StrictlyVC, LLC

Six months ahead.

Rakuten

StrictlyVC: March 27, 2016

Oh, how we love Fridays! Have a great weekend, everyone. See you Monday morning.

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Top News in the A.M.

Last week, French police reportedly raided Uber‘s offices in Paris. Yesterday, it was Dutch authorities barreling their way into the Amsterdam offices of the mobile car-booking company. More here.

BlackBerry just reported a surprise profit for the fourth quarter, but its revenue continues to crater.

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A Startup Takes on Rakuten

Industry watchers are well-aware that Rakuten, the Japanese e-commerce giant, has made a wave of investments in U.S. startups in recent years as it looks to enhance its portfolio of technologies, acquiring Buy.com, Slice and eBates and making big bets on Pinterest and Lyft, among other companies.

According to Ryan Koonce, the founder and CEO of San Francisco-based Superpoints, Rakuten is also making a name for itself as a company that willfully disregards trademarks and intellectual property. Koonce’s bootstrapped, six-year-old online loyalty rewards company filed a lawsuit yesterday against the $23 billion conglomerate, accusing it of trademark infringement, unfair competition, and unfair business practices.

At issue, says Koonce, is Rakuten’s use of “Super Points” in the marketing of its own, newer loyalty rewards program, despite a ruling by the U.S. Patent and Trademark Office that denied Rakuten’s attempts to trademark the language on the grounds that there was likely to be confusion with Superpoints’s trademark. Koonce only learned of the undertaking after being served documents that Rakuten was trying to have Superpoints’s registration canceled.

Koonce says he reached out to Rakuten numerous times afterward, including providing someone in Rakuten’s marketing department with Superpoints’s deck to show that Superpoints would be willing to work with Rakuten. “We wanted to see if there was interest in talking about how we could turn lemons into lemonade,” he says.

The New York-based representative said the deck would be sent to Japan, says Koonce, adding, “We never heard back.”

Rakuten did not respond to a request for comment yesterday.

For Koonce, his dispute with Rakuten isn’t a trivial matter. Koonce says he has spent “many long nights and time away from my wife and kids trying to build the best site I can. I also have a significant percentage of my net worth tied up in the company.”

Competing with a web giant over his trademark was something that never occurred to Koonce, who has founded a number of startups over the years, including the social media marketing company Popular Media, which was funded by Sequoia Capital and acquired in 2010.

That’s partly because it doesn’t happen very often in Silicon Valley, where people tend to play nice to preserve their relationships. But a trademark attorney at one of Silicon Valley’s largest and most-respected law firms also calls it “unusual for a big, sophisticated company to take on a little guy” because it doesn’t make good business sense. “The likelihood of confusion would be a deterrent for most honorable companies, because you don’t want to expose your shareholders to a liability.”

Adds the attorney, who asked not to be named but doesn’t know or represent Koonce: “This sounds like an exceptional situation to me . . . Even though [Koonce] may just be one guy, he has legal rights, and he can [sue] a second comer who takes [his brand].”

If there’s a silver lining for Koonce, it’s that he looks well-positioned to win his case — or at least a settlement. Because he has been using his brand since 2009 and further received trademark approval for it back in 2011, he should “have a presumption of national rights” in the U.S., says the attorney. (Though generally, trademark rights are territorial, meaning companies in different countries can have the same trademark, those national borders mean less in the Internet age, he says.)

Companies of all sizes generally have an incentive to negotiate a resolution sooner than later, too. “Even a company with trillions of dollars has budgets and has to rationalize economic decisions,” says the attorney. “No one wants to throw money and time and resources into litigation.”

In the meantime, Koonce is thinking about crowd-funding his legal fees if it becomes necessary. “The thought of fighting with a $20 billion conglomerate like Rakuten is not something I’d wish on my worst enemy. But I have no choice,” he writes in an email.

“It wears on you,” he adds. “The only way to make it is through sheer grit and tenacity.”

Fortunately, he says, “I have that in spades.”

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New Fundings

Amplience, a seven-year-old, New York-based content marketing startup, has raised $10.5 million in Series B funding led by earlier backer Octopus Investments, with participation from Northstar Ventures and Silicon Valley Bank.

Artsy, a six-year-old, New York-based online resource for art collecting and education, has raised $25 million in Series C funding led by the private equity firm Catterton, with participation from earlier backers Thrive Capital, IDG Capital Partners and the Rockefeller family. The company has raised roughly $51 million to date.

Aryaka, a 6.5-year-old, Milpitas, Ca.-based company that sells its cloud-based WAN optimization and application-acceleration platform as a service, has raised $16 million in funding led by Nexus Venture Partners, with participation from earlier backers, including InterWest Partners, Mohr Davidow Ventures, Presidio Ventures and Trinity Ventures. The company has now raised roughly $100 million altogether, shows Crunchbase. Venture Capital Dispatch has more here.

ChowNow, a three-year-old, Venice, Ca.-based food ordering startup that provides restaurants with custom online ordering tools and white label restaurant apps, has raised $10 million in new funding led by Upfront Ventures, with participation from Steadfast Venture Capital, Daher Capital, and Karlin Ventures. The company has raised $17.7 million altogether, shows Crunchbase.

Dream Payments, a year-old, Toronto, Ontario-based mobile-payments startup, has raised $6 million in funding from Blue Sky Capital, Real Ventures and Rouge River Capital.

Gelesis, an eight-year-old, Boston-based company that’s developing orally administered capsules that expand in the stomach when taken with water to induce weight loss, has raised $22 million financing from unnamed new and previous investors. The company has now raised $56.2 million altogether, shows Crunchbase.

Magic, a month-old, Mountain View, Ca.-based delivery service, is raising $12 million in Series A funding at a $40 million pre-money valuation led by Sequoia Capital, reports TechCrunch. Magic lets users text a single number to have things delivered on demand; it operates atop other delivery services, such as Postmates and Instacart.

NGM Biopharmaceuticals, an eight-year-old, South San Francisco-based drug discovery company developing biotherapeutics for the gastrointestinal endocrine system, has raised $57.5 million in Series D funding led by new and earlier backers, including The Column Group, Prospect Ventures, Tichenor Ventures and Topspin Partners.

PhishMe, a four-year-old, Leesburg, Va.-based anti-phishing startup, has raised $13 million in new funding led by earlier backer Paladin Capital Group, with participation from new investor Aldrich Capital Partners. The company has now raised just north of $15 million, it says.

Pleek, a months-old, Paris-based picture messaging app that allows users to communicate via images, has raised $600,000 in seed funding led by Partech Ventures, with participation from angel investors, including rap star Sean Combs (“Diddy”). TechCrunch has more here.

Quickplay Media, a 12-year-old, Toronto, Ontario-based online video services company, has raised $45.7 million in growth funding from Madison Dearborn Partners, Difference Capital Financial, and Orix Ventures.

Slack, the San Francisco-based real-time messaging company, is raising $160 million in new funding that values the company at $2.76 billion, reports the Wall Street Journal. The round, which will include new investors Institutional Venture Partners, Horizons Ventures, Index Ventures and DST Global, is expected to close in the next few weeks, says the report. Slack had previously raised $180 million from investors, including Accel Partners, Andreessen Horowitz, Google Ventures, Kleiner Perkins Caufield & Byers and Social+Capital Partnership.

View, an eight-year-old, Milpitas, Ca.-based maker of electronically tinting window glass, is raising as much as $100 million in new funding at “about $750 million pre-money” valuation, reports Venture Capital Dispatch.

Waygum, a two-year-old, Dublin, Ca.-based end-to-end mobile app platform for industrial connected devices, has raised $1.5 million from Navitas Capital and the corporate venture arm of Tyco International.

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New Funds

AKT IP Ventures, a months-old, Washington, D.C.-based incubator, said it has launched a fund to turn patents into businesses and it’s targeting $20 million for the effort. More here.

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Exits

DoublePositive, an 11-year-old, Tempe, Az.-based online marketing company, has been acquired by the billing outsourcing and customer-communications company Output Services Group for undisclosed terms. According to Crunchbase, DoublePositive had raised $7.3 million from investors over the years, including Hamilton Investment Partners, Southern Capitol Ventures, Outcome Capital, and The Grosvenor Funds.

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People

Salesforce CEO Marc Benioff has canceled all his company’s events in Indiana after its governor signed into law a bill that makes it legal for individuals to use religious grounds as a defense when they are sued by people who are lesbian, gay, bisexual or transgender. Recode has the story here.

Apple CEO Tim Cook says he plans to donate his estimated $785 million fortune to charity – after paying for his 10-year-old nephew’s college education. More here.

Google plans to pay its new CFO, Ruth Porat, more than $70 million in the next two years through a combination of restricted stock units and a biennial grant. The company hired Porat from Morgan Stanley earlier this week. Recode has more here.

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Jobs

The three-year-old Harvard Innovation Lab (i-lab) is looking to hire a new director of programming. The job is in Cambridge, Ma.

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Essential Reads

Facebook said yesterday that it plans to test a version of its solar-powered drone this summer, as part of its efforts to beam Internet access to billions of people without it today.

Zynga must face a lawsuit that accuses it of defrauding shareholders about its prospects before and after its December 2011 IPO. More here.

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Detours

Over the last year or so, auto racing has become Silicon Valley’s “it” hobby.

Why what your food “sounds” like affects how good it tastes.

New trailers: Entourage, Mission: Impossible, Silicon Valley, and more.

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Retail Therapy

Poor Blackberry. (At least it’s trying.)

A Startup Takes on Rakuten

SuperpointsIndustry watchers are well-aware that Rakuten, the Japanese e-commerce giant, has made a wave of investments in U.S. startups in recent years as it looks to enhance its portfolio of technologies, acquiring Buy.com, Slice and eBates and making big bets on Pinterest and Lyft, among other companies.

According to Ryan Koonce, the founder and CEO of San Francisco-based Superpoints, Rakuten is also making a name for itself as a company that willfully disregards trademarks and intellectual property. Koonce’s bootstrapped, six-year-old online loyalty rewards company filed a lawsuit yesterday against the $23 billion conglomerate, accusing it of trademark infringement, unfair competition, and unfair business practices.

At issue, says Koonce, is Rakuten’s use of “Super Points” in the marketing of its own, newer loyalty rewards program, despite a ruling by the U.S. Patent and Trademark Office that denied Rakuten’s attempts to trademark the language on the grounds that there was likely to be confusion with Superpoints’s trademark. Koonce only learned of the undertaking after being served documents that Rakuten was trying to have Superpoints’s registration canceled.

Koonce says he reached out to Rakuten numerous times afterward, including providing someone in Rakuten’s marketing department with Superpoints’s deck to show that Superpoints would be willing to work with Rakuten. “We wanted to see if there was interest in talking about how we could turn lemons into lemonade,” he says.

The New York-based representative said the deck would be sent to Japan, says Koonce, adding, “We never heard back.”

Rakuten did not respond to a request for comment yesterday.

For Koonce, his dispute with Rakuten isn’t a trivial matter. Koonce says he has spent “many long nights and time away from my wife and kids trying to build the best site I can. I also have a significant percentage of my net worth tied up in the company.”

Competing with a web giant over his trademark was something that never occurred to Koonce, who has founded a number of startups over the years, including the social media marketing company Popular Media, which was funded by Sequoia Capital and acquired in 2010.

That’s partly because it doesn’t happen very often in Silicon Valley, where people tend to play nice to preserve their relationships. But a trademark attorney at one of Silicon Valley’s largest and most-respected law firms also calls it “unusual for a big, sophisticated company to take on a little guy” because it doesn’t make good business sense. “The likelihood of confusion would be a deterrent for most honorable companies, because you don’t want to expose your shareholders to a liability.”

Adds the attorney, who asked not to be named but doesn’t know or represent Koonce: “This sounds like an exceptional situation to me . . . Even though [Koonce] may just be one guy, he has legal rights, and he can [sue] a second comer who takes [his brand].”

If there’s a silver lining for Koonce, it’s that he looks well-positioned to win his case — or at least a settlement. Because he has been using his brand since 2009 and further received trademark approval for it back in 2011, he should “have a presumption of national rights” in the U.S., says the attorney.

Companies of all sizes generally have an incentive to negotiate a resolution sooner than later, too. “Even a company with trillions of dollars has budgets and has to rationalize economic decisions,” says the attorney. “No one wants to throw money and time and resources into litigation.”

In the meantime, Koonce is thinking about crowd-funding his legal fees if it becomes necessary. “The thought of fighting with a $20 billion conglomerate like Rakuten is not something I’d wish on my worst enemy. But I have no choice,” he writes in an email.

“It wears on you,” he adds. “The only way to make it is through sheer grit and tenacity.”

Fortunately, he says, “I have that in spades.”

StrictlyVC: March 12, 2015

Hi, happy Thursday, everyone! (If you aren’t a subscriber yet, here’s an easier-to-read version of this emailed newsletter.)

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Top News in the A.M.

The Guardian has effectively retracted much of its widely circulated reporting about the anonymous messaging app Whisper. More here.

Twitter just changed its rules to prohibit users from publicly posting intimate, and possibly explicit, images or video without consent.

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Highfive Raises $32 Million to Take on Google (and Others)

In 2012, Shan Sinha and Jeremy Roy were working at Google, admiring the fact that each conference room at its Mountain View headquarters is wired for video conferencing. The technology makes it dead simple for employees to communicate with colleagues who aren’t in the office, and the two – who’d sold their software company, DocVerse, to Google in 2010 – realized there might be a larger opportunity to provide similar, but more affordable, technology to a whole host of companies.

They got to work on their newest company, Highfive, and so far, so good. The company, whose video conferencing products include $799 high-definition cameras and mobile and desktop applications that make face-to-face connections a cinch, is beginning to pick up market share. According to Sinha, the company has landed more than 500 customers – including Zenefits, Slack, and Warby Parker — since it began shipping its devices in December.

It also just attracted $32 million in Series B funding from Lightspeed Venture Partners, along with earlier backers like Andreessen Horowitz and General Catalyst that had provided the company with $13.5 million in 2013.

Investors are encouraged by the company’s traction, but it’s apparently what coming that gets them most excited, including premium features that will cost $10 per user per month and a roadmap that includes much more than videoconferencing — though Sinha is reluctant to share more right now.

“Our identity will be tied to helping people communicate much better,” he tells StrictlyVC. “But our task right now is to [sell our current technology to many more customers]. There are 25 million conference rooms in the world today and only 1 million have video conferencing. Our bet is that all will have video in them.”

As it happens, Google thinks there’s an opportunity to take its video conferencing technology to the masses, too.

In fact, shortly after Sinha and Roy began work on Highfive, Google started selling $999 Chromeboxes to businesses, saying it wants to bring video-conferencing “to any room.”

That doesn’t seem to bother Sinha, who calls Chromebox, “Google’s approach to solving enterprise problems, which is kind of halfway there.”

When customers compare the two, he adds, “we tend to win.”

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New Fundings

Agilence, an 8.5-year-old, Mount Laurel, N.J.-based company whose software helps retailers monitor their stores and prevent theft, has raised $4.3 million in funding led by earlier backer Laurel Capital Partners, with participation from new investor Drayton Park Capital and previous backers Aster Capital, Granite Ventures, and NextStage Capital. The company has raised $18.5 million to date, shows Crunchbase.

Bento Labs, a 10-month-old, San Francisco-based startup that’s developing a customizable home screen for Android devices, has raised $2 million in seed funding from investors, including First Round Capital, Google Ventures, and the Social+Capital Partnership. Venture Capital Dispatch has more here.

Cardiac Dimensions, a 14-year-old, Kirkland, Wa.-based heart-valve repair technology startup, has closed its newest round with $43 million, following a recent $15.2 million tranche, the company said. The newest funding was provided by Life Science Partners and Aperture Venture Partners. Earlier investors Arboretum Ventures, Lumira Capital, and M.H. Carnegie & Co. also participated in the round. The company has raised $44.9 million altogether, shows Crunchbase.

ChargeBee, a four-year-old, Chennai, India-based startup that helps companies manage their subscription billings, has raised $5 million in Series B funding led by Tiger Global Management, with participation from previous backer Accel Partners, which provided the company with $800,000 in Series A funding early last year. The company has now raised roughly $6.2 million altogether.

Classkick, a 1.5-year-old, Chicago-based online learning platform that enables teachers to give students immediate feedback, has raised $1.7 million in funding from investors, including Great Oaks Venture Capital, Kapor Capital, Lightbank and individual investors.

DJI, a nine-year-old, Shenzhen, China-based company that makes a popular consumer drone called the Phantom, is in talks with Silicon Valley investors about a new round of funding at a multibillion-dollar valuation, reports The Verge. The company reported $500 million in revenue last year, four times its revenue in 2013, say the outlet’s sources; they add that the company is on pace to see $1 billion in revenue this year.

Kira Talent, a three-year-old, Toronto-based online talent assessment platform, has raised $1.2 million in seed financing led by Relay Ventures, with participation from the Business Development Bank of Canada and numerous angel investors. The company has now raised $3.2 million altogether, shows Crunchbase.

Lyft, the three-year-old, San Francisco-based ride-hailing service, has raised $530 million in new funding, led by the Japanese e-commerce giant Rakuten, reports TechCrunch. The new round brings Lyft’s total funding to $850 million and establishes its value at about $3 billion. Others of its backers include Andreessen Horowitz, K9 Ventures, GSV Capital,QueensBridge Venture Partners, Coatue Management, Mayfield Fund, and Founders Fund.

Memebox, a three-year-old, San Francisco-based online and mobile beauty brand company, has raised $17.5 million in Series B funding, bringing its total funding to $29.4 million. Its investors include Formation 8, Goodwater Capital, AME Cloud Ventures, Pejman Mar Ventures, Y Combinator, Winklevoss Capital, FundersClub, Cowboy Ventures, and Altos Ventures. TechCrunch has more here.

Moonfrog Labs, a two-year-old Bangalore-based startup that makes mobile games for players in India, has raised $15 million in Series A funding from Tiger Global Management and earlier investor Sequoia Capital, which had previously provided the company with $1 million in funding. TechCrunch has the story here.

Ola, a four-year-old, Mumbai, India-based cab-hailing service, is reportedly close to raising about $400 million in a round that will be led by DST Global and could value the startup at about $3 billion. Ola’s earlier investors, including SoftBank Corp. and Tiger Global Management, are also expected to participate in the funding. Earlier this month, Ola acquired TaxiForSure, a nearly four-year-old, Bangalore-based aggregator of car rentals and taxis in India, for $200 in cash and stock.

Ravelin, a three-month-old, London-based online fraud prevention startup, has raised an undisclosed amount of seed funding from Passion Capital. TechCrunch has more here.

Snapchat, the nearly four-year-old, Venice, Ca.-based messaging company, has raised $200 million in new funding from Alibaba Group at a valuation of $15 billion. Bloomberg has the story here.

Spaceflight Industries, a four-year-old, Tukwila, Wa.-based company that helps that U.S. government and other customers launch small satellites on larger space transportation vehicles, has raised $19.2 million in new funding, including from RRE Ventures, Vulcan Ventures, and Razor’s Edge Ventures. The company has now raised $27.5 million altogether. Geekwire has more here.

StarMaker Interactive, a four-year-old, San Francisco-based online platform that invites users to record and share music videos of themselves, has raised $6.5 million in new funding led by Raine Ventures, with participation from Crosscut Ventures, GREE International, iGlobe Partners, Qualcomm Ventures, Three Bridges Ventures, and individual investors.

Steelwedge, a 15-year-old, Pleasanton, Ca.-based supply-chain planning company, has raised $22.5 million in new funding led Camden Partners, with participation from Mainsail Partners, Shea Ventures and the company’s chief executive, Pervinder Johar.

VaporChat, a 1.5-year-old, New York-based company whose newly launched mobile application offers users more control over their messages’ content, has raised $1.5 million led by Social Starts, with participation from numerous angel investors. TechCrunch has more here.

Webgility, an eight-year-old, San Francisco-based maker of e-commerce accounting automation software for small- and mid-size businesses, has raised $2.5 million in growth funding from SaaS Capital.

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New Funds

The Hive, a three-year-old, Palo Alto, Ca.-based incubator and accelerator, has closed its second fund with $22 million in commitments — money it says will be used to build and launch up to 10 new companies that are leveraging data and innovations in data science. The outfit has already funded and launched 11 companies in its short history. In January, it exited from one of them, the machine learning commerce startup Kosei, which Pinterest acquired for undisclosed terms. The Hive is backed by numerous Silicon Valley luminaries, including Pivotal CEO Paul Maritz and Yahoo cofounder Jerry Yang.

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Exits

Kitematic, a two-year-old startup whose tool helps speed up the ability of Docker‘s software containers to ship applications across different cloud computing systems, has been acquired by Docker for an undisclosed price. More here.

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People

Marc Andreessen and his wife, Laura Arrillaga-Andreessen, are very happy new parents today. Said a spokesperson, “Marc and Laura are elated at the birth of their biological baby via gestational carrier. Baby Andreessen is in perfect health and already drafting his first business plan.” Recode has the news here.

Michael Carney, a reporter for PandoDaily for the past three years, has joined the L.A.-based venture firm Upfront Ventures as an associate. Carney was previously an early employee and managing director at WorldVest, a boutique merchant bank.

Ellen Pao, the former Kleiner Perkins Caufield & Byers partner who is suing the firm, watched her case take a turn for the worse yesterday under cross-examination by Kleiner attorney Lynn Hermle, who spent much of the day calling into question Pao’s stated motivation for seeking up to $16 million in damages.

Facebook CEO Mark Zuckerberg likes his privacy, but as the New York Times reports, he’s in an increasingly public battle with a would-be neighbor that threatens to expose details of his personal life and conduct.

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Jobs

Blippar is hiring a corporate development manager in New York.

Evernote is looking for a senior product marketing manager. The job is in Redwood City, Ca.

Reputation.com is looking to hire a VP of product management. The job is also in Redwood City.

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Essential Reads

Chamath Palihapitiya, the former Facebook VP and a renowned investor, is being sued, along with two partners, for allegedly scheming to acquire the stakes of a Canadian venture firm in the dating app Tinder and other startups — and at a bargain-basement price. Much more here.

Breaking up is not hard to do when you’ve got Apple Watches to move.

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Detours

Finland, home of the $103,000 speeding ticket.

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Retail Therapy

Aww. A tiny little keg, just for you.

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

maelle-gavetDipping 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.

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