Hi, everyone, happy Monday, hope you had a great weekend.:)
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Top News in the A.M.
The Supreme Court will begin hearing arguments today regarding whether employers can require employees to give up the right to sue as a group. For Silicon Valley, where companies routinely ask staffers to forfeit this right, the outcome could have huge ramifications. Wired takes a look here.
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“LPs Have a License Now to Ask Questions That are Uncomfortable”
Last Wednesday night, at the Autodesk Gallery in San Francisco, this editor sat down with Michael Kim of Cendana Capital and Elizabeth “Beezer” Clarkson of Sapphire Ventures. I’d invited these fund of fund managers to a StrictlyVC event as they’re two of very few limited partners — meaning people who give VCs money to invest — who speak publicly about their work.
Typically, LPs prefer to operate in the shadows so they won’t be inundated with pitches by venture firms looking for capital. But they also refrain from raising their hand because they are “sheep,” said Kim, whose firm has stakes in SoftTechVC, Lerer Hippeau Ventures, and roughly two dozen other firms.
Noting that many LPs work for institutions like pension funds and universities and have investment committees to answer to, he borrowed the old catchphrase that “no one ever got fired for buying IBM,” meaning LPs often prefer to write checks to established firms rather than gamble on up-and-comers. (For good measure, Kim also called his LP peers “not that smart, typically.”)
It was that kind of conversation, to the crowd’s delight. More outtakes from our chat with Kim and Clarkson — whose bets include Data Collective, August Capital, and Point Nine Ventures in Berlin — follows here.
Let’s start with sexual harassment, an issue that rocked Silicon Valley this summer. How does someone with the reported reputation of an investor like Justin Caldbeck raise a fund — and continue to raise funds?
MK: First, Cendana invests in seed funds; we did not invest in [the fund Caldbeck cofounded] Binary, which is a Series A fund. But I would have to say that when I heard about the story, I was thinking, ‘It finally came out.’ Those topics were out in the market for at least two years, and I know a lot of reporters were looking into it, they just couldn’t get people to go on record. I think that Reed [Albergotti, the reporter who broke the Binary story] was able to [persuade his sources to speak up] represents a sea change in terms of how people are viewing the topics around this, and it’s a great thing.<
So LPs knew.
MK: I would say a lot of LPs probably didn’t know, because I don’t think most LPs do their work and they don’t do their due diligence. If they’d scratched the surface, it would have been very obvious to them.
Beezer, what do you think?
BC: I think Michael is right about there being a sea change. Over the summer, you had so many people coming forward about Binary, and what was going on in some [other] portfolio companies – there was suddenly pre all that and post all that, and the nice thing is that I now have people saying, “I would probably have never told an LP before, but I want to tell you X.” This information is now connecting.
Beehive, a four-year-old, Dubai-based peer-to-peer lending platform, has raised $5 million in Series A funding from the Riyad TAQNIA Fund and the Mohammed Bin Rashid Fund. Forbes has more here.
Burrow, a 1.5-year-old, London-based online mortgage broker that was formerly known as Dwell, has raised $1.2 million in seed funding led by Passion Capital. UKTN has more here.
Cloud4Wi, a four-year-old, San Francisco-based location analytics and marketing platform, raised $11.5 million in Series B funding co-led by Opus Capital and United Ventures. More here.
KSQ Therapeutics, a two-year-old, Cambridge, Ma.-based drug discovery startup that utilizes CRISP-based screening tools, has raised $76 million in funding led by Flagship Pioneering, with participation from Polaris Partners, ARCH Venture Partners, andAlexandria Equities. The company also announced that former Genzyme CEO David Meeker will be its new CEO. More here.
Kryon Systems, an eight-year-old, Franklin Lakes, N.J.-based company that has developed a robotic process automation platform, just raised $12 million in Series B funding, including from Aquiline Technology Growth and Vertex Ventures. TechCrunch has more here.
Peptilogics, a new, Pittsburgh, Pa.-based developer of a peptide platform to treat multidrug-resistant bacterial infections, has raised $5.5 million in Series A funding from Peter Thiel, serial entrepreneur Stefan Roever and BlueTree Ventures. More here.
Reachify, a two-year-old, New York-based business intelligence platform aiming to make it easier for enterprises to know which vendors to enterprise software vendors to use, has raised $1.5 million in funding led by Forerunner Ventures, with participation from NEA, Female Founders Fund, Beanstalk Ventures andCommerce Ventures. More here.
Tecovas, a two-year-old, Austin, Tex.-based direct-to-consumer western brand, has raised $2.6 million in funding led by YETI Capital, with participation from earlier backers, including Trunk Club founder and former CEO Brian Spaly. More here.
Afore Capital, a year-old, San Francisco-based venture capital firm, has closed its pre-seed venture fund with $47 million in capital commitments. We’ll have more on this effort over at TechCrunch later today.
NFX Guild, a three-year-old, Palo Alto, Ca.-based early-stage venture firm and accelerator program cofounded by James Currier,Stan Chudnovsky and Gigi Levy (the team also brought in former Trulia CEO Pete Flint last year), is looking to raise upwards of $150 million for a new fund, shows a new SEC filing. We wrote about the firm’s most recent “demo day” here.
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CarGurus, an 11-year-old, Cambridge, Ma.-based profitable(!) car marketplace, has revealed plans to raised $132 million in an initial public offering of 9.4 million shares at $13 to $15 each. The company’s biggest outside backers include Allen & Co., Spinnaker Capital’s Anastasios Parafestas, and T. Rowe Price. Xconomy has more here.
Former Uber CEO Travis Kalanick appointed two directors late Friday afternoon, without consulting new CEO Dara Khosrowshahi or other members of the board. The company’s directors — including, presumably, new additions Xerox CEO Ursula Burns and former Merrill Lynch CEO John Thain — are scheduled to meet tomorrow to potentially revamp the company’s corporate governance. According to Recode, the proposal they plan to discuss — supported by Khosrowshahi — would drastically limit Kalanick’s voting power and ability to return to leadership at Uber, which suddenly seems more crucial than ever to the company’s continued success. Indeed, last night, Khosrowshahi sent a letter to the the staff of the troubled car-hailing company, calling Kalanick’s actions “disappointing news” and “highly unusual.” More here.
In what sure seems like related news but Uber says is not: Jo Bertram, the company’s top executive in London, has quit for “an exciting new opportunity.” Business Insider has the story here.
Ben Narasin, who’d joined Canvas Venture Partners in the fall of 2015 and left recently, has headed to the Sand Hill Road offices of New Enterprise Associates, reports Axios. Narasin has worked with the firm on a number of past deals, including co-leading a seed round with NEA in the analytics company Branch Metrics.
Sandhya Venkatachalam, a cofounder of Centerview Capital, has joined Social Capital to lead growth equity investing. Fortune has the story here.
New Enterprise Associates is looking to hire a consumer internet-focused analyst. The new hire will work in both Menlo Park and San Francisco.
Facebook say it’s adding 1,000 people to its global ads review teams over the next year and investing more in machine learning to better understand when to flag and take down ads. TechCrunch has much more here.
Say goodbye to your workarounds. Google is doing away with a “first click free” policy that requires subscription-based news outlets to offer three free articles a day through its search and news features (allowing users to skirt pay walls in the process). The New York Times has more here.
Goldman Sachs is reportedly exploring how it could help clients trade bitcoin and other digital currencies. Bloomberg has more here.
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