Hi, happy Friday, everyone, and thanks to those of you who grabbed a ticket yesterday to our upcoming event on Wednesday, February 8! We still have a bunch of seats left, but they’ll start to go fast, just fyi.
Hope you have a terrific weekend — enjoy those holiday parties — and we’ll see you Monday.:)
Top News in the A.M.
The highly hyped demonstration videos of Magic Leap, the secretive augmented reality company, were actually created by a special effects studio, according to a new piece from The Information that spells out what a lot of industry insiders have long speculated: that the promises of the well-funded startup are far from being realized. Magic Leap’s company’s founder and CEO, Rony Abovitz, has since tweeted that “what’s coming next” from Magic Leap is “the best part.” (Natch.)
Formation 8 Founder Jim Kim Has a New Fund in Builders
Jim Kim, who most recently cofounded the venture firm Formation 8, is launching a brand-new venture firm called Builders that looks to be raising a $200 million fund, judging by a recent SEC filing. His cofounder is Paul Lee, who left the Chicago venture firm Lightbank in 2014 and last year launched a startup studio called Roniin that we wrote about last year.
It isn’t a surprise to see Kim starting something new. After a tumultuous 2015, Formation 8 had decided against raising a third fund.
We wondered whether Builders meant that Lee was similarly moving on from Roniin, however, so we recently caught up with both men to ask that question, as well as ask how they came together, and what Builders — which already has an office in both San Francisco and Chicago — plans to do differently than the hundreds of other venture firms up and running. (We also asked about the pair’s fundraising progress, but they declined to comment, citing SEC regulations.)
More from that conversation follows.
How well do you two know each other? When did you meet?
PL: We go back 15 years. We both started our careers at GE Capital. Jim was building up its IT practice; I was building up its media practice. But we spent time talking about deals, we’d get drinks. We’ve probably talked monthly ever since then.
We did go off and build our own platforms. Jim built Formation 8. I ran Lightbank. But he was my first call in helping shape Roniin and he was the first investor in the platform and in five of the companies that have come out of the platform since.
Roniin’s big idea was to take the ideas of overly busy entrepreneurs, find first-time founders to bring them to life, then give both a big chunk of the new company — along with a little seed capital from Roniin. What happens to it now that you’re starting a new fund?
PL: It’s being rebranded as Builder Studios, and it will be working with the startups that we fund. [The $3 million seed round it raised] was used to prove out the concept and it worked; we learned how to run that P&L and run that infrastructure without a massive amount of burn. Now, we want to use that team of experts we’ve assembled [including engineers, sales personnel, marketers, and back office operations employees] to support our portfolio companies.
So you’re creating more of a platform for your new fund. And will the people at the studio get equity in these startups? How does compensation work across the fund and the studio?
JK: We aren’t commenting publicly on that right now. But when you look at the data, one out of every three seed-funded companies was able to raise a Series A round a few years ago; now, that percentage is much smaller. So there’s this opportunity to help an entrepreneur who has a good technical team to find product-market fit and help give them multiple shots on the goal. We aren’t talking about PR or HR. We think instead startups can benefit greatly from working alongside this studio and accessing this group of operators [to improve everything] from their UI/UX to product development.
How much money will you be plugging into your portfolio companies?
New Fundings
AutoGraph, a five-year-old, Seattle-based startup that provides user generated profiles as a service to help marketers better understand customers, has raised $4.7 million in Series B funding led by Rally Capital, with participation from Voyager Capital. More here.
strong>Crossover Health, a six-year-old, Aliso Viejo, Ca.-based company that designs and delivers membership-based primary health and secondary care services to self-insured employers, has raised $92 million from a single healthcare fund, Gurnet Point Capital. More here.
Elysium Health, a two-year-old, San Francisco-based company behind what it describes as an anti-aging pill, has raised $20 million in Series B funding led by General Catalyst Partners, with participation from Robert Nelson of ARCH Venture Partners. TechCrunch has more here.
Eutilex, a South Korea-based biopharmaceutical company that’s focused on treating cancers and autoimmune diseases, raised $18.9 million in Series A funding from DS Asset Management, Kolon Investment, G.N. Tech Venture, and SNU Bio Angel. FierceBiotech has more here.
Eversound, a two-year-old, Boston-based wireless headphone technology company that’s helping older adults tackle hearing loss, has raised $3 million in seed financing from Shelter Group, Red Bear Angels and 10X Ventures. More here.
Nantero, a 16-year-old, Woburn, Ma.-based nanotechnology company that’s using carbon nanotubes to develop semiconductor devices, including memory and logic devices, has raised $21 million in new funding led by Globespan Capital Partners, along with other unnamed investors. VentureBeat has more here.
Nubank, a three-year-old, Sao Paulo, Brazil-based company that offers a “no-fee” credit card managed via mobile app, has raised $80 million in Series D funding led by DST Global, with participation from earlier backers Sequoia Capital, Tiger Global Management, Founders Fund, and QED. Dealbook has more here.
Podotree, a six-year-old, Seoul-based affiliate of the mobile and web giant Kakao, has raised around $107 million in funding led by Anchor Equity Partners, with participation from the Singapore investment fund GIC and numerous other undisclosed investors. Podotree manages two of Kakoa’s fast-growing services: its social network and Daum Webtoons, a digital comics service (which are broadly becoming more popular in Korea, notes TechCrunch). More here.
Sixa, a year-old, San Francisco-based full computer that operates right from the cloud via a client app, has raised $3.5 million in seed funding led by Tandem Capital. TechCrunch has more here.
Vapogenix, a decade-old, Houston, Tex.-based company that makes non-opioid medicine for localized pain, has raised $8.2 million in new funding from Pamoja Capital, among other investors. More here.
Vesper, a seven-year-old, Boston-based electronics startup that’s aiming to make durable, low-power microphones, has raised $15 million in Series A round of funding led by Accomplice, with participation from Amazon’s Alexa Fund, AAC Technologies, Hyperplane, Miraenano Tech and other undisclosed investors. TechCrunch has more here.
(Other) New Funds
GAN, a six-year-old, Denver-based company that publishes industry data about accelerators their best practices, looks to be raising its own venture fund, judging by an SEC filing that lists a $10 million target. More here.
Warburg Pincus is raising a China-focused private equity fund, shows a new SEC filing that doesn’t list a target. The WSJ had reported back in March that the firm was looking to $2 billion for such a fund in order to more quickly “cut deals” in the country.
Time Inc., the New York City-based media company, has hired Morgan Stanley and Bank of America to field takeover or partnership interest, reports the WSJ. More here.
People
Big changes at the Honest Company, which is laying off 80 employees, as well as parting ways with CFO and COO David Parker and cofounder Sean Kane. The L.A. Times (via WWD) has more here.
Sean Rad is stepping away again from his role as CEO of the online dating company Tinder, to head up a new M&A arm of the company called Swipe Ventures. Meanwhile, Match Group CEO Greg Blatt is taking over Tinder. Recode has more here.
Peter Thiel has apparently proposed that Jim O’Neill, a managing director at Thiel’s Mithril Capital Management (who we’ve worked with on stories and who we like on a personal level but we don’t think is so much an active investor as an advisor), run the FDA(!). Bloomberg has more here.
Yik Yak, not so long ago a hot social media app known for allowing users to post messages anonymously to each other based on their location, has laid off 60 percent of its employees amid slowed momentum. The company has raised $73.5 million from investors, including Sequoia Capital. The Verge has the story here.
Jobs
Microsoft is looking to hire a senior business development manager. The job is in San Francisco.
Bloomberg drills into Alphabet in a highly readable piece. Says one former top Google executive to the outlet: “No one wants to face the reality that this is an advertising company with a bunch of hobbies.”
Not so unsurprisingly, Michigan just became the first state to pass comprehensive self-driving regulations. Recode has more here.
How is Twitter going to deal with Trump
Detours
The touching new Christmas ad that’s been making the entire internet cry this week. (Yes, us, too.)
Disney is creating animatronic figures that can follow you (so hurry up and get to Disney before it turns into Westworld).
Better scratch those Apple AirPods off your holiday wish list.
Retail Therapy
The hammock gets an update.