StrictlyVC: October 24, 2013

110611_2084620_176987_imageGood morning, dear reader!

Top News in the A.M.

Early Pinterest investors enjoy a very nice mark-up on their investment, as the social network completes a whopping new $225 million round led by Fidelity Investments.

John Sculley is reportedly exploring a bid for Blackberry with some Canadian partners.


Jim Robinson of RRE Ventures on Square, Bitcoin, and the Firm’s Next Fund

Jim Robinson, cofounder of 19-year-old RRE Ventures, is a veritable sage of the New York venture scene, having arrived earlier — and stayed longer — than many of his industry peers.

I caught up with Robinson yesterday to talk about what’s happening in New York, as well as to learn more about what’s happening specifically at RRE, a firm that now invests 75 percent of its capital in New York-based companies. Our conversation has been edited for length.

RRE has raised five funds to date. Will you be raising a sixth soon and if so, how much will you be targeting?

We’re still investing our fifth [$230 million] fund; we’re mostly through that. And we’ll raise a new fund shortly in the same, $250 million range.

Would we ever see RRE raise a bigger fund?

Fund sizes go in an out of vogue, but you go bigger either to do bigger deals or hire more people. Bigger deals have never been our business model, and we’ve always liked our size and shape: five or six partners, a couple of principals, a couple of associates. During the era, we’d gotten bigger and we sort of concluded that we didn’t want to grow our practice, [because] we felt a little more disconnected, both from our partners and the companies we were funding. When you have 10 VCs standing in a field, they’ll argue about the weather.

There’s obviously a lot going on in New York. Is there too much going on?

Are there too many startups right now? Probably. When you start hearing about whether you should bother with college or start a company instead, it’s probably [a bad sign], but these things [sort themselves out]. I think it’s probably more acute out there [in California]. Most people would rather do a little more following than leading in life, which is a normal human condition, and you don’t get to do that in a startup.

RRE has enjoyed some nice exits, including, most recently, the sale of payments company Braintree to eBay for $800 million in cash last month. I understand you had a chance to invest in the seed round of Square, too, but didn’t. Is that your biggest miss?

Hah, no, not even close. We’ve been around 20 years. We have a bunch of those. We didn’t do Priceline and should have. We didn’t do PayPal and should have. Long ago, we’d invested in Apriva [a point-of-sale dongle made to work with once-ubiquitous PalmPilot handhelds] and barely gotten our money back, so we were leery of incumbents in the payments processing world. We also worried about [Square’s] price. It seemed expensive to us at the time.

Many VCs argue that it’s worth paying up for the right deal. How do you feel about being price sensitive?

If you pay up and it works out great, you say, “Great, this was sensible.” If you pay up and it doesn’t work out, you don’t talk about it. If I had a growth fund here, there’s no question that I’d say on occasion, “This is too big an opportunity.” Then again, price is a function of supply and demand. We disregard it at our own peril.

What do you think about the digital currency bitcoin? 

We’ve been looking at bitcoin technology for over a year. We’ve probably looked at 20 [bitcoin-related] companies seriously and we’ve made very small seed investments in two, but we’ve been reticent to place a major bet on one to date. It gets down to regulatory issues, which seem to indicate that if you’re an institutional investor in a digital currency company, there’s some legal liability. If there are problems in the system, [the liability] doesn’t just stop at the company but can go through investors and even, potentially, investors’ investors. It’s just not field-tested yet.

No doubt we’ll have a major investment in a [bitcoin] company, whether it’s in one year or three years. But we’re watching what’s happening on the federal and state and international level right now. We’re still in studying mode.


New Fundings

Black Lotus, a 14-year-old, L.A.-based security company that caters to data centers, hosting providers and telecommunications carriers, has raised $3.5 million from Industry Capital, a San Francisco-based investment firm.

BloomNation, a two-year-old, L.A.-based startup behind a marketplace for florists, has raised $1.65 million in seed funding, led by Andreessen HorowitzSpark CapitalChicago Ventures, and CrunchFund also participated.

BoostUp, a three-year-old, Detroit-based savings platform designed to help consumers save for major purchases (brands that want their business can help them, too), has raised $1 million led by Detroit Venture Partners. In August, the company moved to downtown Detroit from Chicago. It also ditched its original name, Motozuma, during the transition.

Cureatr, a two-year-old, New York-based startup that makes group messaging software for healthcare providers, has raised $5.7 million in Series A funding from Cardinal Partners and Milestone Venture Partners.

FormLabs, a two-year-old, Somerville, Mass.-based maker of desktop of 3D printers, has raised $19 million from DFJ GrowthPitango Venture Capital, and Innovation Endeavors.

The Football App, a five-year-old, Berlin-based company whose mobile app provides users news about team updates and lets them communicate with other fans about sports news, has raised $7 million in fresh funding. The money comes from Union Square Ventures just six months after the company raised $10 million from EarlyBird Venture Capital. The Football App has been downloaded more than 10 million times.

Funding Circle, a three-year-old, U.K.-based online platform that connects people willing to lend money with small businesses needing capital, has raised $37 million in Series C funding. Accel Partners led the round, with participation from Union Square VenturesIndex Ventures, and Ribbit Capital. Funding Circle, which has now raised around $52 million to date, is using part of its newest financing to enter the U.S. market, reports TechCrunch. Specifically, the company is merging with San Francisco-based Endurance Lending Network. Much more on the news here.

F-star, a seven-year-old, Cambridge, Mass.-based biopharmaceutical company, has formed an immuno-oncology spin-off called F-star Alpha with $12.1 million in Series A funding from Atlas VenturesAescap VentureTVM CapitalSR OneMP Healthcare Venture Management and MS Ventures. You can learn more about the deal — and this particular business model — here.

Gravitant, a nine-year-old, Austin, Tex.-based company that optimizes the cloud consumption of its enterprise customers, has raised $10 million in Series B funding. New investor Corsa Ventures led the round with participation from existing investor S3 Ventures. The company has raised $13.8 million to date.

HighFive, an 18-month-old, Palo Alto, Calif.-based company, has raised $13.5 million in Series A funding led by General Catalyst, which was joined by Andreessen Horowitz and Google Ventures. Other investors to participate include founder Marc Benioff, Box CEO and cofounder Aaron Levie, and Dropbox co-founder and CEO Drew Houston. HighFive is still operating in stealth mode, but a spokeswoman tells me it is “reimagining the way people communicate at work” and will be “squarely focused on business.” She adds that the company is rolling out its beta products to its first customers in the next two weeks.

HomeShop18, a five-year-old company located in Uttar Pradesh, India, has raised $14 million in new funding, including from Network18 Group, a media group in India that operates some of the country’s news TV channels. HomeShop18 is an online and on-air retailer. GS Home Shopping, a Korea-based TV home shopping company, also participated in HomeShop18’s funding. The company has raised roughly $65 million to date.

Nutonian, a 2.5-year-old, Cambridge, Mass.-based that makes machine learning software, has raised a $4 million Series A round led by Atlas Venture. GigaOm has a more detailed write-up of what the company does here.



Aexio, an eight-year-old Kuala Lumpur, Malaysia-based mobile network optimization company, was acquired yesterday by InfoVista, a Paris-based company focused on network performance management. Terms of the deal weren’t disclosed. In 2010, Malaysia Venture Capital Management Berhad, Malaysia’s largest venture firm, had acquired 23 percent of Aexio for an undisclosed amount of funding.

LookFlow, a four-year-old, Mountain View, Calif.-based company whose technology incorporates facial recognition and machine learning, was just acquired by Yahoo. Terms of the deal weren’t disclosed. LookFlow had raised an undisclosed amount of funding, including from Cloudera founder Jeff Hammerbacher and Wellsphere founder Dave Kashen.

Shutl, a three-year-old, U.K.-based same-day delivery service, was acquired yesterday by eBay for an undisclosed amount. Shutl had raised around $8.7 million from Hummingbird VenturesUPS Strategic Enterprise and Notion Capital. TechCrunch has more here.

SoCoCare, a San Diego-based startup focused on mobile customer care, was acquired yesterday by Five9, a San Ramon, Calif.-based company. Terms of the deal weren’t disclosed. Twelve-year-old Five9 is backed by SAP Ventures, Adams Street Partners, Hummer Winblad Venture Partners and Partech International. Five9 has raised at least $72 million over the years.



Business Insider hosts a conference in New York City today called Startup 2013. The focus is on “educating the next generation of startup leaders” and Henry Blodget will be on hand (of course), along with other big New York names, including RRE Ventures’ Stuart Ellman, Betaworks’ cofounder John Borthwick, and Dan Porter, the newly named head of digital at William Morris Endeavor.

Also kicking off today at the San Jose Convention Center in the Bay Area: the 2013 Net Impact Conference, a gathering with more than 350 speakers who are scheduled to talk for a wide range of tracks, from “tech for good” to “sustainable food” to “corporate impact.” You can find more details here.



It’s looking like Hong Kong billionaire Richard Li will soon own Fisker AutomotiveMore here.


Job Listings

GE is looking for a business development and ventures associate in its San Ramon, Calif., office. The new hire will join GE’s Software & Analytics Business Development and Strategy team, which “composes strategy and then sources and executes acquisitions, venture capital investments, strategic alliances, and licensing on behalf of GE Software and Analytics and GE Global Research.” To apply, click here.


Essential Reads

The West Coast tech industry hearts recently elected Democratic New Jersey Senator Cory Booker. The Silicon Valley Business Journal counts the ways donations.

Enough with this “tech surge” business, says venture capitalist Fred Wilson. He thinks the government should open source the project, “or at least all the components that easily lend themselves to open source,”  and he’s asking people to sign this petition toward that end.

The SEC releases a refreshed, 100-page crowdfunding proposal. The public has 90 days to respond.

LinkedIn wants the keys to your email for its innovative new Intro feature – but can you trust it?



Zack Seckler tells jokes with a click of his camera’s shutter.

Googlers discuss how long any one employee has managed to live (live!) at the search giant’s accommodating headquarters.

Witness a very funny newspaper correction.

Dermatologists say to wash your face just once daily — in the evening.


Retail Therapy

A men’s cologne made in collaboration with the Glenlivet distillery. (Is Glenlivet trying to get you fired? We think it might be.).

Earphones for a “high-powered look.” (Do not buy these.)


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