Index Ventures

Call9 Lands $10 Million Series A Led By Index Ventures

Call9, a nine-month-old, Palo Alto, Ca.-based telemedicine startup that came together last spring as a Y Combinator company, has raised $10 million in Series A funding led by Index Ventures, whose cofounder, Neil Rimer, is joining the board.

Other investors in the round include Ali Rowghani, who leads the Y Combinator Continuity Fund; Joe Lonsdale, the VC and co-founder of Palantir Technologies; and Anne Wojcicki, co-founder of 23andMe.

It’s easy to appreciate the young company’s appeal. While there’s no shortage of startups connecting patients to doctors on demand, Call9 specializes in specifically reducing unnecessary visits to emergency rooms by those who call 911 most frequently, which is people in nursing homes.

The company is the brainchild of two physicians: Celina Tenev, a radiology postdoctoral fellow from Stanford, and Timothy Peck, who worked previously as an emergency medicine physician and faculty at Harvard Medical School. The two met while working part-time for a now-defunct startup and shared a joint disbelief that the patient experience still typically includes spending several hours in an emergency room.

More here.

A French VC Shows off a New Fund — and Growing Interest in Europe

Frédéric Court has been a venture capitalist for about 15 years, but it was only recently that he hit the fundraising trail for the first time.

The experience went well, apparently. This morning, Court, a longtime partner with the European venture firm Advent Venture Partners, is taking the wraps off his own, London-based venture fund, Felix Capital, which he says raised $120 million in just a few months.

That might not be terribly uncommon in Silicon Valley, but it doesn’t happen very often in Europe. More unusual, Court is the sole managing partner, though he has enlisted longtime Advent colleague Less Gabb as his finance partner and Antoine Nussenbaum – formerly of Atlas Global – as principal.

Earlier this week, we talked with Court about why he has struck out on his own, and whether his debut fund says anything more broadly about what’s happening in Europe.

Why leave Advent after all these years?

Our last fund is doing extremely well, but Advent is now a life sciences fund [which closed its newest, life sciences fund last fall with $235 million]. It’s a bit like what happened at Atlas Venture. The tech partners were going to raise a tech fund from scratch and I decided instead to start something quite new and have a sector-focused and thematic approach.

Your new theme is “operating at the intersection of technology and creativity.” What does that mean?

It means investing in more creative businesses like digital brands, especially in markets like commerce and media, in sectors like fashion, and beauty and wellness more generally. Some fantastic global brands have been built in Europe, and we think there’s a generation of new companies to be built that are digital first – companies like FarFetch [an e-commerce site featuring designer apparel from hundreds of boutiques], which we backed at Advent and is in our portfolio now at Felix, as well.

Are you looking to fund European companies alone?

They’ll either be in Europe or have a European angle. We have one [still-undisclosed] investment in New York where we’ve been helping them expand across the pond. We did that at Avent with companies like [the mobile payment company] Zong, which we helped move from Switzerland to Palo Alto [where the company was acquired in 2011 by eBay], and [social media marketing company] Vitrue, which is based in Atlanta and we helped expand into Europe.

What size checks will you be writing?

We have the flexibility to invest from $100,000 up to $10 million in a later-stage round, though our sweet spot will be $2 million to $4 million in Series A and B rounds.

You’re announcing three companies as part of the launch. For curious readers, what are they?

There’s FarFetch. We’ve also funded the Business of Fashion, which started pretty much like your newsletter and over the last seven or eight years has become one of the most authoritative media brands in the online fashion industry. Along with [coinvestors] Index Ventures and LVMH, we’re helping the founder turn it into a platform. Our third investment is in Rad, a Paris-based online street wear brand that’s a bit like Urban Outfitters and is expanding across Europe.

This new fund closed with $40 million more than you were targeting. Are LPs loosening their purse strings in Europe more broadly?

There is capital in Europe, but the delta between the opportunity and available capital is significant. It’s still a fraction of the available capital in the U.S.

But you’re also seeing more U.S. firms like Insight Venture Partners enter Europe and take stakes in high-growth companies.

They typically come in much, much later. What we’ve seen in the past two or three years is a reduction in competition from U.S. firms because the market is so competitive in the U.S.; firms just don’t have the bandwidth to fly to Europe unless one of their trusted friends mentions a deal to them. Also, when you’re talking about Insight and [Technology Crossover Ventures] and DST [Global], they’re looking to write checks of $50 million to $70 million, and the number of companies that can take that much capital is much lower here than in the U.S.

Is Europe seeing more corporate investors? They’ve sort of filled a hole in the U.S., especially when it comes to Series B rounds.

We see some corporate money, though much less than in the U.S.. We’re more seeing local sovereign funds step in, where governments have realized that a lack of capital [to startups is a disadvantage]. One of the biggest backers is [the French government’s] Bpifrance.

Are things fairly collegial among traditional early-stage investors then?

There are firms that we know well – Accel, Index – and they were very helpful to me in raising my new fund, and in introducing me to their LPs. In the early stages in Europe, there isn’t the kind of competition you see in the U.S., while in parallel, we’re seeing the quality of talent rise in both founders and people joining startups. These will be very interesting years to invest.

Photo of Less Gabb, Frédéric Court, and Antoine Nussenbaum (left to right), courtesy of Felix Capital.

Troubled Payday Lender Wonga Still Has a Chance, Insist Insiders

In the span of seven years, Wonga, a London-based online payday lender, managed to become one of the best known Internet brands in the U.K, with half the buses in London plastered with its ads, along with a good number of soccer players, through Wonga’s sponsorship of the English Premier League team Newcastle United.

Then, late last week, the company disclosed that it was writing off some $350 million of debt – at a cost of roughly $56 million to the company — following a “voluntary agreement” between the company and the U.K.’s Financial Conduct Authority (FCA), which took over regulation of the consumer finance sector last year. Wonga’s implicit admission: That despite the more than 8,000 pieces of information that its algorithm takes into account when assessing a potential borrower, the company had lent money to people (330,000 of them) it should have declined.

Andy Haste, an executive chairman who was installed at Wonga in July to rehabilitate the company, said that going forward, the company is committed to lending only to those who can “reasonably afford” a loan. Haste – who was hired into Wonga after it was caught sending bogus letters from nonexistent law firms to customers in arrears – also added that he “agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.”

So when did things go south at Wonga and can the company — which has raised roughly $145 million from Balderton Capital, Accel Partners, Wellcome Trust, Oak Investment Partners, Greylock Partners, Dawn Capital, Meritech Capital Partners, and Index Ventures over the years — ever recover? Unsurprisingly, it depends on who you ask.

Insiders generally paint a picture of a company that’s been the victim of a changing regulatory environment. When Wonga was launched, its business was lightly regulated by the Office of Fair Trading (OFT), which was “not a banking oversight function that had a great deal of power or was intrusive,” observes one investor. Wonga suddenly faced a much more stringent set of checks and balances when the regulation of consumer credit was transferred last year from the OFT to the FCA.

The FCA’s regulators have been overly harsh, too, insists another source, who suggests its cozy relationships with established players is primarily why the FCA almost immediately began poring over the fine print at Wonga. “Wonga’s business was always regulated,” says the insider. “From the first day, it was licensed; it had its own underwriting agents and was being reviewed by regulators. But becoming such a large brand so quickly was hurting the established banks, which are very influential in a country like the U.K.”

Still, those who spoke with StrictlyVC also concede that Wonga made plenty of mistakes – not working earlier with financial services authorities, “running the business a lot looser than they should have,” and those threatening debt collection letters among them. (The latter proved an especially big embarrassment to the Church of England, which said it had unwittingly invested in Wonga through an investment fund; it ditched its stake in July.)

The company’s once-renowned algorithm also appears to have failed the company – a lesson, possibly, to many newer lending companies that believe the sophisticated algorithms they’re developing are akin to impenetrable moats.

As says one insider: “With algorithms, you always think you’re doing the right thing until the sh_t hits the fan. You ask the guys involved in Long Term Capital Management [the famous hedge fund that collapsed in the late ‘90s] whether they knew there was a ‘black swan’ in their algorithm; they didn’t.”

The question now is whether Wonga stands any chance of surviving. Haste has said he believes Wonga, which serves 1 million customers, can succeed as a small company. Others close to the company aren’t so sure about its fate. Says one source: “Will Wonga be a big business again? I doubt it because of the damage to their brand reputation.”

Say another: “If Wonga can afford to pay the penalty and stick around, they have a business to build. Consumers in the U.K. don’t have a lot of other good options. The banks are still doing a sh_tty job.”

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

StrictlyVC: June 11, 2014

Happy Wednesday, everyone! Sorry for an abundance of typos in yesterday’s issue. StrictlyVC’s beloved children have discovered her early a.m. writing spot. [Sad trombone sound effect.]

—–

Top News in the A.M.

Microsoft is resisting a government search warrant to compel the firm to turn over customer email data held in a server located overseas. Its fear, and that of other tech firms, too: that if the government prevails and can reach across borders, foreign individuals and businesses will flee to their non-U.S. competitors. The Washington Post has the story.

—–

This Was Going to Be an Interview with Arvind Sodhani

I’d planned to run an interview with the president of Intel Capital, Arvind Sodhani, this a.m., but that exchange didn’t come together last night as planned. The good news (sort of): I’ll be interviewing Sodhani, along with SoftTech VC founder Jeff Clavier, at the IBF venture capital conference in San Francisco today. Looking forward to seeing some of you there!

—–

New Fundings

EdgiLife Media, better known as LoveWithFood, a five-year-old, San Mateo, Ca.-based company that has evolved into snack delivery company à la NatureBox, has raised $1.4 million in seed funding. Among its investors: Kapor Capital, 500 Startups, TEEC Angel Fund, Ironfire Capital, Scrum Ventures and an AngelList syndicate led by Facebook Ads creator Yun-Fang Juan. The company has raised a little more than $2 million date. The WSJ has more here.

Exabeam, a year-old, San Mateo, Ca.-based big data security analytics startup, has raised $10 million in Series A funding led by Norwest Venture Partners. Other investors in the round included Aspect Ventures and entrepreneur-investor Schlomo Kramer.

Gill Business Systems, a four-year-old, Kiev, Ukraine-based inventory distribution system for passenger bus transportation carriers and online ticket sales, has raised $3 million in Series A funding from InVenture Partners, Intel Capital and FinSight Ventures.

Handybook, a two-year-old, New York-based company whose app enables users to order housecleaning or other home repair services on demand, has raised $30 million in new funding led by Revolution Growth. Other participants in the round include earlier backers Highland Capital and General Catalyst Partners. The company has now raised $49 million altogether. Dealbook has more here.

Homestay, a seven-year-old, Dublin, Ireland-based online travel booking platform, has raised $3 million in funding led by Delta Partners, with participation from Enterprise Ireland. The company has also acquired Berlin-based HomestayBooking, reports FinSMEs.

IndoorAtlas, a two-year-old company whose indoor mapping technology can reportedly determine locations inside a structure to within six feet, has raising $4.5 million in a round led by Mobility Ventures and the Finnish seed fund KoppiCatch, reports the WSJ’s Deborah Gage. The company, which has offices in Finland and Mountain View, Ca., might have benefited from an extended profile in the New York Times last month that noted the “somewhat unorthodox” business plan of the company, which will “measure and store your building’s magnetic fingerprint in its computing cloud” but charge customers $99 per month per building to then keep that information private.

Innovari, a three-year-old, Austin, Tx.-based interactive energy platform developer, has raised an undisclosed amount of Series B funding from VantagePoint Capital Partners. The company, which operated in stealth mode until now, hasn’t publicly disclosed previous funding or investors.

Krux Digital, a 4.5-year-old, San Francisco-based data management platform that helps brands understand consumers’ behavior, has raised $35 million in Series B funding from SAP Ventures, Time Warner,Temasek, and Visionnaire Ventures, along with earlier investors Accel Partners and IDG Ventures.

Light, a year-old, Palo Alto, Ca.-based company that’s says it’s re-imagining the art and science of photography, has raised a $9.7 million Series A round co-led by Bessemer Venture Partners and Charles River Ventures. Qualcomm also participated in the funding.

Okta, a six-year-old, San Francisco-based identity management service that helps companies manage security across theirs and their employees’ applications, has raised $75 million in Series E funding led by Sequoia Capital. Earlier investors Andreessen Horowitz, Greylock Partners, and Khosla Ventures also participated in the round, alongside new investors Janus Capital Group and Altimeter Capital. The company has raised $155 million to date, shows Crunchbase.

Payoneer, a nine-year-old, New York-based financial services company that enables users to transfer and receive money through re-loadable MasterCards, has raised an undisclosed amount of funding from the investment arm of Ping An, a China-based insurance company. The company has raised at least $39 million in previous funding rounds, shows Crunchbase, including from Carmel Ventures, Susquehanna Growth Equity, Greylock IL and Vintage Venture Partners.

Placed, a three-year-old, Seattle-based location-based analytics provider that lets users opt-in to online surveys, has raised $10 million in Series B funding led by Two Sigma Ventures, with participation from earlier investor Madrona Venture Group. The company had previously raised $3.4 million, shows Crunchbase.

Plex, a 19-year-old, Troy, Mi.-based software company that sells its ERP and automation software to manufacturers in a variety of industries, has raised $50 million in funding led by funds and institutional accounts managed by T. Rowe Price, as well as with earlier investor Accel Partners. The company has raised $86.5 million altogether, shows Crunchbase.

RebelMail, a months-old, Washington, D.C.-based company that makes an interactive email product, has raised a $2 million seed round co-led by Vaizra and Boldstart. Other investors include Lerer Ventures, David Tisch’s Box Group, Gary Vaynerchuk’s Vayner RSE, and angel investors. Business Insider has the story here.

SourceClear, a year-old, Seattle-based software security startup whose analytics and machine-earning tools better protect popular development frameworks from hackers, has raised $1.5 million in seed funding from individual investors.

Stitch Fix, a three-year-old, San Francisco-based online retailer and personal shopping service, has raised $30 million in Series C funding from earlier investors Benchmark and Baseline Ventures. The company has raised $46.8 million altogether, shows Crunchbase.

TurnKey Vacation Rentals, a 1.5-year-old, Austin, Tx.-based rental manager that helps homeowners manage and rent out their space, has raised $3 million in seed funding from Silverton Partners and about a dozen angel investors from the online travel industry, including Rich Barton, Gregg Brockway, and Alexis de Belloy. TurnKey has raised $4.8 million altogether.

Visier, a four-year-old, Vancouver-based analytics platform that helps HR professionals understand key data like which top talent is at risk of leaving and what’s driving turnover, has raised $25.5 million in Series C funding led by Adams Street Partners. The company has now raised $46.5 million, including from earlier investors Foundation Capital and Summit Partners.

Weave, a months-old, Pleasant Grove, Ut.-based VoIP service for doctors that also helps manage patient records, has raised $5 million in Series A funding led by A Capital, the new, early-stage fund of Ronny Conway. Other investors in the round include Homebrew, SV Angel, and Y Combinator.

Zaius, a two-year-old, Cambridge, Ma.-based company that simplifies how businesses collect, analyze and use data to improve customers’ digital experiences, has raised $6.3 million in Series A funding led by Matrix Partners.

Zula, a two-year-old, New York-based team communication app cofounded by Vonage cofounder Jeff Pulver, has raised $3 million in Series A funding led by Mort Meyerson, the former CEO of EDS and Perot Systems. Other participants in the round included Ourcrowd, Microsoft Ventures, and other individual investors.

—–

New Funds

Index Ventures, the 18-year-old, early-stage venture firm with offices in Geneva, London and San Francisco, has raised $543 million for its seventh and newest fund, the firm announced yesterday. The WSJ has more, including a look at Index’s seven exits over the last 12 months.

Khosla Ventures is targeting about $1 billion for its fifth fund, reports peHUB. The firm closed Khosla Ventures IV in 2011 with $1.05 billion. According to peHUB, that fund charged a 2 percent management fee and a 30 percent carried interest rate and was generating a 1.08x total value multiple as of March.

Lowercase Capital, a 6.5-year-old, Bay Area-based venture firm, is reportedly raising a new $25 million fund. With it, Lowercase’s founder and managing director, Chris Sacca, will be stepping away from day-to-day operations, too, reports TechCrunch, citing the tremendous success of the firm’s first two funds. (TechCrunch co-editor Alexia Tsotsis observes that the value of Lowercase’s debut fund, an $8.5 million vehicle, has risen more than 100 times thanks to an early investment in Uber.) Much more here.

Scrum Ventures, a Foster City, Ca.-based early-stage firm that backs mobile-technology startups looking for growth in Asian markets, has raised $4.3 million of a planned $20 million second fund, shows an SEC filing first flagged by VentureWire. Scrum was founded by Tak Miyata, a graduate of Waseda University in Tokyo who went on to launch two startups: Neven Vision, a biometric and photo recognition company acquired by Google in 2006; and J-Magic, another picture-based search company that was acquired in 2009 by Mixi, a Japan-based social network. Miyata remains CEO of Mixi America. Among the firm’s newest investments is EdgiLife Media (see above, in “New Fundings”).

—–

IPOs

HealthEquity, a 12-year-old, Draper, Ut.-based custodian of health-savings accounts, has disclosed plans to raise up to $100 million in an IPO. The company has raised at least $12.5 million from investors, shows Crunchbase, including Berkley Capital.

Minerva Neurosciences, a seven-year-old, Cambridge, Ma.-based company that develops treatments for central nervous system diseases, has revealed plans to price 5.45 million IPO shares at between $10 and $12. The company had filed for an IPO confidentially in February.

—–

Exits

Alibaba Group is buying all the remaining shares of mobile browser firmUCWeb in the biggest merger in Chinese Internet history. Reuters has more here.

MobileSpan, a three-year-old, Santa Clara, Ca.-based company that helps employees securely access content behind their company’s firewall, has been acquired for undisclosed terms by DropBox, which plans to shut down the company by year end. MobileSpan had raised $2.3 million from True Ventures and K9 Ventures, shows Crunchbase.

Skybox Imaging, a five-year-old, Mountain View, Ca.-based provider of high-quality satellite photos, has officially been acquired by Google for $500 million after weeks of negotiations. The company had raised at least $91 million from investors, shows Crunchbase, including Draper Associates, Asset Management Ventures, CrunchFund, Canaan Partners, Norwest Venture Partners,Khosla Ventures, and Bessemer Venture Partners. Dealbook has more here.

Singapore Telecommunications is acquiring two ad tech companies for $400 million, reports TechCrunch. Kontera, an 11-year-old, San Francisco-based company that sells its content marketing, social marketing, and analytics software to brands, is fetching $150 million. The company had raised $36.1 million from investors, including Sequoia Capital, Carmel Ventures, Tenaya Capital, and Globespan Capital Partners. SingTel is meanwhile paying $235 million for Adconion, a nine-year-old cross-channel digital advertising company with offices in Santa Monica, Ca., and London. Adconion had raised $114 million from investors, including Index Ventures and Wellington Partners.

—–

People

Ross Levinsohn has left his latest gig as CEO of Guggenheim Digital Media, reports Re/code. The former interim CEO of Yahoo and former president of News Corp.’s Fox Interactive Group had joined Guggenheim in January with a mandate that included acquiring new media companies. None of several attempts at deals — including to acquire Hulu — panned out, however. No word yet on Levinsohn’s next move, says Re/code, but it notes that Levinsohn’s famously debonair ‘do remains, as ever, “hairtastic.”

Scott McNealy, the billionaire co-founder of Sun Microsystems, has four sons, and he spent part of this week playing caddy to one of them, a Stanford sophomore, at a Tuesday practice round at the U.S. Open. “I’ve been caddying for him – carrying car seats, luggage, food, his golf bag – since he was 1 years old,” McNealy joked to Golfweek.

Jane Mendillo, who has served as the president and CEO of Harvard Management Company since 2008, made the surprising announcement yesterday that she is stepping down from her role at the end of this year. Mendillo worked for HMC for 21 years altogether. Harvard hasn’t yet released its performance for the latest fiscal year, which ends June 30, but according to the Boston Globe, the university estimates an average annual return of 11 percent to 12 percent for the past five years on Mendillo’s watch. “Harvard Management is in a really good spot now,” Mendillo told the Globe. “The company and the portfolio are firing on all cylinders.” Mendillo added that she has no immediate plans to take another job.

Pinterest has made a couple of big hires, reports VentureBeat. Michael Lopp, a former director at Palantir, as well as former senior engineering manager at Apple, has joined the company as its head of engineering. Meanwhile, Bob Baxley, the former director of design for Apple’s online store, is Pinterest’s new head of product design and research.

Viryanet, a 26-year-old, Southborough, Ma.-based company that makes mobile workforce management software, has been acquired by Verisae, a 14-year-old, Minneapolis-based maker of cloud-based maintenance, energy, and sustainability management software. Verisae is paying roughly $18.8 million in cash for the company, which has been trading publicly, with a roughly $8.5 million market cap.

—–

Job Listings

NewSchools Venture Fund, a 16-year-old, Oakland, Ca.-based venture philanthropy firm, is looking to hire an associate partner.

—–

Data

Tech immigrants: An excellent map of Silicon Valley’s imported talent.

—–

Essential Reads

Uh oh, startups. Amazon is planning to launch a marketplace for local services later this year, and Reuters sources say that means access to everything from babysitters to handymen.

The bitcoin app that could create a black market for leaked data.

The young princes of L.A.’s tech scene.

Two studies by researchers at Virginia Tech have found that even cars that aren’t fully autonomous but that automate some of the most dangerous aspects of driving could have as big an effect as seatbelts.

—–

Detours

A tomato a day keeps the doctor away.

The political memoir title generator.

A letter written by John Steinbeck in 1958 to his love-struck son.

—–

Retail Therapy

Paint-speckled furniture.

Augmented reality glasses that will not make you look absurd. Comparatively.

—–

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

StrictlyVC: June 5, 2014

Hi, everyone, and happy Thursday morning.

StrictlyVC was on parenting duty yesterday (closed summer camp), but hopefully you’ll gain a useful insight or two from today’s rushed column!

—–

Top News in the A.M.

Mobile and Sprint are reportedly zeroing in on a $32 billion merger.

—–

The Pain and Pleasure of Cloud-Based Subscription Billing

Earlier this week, a group of CEOs, SVPs, technology strategists and the like gathered around a conference table in downtown San Francisco to discuss their companies’ respective experiences in switching to a subscription-based businesses. The move hasn’t always gone well with their customers or their sales staff, they openly admitted. But they argued that not only was the switch well worth it but that they increasingly had no choice. Below are some of their comments.

Mark Field, the chief technology officer of the life sciences company LifeTech, acquired earlier this year by Thermo Fisher Scientific on some of the challenges his business has endured in switching from a licensed to a subscription model: “It’s not something that’s easy to change. And as we’ve been acquired, I’m hitting all those roadblocks again. . . Our go-to-market is completely different now, and on the sales side, this is disruptive, big time. If [salespeople] just sold software, it would a licensed sell, and they’d get their commission, make their number; now it’s a subscription. It’s a smaller amount over a long period of time. [The employee] may not even be around before we start to get the full value of that subscription. So we have to think about how do we commission them. . . It’s no longer a technology system issue; it is an organizational issue.”

Field went on to add that while LifeTech may have lost 3 percent of its customers in switching to a subscription model, it has gained many more who couldn’t afford to license its technology but can afford to rent it. He also told those gathered that LifeTech has better insight into its customers than ever before. “It’s changing the way we do R&D, because we’re taking feedback from what we see customers do – which is very different from what they say what they do.”

David Wadhwani, an SVP and general manager at Adobe, on initially enraging part of its customer base by switching business models in the spring of 2013, and getting through it: “Since we announced [our subscription model], our market cap has more than doubled. A lot of this has to do with lifetime value; you have to believe in the retention rates of what you get, you have to believe in the quality of the revenue stream.”

Venture capitalist Mike Volpi of Index Ventures also talked about Wall Street’s response to subscription-based businesses, noting that it’s been uneven to date: “Generally, I think Wall Street is . . .figuring out what metrics they should be looking for. Five or seven years ago, my guess is that Wall Street wouldn’t have understood this notion of a subscription at all and didn’t have the tools to measure what a good subscription business was versus a bad subscription business. Then they came to phase where any subscription business must be great, check, check, check. Now we’re entering a time when investors are learning to discern between what’s good and not . . . Venture capitalists went through this three to four years ago . . . the broad investment community is coming to terms with it now.”

Not last, Karen Devine, technology strategist at Intuit, talked at some length about Intuit’s process of switching over its business, suggesting that, like Adobe, the worst is now, hopefully, behind it.“Three years ago, we were pressured every quarter from sales to do an on-premise version of our software — [these were] million dollar deals. Fortunately, we had the fortitude to say no, because supporting each one is difficult with a cloud-based business. And [to show how much things have changed in the last year], we probably haven’t been asked about an on-site version in three or four quarters.”

—–

New Fundings

Ambition, a 16-month-old, Chattanooga, Tn.-based company whose fantasy football-style app uses gamification to improve sales and productivity, has raised $2 million from SV Angel, Google Ventures and others, reports Venture Capital Dispatch. The company was seeded with $600,000 from the Chattanooga venture incubator Lamp Post Group.

Biotz Intelligent Technologies, a two-year-old, Kerala, India-based startup that has developed a 3D printer called the Makifyre, is close to closing a Series A round of funding, including from the Gurgaon-based private equity firm Ncubate, Biotz’s founder and CEO Paul Anand tells Techcircle.in. Biotz had previously raised $50,000 in seed funding from an unnamed investor.

Buzzoola, a nearly three-year-old, Moscow-based native video advertising platform, has raised $2 million in seed funding from I2BF Global Ventures. The company had previously raised $1 million in funding from BKF Bank.

Complexa, a six-year-old, Pittsburgh, Pa.-based, clinical-stage biopharmaceutical company focused on anti-inflammatory and fibrotic diseases, has raised $13 million in Series B financing led by JAFCO, with “significant” participation from earlier investors. The company has raised $18.4 million altogether, including from Pittsburgh Life Sciences Greenhouse and PLSG Accelerator Fund.

Elasticsearch, a two-year-old, Los Altos-based company that has created popular open-source enterprise search tools, has raise $70 million in Series C funding led by New Enterprise Associates, which was joined by earlier investors Benchmark and Index Ventures. “We’ve been wooing them for over a year,” NEA partner Harry Weller tells Re/code. Elasticsearch, which also has an office in Amsterdam, has now raised $104 million altogether.

Larky, two-year-old, Ann Arbor, Mi.-based online platform and app that helps consumers find discounted retail items online, has raised $1.76 million in seed funding led by North Coast Technology Investors. Also participating were the Michigan Angel Fund, the BlueWater Angels, and the Pure Michigan Venture Match and individual investors. Larky had previously raised $650,000 in a seed round last year.

Lima, a 2.5-year-old, Newark, De.-based maker of a hardware adapter and a multi-platform app that enables users to access their entire digital library from all of their devices, has raised $2.5 million in Series A financing led by Partech Ventures. A Kickstarter campaign had previously garnered $1.2 million for the company.

Night Zookeeper, a three-year-old, London-based maker of educational games for children, has raised roughly $600,000 in new funding, mostly from individual investors. Night Zookeeper, which allows users to design their own character and story lines, says it is used in more than 5,000 schools and that it’s being tested in Canada and Japan.

PackLink, a 2.5-year-old, Madrid-based online comparison, booking and management service for consumer and business shipping needs, has raised $9 million in Series B funding led by Accel Partners, with participation from previous investor Active Venture Partners. The company has now raised roughly $11 million to date.

RigUp, a months-old, Austin, Tx.-based software platform for oil rig logistics, has raised $3 million in seed funding led by Founders Fund. Other participants in the round included Great Oaks VC, BoxGroup, and individual investors. The WSJ has more on the startup here.

SAVO, a 15-year-old, Chicago Heights, Il.-based maker of collaborative sales and marketing software, has raised a $35 million round led by Goldman Sachs. Earlier investors Sterling Partners and SAP Ventures also participated. The company has raised $84 million to date.

Siftit, a two-year-old, Atlanta-based mobile restaurant supply chain ordering platform, has raised $4 million in Series A funding led by the early-stage venture firm TechOperators. The company was founded by former executives of Radiant Systems, a restaurant retail technology company that was acquired by NCR for $1.4 billion in 2011

Slainte Healthcare, an eight-year-old, Dublin, Ireland-based maker of revenue cycle management software for hospitals, has raised a “significant” investment from the AIB Start-up Accelerator Fund, managed by ACT Venture Capital.

Spinal Kinetics, an 11-year-old, Sunnyvale, Ca.-based company that sells an implantable artificial disc to treat degenerative spinal disorders, has raised a $34 million round of funding from earlier investors Scale Venture Partners, Lumira Capital, De Novo Ventures, SV Life Sciences and HLM Ventures.

SpinGo, a two-year-old, Draper, Ut.-based event search engine that scours more than 1,000 media sites and mobile apps for local event content, has raised $2 million in Series A funding from numerous individual investors. The company has raised $6 million to date.

Super Evil Megacorp, a two-year-old, San Antonio, Tx.-based stealthy gaming startup that’s building immersive games for tablets, has raised $11.6 million in new funding led by General Catalyst, with participation from Rain Ventures and earlier backers. The company had raised a $3.6 million seed funding in 2012 from Initial Capital, Signia Ventures,CrossCut Ventures and ZhenFund. The WSJ has the story here.

Toutiao, a two-year-old, Beijing-based Chinese news reader app, has raised $100 million in Series C funding led by Sequoia Capital, with the Chinese microblogging company Sina Weibo and other investors participating. The deal values Toutiao at $500 million, according to Chinese media reports.

Trevi Therapeutics, a three-year-old, Sandy Hook, Ct.-based company that develops drugs to treat uremic pruritus (chronic itching that occurs with advanced renal disease), has raised $25 million led by earlier investor TPG Biotech. The round brings the total capital raised by the company to at least $56 million, shows Crunchbase.

Zapya, a Beijing-based network-free close-range file sharing app for mobile devices, has raised $20 million in Series B funding from IDG Ventures. The company’s earlier investors reportedly include Northern Light Venture Capital and Innovation Works.

—–

New Funds

Shunwei Capital Partners, a three-year-old, Beijing-based venture capital firm focused on early to mid-stage start-ups in China’s Internet and technology industry, has raised $525 million for two new venture funds, according to China Money Network. The firm was created by Lei Jun, founder of Chinese smartphone maker Xiaomi, and Tuck Lye Koh, a Stanford grad and investor who’d worked previously at Deutsche Bank and Starr International. The firm’s first fund, says the report, was a $200-million-plus vehicle.

—–

IPOs

The financial data company Markit and eight more companies set terms this week for initial public offerings, ushering in what will likely be a busy June in the IPO market. Renaissance Capital takes a look at what’s happening here.

Vernon Davis, a tight end for the San Francisco 49ers, broke his silence yesterday over that Fantex IPO. Dealbook has the story here.

—–

Exits

IQM2, a nine-year-old, Ronkonkoma, Ny.-based maker of public sector meeting software, has been acquired by Accela, a 15-year-old maker of software for civic engagement. IQM2 doesn’t appear to have raised institutional funding; Accela has meanwhile raised at least $50 million from investors over the years, including Bregal Sagemount.

Namo Media, a year-old, San Francisco-based company that helps create mobile ads that sit “in-stream,” has been acquired by Twitter for undisclosed terms, Twitter announced in a blog post this morning. Techcrunch speculates that the move may signal that Twitter is looking to take its own ad network out to other sites. Namo Media had raised $1.9 million from a long line of investors, including Google Ventures, Andreessen Horowitz, Betaworks, Trinity Ventures, Susa Ventures, and numerous individuals, including Paul Buchheit.

Pryte, a one-year-old Helsinki-based company that aims to help mobile phone users in underdeveloped parts of the world to use wireless Internet apps, is being acquired by Facebook for undisclosed financial terms. Pryte’s service hadn’t publicly launched yet. Reuters has more here.

Serus, a 14-year-old, Sunnyvale, Ca.-based company whose software is designed to manage outsourced manufacturing operations, has been acquired by publicly traded E2open, which paid $18.5 million — roughly two-thirds of it in cash and the other third in stock. Another $7.5 million is available in earn-outs. According to Crunchbase, Serus had raised at least $13.8 million from investors, including OVP Venture Partners, Diamondhead Ventures, and Zap Ventures.

—–

People

Here are the angel investors who are, on paper at least, “Uber rich.”

Tony Bates has been named president of the pre-IPO wearable-camera maker GoPro, where he’ll report to the company’s founder and CEO, Nicholas Woodman. He was also given a board seat. Bates is a former EVP at Microsoft who was once considered a CEO candidate to replace Steve Ballmer. In March, soon after new Microsoft CEO Satya Nadella was installed, Bates left the company.

Greylock Partners gets a glowing cover story in the new Newsweek, which, among many other things, talks with Evan Williams about Medium’s funding, led by Greylock. “Before deciding on his investors, [Williams] called around to other entrepreneurs to get reference checks on VCs. One call had particular impact. Williams spoke to Kevin Rose, a co-founder of Digg. Greylock had been one of its venture firms. Williams wanted to know one thing: How had David Sze—the partner who got Greylock in to the deal—treated the foundering CEO as his company was unraveling? That is, of course, when you see a VC’s real mettle—when he’s about to lose all his money. ‘The thing I heard, time after time, was David was always trying to do the right thing for the entrepreneur,’ says Williams. ‘People don’t universally say that about all investors.'”

Some big-names in tech are backing a super PAC formed by Harvard professor Lawrence Lessig to reform the nation’s campaign finance laws. LinkedIn CEO Reid Hoffman has donated to the campaign, as have TED curator Chris Anderson, Union Square Ventures partners Brad Burnham and Fred Wilson, and — to the surprise of many — investor-entrepreneurPeter Thiel, a self-described libertarian. More here.

Robert May has been promoted to COO of Industry Ventures, the San Francisco-based investment firm. May has been the firm’s chief financial and compliance officer since 2011. (He remains its chief compliance officer.) May has also been the COO and CFO of Founders Fund in the past.

Abigail Posner, Google‘s head of strategic planning, on the general perception that people who wear Google Glass are, well, you-know-whats: “Over the course of human history, we’ve had to adapt to the negatives, fears and issues with any new tech,” says Posner. “These days, it happens quickly. It wasn’t too long ago, that people who walked around with their cell phones talking to themselves looked completely crazy. Now we all do it, and it’s a universally accepted behavior. People get used to everything.”

Leena Rao, a longtime TechCrunch reporter, is joining Google Ventures as an operating partner, she announced in a post yesterday. More here.

—–

Job Listings

Card.com, a two-year-old, L.A.-based company that offers prepaid debit cards as an alternative to traditional banking, is looking for a VP of business development. The company has raised $3 million from investors.

Socialyzr, a nearly three-year-old, Dallas-based company focused on social media optimization, is looking for a VP of business development. The company has raised an undisclosed amount of seed funding.

—–

Happenings

IBF’s Venture Capital Investing Conference is taking place in San Francisco next week. You can check out the agenda here. (StrictlyVC will be interviewing Jeff Clavier of SoftTech VC and Arvind Sodhani of Intel Capital on Wednesday.)

—–

Data

Pitchbook takes a look at 2006 vintage U.S. VC funds to see which are performing the best, concluding that of the 42 funds that raised between $100 million and $250 million dollars, the top performers based on IRR are currently 5AM Ventures II, Azure Capital Partners II, PTV Sciences II, and Sterling Venture Partners II. The median IRR is 5.1 percent; the top-quartile IRR hurdle rate is 9.3 percent, says Pitchbook.

—–

Essential Reads

Even credit card companies think plastic’s days are numbered.

—–

Detours

The people who can’t not run.

An S.O.S. in a Saks bag.

Fifty-four old films that are not to be missed.

—–

Retail Therapy

The Killerspin Throw II Robot, when you’re deadly serious about your tennis game.

The Pain and Pleasure of Cloud-Based Subscription Billing

It was important to bring Wall Street along, though, noted Wadhwani: “When we announced the transition, we pulled together between 100 and 150 analysts in New York and spent eight hours with them in what was maybe the most dense presentation we’ve ever put together. But we gave them the kind of transparency that they’ve been asking for from our users, in terms of buying patterns, in terms of average selling price by segment, so they could do the math themselves to determine whether this was a good move for us [and] whether it was accretive. We needed Wall Street to understand a different model for valuing the company; otherwise, we would have been dealing with a significantly under-valued stock price in addition to having to deal with all that transition.”

Not last, Karen Devine, technology strategist at Intuit, spoke at some length about Intuit’s process of switching over its business, suggesting that, like Adobe, the worst is now, hopefully, behind it.“Three years ago, we were pressured every quarter from sales to do an on-premise version of our software — [these were] million dollar deals. Fortunately, we had the fortitude to say no, because supporting each one is difficult with a cloud-based business. And [to show how much things have changed in the last year], we probably haven’t been asked about an on-site version in three or four quarters.”

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

With $150 Million in Fresh Funding, Can the Amazon of Russia Deliver?

Dipping into a flourless cake at a French bistro in San Francisco, Maelle Gavet has reason to be in a celebratory mood. The French-born CEO of Ozon, considered the Amazon of Russia, has in the last few weeks sealed up $150 million in fresh backing from investors — money that helped Ozon secure a minority stake last week in LitRes, the leader in Russia’s small but fast-growing e-book market.

The achievements aren’t minor for the company, which Gavet has been leading for the last three years, after a Boston Consulting Group job led her to it. Founded in 1998 as an online bookstore, Ozon had barely issued a press release about its first $3 million round, from the Moscow-based PE firm Baring Vostock, when the dot.com industry imploded. Over the next decade, the company churned through employees, including CEOs, managing to survive but barely until Index Ventures stepped in to lead an $18 million round in the company in 2007. It gave Ozon a needed lifeline. But Ozon has really begun to click on Gavet’s watch.

Gavet’s biggest, and likely smartest, gamble to date has been to invest heavily in Ozon’s own private shipping company, O-Courier, which is making it possible not only for Ozon to fulfill its orders but also to serve as a back-end provider for a growing number of third parties that now rely on its increasingly sophisticated logistics network to deliver their own goods.

She has also been pouring resources into other subsidiaries, including a travel business, Ozon.travel; a shoe business à la Zappos called Sapato.ru; and Ozon Solutions, which offers turnkey solutions to brands that want to sell online but don’t want to pull together retail storefronts themselves.

Ozon, which employs 2,300, is far from profitable because of how much it’s investing in growth. But with roughly half of Russia’s 140 million inhabitants now online, and 20 percent of those 70 million shopping online, the company’s efforts are beginning to pay off. Last year, revenue hit $750 million, up from roughly $500 million in 2012 (which was itself up from $165 million in 2010).

Of course, Ozon still has its share of obstacles, some of which must seem insurmountable to American investors, who passed on Ozon’s newest round of funding. Ozon’s newest backers instead are Sistema and Mobile TeleSystems, two of Russia’s largest publicly traded holding companies, which invested in Ozon last month at a $700 million valuation. (They now own a 20 percent stake in the business.)

Not only are there the obvious geographic, cultural, and economic challenges to navigate (enormous country, terrible roads, cash culture, fewer people than Nigeria and a relatively tiny urban elite with money to spend), but business is utterly entangled with politics, too.

There’s the Ukranian crisis, for one thing, a situation that Gavet says has impacted Ozon indirectly but meaningfully. First, the Russian ruble devalued fairly quickly, making its import contracts far more expensive. Worried banks proceeded to cut customers’ credit lines, and “with retailers everywhere,” notes Gavet, “a lot of your working capital is through credit lines with the banks.” Soon, some European and American investors who Ozon had been talking with about its fundraising “stopped returning our calls,” Gavet tells me with a shrug.

There’s also the little problem of Pavel Durov, the country’s most visible Internet founder, who just fled the country because of the Kremlin’s steady inroads into the ownership of his company, VKontakte, Russia’s leading social network. How could investors not worry that some oligarch will steal her company, too, I ask her over lunch.

“If you look at Yandex [the Russia-based search engine that went public in 2011 on Nasdaq], it’s doing fine,” she says. The Russian Internet company Mail.ru., which went public on the London Stock Exchange in 2010, “is also doing fine. You have a lot of American investors in both of these companies,” she adds, noting that Ozon’s earlier shareholders include some U.S. investors, as well, including Cisco and Intel. (Ozon has raised $271 million altogether, including a $100 million round led by Japan’s Rakuten in 2011.)

“You can always [hypothesize] over whether the government is going to be interested at some point. But if you look at the facts, there is no issue,” she says. “I do think there are industries that are considered to be strategic by any government; I’m not sure that online retail has ever been one of them,” she adds with a laugh.

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

Mike Volpi: If You Don’t Own Bitcoin Yet, Buy It

Last Thursday, I sat down with Mike Volpi, a general partner at Index Ventures in San Francisco, and later mentioned to you that I’d feature his thoughts on Bitcoin. Here, now, is that part of our conversation, lightly edited for length.

If you were to start your own company in 2014, what would it be?

If I were to do something [on my own], I’d definitely do something with Bitcoin.

Has Index made any bets on the currency yet, directly or through a startup?

I’ve heard a number of VC firms have bought Bitcoin as part of their portfolio. But we don’t have an investment in Bitcoin yet. We’re looking at a lot of different things and trying to break it down a little. It’s very early so it’s kind of hard to tell, but we do love the international component of it, so one of the angles we’re exploring is what does it mean from an international perspective, rather than merely a domestic speculation perspective.

Do you think we talk too much about Bitcoin in the context of the U.S.?

Much of the coverage here tries to think of it in the context of an American phenomenon, and where I think it [has received too little coverage] is its global importance. We all have bank accounts and credit cards and all that good stuff, but if you think of some person in South Africa or Ecuador or Argentina or Malaysia, it has a whole different meaning to that world, where currencies are volatile and you don’t have access to dollars and just 10 percent of people have credit.

I often hear that, but how or when will it become useful to people in developing countries, given its volatility and soaring value?

Currency is a multidimensional thing. First, it has stored value, like gold. You don’t really use it every day, but you have it there for safekeeping and it increases in value over time. Another aspect of currency is what we use for transactions: You buy a product from me and I give you money. The last aspect is the transactional plumbing – not that we exchanged value but that there’s a pipe underneath it all that allowed us to do that. Bitcoin is all of that smashed into one.

Because it’s so volatile, people treat it like stored value. You’d be crazy to use it right now – or, at least, it would be very unusual –particularly if you can use other currencies to buy stuff. But you have to think past the point of all that volatility. No one knows what it’s worth, but at some point, people will figure it out, more or less.

What then?

Then, if you’re using your favorite Argentine currency and yesterday it was worth this and today it’s worth half that because your government had a coup d’état or something crazy like that, would you rather be transacting in a Bitcoin currency, which will eventually get more stable because of its global nature, or your currency, which is far less [stable]? Or, if you want to buy products and you don’t have access to dollars because your government decided that it needed to keep all the dollars — that’s where it starts mattering more.

How long until we get there?

I think it will take five years – maybe even 10 years — to stabilize.

In the meantime, are you personally buying Bitcoin?

I have a few personally. I think the best strategy is to own them right now, and if you don’t, I would recommend it!

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

Why It’s “Eyes on the Enterprise” at Index Ventures

In a sit-down with general partner Mike Volpi of Index Ventures late last week, Volpi shared how 18-year-old Index approaches venture marketing — and why it worries about competing with its founders for attention.

Volpi – long a top Cisco executive before joining Index – also explained why he’s confident that investors, who largely shifted their focus to enterprise deals in 2013, will keep it there this year. Our conversation has been lightly edited for length.

You’ve been investing more in enterprise deals as a percentage of your overall fund than you have historically. Why?

In part because we opened this U.S. office, and there’s more [related dealflow] in the U.S, and I think that’s an effect of more entrepreneurs getting into the space.

Getting into the space from where, the consumer side of things?

At the margin, there is some switching going on, like David Sacks, who [created] an enterprise company like Yammer. Or you might look at Dropbox [Index led its $250 million Series B round], which really started as a consumer company but is seeing bigger portions of its business in the enterprise. So you see a crossover effect.

You’re also seeing people who’ve been on the sidelines in recent years getting back in the game. We have an investment in Pure Storage, and if you look at that team, it’s a lot of the folks who were at [the data storage company] Veritas [acquired by security software giant Symantec for $13.5 billion in 2004]. There are people who’ve been going to work every day at these larger corporations, but now they’re coming out of them and restarting things.

How steep is the learning curve for those crossing over from consumer startups?

There is a learning curve. Like it or not, enterprises require sales, whereas with consumers, you can find a great service and, through virality, consumers discover it. So the business processes of selling — find the lead, nurture the lead, educate the customer on the value proposition of what you do, then close them – that along with the tools required and the people you hire are different. When Dropbox decided to launch its “Dropbox For Business” products, it had to learn about things like compliance and corporate directories, which aren’t natural vocabulary words for consumer entrepreneurs.

You say three trends will make 2014 another big year for enterprise. What are they?

First, enterprise budgets tend to be economic-cycle driven; when the economy is doing well [as now], they’re spending money.

A much newer theme is that the pocket of money that startups went after is distributed now, which is a really good thing. Historically, the one customer in the enterprise was the CIO, and he or she was a technical user who decided, “I’m going to use Microsoft for this, and Oracle for that and Cisco for this.” Now, because you don’t need to buy the hardware anymore – you can go to Saleforce or Workday or Zuora – the decision-maker for that technology is no longer the CIO. It’s the VP of sales, it’s the CMO, it’s the CFO; it’s 10 different people at the company. Imagine that you’re the head of public relations at Twitter and want to do sentiment analysis. You don’t call the CIO. You look up “sentiment analysis technology” on Google. Something comes up and you call the sale rep of the company and they say, “Just send us your link and we’ll have some analyses for you.” Well, you just spent money on technology. You’re an enterprise customer.

Last, enterprises have consumer envy. Consumers have cool devices. They have Evernote, with beautiful graphics. Meanwhile, [the enterprise folks] are sitting there looking at [Microsoft] SharePoint or Word. They want some of that cool stuff – including more storage and networking stuff and cooler middleware — so that’s where the money is being, and will continue to be, spent.

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

Index Ventures’ Mike Volpi on the Pitfalls of VC Marketing

Index Ventures is widely perceived by other VCs to be a top-tier firm. Among its active investments are Sonos, the wireless music system company; Dropbox, the popular online storage service; and Hortonworks, a commercial vendor of Apache Hadoop.

The goal for Index now is to raise its profile with U.S. entrepreneurs, many of whom still consider the firm — which launched in Geneva in 1996 and opened a London office in 2001 — to be a European venture fund.

Step one involved opening an office in San Francisco in late 2011, where general partners Danny Rimer and Mike Volpi have been sewing up deals left and right. The second part of Index’s evolution involves giving the press a (slightly) better look into its thought processes. Indeed, I sat down with Volpi at Index’s sunny offices yesterday morning, where we talked about how the historically quiet firm plans to more visibly plant its flag in the U.S. and the Bay Area in particular.

We’ve been sitting here, talking about the professionalization of venture marketing. What is Index’s philosophy when it comes to selling itself?

Venture capital is changing. It’s different. And being good at marketing is an important asset today, when it just wasn’t 10 years ago.

Index certainly isn’t as “out there” as some firms. Will that change?

There’s an inherent conflict that exists in doing a lot of marketing for one’s own firm, because in one dimension, being out there helps attract people to you. In theory, saying, “So and so is backed by X Venture Capital” helps the company.

But one of our key cultural tenets is that we’re supporting the entrepreneur and we want the entrepreneur to be the story, not us. So we’re not trying to take the light away from the entrepreneur. Inherently, we see a little bit of a cultural conflict. Who is in front of the parade? Is it the VC or the entrepreneur? I think if the VC firm gets too far ahead of the parade, the smart entrepreneurs might get uncomfortable with that, so we try to strike a balance.

How exactly?

Presumably, over time, [things will take their] natural course if we do our job properly. But we don’t want to put steroids on [our marketing strategy]; we don’t want to bang on every journalist’s door, saying, “Pay attention to us.”

If you’re an entrepreneur, you want your own signature on the project you’re working on and you don’t want to be overshadowed. If you don’t have a signature to speak of, then you rely on somebody else’s. It’s a gray zone for sure, but I think it’s an important line to draw.

Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

Index Ventures

Related articles

Related articles