StrictlyVC: January 16, 2018

Hi, happy Tuesday, all, and welcome back.

 

We’re getting so excited about our upcoming event the evening of February 27 in San Francisco! In addition to talking next-gen e-commerce with Tina Sharkey of Brandless, and about the latest cyber breaches with Marten Mickos of HackerOne, our newest guest speaker is Ryan Williams, the founder of New York-based Cadre, a commercial real estate platform that Williams co-founded with the Kushner brothers, is backed by Andreessen Horowitz, and has huge ambitions to delve into much more than real estate. (Banks are paying close attention.)

 

More announcements to come. You can still grab a seat here (note that their numbers are dwindling).

 

We also want to thank our generous partners in the evening, including venture firm New Enterprise Associates, which is hosting everyone at its beautiful, glass-lined space in San Francisco’s South Park neighborhood; Morrison Foerster (or MoFo), the progressive global law firm that’s been setting up and advising new ventures for more than 130 years; and Anduin Transactions, a transaction workflow platform founded by Joe Lonsdale and Alin Bui with the goal of making private market transactions far more efficient.

 

It’s a team effort, and we greatly appreciate the support. It’s going to be another fun night.:)

 

Top News

 

Former Uber engineer Anthony Levandowski is facing new claims of stealing trade secrets, this time from a former nanny.

 

Sponsored By …

 

Today’s StrictlyVC is sponsored by Siftery Track. As a reader, get free early access to track and easily optimize your team’s software expenditures. Simply sync your credit card or accounting system, and Siftery Track will automatically create beautiful visualizations of your historic and forecasted spend. You’ll also get alerts for new products, duplicate charges, unexpected increases in spend, and more.

 

Sequoia Capital Just Closed a Giant New Seed Fund — and Here’s How It Works.

 

Sequoia Capital, the top-tier venture firm, has just closed on a $180 million new fund called Sequoia Scout III that’s focused exclusively on seed-stage opportunities.

 

It’s a development that startup founders will be watching closely, no doubt, so we caught up yesterday with Bryan Schreier, a Sequoia partner who sits on the boards of Dropbox, Thumbtack and Qualtrics among others, to ask how the vehicle works exactly.

 

Sequoia doesn’t talk often about its processes. Perhaps owing to greater transparency throughout the industry, as well as growing competition, including from AngelList — which is increasingly providing founders with seed money to invest in other founders — the firm offered to shine some light on its offerings and approach.

 

More from our conversation with Schreier follows, edited lightly for clarity.

 

This new fund is an interesting hybrid. Unlike in past years, where Sequoia made seed bets from its main, early-stage funds, it’ll be used to invest directly in seed deals. Sequoia will also be incorporating investments that are being brought to the firm by so-called “scouts.” Is that correct?

 

Yes, we have a long-standing seed practice at Sequoia, going back to the very beginning, and this new fund just represents the consolidation of our seed program into a single fund. As with Airbnb, Dropbox, and Stripe, we’ll be looking for seed investments that we’ll be investing in directly. We’ll also be [relying on Sequoia’s network of more than 100] scouts, who come from the Sequoia network [and who are mostly] founders and execs.

 

There has long been fascination over this scouting trend, which Sequoia sort of helped to create and a lot of venture firms now employ. Can you talk a bit more about it? For example, how transparent are these founders when they approach their network on behalf of Sequoia? Also, do they have to scout on your behalf exclusively?

 

We encourage them to be totally transparent. That’s always been the case. The money that’s wired [to a startup] literally says “Sequoia.” As for whether the scouts work exclusively on behalf of Sequoia, we don’t require it, but I’d guess that for the most part they do.

 

What kind of cut do they receive, and does the entire network of scouts benefit if one scout finds a winner, or does the person who brought you the deal reap the financial rewards?

 

There’s carry in the fund that’s shared among the scouts, [so] they all benefit from the returns in the scout fund [when a company performs well].

 

Does Sequoia identify a theme and say to its scouts, “Find us the best people working in this area?”

 

We’ve actually found the most success in following the entrepreneurs. There’s a bit of a virtuous cycle, where you have entrepreneurs who have inspiration of their own and as they’re successful, other founders come to them with their ideas. And it’s a wonderful way for us to double down [on that network].

 

You’re making direct seed investments, as well as working with these scouts. In both cases, does Sequoia receive information rights? Warrants? Right of first refusal?

 

There’s a big difference. Scout investments are led by scouts, and we don’t have information rights. It’s meant to empower founders in our network who may not have the administrative support or overhead required to run a seed-investing practice, so they are making decisions together with us. But it’s different from a Sequoia investment in that Sequoia isn’t on the cap table of the company; we aren’t taking information rights or board seats.

 

How much of this new fund will be invested with the help of scouts?

 

More here.

 

New Fundings

 

Aprinoia Therapeutics, a two-year-old, Taiwan-based neuroscience biotech startup, has raised $11.1 million in Series B funding co-led by KTB Network and DCI Partners, with participation from ShangPharma Investment Group andTaiAn TechnologiesMore here.

 

Bidgely, a six-year-old, Mountain View, Ca-based SaaS-based service that applies machine learning to utility meter data to itemize the amount and cost of energy used by various home appliances (it sells to utility companies), has raised $27 million in Series C funding. Georgian Partners led the round; earlier investors Khosla VenturesE.On and Innogy also participated. More here.

 

Bringg, a 4.5-year-old, Chicago-based delivery logistics platform, has raised $12 million in fresh Series B funding, bringing its previously closed round to $22 million. Investors include Salesforce VenturesAleph VCCoca-Cola and earlier backer Pereg Ventures, among others. TechCrunch has more here.

 

Forest, a 1.5-year-old, Paris-based startup that’s aiming to unify disparate SaaS administration interfaces into a single platform, has raised $3.7 million in seed funding from Connect Ventures and participation from investor Xavier Niel and TransferWise founder Taavet Hinrikus. TechCrunch has more here.

 

Kuaishou, a Beijing, China-based video streaming company that’s backed by Tencent Holdings, is looking to raise $1 billion in new funding at a $17 billion valuation. Bloomberg has more here.

 

JD Logistics, the logistics unit of China’s second-biggest e-commerce firm JD.com, is reportedly looking to raise up to $2 billion at a $10 billion valuation. Business Insider has more here.

 

Nyansa, a 4.5-year-old, Palo Alto, Ca.-based wired and wireless data analytics company, has raised $15 million in Series B funding led by Intel Capital, with participation from earlier backer Formation 8. The company has now raised $27 million altogether. TechCrunch has more here.

 

Propagate, a 2.5-year-old, L.A.-based studio that has developed, produced and distributed programming for Apple, Amazon, and ABC, among others, just raised an undisclosed amount of funding from The Raine GroupMore here.

 

Ratehub, a Toronto-based financial product comparison site, has raised C$12 million in Series A funding led by Elephant, a Boston-based venture firm founded by Jeremiah Daly (a previous principal with Accel Partners) and Warby Parker cofounder Andy Hunt. Simon Nixon, a co-founder of the U.K.-based company MoneySuperMarket, also joined the round. The Globe and Mail has more here.

 

Social Bicycles, a 7.5-year-old, Brooklyn, N.Y.-based dockless electric bike share company, has raised $10 million in Series A funding led by Menlo Ventures. TechCrunch has more here.

 

Tissue Analytics, a 3.5-year-old, Baltimore, Md.-based startup whose image analysis algorithms help clinicians make more informed decisions about wound care, has raised $5 million in Series A funding led by DigiTx Partners, with participation from TencentDreamitMolnlycke Health CareIntermountain Healthcare, and Penn MedicineMore here.

 

 

Sponsored By . . .

 

StrictlyVC is sponsored this week by Meld Valuation, a premiere independent valuation firm. We care about understanding the unique risk profile of your situation and most importantly making the quantitative reflect the qualitative story. Contact us today to learn about our services and how we can help you with everything from cap table management to complex valuation engagements.

 

New Funds

 

AngelList has expanded its syndicates program to India in the latest overseas move for the crowdfunding platform. The launch comes some 18 months after TechCrunch reported that AngelList had hired longtime angel investor Utsav Somani to launch the service.

 

Ontario Capital Growth Corporation, the venture capital agency of the government of Ontario, Canada, says it plans to invest $60 million into VC funds that develop the venture sector in the province. More here.

 

IPOs

 

Cardlytics, a nine-year-old, Atlanta, Ga.-based marketing analytics company, has filed for a $75 million IPO. The company has raised roughly $180 million in funding, including from Canaan PartnersPolaris PartnersDiscovery CapitalTTV CapitalITC HoldingsTotal Technology Ventures and Kinetic Ventures. The Atlanta Business Chronicle has more here (sub required).

 

SoftBank Group said yesterday that it’s considering listing its Japanese wireless business—a move that could reportedly raise $18 billion and would accelerate the conglomerate’s transformation into one of the world’s biggest tech investors. The spinoff could potentially be the biggest IPO by a Japanese company in nearly two decades, notes Reuters.

 

Exits

 

In a move that represents further consolidation in the crowdsourced in-store data gathering space, London-headquartered BeMyEye has acquired U.K. rival Task360. Similar to BeMyEye, the company offers an app that pays users to collect data for its corporate clients, but with a greater emphasis on time-sensitive tasks. Terms of the deal weren’t disclosed. TechCrunch has more here.

 

Instacart is acquiring Toronto-based startup Unata for about $65 million, says Bloomberg, which notes the move could signal where Instacart is headed in its battle with Amazon: into making and tracking digital coupons and circulars. More here.

 

People

 

According to Dallas Mavericks owner and tech entrepreneur Mark Cuban, fans of the NBA team will be able to buy tickets to its games in Bitcoin starting next season. Not that anyone is going to spend their precious bitcoin on basketball tickets. But they could.

 

Insight Venture Partners just promoted Anika AgarwalRachel Geller and Ross Devor to managing directors. It also promoted Matt GattoKevin Hurth and Philip Vorobeychik to principals.

 

When it comes to raising tens of millions of dollars in venture capital, it helps to be a veteran of Baidu’s artificial intelligence units. Over the last 12 months, former employees of the Chinese tech giant have raised close to $300 million in venture funding rounds, according to a review of deals by China Money Network.

 

Jobs

 

Jump Capital is looking to add an associate to its investment team. The job is in Chicago.

 

Essential Reads

 

The latest crypto crash is here.

 

Alexa, we’re still trying to figure out what to do with you.

 

Detours

 

Apple just put the finishing touches on its new $5 billion headquarters — and the results are stunning.

 

How automakers invented the crime of “jaywalking.”

 

The best places to travel in February.

 

Retail Therapy

 

Ferrari is planning a battery-powered supercar that it says will leave comparative upstart Tesla in the dust.

 



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