StrictlyVC: January 11, 2017

Hi, happy Wednesday, everyone! Know we’re a little late — we’re still trying to recover from that press conference this morning.

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Precursor Ventures Raises $15.3 Million for Seed Investing, with a Twist

Charles Hudson has lived in the Bay Area for the last 20 years, working as product manager, as an entrepreneur, and an investor. As such, he’s had a front row seat to a number of changes in the way that startup are funding, including the evolution of numerous angel investors into so-called micro VCs into fund managers who are now responsible for hundreds of millions of dollars.

Take investor Jeff Clavier, who began sprinkling tiny amounts of money across what appeared to be a new crop of capital-efficient startups back in 2004 and soon after launched a firm, SoftTechVC, where Hudson would become a partner in 2013. By 2014, SoftTech had closed a fourth fund with $85 million. Last June, it closed on a record $150 million across two funds.

Hudson was cheering on the firm — from down the street in San Francisco. Since last year, he has been creating his own brand, Precursor Ventures, to seize on the funding vacuum creating by firms like SoftTech that can no longer write small checks. Hudson, one of few African American VCs in the Bay Area, also sees another underserved opportunity in funding women and other minorities.

We talked with Hudson last week about how he’s approaching both missions and whether they were a difficult, or easy, sell for Precursor’s investors, who’ve given the company $15.3 million for its first fund.

Why strike out on your own with a new fund?

The big observation for me was that all the micro VC funds are really big now and they’ve stopped doing classic seed-stage funding. The goal for Precursor is to write checks in the range of $150,000 to $250,000 to teams that have maybe two founders and a prototype and probably not much in the way of a launched product or traction, with about 20 percent of the capital set aside to participate in [slightly more mature] companies that are maybe raising $2 million on a $6 million [pre-money] valuation.

How many companies do you think you can support with this new fund?

The idea is to write 18 to 20 checks per year, so I’ve made 50 investments over the last two years, including [as I was raising this fund].

And investors didn’t think that was too much, that you were spreading your investments too thin? Why not go in the exact opposite direction and make lesser, more concentrated bets?

For one thing, because there is so little institutional capital at the pre-seed stage, I felt like I could be more aggressive. Also, because of the rising cost of doing business in San Francisco, and because a lot of the founders I back don’t need to be here, I’ve encouraged many of them to stay where they are — in Tampa and Raleigh and Charleston and Baltimore. And it’s pretty cool to see how much more capital efficient they can be in these regions with $150,000 to $250,0000 in backing.

Are you leading most of these rounds?

I didn’t think we’d lead, but we do lead a lot, because without us, these rounds don’t come together. It’s sort of like, everyone is in for $25,000, but no one wants to issue terms. Believing in people early and being able to issue terms helps rounds come together.

More here.

New Fundings

CompareEuropeGroup, a 1.5-year-old, London-based company that uses machine learning and other algorithms to sort through and search for the best deals for a particular service in real-time, has raised €20 million ($21 million) in Series A funding. ACE & Company led the round, with participation from Pacific Century Group, Nova Founders Capital, SBI Holdings, Zynga cofounder Mark Pincus, investor Peter Thiel and others. TechCrunch has the story here.

EasyStack, a two-year-old, Beijing, China-based open-source enterprise cloud platform and services company, has raised $50 million in Series C funding led by Cash Capital, with participation from several RMB funds. China Money Network has more here.
ezCater, a 10-year-old, Boston, Ma.-based nationwide marketplace for business catering, raised $35 million in funding led by Iconiq Capital, with participation from earlier backer Insight Venture Partners. The company has now raised $70 million altogether. More here.
FarmLogs, a four-year-old, Ann Arbor, Mi.-based company whose technology helps farmers monitor and measure their crops, predict profits, manage risks from weather and pests, has raised $22 million in Series C funding led by Naspers Ventures, with participation from Drive Capital, Huron River Ventures, Hyde Park Venture Partners, SV Angel and individual investors, including Y Combinator president Sam Altman. TechCrunch has more here.

HOOQ, a two-year-old, Singapore-based Netflix challenger in Southeast Asia, has raised $25 million in new funding from earlier backers Singtel, Sony Pictures and Warner Brothers. It has now raised roughly $95 million altogether. TechCrunch has more here.

iZettle, a 6.5-year-old, Stockholm, Swedish-based mobile payments company whose card reader works with your smartphone or tablet, has raised €60 million ($63 million) in new funding, including €45 million in the form of debt from Victory Park Capital, and €15 million from earlier backers, including Intel, Index Ventures, MasterCard and American Express. TechCrunch has more here.

Kuli Kuli, a five-year-old, Oakland, Ca.-based food startup that’s selling a West African crop known as moringa as both a powder supplement and a health food bar, has raised $4.25 million in Series A fudning led by Kellogg Company’s new venture arm, eighteen94 capital. Other participants include S2G Ventures and InvestEco, along with individual angels. TechCrunch has more here.

Revl, a two-year-old, London-based event-discovery marketplace that uses peer-to-peer recommendations, has raised £2.4 million ($2.9 million) in seed funding from unnamed individual investors. TechCrunch has more here.

SmarterHQ, a six-year-old, Indianapolis, In.-based contextual marketing technology company that powers real-time individualized campaigns for Bloomingdales, Eddie Bauer, and Kate Spade among others, has raised $13 million in new funding led by Spring Lake Equity, with participation from earlier backers Simon Venture Group and Battery Ventures. The company has now raised $33.6 million altogether. More here.

Velocidi, a six-year-old, New York-based media and marketing intelligence platform, has raised $12 million in Series A funding led by Pilot Growth Equity, with participation from Neuberger Berman Private Equity Funds. SiliconAngle has more here.

New Funds

Correlation Ventures, an 11-year-old, San Diego, Ca.-based venture capital firm that leverages predictive analytics to make co-investments (for example, it says it has more than 17,000 venture financings in its database of companies that have exited since 2006), just closed its second fund with $200 million. More here.

Thayer Ventures, an eight-year-old, San Francisco-based venture capital capital firm that’s focused on hospitality and travel, is beginning the process of raising a third fund, and it’s targeting $100 million. Some of its portfolio companies include the travel planning site HipMunk and Traxo, an online travel service that organizes users’ personal travel information. The firm had reportedly raised roughly $15 million for its second fund. More here.

Exits

Alibaba is offering $2.6 billion to fully acquire Intime, a company in which  Alibaba bought a stake for $692 million nearly three years ago. Intime operates 29 department stores and 17 shopping malls across urban China and highlights the new focus of e-commerce giants on offline channels. TechCrunch has more here.
The crowdfunding platform GoFundMe has acquired CrowdRise, a fundraising platform for charities and other non-profits, as well as fundraising events, Financial terms of the deal have not been disclosed. CrowdRise had raised around $25 million in funding, including from Union Square Ventures, Index Ventures, and Spark Capital. TechCrunch has more here.

Publicly traded YCoupa Software, which makes cloud-based spend management software, has substantially all of the assets of London-based Spend360 International, which help companies digitize antiquated processes for data classification. Terms of the deal weren’t disclosed. More here.

People

Swiss designer Yves Behar is listed on a patent that was granted to Uber yesterday for a thin, light-up placard designed to be displayed on the “roof of a vehicle or suitably dimensioned mobile environment.” (Like, yes, a taxi.) TechCrunch has more here.

DoubleDutch, a five-year-old startup providing mobile apps and analytics for events and conferences, just announced another round of layoffs, affecting roughly 40 percent its workforce. Around 70 positions were eliminated. TechCrunch has more here.

Daniel Gross, the founder of the Y Combinator-backed startup Cue, a search engine for personal content that sold to Apple, is joining Y Combinator as a partner. TechCrunch has more here.

Flipkart, India’s biggest e-commerce company, has named its first non-founder CEO: former Tiger Global executive Kalyan Krishnamurthy. Quartz has more here.

The grocery deliver startup Instacart is cutting worker pay again in at least four cities. Recode has more here.

John MacFarlane resigned yesterday as chief executive of Sonos and has been replaced by one of his deputies, Patrick Spence. MacFarlane has also left the company’s board of directors. The New York Times has more here.

Facebook CEO Mark Zuckerberg has hired former Obama adviser David Plouffe away from Uber to work on his social advocacy organization, the Chan Zuckerberg Initiative. CNBC has more here.
Major switcheroo at Tesla Motors: Sterling Anderson, Tesla’s director of autopilot programs since November 2015, has left the company. Meanwhile, Chris Lattner, who led the creation of Apple’s Swift software programming language, is now Tesla’s vice president of autopilot software. Bloomberg has more here.

Jobs

Obvious Ventures in San Francisco is hiring for another senior associate position; this time, the new hire will be working closely with managing director Vishal Vasishth. You can learn more here.

Essential Reads

About that giant Softbank tech fund, bankers who are advising it say that more than three-quarters of it will be funneled into larger investments in private and public markets rather than into start-ups.

If a Best Buy technician is a paid FBI informant, are his computer searches legal?

Your next iPhone might be made of stainless steel.

Detours

It’s not just Altaba; Fortune looks at seven other terrible company name changes.

The preposterous success story of America’s pillow king.

Retail Therapy

We’re definitely going to be needing one of these.


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