StrictlyVC: October 2, 2013

110611_2084620_176987_thumbnailGood morning! It’s Wednesday, and the government is still partly closed for business. The only good news is this insane scenario is that Wall Street doesn’t seem to mind it (yet).

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Top News in the A.M.

Steve Ballmer is out; now three top Microsoft shareholders want Bill Gates to scoot along, too.


Todd Chaffee on IVP’s Twitter Stake: Fred Wilson was “Instrumental”

Any day now, it’s expected that Twitter will make its IPO filing public, revealing exactly who owns what.

No one yet knows Institutional Venture Partners’s stake in Twitter, but based on the $35 million Series C round for the company that IVP led in January 2009, it’s clear the Sand Hill Road firm will generate a world-class return on its investment.

Yesterday, as part of a longer conversation, Chaffee shared the story of how that Twitter funding came together. It’s a good reminder of the importance of relationships in this business:

“One of the things we’re always doing is surveying the landscape for breakout companies, where they’re starting to gain traction…and their users and other metrics are starting to track up.  Twitter was classic case of company just starting to break out. 

One variable for us is: What could this be in terms of potential? An early-stage company can be interesting and getting some traction, but when you run the profile, [you realize it has the potential] of making 3x to 5x your return, [which isn’t a compelling enough exception for IVP, which specializes in later-stage companies that already have meaningful revenue]. 

Twitter fit our criteria [of being able to deliver a much bigger return]. And we had a view into that, so we called [early Twitter investor] Fred [Wilson] and asked if the Twitter guys would see us. 

‘We’re not raising money right now,’ Fred told us. ‘Go away.’ But we’re co-investors [with Union Square Ventures] in Comscore [which tracks Web and mobile usage]. And so [after another plea or two] Fred asked if the Twitter guys would see us, telling them, ‘Just meet with them, and when you’re ready to raise, [IVP] will be there.’ 

So we had them come in [to our office] on a Monday in early January 2009, and when we heard them describe the company as the ‘pulse of the planet’ — those were their words — we could see this was much more than a microblogging service. Ev Williams and Biz Stone are sharp guys. Some entrepreneurs have a vision that’s clearly infectious and much bigger than everyone realizes, and [that was the case here], so it was pretty straightforward. In fact, you could see everyone around the table, thinking, This one could really go. Meanwhile, they [thought] IVP was asking all the right questions, [that we could] see opportunities and threats more clearly than anyone else, and they told Fred that they could see IVP as a partner.

It was a hot deal for us, so we scrambled the jets and the next day I went up there [to San Francisco from Menlo Park] with [IVP colleagues] Dennis [Phelps] and Jules [Maltz] for a day of due diligence. This was a Tuesday. Wednesday night, I had dinner with Ev Williams. On Thursday, he was calling our CEOs to see what it’s like to work with IVP. And by Friday, we had a term sheet.

Eventually, that news broke, and it brought everyone out of the weeds to outbid us. We asked [Williams and Stone], ‘Who do you like best of these groups?’ and they said Benchmark [Capital], so we dialed Benchmark into the deal.

Fred was absolutely instrumental. Because Ev and Biz hadn’t done this many times, I [feel] like Fred was the one who really opened the door for us and said [to them], ‘Let’s do the IVP deal.’”

(Look for the inside story behind IVP’s rise to the top — and how the firm plans to stay there — on Friday.)


New Fundings

Algolia, a year-old, Paris-based company focused on helping developers to make their apps or sites smarter through its search technology, has raised $1.5 million in seed funding from Index VenturesPoint Nine Capital and Alven Capital.

CardFlight, an 18-month-old, New York- based company that enables developers to integrate in-person card payments into their own app, has raised $1.6 million in seed funding led by ff Venture Capital. The round also included Payment VenturesApostolos ApostolakisEntrepreneurs Roundtable AcceleratorPlug & Play Ventures, and Great Oaks Venture Capital.

Estify, a  graduate of Amplify LA’s business accelerator that produces software for the auto collision industry, has raised an $800,000 round of seed capital, led by ff Venture Capital, with participation from Romulus CapitalREES Capital and Amplify LA.

Listia, a four-year-old, Mountain View, Calif.-based online trading marketplace, has raised $9 million led by General Catalyst Partners. The company had previously raised $2 million in seed funding, including Andreessen HorowitzSV AngelY Combinator and individuals such as Max Levchin.

Quantopian, a year-old, Boston-based company that’s building an algorithmic trading platform for browsers, has raised a $6.7 million Series A round from Khosla Ventures and Spark Capital. In January, the company announced it had raised a seed round of $2.1 million from Spark Capital.

Sefaira, a four-year-old, U.K.-based company that makes cloud-based efficiency software that helps architects design higher-performing buildings, has raised $2 million in debt from Silicon Valley Bank. The company has previously raised $18 million in equity from Braemar Energy VenturesChrysalix, and the Hermes GPE Environmental Innovation Fund.

Tackk, a year-old, Cleveland, Oh.-based company that makes an online content creation and sharing tool, has raised $1.2 million in new funding led by ff Venture Capital, which was joined by several existing investors, including Hatch Partners and Drummond Road Capital.

Telogis, a 13-year-old company, Aliso Viejo, Calif.-based company whose software tracks commercial vehicles, has raised $93 million from investors, including Kleiner Perkins Caufield & Byers. The company plans to go public next year.

Wrike, a seven-year-old, San Jose, Calif.-based maker of collaboration software, has closed $10 million in Series A financing from Bain Capital Ventures. Wrike had raised $1 million in seed funding last year from TMT Financing.


New Funds

SAP Ventures, a group spun out of the enterprise software giant in 2010, has raised $650 million for a direct investment fund, with the money coming from SAP and SAP Ventures’ executives. The firm has also created 10-person biz dev team intended to help its portfolio companies grow. SAP Ventures has been managing its first direct investment fund, a $353 million fund, since 2011; it also manages a $405 million fund of funds that owns stakes in other venture capital funds, including August Capital.

Peer Venture Partners, a Sand Hill Road firm with an exceedingly low profile (and bare-bones site), has just raised $36.6 million for its fourth fund, according to an SEC filing that lists the total offering amount as “indefinite.” Listed on the filing are Jared Hutchings and Mark Campbell, who previously helped manage University Venture Fund, the University of Utah’s student-run fund.

Emerald Ocean Capital Group, a Newport Beach, Calif. firm, is the process of raising a $10 million venture fund for marijuana startups. Dudes.



Foundation Capital has a new EIR: Mitali Pattnaik, a former product and marketing lead at Twitter and Google has joined the firm to focus on building a new, consumer-focused companies. Foundation says Pattnaik is exploring “several areas of interest,” including education, mobile and collaborative consumption.

Jim Orlando is the newest managing director at OMERS Ventures, the venture capital investment arm of the OMERS pension plan. In the role, Orlando — who was most recently a managing director at OMERS Private Equity and has worked previously at Bell Canada and Battery Ventures — will be responsible for leading tech, media, and telecommunications investments in North America.

Mohammad Sabah, the former manager of data science and analytics at Facebook, is joining venture-backed Identified as its “chief data officer.” Identified, in San Francisco, transforms social data from Facebook into intelligence for consumers and enterprises. Since its fall 2010 founding, it has raised $22.5 million, including from Transmedia CapitalCapricorn Investment Group and a long list of individuals, such as Alexander TamasChamath Palihapitiya, and Bill and Tim Draper.

MG Siegler, a partner at Google Ventures, is among a growing number of venture capitalists who is now spearheading an AngelList syndicate.



41st Parameter, a nine-year-old, Scottsdale, Az.-based company that produces fraud detection and prevention software, is being acquired for $324 million by the global information services company Experian. Over the years, the company had raised roughly $38 million from Kleiner Perkins Caufield & ByersJafco Ventures, and Norwest Venture Partners, among others.

Yahoo is acquiring Hitpost, a South San Francisco-based company whose apps allow sports fans to connect and compete. The three-year-old company had raised roughly $2 million from investors, including RRE Ventures, Floodgate, and numerous angel investors. Terms of the acquisition were not disclosed.



The government shutdown won’t delay Twitter’s public offering. Here’s why.


Job Listings

Singularity University, an elite Silicon Valley think tank, is launching a new venture fund and it’s looking for a managing partner for that fund. To apply, you’ll need previous experience with early-stage fund management, some board service, and an MBA. If you happen to have experience investing internationally, all the better.


Essential Reads

New York Magazine profiles Tumblr founder David Karp. Said one source to the magazine of Tumblr’s sale to Yahoo: “It was the biggest game of chicken I’ve ever seen in a startup. Literally months away from bankruptcy, and he manages to find an angel in Marissa Mayer.”‘

Eek. Authorities and Internet-security experts say tens of thousands of dubious websites are popping up across the Internet.



What it’s like to sell your company to Google: “Desks, laptops, no servers, here’s the intranet, figure it out.”

Truly amazing feats of facial hair.

Banksy is hosting a “show” on the streets of New York this month. Details are here.


Retail Therapy

Time to say goodbye to that back-breaking rucksack you’ve been lugging along on your bike ride, and say hello to these cool, custom-made bicycle bags.

Happy socks! Who couldn’t use a pair of these?


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