Hi, everyone, and welcome back! Hope you had terrific break. We’re still a little zonked from ours.
Quick mention: we head to London a little later this week for TechCrunch Disrupt. We’re excited; among our on-stage interviews is a sit-down with Skype and Atomico founder Niklas Zennström. (The rest of the line-up is great, too.) As longtime readers know, when we travel, SVC grows a little more abbreviated, but we’ll still be publishing.:)
Top News in the A.M.
Samsung Electronics‘ board will reportedly consider splitting the conglomerate into two tomorrow, as proposed by activist hedge fund Elliott Management. More here.
A Longtime VC on the Merits of Not Swinging for the Fences
There’s a winner-take-all mentality in Silicon Valley. Unfortunately, it has seemingly distorted the thinking of countless entrepreneurs who’d likely be better off running smaller companies — and giving up less ownership to investors in the process. While funding announcements are widely celebrated as milestones, the reality is that founders often wind up with far less than their investors, and in plenty of cases, they can sell a company and make almost no money at all.
It’s a point that longtime VC Jodi Sherman Jahic was eager to make recently when we met up for coffee in San Francisco. In fact, Jahic — who cofounded the venture firm Aligned Partners with Susan Mason (who previously spent 15 years with Onset Ventures) — focuses exclusively on enterprise companies that are ruthlessly focused on capital efficiency and whose founders will turn away bigger checks, knowing they could be shooting themselves in the foot otherwise.
More from our chat follows, edited for length.
You were a Kauffman Fellow, then spent something like seven years as a principal at Voyager Capital. Why start your own firm?
At the time, we were managing a $200 million fund, and [by 2007, 2008] I started to think that even that might be too much for some companies. With $200 million, you’re probably investing in 20 companies, committing up to $10 million in each, and at that level of risk, you’re likely to syndicate each deal. So, if every company can’t take at least $20 million and usually quite a bit more, then it’s probably not that interesting [to the $200 million fund]. And the problem gets larger as the fund gets larger.
Did you see that a lot?
Absolutely. When a company is doing just fine, everyone wants to put their money into it, which is ironic because it only generates less cash-on-cash returns for everyone. Also, the venture world tells us this story that one-third of venture-backed companies will become an abject loss and one-third will go sideways and one-third will be hits. So founders reason that two-thirds of the time, they’ll be fine. But that’s not what happens. The majority of the time — something like 75 percent of the time, according to [the benchmarking company] Sand Hill Econometrics — founders who take venture money get not a dime. And the venture industry has made it worse by taking some opportunities that could be more efficient and generate returns for everybody and turning them into lets-swing-for-the-fences types of things. And not every company is going to grow up to be that.
People don’t realize this, but there is zero correlation between how much money goes into a company and its exit value.
You struck out on your own years ago, when it was even harder for a woman to form a venture fund than today. How did you get things rolling?
I started with a pledge fund.
New Fundings
8i, a 2.5-year-old, Wellington, New Zealand-based virtual reality startup, has raised $20.4 million in Series B funding, shows an SEC filing first flagged by Fortune. Looks like the capital is coming at least in part from from Time Warner Investments and earlier backer Founders Fund.
Agricool, a year-old, Paris, France-based argiculture startup that grows and produces fruits and vegetables inside shipping containers, has raised €4 million ($4.3 million) in funding from the newly launched venture firm Daphni, as well as entrepreneurs Henri Seydoux and Jean-Daniel Guyot. TechCrunch has more here.
Cashboard, a two-year-old, Berlin, Germany-based wealth management startup, has raised €3 million ($3.1 million) in Series A funding led by Digital Space Ventures, with participation from earlier backers Redalpine Capital, Earlybird Ventures, and 500 Startups. Crowdfund Insider has more here.
Galera Therapeutics, a seven-year-old, Malvern, Pa.-based clinical-stage biotechnology company developing new treatments for cancer patients, has raised $15 million in new funding funding led by Sofinnova Ventures. Earlier backers also joined the round, including New Enterprise Associates, Novartis Venture Fund, Novo Ventures, Correlation Ventures, Enso Ventures and Galera Angels. More here.
Hornet, a five-year-old, San Francisco-based gay social network, has raised $8 million in funding led by the Shanghai-based venture firm Ventech China. VentureBeat has more here.
ItemMaster, a seven-year-old, Chicago-based company that creates product information tools for food brands and retailers, has raised $7.5 million in Series A financing led by Edison Partners, with participation from Chicago Ventures. More here.
Knowlarity Communications, a seven-year-old, Gurgaon, India-based telephony company, has raised roughly $20 million in Series C funding led by the Dubai-based private equity firm Delta Partners Capital, with participation from earlier backers Mayfield Fund and Sequoia India. LiveMint has more here.
Kymab, a seven-year-old, Cambridge, U.K.-based company that’s developing human monoclonal antibody therapeutics, has raised $100 million in Series C funding led by ORI Fund. Other participants in the round include Wellcome Trust, the Bill & Melinda Gates Foundation, Shenzhen Hepalink Pharmaceutical, Malin Corporation, CF Woodford Equity Income Fundand Woodford Patient Capital. More here.
Proficio, a six-year-old, Carlsbad, Ca.-based cybersecurity company, has raised $12 million in funding led by the private equity firm Kayne Anderson Capital Advisors. The San Diego Business Journal has more here.
SafeDK, a two-year-old, Herzelia, Israel-based provider of a mobile SDKs management platform, has raised $3.5 million in Series A funding led by StageOne Ventures, with participation from Samsung Next Tel Aviv, Marius Nacht, Kaedan Capital, and angel investor Leon Waisbein. NoCamels has more here.
Shockwave Medical, a seven-year-old, Freemont, Ca.-based startup focused on treating calcified cardiovascular disease, has raised $45 million in Series C funding led by Sectoral Asset Management, with participation from T. Rowe Price Associates and earlier backers Sofinnova Partners, Venrock, RA Capital, Deerfield, and Ally Bridge Group, among others. More here.
Sightbox, a two-year-old, Portland, Or.-based on-demand contact lens startup, has raised $1.8 million in funding led by Rogue Venture Partners, with participation from Jumpstart Foundry, Portland Seed Fund and VistaRiver Healthcare Solutions. More here.
Silexica, a two-year-old, Palo Alto, Ca.-based startup whose software development tools make it easier for electronic device manufactures to deploy multicore processors, has raised $8 million in Series A funding led by Merus Capital, with participation from Paua Ventures and earlier backers Seed Fonds Aachen and DSA Invest.
Soul Machines, a months-old, Auckland, N.Z.-based developer of human-like avatars, has raised $7.5 million in Series A funding led by Horizons Ventures, with participation from Iconiq Capital. The New Zealand Herald has more here.
Stripe, a six-year-old, San Francisco-based company that lets websites and apps incorporate payments services by way of an API and a few lines of code, has raised $150 million in Series D funding at a whopping $9.2 billion post-money valuation. (It was valued at $5 billion roughly a year ago.) The round was led by CapitalG (formerly known as Google Capital) and earlier backer General Catalyst Partners. Other participants in the round include earlier investors such as Sequoia Capital. Stripe has now raised $460 million altogether. TechCrunch has more here.
Wynd, three-year-old, Nova Scotia, Canada-based startup whose software aims to replace existing point-of-sale services in use at restaurants and stores, has raised a $31.7 million Series B round (€30 million) from Sodexo Ventures and earlier backer Orange Digital Ventures, with Bpifrance also participating. TechCrunch has more here.
Zola, a three-year-old, New York-based wedding registry site co-founded by serial entrepreneur Kevin Ryan, has raised $25 million in Series C funding at a $200 million valuation, says TechCrunch. It says Lightspeed Venture Partners led the round. More here.
New Funds
BMW is increasing the size of its five-year-old venture capital fund, BMW i Ventures, to 500 million euros (roughly $533 million) from 100 million euros, the German business daily Handelsblatt reported yesterday, citing an interview with one of the carmaker’s board members. The fund is also relocating from New York to Silicon Valley. Reuters has more here.
Draper Nexus, a five-year-old, early-stage venture firm based in San Mateo, Ca., and Tokyo, Japan, has raised $175 million for its second fund. TechCrunch has more here.
Playground Ventures, a Palo Alto-based venture firm run by Android co-founder Andy Rubin, is looking to raise up to $500 million for its second fund, shows an SEC filing. Rubin’s name is listed alongside fellow Playground founders Peter Barrett, Matt Hershenson and Bruce Leak. This follows a $300 million funding round that closed just about this time last year. TechCrunch has more here.
Seraphim Capital, a 10-year-old, U.K.-based venture fund, is looking to raise up to £80 million ($100 million) for an early-stage venture fund focused on outer space-related software and hardware opportunities. The firm has already garnered a £30 million ($37.5 million) commitment from the British Business Bank (made under its Enterprise Capital Funds program), along with commitments from unnamed “international space companies, family offices and individual investors.” More here.
SV Angel, a seven-year-old, seed-stage fund known for making a wide number of small bets (including on Pinterest and Airbnb) has closed its sixth fund with just over $53 million, says partner Topher Conway. The firm closed its predecessor fund with $75 million in 2014. More here.
IPOs
AppDynamics — an eight-year-old, San Francisco-based company that makes performance management tools for app makers and has raised more than $300 million from investors, including Goldman Sachs, Greylock Partners, and Lightspeed Venture Partners — has postponed its planned IPO, bumping it from next month into next year. The WSJ has more here.
Exits
Airbnb is reportedly in advanced talks to acquire a Chinese home rental startup called Xiaozhu.com that has raised more than $150 million from investors, including Morningside Ventures. Bloomberg has more here.
Beme, the social media app startup cofounded by famed vlogger Casey Neistat, has been acquired for an undisclosed amount by CNN, which is bringing Neistat in-house along with Beme’s 11 other employees. The New York Times has more here.
SkyScanner, a 13-year-old, Edinburgh, Scotland-based global travel search site that had raised $200 million from investors, including Sequoia Capital and Scottish Equity Partners, has been acquired by Chinese online travel giant Ctrip for £1.4 billion in predominately cash, or approximately $1.74 billion. TechCrunch has more here.
People
Grab, the company rivaling Uber in Southeast Asia, is losing its first CFO just seven months after her appointment, the company confirmed. TechCrunch has more here.
Peter Thiel is reportedly pulling a principal at Founders Fund — Trae Stephens — into President-elect Donald Trump’s transition team, which Thiel himself officially joined two weeks ago. More here.
Tomorrow is #GivingTuesday, and leaders across nonprofit and for-profit industries will be using social media to promote the end-of-year giving season. Recode has more here.
Essential Reads
India’s largest ride-hailing app Ola, which is reportedy raising a new round of funding led by Japan’s SoftBank, will take a hit on its valuation in the process, reports the Economic Times. It says the new round will value Ola at anywhere between $3 billion and $4 billion. The company, which reportedly still dominates the ride-hailing industry in India with about 60 percent market share, was last valued at $5 billion when it raised $500 million in November 2015.
The untold story of Vergence Labs, a once-struggling startup whose technology now powers Snap‘s “Spectacles.”
How China’s lightning-fast copycats are ruining Kickstarter campaigns.
The rapid ascent Otto, the self-driving truck startup, involved a high-stakes gamble that could have landed the startup in legal hot water rather than the arms of Uber. BackChannel looks at what happened.
Detours
The best five Cyber Monday flight deals.
Watch a helicopter pilot nail a ship landing in a ridiculous storm.