StrictlyVC: October 21, 2013

Top News in the A.M.

Tablet shipments are expected to grow a whopping 53 percent this year.

Apple debuts its first iPhone 5S TV spot.

Oops. An identity theft service that sold Social Security and drivers license numbers purchased much of its data from Experian.


Andreessen Horowitz Backs Out of Seed Investing

There’s been a lot of back and forth in recent weeks about whether or not the venture firm Andreessen Horowitz is dialing back on certain types of Series A investments. But cofounder Marc Andreessen suggests a bigger shift is the firm’s decision to get out of seed investing, except when presented with “fringe” opportunities. 

Andreessen explained the firm’s thinking during a sit-down last week at his Sand Hill Road office. Our conversation — which we’ll run more of this week — has been edited slightly for clarity.

You think companies have to compete against themselves to stay innovative. How is Andreessen Horowitz continuing to innovate?

Probably the biggest change is that we’re pulling back significantly on the number of seed investments we’re making. We’ve had this policy, which all [venture] investors have, which is that if we invest in the [Series A or later] stage, we’re not going to invest in a competitive company, because that’s very damaging to an entrepreneur. For seed, we’ve always been explicit that if we’re putting in $50,000 to $100,000 [we can invest in competing companies, too].

Which can still create signaling issues, of course. Isn’t that why you’d launched a scouting program, using entrepreneurs to quietly seek out seed deals on your behalf?

We tried for a while to minimize [signaling damage] through the scout program; that was one potential layer of interaction that we thought would help. We also tried briefly to have this A16z seed brand and under that program, we could make multiple bets in one category.

Nobody can really do seed investing with a conflict policy because it’s all so uncertain at that point. You don’t have any idea what these companies are going to be doing in a year, much less whether you’re investing in the right one. And you’re putting very small amounts of money to work, so if you can only invest in one [startup per] category, you could never make many investments.

So what changed?

What we tell everybody is we don’t take the conflict policy with seed investments. But [entrepreneurs] don’t necessarily hear us, and it causes them problems anyway and makes them feel bad.

Also, the outside world doesn’t necessarily understand the difference. So we think there are more and more entrepreneurs at the seed stage who don’t want to talk with us because they think we’re already invested in a competitor. They think we’re conflicted out of the category. And they don’t differentiate between the seed and venture category. So we’re backing off of the number of seed investments we make basically to prevent that problem from getting worse.

What will happen instead?

One, we’re going to work even more closely with a bunch of the top-tier seed firms to be an even better source of deal flow for them. There’s also stuff we’ll do with seed companies to help them out without actually having investment stakes. We’ll kind of do favors, build a relationship [with them].

What we will back is fringe, where you couldn’t even conceive that there will be a competitor. So something that looks really nuts becomes very attractive for that program, which, arguably, is the best thing to invest in at the seed stage, because the whole point of the seed investments is to learn. ‘Here’s a brand new idea: Is it going to work. Is it not going to work? Is this person for real or are they crazy?’ You kind of want to figure that out before you write the big check.


New Fundings

Everest, a year-old, San Francisco-based startup behind a mobile app that reminds users of their personal goals, is raising a $500,000 round of funding, according to an SEC filing. TechCrunch reported earlier this year that the company has already received some financial support from investor Peter Thiel; according to the Form D, Everest, listed as EVRST, has already raised $50,000.

Gremln, a four-year-old, St. Louis, Missouri-based startup that makes social media management software, has collected roughly half of a $962,000 round it’s raising, according to an SEC filing. Gremln raised $700,000 late last year from a St. Louis accelerator program called Capital Innovators.

Insightra Medical, a 12-year-old, Irvine, Calif.-based company whose products serve the hernia repair market, has closed an undisclosed amount of Series C funding from Baird Capital and Tekla Capital Management. Others of its previous investors include Manipal GroupSamos Investments, and Vision Sciences.

K2 Learning, a nascent, Bangalore-based education startup with both software and hardware components (it plans to make specialized tablets), has raised $1.3 million in angel funding from Radheshyam Agarwal, founder and director of Calcutta Tube India.

M-DAQ, a three-year-old, Singapore-based financial tech startup whose platform allows users to price and trade exchange-traded products in more than one currency, has raised $11.7 million in Series B funding led by GSR Ventures and Citi Ventures. With its previous rounds, the company’s total capital comes to roughly $24 million.

Panorama Education, a three-yeard-old, Boston-based  data analytics company designed to give school districts information about their students and teachers, has raised $4 million in Series A funding from Startup:EducationA-Grade InvestmentsYale UniversitySoftech VC and Google Ventures.

Panoramic Power, a four-year-old company that’s headquartered in Kfar Saba, Israel, and makes real-time energy management software for commercial businesses, has raised $8 million in funding. The round was led by Marker, a year-old fund launched by Rick Scanlon, cofounder of Crescent Group. Other participants in the financing included Greylock PartnersIsrael Cleantech Ventures FundsClal Energy, and Qualcomm Ventures.

OKPanda, a new, New York-based startup that produces digital products to help users learn English, has raised $1.4 million, including from Resolute VenturesInnovation EndeavorsKapor Capital and 500 Startups. You can learn more here.

Swift Biosciences, a four-year-old, Ann Arbor, Mi.-based company whose technologies examine disease-related genes and help enable tools for managing cancer, has closed $7 million in Series B financing. Fletcher Spaght Ventures led the round with participation from Renaissance Venture Capital Fund, the Mercury FundMichigan Accelerator Fund and several Michigan-based individual investors. The company had raised a $3 million Series A in August 2010.

TapStream, an 18-month-old, British Columbia company that makes app marketing software, has raised about $680,000 in seed funding led by BDC Venture Capital, which was joined by unnamed individual investors.

Teads, a two-year-old Paris-based company that has developed a platform for video advertising, has raised $5.15 million in Series A funding from Partech Ventures and Elaia Partners.


New Funds

The investing team at Felicis Ventures in Palo Alto, Calif., has raised a separate, $7 million fund called Clover Fund, according to an SEC filing, which lists Felicis Ventures’ founder Aydin Senkut along with his partners Renata Streit Quintini and Sundeep Peechu.

Turn/River Capital, a San Francisco-based, tech-focused firm is targeting $2 million for a side venture fund, according to a new SEC filing. Turn/River was founded by Dominic Ang, who held junior roles at Plumtree Software, Advent International, and Vector Capital before taking over an apparel site in 2008 and later selling it in 2010 to the women’s media network Popsugar for undisclosed terms. Turn/River registered paperworkwith the SEC last year to raise a separate $10 million.

Versant Venture Capital, a 14-year-old Sand Hill Road venture firm, is looking to raise $250 million for its fifth fund, judging by a new SEC filing. Versant raised its last fund, a $500 million pool, in 2008. Robin Praeger, the firm’s CFO, is listed on the form, along with just six of the 10 managing directors who are featured at its site: Brad BolzonSam ColellaRoss JaffeWilliam LinkKirk Nielsen, and Charles Warden. Versant invests in medical devices, biopharmaceuticals and other life science companies.



Nimble Storage, a five-year-old, San Jose-based data storage company has filed to go public.The number of shares to be sold and the price range for the proposed offering have not yet been determined, but Goldman Sachs and Morgan Stanley have been selected as book-running managers for the offering. The company has raised more than $80 million to date, with early investors Accel Partners, Sequoia Capital, and Lightspeed Ventures Partners poised to see the biggest returns. Accel and Sequoia each own 20.9 percent of the company; Lightspeed owns 15.8 percent of its shares.

Paylocity, a 16-year-old, Arlington Heights, Ill.-based online payroll and human resources software company, has picked Bank of America CorpDeutsche Bank and William Blair to lead an IPO for the company that could come next year, sources tell Reuters. The offering could reportedly raise around $100 million. The company raised $9.5 million from Adams Street Ventures in 2008.

TetraLogic Pharmaceuticals, a 10-year-old, Malvern, Pa.-based biopharmaceutical company whose drug is being tested for treating colorectal cancer, ovarian cancer, and blood cancers, filed to go public on Friday, for an offering of up to $103.5 million. The company hasn’t yet generated any product revenue. HealthCare VenturesNovitas CapitalQuaker BioVenturesLatterell Venture PartnersClarus Life SciencesHatteras Venture Partners, and Pfizer each own 5 percent or more of the company’s outstanding shares, says its filing.



The Variety Entertainment and Technology Summit kicks off today at the Marina Del Ray Ritz Carlton in Southern California. Here are some details about the lineup.

The Wolfram Technology Conference gets underway in Champaign, Ill., today. More details here.



Dennis Crowley, founder and CEO of Foursquare, is a happily married man. He was wed this past Saturday.

Edward Nadel has joined Lowenstein Sandler‘s Investment Management Group as Senior Counsel. He was previously general counsel and COO at Star Mountain Capital and, prior to that, was the Director of Alternative Investments at Credit Suisse.


Job Listings

Google is looking for a Corporate Development Associate to work at its headquarters in Mountain View, Calif. The role involves working collaboratively across the company’s legal, finance and people operations to find and evaluate acquisition and investment opportunities. To apply, you need at least two years of relevant work experience in corporate development, venture capital, private equity or investment banking. An MBA or other advanced degree is preferred.


Essential Reads

Does Twitter have a patent problem?

Sure, Android is open — except for al the good parts.

The “road show” for star running back Arian Foster initial public offering has gotten off to a lousy start.



Google’s latest terms and conditions are harder to comprehend than both Beowulf and War and Peace, say scientific researchers at the University of Nottingham.

Kings of the Dot.Com Bubble: Where are they now?

The man who forgot everything.

We couldn’t stop reading this excerpt from Mike Tyson’s autobiography.

Kai Rysdall of Marketplace is also a pretty fascinating guy.


Retail Therapy

When it comes to cool, we think this $1.2 million, 42-foot-long J Craft Torpedo Boat, made in Stockholm, is very hard to beat. Supple leather, handcrafted cabinetry, a handsome Nardi steering wheel. Drool.

Sunglasses by Persol. For outings on your J Craft Torpedo Boat.

You’ll also need shoes (yes, also for the the boat). You could go with a nice pair of top siders, but as long as you’re already channeling Dickie Greenleaf, we kind of like this pair of hand-sewn penny loafers.


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