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Carmaker Tesla Motors and electronics giant Panasonic have just announced a deal to build a huge battery plant in the U.S. and they’re providing many more details about that agreement than they have previously.
A New Holding Company Looks to Align Investors with Mature Startups
You can get away with a lot when your investors are wealthy individuals. Such is the case with Collaborative Fund, a three-year-old, New York-based venture fund focused on collaborative-consumption models and backed by some big wheels, including former Sequoia Capital general partner Tom McMurray, private equity veteran Doug Smith, and Jay Kim, a venture partner and investor in Collaborative who co-founded the video game developer Nexon Corp in 1994. (The bootstrapped company went public in 2011 on the Tokyo Stock Exchange and is now valued in the billions of dollars.)
Indeed, the same group of investors to back Collaborative are today rolling out a new, special purpose entity called Alignment Holdings that counts Collaborative founder Craig Shapiro as one general partner and Smith — who will be leading the outfit’s day-to-day affairs — the other. The idea, says Shapiro, is to work with companies that are producing real revenue, without forcing them to adhere to the constraints of a typical fund. “The life of most funds is 10 years, and you have a three- or four-year investment period after which you’re expected to harvest investments.” With Alignment, “We can invest in a business and hold it for 20 years or more.”
I talked with Shapiro yesterday about how Alignment works, who would use it, and why he’s suddenly involved with two very disparate funds.
What was the impetus for Alignment?
It kind of came together because we were seeing mission-driven founders not being excited about their current liquidity options. Some feel like selling their business would detract from their mission and that going public is arduous and expensive and makes them beholden to a quarterly result. This is targeting companies whose early-stage investors may be looking to exit. It’s almost like a leveraged buyout, where we say, “At this price, we’re going to purchase your preferred shares.”
Don’t secondary sales address this issue?
You’re seeing some people solve for that problem through secondary markets, but it can also be really distracting, deciding who gets to sell their shares and for how much. It’s why we chose to create vehicle that’s evergreen. While the purchase side is the same — we won’t be doing anything different than, say, a private equity firm that buys shares on the secondary market — the difference is that the private equity firm will expect [to receive several times their investment] within a few years. With us, companies have a significantly longer time period to [produce a return] through smaller chunks based on revenue. It’s more like a mortgage on your house.
Have you raised the capital yet? If not, how much are you targeting?
We’ve raised money; Jay [Kim] is our anchor investor, but it’s still open, so our attorneys have advised us to be cautious about what we share.
Does this kind of structure rule out syndicates?
We could partner with an entity that has a similar return profile, but yes, it wouldn’t work if we were working with a private equity or venture shop that’s hoping a company is going go public. If I’m a VC, I’m saying, “Reinvest everything so we can get to the IPO.” Alignment is targeting companies that don’t want to rush, that would rather buy [their shares] back from employees and shareholders and refinance the company.
What size checks will you be writing, what kind of return do you expect, and how long will these terms be?
The size of checks will vary pretty greatly, and we can structure [these arrangements] in different ways. If a company is throwing off a lot of cash, it can carry a larger debt component at a lower rate. If it isn’t throwing off a lot of cash, you can extend the life [of the loan] but have additional equity, so if the company has a liquidity event, Alignment gets some upside.
Do you expect that some of Collaborative’s portfolio companies [which include Kickstarter, Lyft, TaskRabbit, and Hampton Creek Foods] will eventually be candidates for Alignment? If so, would that be a conflict?
We’ve formed an external investment committee to deal with any conflicts. The truth, though, is that because Collaborative Fund is investing so early, it will likely be years before any of our companies would be ready for Alignment Holdings. But I think it would be a great thing.
1006.tv, a five-year-old, Beijing-based mobile game media company, has raised $10 million in Series B funding led by Sequoia Capital, with ClearVue Partners participating. China Money Network reports that last year, the company raised “several million” dollars in Series A funding led by Matrix Partners, which had also provided the company with seed funding in 2011.
ABA English, a three-year-old, Barcelona-based online English-learning platform, has raised $3.4 million from the venture firm Nauta Capital.
Bluegrass Vascular Technologies, a four-year-old, Lexington, Ky.-based medical device maker focused on vascular access, has raised $4.5 million in Series A funding led by Targeted Technology Fund II, with unnamed individual investors participating. As part of the deal, Bluegrass will move to San Antonio, Tx., where Targeted Technology is based.
Cold Genesys, a nearly four-year-old, Newport Beach, Ca.-based company that’s been developing a drug to treat bladder cancer, has raised $13.57 million in Series A financing from Ally Bridge Group.
Dstillery, a six-year-old, New York-based ad tech company, has raised $24 million in Series C funding led by NewSpring Capital. Earlier backers U.S. Venture Partners, Menlo Ventures and Venrock also participated in the round, which brings the company’s total funding to $52 million, shows Crunchbase.
GetYourGuide, a five-year-old, Zurich-based compendium of tourism activities that works with more than 1,000 partners whose products it uploads, bookings it manages and payments it processes through a central system, has raised $25 million in new funding from two earlier investors, Spark Capital and Highland Capital Partners Europe. “I like this business because no one’s really aggregated this before,” says Spark Capital’s Alex Finkelstein to Dealbook. The company has now raised $45.5 million altogether.
Green Charge Networks, a five-year-old, Santa Clara, Ca.-based energy storage company, has raised $56 million in funding from the New York-based power producer K Road DG. Forbes has more here.
Moogsoft, 2.5-year-old, San Francisco-based company whose software detects and repairs outages that its customers’ IT monitoring systems can’t see, has raised $11.3 million in Series B funding led by Wing Venture Capital. Earlier investors, including Redpoint Ventures, also participated in the round, which brings the company’s total funding to $18 million.
PagerDuty, a five-year-old, San Francisco-based software-as-a-service company that helps IT ops resolve problems faster by sending them automatic alerts about errors, has raised $27.2 million in Series B funding by Bessemer Venture Partners. Earlier investors Andreessen Horowitz, Baseline Ventures, and Harrison Metal also joined the round, which brings the company’s total funding to roughly $40 million.
SocialCops, a two-year-old, Delhi, India-based social analytics and reporting app that helps users report problems in their vicinity, like potholes, has raised $350,000 in seed funding from 500 Startups, Rajan Anandan, Manoj Menon and other angels, reports DealCurry.
It isn’t just Mobileye. Five Israeli companies are going public in the U.S. this week in what Bloomberg calls a record week for new Israeli equity sales.
Gyft, a two-year-old, Redwood City-based virtual gift card provider, is being acquired by payment giant First Data, PandoDaily reported yesterday. Terms of the transaction, expected to close next month, are not being disclosed. Gyft had raised $6 million in Series A funding, including from Karlin Ventures, Google Ventures, A-Grade Investments, Canyon Creek Capital, The Social+Capital Partnership, and individual investors David Sacks and Haas Portman.
Icebergs, a 1.5-year-old, Barcelona-based online collaboration service that helps users organize their research and projects, has been acquired by Pinterest for an undisclosed amount. Its two co-founders are relocating from Spain to San Francisco to join Pinterest, the company tells TechCrunch. Meanwhile, the Iceberg service will be shut down on September 1.
Sifteo, a five-year-old, San Francisco-based interactive game platform, has been acquired by 3D Robotics, the unmanned aerial vehicle company led by former Wired editor Chris Anderson. Terms of the deal were not disclosed, but Sifteo had raised $16 million from investors, including True Ventures, Foundry Group, and Foundation Capital. 3D Robotics, meanwhile, has raised $35 million to date, including from some of those same investors. GigaOm has more here.
Snapchat, the mobile-messaging phenomenon, is talking with Alibaba about a new round of funding that could value the three-year-old company at $10 billion dollars, with a B. Bloomberg has the story here.
Andrew Mason, the cofounder and ousted CEO of Groupon, is back with a new app that’s centered on really good walking tours. It isn’t so silly, says Bloomberg’s Brad Stone, nothing that the guided-tour industry “brings in tens of billions” of dollars a year. “People have an enormous hunger to have really compelling experiences in their cities,” Mason tells Stone, moments before a seagull poops on Mason’s head. (Really.)
Rob Glaser is once again the permanent CEO of RealNetworks, the digital media company he founded in 1994. Geekwire has more here.
Business Insider takes a look at what it’s like to be one of Google‘s most elite new employees.
GE Ventures is looking for an associate to add to its incubations team, which develops and funds healthcare and energy startups. The job is in Menlo Park, Ca.
Venture capital firms put $15.59 billion into companies raising third rounds of financing or later through the first half of this year, according to Dow Jones VentureSource. If that pace holds, says the outlet, it will break break the record set in 2000.
Revenge of the ripoff: How Zalando became a $5 billion retailing sensation.
Replaced by robots: Jobs cuts in the tech industry have soared 68 percent year-over-year through June, according to new data from Challenger, Gray & Christmas. Losses are on pace for their biggest jump since 2009, says Business Insider.
The case for exercising vigorously, at least five minutes a day.
Kids acting up? Send them to summer camp in North Korea.
Cabana-striped towels for the beach.
Christopher Nolan fans, “Interstellar” is coming. See the trailer here.