Hello, lovely and talented readers, happy Wednesday!
We’ll be on a plane to New York early tomorrow for TechCrunch Disrupt, so we can’t publish StrictlyVC. But look for your next issue Friday. See you then.:)
Top News in the A.M.
It’s “Star Wars” Day again (we’re told). Just in time to celebrate, a new video marries the magic of the Force with the music of sold-out Broadway sensation “Hamilton.” The Washington Post has more here.
eShares Puts the Screws to 409A Valuation Firms
very startup that gives employees option grants has to comply with 409A, a section of the U.S. tax code that was established in late 2004 and basically states that a company has to pay tax on some of the compensation it defers, including those options. The 409A valuations are a way to get to their value.
Unfortunately, for much of the last 12 years, such 409A audits have proved expensive, not to mention incredibly confusing. Accounting specialists initially charged startups north of $10,000 per audit, until a a sudden glut of specialists drove prices down fivefold. Meanwhile, many founders still don’t know precisely how valuation firms arrive at a particular number. Appraisers typically look at a company’s costs (meaning its assets and liabilities), its income, and/or the valuations of companies with similar financial and operating characteristics. But there’s little transparency into the whole process.
That’s not accidental or necessary, says Henry Ward, the cofounder and CEO of eShares, an 80-person Mountain View, Ca., startup that now works with more than 4,000 companies, digitizing their paper stock certificates along with stock options, warrants, and derivatives to create a real-time picture of who owns what. In fact, starting today, eShares is charging just $25 a month for its own wholly transparent 409A service. It’s also open sourcing its valuation models for startups that might like to manage the process themselves.
We talked with Ward yesterday about the new service and what it may presage.
There’s so much confusion about 409A valuations, including how they compare with a company’s fair market value. Is there an easy way to understand how the two work together?
In theory, and arguably in practice, a 409A valuation tends to run at a discount of 25 percent to the [value of a company’s] preferred shares. But as a company matures and heads towards an IPO, the 409A starts to converge toward the price that [investors have assigned it in its most recent funding round].
Why do you think confusion around 409A valuations has persisted for so long?
It’s consulting. When the IRS created this standard in the mid 2000s, they documented a set of models that you could use that would pass its requirements. Financial analysts got a hold of these models and they basically turned them into a trade secret. As more people ran into the business [to service startups], prices fell, but nobody solved the tech piece of it. Everyone was just hiring people to do cheaper and cheaper work.
Does that include you? You started offering 409A valuations as part of a bundled service a couple of years ago.
Appboy, a five-year-old, New York-based mobile marketing automation platform, has raised $20 million in Series C funding led by Battery Ventures, with participation from earlier backers Blumberg Capital, Bullpen Capital, IDG Ventures, InterWest Partners, Metamorphic Ventures and Rally Ventures. VentureBeat has more here.
ChargePoint, a nine-year-old, Campbell, Ca.-based electric vehicle charging network, has raised $50 million in funding led by Linse Capital, with participation from earlier backers Braemar Energy Ventures and Constellation Energy. Automotive News has more here.
DFLabs, an 11-year-old, Milan, Italy-based company that makes automated cyber incident management and response software, has raised $5.5 million in Series A funding from Evolution Equity Partners. More here.
Farfetch, an eight-year-old, London-based a fashion e-commerce platform that connects consumers with a curated global network of boutiques and bigger brands, has just raised $110 million in Series F funding led by new investors Temasek, IDG Capital Partners and Eurazeo, with the participation of earlier investor Vitruvian Partners. The company has now raised roughly $305 million. This new round was reportedly sewn up at a post-money valuation of $1.5 billion. The Business of Fashion has the story here.
Full Measure Education, a three-year-old, Washington, D.C.-based mobile platform for post-secondary student communication and administrative management needs, has raised $6 million in Series B funding led by Safeguard Scientifics. More here.
Haven, a two-year-old, San Francisco, Ca.- and Singapore-based programmatic logistics platform that automates freight procurement for commodity traders, food producers, and CPG companies, has raised $11 million in Series A funding led by Spark Capital. Other participants include AITV and earlier backers O’Reilly Alpha Tech Ventures, Data Collective and First Round Capital. More here.
IDEAYA Biosciences, a year-old, South San Francisco, Ca.-based oncology-focused biotechnology company, has raised $46 million in Series A funding from 5AM Ventures, Canaan Partners, Celgene, WuXi Healthcare Ventures, Novartis Institute of Biomedical Research and Alexandria Real Estate Equities. Biospace has more here.
Job Market Maker, a three-year-old Charleston, S.C.-based online recruitment startup, has raised $1 million in Series A funding from Charleston Angel Partners. More here.
Jolla, a five-year-old, Helsinki, Finland-based mobile OS maker whose Sailfish licensing business aims competes with Android by offering OEMs the ability to tailor the mobile platform to their needs, has raised $12 million in Series C funding from undisclosed investors. TechCrunch has more here.
LiveNinja, a five-year-old, Miami, Fla.-based live video chat marketplace that connects users with topic experts, has raised $2 million in fresh funding from Scout Ventures, Anzu Partners, Comcast Ventures Catalyst Fund, Citi Ventures, Accelerated Growth Partners and SeedInvest. The company has now raised $3.5 million altogether. TechCrunch has more here.
OutboundEngine, a 3.5-year-old, Austin, Tex.-based automated marketing platform for small business owners, has raised $16 million in Series C funding led by S3 Ventures, with participation from Silverton Partners, Noro-Moseley, Harmony Partners, Altos Ventures and Capital Factory. The company has now raised $33.8 million to date. More here.
Passport, a six-year-old, Charlotte, N.C.-based company specializing in enterprise business applications and payments for parking and transportation, has raised $8 million in Series B funding led by MK Capital, with participation from earlier backers Grotech Ventures and Relevance Capital. The company has now raised $17 million altogether. TechCrunch has more here.
PowWow Mobile, a 3.5-year-old, San Francisco-based enterprise app mobility startup, has raised $4.3 million in new funding led by Vertical Venture Partners, with participation from IT-Farm, OurCrowd, Prabhakar Goel and VKRN. More here.
Rebagg, a two-year-old, New York-based online marketplace for previously owned designer handbags, has raised $8 million in Series A funding led byGeneral Catalyst Partners, which also led the company’s $4 million seed round last August. Other earlier investors to join the new financing include FJ labs, Metamorphic Ventures, Crosslink Capital, Founder Collective, Big Sur Ventures and Necotium. TechCrunch has more here.
Roli, a seven-year-old, London-based music technology company, has raised $27 million in funding led by Foundry Group, with participation from BGF Ventures, Founders Fund, Balderton Capital, FirstMark Capital, Index Ventures, Horizons Ventures, and Universal Music Group. TechCrunch has more here.
VTS, a five-year-old, New York-based commercial real estate leasing and asset management platform, has raised $55 million in Series C funding led by Insight Venture Partners, with participation from OpenView Venture Partners andTrinity Ventures. TechCrunch has more here.
Winc, a 4.5-year-old, L.A.-based online wine retailer that’s been known until now as Club W, has raised $17.5 million in new funding co-led by Shining Capital and earlier investor Bessemer Venture Partners. TechCrunch has more here.
Adobe yesterday announced plans to acquire Livefyre, a service that’s probably best known for its online commenting system. Terms of the deal aren’t being disclosed. Livefyre had raised $67.3 million from investors, shows CrunchBase. Adobe participated in its last $47 million round (as did Salesforce), so the two companies were already quite familiar with each other. TechCrunch has more here.
Pinterest, the popular, San Francisco-based visual bookmarking tool, has acquired URX, a three-year-old, San Francisco-based adtech startup whose platform helps consumers to discover content inside mobile apps. Terms of the deal weren’t disclosed. URX had raised $15 million from investors, shows CrunchBase.
It’s graduation time; this year, Oracle cofounder Larry Ellison is giving the commencement address at USC.
Apple has hired famed robotics expert Yoky Matsuoka, one of the co-founders of Google’s X lab and former head of technology at Nest, to work on the iPhone maker’s health projects. Fortune has more here.
Octopus Ventures in London has hired as an investor mobile gaming entrepreneur Eyal Rabinovich, who’s best known for co-founding the Israeli game publisher PlayScape.
In case you missed all the coverage (we love our tech execs!): 23andMe CEOAnne Wojcicki attended the Met Gala on Monday night with New York Yankee slugger Alex Rodriguez. They arrived in the same car as Wojcicki’s ex-husband, Google co-founder Sergey Brin, and his girlfriend of the last year,Nicole Shanahan, who founded the patent-technology company ClearAccesIP. Tesla Motors and SpaceX CEO Elon Musk was also at the gala, with his glamorous mama. So was Uber CEO Travis Kalanick, Apple CEO Tim Cook, Emerson Collective CEO Laurene Powell Jobs, Instagram CEO Kevin Systrom, and Yahoo CEO Marissa Mayer. Business Insider has more pics here.
NextEv, a Chinese car company taking on Tesla (and headed up by Cisco’s former chief strategy officer, Padmasree Warrior), is looking to hire a corporate development associate. The job is in San Jose, Ca.
Apple is revamping its streaming music service, in response to customers not liking it very much.
The fascinating correlation between the first class cabin and air rage.
That baby is sizing you up.
Beautiful Kung Fu visualizations.
A precision-engineered humidor, for your herb(s).