Happy Thursday, everyone! (Web visitors, here’s an easier-to-read version of this morning’s email here. You might also just go ahead and sign-up.)
Top News in the A.M.
Apple is more than doubling its stores in China, CEO Tim Cook announced this morning.
Boris Wertz Raises a New, Much Bigger, Fund
Version One Ventures, the Vancouver-based fund of entrepreneur-turned-investor Boris Wertz, is taking the wraps off a $35 million early-stage fund today. That’s nearly twice the size of Wertz’s $20 million debut fund, closed in early 2012. Northleaf Venture Catalyst Fund and BDC Capital are the new fund’s anchor investors.
As you might imagine, the extra capital will allow Wertz to write bigger checks. In a call yesterday, he said he now plans to make initial investments of between $500,000 and $750,000, up from $250,000 to $300,000, a shift that should allow him to lead more deals. The bigger pool should also enable Wertz to pour more follow-on funding into Version One’s existing portfolio, which right now includes the online cosmetics company Julep; the business intelligence platform Mattermark; and Kinnek, an online platform that brings together small businesses with suppliers.
All told, said Wertz, he plans to invest his second fund in 20 to 25 companies. I asked him what else he’s planning for, particularly amid what feel like big shifts in the market.
Congratulations on the your new fund. That’s quite a jump up in size.
Thank you. We set out to raise $30 million and probably could have raised $40 million but didn’t want to make it larger. I’m still the single investing partner, and we think a good benchmark is $30 million to $35 million per partner, which is what you see at comparable funds like Floodgate.
You say the collective value of Version One’s portfolio is now $600 million. Recognizing it’s early days, have any companies exited yet?
No, angel investments I made prior to [creating Version One] have [been acquired] like Flurry [sold to Yahoo], but one rocket ship in our portfolio – [a consumer marketplace] that has raised an A and B round – hasn’t even announced [itself publicly yet].
More companies are waiting on their funding announcements. Why do you think that is?
We have two companies in our portfolio that have raised [capital] and never announced. The entrepreneurs feel that they’re on to something and want to get solid traction and a head start before telling anybody else. It makes sense, especially if you have a product where you aren’t going to acquire users on StrictlyVC or TechCrunch and don’t need [the press] for branding purposes.
You live in Vancouver but invest all around North America, including Silicon Valley. What are you seeing in terms of seed-stage valuations right now?
Two-thirds to three-quarters of our deals are outside the Valley – in Seattle, Toronto, and New York. And those ecosystems have never gotten that crazy. But there’s definitely a little insecurity in the market, which is good, given that seed-stage valuations have continued to creep up over the last three or four years. I think we’re seeing a healthy correction of expectations on the part of both investors and entrepreneurs. Things can’t always go in one direction.
When we last talked, in May, you were spending more time looking into digital healthcare, government “2.0” and bitcoin. Have you made any related bets yet?
We have one digital healthcare investment, [Figure 1, a crowdsourced medical image library for health care professionals that VersionOne invested in last December], but the challenge in [backing another] is that it has blown up crazily in terms of valuations. Look at the on-demand doctor space. There are at least eight players, all of which were well-funded at crazy valuations. [The sector] ran away pretty quickly.
As for bitcoin, we believe in the long-term potential, but we’re still forming an investing thesis around when is the right moment to invest.
It must be challenging. I’m amazed by how many seriously smart people are divided over bitcoin.
I’m in the middle. The technical platform is beautiful, and a decentralized system to record ownership makes a lot of sense for a lot of use cases. I think the real problem is that right now, there isn’t a killer use case. Payments in North America aren’t broken. I can use credit and debit cards or cash or PayPal. So people need to start focusing more on international payments and remittances, where bitcoin does make sense. The challenge is how to get into the markets that could use it the most – Brazil, Vietnam, Nigeria – and make it easy to spread. And there’s no clear path [to doing that], though we do believe some entrepreneurs will eventually figure it out.
A prominent institutional LP recently said that right now could be an especially bad time to start investing a new fund based on traditional market cycles. Is that a concern of yours?
Yes, there are cycles, but nobody can really predict them. You can only make your best investments given the environment and stay disciplined around valuations and your investment thesis and not get carried away by hype. The reality is that some vintages of funds will do better than others based on waves of new innovations or when valuations were really low. But it’s hard to predict beforehand and say 2014 or 2015 will be a terrible year for venture funds. Who knows? Timing and luck are involved in all of it, but if you focus on fundamentals and support your companies for the long term, you can hopefully smooth out your returns over time.
Boostable, a year-old, San Francisco-based company that makes advertising easier for sellers on marketplaces, has raised $3.2 million in Series A funding from Morado Ventures, Omidyar Network, and earlier investor SV Angel. The company, a Y Combinator alum, had previously raised $500,000. TechCrunch has more here.
Flint, a three-year-old, Redwood City, Ca.-based mobile payment service, has raised $9.4 million in Series C funding led by Verizon Ventures, with participation from Peninsula Ventures and earlier backers Digicel, Storm Ventures and True Ventures. The company has now raised $20.4 million altogether, shows Crunchbase.
Fortress Risk Management, a four-year-old, South Glastonbury, Ct.-based company that sells antifraud technology to community banks and credit unions, has raised $3.5 million from investors, including Advantage Capital Connecticut Partners, Black Dragon Capital and the Connecticut Department of Economic and Community Development.
Gamma Medica, a 17-year-old, Salem, N.H.-based maker of an FDA-cleared dual-headed digital imaging system, has raised $6.5 million in growth capital financing from the specialty finance company Hercules Technology Growth Capital, along with $5 million from earlier investor Psilos Group. The company has raised at least $27.5 million to date, shows Crunchbase.
Glamsquad, a 10-month-old, New York-based on-demand beauty services business, has raised $7 million in Series A funding led by SoftBank Capital, with AOL’s BBG Fund, Lerer Hippeau Ventures and Montage Ventures, participating. Business Insider has more here.
HMicro, a six-year-old, Los Altos, Calif.-based semiconductor company that makes products for medical, industrial and connected home devices, has raised $5.5 million in Series B funding from investors, including Reddy Capital Partners and Seraph Group.
iCapital Network, a 1.5-year-old, New York-based online marketplace that connects institutional investors with alternative investment fund managers, has raised $9.25 million in funding led by a consortium of partners led by Credit Suisse’s Private Fund Group.
InSilixa, a 3.5-year-old, Sunnyvale, Calif.-based developer of a molecular diagnostics platform, has raised $13 million in funding from PointGuard Ventures and Morningside Group.
Kespry, a year-old, Menlo Park, Ca.-based maker of drones for commercial applications, has raised $10 million in Series A financing led by Lightspeed Venture Partners. The company had previously raised an undisclosed amount of funding from Chmod Ventures.
Moov, a year-old, Mountain View-based maker of a fitness tracker that can reconstruct users’ movements, helping them improve their form (theoretically), has raised $2 million in Series A funding led by the China-based venture firm Banyan Capital. Moov had earlier raised $1 million via a crowdfunding campaign. More here.
Mozido, a nine-year-old, Austin, Tx.-based company aiming to provide mobile financial, retail and marketing services to the millions of people without established banking relationships, has raised a whopping $185 million as part of a planned $400 million Series B round. The funding comes from MasterCard, Wellington Management, H.R.H. Sheikh Nahyan of UAE, and Tiger Management chairman and CEO Julian Robertson. Mozido has raised roughly $265 million in capital over the last 12 months and $307 million altogether thus far, shows Crunchbase.
Playstudios, a three-year-old, Las Vegas-based maker of casual games for social platforms, has raised $20 million in Series C funding led by Jafco Ventures. Other, unnamed earlier investors also participated. The company has raised at least $28.7 million to date, shows Crunchbase.
Quartet Medicine, a year-old, Cambridge, Ma.-based company that aims to develop treatments for chronic pain and inflammation, has raised $17 million in Series A funding led by Atlas Venture, with Novartis Venture Funds, Pfizer Venture Investment and Partners Innovation Fund joining the round.
Reputation Institute, a 17-year-old, New York-based research and advisory organization focused on corporate reputation, has raised an undisclosed amount of funding from earlier investor Catalyst Investors.
Urban Airship, a five-year-old, Portland, Or.-based company that makes so-called mobile relationship management software that allows marketers to more easily delive messages to their connected customers, has raised $12.1 million in Series D funding from earlier investors True Ventures, Foundry Group, and August Capital. The company has now raised $58.7 million altogether.
YieldMo, a two-year-old, New York-based mobile ad startup, has raised $10 million in funding led by Timer Warner Investments, with participation from earlier backers Google Ventures and Union Square Ventures. The company has raised $22.1 million altogether.
YouAppi, a three-year-old, Ra’anana, Israel-based company that makes engagement, acquisition and retention software for publishers and mobile apps, has raised $3 million in Series A funding from Glilot Capital Partners, 2B Angels and Flint Capital. The company has now raised $5 million to date.
Maverick Capital, the 21-year-old, New York-based hedge fund firm, plans to launch its first venture-capital fund on Jan. 1, according to WSJ. Maverick was founded by Lee Ainslie, one of numerous prominent “Tiger Cubs” who worked for Julian Robertson’s Tiger Management earlier in his career. Tiger, along with Coatue Management, are among a growing number of hedge funds to jump into active startup investing in recent years.
California’s privacy laws have saved Kleiner Perkins Caufield & Byers firm from having to release potentially embarrassing information about former partner Ajit Nazre, in a discrimination lawsuit by a former partner Ellen Pao, reports Reuters. A judge ruled KPCB will be able to keep private any other harassment complaints about Nazre, partly because producing such complaints would hurt the privacy rights of other Kleiner employees.
Sean Jacobsohn has joined Norwest Venture Partners as a principal. Jacobsohn was previously a venture partner at Emergence Capital Partners and, earlier, a vice president at the cloud collaboration company Hightail. In related news, Norwest, on Sand Hill Road, is now opening a San Francisco office.
Jon Sakoda, who joined New Enterprise Associates in 2006 and co-manages the firm’s seed investment program, has been promoted from partner to general partner at the firm. Before joining NEA, Sakoda had cofounded the enterprise instant messaging company IMlogic, acquired by Symantec Corporation. StrictlyVC had talked signaling risk with Sakoda over lunch last month.
Facebook CEO Mark Zuckerberg famously assigns himself annual self-improvement goals. In 2010, it was to learn to Mandarin, and judging by a 30-minute question-and-answer session yesterday at Tsinghua University in Beijing — which Zuckerberg did entirely in Mandarin — that year paid off. (Unsurprisingly, there’s still room for improvement. The Asia editor ofForeign Policy later characterized Zuckerberg’s Mandarin as “roughly at the level of someone who studied for two years in college, which means he can communicate like an articulate seven year-old with a mouth full of marbles.)
Castlight Health, the six-year-old, newly public company whose online application provides employees with personalized shopping tools for healthcare benefits, is looking for a VP of corporate development in San Francisco. (It’s probably worth mentioning that the company’s shares have been dropping like a spent rocket since its March IPO, but think of the upside.)
Have we reached peak Google?
Wired delves into Twitter’s audacious plan to infiltrate all your apps.
The latest in luxury travel: Moving in.
A 26-year-old woman from Sichuan Province in China spent an entire week at KFC lamenting her failed relationship. Said the woman, “I hadn’t planned on staying there long, I just wanted some chicken wings.”
Don DeLillo, the author of “White Noise,” reviews Taylor Swift, the artist of “White Noise.”
Now you can be the most fashion-forward lumberjack in the forest.
Hemingwrite. We will take two, please.