StrictlyVC: September 15, 2017

Happy Friday! Chirp!

Top New in the A.M.

Following its falling out with Uber, Alphabet is reportedly holding talks with Lyft about a potential investment of about $1 billion, says Bloomberg, which adds that the capital could come from Google or CapitalG, Alphabet’s private-equity arm. More here.

Tim O’Reilly Thinks Focusing Less on Shareholders Might Just Save the World

There’s no shortage of angst in Silicon Valley. Tech leaders are still reeling from the outcome of the U.S. presidential election. Their increasingly rich companies are coming to be viewed as more and more sinister, thanks in part to the jobs they look to automate. Calls to break up some of the biggest companies are starting to take on some urgency for the first time in nearly 20 years.

Tim O’Reilly, founder and CEO of O’Reilly Media and author of a new book, “WTF: What’s the Future and Why It’s Up to Us,” thinks a lot of these problems could be solved if only big tech would focus a little less on profits and more on enabling other companies to be built atop of, or in partnership, with their platforms. In fact, his book, which is part memoir and part case study, is largely an entreaty to do things differently before it’s too late.

We talked with O’Reilly this morning. Our conversation has been edited for length and clarity.

In your new book, you talk at some length about what makes today’s multibillion-dollar companies so powerful, including, centrally, their growing use of algorithms. Google is managing for relevance; Facebook is managing for engagement, you say. Do you think their power should be curtailed, and, if so, do you think that’s the government’s job?

I think that would require radical rethinking. It’s like, when we talk about tax reform — that’s minor tweaks. That’s the screen in the back of a taxi cab. Periodically, things do get bad enough to [compel] major changes. If you think about what happened during the New Deal, that was radical thinking. I think the assumption right now is that things are always going to be the way they are today, and that’s stupid. It’s possible to disrupt it.

Where to start, in your view?

In some ways, the financial markets are the first rogue AI. People are worrying about strawberry-picking robots that wind up getting rid of all obstacles, including humans. But we’re already inside of a vast economic machine that says, “Get rid of people. You’re supposed to be optimizing for stock price.”

Companies should be focused instead on their employees, greater society . . .

They should be focused on society as a whole. Just like Facebook is struggling because engagement with the platform was subverted by bad actors and it didn’t work like the company thought it would, if [these other companies] aren’t producing the results that are [beneficial to more people], that needs to change.

What’s your preferred solution?

My preferred solution is for both government to encourage companies to go after solving real problems, and for startups to do the same. I’d like to see more Elon Musks and fewer startups that are chasing money. To me, a lot of startups look and act like the Wall Street investors who brought us the financial crisis. They’re just trying to create a product the market will buy. It doesn’t matter if it’s toxic to the ecosystem as long as they can convince someone to invest in their business. It feels a lot like a horse race to me where a lot of founders are being paid to be a horse and a lot of investors feel like actors in a Hollywood movie.

Are you saying that entrepreneurship doesn’t or shouldn’t scale as fast as some people would like?

I feel like we’re in a kind of “big short” period in tech.

More here.

New Fundings

AppGuard, a Chantilly, Va.-based maker of intelligent prevention endpoint protection software, has raised $30 million in Series B funding led by Japan’s JTB Corporation. According to ZDNet, it’s using some of the money to complete its acquisition of KeepTree, a secure video communication technology company. More here.

Augment, a six-year-old, San Francisco-based mobile app that lets businesses visualize their 3D models in augmented reality, has raised $5 million in Series A funding, including from Silicon Valley Data Capital and JAZZ Venture Partners. VentureBeat has more here.

Clinch, a four-year-old, New York City-based video ad personalization firm, has raised $3 million in Series A funding, including from Richard Gati, a member of the investment advisory firm BXR Partners. More here.

Fauna, a five-year-old, San Francisco-based startup that’s selling what it describes as an “adaptive operational database” that can support a wide range of use cases, has raised $25 million in Series A funding. Point72 Ventures led the round, and was joined by GV, Costanoa Ventures, Afore Capital, CRV, Data Collective, Quest Venture Partners, the Webb Investment Networkand Ulu Ventures. SiliconAngle has more here.

Federated Wireless, a five-year-old, Arlington, Va.-based company that aims to provide access to high-quality, low-cost licensed spectrum, raised $42 million in Series B funding, including from Charter Communications, American Tower Corp., ARRIS International and GIC. FierceWireless has more here.

Green Dot Labs, a three-year-old, Boulder, Co-based company that produces cannabis extracts in the form of oils, has raised $3.3 million in Series A funding from Tuatara Capital, an alternative investment manager. More here.

Grid Therapeutics, a three-year-old, Durham, N.C.-based biotech company focused on cancer therapeutics, has raised an undiclosed amount of Series A funding led by Longview International, with participation from Duke University. More here.’

KeyMe, a five-year-old, New York City-based company with an unusual twist on how people might access and manage their keys, has raised $25 million in Series D funding led by Comcast Ventures. Other investors include Battery Ventures, Benefit Street Partners, Michael Polsky, Questmark Partners, Ravin Gandhi, RiverPark Ventures, 7-Eleven and White Star Capital. More here.

Patreon, a four-year-old, San Francisco-based funding and fan platform for artists, has raised an undislcosed amount of Series C funding at a roughly $450 million valuation, including from Index Ventures, says TechCrunch. More here.

Piper, a 3.5-year-old, San Francisco-based STEM education company that makes a DIY computer kit for kids, has raised $7.6 million in Series A funding led by Owl Ventures led the round, with participation from Reach Capital, Stanford’s StartX fund, and Guitar Hero founder Charles Huang. Newscenter.io has more here.

RealtyShares, a four-old, San Francisco-based online marketplace for real estate investing, has raised $28 million in Series C funding from Cross Creek Advisors, Danhua Capital, Barry Sternlicht and Bow Capital, along with earlier backers Union Square Ventures, General Catalyst Partners and Menlo Ventures. TechCrunch has more here.

Shanghai United Imaging Healthcare, a six-year-old, China-based company that specializes in developing imaging devices covering computerized tomography, magnetic resonance imaging, and digital radiography, has raised a whopping $500 million in Series A funding. SDIC Fund Management and China Life Insurance Co. co-led the round, with participation from Capital Venture Investment Fund, China International Capital Co., CITIC Securities, CDB Capital and CMB International. China Money Network has more here.

Sixgill, a three-year-old, Santa Monica, Ca.-based company that’s trying to unify sensor intelligence for all of user’s sensor-enabled applications, is raising $27.9 million in funding, led by DRW Venture Capital. Mobile Financial Partners is also investing in the round. More here.

Swirlds, a two-year-old, Dallas, Tex.-based developer of a software platform that’s aimed at replacing Blockchain, has raised $3 million in seed funding led by New Enterprise Associates. More here.

>Swrve, a six-year-old, San Francisco-based company behind an in-app direct marketing platform, has raised $25 million in Series D funding led by Summit Bridge Capital. More here.

Virtuo, a two-year-old, Paris-based startup whose mobile app makes it easier to lease a car from airports and train stations, has raised €7.5 million ($8.9 million) from investors that include Balderton Capital. Tech.eu has more here.

YayPay, a two-year-old, San Francisco-based company whose software automates payment workflows, has raised $5.3 million in funding from QED Investors, Birchmere, Fifth Third Capital, 500 Fintech Fund, Aspect Ventures, Gaingels, Techstars and Zelkova. TechCrunch has more here.

New Funds

Costanoa Ventures, a five-year-old, Palo Alto, Ca-based firm focused on early-stage enterprise tech startups, has closed its third fund with $175 million in capital commitments. The company had closed its previous fund with $135 million in 2015. TechCrunch has more here.

IPOs

Nightstar Therapeutics, a London-based gene therapy company focused on retinal diseases, has revealed plans to raise $75 million in an IPO, pricing 5.4 million shares at between $13 to $15 a piece. The company’s investors include Syncona Partners and New Enterprise Associates. More here.

Rovio has set its IPO terms to between €10.25 and €11.50 per share, which could give it a market value of roughly $1.1 billion. That’s well below values in earlier media reports, notes Reuters. More here.

Exits

Another traditional retail brand is struggling. Women’s shoe seller Aerosoles filed for bankruptcy this morning, saying it will close up to 74 stores and focus on e-commerce. Fox Business has more here.

The 10-year-old, San Diego-based online radio service Slacker Radio has been acquired by LiveXLive, a music streaming service focused on live music streaming, the companies announced today. Terms weren’t disclosed. Slacker Radio had raised more than $70 million in funding over the years, including from Centennial Ventures, Rho Capital Partners, Austin Ventures, and Sevin Rosen Funds. The Verge has more here.

Also Sponsored By . . .

“South of Market, The Musical” is back for v2! The annual tech parody is running Oct 12-22nd in San Francisco and features an entirely new script, cast and score! This year’s show follows an aspiring tech journalist as she attempts to get the scoop on the too-good-to-be-true hottest startup of the year – ai.ai. With songs likes “Self Driving,” “Boulder Moves, Bolder You,” and “Tech Issues,” this year’s show highlights the perks and perils of startup scene hype machine.

The show will also feature a host of cameo appearances (including by yours truly, Product Hunt founder Ryan Hoover, and Rolfe Winkler of the WSJ). Tickets are on sale now, so come see our musical debut!

People

Remember, earlier this week, when SoFi said its cofounder and CEO Mike Cagney was stepping down at the end of this year? So there was a change of plans and he’s out the door today.

Apple’s SVP of Software Engineering, Craig Federighi, answers some burning questions about Face ID.

Cyber security “unicorn” Tanium is planning another secondary sale, says cofounder and CEO Orion Hindawi, citing recent volatility in tech floats.

Condiments maker Hampton Creek has restocked its board (after its former directors left). Among those newly at the table: Saudi Prince Khaled bin Alwaleed bin Talal.

Jobs

Jackson Square Ventures is hiring a principal. The job is in San Francisco.

Essential Reads

Oof. Buzzfeed is reporting that, until this morning, Google was allowing advertisers to specifically target ads to people typing racist and bigoted terms into its search bar. More, it says, Google would suggest additional racist and bigoted terms once a user typed others into its ad-buying tool. (Twitter is just as bad, reports The Daily Beast.)

Detours

“South Park” messes with Alexa users.

Elon Musk’s has posted an Instagram video of all his Space X rocket explosions and disasters.

The strange world of sorority rush consultants.

Retail Therapy

A Roomba for your windows. Looks like it isn’t quite there yet, but we love the idea.