StrictlyVC: October 18, 2013

110611_2084620_176987_imageTop News in the A.M.

Google bounces back from a disappointing second quarter.

Growth in China is picking up.

And, if you live in the Bay Area, be warned: BART workers are now on strike.

Marc Andreessen: We’ve “Kicked Around” Doing a Hedge Fund, Too

This week, I headed to Sand Hill Road to sit down with venture capitalist Marc Andreessen of Andreessen Horowitz, who is expert in keeping the media on its toes. His willingness to engage with the press – which has probably generated more public interest in venture capital than ever existed previously – is meant to crush the competition. As he told me years ago in a separate sit-down, “We like counter-programming. If there are three networks showing cop drama shows on Thursday at 9 pm, then what you want to do is put on a comedy.”

Next week, I’ll feature excerpts from our hour-long chat in which Andreessen touched on other ways Andreessen Horowitz is trying to out-innovate its venture peers, so be sure to tune in. In the meantime, here are two quick snippets from our conversation. In the first, Andreessen and I chat briefly about Twitter, a company that will make Andreessen money both personally and professionally. (Andreessen was among Twitter’s earliest individual investors, participating in the company’s $5 million Series A. As a firm, Andreessen Horowitz elbowed its way into Twitter in early 2011 by purchasing $80 million worth of secondary shares; Twitter was valued at roughly $3.7 billion at the time.)

Andreessen Horowitz prides itself on being fairly transparent. Yet you’ve tweeted twice – once, more than six years ago, to write “Twittering,” and about three years later to add, “I’m back – did anything happen while I was gone?” Why don’t you use it?

[Laughs.] I don’t know that I even have a good reason for it. I was a very active blogger at one point. I’m actually very active on Hacker News. I was very active on Quora for a while. So I just kind of bounce around, do different things.

At this point, at this firm, it’s more interesting for the other people to become more well-known, rather than me becoming more well-known. So it’s not a big priority for me to elevate my own brand. Plus, I’ve always thought it’s kind of funny.

Funny in what way?

[Laughs.] I don’t know. It’s just really funny. I was one of the first investors. And then I tweeted. And then I didn’t tweet. [And 900 days later], I tweeted again.

You have something like 18,000 people following you, waiting for your next tweet.

18,000 people. Two tweets. [Laughs again.] It’s just kind of funny.

In this next snippet, Andreessen shares that his firm has more recently contemplated starting a hedge fund.

You’re managing $2.7 billion at this point, but it’s been a couple of years since you raised your last fund. Will we see a new fund in 2014, and might we see a $2 billion or $3 billion fund?

[We’ll probably raise a new fund] next year. [As for that range], I don’t think so. We’ve kicked around a couple of ideas. We’ve kicked around doing something on the public side like a hedge fund, but we’re not going to do it.

Why contemplate it?

First of all, there are public companies we greatly admire…that we feel are undervalued or misunderstood. Also, in the venture fund, we’re trying to go long in the future, and so the other side of that would be to go short in the past, or to short the people who are not long in the future. So if we’re doing e-commerce in a category and think there’s a retailer that will suffer as a consequence of e-commerce becoming bigger, there’s another trade you could do on the hedge fund side if you’re private.


There are two really big issues with a firm like ours doing anything public. One, we think the insider trading risk is just off the charts. I saw that Mark Cuban just got off for the trade, and I’m very happy for him, but it’s a good illustration of how dangerous an environment it is for people who are kind of in the middle of things to take stock positions right now. There are just tons of prosecutions – the whole SEC thing – there’s just tons of scrutiny.

The other issue is we have this whole corporate briefing program, where you have 1,200 management teams from big companies coming through here every year and we run these big conferences. We just held out big CIO/CMO conference last week, with 150 top CIOs [and] CMOs, and it’s an amazing program and they’re really open with us about what their challenges are and what they’re working on and trying to do, and so, if we started to short their stocks…[laughs]…right? We’d basically blow that program up. So we decided we can’t do a hedge fund.”


New Fundings

Accela, a 14-year-old, San Ramon, Calif.-based company that sells enterprise software to federal, state, and local government agencies — including the cities of San Francisco and New York — has raised $40 million in funding led by the Bregal Sagemont, a New York-based growth equity fund.

Anaqua, a nine-year-old, Boston-based that helps law firms and the like better manage the intellectual property assets of their clients, has raised $25 million in funding led by Bessemer Venture Partners. The funding comes just months after Anaqua raised a $100 million round from Insight Venture Partners.

Bambeco, a four-year-old, Baltimore-based maker of environmentally friendly home décor and furniture, has raised $4.6 million in equity, rights and securities, according to an SEC filing. In addition to the company’s founders, Thanasis Delistathis of New Atlantic Ventures is listed on the filing.

Biodesy, a 13-year-old, Burlingame, Calif.-based company focused on protein structure monitoring, has raised $15 million in Series A financing. Investors included 5AM VenturesPfizer Venture Investments and Roche Venture Fund.

Breathometer, a year-old, Burlingame, Calif.-based company that makes a smartphone breathalyzer app, has closed on $1.54 million in seed funding from Structure Capital VC and Dillon Hill Capital, as well as all five investors on the TV show “Shark Tank,” including Mark Cuban.

Chukong, one of China’s largest mobile game developers, has raised $50 million led by the Chinese private equity fund New Horizon Capital. The company has raised $83 million to date, including from GGV CapitalSequoia CapitalSteamboat Ventures and Northern Light.

Luxa, a three-year-old, Tokyo-based startup that manages a members-only discount e-commerce platform, has raised 330 million yen ($3.3 million) from KDDI Open Innovation Fund, a fund operated by the Japanese telcommunications company KDDI. The company had previously raised a round of funding from JAFCO.

Minted, six-year-old, San Francisco-based online marketplace for independent design and art, has raised $41 million in Series C funding, led by Technology Crossover VenturesAllen & Company and existing investor Benchmark Capital also participated in the round, along with numerous individuals, including Yahoo CEO Marissa Mayer and Yelp CEO Jeremy Stoppelman. Minted has raised $49 million altogether.

Mode, a months-old company that’s building an online repository for data science work, has raised a $550,000 seed round led by Yammer founder David Sacks, who was joined by other former and current Yammer executives. Mode’s CEO, Derek Steer, had worked at Yammer until August of this year.

MyBuys, a seven-year-old, San Mateo, Calif.-based company whose software aims to helps its retail customers improve their marketing effectiveness, has closed on a $4.5 million subordinated venture loan from NXT Capital‘s Venture Finance Group. The company has raised $33.8 million in equity to date, including from Lightspeed Venture Partners and Palomar Ventures.

ParStream, a five-year-old, Cologne, Germany-based big data analytics platform company, has raised $8 million in Series B funding led by Khosla Ventures. The company had raised a $5.6 million Series A round a year ago from Khosla Ventures, Baker CapitalData CollectiveCrunchFund, and Tola Capital.

SolarVista Media, an outdoor billboards company based in Beijing, has raised an undislosed amount of Series D funding led by Nokia Growth PartnersChina Ease Management LimitedNorthern Light VCTuspark Ventures and FnH also participated in the funding.

TextPower, a young, San Juan Capistrano, Calif.-based company focused on improving text messaging for enterprise alerts and security authentication, has closed a $525,000 Series A financing round. Investors included Tech Coast Angel’s ACE Fund and other, Orange County-based angel investors.

Viridis Learning, a four-year-old, New York City-based company behind an online training and hiring platform, has received an undisclosed amount of funding from Comcast VenturesULU VenturesExpansion Venture CapitalCNF Investments and Dauk/Wagner Investments.

Wilocity, a six-year-old, Caesarea, Israel-based wireless chipset developer, has raised $35 million in funding led by Vintage Investment Partners and Jerusalem Global Ventures. Three years ago, the company raised a $20 million round from Benchmark CapitalQualcomm AtherosTallwood Venture Capital and Sequoia Capital, all of which reportedly participated in Wilocity’s new funding.


New Funds

Data Elite, a new Silicon Valley-based venture lab and fund, was unveiled yesterday. The outfit will provide startups that are focusing on big data with three months of workspace, mentorship, and $50,000 for roughly 6 percent of the company. It will look to fund between five and ten companies, and it’s backed by Social+Capital PartnershipAndreessen HorowitzFormation8, investor Ron Conway and former Amazon executive Anand Rajaraman, among others. Reuters has much more here.

Female Founders Fund may be New York’s latest micro fund. The outfit is raising $5 million — and has secured $1.5 million toward that end — according to an SEC filing that lists just one executive: Anu Duggal. The serial entrepreneur has founded, among other things, the niche, flash sales site Exclusively.In, which raised $16 million in venture funding from Tiger Capital and Accel Partners and sold to Myntra, a large Indian e-commerce business last November. Terms of the deal were not disclosed, but on Duggal’s LinkedIn profile, she says the sale returned 7x for the company’s angel investors.



Compendium, a seven-year-old, Indianapolis-based content marketing platform, has been acquired by Oracle. Terms of the deal were not disclosed. Compendium had raised just $2.8 million in angel funding. TechCrunch has much more here.

The popular torrent site isoHunt, is shutting down as part of a settlement with Hollywood’s major movie studios, which had sued isoHunt in 2006 and on whose side the 9th Circuit Court of Appeals sided earlier this year, finding that the site was promoting copyright infringement.

PinReach, an outfit that was focused on providing Pinterest analytics and influence metrics to customers, has been acquired an Oklahoma City-based competitor called Tailwind. Terms of the purchase were not disclosed, but the deals marks the second time that PinReach is being acquired. According to news reports, PinReach was acquired last year by the New York-based marketing and technology firm Nervewire, which has since decided to focus its energy on its core business of digital marketing and public relations.



The NVCA and PricewaterhouseCoopers published some new data this morning that shows VC activity is up 12 percent on a dollar basis and 5 percent on a deal basis, compared with the second quarter of this year, when $7 billion was invested in 956 deals. Software received the most funding, garnering more than $3 billion ($3.6 billion to be exact) for the first time in 12 years. The SJ Merc has more here.



Mike Hopkins is Hulu‘s new CEO. Hopkins was formerly Fox Networks’ distribution chief. Andy Forssell, who has been Hulu’s interim CEO since March, is leaving the company with Hopkins’s appointment.

Jessica Steel, a former Pandora executive, has joined the venture-backed babysitting marketplace UrbanSitter as president; she also joins the company’s board. Steel had long served as Pandora’s executive VP of biz dev; she stepped down last year.

J.J.Hirschle, a former Google ad exec, has just been hired as Twitter‘s head of retail.

R.J. Pittman is EBay‘s new chief product officer of its eBay Marketplaces business, the company announced yesterday. Pittman joins the company from Apple, where, since April 2010, he has been responsible for the design, product management and development of its worldwide e-commerce platform.


Job Listings

The Walt Disney Company is looking for a senior manager of business strategy to join the company’s mobile app/digital product team. The position is responsible for (among other things), identifying and optimizing revenue opportunities, developing, managing and executing marketing and promotional plans, and identifying and executing new business development opportunities. Seven years or more in a business strategy or development role are required; an MBA is preferred.


Essential Reads

Last week, we asked: Does Jeff Bezos need a wingman? Turns out he cycles through them systematically, according to this interesting Bloomberg account.

It’s contagious! People who know entrepreneurs are much more likely to become entrepreneurs, finds a new survey by Kauffman Foundation fellow Paul Kedrosky.

Behind the VC numbers: Higher prices, less control.



New research finds the presence of security cameras prompts people in a crowd to help those in need.

It’s looking like a mystery bidder who spent $866,000 on the James Bond Lotus submarine from “The Spy Who Loved Me” was James Bond-like entrepreneur Elon Musk.

Homes in several San Francisco neighborhoods are up a stunning 51 percent(!) over this period last year.

Here’s why it’s important to teach kids to relax and just daydream.


Retail Therapy

Nothing screams, “I’m single,” quite like an aquarium bed.

GoPlates. They might look absurd, but do you know of a better way to eat, drink, and obsessively scan your phone while standing?


Corrections: Yesterday’s StrictlyVC inadvertently stated that Stitch Fix, an online shopping platform, had raised $12 billion; it wishes it raised $12 billion. (Kidding.) It raised $12 million, and we apologize for the error. StrictlyVC needs to catch up on some sleep this weekend.

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