Happy Friday morning, everyone! We hope you have a stellar weekend; we’ll see you back here on Monday. (In the meantime, here is an easier-to-read version of today’s email.)
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Top News in the A.M.
Alibaba is now worth more than either Amazon or eBay, with a market value of close to $224 billion as of this writing. As it rings in the day (and the bell) at NYSE, Recode offers a few things to keep in mind about the largest tech IPO of all time.
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Jon Sakoda: Never Mind What Angels Say, VCs Have Your Back
Partner Jon Sakoda of New Enterprise Associates, who co-heads the firm’s seed-stage practice, doesn’t know yet if it makes sense for NEA – which manages billions of dollars — to be dabbling with nascent startups.
Over lunch recently at San Francisco’s MarketBar brasserie, Sakoda spoke candidly about the firm’s concerns about “diluting the NEA brand and the experience that an entrepreneur has with an NEA partner. We didn’t want to emulate other models where you get a second-tier experience because you’re a seed-funded company versus a prime-time NEA company.” NEA’s limited partners also “question whether it’s a good use of our time,” said Sakoda between bites of his BLT. “If I’ve invested $2.5 million in other companies and $250,000 in these other companies, is it really worth my time to invest in what can be some very challenging times for these companies?”
Unsurprisingly, perhaps, NEA thinks the answer is yes. Out of 75 seed investments the firm has made since delving into the world of seed investing in 2011 — with 50 now far enough long to have either attracted follow-on funding, been acquired, or floundered – 25 have gone on to raise Series A funding, 10 of them from NEA. “It’s a little better than we’d thought” NEA would see on an overall basis, said Sakoda, adding that: “Of course, in five years, we’ll have to look and ask how much time we invested in these companies and whether we have enough meaningful returns. Because the Series A is not the end goal from our LPs’ perspective.”
Here’s more from that conversation, edited for length:
There still seems to be some confusion over whether it’s better to have a syndicate of investors, all of whom bring something to the table, or one or two investors who are more invested in the company.
You could argue both sides, but our experience would suggest that it’s better to have a syndicate of investors and it’s also largely better to have an institutional VC because the startup’s likelihood of raising a Series A round is higher. Our own research shows entrepreneurs are 50 percent more likely to get funding from another firm if they take money from us.
So you don’t put much stock in signaling risk.
I joke that signaling risk was created so that angels could do no wrong. What’s the logic behind [thinking that if a] a high-quality institutional VC invests in your seed round, that somehow sends a negative signal? Some people think if that same VC doesn’t lead your Series A, then all hell breaks loose. And it’s true that when things aren’t going well, the investors in your syndicate aren’t likely to lead your Series A – but neither is anyone else.
When the going gets tough, we’re the first people to go into our pocketbooks and bridge companies and give them a second seed and give them a chance to survive. We’re the most supportive when things are going sideways because if you think about it, we’re investing in these long-term relationships.
I think it’s frequently the angel investors who aren’t doing this full time and don’t view this as a career investment in the individual who are the least likely to support these companies when times get tough. How can they? They don’t have the resources, they don’t have the time, they maybe have 50 investments.
They’d probably argue that you don’t have unlimited bandwidth, either.
Actually, we let any partner sponsor a seed investment and I’m one of two people [the other is NEA principal Rick Yang] who approves each investment. If I was sponsoring 75 investments, I’d be no different than angel inevstors. But I have 12 or 13 partners who are making five to seven seed investments over the course of a few years — maybe doing one or two a year — so they can spend as much time with the [seed-stage] entrepreneur as if they’d invested $5 million or $10 million. We want every partner to own the relationship with the entrepreneur. And we’re constantly paying attention to that. Are we doing too many deals? Are providing that same quality of service?
There’s a lot of competition for the best seed deals. Are you having to find new ways to reach entrepreneurs?
No, but we have had to be a lot more outspoken and public about what we do for our companies. People used to come to us, but in an environment where you have firms that are being much more outbound-oriented about promoting their services, we’ve had to rely on more active referencing for our network, including connecting entrepreneurs from our enterprise companies with CIOs and throwing events for our companies that need help with their marketing. In many ways, we’ve had to institutionalize things we were doing ad hoc because the industry grew more promotional about these services, and we’ve had to respond to that.
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New Fundings
Campus Job, a months-old, New York-based online hiring marketplace for students in search of part-time jobs, has raised $965,000 in seed funding led by BoxGroup, with Lerer Hippeau Ventures, Kal Vepuri, Female Founders Fund and Red Sea Venture Partners participating. AlleyWatch has more here.
CoinPlus, a months-old, Luxembourg-based bitcoin startup that’s developing a multi-support payment processor and a currency exchange platform, has raised $222,000 in seed funding from undisclosed investors. Chronicle.lu has more here.
DroneDeploy, a 1.5-year-old, San Francisco-based smart drone management platform that makes it easy for anyone to analyze the images they capture using drones, has raised $2 million in seed funding from SoftTech VC, Data Collective, Red Point Ventures, DFJ and AngelPad. (The company participated in AngelPad’s accelerator program last year.)
Etaoshi, two-year-old, Beijing-based online food ordering and delivering service provider, has raised $20 million in Series B funding from Beijing New Hope Industry Investment Center, reports China Money Network. The company had previously raised $10 million in Series A funding from Highland Capital Partners and other undisclosed investors, says the outlet.
Genisphere, a 17-year-old, Hatfield, Pa.-based nanotechnology company focused on targeted drug delivery technologies, has raised $2 million from earlier investors, including Corporate Fuel Partners, a New York fund.
Hazelcast, a nearly six-year-old, Palo Alto, Ca.-based open source in-memory platform for data distribution, has raised $11 million in Series B funding led by Earlybird Venture Capital. Earlier investors, including Bain Capital Ventures and individuals Ali Kutay and Rod Johnson, also participated in the round, which brings the company’s total funding to $13.5 million.
Kelase, a 10-month-old, Jakara, Indonesia-based technology platform that enables schools to have their own private social networks, has raised an undisclosed amount seed funding from PT Insights Investments, a regional investment firm. Tech in Asia has more here.
KIN, a seven-year-old, Santa Monica, Ca.-based digital media company, has raised $12 million in Series C funding, led by Corus Entertainment, with participation by Emil Capital. Earlier investors Mayfield Fund,General Catalyst Partners and Rustic Canyon Partners also participated in the round.
New Vision, a Padua, Italy-based startup whose platform allows users to collaboratively manage content, has raised roughly $8 million in funding from Innogest Sgr, Withfounders, Centerboard Partners, and other unnamed investors.
Odilo, a three-year-old, Madrid, Spain-based company whose digital asset management platform makes it possible to lend and otherwise manage digital content, has raised $2.8 million in funding from Active Venture Partners.
Placemeter, a two-year-old, New York-based computer vision platform that translates common video feeds into structured data that can be analyzed in real time, has raised $6 million in Series A funding. The round was led by New Enterprise Associates, with participation Qualcomm Ventures, Collaborative Fund, and existing investors. The company has now raised $7.8 million to date, shows Crunchbase.
PrecisionHawk, a three-year-old, Indianapolis, In.-based startup that uses unmanned aerial vehicles to collect data for numerous industries, has raised $10 million in Series B funding led by Millennium Technology Value Partners. Earlier investors, including Red Hat cofounder Bob Young and Innovate Indiana Fund, also participated in the round, which brings the company’s funding to $11 million.
Reveal Chat, a new, Seattle-based free anonymous mobile chat app designed to let users reveal more about themselves to strangers as they go along, has raised $1 million from investors, including Microsoft Ventures. GeekWire has more here.
SchoolMint, a 1.5-year-old, San Francisco-based company that makes mobile and online-enrollment software for K-12 public, charter and private schools, has raised $2.2 million in seed funding led by NewSchools Venture Fund, Runa Capital and Crosslink Capital. Other participants in the round include Kapor Capital, Imagine K12, Romulus Capital, Fresco Capital, EdMentor VC, and individual investors.
Shippo, a year-old, San Francisco-based company that has built an API that makes shipping more affordable for small businesses that aren’t eligible for bulk discounts, has raised $2 million in seed funding led by SoftTech VC, with participation from Version One Ventures, 500 Startups, Joanne Wilson, Slow Ventures, Fabrice Grinda, and other angels. The company had previously raised $275,000 in seed funding.
Shuttlerock, a three-year-old, Christchurch, New Zealand-based visual marketing platform, has raised $2.35 million in Series A funding, including from Opt, ICE Angels, Air New Zealand and Black Cat Cruises.
Zipari, a, months-old, Brooklyn, N.Y.-based maker of customer relationship management software for health insurance companies, has raised an undisclosed amount of funding from Vertical Venture Partners, the new venture firm of longtime Sierra Ventures managing director David Schwab.
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New Funds
Aglaia, a Bilthoven, Netherlands-based venture firm, has held a first, $65 million, close on its Aglaia Oncology Fund II, which is targeting between $80 million and $100 million. LPs include high-net-worth families and the European Investment Fund. Through the new fund, Aglaia will be investing in 10 to 15 biotechnology start-ups, and it will be scouring Europe and the Netherlands in particular for opportunities.
Altos Ventures, an 18-year-old Silicon Valley venture capital firm, has just finished raising a $60 million fund dedicated to South Korea-based startups, reports Fortune, which suggests it’s the largest Korea-focused fund ever raised by a U.S. venture firm.
Amadeus Capital Partners, a 17-year-old, London-based technology venture capital firm that focuses largely on mobile technologies, financial services, and digital media, is planning to enter the Indian market, according to LiveMint. The country is “at a tipping point and there’s a lot of maturity in the market, particularly in the online services space,” Jason Pinto, a partner at the firm, tells the outlet of its plans to open a regional office.
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IPOs
Alibaba‘s IPO is minting thousands of millionaires. Dealbook has an interesting look at how the event might transform the “leafy manufacturing hub two hours southwest of Shanghai,” where they live and where Alibaba is based.
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Exits
Concur, a 21-year-old vendor that delivers cloud-based expense and travel management solutions, has been acquired by SAP for $129 per share, or a 20 percent jump over Concur’s latest closing price, making the deal worth more than $8 billion.
Pheed, an 18-month-old, Beverly Hills, Ca.-based social media platform, has been acquired for $40 million by a similar-but-bigger privately held company, Mobli, whose real-time visual media platform allows users to share photos and videos. It isn’t clear that Pheed had outside investors; Mobli has meanwhile raised $86 million over its four-year history. Forbes has more here.
VAN, a London-based company that helps brands create and distribute branded content campaigns, has been acquired by Sharethrough, a six-year-old, San Francisco-based software company that powers in-feed, native ads for premium publishers & brand marketers. VAN’s funding isn’t public, seemingly; Sharethrough has raised $28 million from investors, shows Crunchbase. TechCrunch has more here.
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People
Larry Ellison, who cofounded and headed up the database giant Oracle for more than 35 years, stunned the business world yesterday by stepping down as CEO and replacing himself with co-presidents Mark Hurd and Safra Catz. Hurd will run sales, marketing and strategy, while Catz will remain CFO and oversee legal and manufacturing operations. Ellison, who turned 70 in August, will become chairman. Bloomberg has more here.
Google‘s first 21 employees and where they are now.
Peter Hazlehurst has joined the on-demand delivery startup PostMates as its new COO, reports TechCrunch. Hazlehurst was previously a director of product management for Google Wallet, leading a team of nine product managers. He was also the chief product officer of the personal financial management platform Yodlee for nearly eight years.
Alshon Jeffery, a 24-year-old wide receiver for the Chicago Bears, yesterday became the latest professional football player to sign up to sell shares through Fantex, the San Francisco start-up that is trying to create a market for stock linked to the future earnings of athletes. Dealbook has the story.
Microsoft confirmed yesterday that it’s cutting 2,100 jobs across the company worldwide. It’s also closing its Silicon Valley-based R&D lab.More here.
David Socks has joined Frazier Healthcare as a venture partner in Boston. Socks co-founded two Frazier Healthcare-backed startups, including Incline Therapeutics, acquired last year by The Medicines Company for upwards of $390 million, and Cadence Pharmaceuticals, acquired last year by Mallinckrodt Pharmaceuticals for $1.3 billion. MedCity News has more here.
Airbnb CFO Andrew Swain has left the company, and TechCrunch sources say he was asked to leave — that there there “was a recognition that he wasn’t the right fit for the startup moving forward.” Swain joined Airbnb more than two years ago. Previously, he was a VP of finance at Intuit’s consumer group as well as a VP of corporate strategy at Intuit.
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Job Listings
Comcast Ventures is looking to hire an associate in New York.
Zelkova Ventures is looking for an intern in New York, preferably an undergrad.
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Data
Emboldened by the success of Alibaba, investors are plowing more money into late-stage China-based companies, according to Preqin data. Firms have invested an average of $54 million into Series C rounds and $84 million into Series D rounds this year, up from average of $26 million and $76 million at the Series C and D stages respectively in 2013. VentureWire has more here.
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Essential Reads
The looming threat for Uber and other startups that employ contractors.
Venture Capital Dispatch reported on Tuesday that General Catalyst Partners and Accel Partners have quietly divested shares in Russia-based Ostrovok.ru. Now the Moscow-based online travel company is piping up, reportedly telling a local publication of the firms: “I think it may be difficult for [Accel and General Catalyst] to explain to their investors how they managed to invest more than $25 million in a Russian company and never visit the company’s office after the investment.”
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Detours
On a wide variety of dimensions, living conditions for most people on Earth are getting better. Here’s some proof.
“[O]ne of the reasons that people are vitriolic is because part of them wants to be a hipster – but of course they’d never admit it.”
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Retail Therapy
Johnny Cash’s 1970 Rolls Royce Silver Shadow, with just 32,000 miles on the odometer. Black, naturally, and up for sale soon.
