StrictlyVC, LLC

Six months ahead.

Chrono Therapeutics

StrictlyVC: June 13, 2014

It’s Friday the 13th! Have a great weekend, everyone, and to all the terrific dads out there, we wish you a very happy Father’s Day on Sunday!

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Top New in the A.M.

OpenTable, the publicly traded restaurant booking service, is being acquired by publicly traded travel giant Priceline Group for a whopping $2.6 billion in cash, a deal that values OpenTable at a 46 percent premium to its current market cap. The WSJ has much more here.

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VCs Just Bet $32 Million on This 76-Year-Old; Here’s Why

Thanks to the startup industry’s obsession with youth, you might think that running a fledgling venture-backed company is a young person’s game. But it’s often a different story when it comes to healthcare companies, where more experience can mean a smoother path through the lengthy FDA process — and a failure to deeply understand a technology can prove fatal.

Seventy-six-year-old Alan Levy, an organic chemistry PhD and serial CEO, is a case in point. Guy DiPierro, a corporate attorney who acquired a smoking cessation technology from the University of Basel, spent nearly a decade trying to turn it into a commercial enterprise, but his progress was painstakingly slow. By 2012, he’d successfully attracted a $2.25 million grant from the National Institute of Health for his company, Chrono Therapeutics, but he knew it wasn’t enough; he knew he needed someone like Levy.

Smart thinking. Last fall, after he pitched Levy on his anti-smoking cure, Levy, who has shepherded four early-stage companies to significant liquidity events, signed on. And yesterday, Chrono announced a $32 million round led by 5AM Venture and Canaan Partners — both of which have backed Levy in previous companies. I talked with Levy yesterday about signing up for a fifth company, and what made Chrono too good an opportunity to miss. Here’s part of that conversation, edited for length:

How is Chrono’s product different from what’s already available?

With other solutions, you put on a nicotine patch and it delivers a low, constant dose of nicotine. But you can improve efficacy if you can prevent smokers’ cravings, which are highly predictable. Take someone who wakes at 6 o’clock. We begin delivering nicotine to that person at 5 a.m., so that when he wakes, he’s feeling good. Smokers’ cravings typically spike after dinner, too, when they’re metabolizing everything — including nicotine — more quickly.

It’s well-known that you can increase efficacy from around 10 percent to 50 percent [by delivering nicotine in targeted fashion], so the industry has been trying to do it for more than a decade. Our proprietary technology can do it reproducibly, robustly, and in a cost-effective manner.

Tell me about the form factor and the cost.

The product is about the size of a small men’s watch and it can be worn as a watch, as an arm band, or a patch. It’s this circular product, mostly made out of plastic, into which a disposable cartridge snaps. It’s the razor-razorblade model.

It’s a 10-week course of treatment. Existing products on the market cost between $400 and $500 and that’s what our product will cost, too, for the band and 70 daily cartridges.

When will it hit the market?

We’ll need to do what’s required for the FDA which, in this case, is very little compared with what it would be if it were a new drug . . . so we should be able to market the product within three years.

How can you be so certain?

Nicotine delivered through the skin [is a decade-old technology] that’s been shown to be very safe. Even if someone puts on two patches, they may get sick to their stomach, but no one dies from patches. Because of that, there’s a specific pathway to approval that’s low cost and low risk.

You sold your last company in 2012, less than three years after it was founded. Why not kick up your heels and relax?

I did take a weekend off. [Laughs.] On a more serious note, I saw [Chrono’s technology] as something that could have an enormous impact – perhaps more than any other product I’ve developed in my career. The consequences of smoking are just devastating and as an ex-smoker, I know how hard it is to quit.

You’re 76. Did your age ever come up in Chrono’s funding discussions? You don’t see a lot of 76-year-olds raising huge venture rounds in information technology.

It didn’t [come up]. Most of the investors in the healthcare space know me or we know one another. They know my energy level and my level of involvement, as well as my management style and accomplishments. Fortunately, I’m very healthy; in fact, in two weeks, I’m going on a two-week biking trip to Poland.

I don’t think [healthcare executives] necessarily have to be my age. [Laughs.] But experience counts. If Groupon fails, it doesn’t make that much of a difference. I don’t think anyone is gong to die. But [at my last company], if [the product] failed, there was the potential for people to die and that’s been true of many products that I’ve developed.

You’ve heard people in the venture world say, “We can have a product out there and have it fail.” People don’t go into healthcare with that attitude. No one can afford it.

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New Fundings

5app, a three-year-old, London-based company whose software allows enterprises to create their own “app stores” to regain some control over what employees are putting on their phones, has raised $5.1 million in funding led by Beckman Group and other unnamed investors. TechCrunch has more here.

Crowdability, a year-old, New York-based education and research platform that’s hoping to capitalize on the equity crowdfunding market, has raised $1 million in seed funding, including from Howard Lindzon and Steadfast Venture Capital.

Glympse, a six-year-old, Seattle-based company whose app invites users to chart their location on a map and share it with others in real time, has raised $12 million in Series C funding, including from new investors UMC Capital, Verizon Ventures and unnamed strategic investors, along with earlier investors Ignition Partners, Menlo Ventures and Naya Ventures. The company has raised nearly $20 million altogether.

HackerRank, a two-year-old, Palo Alto, Ca.-based technical recruitment platform and code-challenge community, has raised a $9.2 million in Series B funding led by Khosla Ventures and Battery Ventures. They were joined by numerous individual investors, including Motorola Mobility VP Peeyush Ranjan and former Facebook senior director of engineering Greg Badros.

HashPlex, a nine-month-old, Seattle-based cryptocurrency-miner hosting company, has raised $400,000 in seed funding from investors, including Bitcoin Opportunity Corp., and Facebook engineer Jason Prado. TechCrunch has the story about company (the first of its kind that we’ve seen) here.

Nuzzel, the three-year-old, San Francisco-based social news startup founded by Friendster founder Jonathan Abrams, has raised $1.7 million in seed funding from a long list of investors, including Lowercase Capital, Homebrew, Streamlined Ventures, DG Incubation, World Innovation Lab, and numerous individuals, including San Francisco philanthropist Daniel Lurie. The round marks the company’s second, $1.7 million round of seed funding; it has raised $3.4 million to date.

Mobile Majority, a two-year-old, Santa Monica, Ca.-based mobile-advertising startup formerly known as PaeDae, has raised $8 million in Series B financing led by an undisclosed strategic investor. Earlier investors, including 3G Capital, also participated in the round. The company has raised $12.9 million to date, shows Crunchbase.

Peel, a five-year-old, Mountain View, Ca.-based company whose software turns smartphones and tablets into universal TV remote controls, has raised an undisclosed amount of funding from Alibaba Group. Crunchbase shows the company has previously raised $36.7 million, including from Harrison Metal, Lightspeed Venture Partners, Redpoint Ventures, and Translink Capital.

VigLink, a five-year-old, San Francisco-based platform used by publishers to insert native advertising in the form of links into their content, has raised $18 million in Series C funding led by RRE Ventures. Other investors in the round included Emergence Capital, First Round Capital, Google Ventures, Correlation Ventures, and Silicon Valley Bank.

Vizury Interactive Solutions, a 5.5-year-old, Bangalore City, India-based ad retargeting company, has raised $16 million in Series C funding led by Intel Capital. Ascent Capital and earlier investors Nokia Growth Partners and Inventus Capital Partners also participated in the round, which brings the total that the company has raised to date to $27 million.

Webtrekk, an 11-year-old, Berlin-based analytics software company that helps marketers optimize their marketing spend, has raised $33.9 million from Deutsche Private Equity. The company has raised about $35 million altogether, shows Crunchbase.

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IPOs

Shares of Mobile Iron, the seven-year-old, Mountain View, Ca.-based company that makes mobile security software for enterprises, closed their first day on the public market yesterday at $11.02, up from their offering price of $9 per share. Mobile Iron filed to go public in April.

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Exits

Medio Systems, a 10-year-old, Seattle-based predictive analytics company, is being acquired by Nokia for undisclosed terms. TechCrunch reports that Nokia will use the company’s technology in its location-based services and more specifically, to provide users more personalized maps. Medio had raised at least $30 million, shows Crunchbase, including from Trilogy Equity Partnership, Mohr Davidow Ventures, Frazier Technology Ventures and Accel Partners.

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People

Lindy Fishburne, the executive director of the early-stage, science-focused fund Breakout Labs, talks with the WSJ about why she cofounded the organization with Peter Thiel — and sheds a bit more light on how it works.

Investor Vinod Khosla tells the New York Times he’s scaling back the risk he’s willing to take on when it comes to clean tech. “We stay committed to the area, but will likely do less and will do only certain types of clean tech projects that are not capital-intensive,” he says.

Heidi Roizen, operating partner at DFJ, talks with Stanford Graduate School about relationships — real and imagined — in the age of social media. “There’s a lot of research and writing about weak links being potentially more powerful than strong ones. And I’m a big believer in that.”

Nextdoor‘s backers are breathing a sigh of relief today. Yesterday, the company’s CEO, Nirav Tolia, pleaded no contest in a San Mateo, Ca., court to a misdemeanor for leaving the scene of a highway accident that a driver says Tolia caused. According to Reuters, Tolia will pay a $239 fine, spend 30 weekend days in a county program in lieu of 30 days’ jail time, serve two years’ probation, and will be responsible for restitution to the victim, an executive recruiter who recently filed a civil suit against Tolia over the accident. Tolia was originally facing felony criminal charges but the local district attorney says he reduced them because Tolia “accepted responsibility right up front and never tried to lie about what happened or avoid responsibility.”

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Job Listings

Rockefeller University is looking for an investment analyst to help with its endowment; the job is in New York City.

Optoro, a company that raised a $23.5 million last July from Revolution and others, is looking for a business development associate. The job is in Lanham, Md., just outside of Washington, D.C.

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Essential Reads

Everything you need to know about Samsung‘s razor-thin Galaxy Tab S.

Why Elon Musk just opened Tesla’s patents to his biggest rivals.

Atari has a comeback plan. Really.

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Detours

Lean out: The dangers for women who negotiate.

Bizarre moments at the World Cup opening ceremonies.

Remember to go outside later and look up.

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Retail Therapy

Customizable backpacks. (H/T: InsideHook.)

We tried but we can’t get past the ridiculous name. (Also: Who breaks down doors?)

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VCs Just Bet $32 Million on this 76-Year-Old; Here’s Why

OM ChoiceThanks to the startup industry’s obsession with youth, you might think that running a fledgling venture-backed company is a young person’s game. But it’s often a different story when it comes to healthcare companies, where more experience can mean a smoother path through the lengthy FDA process — and a failure to deeply understand a technology can prove fatal.

Seventy-six-year-old Alan Levy, an organic chemistry PhD and serial CEO, is a case in point. Guy DiPierro, a corporate attorney who acquired a smoking cessation technology from the University of Basel, spent nearly a decade trying to turn it into a commercial enterprise, but his progress was painstakingly slow. By 2012, he’d successfully attracted a $2.25 million grant from the National Institute of Health for his company, Chrono Therapeutics, but he knew it wasn’t enough; he knew he needed someone like Levy.

Smart thinking. Last fall, after he pitched Levy on his anti-smoking cure, Levy, who has shepherded four early-stage companies to significant liquidity events, signed on. And yesterday, Chrono announced a $32 million round led by 5AM Venture and Canaan Partners — both of which have backed Levy in previous companies. I talked with Levy yesterday about signing up for a fifth company, and what made Chrono too good an opportunity to miss. Here’s part of that conversation, edited for length:

How is Chrono’s product different from what’s already available?

With other solutions, you put on a nicotine patch and it delivers a low, constant dose of nicotine. But you can improve efficacy if you can prevent smokers’ cravings, which are highly predictable. Take someone who wakes at 6 o’clock. We begin delivering nicotine to that person at 5 a.m., so that when he wakes, he’s feeling good. Smokers’ cravings typically spike after dinner, too, when they’re metabolizing everything — including nicotine — more quickly.

It’s well-known that you can increase efficacy from around 10 percent to 50 percent [by delivering nicotine in targeted fashion], so the industry has been trying to do it for more than a decade. Our proprietary technology can do it reproducibly, robustly, and in a cost-effective manner.

Tell me about the form factor and the cost.

The product is about the size of a small men’s watch and it can be worn as a watch, as an arm band, or a patch. It’s this circular product, mostly made out of plastic, into which a disposable cartridge snaps. It’s the razor-razorblade model.

It’s a 10-week course of treatment. Existing products on the market cost between $400 and $500 and that’s what our product will cost, too, for the band and 70 daily cartridges.

When will it hit the market?

We’ll need to do what’s required for the FDA which, in this case, is very little compared with what it would be if it were a new drug . . . so we should be able to market the product within three years.

How can you be so certain?

Nicotine delivered through the skin [is a decade-old technology] that’s been shown to be very safe. Even if someone puts on two patches, they may get sick to their stomach, but no one dies from patches. Because of that, there’s a specific pathway to approval that’s low cost and low risk.

You sold your last company in 2012, less than three years after it was founded. Why not kick up your heels and relax?

I did take a weekend off. [Laughs.] On a more serious note, I saw [Chrono’s technology] as something that could have an enormous impact – perhaps more than any other product I’ve developed in my career. The consequences of smoking are just devastating and as an ex-smoker, I know how hard it is to quit.

You’re 76. Did your age ever come up in Chrono’s funding discussions? You don’t see a lot of 76-year-olds raising huge venture rounds in information technology.

It didn’t [come up]. Most of the investors in the healthcare space know me or we know one another. They know my energy level and my level of involvement, as well as my management style and accomplishments. Fortunately, I’m very healthy; in fact, in two weeks, I’m going on a two-week biking trip to Poland.

I don’t think [healthcare executives] necessarily have to be my age. [Laughs.] But experience counts. If Groupon fails, it doesn’t make that much of a difference. I don’t think anyone is gong to die. But [at my last company], if [the product] failed, there was the potential for people to die and that’s been true of many products that I’ve developed.

You’ve heard people in the venture world say, “We can have a product out there and have it fail.” People don’t go into healthcare with that attitude. No one can afford it.