Happy Tuesday, everyone!
Top News in the A.M.
Wow. Oscar, the nearly three-year-old, New York-based health insurance company, has raised $400 million in funding led by Fidelity Investments at a valuation of $2.7 billion, reports Forbes. As its report notes, that’s roughly $1 billion more than when the startup last raised funding — $32.5 million from Google Capital — in September.
“Tough Sledding” for New Funds in 2016, Says LP
Most institutional investors are notoriously circumspect. Chris Douvos is not like most institutional investors. In fact, Douvos, a managing director with Venture Investment Associates — a fund of funds group that commits capital to venture capital, growth capital, and private equity groups — is very opinionated comparatively.
It’s a refreshing quality, particularly when looking for insights into how the people who fund venture firms are feeling about the industry right now. And according to Douvos, they’re nervous, including because their venture customers are coming back to them a lot sooner for capital than they once did.
He explained during a chat on Friday, which we’ve lightly edited for length.
There’s a lot of nervousness out there suddenly. Are you feeling it at VIA, or does it seem to you like this will pass?
A lot of people are worried right now that we’re in a game of musical chairs, and no one wants to be standing when the music stops. People think that 80 to 90 percent of the billion dollar companies will end up getting liquid for less than a billion dollars, and I think there’s truth to that. We’ve been in a market where capital has been relatively cheap, and we’re looking ahead to a market where capital will get more expensive potentially.
So VCs should be selling before things fall further? We wrote about secondary firms last week, and they say they’re getting a lot of calls.
CD: LPS are definitely yelling at VCs to put some ‘moolah in the coolah.’ They’re hammering their GPs to turn some of that [paper] value into actual cash because of what I call the exit sphincter. When the capital isn’t coming back [to institutional investors], it interrupts the flow of things. We give out money expecting it will come back with profits in a reasonable amount of time. When it doesn’t, we can’t put more money into the asset class because a.) we’re at the top of our allocation [to venture capital and b.) we’re out of money.
We have a down-trending public market at the same time that [our] private investments are really inflated [and not exiting], so LPs are getting doubly crushed.
But you saw some money back. For example, one of your funds is True Ventures, which made an apparent fortune on its early check to Fitbit.
We have seen money from Fitbit and there’s more on the way. We’re in some great funds. But now, all the funds we love are coming back in 2016.
Betterview, a two-year-old, San Francisco-based company that uses drones to collect data that is then analyzed by remote roofing experts, has raised $1.5 million in seed funding led by Arena Ventures. More here.
Namely, a four-year-old, New York-based HR software platform for mid-market companies, has raised $30 million in Series D funding led by Sequoia Capital, with participation from Matrix Partners, True Ventures and Greenspring Associates. Fortune has more here.
MasterClass, a three-year-old, San Francisco-based online education platform that’s luring some of the most talented professionals in their respective fields to teach, has raised $15 million in Series B funding led by New Enterprise Associates. Javelin Venture Partners also joined the round, which follows a previously undisclosed $4.5 million Series A led by Javelin. Other investors in the company include Bloomberg Beta, Novel TMT Ventures, Advancit Capital, Harrison Metal, WME Ventures, Downey Ventures, and numerous individual investors, Casper CEO Philip Krim, actor Kevin Spacey and singer Usher. We talked with the company’s founders here.
Mintos, a 1.5-year-old, Riga Latvia- based peer-to-peer lending marketplace, has raised €2 million ($2.2 million) in seed funding from Skillion Ventures. TechCrunch has more here.
Raw Pressery, a three-year-old, Mumbai, India-based home delivery service for cold-pressed juices in India, has raised $4.5 million in Series B funding from Sequoia Capital, Saama Capital and DSG Consumer Partners. TechCrunch has more here.
Razer, an 18-year-old, Irvine, Ca.-based Carlsbad, Ca.-based maker of interactive gaming hardware, has raised $75 million in Series C funding at a $1.5 billion valuation, says TechCrunch. The funding comes in part from China, specifically the Digital Grid subsidiary of IT company Hangzhou Liaison Interactive. TechCrunch has more here.
Reflektion, a four-year-old, San Mateo, Ca.-based company that uses machine learning to recommend e-commerce products to shoppers so they’re shown just-right products in real time, has raised $18 million in Series B funding led by Battery Ventures, with participation from Hasso Plattner Ventures and earlier backer Intel Capital. More here.
TaskBob, a year-old, Mumbai, India-based home services startup that pairs customers with servicemen, has raised $4.5 million in Series A funding led by IvyCap Ventures, with participation from earlier backers Orios Venture Partners and Mayfield. TechCrunch has more here.
Team8, a two-year-old, Tel Aviv, Israel-based cybersecurity startup, has raised $23 million in Series B funding, including from AT&T, Accenture, Nokia,Mitsui & Co. and Temasek. The companies earlier backers include Cisco, Alcatel-Lucent, Bessemer Venture Partners, Marker and Innovation Endeavors. TechCrunch has more here.
500 Startups has just launched two micro funds: A $25 million fintech fund, to be run by Sheel Mohnot and 500 Startups cofounder Dave McClure, and a $25 million India fund, to be run by Pankaj Jain and McClure. More here and here.
Battery Ventures, a 33-year-old investment firm with offices in San Francisco, Menlo Park, Boston, and Herzliya, Israel, has raised $950 million across two new funds: a main fund, Battery Ventures XI, which is a $650 million pool, and a side fund that will support the company’s larger investments, which closed with $300 million. The firm previously similarly closed a $650 main fund and a $250 million side fund in 2013. More here.
Ativision Blizzard today announced that it has closed its acquisition of King Digital for $5.9 billion, a deal that it says makes it the largest game network in the world with more than 500 million users. TechCrunch has more here.
Publicly traded ResMed is paying $800 million in cash for Brightree, a 14-year-old, Lawrenceville, Ga-based maker of business management and clinical software that Battery Ventures began backing in 2008. (Battery was its majority owner as of yesterday.) The Atlanta Business Chronicle has more here.
Synacor, a company that provides monetization services for ISPs, carriers and others that offer content services, has acquired Technorati, once a leading authority for ranking important blogs and other sites online, for $3 million in cash. TechCrunch has more here.
Bill Gates is siding with the FBI and says Apple should unlock the phone of the San Bernardino shooter. He has plenty of company, seemingly. Pew Research Center has just released a study on the dispute between the FBI and Apple. Fifty-one percent of Americans think Apple should assist the FBI and unlock the iPhone 5c, while 38 percent of Americans side with Apple. Facebook CEO Mark Zuckerberg is meanwhile siding with Apple on this one.
Kabam, a nine-year-old, San Francisco-based games developer, is letting go of nearly 8 percent of its employees in order to cut its burn rate. VentureBeat has more here.
Hearst Health Ventures, a member of the Hearst Organization, is looking for a venture capital associate. The job is in South San Francisco.
Venture capital firm Fenox Venture Capital in San Jose, Ca., has agreed to pay $331,269 in back wages after the U.S. Department of Labor found the company misclassified 56(!) workers as unpaid interns. The WSJ has more here.
Time Inc., is reportedly interesting in joining the fray of Yahoo suitors. Bloomberg has more here.