a year-old, San Francisco-based on-demand moving company that just graduated from Y Combinator’s summer class, has raised $3.8 million in seed funding led by A Capital, with participation from SV Angel, CrunchFund and numerous angel investors, including Gmail creator Paul Buchheit. TechCrunch has more here.

Modumetal, an eight-year-old, Seattle-based maker of nanolaminated metals and materials, has raised $33.5 million in venture and debt funding. Founders Fund led the venture round, with participation from Sunshine TechCatamount Ventures, Second Avenue Partners, Goldenseeds, Alliance of Angels members and Concur Technologies CEO Steve Singh. Hercules Technology Growth Capital provided the debt. TechCrunch has more here.

PreNav, a two-year-old, San Carlos, Ca.-based company that can fly a drone within centimeters of a structure, allowing for its close inspection, has raised $1.2 million in seed funding from investors, including Pejman Mar Ventures, Drone.vc, Oculus VR co-founder Michael Antonov and angel investor Toivo Annus. Venture Capital Dispatch has more here.

Pronto, a year-old, London-based food delivery service, has raised $1.6 million in seed funding from Playfair Capital and Seedcamp. Other investors in the round include the London Co-Investment Fund, Ballpark Ventures, The Next Web cofounder Patrick de Laive and other unnamed angel investors. TechCrunch has more here.

Remerge, a 1.5-year-old, Berlin, Germany-based mobile app marketing platform, has raised $3 million in Series A funding led by earlier backer Point Nine Capital, with participation from VC Fonds Technologie Berlin and earlier backers German Startups Group and WestTech Ventures. The company has now raised $4 million altogether. TechCrunch has more here.

ReShape Medical, a seven-year-old, San Clemente, Calif.-based maker of non-surgical weight loss devices, has raised $38 million in Series D funding led by HealthCor Partners Management, with participation from Endeavour Vision and earlier backers SV Life Sciences, New Leaf Venture Partners, U.S. Venture Partners and Venture Investors. More here.

Resolution Games, a months-old, Stockholm, Sweden-based virtual reality games studio co-founded by Candy Crush developer Tommy Palm, has raised $6 million in Series A funding led by Google Ventures, with participation fromCreandum, Initial Capital, Bonnier Growth Media and Partech Ventures. VentureBeat has more here.

ServiceMax, an eight-year-old, Pleasanton, Ca.-based company that makes field service management software for technicians, has raised $82 million in Series F funding led by Premji Invest, with participation from GE Ventures,PTC Inc., and Cloud Apps Capital. Earlier backers also joined the round, including Emergence Capital Partners, Kleiner Perkins Caufield & ByersMayfield, Meritech Capital Partners, Adams Street Partners, Crosslink Capital, Questmark Partners, Sozo Ventures, and Trinity Ventures. The company has now raised $204 million altogether, shows Crunchbase. More here.

Spoonflower, a 7.5-year-old, Durham, N.C.-based company offering custom fabric, wallpaper and gift wrap printing, has raised $25 million in funding led byNorth Bridge Growth Equity, with participation from Bull City Venture Partners. More here.

Yuneec, a 16-year-old drone and aerospace company with offices in Hong Kong, Shanghai, Ontario, Ca., and Hamburg, Germany, has raised $60 million funding from Intel Capital. Bloomberg has more here.

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New Funds

PCH, which designs custom products for startups and Fortune 500 companies, is teaming up with Johnson & Johnson Innovation to identify and financially support  consumer health hardware startups. If you’re an entrepreneur with a health hardware startup, you can learn more about the new program — as well as apply to be part of it — here.

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Exits

Life360, a seven-year-old, San Francisco-based maker of smartphone apps that help keep families connected, has acquired Chronos Mobile Technologies, a three-year-old, San Francisco-based startup whose mobile apps passively collect data from users’ smartphones in order to highlight trends and connections between various behaviors. Terms of the deal were not disclosed. Life360 has raised roughly $76 million from investors, including DCM, Bessemer Venture Partners, and Fontinalis Partners. Chronos had raised an undisclosed amount of seed funding from Maven Ventures, Draper Associates, Major League Baseball, and Plug & Play Ventures, among others. TechCrunch has the story here.

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People

Amazon is scaling back its efforts to develop consumer devices and laying off dozens of engineers in the process. The WSJ has the story here.

Serial entrepreneur Garrett Camp is stepping in a second time to rescue his first company, StumbleUpon. Business Insider has the story here.

Former Apple CEO John Sculley has just helped launch a line of stylish smartphones for Asia-based consumers via his new company, Obi Worldphone. More here.

Y Combinator appointed a COO yesterday: Qasar Younis, a former YC alum who spent years at Google before joining the accelerator outfit as a full-time partner last year. Fortune has more here.

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Essential Reads

Watch out, Siri. Facebook has begun testing out a personal digital assistant technology dubbed “M.”

The Apple Watch isn’t a flop at all, says IDC.

Turns out almost none of the women in the Ashley Madison database ever used the site. [Pulls out world’s tiniest violin.]

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Detours

The 50 best colleges where students earn high starting salaries.

Tesla’s Model S P85D just broke Consumer Reports’ ratings system.

Ten popular grammar myths debunked by a Harvard linguist.

Street photography of Japan by Takashi Yasui.

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Retail Therapy

With Betabrand’s red-eye wrap sweater, you don’t have to look crazy anymore.

Cool clock.




VC Brian O’Malley on the Next “On Demand” Wave

bpo lrgBrian O’Malley is good at his job. He’s good enough, in fact, that two years, ago, Accel Partners plucked him out of his former firm, Battery Ventures, so he could bat for its team instead.

As venture industry watchers know, these moves are rare, and they often pay off. Two famous examples include Sequoia Capital enticing Jim Goetz to leave Accel in 2004; Goetz has since led hugely profitable deals for Sequoia, including WhatsApp. Peter Fenton, also formerly of Accel, has similarly done a bang-up job for Benchmark, which lured him away in 2006.

Earlier this week, we sat down with O’Malley at Accel’s new San Francisco office to talk about switching firms, as well as why, despite a sudden cooling toward on-demand companies, he’s as bullish as ever about them.

We’re running one part of that chat today; stay tuned for the rest.

Across both Battery and Accel, you’ve backed numerous startups that meet on-demand needs, like HotelTonight, the sports ticketing app Gametime, and the food delivery app Sprig. Are you still interested in apps that meet last-minute needs?

At Accel, we’ve done three on-demand companies. We put a small piece in Sprig. We’ve backed the [Uber-for-kids startup] Shuddle. And we invested in Din [formerly called Forage], which is kind of like Blue Apron but that leverages the whole on-demand infrastructure, so you aren’t relying on all this packaging and UPS to get food across the country.

You mean Din is piggybacking off other on-demand startups?

If you think about it, Uber, Postmates, Sidecar — they all have APIs…

More here.




StrictlyVC: August 26, 2015

It is Wednesday. We are halfway there, people!

No column today. (We have some good stuff coming your way tomorrow.)

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Top New in the A.M.

Windows 10 is evidently a giant hit for Microsoft. Corporate VP Yusuf Mehdi says that more than 75 million devices are now running the operating system, less than a month after its rollout began. ZDNet has more here.

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New Fundings

7Park Data, a three-year-old, New Hork-based analytics company that sells its information products to enterprises, has raised $3 million in Series A funding led by Mueller Ventures. More here.

Apto, a three-year-old, Denver, Co.-based maker of a commercial real estate CRM and deal management app, has raised $8 million in Series B funding led byAdam Street Partners. The Tech Bulletin has more here.

BasharSoft, the six-year-old, Cairo, Egypt-based company behind the popular, three-year-old Egyptian online recruiting platform Wuzzuf, has raised $1.7 million in Series A funding from the Sweden-based firm Vostok New Venturesand U.K.-based Piton Capital. TechCrunch has more here.

Charge Messenger, a year-old, L.A.-based messaging app that hopes to make room for itself in a crowded market that already includes WhatsApp, Line, and Viber, has raised $1.7 million in seed funding. Its investors and advisors includePelion Venture Partners, Atlas Venture, Maiden Lane Ventures,Metamorphic Ventures, Cherubic Ventures, GrandCentral founder Craig Walker, Twilio co-founder John Wolthuis, and Slicehost co-founder Matt Tanas. TechCrunch has more here.

Docady, a 1.5-year-old, Tel Aviv, Israel-based company whose iOS app lets users store and manage documents, has raised $1.5 million in funding from investors, including Pitango Ventures and Disruptive, the venture fund of Tal Barnoach, Eilon Tirosh and various former AOL video execs. TechCrunch hasmore here.

Everykey, a three-year-old, Cleveland, Oh.-based company whose access device intends to be the “master key” for users’ phone, computer, online accounts, and more, has raised $720,000 in seed funding led by IncWell, an early-stage venture firm founded in 2013 by former Chryser CEO Tom LaSorda. The company also received $195,000 from grants through the state of Ohio, including the GLIDE Innovation Fund and NCOTF. More here.

Fluxx, a five-year-old, San Francisco-based grants management platform for the philanthropic sector, has raised $10.2 million in Series A funding led byFelicis Ventures, with participation from The Kresge Foundation. More here.

Intercom, a four-year-old, San Francisco-based customer communication platform, has raised $35 million in  Series C funding led by ICONIQ Capital, with participation from earlier investors The Social + Capital Partnership andBessemer Venture Partners. The company, which has now raised $66 million altogether, has more here.

MOCACARE, a two-year-old, Palo Alto, Ca.-based maker of a heart tracker called MOCAheart, has raised $2 million in Series A funding led by the Singapore-based fund JDM, with participation from EMB International and earlier backers DCM Ventures, Lenovo Group, ONSET Ventures and Raven Ventures. TechCrunch has more here.

Onapsis, a six-year-old, Boston-based cyber security company focused on business-critical applications, has raised $13.8 million in fresh funding, shows an SEC filing. The company had previously raised $12.6 million from investors, including Endeavor Catalyst, TPG Capital, Endeavor, and .406 Ventures.

Velostrata, a year-old, Israel-based, early-stage hybrid cloud startup, has raised $14 million in Series A funding led by Norwest Venture Partners andGreylock IL Partners. TechCrunch has more here.

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New Funds

Looks like FedEx may be getting into more alternative investing, if not strict corporate venturing. A new SEC filing shows the company has set aside $150 million for a vehicle called FedEx Alternative InvestmentsMichael Brandmeyer, a VP at Goldman Sachs Asset Management who has been running a hedge fund investment vehicle for the bank called Petershill, is listed on the filing. So are Goldman Sachs managing directors Harold Hope and J. Christopher Kojima.

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Exits

Chic by Choice, a 1.5-year-old, London-based startup resembling RentTheRunway, has acquired its German competitor La Remia. Terms were undisclosed. TechCrunch has more here.

Hortonworks, the publicly traded, big data company built on Hadoop, is paying an undisclosed amount to acquire the months-old, Washington, D.C. based company Onyara, which makes scalable dataflow software. TechCrunch has more here.

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People

Former JPMorgan Chase analyst Ashish Aggarwal, a 27-year-old UC Berkeley graduate, has been charged along with two friends in an alleged insider trading scheme that netted more than $670,000 in illicit profits. The trades centered on two tech deals, including Salesforce’s acquisition of ExactTarget in 2013. CNN has more here.

Andrew Chen, an entrepreneur and popular blogger known for his focus on mobile products, metrics and user growth, has joined Uber in a role that will see him supercharge driver signups, referral programs and more. He writes about the move here.

Former Washington D.C. mayor Adrian Fenty, who joined Andreessen Horowitz as a special advisor in 2012 and joined the law firm Perkins Coie the following year as a business development manager, is positioning himself to advise more tech firms wanting to do business in Washington, suggests the Washingtonian.

“Angry Birds” maker Rovio is cutting another 260 jobs — or 38.8 percent of its 670 employees — after reducing its workforce by 110 employees roughly a year ago. TechCrunch takes a look at the news here.

Drew Vollero, a former finance executive at toy maker Mattel, is joining Snapchat as its VP of financing and acting CFO. He’ll report to Imran Khan, a former Credit Suisse banker who joined Snapchat in January as its chief strategy officer. The WSJ has the scoop here.
—–

Jobs

Osage University Partners, the venture firm, is looking to hire a tech associate. The job is in Philadelphia.

—–

Essential Reads

Apple has lost a ruling at Germany’s top civil court over a patent for unlocking smartphones with a finger swipe.

Why GoGo’s infuriatingly expensive, slow Internet still owns the skies.

Inside the fight over bitcoin’s future.

—–

Detours

Google’s eerie secret interview process for programmers.

The dog make-up tutorial you never wanted.

Impressive Oreo art.

—–

Retail Therapy

The Mercedes 2017 S-Class Cabriolet. It’s a full-size drop-top and it’s coming soon.

Lion Killer Dentist Halloween costume. (Not an endorsement, but also, notably, an actual product for sale!)




StrictlyVC: August 25, 2015

Hi, happy Tuesday, everyone!

A quick mention: As some of you have discovered, our September 16 event is now sold out. For what it’s worth, we opened up a waitlist yesterday — it’s here — and we’ll do our best to accommodate a few more of you between now and then. Thanks to those of you who purchased tickets; we’re excited to see you. We’re also very thankful to our wonderful speakers and to our friends and partners, including at Bolt and Ludlow Ventures, for helping make possible what’s going to be a very fun night!

—–

Top News in the A.M.

This Ashley Madison business is far from over. Here’s the latest.

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A Slick New 401(k) Platform, From TaskRabbit Cofounder Kevin Busque

In recent years, Kevin Busque began to notice something at TaskRabbit, the outsourced jobs marketplace that he co-founded seven years ago with his wife, and TaskRabbit’s CEO, Leah Busque.

The company employs a lot of younger employees, and according to Busque (who was long the company’s VP of Technology but also tackled HR for some time), they weren’t taking advantage of TaskRabbit’s 401(k) program.

In fact, the participation rate was somewhere in the range of 30 to 40 percent — on par with other U.S. businesses, where 401(k) participation is around just 36 percent, Busque says.

According to Government Accountability Office testimony from 2013, numerous reasons explain such low figures. Sometimes, the employer plans of small businesses are too expensive. Sometimes, employees worry they aren’t making enough money to contribute to retirement savings. Often, too, retirement plans are so confusing that employees – younger staffers especially — decide they’re not worth the hassle.

Enter Guideline Technologies, Busque’s four-month-old, San Francisco-based company, which has just raised $2 million in seed funding from New Enterprise Associates, Lerer Hippeau Ventures, SV Angel, Red Swan Ventures, BoxGroup, Xfund and 500 Startups.

Its big idea: To work with small and mid-size employers in making 401(k) plans affordable for employees — as well as dead simple to set up.

More here.

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New Fundings

BlueData, a three-year-old, Mountain View, Ca.-based company that helps customers generate virtualized big data clusters, has raised $20 million in Series C funding led by Intel Capital, with participation from Amplify PartnersAtlantic Bridge, Ignition Partners, and an unnamed strategic investor. TechCrunch has more here.

carbonTRACK, a five-year-old, Victoria, Australia-based energy-tech startup that helps users to track their energy use in their homes, has raised $1.4 million (U.S.) in seed funding from Impact Investment Fund and Wolf Capital. Startup Daily has more here.

Coursera, the three-year-old, Mountain View, Ca.-based online education service, has raised $49.5 million in Series C funding led by New Enterprise Associates. Other investors include Kleiner Perkins Caufield & ByersInternational Finance Corporation, and Times Internet Limited. Coursera expects a second closing of the round this fall. TechCrunch has more here.

EHang, a year-old, San Carlos, Ca.-based drone startup, has raised $42 million in Series B funding led by GP Capital, with participation from earlier backers GGV Capital, ZhenFund, PreAngel, Lebox Capital and OFC. TechCrunch hasmore here.

Fanatics, a 20-year-old, Jacksonville, Fla.-based e-commerce company focused on sports merchandise, has sold a minority ownership stake to private equity firm Silver Lake for $300 million, Fortune is reporting this morning. The company, acquired in 2011 by eBay spinoff Kynetic, had earlier raised $320 million in minority equity funding from Andreessen Horowitz and Insight Venture Partners and another $130 million from Alibaba Group.

FluGen, an eight-year-old, Madison, Wi.-based biotechnology company at work on a  “universal” influenza vaccine, has raised $12 million in Series A funding from Venture Investors, the Wisconsin Alumni Research Foundation, the State of Wisconsin Investment Board, and other new and existing investors led by Knox LLC. More here.

Friendsy, a 2.5-year-old, Princeton, N.J.-based student-only social network, has raised $500,000 in seed funding from Lerer Hippeau Ventures and Slow Ventures, firms that had previously provided the startup with $200,000 in funding. Princeton University also joined the round. TechCrunch has more here.

Greenhouse Software, a three-year-old, New York-based recruiting optimization platform, has raised $35 million in Series C funding led by Thrive Capital, with participation from Benchmark, The Social+Capital Partnership, and Groupe Arnault.

Scality, a six-year-old, San Francisco-based object-based storage startup, has raised $45 million in Series D funding led by Menlo Ventures, with participation from new strategic partner Broadband Tower, Scality employees, and earlier backers IDInvest, Digital Ambition Fund, Iris Capital, Omnes Capital and Galileo Partners. The company has raised $80 million to date. Silicon Valley Business Journal has more here.

Simility, a year-old, Palo Alto, Ca.-based maker of adaptive fraud prevention software, has raised $3.45 million in seed funding led by Accel Partners. More here.

Spare5, a 10-month-old, Seattle, Wa.-based company that helps businesses outsource menial tasks like tagging and describing images (the company calls itself a “snack-sized task platform”), has raised $10 million in Series A funding led by Foundry Group, Madrona Venture Group and New Enterprise Associates. TechCrunch has more here.

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New Funds

Owl Ventures — founded by Tory Patterson and Jed Smith, who previously ran the consumer goods and tech fund Catamount Ventures — has closed a $100 million fund. Venture Capital Dispatch has the story here.

Peakview Capital, the two-year-old investment arm of the management consulting giant Shengjing Group, has been investing about $1 billion a year in private equity and venture capital funds. Next year, though, it plans to invest more than $1.5 billion, and much of it in the U.S. Venture Capital Dispatch has more here.

—–

IPOs

In the U.S., there are 40 fewer deals in the IPO pipeline than this time last year. The WSJ has more here.

—–

Exits

Shopa, a nearly two-year-old, London-based social shopping site, is reportedly shutting down and its CEO is out just seven months after it raised $11 million from investors, including Notion Capital and Octopus Investments. Business Insider takes a look at what’s happening here.

—–

People

Meet Liam Casey, the founder and CEO of PCH International, otherwise known as the tech industry’s “fixer” in China.

—–

Jobs

Saints Capital, which makes primary and secondary investments in venture-backed startups, is looking for an analyst. The job is in San Francisco.

—–

Essential Reads

Aerosense, Sony’s joint-venture drone company, yesterday unveiled a prototype of the flying machines it will use to serve business customers.

Uber is testing bus-style “smart routes” with designated pick-up and drop-off areas.

—–

Detours

Wall Street: Still very white and very male.

Posture for a healthy back.

Why teenagers are the worst.

—–

Retail Therapy

Do mosquitoes love you? Try this.

OCD for breakfast.




A Slick New 401(k) Platform, From TaskRabbit Cofounder Kevin Busque

1485040In recent years, Kevin Busque began to notice something at TaskRabbit, the outsourced jobs marketplace that he co-founded seven years ago with his wife, and TaskRabbit’s CEO, Leah.

The company employs a lot of younger employees, and according to Busque (who was long the company’s VP of Technology but also tackled HR for some time), they weren’t taking advantage of TaskRabbit’s 401(k) program.

In fact, the participation rate was somewhere in the range of 30 to 40 percent — on par with other U.S. businesses, where 401(k) participation is around just 36 percent, Busque says.

According to Government Accountability Office testimony from 2013, numerous reasons explain such low figures. Sometimes, the employer plans of small businesses are too expensive. Sometimes, employees worry they aren’t making enough money to contribute to retirement savings. Often, too, retirement plans are so confusing that employees – younger staffers especially — decide they’re not worth the hassle.

Enter Guideline Technologies, Busque’s four-month-old, San Francisco-based company, which has just raised $2 million in seed funding from New Enterprise Associates, Lerer Hippeau Ventures, SV Angel, Red Swan Ventures, BoxGroup, Xfund and 500 Startups.

Its big idea: To work with small and mid-size employers in making 401(k) plans affordable for employees — as well as dead simple to set up.

More here.




StrictlyVC: August 24, 2015

Hi, everyone, welcome back!

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Top News in the A.M.

Chinese stocks plummeted earlier today, erasing gains for the year. It’s dragging our markets down with it, too. (A tumbling stock market could also mean bad juju for so-called unicorn companies.)

Need more proof that the stock market is in trouble? Apple CEO Tim Cook emailed TV personality Jim Cramer this morning to calm nervous investors.

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Having Won Over VCs, Y Combinator Turns to LPs

Last week, Y Combinator ran investors through 105 presentations by early-stage startups in a two-day show it calls Demo Day. The pace of deal-making for such events, staged every summer and winter, has grown so feverish that the incubator introduced a new wrinkle: backers could commit to plowing millions into a company by simply clicking the equivalent of an “easy button” via an online dashboard that Y Combinator created.

Many local VCs seemed too busy to notice. Brian O’Malley of Accel Partners was walking around on his phone. Jon Sakoda of New Enteprise Associates made the rounds. Hunter Walk of Homebrew looked to be taking a couple of meetings, too.

Yet there were other, more surprising guests. There, in the front row, was “Stevie” Cohen, the famed hedge fund manager. Elsewhere in the audience, a money manager for Major League Baseball sat rapt, listening to the procession of startup presentations.

Perhaps the most interesting category of attendee, though, were more traditional limited partners, who typically invest in venture and private equity funds.

Indeed, while it used to be that VCs treated their LPs a bit like mushrooms, keeping them mostly in the dark, today’s LPs want to be closer to the action, and for them, Y Combinator is Ground Zero.

More here.

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New Fundings

AppInside, a months-old, Israel-based mobile application security platform that identifies vulnerabilities, has raised $2.3 million in seed funding from Accomplice and unnamed angel investors. The Globes has more here.

Cavendish Kinetics, a nine-year-old, San Jose, Ca.-based radio chip design company, has raised $36 million from undisclosed backers in a round that brings its total funding to $105 million. The company’s earlier backers include Tallwood Venture Capital, Wellington Partners, Celtic House Venture Partners, Qualcomm Ventures, and Quadia. VentureBeat has more here.

Everything But The House, a seven-year-old, Cincinnati, Oh.-based online estate sale marketplace, has raised $30 million in Series B funding led byGreenspring Associates, with participation from earlier backers Greycroft Partners and Spark Capital. The company has now raised $43 million altogether. TechCrunch has more here.

Freee, a three-year-old, Tokyo, Japan-based accounting software-as-a-service startup led by ex-Googler Daisuke Sasaki, has raised $28.7 million in Series C funding from Recruit Holdings, Japan Co-Invest, and earlier backer DCM. The company has now raised $45.9 million altogether, shows Crunchbase. Tech in Asia has more here.

Get Smart Content, a nearly four-year-old, Austin, Tex.-based company whose tech helps marketers provide site content and messaging based on visitors’ profiles and web-based interactions, has raised $3.5 million in funding led by Origin Ventures, with participation from earlier backers Chicago Ventures and Virgo Capital. More here.

Link Labs, a 1.5-year-old, Annapolis, Md.-based company that builds long-range machine-to-machine networks for the Internet of Things, has raised $5.7 million in funding from TCP Venture Capital, the Maryland Department of Business and Economic Development, and unnamed individual investors. Capital Gazette has more here.

Mirantis, a 4.5-year-old, Mountain View, Ca.-based company that says it delivers all the software, services, training and support needed for running OpenStack, has raised $100 million in new funding led by Intel Capital, with participation from Goldman Sachs, August Capital, Insight Venture Partners, Ericsson, Sapphire Ventures and WestSummit Capital. (Last week, we told you that the company — which raised $100 million in October of last year, too — had raised at least $75 million, per a regulatory filing.) TechCrunch has more here.

RNTS Media, a five-year-old, San Francisco-based investment company that acquires and owns businesses in the mobile ecosystem, has raised 100 million euros, or $112 million, in a convertible bond. VentureBeat has more here.

SkinVision, a three-year-old, Amsterdam-based digital health startup whose smartphone tech and vision algorithms help users track changes to their moles with the aim of identifying suspicious growth, has raised $3.4 million from the European pharmaceutical firm LEO Pharma, with participation from earlier backer Personal Health Solutions Capital, a Dutch investment firm focusing on consumer-centric digital health opportunities.

Stream.io, a year-old, Boulder, Co.-based company whose development tools aim to help companies reduce the time required to build feeds for their mobile apps and websites, has raised $1.75 million in funding from investors, including Brad Feld/FG Angels, Techstars Ventures, and Tahoma Ventures, among others. BizWest has more here.

Syndax Pharmaceuticals, a 10-year-old, Waltham, Ma.-based clinical-stage pharmaceutical company focused on an inhibitor for solid tumors and hematological tumors, has raised $80 million in Series C funding led by Fidelity Management & Research Company and Delos Capital Fund, with participation from EcoR1 Capital, OrbiMed, Jennison Associates (on behalf of certain clients), Tavistock Life Sciences, Arrowpoint Partners,Cormorant Asset Management, BioMed Ventures and undisclosed mutual funds. Earlier backers Domain Associates, MPM CapitalRusnanoMedInvest and Forward Ventures also joined the round. FierceBiotech has more here.

Thread, a three-year-old, London-based e-company that’s aiming to make shopping easier for men, has raised $8 million in funding from Balderton Capital and other investors. The Sunday Times has more here.

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New Funds

Hatteras Venture Partners, a 15-year-old, Durham, N.C.-based venture firm focused on life sciences and other healthcare technologies, has raised $90 million for its fifth fund, which could reportedly reach as much as $150 million before it holds a final close. Its anchor LP is the Irish life sciences firm Malin. The firm, which specializes in the Southeast U.S., closed its last fund with $90 million. Xconomy has more here.

InnoSpring, a three-year-old, Santa Clara, Ca.-based U.S.-China tech incubator, announced this morning that its Shanghai, China-based holding company has raised $10 million in strategic funding from Chinese auto parks maker Wanxiang Group. More here.

The LA Dodgers Accelerator, a new, L.A.-based accelerator program in partnership with R/GA, is kicking off its first class today with ten sports-related tech startups. TechCrunch has the story here.

Lakestar, a Zurich, 2.5-year-old, Switzerland-based venture firm founded by longtime VC Klaus Hommels, has closed its second fund with $385 million. TechCrunch has more here.

Versant Ventures, a 16-year-old, Menlo Park, Ca.-based healthcare venture capital firm, has launched its third biotech incubator, Highline Therapeutics, in Manhattan. The firm says it’s busily forming partnerships with local academic institutions — beginning with the Weill Cornell Medical College — and that several other formal programs will be announced over the coming months. Carlo Rizzuto, who’d joined as Versant from Novartis Pharmaceuticals in 2012, will manage the firm’s newly established New York base. Xconomy has more here.

—–

People

Apple has hired senior engineer Jamie Carlson from electric car maker Tesla Motors, as part of its effort to build a team of experts in automated driving. Reuters has the story here.

Talk about a change in direction: Stephen Colbert’s first handful of “Late Show” guests will include SpaceX and Tesla CEO Elon Musk and Uber CEO Travis Kalanick. The Verge has more here.

Silicon Valley companies like may provide companies plenty of perks, but enough child care (including day care centers so employees can remain close to their toddlers) is not one of them yet, argues Buzzfeed.

—–

Jobs

Hulu is looking to hire a business development and partnerships manager. The job is in Santa Monica, Ca.

—–

Essential Reads

In Uber’s quest to Win over China, Tencent blocks the way.

How not to commit fraud when raising money, by Andreessen Horowitz.

—–

Detours

No, you don’t have to drink eight glasses of water a day.

—–

Retail Therapy

A “paparazzi proof” penthouse in L.A. Cost: $50 million.

Action hero beach blankets. (Heh.)