StrictlyVC, LLC

Six months ahead.

Manhattan Venture Partners

StrictlyVC: February 27, 2015

Happy Friday, everyone! Hope you have terrific weekend, and we’ll see you back here bright and early on Monday.:)

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Top News in the A.M.

This morning, Ericsson filed seven new lawsuits in a U.S. court and is asking the U.S. International Trade Commission to block Apple products from the U.S. market.

In what we’d guess is unrelated news, Apple has announced a surprise media event to be held March 9. So. Excited. Can’t. Breathe. [Faints.]

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In a Heated Market, a Secondaries Player Casts a Wide Net

When Manhattan Venture Partners publicly launched last month, the merchant bank joined a growing number of players who are matching investors with startups that are in no apparent rush to go public.

Talking recently with StrictlyVC, plugged-in investor and AngelList cofounder Naval Ravikant opined that it’s “possible that the amount of secondary trading going on in Silicon Valley under the covers is going to match the amount of primary financing soon” as household names like Uber and Airbnb and Dropbox move more slowly than expected toward IPOs.

Perhaps it’s no wonder then that Manhattan Venture Partners is casting its net far beyond the Bay Area. Last week, we talked with the firm’s cofounder, Jared Carmel, and its chief economist, Max Wolff, about which markets, exactly, the new outfit is chasing.

Most of the so-called unicorns are headquartered — broadly speaking – in Silicon Valley. But you’re also looking elsewhere. Why?

JC: We’ve expanded overseas because we’re starting to see demand for what we do from [India-based] Flipkart and [China-based] Xiaomi and the like. Those companies aren’t current customers, but [the China-based e-commerce giant] Alibaba was one of the big positions we took last year. We had a significant amount of shares that came from an executive last April, prior to its [September] IPO.

MW: We see the center of gravity in pre-IPO tech companies beginning to drift both south and east from the U.S., which is pretty consistent in terms of the global economy as it drifts more toward the global south away from the U.S. and Europe. It’s much more advanced in the global macro sense than in the private company sense. Today and in the foreseeable future, Northern California will remain at the center of a lot of this activity. But right now, as large and aggressive as Uber’s [$40 billion] valuation is, it’s still $5 billion less than the valuation of Xiaomi, a handset maker that no one in the U.S. has really heard of outside of the business press. We’re at a moment historically where we’re living in the long shadow of the largest tech IPO ever – Alibaba, which, by the way, when we first began talking with people about it [long ago], they thought was a [brand of] hummus.

Culturally, are secondaries seen as an acceptable practice in China and elsewhere? Obviously, in the U.S., they were long stigmatized as a last resort for troubled companies.

MW: There’s more acceptance of secondaries and more acceptance of high, late-stage valuations than at any time in the recent past. We’ve seen large [foreign] institutional investments in secondary shares really since Facebook, and given that many of those investors – who’ve also backed LinkedIn and Tesla and Twitter – made money, we’re seeing them come home and really start to introduce [secondary investments] to the whole market.

JC: It’s still pretty new in the U.S., so it’s even newer in many countries, and I don’t think it’s as well-understood or accepted as in the U.S. But as we’re starting to see companies get into seven-plus years in their lifespan, and they’re seeing their best employees heading off to other projects and companies, they’re beginning to understand that a secondary or liquidity program can also act as a retention tool.

You’re also talking with U.S. companies and investors. What are you seeing? What’s hot and what’s not?

JC: Games [companies] have really been in the doldrums, owing to private and public investments that didn’t necessary end well in recent years. Social is definitely deeply out of favor. Another sector that people are much less excited about are flash deal sites. Red hot: privacy, private messaging, and driver logistics companies.

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New Fundings

Accela, a 16-year-old, San Ramon, Ca.-based company that makes cloud-based civic-engagement software, has raised $143.5 million in new financing led Abry Partners, with participation from Landmark Partners, J.P. Morgan Private Equity, and Karlani Capital. The company had raised at least $50 million across two previous rounds, shows Crunchbase.

Citymaps, a 4.5-year-old, New York-based mobile app company whose visual maps help users discover and mark favorite places, has raised $6 million from new investors Nokia Growth Partners, Coatue Management and Acadia Woods, with participation from earlier investors. The company has now raised $11 million altogether, shows Crunchbase.

Emailage, a nearly three-year-old, Chandler, Az.-based company that makes a fraud-detection system that relies on email addresses to produce a fraud risk score, has raised $3.8 million in funding led by Felicis Ventures.

FreshWorld, a year-old, Bangalore-based startup that delivers fresh fruits and vegetables straight from farmers to homes using GPS-enabled smart carts, has secured an undisclosed amount in funding from Indian Angel Network and Infosys cofounder Kris Gopalakrishnan.

Grofers, a 14-month-old, Gurgaon, India-based company that helps facilitate on-demand delivery for local store owners, has raised $10 million in Series A funding led by Tiger Global Management and earlier backer Sequoia Capital. The company has now raised $10.5 million altogether. TechCrunch has more here.

InMoji, a year-old, San Francisco-based mobile marketing startup, has raised $1.25 million in seed funding led by former PayPal Media COO David Chang, with participation from PayPal’s StartTank and Atlas Venture through its Boston Syndicates. Boston Business Journal has more here.

JRNL, a new, Las Vegas-based company whose private journaling application is designed for Web and mobile use, has raised an undisclosed amount of seed financing from Varkain, a Las Vegas-based venture capital firm.

Kobalt, a 15-year-old, New York company whose computer system scours payment systems around the world to make sure royalty money ends up where it belongs, has raised $60 million in new funding from Google Ventures and Michael Dell. The company has now raised $116 million altogether, shows Crunchbase. The L.A. Times has the story here.

LeadDesk, a five-year-old, Helsinki, Finland-based cloud call center software company, has raised $6.2 million in Series A funding led by Dawn Capital, with participation from the public fund Finnish Industry Investment.

LoveCrafts, a 2.5-year-old, London-based builder of social marketplaces for crafts communities, has raised $7.5 million in funding from Balderton Capital. More here.

PlayFab, a year-old, Seattle-based company that provides back-end support for game studios (it spun out from the gaming company Uber Entertainment last year), has raised $7.4 million in funding led by Benchmark Capital, with participation from Madrona Venture Group, Startup Capital Ventures, and individual investors, including Orbitz CEO Barney Harford. The company has now raised $9.9 million to date, shows Crunchbase.

PracticeGigs, a seven-month-old, Boston-based peer-to-peer learning marketplace designed to help people improve their skills at tennis — and eventually, other sports and activities — is raising a seed round of funding that so far includes Andy Miller of Constant Contact and Jeff Fagnan at FKA (the tech venture capital firm Formerly Known as Atlas) and others. BetaBoston has more here.

Skully, a two-year-old, San Francisco-based company whose $1,500 augmented reality motorcycle helmets are schedules to ship to its first customers this summer, has raised $11 million in Series A funding led by Walden Riverwood Ventures and Intel Capital, with participation from Formation 8, Eastlink Capital, Techstars, and Western Technology Investment, which had earlier contributed $500,000 in venture debt. Skully had previously raised $2 million in seed funding and more than $3.4 million in a crowdfunding campaign on Indiegogo. Venture Capital Dispatch has more here.

SOLS, a two-year-old, New York-based 3D-printing company that prints custom shoe insoles, has raised $11.1 million in funding from Tenaya Capital, Melo7 Tech Partners and earlier backers Founders Fund and Lux Capital. The company has now raised $19.3 million altogether, shows Crunchbase. TechCrunch has more here.

Twenty20, a 3.5-year-old, Marina Del Ray, Ca.-based photography marketplace connecting stock photo buyers with everyday smartphone photographers, has raised $8 million in Series A funding led by Canaan Partners, with First Round Capital, Bullpen Capital, and VersionOne Ventures participating. The company has now raised $9.7 million altogether, shows Crunchbase.

Trov, a 2.5-year-old, Danville, Ca.-based company whose app helps users easily organize and value the things they own, has raised $6.5 million in new Series B funding led by Anthemis Group of Geneva. The company has now raised $13.3 million altogether. PandoDaily has much more here.

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New Funds

AXA Equitable Financial Services, the 200-year-old, Paris-based multinational investment banking firm, has formed a venture unit with a 200 million euro ($224.3 million) fund that it intends to invest in insurance, asset management, financial technology and health-care services startups.

GGV Capital, a 15-year-old, Menlo Park, Ca.-based company whose newest bet is the home-buying business Opendoor (profiled here yesterday), is raising a $450 million growth fund to invest in startups that it has backed with its last two funds, reports VentureWire. In May of last year, the firm, which focuses on the U.S. and China, raised $620 million for its fifth venture fund. It typically plugs between $5 million and $25 million into its portfolio companies.

Illumina, the San Diego-based genetic analysis and sequencing company, has raised a new, $40 million fund to match investments raised by companies that pass through an accelerator program it’s been running in San Francisco for roughly a year. Funding for the investment vehicle, called Accelerator Boost Capital, was provided by Viking Global Investors, Illumina tells VentureWire.

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Exits

Aereo, the digital video service that threatened to disrupt the television industry and filed for bankruptcy in November, attracted less than $2 million for its assets at a bankruptcy auction, reports Bloomberg. TiVo won its trademark, customer list and certain other assets; RPX, a patent risk-management company, bought its patent portfolio; and Alliance Technologies, a computer consulting company in Des Moines, Ia., acquired some of its equipment.

Pluck, a 12-year-old, Austin, Tx.-based company that sells social media software to companies that want to create communities around their existing web properties, has been acquired for undisclosed terms by Sprinklr, a subsidiary of publicly traded Demand Media. Terms aren’t being disclosed. According to Crunchbase, Pluck had raised at least $17 million from investors, including Reuters, Mayfield Fund, and Austin Ventures.

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People

Amazon has hired Jay Carney, former press secretary for President Obama, as senior vice president for global corporate affairs — which is a new position, says the company. Politico has more here.

Sue Biglieri, the longtime CFO of Kleiner Perkins Caufield & Byers, took the stand yesterday in Ellen Pao’s gender discrimination suit and revealed that in 2011, at least one general partner earned up to five times more than a junior partner at the firm, owing to the profits they receive from Kleiner’s investments, plus their management fees. (Junior employees instead receive salaries and bonuses.) Kleiner attorney Lynn Hermle said that as a junior partner, Pao’s total compensation in 2011 was $516,000. That’s not so shabby, though Pao has argued she’d be making far more today had she been promoted. Business Insider has the story.

Former Kleiner Perkins Caufield & Byers investor Ajit Nazre, who former partner Ellen Pao says pressured her into having an affair then retaliated against her when she ended their relationship — contributed to her 2011 performance review, even though he wasn’t listed as a contributor. Venture Capital Dispatch has the story here.

Ted Schlein, a Kleiner Perkins Caufield & Byers managing partner who, like Kleiner CFO Sue Biglieri, took the stand yesterday in Ellen Pao’s gender discrimination suit, said repeatedly he couldn’t remember relevant details about performance reviews he’d helped write about Pao or email exchanges he’d had about her and with her. Fortune has the story here.

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Jobs

Siemens Venture Capital is looking to add a vice president to its team. The job is in Boston.

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Essential Reads

Google just made “mobile friendliness” a ranking signal.

Google also just paid $25 million for exclusive rights to the “.app” top-level web domain.

Talk about a bad sport.

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Detours

A 14,000-square-foot, five-bedroom, five-bath duplex penthouse in San Francisco has come on the market for a whopping $49 million.

Awe-inspiring satellite photos from around the world.

R/C drifting in Yokohama, Japan.

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Retail Therapy

Now that’s a set of speakers.

In a Heated Market, a Secondaries Player Casts a Wide Net

world_600wWhen Manhattan Venture Partners publicly launched last month, the merchant bank joined a growing number of players who are matching investors with startups that are in no apparent rush to go public.

Talking recently with StrictlyVC, plugged-in investor and AngelList cofounder Naval Ravikant opined that it’s “possible that the amount of secondary trading going on in Silicon Valley under the covers is going to match the amount of primary financing soon” as household names like Uber and Airbnb and Dropbox move more slowly than expected toward IPOs.

Perhaps it’s no wonder then that Manhattan Venture Partners is casting its net far beyond the Bay Area. Last week, we talked with the firm’s cofounder, Jared Carmel, and its chief economist, Max Wolff, about which markets, exactly, the new outfit is chasing.

Most of the so-called unicorns are headquartered — broadly speaking – in Silicon Valley. But you’re also looking elsewhere. Why?

JC: We’ve expanded overseas because we’re starting to see demand for what we do from [India-based] Flipkart and [China-based] Xiaomi and the like. Those companies aren’t current customers, but [the China-based e-commerce giant] Alibaba was one of the big positions we took last year. We had a significant amount of shares that came from an executive last April, prior to its [September] IPO.

MW: We see the center of gravity in pre-IPO tech companies beginning to drift both south and east from the U.S., which is pretty consistent in terms of the global economy as it drifts more toward the global south away from the U.S. and Europe. It’s much more advanced in the global macro sense than in the private company sense. Today and in the foreseeable future, Northern California will remain at the center of a lot of this activity. But right now, as large and aggressive as Uber’s [$40 billion] valuation is, it’s still $5 billion less than the valuation of Xiaomi, a handset maker that no one in the U.S. has really heard of outside of the business press. We’re at a moment historically where we’re living in the long shadow of the largest tech IPO ever – Alibaba, which, by the way, when we first began talking with people about it long ago, they thought was a [brand of] hummus.

Culturally, are secondaries seen as an acceptable practice in China and elsewhere? Obviously, in the U.S., they were long stigmatized as a last resort for troubled companies.

MW: There’s more acceptance of secondaries and more acceptance of high, late-stage valuations than at any time in the recent past. We’ve seen large [foreign] institutional investments into secondary shares really since Facebook, and given that many of those investors – who’ve also backed LinkedIn and Tesla and Twitter – made money, we’re seeing them come home and really start to introduce [secondary investments] to the whole market.

JC: It’s still pretty new in the U.S., so it’s even newer in many countries, and I don’t think it’s as well-understood or accepted as in the U.S. But as we’re starting to see companies get into seven-plus years in their lifespan, they’re seeing that their best employees are heading off to other projects and companies and they’re beginning to understand that a secondary or liquidity program can also act as a retention tool.

You’re also talking with U.S. companies. What are you seeing? What’s hot? What’s not in terms of institutional demand for secondary shares?

JC: Games [companies] have really been in the doldrums, owing to private and public investments that didn’t necessary end well in recent years. Social is definitely deeply out of favor. Another sector that people are much less excited about are flash deal sites. Red hot: privacy and private messaging and driver logistics companies.