Search results for: “Josh Stein”

  • StrictlyVC: April 1, 2014

    Happy April Fool’s Day, everyone! Have a great day. Don’t get punked.

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    Top News in the A.M.

    Apple is reportedly struggling to make a giant iPhone with a 5.5-inch screen.

    Airbnb is going (more) legit, announcing yesterday that it will begin collecting hotel taxes from its customers in San Francisco.

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    Recommind Bets Big on Big Data Components

    Recommind isn’t a household name, but it looks likely to join the ranks of other business software companies that have gone public in recent years.

    The San Francisco-based company uses machine learning and advanced analytics to identify patterns in email, online documents, voicemail and social media, in the process helping law firms, corporations and the U.S. government tackle one of their biggest headaches — their growing piles of unstructured data. One of Recommind’s clients is the SEC, for example, which began testing Recommind’s software two years ago, and six months later signed up its roughly 1,200 employees to the service.

    Recommind prides itself on having raised just $22.5 million from investors, much of it last fall. As a result, its CEO, Bob Tennant, insists Recommind is in no rush to do anything other than perfect its newest offerings. Still, the company is nearly 14 years old. And with over $70 million in 2012 revenue (the company’s 2013 revenues are still with the auditors), it’s hard not to wonder what’s next for the company, so I asked Tennant. Our chat has been edited for length.

    You’re excited about a new platform that makes building cloud-based applications for big data technologies really easy. On the most basic level, how does it work?

    A typical enterprise app might have million lines of code, which is a lot to [write] from scratch. It’s a little like cooking a meal. You start with some ingredients and put them together in a particular way and, voila, you have an outcome. Now, maybe you cooked everything from scratch, including grounding the flour yourself, but most of us prefer to buy ingredients that are semi or fully prepared. That’s what we’re doing here. One way is to write code from scratch; another is to snap together components. And there’s been a big set of components missing, and we think we’ve got the stuff to fill the hole.

    You’ve traditionally specialized in e-discovery but say this new platform extends to a host of other applications. Can you elaborate, and what industries are you targeting?

    One broader set of applications we call information governance, which is the migration of data and the legally defensible deletion of data. For example, we’re about to close a big deal with a big bank that needs to deal with the e-discovery process, but whose IT department also wants to be able to get rid of data — just delete it, and you can’t do that; you have to [first] satisfy the SEC and the Department of Justice and anyone who might have claims to it.

    Other verticals we’re focused on include insurance, healthcare, technology and energy, so with regard to tech, we do a lot of work for Google and Cisco. Another client is TransCanada [the company seeking to build the Keystone XL pipeline]. Seven of the top 10 banks also use some version of our software, as does the SEC …[and] FINRA, the self-regulatory body, which uses us as its primary investigative tool.

    Why haven’t you gone public yet? Reports suggested that you might go out in 2013.

    We’ve never said that. We’re putting the infrastructure in place to be ready to go public, but we’re not committed to doing that. We don’t have a ton of VC backers [to satisfy] and we’re not burning through cash such that we need to raised bigger and bigger amounts of money.

    Are you open then to another private financing round?

    Yes. We won’t go [public] unless we think we’re completely ready to go out [and] there may well be investment needs prior to the point at which we have all our ducks in a row.

    In the meantime, how does a 14-year-old company keep its engineering talent engaged? Have you allowed employees to cash out some of their holdings on the secondary market?

    We haven’t, but we also don’t have a lot of the same pressure that Silicon Valley companies do, partly because a lot of our engineering work is done in Germany, and those folks aren’t being called every day to go to Twitter. We don’t have trouble attracting talent here, either, because the technology we’re developing is really cool in terms of what it will do from an architectural perspective. It’s unique, no one else is doing it, and that’s even more attractive to engineers than popping [a] stock [the day of its IPO].

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    New Fundings

    2can, a two-year-old, Moscow-based mobile application and card reader that turns smart phones into terminals that can accept credit card payments, has raised $5 million in funding led by InVenture Partners with participation by earlier investors Almaz Capital Partners and ESN Group. The company has raised $7 million altogether.

    Bizzby, a two-year-old, London-based on-demand services marketplace akin to TaskRabbit, has raised $10 million in funding from an undisclosed investor that TechCrunch sources say is a major U.S.-based hedge fund.

    Cloudera, a 5.5-year-old, Palo Alto-based Hadoop vendor, has raised $900 million in financing from Google Ventures, T.Rowe Price, Intel and MSD Capital, the private equity firm of Michael Dell. As part of the round, Intel acquired an 18 percent stake in the company. The round, which includes a $160 million round announced two weeks ago, brings Cloudera’s funding to more than $1 billion — and its valuation to roughly $4.1 billion.

    Cool Planet Energy Systems, a 5.5-year-old, Greenwood Village, Co.-based company creating negative carbon fuels from organic materials, has raised $100 million in Series D financing led by North Bridge Venture Partners and Concord Energy. Earlier investors BP, Energy Technology Ventures, Google Ventures and the Constellation division of Exelon also participated in the round. Cool Planet has raised $121 million altogether, according to Crunchbase.

    Enterra Feed, a 6.5-year-old, Vancouver-based company that creates sustainable animal feed ingredients and concentrated natural fertilizer for food production, has received $5 million in funding from Avrio Capital, a Calgary-based agricultural fund.

    Gamblit Gaming, a four-year-old, Glendale, Ca.-based company that accommodates real-money gambling experiences in online and on-site deployments worldwide, has closed $12 million in financing led by American Capital.

    Industrial Toys, a two-year-old, Pasadena, Ca.-based mobile games developer, has raised $5 million in Series A funding led by Accel Partners.

    Kaizen Platform, a year-old, Tokyo-based the startup behind a user interface A/B testing platform called PlanBCD, has raised $5 million from Fidelity Growth Partners Japan and Gree Ventures, according to the Bridge, a Japan-focused media outlet. The company has raised $5.8 million altogether.

    Mercari, a year-old, Tokyo-based the startup behind a mobile flea market app of the same name, has raised $14.1 million from Global Brain, Globis Capital Partners, Itochu Technology Ventures, GMO Venture Partners, and other unnamed investors. Since the service’s launch last July, the Mercari app has surpassed one million listed items, reports the Bridge.

    Number2andYou, a new, Boston-based, still-stealth startup, is newly flush with $60 million, according to backers Lux Capital and the company’s director, Seymour Pheecis. Details here.

    Ricebook, a year-old Beijing-based application that invites users to photograph their food, then share them with friends over social networks, has raised $7 million in Series B financing, according to Chinese media reports. IDG Capital led the round, with participation from earlier investorCeyuan Ventures.

    SCIenergy, a 4.5-year-old, San Francisco-based building energy management company, has raised $12 million in new funding led by Braemar Energy Ventures. New investors Edison Energy and Mitsui USA also participated in the round. Earlier investors The Westly Group,DFJ Core, DFJ Growth and Triangle Peak Partners also participated in the new financing of the company, which survived a major shake-up less than two years ago.

    T1Visions, a 5.5-year-old, Charlotte, N.C.-based company that makes interactive touch screens, has raised $3.8 million in Series B funding from Fidelis Capital of Birmingham, Al., and an unnamed investment group from Mooresville, N.C. The company has raised a total of $6.7 million to date.

    WalkMe, a three-year-old, San Francisco-based company that helps website owners and app developers create interactive on-screen “walk-thru’s” that help users complete complex tasks, has raised $11 million in new funding led by new investor Scale Venture Partners. Other participants in the round included Mangrove Capital Partners, Giza Venture Capital and Gemini Israel Ventures. The company has raised roughly $17.5 million altogether.

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    New Funds

    Balderton Capital, the London-based venture capital firm, has raised a new, $305 million fund to invest in early stage startups, largely in Europe. The WSJ has much more on the firm, which now manages $2.2 billion in funds, here.

    Data Collective, a three-year-old, San Francisco-based venture firm that invests in data-focused startups, has closed a third fund with $125 million in commitments, reports TechCrunch, which has published a lengthy profile of the firm. Data Collective’s second fund, an $80 million pool, closed in 2012. The firm, founded by Matt Ocko and Zach Bogue, tells TechCrunch that one of its biggest differentiators is 35 “equity partners” who’ve worked in big data at companies like Facebook, Saleforce, and VMWare and who help with deal flow as well as in evaluating startups. Ocko is a longtime investor who spent 21 years at Archimedes Capital and another seven years at Sevin Rosen Funds; Bogue spent much of his earlier career as a corporate attorney, first with Wilson Sonsini Goodrich & Rosati and later with Virtual Law Partners.

    Ribbit Capital, a two-year-old Palo Alto, Ca.-based venture firm that focuses on financial services startups, is in the market for its second fund, shows an SEC filing that lists its target as $110 million. In January of last year, Ribbit Capital closed its inaugural fund with $100 million. The firm, whose investors include Silicon Valley Bank and the Spanish banking group Banco Bilbao Vizcaya Argentaria SA, was founded by serial entrepreneur Micky Malka, who remains its sole general partner.

    Rise Capital, a year-old, San Francisco-based, early-stage venture firm focused on startups in emerging markets, is raising a $146 million fund, according to an SEC filing. Rise was founded by Nazar Yasin, a former Tiger Global Management director. Yasin tells the WSJ that the fund has already held a first close on $100 million and that it listed a higher amount with the SEC in case there was “some leakage over $100 million so we don’t have to re-file again.”

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    IPOs

    Arista Networks, a 10-year-old, Santa Clara, Ca.-based maker of network switches for large data centers, filed to go public yesterday. The company, led by former Cisco executive Jayashree Ullal, was founded by Sun Microsystems cofounder Andy Bechtolsheim and David Cheriton, a computer science professor at Stanford University, with $100 million in funding. In a twist, Arista disclosed in its IPO plans a dispute with another company cofounded by Cheriton called Optumsoft that sent Arista a letter in November, asserting ownership of certain components of Arista’s network operating system. The letter alleged that Arista violated terms of a 2004 licensing agreement covering confidentiality of information and use of the software, Arista said. Optumsoft hasn’t filed legal action, but Arista’s filing said it couldn’t rule litigation out.

    It’s a big week for tech IPOs, and Rubicon Project kicks things off tomorrow, when it begins trading publicly on the New York Stock Exchange. The company has raised $51 million in funding over the years. Its biggest shareholders are Clearstone Venture Partners, which owns 21 percent of its shares going into the offering; News Corporation, which owns 19.3 percent; and Mayfield Fund, which owns 14.2 percent. (All plan to sell part of their stake in the IPO.)

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    Exits

    Yahoo is in preliminary talks to acquire online-video service News Distribution Network, a deal that would help Yahoo compete with Google’s YouTube for viewers and ad dollars, reports the WSJ. Yahoo could pay roughly $300 million for NDN, say WSJ sources.

    The four-year-old, Atlanta-based company, which supplies news outlets and other Web publishers with video clips about news, sports, politics and other topics, has raised an undisclosed amount of seed funding from TomorrowVentures, among others. “We are not in talks to get acquired by Yahoo at this time,” a spokeswoman for NDN, told the WSJ (which apparently has reason to think otherwise).

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    People

    Sam Altman, the newly appointed president of Y Combinator, tells the Silicon Valley Business Journal that the accelerator would never have enjoyed the success it has had it remained in Boston, where it launched. “No. Definitely not. At this point, Boston is not even the number two city for startups. I think New York is now. And the difference between number one and number two is massive. If you want to be the best program in the world, which we really do want to be, you’ve got to be in the best place in the world.”

    Philippe Dauman, Jr. the son of Viacom CEO Philippe Dauman, is joiningTwitter as its director of commerce partnerships after a six-plus-year run at Google, where his most recent title was “Strategic Partner Development Manager” within Google’s mobile commerce division. TechCrunch has more here.

    Fred Davis is leaving CODE Advisors, a tech and media-focused investment bank that he co-founded in 2010 with Quincy Smith and Michael Marquez, reports Fortune. No word yet on where Davis, whose father is music executive Clive Davis, is headed.

    Bill Gurley of Benchmark thinks anonymous apps like Secret and Whisper are going to be “really hard to monetize,” he said in a meeting with Business Insider. Noting the platforms attract mean comments as well as thoughts about suicide and depression — not exactly ideal content for advertisers — Gurley added, “I haven’t felt any anxiety because we aren’t in the one or two companies.”

    Scott Guthrie was appointed the permanent head of Microsoft‘s enterprise group yesterday, a position he has held since Satya Nadella left the role to become CEO of the company. Here is the memo sent to employees by Nadella.

    Chad Gutstein has just been appointed the CEO of venture-backedMachinima, the giant YouTube network, reports Re/code. Gutstein, the former chief operating officer of the small cable network Ovation, is replacing replace Machinima co-founder Allen DeBevoise, who will stay on as chairman at the company.

    Andy Rendich, the chief service and operation officer of the steath-payments startup Clinkle, is the newest exec to beat a quick path out the door of the company, reports Re/code. Just weeks ago, COO Barry McCarthy and design chief Josh Brewer also hit the road. All have stayed for astonishingly short periods of time. Rendich, a Walmart.com and Netflix veteran, joined Clinkle in December.

    Jana Rich, a well-known tech recruiter at Russell Reynolds, is leaving the firm after 12 years as a partner to start her own outfit called the Rich Talent Group. Re/code has more here.

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    Job Listings

    HarbourVest, the institutional investor, is looking to hire a Boston-based associate.

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    Data

    M&A spending in the tech, media and telecom market set a record for the first three months of any year since the dot com implosion of 2000. The aggregate value of first-quarter deals totaled $128 billion, according to 451 Research. The numbers were driven up by Facebook’s $19 billion acquisition of the messaging company WhatsApp, Google’s $3.2 billion acquisition of Nest Labs, and Comcast’s $45 billion purchase of Time Warner Cable. But that’s only part of the story, say 451 Research analysts. Mid-market deals — those between $200 million and $600 million —  are also ballooning, reaching a median size of $391 million in the first quarter, the highest they’ve been in five years.

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    Essential Reads

    What’s going on with publicly traded GSV Capital (and should the rest of us care)?

    You don’t have to work for the NSA to track someone using their metadata, shows Ars Technica.

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    Detours

    One-inch to one-foot scale miniatures of artists and their work spaces by hand, and in exacting detail.

    The jobs with the highest obesity rates.

    This authentic food is delicious, but I think my mouth is on fire.

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    Retail Therapy

    We could learn to love airport trolleys with these numbers.

    Take a luxuriously appointed balloon to outer space. No joke.

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    Connie

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  • StrictlyVC: March 14, 2014

    Top News in the A.M.

    Almost a week after a Malaysia Airlines jet disappeared with 239 passengers and crew members on board, there’s no firm evidence to suggest where it could be.

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    The Analyst: Talking with Azure Capital’s Mike Kwatinetz

    Mike Kwatinetz is old school. The cofounder of Azure Capital in San Francisco isn’t likely to call himself a “an artisan” or “venture assistant.” He’s no great fan of networking. And Kwatinetz co-manages the firm with three people he has worked alongside for 20 years, a rarity in the venture world. (The firm’s GPs all spun out together from Credit Suisse First Boston.)

    Azure emerged on the scene in 2000, just as the market was going into Internet Bubble free fall. Bolstered by early wins like VMWare, which EMC acquired for $675 million in 2003; and BillMeLater, which eBay purchased in 2008 for $945 million, Azure survived, but it had to significantly reconstitute itself in the process. Although Azure raised $540 million in its 2000 debut fund, its second fund (vintage year 2006) was only $127 million, and Kwatinetz says the firm’s third fund, closed in 2011 is “smaller,” on the scale of its immediate predecessor.

    Today Azure focuses on post-seed-stage investments. The other day, StrictlyVC caught up with Kwatinetz, an amiable straight-talker with a PhD in mathematical modeling, to talk about that shift — and what’s next. Our chat has been shortened for length.

    Azure’s team is like a band. How would its four GPs characterize one other? Who plays drums?

    Hah. I’m probably the most analytic, though Paul Weinstein is pretty similar. Cameron [Lester] is probably the best one at networking. And Paul Ferris has some very deep relationships with real superstars in his area. He’s also probably the nicest of the four of us.

    Azure had some big exits in the aughts. What are some of your most recent exits?

    Cyan, [a computer network gear company] went public last year. We also had a relatively fast exit with [travel app] TripIt [acquired by the expense and travel management company Concur for $120 million in 2011].

    We completed our distribution of stock last year of Concur, which was an unusual deal but worked out well. When Concur came to the table, it as offering much less. We said no, so Concur wound up guaranteeing us its stock would be worth a certain amount two-and-a-half years later. We had to hold on to the stock [for the duration] but it made it possible for them to give us a lot less stock, while we locked in the price we wanted.

    I’ve read about these ratchet provisions, which sound incredibly risky. Are you seeing more of them?

    Not first-hand, though I’ve heard other instances of them. This was a pretty big payday for key members of the TripIt team, though, and taking cash right away [versus agreeing to this stock deal] would have significantly reduced their payday.

    Where’s your investment sweet spot right now?

    We tend to come in at around a $10 million [pre-money valuation], so we call ourselves post-seed — that’s how we think of ourselves. We’re aiming to have three-quarters of our startups in that category and one or two earlier and one or two later.

    It seems like that stage is getting crowded all of a sudden.

    Post seed is still the least crowded. About 40 percent of seed-funded companies can’t get to their next round, so we have a tremendous volume of opportunity, though, again, we’ll make exceptions and go even earlier. We’ve already invested in the new company of TripIt’s founders, Chairish, an online consignment marketplace for furniture. It’s now reaching that post-seed stage and they’ll have to decide if they raise another round; from our view, I’d be happy if we could lead it.

    Having experienced the late ’90s dot com bubble, how are you feeling about the market right now?

    It’s wide open but the requirements are much higher than they were in the mid ‘90s, even pre-bubble. What’s interesting to us: the Toronto Stock Exchange and the London Stock Exchange are trying to fill the gap that Nasdaq has created by moving up market, so we’re looking at them. We want as many options as possible for our companies.

    What are the advantages and disadvantages of going abroad?

    There are lots of pros and cons to Toronto. The pros: you need a minimum of $10 million in [annual] revenue, not $100 million. Of course, you don’t want the to be orphaned afterward, where there’s no constituency of buyers and your company becomes a penny stock. So we’re trying to understand all of that better before we do anything in that arena.

    We’ve been studying London longer. The [revenue] threshold is higher, but there are restrictions about how you can exit that make it trickier.

    Do you think the U.S. is anti- small companies?

    I think startups that get acquired before going public cut off job creation and that the government should pay attention to that.

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    New Fundings

    EnEvolv, a three-year-old Boston-based company that’s engineering microorganisms to make chemicals, enzymes and small molecules for variety of industries, has raised $1.7 million in Series A funding led by Cultivian Sandbox Venture Partners of Chicago.

    Coull, a 5.5-year-old, Bristol, England-based ad tech company whose technology allows advertisers to tag individual products within videos that can be clicked on for purchase, has raised $4 million from angel investors, says TechCrunch. The company has raised $16 million to date, all from wealthy individuals, including John Greathouse, a partner with Rincon Venture Partners, and Paul Fraser, a founder of PFC Auctions.

    Kineta, a six-year-old, Seattle-based company that’s developing drugs to treat RNA viruses like hepatitis C, influenza, and the common cold, has raised an undisclosed amount of investment from angelMD, a crowd-funding platform that connects physician investors with medical startups seeking capital investments, advisors, and users.

    Mubi, a six-year-old, Palo Alto, Ca.-based online movie website that integrates elements of social networking with on-demand video streaming, has raised $7.5 million in Series D funding, including from Floreat, MMC Ventures and White Star Capital. Mubi has raised $15.7 million to date, according to Crunchbase.

    ownCloud, a three-year-old, Lexington, Ma.-based company behind the ownCloud Project, a popular file sync and share open source project, has raised $6.3 million in Series A funding led by Devonshire Investors and earlier backer General Catalyst Partners, with participation from existing angel investors. The company has raised roughly $9.6 million altogether, shows Crunchbase.

    Premise, two-year-old, San Francisco-based company that’s building a network to track macroeconomic data in real time, has raised $11 million in Series B funding led by The Social+Capital Partnership. Earlier investors Google Ventures, Harrison Metal, Andreessen Horowitz and Bowery Capital also participated in the round, which brings the company’s total funding to $16.5 million. TechCrunch takes a look at the company here.

    Sage Therapeutics, a two-year-old, Cambridge, Ma.-based company that’s developing medicines for central nervous system disorders, has raised $38 million in Series C financing from OrbiMed Advisors, EcoR1 Capital Management, Foresite Capital Management, Third Rock Ventures and ARCH Venture Partners. The funding comes just five months after the company closed on a $20 million Series B round led by ARCH Venture Partners and Third Rock Ventures. The company has raised roughly $95 million to date.

    SiNode Systems, two-year-old, Chicago-based materials startup developed at Northwestern University, has raised an undisclosed amount of seed funding from Energy Foundry, an impact venture capital fund created out of the Illinois Energy Infrastructure Modernization Act.

    Smart Sparrow, a three-year-old, Sydney, Australia-based ed-tech start-up, has raised $10 million in funding led by London-based Yellow Brick Capital. Earlier investors OneVentures and Uniseed — which had given the company $2 million last year — also participated in the round.

    SteelBrick, a four-year-old, Palo Alto, Ca.based maker of easy-to-use apps for Salesforce.com customers, has raised $5 million backing from SteelBrick CEO Godard Abel, and Matt Gorniak, former global SVP sales/alliances from BigMachines (Abel’s last company), who will serve as a senior advisor to SteelBrick.

    Xapo, a two-year-old, Palo Alto, Ca.-based company that’s building bank vaults deep in the earth to store millions of dollars worth of bitcoin code on computer drives, has raised $20 million in first-round funding led by Benchmark. Other investors include Fortress Investment Group and payment-focused VC firm Ribbit Captial. It’s the brainchild of Wences Casares, former CEO of digital wallet company Lemon (acquired by Lifelock last December). The WSJ has much more on the company here.

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    New Funds

    Binary, a new San Francisco-based, consumer-focused, early-stage venture fund, is emerging on the scene, reports Fortune. The firm, which isn’t talking yet with reporters, was founded by two VCs of other firms who’ve joined forces: Jonathan Teo and Justin Caldbeck. Teo comes to Binary after two years as a managing director at General Catalyst Partners, whose investment in Snapchat Teo reportedly led. (He also reportedly owns a personal stake in the company.) Teo was previously a principal at Benchmark Capital, where he says he originated its investments in Instagram and Twitter. (So Teo, who also logged four years as an engineering manager at Google, is a superstar, basically.) Caldbeck has meanwhile spent the last three years as a managing director at Lightspeed Venture Partners and had spent the previous six years working his way up to partner at Bain Capital Ventures. The one-time McKinsey & Company analyst has led high-profile deals for Lightspeed in numerous consumer startups, including GrubHub and TaskRabbit.

    Maiden Lane, a new, San Francisco-based firm is “expected to close its debut fund within the next week on between $20 million and $25 million,”reports Fortune. The fund’s LPs include traditional sorts, such as Top Tier Capital Partners and Venture Investment Associates. Half of the firm’s capital will be designated for AngelList syndicates, says Fortune, while the other half will flow to direct investment opportunities (or co-investments) offered via AngelList’s deal platform.

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    Exits

    Appixia, a young Tel Aviv, Israel-based startup — incubated through the Microsoft Ventures Israel Accelerator program — has been acquired by the publicly traded Israeli company Wix, a cloud-based Web development platform. Terms for the deal were not disclosed. Appixia’s platform promises to make it easy for retailers to take their stores mobile and build their own native commerce apps.

    Katech, a 37-year-old, Clinton Township, Mi.-based company that specializes in the design, prototyping, testing, research and development, and making of engines, has been acquired by six-year-old EcoMotors, the venture-backed maker of advanced engines and power trains. Terms of the deal weren’t disclosed. EcoMotors has raised roughly $60 million from investors, including Khosla Ventures, Bill Gates, and Braemar Energy Ventures.

    LaunchRock, a three-year-old, Walnut, Ca.-based company that helps startups set up viral “launching soon” pages in minutes, has been acquired by Fundable, a business crowdfunding platform. Terms of the deal weren’t disclosed. LaunchRock had raised $800,000 in seed funding from 500 Startups, White Star Capital, Venture51, Quotidian Ventures andTrinity Ventures, among others.

    Zuuka, a five-year-old, Santa Barbara, Ca.-based children’s media company, has been acquired by New York-based mobile games and app developer Cupcake Digital for undisclosed terms. Zuuka had raised an undisclosed amount of funding from CFP Investments.

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    People

    Bill Gates sits down with Rolling Stone for extraordinarily wide-ranging interview that’s well worth reading. Among his many keen observations, Gates says, “We take things like TV or Internet or a microwave or a refrigerator for granted, but moving people from basic lives to decent lives requires a lot less than that. You know, development sometimes is viewed as a project in which you give people things and nothing much happens, which is perfectly valid, but if you just focus on that, then you’d also have to say that venture capital is pretty stupid, too. Its hit rate is pathetic. But occasionally, you get successes, you fund a Google or something, and suddenly venture capital is vaunted as the most amazing field of all time. Our hit rate in development is better than theirs, but we should strive to make it better.”

    Serial entrepreneur Max Levchin sat down for a fireside chat with PandoDaily founder Sarah Lacy last night. Among other things, he said that his social apps company Slide “drained the crap out of me.”

    Oh, boy. Barry McCarthy is out the door of Clinkle, reports Re/code. The longtime Netflix CEO joined the stealth payments startup last fall in a move that signaled the still-stealth company was ready for prime time. In fact, McCarthy was led to believe the company’s app would launch in November. Instead, the app has only gone live in a limited beta test. “They’re not nearly as close to scaling the businesses as I thought they were when I came in the door,” McCarthy tells Re/code. “And that’s what I do.” In related, terrible news for the startup that raised what was infamously billed as the “largest seed round in Silicon Valley history,” former Twitter designer Josh Brewer has reportedly walked away from Clinkle, too, after less than a week’s time. (That’s probably some kind of record.)

    Pamela Rice has joined the alternative lending company OnDeck as its senior vice president of technology. Rice worked as a hiring manager at PayPal for nearly eight years, as a credit and payments product leader. OnDeck, in New York, just last week announced a whopping $77 million round led by Tiger Management, with earlier investors Institutional Venture Partners, RRE Ventures, SAP Ventures, Google Ventures, First Round Capital, Industry Ventures, and Peter Thiel participating.

    David Zhu, former COO of Chinese search giant Baidu, has joined GGV Capital as a venture partner in Singapore. According to his bio, he was in “charge of [Baidu’s] overall operations” from 2002 until 2007, when he left. Before joining Baidu, he was VP of one of what was one of country’s largest consulting companies, Han Consulting.

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    Happenings

    It’s a couple of months away, but knowing some of you like to plan ahead: The National Venture Capital Association is hosting one of its biggest yearly events, VentureScape, on May 14 at the Westin San Francisco. The two-day event will feature GE chairman and CEO Jeff Immelt, Workday cofounder and CEO Aneel Bhusri, and former Secretary of State Condoleezza Rice, among other speakers. Learn more here.

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    Job Listings

    Looks like Andreessen Horowitz is still in the market for both consumer and enterprise deal partners to help the firm’s GPs find and assess deals. (H/T: Dan Primack)

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    Data

    A chart, care of CB Insights, of the top 10 (in terms of fundraising) tech companies backed by Goldman Sachs.

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    Essential Reads

    Facebook CEO Mark Zuckerberg says he has called President Barack Obama to express his frustration over the government’s spying. “The U.S. government should be the champion for the Internet, not a threat,” he wrote in a post on his Facebook page yesterday.

    Leaked photos claim to show Amazon‘s new games controller, and it is ugly.

    Oops. Phone call metadata does betray sensitive details about your life, says a new study.

    —–

    Detours

    To keep teens alert, a growing number of high schools is letting them sleep in.

    Former Secretary of State Colin Powell posts a 60-year-old selfie to Facebook.

    Two guys, singing Bey’s newest album, “Beyonce,” in five minutes.

    —–

    Retail Therapy

    You have to admire creative, high-end retailers. In today’s news, Harrys of London is selling $1,500 socks crafted from deer hair. Deer hair! Says the Daily Mail, “Harrys of London claim the grey-colored fashion accessories are the ‘most exclusive in the world’ because they are crafted out of ‘light’ and ‘soft’ down hair harvested from New Zealand Red Deer.” Before readers race to the store’s site, you should know the report goes on to say that “the Today show managed to get hold of a pair and after giving them to various people to touch concluded the high price tag is ‘not justifiable.’”

    ——

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    Connie

  • StrictlyVC: January 31, 2014

    110611_2084620_176987_imageIt’s Friday, good people. Hope you have a wonderful weekend, and we’ll see you back here next week.

    —–

    Top News in the A.M.

    Ouch. Consumer Intelligence Research Partners came out with its latest numbers on mobile market share in the United States yesterday and found that BlackBerry devices accounted for zero percent of all smartphone activations in the fourth quarter of last year.

    —–

    An Invite-Only Social Network Turns to Crowdfunding

    You may remember Erik Wachtmeister from his days at ASmallWorld, the exclusive, invitation-only social network community that he founded with his wife in 2004. The son of an ambassador and a countess, the aristocratic Wachtmeister disappeared from view after selling a majority stake in the business to movie mogul Harvey Weinstein, who elbowed Wachtmeister aside, tanked the business, and later sold it to a Nestlé heir, who has recently run into troubles of his own.

    Now Wachtmeister is back and taking another shot at the genre with his newest venture, Best of All Worlds, an 18-month-old, invitation-only social network that’s even harder to join. It features a new wrinkle, though: starting next week, accredited investors will be able to buy their way into the platform via a crowdfunding campaign. “It’s a way for us to widen our base of investors, stakeholders and global ambassadors of the brand,” says Wachtmeister. We spoke yesterday morning; our conversation has been lightly edited for length.

    We talked about Best of All Worlds in July 2012, when it was set to launch. What’s been happening since?

    It’s been in private beta. We launched it with 35,000 people, a relatively small group in global terms. And we’ve since been evaluating how people use it, what features they most like, whether the user interface is intuitive or not and making adjustments.

    Why did you decide to form another invitation-only social network?

    Not so much to keep it exclusive but to maintain an intimate space where people can network more openly. You can’t just walk up to someone at an airport, but if you’re in a private venue, the social rules are different; it’s more acceptable to walk up to someone.

    How does the admittance process work?

    It’s very democratic. Members decide who can be invited, but not everyone gets invitation rights, so there’s an algorithm that [decides how many invitations are allotted those with invitation privileges]. It’s to prime it and hopefully ensure that it grows in the right direction. We don’t want an overwhelming amount of students, for example. We want a good mix geographically, professionally, age-wise.

    Some might interpret this as yet another way for the “1 percent” to avoid everyone else.

    Not at all. It’s very simple. All we’re doing is creating what exists in real life online. People don’t necessarily want to pass out their business cards at Grand Central Station; that’s not normal.

    We want to grow our community in an orderly fashion, where you’re starting with people who have a lot of affinity for each other and know the same people and have similar appreciations for what’s around them. Our goal is to have an eclectic mix of people from all over the world, from all kinds of backgrounds, but there should be a certain commonality of interest.

    You’re turning to crowd-funding. Will these investors who may well be strangers to your other members be able to access the site?

    Anyone who invests will of course be able to become a member. At a very minimum, investors should be able to able to find their way around the site.

    Why do it?

    We see it as complementing our fundraising strategy with giving our members and other accredited investors the opportunity to “take a bet” on a private company.

    Which crowdfunding platform are you using and what’s the minimum investment?

    London-based crowdcube.com is doing the deal. The minimum size is $1,000, but we’re limiting the number of investors to 200. Our goal is to raise around $500,000.

    Are you also talking to VCs?

    We’re very open to it, though VCs tend to want to see that hockey stick [growth] being realized already – they want huge traction – and we’re not quite there yet.

    What makes you think you can compete with Facebook?

    I think people are sick of Facebook. They use it like a directory, to look up people, and if they’re bored, they’ll look to see what people did yesterday. It’s for vanity and self-expression. We’re more a utility.

    Once we have critical mass, for example, we’ll create verticals for groups of people who share the same passions. Facebook Groups are great if you’re organizing something like a bachelor party but not if you want to hook up with people with a strong passion or knowledge in a given area. Facebook has several million of these groups, with an average size of 20 members; our goal is to have a few dozen “worlds” with tens of thousands of people in each world. It’s a completely different concept.

    JamBase

    New Fundings

    BlueCava, a 3.5-year-old, New York-based company that sells online audience management and measurement services, has raised $13 million in funding from S3 Ventures, Performance Edge Partners and Zeitgeist Capital. The company has raised $36 million to date, according to Crunchbase.

    Bow & Drape, a two-year-old, New York-based fashion technology startup, has raised $1.2 million in seed funding led by VegasTechFund. Other participants in the round included Great Oaks Venture Capital,Triple Point Capital, and StubHub co-founder Jeff Fluhr. The Journal takes a look at what the company is doing exactly here.

    Cleverbug, a nearly three-year-old, Dublin, Ireland-based “social gifting” company that produces online photo cards and other gifts, has raised $6 million in financing led by Delta Partners. To date, the company has raised $8 million.

    Enigma, a year-old, New York-based search and discovery platform for public data, has raised $4.5 million in Series A funding led by Comcast Ventures, with participation from American Express Ventures, Crosslink Capital and the New York Times Company.

    Moontoast, a four-year-old, Boston-based ad platform that helps brands get the most out of Facebook, has raised a $4.5 million extension to its Series B funding, secured early last year. The new investment was made by the Martin Companies, an early-stage firm based in Nashville that also led a $5 million round in Moontoast last year. The company has has raised $15.5 million altogether, shows Crunchbase.

    One Kings Lane, the 4.5-year-old, San Francisco-based online home decor retailer, has raised $112 million in new funding led by Mousse Partners, with Fidelity and one other (unnamed) large institutional firm participating alongside earlier investors. The investment gives the company a $912 million post-money valuation. One Kings Lane has raised $229 million altogether, including from Kleiner Perkins Caufield & Byers,Greylock Partners, Institutional Venture Partners and Tiger Global Management.

    Practically Green, a 3.5-year-old, Boston-based company whose online tools help companies manage their sustainability programs, has raised $3 million in Series A funding. The round included CommonAngels, Pan Asia Solar, Clean Energy Venture Group and Launchpad Venture Group. The company has raised $4.75 million so far.

    Qordoba, a two-year-old, Dubai-based company that provides localization services for companies like Google and LinkedIn, has raised $1.5 million in Series A funding from Silicon Oasis Investments and MENA Venture Investments.

    Zopa, an 8.5-year-old, London-based peer-to-peer lending platform, has raised $25 million in funding from Arrowgrass Capital Partners, a European-focused investment firm headquartered in London. Zopa, whose earlier backers include Benchmark, Bessemer Venture Partners,Augmentum Capital and Wellington Partners, has now raised roughly $56 million altogether.

    —–

    New Funds

    CrunchFund, 2.5-year-old, San Carlos, Ca.-based early-stage venture firm cofounded by Michael Arrington, is in the market for a second fund, according to an SEC filing that shows a target of $40 million. Fortune’s Dan Primack reports that CrunchFund already has held around a $25 million first close for the new fund, which includes a new commitment from founding investor AOL. CrunchFund has made more than 115 investments, including in Airbnb, Uber, and Yammer, acquired by Microsoft for $1.2 billion in 2012. Among its most recent investments is the video-sharing app Mindie.

    Jerusalem Venture Partners is raising a new, $120 million cyber security fund, and Cisco plans to invest tens of millions of dollars in it, reports Haaretz.

    —–

    IPOs

    JD.com, one of China’s biggest e-commerce companies, has filed with the SEC to raise $1.5 billion in a U.S. IPO. Formerly known as 360buy.com, the company is the second biggest e-commerce company in China and a rival to the e-commerce giant Alibaba Group. Dealbook has much more here.

    —–

    Exits

    Incredible Labs, a three-year-old, San Francisco-based company that had developed a mobile personal assistant app called Donna, has beenacquired by Yahoo, which is shutting down Donna and bringing five of Incredible Labs’s seven employees onboard. Other terms of the transaction were not disclosed. Incredible Labs had raised $2.5 million from investors, including Khosla Ventures, Betaworks, Webb Investment Network, CrunchFund, and Ashton Kutcher, among other angel investors.

    LoopFuse, a six-year-old, Atlanta-based social analytics platform, has been acquired by marketing automation platform Salesfusion for an undisclosed amount. Two weeks ago, Salesfusion, also based in Atlanta, had raised $8.25 million in Series B funding, including from Noro-Moseley Partners, Hallett Capital and BLH Venture Partners; it has raised roughly $10 million altogether. LoopFuse, meanwhile, had raised $1.4 million from True Ventures in 2009.

    NaturalMotion, a 13-year-old games company with offices in Oxford, England and San Francisco, has been acquired by Zynga for $527 million in cash and stock. Among other things, NaturalMotion makes a popular app called “Clumsy Ninja” that was released late last year. Alongside news of the acquisition, Zynga also announced it was laying off 314 employees, representing 15 percent of its staff, as part of a cost reduction plan designed to save the money up to $35 million.

    —–

    People

    Salesforce founder Marc Benioff tells the Journal how to address tensions in San Francisco: “I think these [Google, Facebook, and other tech company] buses — which if you hang out in the Mission, [they come] every five minutes — they’ve got to be massively regulated, we have toget them off our streets.”

    The New York-based early-stage venture firm ff Venture Capital has promoted three employees: Ryan Armbrust, who joined the firm in 2012 from the technology transfer office of Columbia University, has been promoted from associate to director; Katie Frankel, who joined the firm in 2010, has been promoted from associate to director of community management; and Paul Bianco, who joined the firm from insurer AXA Equitable a year ago, has been promoted from analyst to associate.

    Jason Kilar, former head of Hulu is back with a new stealth startup called The Fremont Project, and according to Re/code, its app will offer a mix of magazine and newspaper content and videos videos from which readers will pick and choose.

    Bill Krause, the cofounder of 3Com, is Andreessen Horowitz‘s newest special advisor, the firm revealed in an interview with Krause yesterday. Krause is also affiliated with the powerful buyout firm The Carlyle Group, where his title is “operating executive” to Carlyle’s technology and business services group.

    Josh Miller is taking on a part-time role as a venture partner atBetaworks in New York, the outfit announced yesterday. Miller founded Branch Media, acquired by Facebook this month for a reported $15 million. Betaworks was an investor and Miller and his team worked out of Betaworks’s offices for roughly nine months. Miller and his New York-based team are now forming a new “Conversations” group inside of Facebook to help users connect around their interests.

    Could the long wait soon be over? According to Bloomberg’s sources,Microsoft‘s board is on the verge of annointing Satya Nadella, the company’s enterprise and cloud chief, as its newest CEO. More here.

    Each new year, Facebook CEO Mark Zuckerberg chooses a new goal for himself. One year the goal was to learn Mandarin; another year, it was to only eat meat that he’d killed himself. In 2014, his goal is to write a thank-you note every day.

    —–

    Job Listings

    Speaking of promotions at ff Venture Capital in New York, the firm is looking for a new analyst. Apply here.

    —–

    Data

    It’s the Super Bowl this weekend, which means it’s also time for the Super VC Bowl, brought to you by PitchBook. Witness its fun look at the 2013 venture activity of the competing teams’ home states. Go Washington! Wait, go Colorado! Oh, forget it. We can’t muster any real enthusiasm for this one. (Sorry.)

    —–

    Essential Reads

    Nest‘s team is becoming Google‘s core hardware group, reports TechCrunch.

    Amazon is planning to offer a checkout system to retail stores later this year. But Amazon’s bricks-and-mortar ambitions may go far beyond payments.

    There are very few things the public sector can do to encourage entrepreneurship, argues a new Kauffman Foundation study.

    —–

    Detours

    A new paper looks at alcohol consumption and voting patterns from 1952 to 2010, finding that as states become more liberal politically, beer and spirit consumption increases.

    Forgotify: The tool for discovering Spotify’s four million unheard (like, zero-play) tracks.

    —–

    Retail Therapy (Super Bowl Edition)

    Maple Bacon Coffee Porter. Serve it to fans of the opposing team and have the last laugh!

    Best Buds App, to help you locate the good stuff in Denver. (This announcement constitutes neither an endorsement nor a recommendation.)

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • StrictlyVC: December 3, 2013

    110611_2084620_176987_imageHappy Tuesday! StrictlyVC is feeling a little sickly this a.m, so please excuse any craziness below. Also, just a quick reminder that if you haven’t signed up for the newsletter yet, you can do that right over here.

    —–

    Top News in the A.M.

    The results are in. When it comes to American schools versus the rest of the world, our institutions are expensive, unequal, and pretty lousy at math.

    —–

    With Little Notice, Seed-Stage Valuations Begin Falling

    A widely held belief in Silicon Valley is that valuations are still on a one-way trajectory toward the sky, with founders firmly in the driver’s seat.

    But the reality for seed-stage companies may be a bit more dire than that — and getting worse by the month.

    According to the research firm CB Insights, both average and median seed-stage valuations have fallen since last year, with the average valuation dropping from $2.2 million to $1.7 million and median valuation falling even more precipitously, from $1.7 million to just .6 million.

    Data from AngelList, a matchmaking service for investors and seed-stage entrepreneurs, also shows declining valuations. According to AngelList, which tracks thousands of startups in its system, the average seed-funded company’s valuation dropped from $3.9 million in the third quarter of 2012 to $3.6 million in the third quarter of this year. That isn’t a massive dip, but AngelList founder Naval Ravikant tells me that “by the time [a shift in one direction] shows up in the averages, it’s pretty pronounced.”

    A recent quarterly venture capital report out of Pitchbook, which operates a subscription-only database of private equity and VC deals paints a rosier picture. Pitchbook found that median pre-money valuations for seed-stage, VC-funded companies have nearly doubled over the last three years — from $3.2 million in 2010 to $5.2 million through the first three quarters of 2013.

    Still, this same report observed that lofty valuations are only making it harder for companies to raise Series A rounds. Pitchbook further noted that the rise of valuations can’t go on endlessly, suggesting there will likely be more flat and down rounds in coming years.

    Ravikant — noting that “everyone’s dataset is incomplete” — suggests the future is now. Though he can’t pinpoint exactly when things began trending downward, he thinks valuations “kind of peaked around the Facebook IPO, when it turned out to be less than people thought it would be.”

    According to Ravikant, there “hasn’t been a mass exodus out” out of the seed-stage investing market, mainly because “people still believe some percentage of your portfolio should be early-stage. But there’s increased recognition” that it’s a tough racket, with many angels suffering from investor fatigue and suddenly becoming more realistic about the chances of their portfolio companies receiving follow-on investments.

    There will always be a market for the most promising seed-stage startups, in other words. But evidence from CB Insights and AngelList suggests that for entrepreneurs just setting out, the road ahead looks bumpy.

    JamBase

    New Fundings

    Biodesix, an eight-year-old, Boulder, Colo.-based molecular diagnostics company, has raised $8.3 million in funding. New funds accounted for $4.3 million of the financing round, while the remaining $4 million came from the conversion of a convertible note, the company said in a release yesterday. Existing shareholders provided all of the capital. (The company, which has raised more than $65 million over the years, has never disclosed its investors.)

    Catalyze, a months-old, Madison, Wi.-based company that’s building healthcare apps, has raised roughly $2 million in Series A financing, led by Arthur Ventures, Baird Venture Partners, and Chicago Ventures.

    Green Biologics, a 10-year-old, Oxford, England-based industrial biotechnology company that’s largely focused on breaking down agricultural waste to create butanol fuel, has raised $23.3 million. Sofinnova Partners led the Series B round, joined by previous investors, including Swire Pacific, Capricorn Venture Partners, Oxford Capital Partners, and Morningside Ventures.

    Grokker, a nascent, San Francisco-based video network that pairs consumers with experts in a variety of verticals, from yoga to Pilates to French cooking, has raised $5.5 million, reports AllThingsD. Khosla Ventures, First Round Capital founder Josh Kopelman, and angel investor Ron Conway, are among Grokker’s investors, says the outlet.

    Payoff.com, a three-year-old, Long Beach, Calif.-based company that aims to make personal finance social and “fun” through rewards and goal setting, has closed on $7 million in new funding, according to an SEC filing. Investors including FirstMark Capital and Great Oaks Venture Capital have previously provided the company with roughly $5.8 million, according to Crunchbase.

    Portea Medical, a two-year-old, Bangalore-based provider of in-home healthcare and emergency medical services in India, has secured Rs 48 crore ($8 million) from Accel Partners and Ventureast. Reportedly, the company already employs 150 people, who provide services in Bangalore, Delhi, Chennai and Mumbai. The outfit is now looking to expand into Hyderabad and Pune, among other spots.

    Quest Inspar, an 18-month-old, Kent, Washington-based company that robotically rehabilitates energy, water supply and other pipelines, has raised $4.2 million from Five Elms Capital.

    Restorsea Holdings, a two-year-old, New York-based company behind a new skin care line, has raised $24.9 million as part of a $28 million round, according to an SEC filing. It isn’t clear from the Form D who the lead investor is, though Restorsea’s chairman, Muneer Satter, is listed. (Satter is credited with building the world’s largest family of mezzanine funds at Goldman Sachs before leaving the bank last year after a 24-year career.) Also included on the filing is Corinne Nevinny, who cofounded the L.A.-based, early-stage venture capital firm LMN Ventures in 2010.

    Stem, a four-year-old, Millbrae, Calif.-based company that’s selling “intelligent” energy storage, has raised $15 million in Series B financing. The international utility Iberdrola and GE Ventures led the round, joined by previous investor Angeleno Group. In September 2011, Angeleno Group and Greener Capital provided Stem with $10.2 million in Series A funding.

    Vertical Brands Media, the five-year-old, San Francisco-based parent company to ApartmentList.com, a site that aggregates rental listings from numerous sources, has raised $14.9 million in new funding, according to an SEC filing that shows a target of $19.9 million. The filing doesn’t disclose the startup’s investors.

    Visterra, a six-year-old, Cambridge, Mass.-based company building a pipeline of medicines to combat infectious diseases, has raised $8.1 million as the final tranche of a $34.2 million Series A round that the company began raising last year. Previous investors Polaris Partners, Flagship Ventures, Lux Capital, the Bill & Melinda Gates Foundation, and Omega Funds provided the newest funding, along with Visterra insiders.

    Xagenic, a three-year-old, Toronto-based molecular diagnostics company, has raised $20 million in Series B financing led by Domain Associates. Previous investors CTI Life Sciences Fund and the Ontario Emerging Technologies Fund also participated in the found. Xagenic is developing a “lab-free” diagnostic platform that produces results within 20 minutes.

    Xlumena, a five-year-old, Mountain View, Calif.-based company that makes a stent and medicine delivery system, has closed a $25 million Series C financing.  The round was led Third Point, and included existing investors Prism VentureWorks, Charter Life Sciences, Ascent Biomedical Ventures and Aperture Venture Partners. The company had reported a $4.8 million round earlier this year, and another, $7 million round, in 2011.

    —–

    People

    Willis Ware, an electrical engineer helped build a machine that would become a blueprint for computer design in the 20th century, died last week at age 93. The New York Times elaborates on the important role Ware played in the computer industry.

    —–

    IPOs

    Inogen, a 12-year-old, Goleta, Calif.-based maker of portable oxygen equipment, filed to go public late last week, with plans to raised up to $86.25 million. Inogen’s principal shareholders include Novo A/S (it owns 42.2 percent of the company), Versant Ventures (26.1 percent), Arboretum Ventures (15.1 percent), Avalon Ventures (6.5 percent), and AMV Partners (5.95 percent).

    Kindred Biosciences, a two-year-old, Burlingame, Calif.-based veterinary drug developer plans to raise less during its IPO than originally planned, according to its amended S-1, which shows it hopes to raise $46 million, down from as much as $57.5 million. Kindred has raised $6.3 million in venture backing, according to Crunchbase. Though its filings don’t disclose how much investors own, they show the company’s biggest outside shareholders include Adage Capital Partners and EcoR1 Capital 1 Fund.

    Nimble Storage, a five-year-old, San Jose, Calif.-based hybrid data storage company, amended its S-1 yesterday to reflect its plans to raise up to $165.6 million in an offering. The company has raised around $82 million over the years, according to Crunchbase. Its biggest VC shareholders are Sequoia Capital and Accel Partners (each owns 20.9 percent) and Lightspeed Venture Partners (which owns 15.8 percent).

    Twitter is getting mixed reviews by its IPO underwriters. Reuters has more here.

    —–

    Exits

    Chalkable, a 3.5-year-old, New York-based ed-tech startup, has been acquired by STI, a private equity-backed data management company serving K-12 schools, reports PandoDaily. The deal value was not disclosed. Chalkable had raised $1.3 million in seed funding from 500 Startups, Expansion Venture Capital and Prolific Venture Capital.

    Prolexic Technologies, a 10-year-old, Hollywood, Fla.-based Distributed Denial of Service (DDoS) mitigation company, is being acquired by publicly traded Akamai Technologies, says the WSJ. Akamai agreed to pay about $370 million in cash for Prolexic, which was reportedly talking with bankers about going public. Prolexic had raised roughly $52 million in recent years, including from Kennet Partners, Trident Capital, and Camden Partners.

    SkyPhrase, a two-year-old, New York-based company that’s been building Natural Language Processing (NLP) technology, is now part of Yahoo, the companies announced yesterday. No financial terms were disclosed. SkyPhrase had raised just $250,000 in seed funding, including from the Thiel Foundation.

    Topsy Labs, a six-year-old, San Francisco-based company whose tools analyze tweets to track news along with consumer sentiment, has been acquired by Apple for more than $200 million, according to WSJ sources. The company is one of a handful of Twitter’s partners that have access to the full stream of all tweets posted to the service. Topsy had raised north of $30 million, according to Crunchbase, which lists its earliest investor as IronPort Systems cofounder Scott Banister. Others of its investors include BlueRun Ventures, Founders Fund, and Ignition Partners.

    —–

    Happenings

    The 17th annual Credit Suisse Technology Conference rolls into day two in Scottsdale, Arizona. You can check out the agenda here. If you don’t happen to be on hand, you can check out some of the companies’ presentations here.

    —–

    Job Listings

    SAP Ventures is forming a new biz dev group to act as a liaison between SAP, the SAP ecosystem, and any other relevant business network, and it’s looking to add a director-level person to its ranks by January. Candidates need five to eight years of experience in business development, sales, or marketing. You can learn more here.

    —–

    Essential Reads

    Yesterday, a federal judge tossed an antitrust class action accusing Apple of illegally driving up the price of applications sold for use on iPhones.

    GigaOm looks at how Netflix is balancing its streaming traffic.

    —–

    Detours

    Why our brains love lists.

    “For most people, software programming’s social cachet falls somewhere between that of tax preparation and autism. But it’s catching fire among forward-thinking New York parents.”

    While at a bar, “Don’t whistle, snap, yell, or wave money. Unless you want people to think you work at Morgan Stanley.” — The unofficial Goldman Sachs guide to bar etiquette.

    FunnyorDie has created an hilariously funny “trailer” about legendary Deadline Hollywood founder Nikki Finke, who was recently pushed out of the company by its owner, Jay Penske. (Here’s some backstory, though you don’t need it to enjoy the clip.)

    —–

    Retail Therapy

    This handsome jetpack will set you back more than $100,000, but listen, you can use it to fly up to 800 feet and you can travel at nearly 50 miles per hour for up to 30 minutes. More to the point, you’ll be the only person you know with a jetpack.

    The Venus of Cupertino iPad docking station. How can you not buy it for someone you know?

    —–

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

     

     

    Connie

  • StrictlyVC: November 11, 2013

    110611_2084620_176987_imageGood morning! Hope you had a fine weekend. If you happen to be a veteran or have an active service member in your family, thank you — today and always.

    —–

    Top News in the A.M.

    With no hands-on technology experience and a tight deadline, entrepreneur Jeffrey Zients, who is leading the effort to fix HealthCare.gov, has his work cut out for him. “To try to come in, in six weeks, and sort something like this out – I just have a lot of sympathy for him,” said Joshua Bolten, a friend of Zients and a chief of staff to President George W. Bush.
    —–

    AppNexus on Ad Tech IPOs, and Why It’s Not Yet Public

    New York-based AppNexus has been having a very good run. The six-year-old ad platform, which oversees the real-time buying and selling of online display advertising, has grown to 600 employees. The company, which had nine offices at the start of the year, has since opened two others. And so many billions of ads are being processed on AppNexus’s platform each day that it’s now the “largest [ad tech] company outside of Google,” says AppNexus President Michael Rubenstein. 

    So when is AppNexus going to follow in the footsteps of other ad tech companies to go public? On Friday, I asked Rubenstein, who was director of Google Ad Exchange before joining AppNexus in 2009 (and who spent a decade at DoubleClick before that). Our conversation has been edited for length. 

    When we last talked much earlier this year, you’d just closed on $75 million in funding. What are some of the highlights since?

    It’s been an amazing growth year. We’ve just about doubled our revenue [since 2012]. We decided to accelerate our international expansion and just recently opened offices and a data center in Sydney and Singapore. The other major investment we’ve made this year was mobile. Because it’s such an explosive trend in the digital media industry, we dedicated a team of dozens of people inside the company to building the best mobile ad technology in the world based on our existing capabilities.

    You recently partnered with the mobile ad network Millennial Media. Why do you think its stock hasn’t performed better?

    They went public at a very high valuation and the stock has come down a lot since then, but I’m not an expert on [why]. What’s clear is that Millennial is building a leading business in what’s likely to be the fastest-growing and most exciting area of the ad market for a long time to come.

    Any thoughts on why another ad tech company, the automated ad buying startup Rocket Fuel, has received a warmer reception by public investors? 

    Rocket Fuel is doing a really great job of serving its customers and building a very strong ad business. Whether that means its stock price is justified or over- or undervalued, it’s hard to say with valuations all over the place.

    Why are ad tech valuations so seemingly schizophrenic?

    I don’t know if the market really knows how to value these businesses. It could be the market is trying to sort out which are the great companies and which aren’t.

    Can you share anything about your revenue and whether or not you’ve ever been profitable? The standard for going public still seems to be revenue of more than $100 million.

    We’ll do significantly more than that [in 2013]. We’re not profitable because we continue to invest very heavily in the long term. We’ve invested massively in mobile advertising and had very little revenue from [it], for example, but that will change next year. And by 2017, the [Internet Advertising Bureau] is forecasting that mobile advertising will [represent a slight majority of U.S. online ad spending].

    It is safe to say you’re thinking about an IPO?

    We had some thoughts about it and decided to do that big round at the beginning of the year instead because we felt like we’d be best off building value rather than going public. An IPO is something that we’d like to do in the future, but it would be more of a financing event than anything else.

    Will we see AppNexus make an acquisition any time soon?

    We always look. But acquisitions are a big deal, and, having been involved in a number at DoubleClick and Google, I can tell you that an acquisition can be a terrific catalyst for growth if done right. But often, they are not done right. So you have to pick your pitch.

    StrictlyVC02

    New Fundings

    DesignCrowd, a five-year-old, Sydney, Australia-based crowdsourcing marketplace for freelance designers, has raised $3 million in new funding from investors led by Starfish Ventures. The round brings the company’s total funding to date to $6.3 million. (In a related story, Starfish cofounder John Dyson told The Australian this weekend that he welcomes the entry of U.S. venture firms into the Australian market, including Peter Thiel’s Valar Ventures, Sequoia Capital, and Accel Partners. “Bring it,” Dyson did not say.)

    The Honest Company, a two-year-old, Santa Monica, Calif.-based company that was co-founded by actress Jessica Alba and sells baby diapers, wipes, bath and body care products and non-toxic cleaning products, just raised $25 million in fresh capital. The round was led by Institutional Venture Partners, which was joined by ICONIQ Capital. Previous investors Lightspeed Venture Partners and General Catalyst Partners also participated. The company has now raised $52 million.

    SkyFuel, a six-year-old, Arvada, Colo.-based company that makes thermal concentrating solar power (CSP) equipment, is raising a $2 million debt round and is a quarter of the way there, shows an SEC filing. The company announced that it raised $17 million in Series B funding in 2008, led by publicly traded Leaf Clean Energy Company. Filings show it raised another $3.5 million in equity in 2010, and that it has subsequently raised about $20 million in debt.

    Spartz, a four-year-old, Chicago-based startup that produces websites with “viral potential” every six weeks (among them is OMG Facts), has raised $2.4 million of a targeted $10 million round, shows an SEC filing. Inc. profiled the company this past spring.

    uBid Holdings, a 16-year-old, Chicago-based online marketplace for closeout and overstocked items, is in the market for a new $6 million round, according to a new SEC filing that shows that uBid has so far raised $500,000. The company has raised at least $14.5 million in equity and debt since 2010, Crunchbase shows.

    Uniplaces, a two-year-old, London-based marketplace that invites students to rent their homes (so a focused Airbnb, essentially), has raised $1.06 million in seed led by Octopus Investments and angel investors Alex Chesterman (founder of Zoopla) and William Reeve (chairman of Grace.com). Uniplaces launched in Lisbon last year, but expanded into London, where it moved its headquarters last summer.

    Via Motors, a three-year-old, Orem, Utah-based company that specializes in extended-range electric trucks, vans and SUVs, has raised $5.7 million as part of a $10 million round, shows a new SEC filing. Silicon Valley real estate billionaire Carl Berg is listed as a non-executive director on the filing, as is automotive executive Bob Lutz, who has held senior management roles at GM, Ford, Chrysler and BMW over his career.

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    New Funds

    Atomico, the U.K.-based venture firm that has expanded into numerous countries in recent years, has closed its third fund with $476.6 million, a new SEC filing shows. The firm began raising the capital in October 2012.

    Seven-year-old Atomico was founded by Skype co-founder Niklas Zennstrom to (mostly) seek out investments in non U.S.-based startups. Among its portfolio companies is the three-year-old, Berlin-based task management app developer 6Wunderkinder, which just closed on $30 million in new funding led by Sequoia Capital. (The deal marked Sequoia’s first investment in Germany.)

    In 2011, Atomico also participated in the $42 million Series A round of the 10-year-old Finnish game maker Rovio, of the Angry Birds franchise. It’s the only funding that Rovio has publicly disclosed to date.

    Atomico presumably saw a very nice return last month, when the Climate Corporation was acquired by Monsanto for roughly $1 billion. Climate Corporation helped its agribusiness customers predict crop yields using big data to examine soil quality, historical rainfall and more. Altogether, Climate Corporation had raised $109 million, and Atomico was there from the beginning, leading its $4.3 million angel round in 2007 with Index Ventures.

    Atomico has offices in São Paulo, Beijing and Istanbul, and  Tokyo. It closed its second, $165 million, fund in 2010.

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    IPOs

    Cara Therapeutics, a nine-year-old, Shelton, Conn.-based clinical-stage biopharmaceutical company at work on drugs to treat pain and inflammation, has filed an S-1 to raise around $60 million. Its principal stockholders include Esperante AB, which owns 9.2 percent of the company; Ascent Biomedical Ventures, which owns 9.9 percent; Alta BioPharma Partners, which owns 10.7 percent; MVM International Life Sciences, which owns 9.7 percent; Healthcare Private Equity Limited Partnership, which owns 5.3 percent; Devon Park Bioventures, which owns 9.4 percent; and Rho Ventures, which owns 14.5 percent.

    Globoforce, a 16-year-old, Southborough, Mass.-based company that was incorporated in Ireland (where it still maintains one of its principal offices) filed an S-1 on Friday to raise about $75 million. The company’s software powers recognition and rewards programs for its enterprise customers. Its principal shareholders include Atlas Venture, which owns 31.4 percent of the company, and Balderton Capital, which owns 41.5 percent. (Balderton invested in 2002, when it was still affiliated with Benchmark Capital and known as Benchmark Europe.)

    Ultragenyx Pharmaceuticals, a 3.5-year-old, Novato, Calif.-based clinical-stage biotech company that’s developing treatments for metabolic genetic diseases, filed an S-1 on Friday to raise up to $86 million. Its biggest shareholders include TPG, which owns 13.2 percent of the company; Beacon Bioventures, which owns 13.2 percent; HealthCap, which owns 11.8 percent; Adage Capital Partners, which owns 7.4 percent; and A.M. Pappas Life Science Ventures, which owns 5.9 percent.

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    Exits

    Curbed.com, a nine-year-old, New York-based media company with three Web publications –Curbed, Eater, and Racked — has been acquired by the 10-year-old online publisher Vox Media. The price isn’t being disclosed, but outlets have been reporting that Curbed.com went for between $20 million and $30 million. Vox Media has experienced hypergrowth since raising its first round of venture funding in 2008 from Accel Partners, Allen & Co., and former AOL exec Ted Leonsis. Vox, whose properties include SB Nation and The Verge, is run by Jim Bankoff, another former AOL executive. The company has raised nearly $80 million to date, including through a $34 million round (that is expected to reach $40 million) that was reported last month.

    On Friday, Intel announced it was acquiring the four-year-old, Santa Clara, Calif.-based, education-software maker Kno, providing what appears like a soft landing for the company. Kno’s original focus was on making tablets, and it raised $55.4 million in equity and debt within its first year toward that end, including from Andreessen Horowitz, along with First Round Capital and SV Angel. The company switched gears in 2011 to focus on interactive textbooks for mobile devices; according to an SEC filing, it then raised an additional $37.2 million. Terms of Kno’s acquisition aren’t being disclosed.

    Last week, when Facebook‘s shares reached a record high, Andreessen Horowitz sold a third of Facebook holdings, Bloomberg reports. According to a filing flagged by the outlet, the firm offloaded 2.28 million shares at $49 and $50 apiece for about $111 million. Andreessen Horowitz still owns 4.57 million shares. (A year ago, it reportedly distributed about 4.6 million shares of Facebook, most of which were acquired in Facebook’s purchase of Instagram.) Andreessen Horowitz had invested at least $80 million in Facebook shares in 2010 at what was then a $35 billion valuation.

    —-

    People

    Kerry Cooper is the new CEO of Choose Energy, a five-year-old, Plano, Tex.-based site that invites users to compare and shop for plans from energy suppliers. Cooper was previously the CMO and COO of clothing retailer ModCloth. Choose Energy has raised $11.5 million to date, including a newly raised $7.5 million round from Kleiner Perkins Caufield & Byers, Stephens Capital Partners, BlueScape Resources, NGEN Partners, and Michael Polsky, the president and CEO of Invenergy, a Chicago-based renewable energy company.

    Profiled over the weekend: Shana Fisher, one of New York’s “best angel” investors who you’ve likely never heard of before. (Fisher’s bets include Vine, Refinery29, Makerbot and Pinterest.)

    Evan Williams and Medium also get the long-form treatment. Says Williams of the type of journalism he aims to attract to the platform: “I want to give rationality a fighting chance.”

    —–

    Happenings

    Business Insider‘s three-day Ignition conference gets underway in New York today, featuring Elon Musk, Arianna Huffington, and Russell Simmons among others. Here is the agenda.

    O’Reilly kicks off its three-day Strata conference in London today. You can learn more here.

    The three-day Techonomy 2013 conference also gets rolling this afternoon, in Tucson, Ariz. Among the panelists today is Samir Arora or Glam Media and Konrad Feldman of Quantcast.

    —–

    Job Listings

    Dropbox is looking to add someone to its corporate development team in San Francisco. This person will identify and recommend acquisition targets for Dropbox; support related deals through the acquisition process; and represent Dropbox at events. To apply, you need two to four years of experience in venture capital, investment banking, and, preferably, a B.A. from a “top tier” university.

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    Data

    In honor of Veteran’s Day, Pitchbook is publishing its findings on VC-backed startups that in some capacity serve the military. Over the last decade, says the firm: 280 such companies have raised about $3.27 billion. Most of that flowed to the IT industry (42%), followed by B2B (33%), B2C (9%), Energy (7%), Healthcare (5%) and Materials and Resources (3.5%). Military and defense-related companies have already landed 36 financings this year, including for CyPhy Works (which StrictlyVC wrote about on Friday) and RallyPoint, a social network for active-duty military members and veterans.

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    Essential Reads

    Big Data is so yesterday. The real insights, say a growing number of startups, can be found through hyperdata.

    Why is encrypted email so rare in the first place?

    Lawyers for Apple and Samsung are reportedly ready for the second “Trial of the Century.”

    —–

    Detours

    Think you may work with a psychopath? The odds are higher if work in one of these professions.

    Confronted with an unprecedentedly secular crop of young people, Jewish leaders work overtime to convince Millennials to just come on and “marry a nice Jewish boy.”

    An ESPN columnist admits how hard it has become for him to watch NFL games. “I used to love football the way German shepherds love sirloin…I see too much sorrow and ugliness now…”

    Aging liberals have far more sex than conservatives, according to a decades-long Harvard study. Says the Harvard professor who led the research, “I have consulted urologists about this, they have no idea why it might be so.”

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    Retail Therapy

    Beautiful maps of national parks.

    The $670 Bonneville Red Selvedge Denim Coverall. Who knew you could look so stylish while repainting/rebuilding/fixing stuff? Just don’t wear these anywhere near your auto body shop or, for that matter, around anyone who uses their hands for a living. You will be mocked mercilessly, and you will deserve it.

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    Connie

StrictlyVC on Twitter