August! And also, Friday! [Attempts front handspring; crumples against office door.]
Hope you have a terrific weekend; see you in a few days.:)
Top News
In a big, seemingly ill-conceived, shift, Facebook plans to signal its control of Instagram and WhatsApp by adding its name to both apps, according to The Information, which says the apps will be called “Instagram from Facebook” and “WhatsApp from Facebook.” The outlet speculates that, among other things, Facebook wants more credit for the growth of these subsidiaries. Of course, many people who no longer trust Facebook conveniently forget that it owns Instagram and WhatsApp, which may explain why the move is being “met with surprise and confusion internally.” More here.
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The SEC Wants Disgraced VC Mike Rothenberg to Cough Up $30 Million
Nearly three years ago, TechCrunch reported on suspected fraud committed by Mike Rothenberg, a self-described “millennial venture capitalist” who’d made a name for himself not only by eponymously branding his venture firm but for spending lavishly to woo startup founders, including on Napa Valley wine tours, at luxury boxes at Golden State Warriors games, and most famously, hosting an annual “founder field day” at the San Francisco Giants’s baseball stadium that later inspired a scene in the HBO show “Silicon Valley.”
The Securities & Exchange Commission had initially reached out to Rothenberg in June of 2016 and by last August, he’d been formally charged for misappropriating up to $7 million of his investors’ capital. He settled with the agency without making an admission of guilt, and, as part of the settlement, he stepped down from what was left of the firm and agreed to be barred from the brokerage and investment advisory business with a right to reapply after five years.
Now, comes the money part. Following a forensic audit conducted in partnership with the accounting firm Deloitte, the SEC is seeking $18.8 million in disgorgement penalties from Rothenberg, and an additional $9 million civil penalty. The SEC is also asking that Rothenberg be forced to pay pre-judgment interest of $3,663,323.47.
How it arrived at that math: according to a new lawsuit filed on Wednesday, the SEC argues that Rothenberg raised a net amount of approximately $45.9 million across six venture funds from at least 200 investors, but that he took “fees” on their capital that far exceeded what his firm was entitled to during the life of those funds, covering up these “misdeeds” by “modifying accounting entries to make his misappropriation look like investments, entering into undisclosed transactions to paper over diverted money, and shuffling investments from one [f]und to another to conceal prior diversions.”
Ultimately, it says, Deloitte’s examination demonstrated that Rothenberg misappropriated $18.8 million that rightfully belong to Rothenberg Ventures, $3.8 million of which was transferred to Rothenberg personally; $8.8 million of which was used to fund other entities under his control (including a car racing team and a virtual reality studio); and $5.7 of which was used to pay the firm’s expenses “over and above” the management and administrative fees it was entitled to per its management agreements.
We reached out to Rothenberg this morning. He has not yet responded to our request to discuss the development.
It sounds from the filing like he won’t have much wiggle room.
Massive Fundings
Babylon Health, a six-year-old, U.K.-based startup that has developed a number of AI-based health services, including a chatbot used by the U.K’.s National Health Service to help diagnose ailments, has confirmed a massive investment that it plans to use to expand its business to the U.S. and Asia. The $550 million round — which comes in part from Saudi Arabia’s Public Investment Fund, Munich Re’s ERGO Fund, and earlier investors Kinnevik and Vostok New Ventures — values the company at more than $2 billion and is apparently the largest-ever fundraise in Europe or U.S. for digital health delivery. TechCrunch has more here.
Latch, a six-year-old, New York-based company that sells its smart locks to property managers, has raised $56 million in new funding led by Avenir Growth Capital at a valuation of $400 million. (As the WSJ notes, it was valued at $250 million last year, when Brookfield Ventures, a unit of real-estate firm Brookfield Asset Management, led an investment in the company.) More here.
Ninja-Cart, a four-year-old, Bengaluru, India-based fresh produce supply chain company, is reportedly on the cusp of raising $50 million in funding from U.S. retailing giant Walmart, which operates cash-and-carry stores in India under the Best Price brand and also is the majority owner of Flipkart. The Economic Times has more here.
Big-But-Not-Crazy-Big Fundings
Scalable Capital, a five-year-old, Munich, Germany-based digital wealth management startup, has raised €25 million in Series C funding round from earlier shareholders BlackRock, HV Holtzbrinck Ventures, and Tengelmann Ventures. The company has now raise €66 million altogether. EU Startups has more here.
Smaller Fundings
Biome Makers, a four-year-old, West Sacramento, Ca.-based company that uses data analytics and AI to analyze soil and provide data-driven insights to farmers, has raised $4 million in funding co-led by Seaya Ventures and JME Ventures, with participation from LocalGlobe. Dumpling, a nearly three-year-old, Seattle-based startup that’s aiming to empower people to run their own grocery delivery businesses, has raised $3 million in seed funding from Floodgate and Fuel Capital. More here.
FNA, a five-year-old, London-based startup that’s selling a regulatory technology analytics platform, has raised $5.5 million in Series A funding led by IQ Capital, with participation from GettyLab. More here.
Holloway, a three-year-old, San Francisco-based online publishing company that aims to distill industry expertise into information guides, has raised $4.6 million in seed funding. Backers include NEA, The New York Times, and South Park Commons. More here.
Yoti, a four-year-old, London-based startup offering a digital identity platform and app that helps users prove who they say they are when accessing services or making age-verified purchases, has raised £8 million in new funding from unnamed private investors, Yoti employees, and company cofounder and CEO Robin Tombs. TechCrunch has more here.
Not-Saying-How-Much Fundings
Fantasy Life, a four-year-old, New York-based online community for fantasy sports players and bettors, has raised an undisclosed amount of Series A funding from SK Ventures, Upstage Ventures and numerous athletes. World Casino News has more here.
New Funds
Coatue Management has closed $700 million for a new early-stage venture capital fund; Dan Rose, a former Facebook vice president, has joined Coatue Management as co-chairman of the new fund and the firm’s existing growth fund, whose bets include Snap and DoorDash. Coatue recently opened a new office in South Park in San Francisco, one appointed in “the style of a clubhouse by the designer of the Los Angeles Soho House,” reports The Information. More here.
Iporanga Ventures, a 10-year-old, Sao Paulo, Brazil-based investment firm that specializes in venture capital, equities, fixed income and currencies, is looking to raise up to $100 million for an early-stage venture-capital fund, shows an SEC filing. More here.
Nyca Partners, a New York-based firm with investments in fintech startups, including PayRange, Trellis, Affirm and Acorns, has secured $210 million in capital commitments for its third venture capital fund. The firm’s debut fund had closed on $31 million in 2014. Its second fund, a similarly focused fintech effort, raised $125 million in 2017. TechCrunch has more here.
OSF Ventures, the three-year-old, Peoria, Il.-based corporate venture capital arm of OSF HealthCare, has closed its sophomore venture capital fund with $75 million in committed capital. Like its predecessor, the fund will invest in new technology, devices, and services that offer improved and more cost-efficient healthcare. More here.
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People
Bhaskar Sunkara has joined the Cisco-backed venture firm Decibel as a venture partner. Sunkara was the founding CTO of AppDynamics. More here.
Essential Reads
Apple has suspended its practice of having human contractors listen to users’ Siri recordings to “grade” them, following a Guardian report revealing the practice. The company says it won’t restart the program until it has conducted a thorough review of the practice. It also says it will add the ability for users to opt out of the quality assurance scheme in a future software update.
Detours
Everything that’s coming to Netflix this month.
Banana milk is also now a thing.
Things people say to their dogs.
Retail Therapy
Antikythera island. Bonus: you’ll live on a Greek island! Downside: with just 20 other residents, you’d better know how to fish.