StrictlyVC: July 11, 2017

Tuesday!

Top News in the A.M.

Snapchat shares were downgraded this morning by Morgan Stanley, a rare rebuke by a firm that helped bring it public.

The Trump administration said yesterday it would delay, and probably eliminate down the line, a federal rule that would have let foreign entrepreneurs come to the United States to start companies.

Sponsored By . . .

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The Hunted Becomes the Hunter: How Cloudflare’s Fight with a “Patent Troll” Could Alter the Game

Matthew Prince knew what was coming. The CEO of Cloudflare, an Internet security company and content delivery network in San Francisco, was behind his desk, when the emails began to trickle in, slowly at first, then in bursts. College classmates-turned-defense attorneys, including from the University of Chicago, where Prince had nabbed his law degree years earlier, were reaching out to say hello and to ask: did Prince perhaps need help to fight a lawsuit they’d seen filed in Delaware against Cloudflare?

The paperwork would itself arrive shortly after from a registered agent in a thick white envelope. The claim: patent infringement. The firm going after Cloudflare: Blackbird Technologies, a three-year-old, Boston- and Chicago-based firm founded by two former attorneys with white-shoe law firms who’d previously litigated intellectual property cases on behalf of some of the largest tech companies in the world.

Blackbird has since amassed a portfolio of roughly 37 broad-seeming patents that it has so far used to file more than 100 lawsuits, including against Asics, New Balance, and Lululemon over a sports bra, and Amazon, Petsmart, and Walmart over a bicycle pet carrier.

Blackbird’s specific lawsuit against Cloudflare accuses it of violating US Patent No. 6,453,335, a patent filed 18 years ago by the owner of a Web hosting company in Germany that describes providing a “third party data channel” online and whose original owner, Oliver Kaufmann, doesn’t seem to have tried using it to create anything.

Kaufmann hasn’t responded to a request for comment for this story, but a patent record shows he sold the patent last October for $1 plus “other good and valuable consideration” to Blackbird, which is also using the patent to sue another startup called Fastly.

The Cloudflare suit is fairly typical. So-called non-practicing entities — or holders of a patent for a process or product that they don’t plan to develop — often use them to sue companies that would sooner settle, rather than pay what can add up to $1 million by the time a case reaches a courtroom. Prince calls Blackbird uniquely dangerous because its founders’ law backgrounds make it even easier for the outfit to sue companies like Cloudflare; they needn’t pay an attorney to represent their interests.

Even more unusual, however, and potentially more meaningful for other companies, is Cloudflare’s response to the suit. Indeed, when Prince was handed that envelope on a sunny March afternoon, he saw it as a moment he’d been waiting for since cofounding Cloudflare seven years earlier. As far as he was concerned, this was war, and he was ready for it.

More here.

New Fundings

Advanced Microgrid Solutions, a five-year-old, San Francisco-based energy services company and developer of behind-the-meter energy storage systems, has raised more than $34 million in Series B funding led by Energy Impact PartnersSouthern Company and DBL Partners. Other investors to participate included GE VenturesAGL Energy Limited, and Macquarie CapitalMore here.

Allurion Technologies, an eight-year-old, Wellesley, Ma.-based developer of an intragastric balloon for weight loss (you swallow it in pill form), has raised $27 million in Series C funding led by Romulus Capital, with participation fro mCogepa Investments and IDO Investments. TechCrunch has more here.

Brandless, a year-old, San Francisco-based consumer-packaged goods company that’s selling household items from groceries to dishes to cleaning items for flat $3 pricing, has raised $35 million in Series B funding led by New Enterprise Associates and GV. The company, which staged a public unveiling earlier today, was incubated by Sherpa Capital, received seed funding from Cowboy Ventures and Slow Ventures, and raised Series A funding led by Redpoint Ventures. It has now collected $40 million in funding altogether. TechCrunch has more here.

Buoyant, a 2.5-year-old, San Francisco-based developer of open source software for cloud-native applications, has raised $10.5 million in Series A funding led by Benchmark, with participation from Twitter AngelsA Capital VenturesData CollectiveFuel CapitalSV Angel, and the Webb Investment Network. TechCrunch has more here.

CompareAsiaGroup, a three-year-old, Hong Kong-based online comparison shopping engine for financial, telecom and utility products in Asia, has raised $50 million in Series B funding. International Finance Corp. led the round and was joined by the Alibaba Entrepreneurs FundSBI GroupH&A Asia Pacific and return backers Nova Founders CapitalACE & Co.Route 66 Ventures and Lisa and Doug Goldman of San Francisco. China Money Network has more here.

Curve, a two-year-old, London-based platform that invites users to consolidate all their bank cards into a single Curve card, is on the verge of closing $10 million in Series A funding, says TechCrunch. The round is being led by Connect Ventures, with participation from Santander VenturesMore here.

Darktrace, a four-year-old, Cambridge, U.K.-based AI cybersecurity company, has raised $75 million in Series D funding round led by Insight Venture Partners with participation from earlier backers Summit PartnersKKR and TenEleven Ventures. The company was assigned a post-money valuation of $825 million. More here.

Datatron, a year-old, San Francisco-based company whose technology helps companies query real-time and historical data, has raised $2.7 million in funding from Start XCredence PartnersAuthentic VenturesEnspire PartnersPlug and Play and 500 Startups.TechCrunch has more here.

Engage3, a nine-year-old, Davis, Ca.-based competitive intelligence and consumer engagement company, has raised $12 million in Series B funding led by Kayne NewRoad Ventures, with participation from Pereg VenturesMoneta Ventures and Dale CarlsenMore here.

Ephesoft, an eight-year-old, Laguna Hills, Ca.-based developer of document capture and analytics software, has raised $15 million in Series A funding led by Mercato PartnersMore here.

Evy Tea, a three-year-old, Boston, Ma.-based maker of all-natural cold brew teas, has raised $1 million in seed funding co- Notudis Ventures and Campitor Investments. BostInno has more here.

Gencove, a two-month-old, New York-based genome sequencing technology developer, has raised $1 million in seed funding, including from Third Kind Venture Capital, Version One VenturesRefactor Capital, and SV Angel. The company’s technology was spun out from the New York Genome Center. GenomeWeb has more here.

Genoox, a three-year-old, Palo Alto, Ca.-based genomic analysis company, has raised $6 million in funding co-led by Inimiti Capital Partners and Glilot Capital PartnersMore here.

HyTrust, a 10-year-old, Mountain View, Ca.-based company whose software automates security controls for software-defined computing, networking and storage workloads, has raised $36 million in funding led by Advance Venture Partners. Earlier backers also joined the round, including Sway VenturesEpic VenturesVanedge CapitalTrident CapitalCiscoFortinetInteland VMware. Part of the funding was used to acquire security startup DataGravity. TechCrunch has more here.

Intuition Robotics, the year-old Israel-based developer of the “ElliQ” robotic elder care assistant, has raised $14 million in Series A funding led by the Toyota Research Institute. Other investors include OurCrowdiRobotManiv MobilityTerra Venture Partners, and Bloomberg Beta. TechCrunch has more here.

Lastline, a six-year-old, Redwood City, Ca.-based malware protection platform developer, has raised $28.5 million in Series C funding led by Thomvest Ventures, with participation from Osage University PartnersRedpoint VenturesBarracuda NetworksNTT Finance Corporation, and WatchGuard Technologies, among others. More here.

Move Guides, a nearly seven-year-old, London-based SaaS platform that helps HR teams relocate their employees, has raised $48 million in Series C funding from Future FundNew Enterprise Associates and Notion Capital. The company has now raised $91 million altogether. TechCrunch has more here.

Telestax, a six-year-old, Austin, Tex.-based open source platform for developing and deploying real time communications applications, has raised $4.7 million in funding led by LiveOak Venture PartnersMore here.

WeWork, a seven-year-old, New York-based co-working, co-living, and real estate company, has raised $760 million in a new Series G funding round, which according to Forbes, puts the co-working company’s valuation at $20 billion. With the latest valuation, WeWork now tops the market caps of office REITs like Boston Properties and Vornado Realty. We talked with WeWork cofounder and CEO Adam Neumann on stage in May. Forbes has more here.

New Funds

Babel Ventures, a Silicon Valley firm founded by two immigrant Latina entrepreneurs, has closed on $30 million in capital commitments to invest primarily in fintech and health-tech-related startups. The Huffington Post has more here.

Alphabet has officially launched Gradient Ventures, a new firm within Google that will invest in early-stage artificial intelligence start-ups, writing checks of roughly $1 million to $8 million in each, according to Anna Patterson, founder and managing director. The announcement is the latest sign of Alphabet’s growing interest in AI. CNBC has more here.

Loup Ventures, a months-old, Minneapolis-based early-stage venture firm that’s focused on AI and VR, is looking to raise at least $20 million for its debut fund, shows an SEC filingGene Munster, the longtime Piper Jaffray analyst, is one of the firm’s cofounders. More here.

Exits

Samsung has acquired Innoetics, a 10.5-year-old, Athens, Greece-based text-to-speech technology company. Terms of the deal aren’t being disclosed, but TechCrunch is told it’s one of the bigger exits for a tech startup in Greece. More here.

Premise Health acquired eHealthScreenings, a 10-year-old San Antonio, Tex.-based biometric screenings company. Financial terms weren’t disclosed. The San Antonio Business Journal has more here.

People

Elon Musk has just bought back X.com, the domain he owned in 1999. TechCrunch has more here.

Demi Obayomi joined FirstMark Capital as an associate. Obayomi was previously an analyst with Goldman Sachs.

A free-speech group today sued Donald Trump for blocking Twitter users from his @realDonaldTrump account. Reuters has more here.

Jobs

Core Innovation Capital, a seven-year-old, L.A.-based venture firm focused on underbanked consumers, is looking to hire an analyst. The job is in San Francisco.

Data

According to a new Pew Research Center survey,  41 percent of adults saying they have experienced harassment online, and 66 percent of people saying they’ve seen it happen to others. The most common form of online harassment is offensive name-calling, according to the study, with men slightly more likely than women to be harassed. Much more here.

Essential Reads

Over the past decade, Google has helped finance hundreds of research papers to defend against regulatory challenges of its market dominance, paying stipends of $5,000 to $400,000, reports the WSJ.

Amazon has filed a patent for underwater warehouses. (Better safe than sorry?)

Detours

We shouldn’t laugh at this but we’re laughing at this.

This Pulitzer-winning photographer captured city life using only Volvo’s onboard safety cameras.

Retail Therapy

The second season of “Stranger Things” will be available on Netflix October 27. [Squeal.]

The ninth season of “Curb Your Enthusiasm” returns to HBO October 10. [Double squeal.]


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