StrictlyVC, LLC

Six months ahead.

CRV

CRV Comes Out Against Trump in New Statement

Screen Shot 2016-09-03 at 7.54.21 PMThe U.S. presidential elections are fast approaching, and a growing number of VCs who’ve historically shied from making taking sides publicly, are tweeting, talking with reporters, and blogging about who they are backing and why. The early-stage venture firm CRV, formerly known as Charles River Ventures, is taking things a step further, having just published a tranquil little piece called “F*ck Trump” about the firm’s rejection of Republican candidate Donald Trump’s “anti-immigration statements.”

We talked with CRV general partner George Zachary earlier this morning about why it bothered.

Democratic candidate Hillary Clinton has a strong lead over Trump in the polls. Why publish this statement right now?

It doesn’t make a difference how he’s doing in the polls. We feel strongly about the topic. Several weeks ago, we had an off-site, where we talked about strategy and where we also talked about the election. And each one of us felt offended by what Donald Trump has been saying, including what he has been saying specifically about immigrants. Your grandparents were Greek. My father came from Greece. This country was built by immigrants. It’s time for us to speak up about it.

His statements have varied over time.

And they’ll continue to vary, but we have to be authentic here and speak up on behalf of the people who come to this country and build. Half the teams we’ve backed were founded by immigrants. Our nine partners come from seven countries.

I was in Cleveland not long ago, where I saw much more Trump support than we see in the Bay Area. You run a business. Don’t you risk alienating people?

More here.

This Silicon Valley VC Says Chinese Investors are Joining Series A Deals, and They’re Playing “Hardball”

Screen Shot 2016-04-27 at 1.30.49 PMAs a venture investor for the last 20 years, George Zachary has witnessed plenty of trends develop and fizzle. Yesterday, we talked with him about what he’s seeing right now. One of the newest wrinkles he noted is a growing number of Chinese investors who’ve grown aggressive about getting into Series A deals, and who seem to be playing by their own rules.

Our chat with Zachary — a general partner at CRV who has led the venture firm into bets on Twitter, Yammer and Udacity, among others — has been edited for length.

You’re investing in seed and Series A deals. Are you not concerning yourself with what’s happening in the later-stage and public markets? That seems to be a common refrain for early-stage investors.

You definitely have to worry about whether your company can be financed later on, no matter what everyone says. In fact, a lot of Series A companies that have to do an extension of the Series A are raising at lower valuations. One of our founders has done two startups before, but valuations in the space where he’s operating all went down 50 percent, so he’s just accepting that he’ll have to raise his (extension) round with a lot more dilution than he wanted. It is what it is.

How much have valuations come down, and where are you seeing them hit the hardest?

Well, for celebrity founders, they are staying high.We’re doing a celebrity-founder deal now that has a high price tag, and everyone wants into it. For repeat founders with a good exit the last time, the price is always going to be high, plus or minus 10 percent. This particular team is at concept stage. We’re basically handing them a near-blank check.

But valuations are down elsewhere. The average thing coming out of Y Combinator is probably a half to three-quarters of what it was [in terms of valuation in recent years]. The average seed-stage deal is half.

I should mention that for celebrity founders, research supports that if they’re operating in the same space [as their last company], they have a higher rate of success [than other people]. If they move from databases to clean tech or from cell towers to social networks, they usually don’t do super well.

According to CrunchBase, CRV was involved in at least 27 financings last year. Its data shows just four deals in 2016. Is the firm waiting for the market to sort itself out?

Not explicitly. We’ve committed to three things in the last month that are in the docs stage.

Docs are taking longer because there are new investors coming in, and they want more stuff in their terms. These are newer investors, often foreign investors, who are basically saying: “I want senior preference to [a company’s earlier] investors,” and that’s adding two or three weeks as they usually ask right as the docs are closing.

Wait, what’s happening? Who are these new investors, and how prevalent is this? When you say foreign, do you mean mostly from China? Obviously, a lot of Chinese investors are looking to invest more money in the U.S.

They’re almost all from China, and they want all of their preferences to be senior to everyone else’s. What’s happening is, since they know the startup’s financials, they just wait it out. By that point, we’ve already signed a term sheet and turned off a lot of other people who wanted to invest. These things never come up in the term sheet phase but later in the docs. They’ll say, “We did our diligence, and we need XYZ to invest.”

More here.

StrictlyVC: December 19, 2014

Hi, good Monday morning, everyone! Hope you’re having a wonderful holiday break. (We are.)

Quick scheduling note: We’re publishing today and tomorrow. After that, we’ll be resuming our daily schedule on Monday.:)

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Top News in the A.M.

China has blocked Gmail. (Sigh.)

A hacker who claims to be behind the Christmas Day cyber attack on computer games consoles tells Sky News that he and “basically” two others launched the attack to “raise awareness” about the poor security afforded PlayStation and Xbox users, as well as “to amuse ourselves . . . I’d be rather worried if those people didn’t have anything better to do than play games on their consoles on Christmas Eve and Christmas Day.”

German researchers have discovered a flaw that could let anyone listen to your cell calls via SS7, the global network that allows the world’s cellular carriers to route calls, texts and other services to each other. “Many of the big intelligence agencies probably have teams that do nothing but SS7 research and exploitation,” one surveillance technology expert tells the Washington Post. “They’ve likely sat on these things and quietly exploited them.”

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Saar Gur of CRV on Marketing, New Platforms, and Breaking into VC

By Semil Shah

Saar Gur joined CRV in 2007, though Gur was well-known in startup circles long before diving into venture capital, partly because of his early involvement in companies like Carebadges, which made a flash fundraising widget and was acquired by Facebook Causes, and the Internet video advertising network BrightRoll, which was acquired last month by Yahoo. We recently caught up with Gur — who focuses on consumer Internet investments for CRV — to learn a bit about how the firm sees the world as it heads into 2015.

Some long-established venture firms still appear to be struggling with how to market themselves. Is marketing something you and your partners wrestle with? I should note that this Q&A was my idea and not yours.

Marketing is very important in our business, and we could always do a better job on this front, but there are lots of ways to market. At CRV, our first priority is serving our entrepreneurs and promoting our companies, not ourselves. 
We know if we do a world-class job of supporting our entrepreneurs and helping our companies, they’ll help refer us to other great entrepreneurs.

CRV was one of first venture firms to focus on seed investing. Is that still the case today, or has firm’s strategy changed?

Over 90 percent of our investments are seed and Series A. We invest at this stage as we really enjoy being partners with our entrepreneurs throughout their company’s journey, starting as early as possible — often at the idea stage. There was a time when our seed program included investing small amounts of $50,000 to $100,000, but we no longer do that. Today most of our seed investments are in the range of $500,000 to $3 million, and we treat them as significant investments. We often take board seats of these early companies and work hard to help turn them into meaningful companies. Many of my recent consumer investments started with a seed investment, including Viki (sold to Rakuten last year), Doordash, and Patreon.

One of the companies you helped start — BrightRoll — just had an exit. Tell us a bit about the story, as well as the tough lesson you learned from it.

I will start by saying that there are 10x entrepreneurs, and [BrightRoll founder] Tod Sacerdoti is one of them. BrightRoll was a story of day-in and day-out execution for many years. There were no great network effects or unfair advantages afforded to the company. They just had to execute every single day for a long time. There were many lessons that I gained from the experience but primarily it reinforced my belief that great entrepreneurs, more than anything else, are the key ingredient in the startup success equation.

Of all the new platforms being built upon — drones, virtual reality, bitcoin, crowdfunding, robotics/autonomous driving — where would you place a bet as to what will hit the mainstream market first?

We think many of these areas will continue to grow, but I spend a lot of my time trying to think about the catalysts that will create non-linear accelerated adoption of these technologies. In terms of specifics, I guess it depends how you define “mainstream.” Of the technologies you mentioned, millions of consumers have participated in crowdfunding campaigns, and this is the one that’s probably closest to touching hundreds of millions of users before the others. At the same time, robotics/autonomous driving has already reached massive scale. Granted I am not talking about fully-autonomous self-driving cars. Often technology gets implemented in incremental steps and it seems to me that “smart” cruise control and reverse back-up alerts are pretty mainstream in newer vehicles at this point.

On this topic of “mainstream,” I think we see a similar analogy in hot VC words like drones, bitcoin, and artificial intelligence. Often the implementation of a technology occurs in a non-obvious way. For example, many folks say “AI” is not yet mainstream, but it turns out that one of the most widely adopted implementations of AI is the auto-focus technology that’s incorporated in every smartphone camera and that has enabled the common person to take much better photos than ever before. All of these areas are very exciting and we’re actively looking to invest in them.

I’m sure you and CRV are asked often about how folks can crack into venture. What advice would you give new college graduates and others who are interested in venture capital?

It’s hard to enter the venture business as a young person. It feels to me that many firms will recruit based on:

1) Network – e.g., you went to Stanford and seem connected to many potential founders, or you worked at a company like Facebook that will produce new company founders. This is why we often recommend that young people go and work in companies that will produce great people networks if they want to do venture.

2) Unique domain expertise. You may be the leading drone expert at 18 years old, or be an expert in bitcoin at 16. Either way, if you have a unique domain experience and network in an area of venture interest, it can help.

3) Analytics. If you have a demonstrable track record showing innate curiosity in tech startups and/or an ability to get up to speed on a market and form a unique point of view, that might make you more attractive.

Semil Shah is a guest holiday contributor to StrictlyVC. Shah is currently working as a venture advisor to two funds, Bullpen Capital (which focuses on post-seed rounds) and GGV Capital (a cross-border U.S.-Asia fund). You can follow him on Twitter at @semil.

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New Fundings

Swoop, a three-year-old, Cambridge, Ma.-based ad tech firm, has raised $2.1 million from six undisclosed investors, according to an SEC filing that was first flagged by Boston Business Journal. The round brings the company’s total funding to date to about $13.4 million, shows Crunchbase.

Verbling, a three-year-old, San Francisco-based platform that enhances users’ language fluency through video chat technology, has raised $3.5 million in new funding, according to an SEC filing that lists a $4.8 million target. The company had previously raised an undisclosed amount of seed funding, including from SV Angel, Learn Capital, Rothenberg Ventures, and Hydrazine Capital.

Xiaomi, the 4.5-year-old, Beijing-based smartphone maker, has finally closed on that $1.1 billion round of funding, at a reported $45 billion pre-money valuation. DST Global, which Recode sources say had already poured $500 million into Xiaomi, took part in round, along with other players, including a private equity group affiliated with Alibaba Group’s Jack Ma. “I was attracted by the size of the opportunity ahead of them,” DST’s Yuri Milner told Bloomberg in a telephone interview this morning. “I don’t think there’s any company that has reached $1 billion in revenue as fast as Xiaomi. In every conceivable benchmark, it’s almost unprecedented in terms of its speed of growth.”

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New Funds

Aavishkar, a 10-year-old, Mumbai, India-based social entrepreneurship-focused venture capital fund, is set to raise $400 million in 2015, reports the Economic Times. The company’s CEO, Vineet Rai, says the firm is raising two separate funds: a $100 million fund that is expected to close by March’s end and will be Africa focused, and a $300 million fund that will be poured into India-based companies and is expected to close by next year’s end.

Domain Associates, the 29-year-old health care-focused venture firm with offices in Princeton, N.J., and San Diego, is raising a ninth fund, according to an SEC filing that shows the firm has raised $163.6 million so far. The fund’s target is listed as “indefinite.”

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People

James Golick, the young CTO of Normal, a New York company that produces custom-fit 3D-printed earphones, died in a car accident in Mexico Friday night. Ben Kaufman, the founder and CEO of Quirky, has authored a moving tribute to his friend Golick here.

Jessica Verrilli, a former associate at Venrock, talks about becoming an early employee of Twitter (where she remains a director of corporate development) and getting ahead in tech: “First, study computer science or become as technical as possible. Even if you don’t want to be a programmer, deeper technical knowledge will put you at an advantage throughout your career. I’m constantly sitting in tech talks and engineering and product meetings and trying to pick up more and more.”

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Data

The 20 largest VC-backed tech exits of this year were valued at more than $55 billion. CB Insights breaks them down here.

A dozen tech companies that are primed for exits or IPOs in 2015.

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Essential Reads

Pinterest is opening its ads platform to marketers on New Year’s Day.

A Google gentrification fight that doesn’t involve San Francisco.

Where boss is a dirty word.

A broad look at the Chinese entrepreneurs who aim to become technology’s biggest power players.

—–

Detours

Remembering some of those we lost this year.

The benefits of being cold.

Twenty-four amazing roads.

—–

Retail Therapy

BookBook for the iPhone 6 and 6 Plus.

Gold (bar) clutch.

Rick Owens Tech Runners. (Note: For looking cool, not actual running.)

Saar Gur of CRV on Marketing, New Platforms, and Breaking Into VC

GurSaarPhoto1-225x150By Semil Shah

Saar Gur joined CRV in 2007, though Gur was well-known in startup circles long before diving into venture capital, partly because of his early involvement in companies like Carebadges, which made a flash fundraising widget and was acquired by Facebook Causes, and the Internet video advertising network BrightRoll, which was acquired last month by Yahoo. We recently caught up with Gur — who focuses on consumer Internet investments for CRV — to learn a bit about how the firm sees the world as it heads into 2015.

Some long-established venture firms still appear to be struggling with how to market themselves. Is marketing something you and your partners wrestle with? I should note that this Q&A was my idea and not yours.

Marketing is very important in our business, and we could always do a better job on this front, but there are lots of ways to market. At CRV, our first priority is serving our entrepreneurs and promoting our companies, not ourselves. 
We know if we do a world-class job of supporting our entrepreneurs and helping our companies, they’ll help refer us to other great entrepreneurs.

CRV was one of first venture firms to focus on seed investing. Is that still the case today, or has firm’s strategy changed?

Over 90 percent of our investments are seed and Series A. We invest at this stage as we really enjoy being partners with our entrepreneurs throughout their company’s journey, starting as early as possible — often at the idea stage. There was a time when our seed program included investing small amounts of $50,000 to $100,000, but we no longer do that. Today most of our seed investments are in the range of $500,000 to $3 million, and we treat them as significant investments. We often take board seats of these early companies and work hard to help turn them into meaningful companies. Many of my recent consumer investments started with a seed investment, including Viki (sold to Rakuten last year), Doordash, and Patreon.

One of the companies you helped start — BrightRoll — just had an exit. Tell us a bit about the story, as well as the tough lesson you learned from it.

I will start by saying that there are 10x entrepreneurs, and [BrightRoll founder] Tod Sacerdoti is one of them. BrightRoll was a story of day-in and day-out execution for many years. There were no great network effects or unfair advantages afforded to the company. They just had to execute every single day for a long time. There were many lessons that I gained from the experience but primarily it reinforced my belief that great entrepreneurs, more than anything else, are the key ingredient in the startup success equation.

Of all the new platforms being built upon — drones, virtual reality, bitcoin, crowdfunding, robotics/autonomous driving — where would you place a bet as to what will hit the mainstream market first?

We think many of these areas will continue to grow, but I spend a lot of my time trying to think about the catalysts that will create non-linear accelerated adoption of these technologies. In terms of specifics, I guess it depends how you define “mainstream.” Of the technologies you mentioned, millions of consumers have participated in crowdfunding campaigns, and this is the one that’s probably closest to touching hundreds of millions of users before the others. At the same time, robotics/autonomous driving has already reached massive scale. Granted I am not talking about fully-autonomous self-driving cars. Often technology gets implemented in incremental steps and it seems to me that “smart” cruise control and reverse back-up alerts are pretty mainstream in newer vehicles at this point.

On this topic of “mainstream,” I think we see a similar analogy in hot VC words like drones, bitcoin, and artificial intelligence. Often the implementation of a technology occurs in a non-obvious way. For example, many folks say “AI” is not yet mainstream, but it turns out that one of the most widely adopted implementations of AI is the auto-focus technology that’s incorporated in every smartphone camera and that has enabled the common person to take much better photos than ever before. All of these areas are very exciting and we’re actively looking to invest in them.

I’m sure you and CRV are asked often about how folks can crack into venture. What advice would you give new college graduates and others who are interested in venture capital?

It’s hard to enter the venture business as a young person. It feels to me that many firms will recruit based on:

1) Network – e.g., you went to Stanford and seem connected to many potential founders, or you worked at a company like Facebook that will produce new company founders. This is why we often recommend that young people go and work in companies that will produce great people networks if they want to do venture.

2) Unique domain expertise. You may be the leading drone expert at 18 years old, or be an expert in bitcoin at 16. Either way, if you have a unique domain experience and network in an area of venture interest, it can help.

3) Analytics. If you have a demonstrable track record showing innate curiosity in tech startups and/or an ability to get up to speed on a market and form a unique point of view, that might make you more attractive.

Semil Shah is a guest holiday contributor to StrictlyVC. Shah is currently working as a venture advisor to two funds, Bullpen Capital (which focuses on post-seed rounds) and GGV Capital (a cross-border U.S.-Asia fund). You can follow him on Twitter at @semil.