September 20, 2019

Friday! [Opens front door; falls, exhausted, into hot dog sofa.]

Wishing you a terrific weekend, everyone. See you in a couple of days.:)

Top News

Facebook announced today that it has suspended tens of thousands of apps for improperly hoarding users’ personal information, which is way up from the 400 apps flagged a year ago by the company’s investigation in the wake of Cambridge Analytica. TechCrunch has more here.

Palantir Technologies is reportedly raising money at what it hope will be a $26 billion post-money valuation, or $6 billion more than it was assigned during its last funding round four years ago. As CNBC notes, if successful, the now 16-year-old, Silicon Valley contractor to U.S. spy agencies and the Pentagon would show that private investors are “continuing to drive the valuations of Silicon Valley unicorns higher, even as stock market investors are pushing back.” More here.

Want to Crush Competitors? Forget SoftBank; Blackstone Wants You to Know It Writes $500 Million Checks, Too

Back in January, Blackstone — the investment firm whose assets under management surpassed a jaw-dropping half a trillion dollars earlier this year — quietly began piecing together a new, growth equity platform called Blackstone Growth, or BXG. Step one was hiring away Jon Korngold from General Atlantic, where he’d spent the previous 18 years, including as a managing director and a member of its management committee.

Step two has been for Korngold, who is responsible for running the new program, to build a team, which he has been doing throughout the year, bringing in “people who speak the language of Blackstone,” he says, including from TCV, Andreessen Horowitz, Carlyle, Vista Private Equity, NEA, and SoftBank .

Apparently, the group is now ready for business. It has already closed on two deals from existing pools of capital with Blackstone, including acquiring outright the mobile ad company Vungle. According to Korngold, two more term sheets “are being signed imminently.”

We talked with him last week for more information about what the group is shopping for, what size checks it is willing to write, and which firms it views as its biggest rivals for deals (and more). Our chat has been edited for length and clarity.

You’ve been hiring throughout the year people who have large-scale growth equity backgrounds. Are many of them women? Blackstone is one of the most diverse organizations [in terms of] gender or ethnicity. In general, it’s a huge priority for the firm and within our group of 20 people, 40 percent are female, a number we hope to get to 50 percent. Hiring is still in process, but it’s a really healthy culture.

How many people does Blackstone employ altogether? There are 2,600 altogether across 24 offices.

Is your group investing a discreet pool of capital? At some point, we’ll have a dedicated pool of capital, but as a firm, we’ve been investing in growth equity for some time [so have relied on other funds within Blackstone to date].

There’s no shortage of growth equity in the world right now. What is Blackstone building that’s so different? The sheer scale of the operation is different. We have nearly 100 operating professionals — employees of Blackstone — who were hired because they are functional experts — from pricing experts to process engineering experts to human capital and procurement and digital marketing experts — and who can advise our companies. Also, Blackstone can holistically assist a company through [our] growth equity and real estate and procurement and debt [groups] and other related infrastructure support, enabling companies to fight way above their weight class. We have 600,000 people across our portfolio, and that provides an interesting opportunity for our companies to cross pollinate [and to cross-sell to] one another. Unlike most growth equity firms, we also have a significant number of data scientists who do three things: identify proprietary signals across asset classes to help instruct where we should be hunting; help our companies monetize their data; and help us in our diligence. They’ll access raw data feeds and almost see the matrix, if you will.

How many data scientists are we talking about? A couple dozen [across Blackstone].

Blackstone must be competing against fast-growing tech companies for data scientists. How do you convince them that work for an investing giant is the better gig? If you’re an intellectually curious individual, there are so many signals [coming through Blackstone] that it’s almost a proxy for the world. It’s like manna from heaven. It’s not like they’re doing a single-threaded approach. The nature of the challenges across our companies is so vast and so varying that whether you’re looking at a fast-growing retailer or a cell phone tower in another country, the nature of the tasks is always changing.

SoftBank seems to have shaken things up a bit when it came on to the scene, given the size checks it is writing. Your boss, Steven Schwarzman, who recently talked with us about this bigger new push into growth equity, made sure to note that there are few organizations that can write $500 million checks. Everyone in Silicon Valley wants to talk about SoftBank. More here.

Massive Fundings

Vianai, a months-old, Palo Alto, Ca.-based early-stage, machine learning startup that was launched by former Infosys managing director and SAP executive Vishal Sikka, has raised $50 million in seed(!) funding. The funding comes from friends, family offices and institutions that Sikka is declining to name for now. TechCrunch has more here.

Big-But-Not-Crazy-Big Fundings

AvantStay, a two-year-old, West Hollywood, Ca.-based hospitality startup focused on short-term rental properties tailored for group getaways, has raised $20 million in Series A funding. 3L Capital led the round, joined by Bullpen Capital, Convivialite Ventures, F-Prime Capital, Zeno Ventures and Olympic snowboarder Shaun White. Built in LA has more here.

Built Robotics, a three-year-old, Bay Area-based maker of self-driving heavy equipment to make construction safer and, it says, faster, has raised $33 million in Series B funding from Next47, Founders Fund, and NEA. ZDNet has more here.

Kitchen United, a nearly two-year-old, Pasadena, Ca.-based cloud kitchen company, has raised $40 million in Series B funding co-led by RXR Reality and earlier backer GV with participation from Fidelity Investments Canada, DivcoWest, and G Squared. The Spoon has more here.

Lookiero, a three-year-old, Bilbao, Spain-based online personal shopping service for clothes and accessories, has closed a $19 million funding round led by MMC Ventures, with participation from earlier backer All Iron Ventures and new investors Bonsai Partners, 10x and Santander Smart. TechCrunch has more here.

Smaller Fundings

Daisy Intelligence, a 16-year-old, Vaughan, Ontario-based retail and insurance analytics startup, has raised C$10 million ($7.5 million) in Series A funding led by Framework Venture Partners, with participation from Sonae IM. More here.

Digi-Prex, a seven-month-old, Hyderabad, India-based startup that runs an online subscription pharmacy that deliver patients with chronic diseases their prescriptions, has $5.5 million from Khosla Ventures, Vedanta Capital, Y Combinator, Quiet Capital, and SV Angel. Justin Mateen, a founder of Tinder, also joined the round. TechCrunch has more here.

Plutoshift, a three-year-old, Palo Alto, Ca.-based data intelligence startup focused on industrial processes, just raised $8 million in Series A funding from Fall Line Capital and Unshackled Ventures. More here.

Red Sift, a four-year-old, London-based email security startup, has raised $8.8 million in funding led by MMC Ventures, with participation from In-Q-Tel and earlier investors White Star Capital and Oxford Capital. More here.

VentriFlo, a months-old, Pelham, N.H.-based blood pumping system used during surgery or in the intensive care unit, has raised $10 million in Series A funding led by philanthropists Jim and Pat Poitras and other investors. More here.

New Funds

Matchstick Ventures, a six-year-old, seed-stage firm that says it invests in “rapidly growing, yet underserved startup ecosystems,” has raised $30 million for its second fund — which is 10 times what they raised for their first fund. The firm’s two general partners — one is in Minneapolis and the other is in Boulder, Co.– say they will write initial checks of around $500,000, and in some cases make follow-on investments of $1 million or $2 million. Among its LPs is Foundry Group in Boulder. More here.

Two former executives from smart door lock company August Technology have created Union Labs, a venture capital firm that has filed to raise $50 million for its first fund. The founders are Nate Williams, the former chief revenue officer at August, and Chris Kim, its former CTO, and their LinkedIn profiles indicates that Union Labs will be focused on helping to build and back seed-stage startups focused around the internet of things, artificial intelligence, and autonomy. Journalist Stacey Higginbotham has more here.

Exits

Clutter, a four-year-old, L.A.-based on-demand storage company, has shelled out $152 million for a portfolio of four properties in New York that will bolster its presence in the city. TechCrunch has so far raised $310 million from its venture investors. TechCrunch has more here.

People

Accomplice promoted Ash Egan from principal to partner. Egan joined Accomplice a year ago, after spending roughly a year with the blockchain studio ConsenSys, where he first crossed paths with Accomplice team.

Battery Ventures has promoted three staffers to vice president: Dillon Joyce, Max-Julian Kaye and Aaron Rinberg. More here.

Ouch. Oracle’s billionaire founder Larry Ellison reportedly told a small cohort of founders at his San Francisco home that Uber, despite its $57.5 billion public market capitalization, is “almost worthless.”

Sam Smith-Eppsteiner has joined Eric Schmidt’s venture firm Innovation Endeavors as an investment partner. It’s a homecoming for Smith-Eppsteiner, who’d previously spent two years with the Palo Alto outfit, leaving in late 2017 to intern at both the self-driving technology company Nuro and at an AI and machine-earning startup focused on medical and biology research called Owkin.

Lawsuit!

IBM filed a lawsuit agains the real estate giant Zillow this week, accusing it of using its patented technology to build key parts of its home value estimation and search features. The dispute is the latest in a series of high-profile patent suits filed by IBM against other well-known tech companies, notes GeekWire. More here.

Detours

New York City Mayor Bill De Blasio has ended his 2020 presidential bid, in the process reminding people that he was campaigning.

What really brought down the Boeing 737 Max.

Can you go home again? Yes, if that home is a castle called Downton Abbey.

Retail Therapy

Like a home dry cleaner right in your closet.