• A Global VC on Outsiders’ View of the U.S. Right Now: “Speechless”

    027-20120712-KS026-Edit-2-324x324Mathias Schilling is the cofounder and managing partner of e.ventures, an early-stage venture firm that invests out of dedicated funds in five geographies: the U.S., Russia, Germany, Asia, and Brazil. The vantage point gives Schilling a unique perspective on how the world sees the U.S. debt crisis. During a quick chat yesterday, he told me his partners are, in a word, “confused.” We also talked about what he’s seeing around the globe.

    You have these dedicated funds where you share carry. Do you sign off on deals as individual firms?

    We look at every region very locally, but we [employ] different structures for different deals. Sometimes, we’ll have an investment committee where I’ll participate in the decision-making. Sometimes, we don’t get involved at all. Our mantra is to keep local teams to two to three partners so we can make decisions quickly.

    Last year, you and Redpoint Ventures joined forces for your Brazil-focused venture fund, raising $130 million. What are you seeing there in late 2013?

    Brazil has had many lost decades, including after 2000. So many basic [online] categories still haven’t been created and funded. There’s also a lack of capital, and entrepreneurship culture, and there’s a difficult regulatory environment. But I’m very positive on Brazil. We’re not only seeing copycats, which obviously makes sense, as large categories need to be created; we’re also seeing a lot of very high quality entrepreneurs. We’ve [backed]10 companies in the last 18 months or so, in e-commerce, financial services, advertising, travel.

    Right now, it’s cooled off on a macro level, in terms of investors going there, because if you aren’t local and make a commitment to stay, it’s very difficult. It puts us in a good position there.

    What can you share about the other markets you’ve entered?

    Japan is an interesting market. It’s traditionally been a tough venture market – people are very hierarchical and risk averse, which is also true of Brazil and, to some extent, Germany. But on the mobile side, we’re seeing a lot of advanced things happening. Half of Android’s revenue is coming from apps being made in Japan and South Korea.

    Berlin is building great critical mass; it’s cheap, exciting, and innovative. Russia is more technology driven, with a lot of very strong engineering. But it lacks general management skills.

    Each is distinct, but I believe you have to go into these markets and build a commitment there and stay for the long run, because I don’t think you can stop the trend. We are globalizing.

    Is entrepreneurship as widely celebrated in other parts of the world?

    I think it’s cool to be an entrepreneur in most countries at this point. Everyone knows some fantastic success story of some guy who really did it. And some of these people really had to pull through to be the first [success story], so they’re great role models.

    Culturally and psychologically, people don’t want to work for big companies anymore.

    I gather the rest of the world is very concerned by the U.S. government right now. What are you hearing from your far-flung partners about this mess?

    I think people are speechless. Honestly, they’re shrugging their shoulders. They don’t get what’s happening and why. And to some extent, it is a bigger deal elsewhere than it is here. They think it will be resolved. It has to be resolved.

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    Connie

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  • StrictlyVC: October 10, 2013

    110611_2084620_176987_thumbnailHey, good news, it’s Thursday! Hope you have a great day, and remember, you can always email me at connie@strictlyvc.com. To sign up for the newsletter, click here.

    Top News in the A.M.

    Treasury Secretary Jack Lew warns lawmakers that he’ll be unable to guarantee payments to any group – whether Social Security recipients or U.S. bondholders – unless Congress approves an increase in the federal debt limit.

    A Global VC Shares His World View

    Mathias Schilling is the cofounder and managing partner of e.ventures, an early-stage venture firm that invests out of dedicated funds in five geographies: the U.S., Russia, Germany, Asia, and Brazil. The vantage point gives Schilling a unique perspective on how the world sees the U.S. debt crisis. During a quick chat yesterday, he told me his partners are, in a word, “confused.” We also talked about what he’s seeing around the globe.

    You have these dedicated funds where you share carry. Do you sign off on deals as individual firms?

    We look at every region very locally, but we [employ] different structures for different deals. Sometimes, we’ll have an investment committee where I’ll participate in the decision-making. Sometimes, we don’t get involved at all. Our mantra is to keep local teams to two to three partners so we can make decisions quickly.

    Last year, you and Redpoint Ventures joined forces for your Brazil-focused venture fund, raising $130 million. What are you seeing there in late 2013?

    Brazil has had many lost decades, including after 2000. So many basic [online] categories still haven’t been created and funded. There’s also a lack of capital, and entrepreneurship culture, and there’s a difficult regulatory environment. But I’m very positive on Brazil. We’re not only seeing copycats, which obviously makes sense, as large categories need to be created; we’re also seeing a lot of very high quality entrepreneurs. We’ve [backed]10 companies in the last 18 months or so, in e-commerce, financial services, advertising, travel.

    Right now, it’s cooled off on a macro level, in terms of investors going there, because if you aren’t local and make a commitment to stay, it’s very difficult. It puts us in a good position there.

    What can you share about the other markets you’ve entered?

    Japan is an interesting market. It’s traditionally been a tough venture market – people are very hierarchical and risk averse, which is also true of Brazil and, to some extent, Germany. But on the mobile side, we’re seeing a lot of advanced things happening. Half of Android’s revenue is coming from apps being made in Japan and South Korea.

    Berlin is building great critical mass; it’s cheap, exciting, and innovative. Russia is more technology driven, with a lot of very strong engineering. But it lacks general management skills.

    Each is distinct, but I believe you have to go into these markets and build a commitment there and stay for the long run, because I don’t think you can stop the trend. We are globalizing.

    Is entrepreneurship as widely celebrated in other parts of the world?

    I think it’s cool to be an entrepreneur in most countries at this point. Everyone knows some fantastic success story of some guy who really did it. And some of these people really had to pull through to be the first [success story], so they’re great role models.

    Culturally and psychologically, people don’t want to work for big companies anymore.

    I gather the rest of the world is very concerned by the U.S. government right now. What are you hearing from your far-flung partners about this mess?

    I think people are speechless. Honestly, they’re shrugging their shoulders. They don’t get what’s happening and why. And to some extent, it is a bigger deal elsewhere than it is here. They think it will be resolved. It has to be resolved.

    JamBase

    New Fundings

    BizBrag, a nearly three-year-old Baltimore, Md.-based platform that connects advertisers with local social networking feeds, is raising $600,000 in seed funding, according to an SEC filing. It has so far raised $200K, including from Bluewater International, an investment firm in Washington, D.C.

    Blab, a two-old Seattle-based analytics company that tries to help customers understand where social media conversations are headed, has raised $342,000 in debt, according to an SEC filing that shows the company is looking for up to $2.5 million. The company has raised nearly $3.6 million to date.

    City Notes, a year-old, Brooklyn, NY-based mobile city guide cofounded by former tech writer and editor Dan Frommer, is looking to raise up to $800,000 in debt, according to an SEC filing. The company’s cofounder, Mark Dorison, formerly a director of application development at Martha Stewart Living Omnimedia, is also listed on the filing.

    CTI Towers, a wireless tower operator that is based in Franklin, Mass., has raised $30 million in debt financing, just as it has completed an acquisition of five towers from an unnamed wireless carrier for undisclosed terms. CTI Towers launched two years ago with a portfolio of roughly 800 towers that were previously owned and operated by Comcast Cable subsidiaries. It’s backed by Comcast Ventures.

    Refresh, an 18-month-old, Palo Alto-based company whose mobile application delivers users an instant dossier about people based on what’s publicly available about them, has raised a $10 million Series A round from Redpoint Ventures, Charles River Ventures, and Foundation Capital.

    Smartling, a four-year-old, New York-based startup that helps its business customers understand and interact with their global customers by helping them translate their sites, apps, and more, has raised a $24 million Series C round led by Tenaya Capital. Other investors in the round included Harmony Partners, Venrock, IDG Ventures, U.S. Venture Partners, Felicis Ventures and First Round Capital. The company has raised a little more than $38 million to date.

    Splice, a new, online workflow platform for music creators that lets that back up their songs, share changes and more, has raised $2.75 million in seed funding led by Union Square Ventures. Other investors in the round included True Ventures, SV Angel, Lerer Ventures, First Round Capital and Code Advisors. Splice has an office in New York and in Santa Monica.

    TempoDB, a two-year-old, Chicago-based database service for time series data — everything from measuring networking latencies to heart rates — has raised $3.2 million in Series A funding led by Hyde Park Venture Partners, with participation from Chicago Ventures and Divergent Ventures. TempoDB had raised roughly a million dollars in seed funding previously, including from Data Collective and TechStars.

    ——-

    Fund News

    Alibaba, the China-based e-commerce juggernaut is apparently getting into yet another business, acquiring a 51 percent stake in a Chinese mutual fund called THFund for more than $190 million. In summer, Alibaba’s payment service, Alipay, and THFund launched a mutual fund called Yuebao; consumers can invest in Yuebao via their Alipay accounts.

    ——–

    Exits

    Validity, 13-year-old San Jose, Calif., company that makes sensors used in biometric identification, is being purchased for $92.5 million in cash and stock, reports VentureBeat. The acquiring company, Synaptics, a publicly traded manufacturer of touch pads, will pay up to $255 million for Validity based on performance targets over time. Validity had raised $82 million over the years, including from TeleSoft Partners, Qualcomm Ventures, Crosslink Capital, Panorama Capital and individuals like Salesforce.com founder Marc Benioff and famed angel investor Ram Shriram.

    ——-

    IPOs

    Looks like Twitter has accidentally revealed its IPO date.

    ——-

    People

    Mike Gridley has joined Akkadian Ventures, a direct secondary investment firm based in San Francisco, as a managing director. Gridley was most recently a managing director at Industry Ventures in San Francisco, which he joined in 2004. Before Industry Ventures, Gridley worked as an associate at BV Capital/Bertelsmann Ventures. Akkadian Ventures founder Ben Black has much on Gridley’s new role here.

    Zack Urlocker is rejoining Scale Venture Partners as an executive-in-residence. Urlocker was most recently chief operating officer at the venture-backed customer support platform company Zendesk, which he joined in December 2010. Between September 2010 until his appointment at Zendesk, he worked with ScaleVP as an EIR, evaluating new investment opportunities in data and NoSQL companies.

    Gregory Silva is also joining Scale Venture Partners, as a new associate. Silva was most recently an investment banking analyst at Piper Jaffray and briefly before that, Silva worked as a financial analyst for Bayer HealthCare.

    Joe Montana, the legendary San Francisco 49ers quarterback, has a new pastime in — you guessed it — technology investing.

    ——-

    Happenings

    If you’re in Cambridge, Mass., it isn’t too late to check out Emtech, an emerging tech conference being hosted by MIT Technology Review.

    If you happen to be in Kiev, Ukraine, you might hustle over to the two-day IDCEE conference, where Alan Patricof of Greycroft Partners, Pavel Bogdanov of Almaz Capital Partners and many other investors will be speaking, mingling, and hearing startup pitches.

    ——-

    Job Listings

    WI Harper, a venture capital firm that focuses on early and early expansion investments in Mainland China, Taiwan and Silicon Valley, is looking for a venture capital analyst intern at its office in San Francisco’s Financial District. Applicants should have a GPA of 3.5 or higher; fluency in reading and writing English, along with speaking Mandarin, are big plusses.

    ——–

    Essential Reads

    Bloomberg publishes a juicy excerpt of The Everything Store: Jeff Bezos and the Age of Amazon by its senior writer, Brad Stone. One small snippet: “The one unguarded thing about Bezos is his laugh-a pulsing, mirthful bray that he leans into while craning his neck back. He unleashes it often, even when nothing is obviously funny to anyone else. And it startles people. ‘You can’t misunderstand it,’ says Rick Dalzell, Amazon’s former chief information officer, who says Bezos often wields his laugh when others fail to meet his lofty standards. ‘It’s disarming and punishing. He’s punishing you.’”

    In its S-1, Twitter says that through the “eyes of management,” the company had a profit of just over $21 million in the first six months of the year. Through an accountant’s eyes, though, Twitter actually lost just over $69 million.

    Revenue from mobile ads accounted for 15 percent of Internet advertising’s $21 billion haul in the first half of this year, says the Internet Advertising Bureau. That’s more than double its market share this time last year.

    ——–

    Detour

    “Who was that muscle man who decided that he’d get more money from Amazon than from [Crown Publishing] and sold seventeen books when he’d sold six hundred thousand before? He swan dived into the pavement.”  — Legendary literary agent Andrew Wylie on Tim Ferriss, Amazon, and dealing with young writers.

    Examining the word “bro.”

    Check out your timid first tweet (and anyone else’s) right here.

    ——-

    Retail Therapy

    We can’t imagine who’d want this watch for themselves, but it would make a pretty clever parting gift for a terrible roommate or evil landlord.

    If you love maple syrup and you love bourbon, you are going to love this smoked maple bourbon. (Not for pancakes.)

    ——–

    Correction: Yesterday, we mistakenly reported that App Nexus cofounder and president Michael Rubenstein was leaving the company, when in fact App Nexus cofounder and CTO Michael Nolet is leaving. Rubenstein is now replacing Nolet on the board. We sincerely regret the error. 

    ——–

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

    Related articles

    Connie

  • Flipkart Raises $160 Million, While Others in Bangalore Watch and Wait

    bangaloreA couple of years ago, venture capitalists began aggressively funding e-commerce sites in Bangalore, largely inspired by the success of Flipkart, the e-commerce Indian company that’s raking in rupees by delivering goods to villages and far-flung towns. Just today, the company revealed that it has raised $160 million in fresh capital, atop a $200 million capital injection it closed in July. (The six-year old has now raised $540 million altogether, according to Crunchbase.)

    Unfortunately, e-commerce riches have been hard to come by. While Flipkart has pulled ever further ahead, racking up 10 million registered users and over a million daily unique visitors, roughly 40 other venture-funded e-commerce startups have since bit the dust.

    Insiders say there’s a light at the end of the tunnel for a small number of companies that have benefited from government efforts to keep U.S. companies out. The question is, how long can these sanctions last?

    According to Subu S.V., a managing director with BVP India in Bangalore, the absence of a strong retail — and physical — infrastructure has significantly hampered the growth of  Indian e-commerce. While in the U.S., the online shopping revolution followed the rise of the giant shopping mall, in India, “offline never really happened,” he notes. “It’s still mom and pop stores ruling the country. So offline and online are happening simultaneously, and while the market size is huge, there are many bottlenecks” to overcome, he says.

    Nandu Madhava, a Harvard MBA and Texan who is CEO of mDhil.com, a WebMD for India based in Bangalore, lays the blame for so many busted e-commerce companies on a faulty investment premise.

    Pointing to India’s fast-growing base of 165 million Internet users, Madhava observes, “Give a man or woman access to the Internet for the first time in their life, and their natural inclination isn’t to go buy a pair of shoes, a polo shirt, or fancy watch.  It’s likely to go: porn, cricket, Facebook, politics, jobs, health, YouTube, news, pirated media. Unfortunately, most Indian VCs had never run a business, much less an online business. Most were former bankers or consultants from MBA schools trying to lift US models and place them into India.”

    Still, some companies will make it, say both men. Madhava points to startups in the mobile, consumer Internet, online video, Saas and payment transaction industries that are “incredible” but “need patient capital ready to take a 24- to 36-month view of the Indian opportunity.”

    As examples, S.V. points to the lifestyle goods e-tailer Jabong.com, which is gaining traction, and to the fast-growing e-commerce site SnapDeal, backed by Bessemer, which attracted a $50 million investment from eBay earlier this year. The 1,000-employee company is a marketplace for more than 10,000 small merchants and more than 20 million registered users.

    S.V. says that complicated and onerous government regulations have enabled Jabong and SnapDeal and FlipKart to get a jump on global giants like Amazon, which launched operations in India in June. For now, at least, Amazon and other foreign companies may host marketplaces that brings buyers and sellers together, but they can’t maintain inventory to sell directly to shoppers.

    Nevertheless, those rules may change, particularly after India’s general election next year. In fact, S.V. tells me the “general expectation is that [things] are going to change in another six to 12 months.” In the meantime, he says, the country’s most successful “home-grown companies are getting a four- to six-year head start.”

    It will be “interesting to see what happens,” he adds.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

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  • StrictlyVC: October 9, 2013

    110611_2084620_176987_thumbnailGood morning. It’s Wednesday, woot! Hope you have a great one.

    ——

    Top News in the A.M.

    OMG. Apple is reportedly hosting an invitation-only event to roll out new stuff on October 22.Our lawmakers are truly unbelievable. Now they’re trying to open the government piece by piece to ease the political pressure they’re feeling.

    ——

    Flipkart Raises a Fresh $160 Million, While Others in Bangalore Watch and Wait

    A couple of years ago, venture capitalists began aggressively funding e-commerce sites in Bangalore, largely inspired by the success of Flipkart, the e-commerce Indian company that’s raking in rupees by delivering goods to villages and far-flung towns. Just today, the company revealed that it has raised $160 million in fresh capital, atop a $200 million capital injection it closed in July. (The six-year old has now raised $540 million altogether, according to Crunchbase.)

    Unfortunately, e-commerce riches have been hard to come by. While Flipkart has pulled ever further ahead, racking up 10 million registered users and over a million daily unique visitors, roughly 40 other venture-funded e-commerce startups have since bit the dust.

    Insiders say there’s a light at the end of the tunnel for a small number of companies that have benefited from government efforts to keep U.S. companies out. The question is, how long can these sanctions last?

    According to Subu S.V., a managing director with BVP India in Bangalore, the absence of a strong retail infrastructure has significantly hampered the growth of  Indian e-commerce. While in the U.S., the online shopping revolution followed the rise of the giant shopping mall, in India, “offline never really happened,” he notes. “It’s still mom and pop stores ruling the country. So offline and online are happening simultaneously, and while the market size is huge, there are many bottlenecks” to overcome, he says.

    Nandu Madhava, a Harvard MBA and Texan who is CEO of mDhil.com, a WebMD for India based in Bangalore, lays the blame for so many busted e-commerce companies on a faulty investment premise.

    Pointing to India’s fast-growing base of 165 million Internet users, Madhava observes, “Give a man or woman access to the Internet for the first time in their life, and their natural inclination isn’t to go buy a pair of shoes, a polo shirt, or fancy watch.  It’s likely to go: porn, cricket, Facebook, politics, jobs, health, YouTube, news, pirated media. Unfortunately, most Indian VCs had never run a business, much less an online business. Most were former bankers or consultants from MBA schools trying to lift US models and place them into India.”

    Still, some companies will make it, say both men. Madhava points to startups in the mobile, consumer Internet, online video, Saas and payment transaction industries that are “incredible” but “need patient capital ready to take a 24- to 36-month view of the Indian opportunity.”

    As examples, S.V. points to the lifestyle goods e-tailer Jabong.com, which is gaining traction, and to the fast-growing e-commerce site SnapDeal, backed by Bessemer, which attracted a $50 million investment from eBay earlier this year. The 1,000-employee company is a marketplace for more than 10,000 small merchants and more than 20 million registered users.

    S.V. says that complicated and onerous government regulations have enabled Jabong and SnapDeal and FlipKart to get a jump on global giants like Amazon, which launched operations in India in June. For now, at least, Amazon and other foreign companies may host marketplaces that brings buyers and sellers together, but they can’t maintain inventory to sell directly to shoppers.

    Nevertheless, those rules may change, particularly after India’s general election next year. In fact, S.V. tells me the “general expectation is that [things] are going to change in another six to 12 months.” In the meantime, he says, the country’s most successful “home-grown companies are getting a four- to six-year head start.”

    It will be “interesting to see what happens,” he adds.

    JamBase

    New Fundings

    B5M, a five-year-old, Shanghai-based shopping search portal, has raised a $16 million Series B investment round led by ClearVue Partners. The round also included Oak Investment Partners, the lead investor from its $7.1 million Series A investment, as well as existing investors and several new angel investors.

    Divide, a nearly four-year-old, New York-based company whose software allows smartphone users to configure separate profiles for business and personal use on their mobile devices, has closed a $12 million Series B round led by Google Ventures. Other new investors in the round included Globespan Capital Partners and Harmony Partners, which were joined by existing investors Comcast Ventures and Qualcomm Ventures. Divide, formerly known as Enterproid, has raised $23 million to date.

    Grabit, a two-year-old, Santa Clara, Calif.-based company that makes electro adhesion-based materials and which spun out of the nonprofit research institute SRI International, has raised an undisclosed amount of Series A funding led by Formation 8. Nike and ABB Technology Ventures also participated in the round.

    Luminate Health, a New York-based software-as-a-service company whose platform provides patients access to and analysis of their lab test results, has raised $1 million in seed funding led by KEC Ventures. Luminate graduated from the New York City-based health tech accelerator Blueprint Health earlier this year.

    iScreen Vision, a three-year-old Memphis, Tenn.-based maker of pediatric vision screening equipment and services, has raised $4 million in a Series B funding led by MB Venture Partners. Innova, who led the company’s Series A round, also participated along with other (undisclosed) new and existing private investors.

    Molecular Templates, a Georgetown, Tex.-based company that creates anti-cancer agents using protein engineering, has raised $8.5 million in Series C funding led by Excel Venture Management, with existing investor Santé Ventures also participating in the round.

    ——

    Exits

    EchoPass, a 13-year-old, Pleasanton, Calif.-based company that makes call and contact center software, has been acquired by the 23-year-old call center software giant Genesys, located in Daly City, Calif. EchoPass had raised $9 million in recent years, including from Canaan Partners, Outlook Ventures, New Enterprise Associates, and the now-defunct Advanced Equities. Terms of the deal weren’t disclosed.

    GlobalLogic, a 15-year-old, McLean, Va.-based offshore software development company, is being acquired by the private equity group Apax Partners. Terms of the deal aren’t being disclosed, but GlobalLogic has raised at least $26 million over the years, including from New Atlantic Ventures, Westbridge Capital Partners, and New Enterprise Associates.

    —–

    IPOs

    Zulily — the four-year-old, Seattle-based online retail site for moms, kids, and babies — has filed to go public, and AllThingsD dives into the numbers. Among the interesting tidbits it finds: Andreessen Horowitz paid roughly $69 million for 7 percent of the company in an $85 million venture round that closed last November. Maveron, which already cashed out part of its stake in the company last year, is also poised to make a bundle.

    Tandem Diabetes Care, a five-year-old, San Diego, CA-based company that develops medical devices to treat diabetes, has filed for an IPO, according to an SEC filing. Tandem, which is looking to raise $100 million, is backed by Delphi Ventures, Domain Associates, TPG Biotechnology Partners, HLM Venture Partners and Kearny Venture Partners, which own 26.9 percent, 26.2 percent, 20.3 percent, 11.4 percent and 6.4 percent of the company, respectively.

    ——

    People

    Michael Nolet, a cofounder and the CTO of the real-time online ad buying platform AppNexus, is leaving the six-year-old New York company, he announced in a blog post yesterday. Nolet, who formed the company with AppNexus CEO Brian O’Kelley and AppNexus president Michael Rubenstein, said in his note that he’s “ready for my next adventure,” adding that he’s planning to start an “online business” next month with his wife.

    Ashley Dombkowski has joined Bay City Capital, the life sciences-focused venture firm, after serving more than two years as chief business officer at 23andMe, a company that makes the human genome searchable and which has raised more than $160 million since is 2006 founding. Dombkowski has plenty of previous experience in the investing world. Before joining 23andMe, she worked as a managing director at the venture firm MPM Capital; earlier in her career, she was a healthcare equity analyst for the hedge fund Tiger Management and for the institutional asset management firm Dresdner RCM Global Investors. (H/T: Dan Primack)

    Dana Deasy has been named chief information officer at JPMorgan Chase. The position is a new one for the financial services company. Deasy, on the other hand, has been chief information officer at a number of corporate giants, including BP, General Motors, Tyco International, and Siemens Corporation Americas.

    Top Tier Capital Partners, a San Francisco-based venture capital fund of funds, has appointed Jeff Watts as its chief business development officer.

    ——-

    Happenings

    If you’re in or near Cambridge, Mass., today, you might want to head to the EmTech conference, presented by MIT Technology Review. The three-day event is designed to showcase emerging technologies with the “greatest potential to change our lives.” You can find much more information here.

    ——-

    Job Listings

    500 Startups, the venture capital firm and startup accelerator, is looking to hire a director of global community development, to help the firm expand the team and the reach of its startup conferences, tours, and other programs. To apply, send your resume and a YouTube video that answers who you are, where you’re from, what you’ve done that makes you ideal for the role, and who your biggest role model is, to christen@500startups.com.

    ——

    Essential Reads

    “Jack’s gone rogue.” The New York Times excerpts Nick Bilton’s new Twitter book and it is good.

    San Francisco gave numerous tech startups tax breaks in exchange for promises of local charity and outreach work. But while some have done volunteer work, others are really stretching expectations, reports Justine Sharrock. “Instead of job training, there are cocktail parties. Community engagement equals Yelp reviews written by and for techies.”

    It’s hard for an acquired company to be heard once part of a bigger company. It’s even harder when that bigger company is also being acquired, writes Erin Griffith.

    ——

    Detour

    A new study suggests we unlock our phones a lot each day.

    The New Republic looks at the future of China’s public toilets.

    Retail Therapy

    These chrome-coated, vintage Polaroid SX-70s are pretty neat, though shop around for the best price. They’re delicate, and you don’t want to be crying onto a pile of automatically ejected pictures when yours invariably breaks.

    If you’re willing to pay up — as in, up to $750,000 — for a camera, we also have you covered.

    [Correction: Today’s StrictlyVC originally reported that Michael Rubenstein, AppNexus’s cofounder and president, was leaving the company. We sincerely regret the error.]

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

    ——

     

     

    Related articles

    Connie

  • StrictlyVC: October 8, 2013

    110611_2084620_176987_imageGood morning, and happy Tuesday!

    ——

    Wall Street is showing puzzlingly few signs of panic that we’ll default on or debt. Meanwhile, Silicon Valley seems to be paying even less attention. But it’s time to freak-out, argues Dealbook’s Andrew Ross Sorkin.

    —–

    Silicon Valley’s ‘Undertaker’ Doubles Down, Too

    Everyone in Silicon Valley seems to be wearing more than one hat these days. Venture capitalists are active startup founders. Active startup founders are raising venture funds.

    Even Sherwood Partners  – a 30-person company that industry insiders long ago coined “the undertaker” because of its decades-long history of shuttering companies – has launched a second business. Called AgencyIP, it’s a platform for selling the patents, trademarks, and other intellectual property of failed startups that Sherwood unwinds.

    I caught up with Sherwood founder Marty Pichinson yesterday at his Mountain View, Calif., office to learn more, as well as see how Sherwood is doing in these boom times.

    When we last talked a couple of years ago, people thought so-called “winter” was coming for startups. It did not. Has that been bad news for Sherwood?

    Not at all! After more than 20 years in the business, we now have VCs bringing us in earlier where they really want management to focus on tomorrow and let us take care of hiccups or financial problems that can take a company off track. We’ve been doing a lot more corporate restructuring.

    What kind of hiccups are you ridding companies of?

    It can be anything. Sometimes they made a bad deal for equipment, or they paid people to [take the company one direction] and now they’re going another way. VCs will bring us in before raising a new round so we can help reduce any unsecured debt first.

    Beyond renegotiating equipment leases and analyzing who to cut, what else can you do in this kind of roaring economy? Is it impossible to work out cheaper rent right now, given low vacancy rates?

    Nothing is impossible. We’re kind in what we do. If you’re a jerk in life, people don’t want to work with you. Even though we’re renegotiating debt, maybe you’re talking about a few months. If everyone pitches in a little, there’s a better chance that the company will make it.

    What’s the failure rate right now? Has it changed because of all the seed-funding we’ve been seeing?

    Nah. About 2,000 companies are funded per year and about 20 percent of those companies exit, meaning 1,600 [fail]. Maybe it’s because your customers aren’t coming in fast enough, or another player has beat you to market, or your board members don’t have the resources to re-up anymore and they’d sooner walk away and save their dry powder.

    Right now, I’m closing a 12-year-old company that raised $227 million. It needs $40 million more but its investors are tired. Do you put it in this company or put it another? It’s all about placing bets.

    Why launch AgencyIP?

    We probably sell more orphaned [intellectual property] than anyone around. We launched the company eight months ago and we already represent more than 1,800 patents, including from CBS and Showtime and other Fortune 500 companies. We’re like William Morris, negotiating the best deals possible for the IP we have [along with finding ways to repackage it]. We can take two patents that aren’t the best in the world, for example, and put them together and they can become better.

    Who’s buying what, and what’s the range of how much they are willing to pay? 

    Our offices are full of people all the time, so we have excellent relationships with everyone. And we’ve had IP sell for $500,000 and we’ve sold it for between $25 million and $30 million.

    You’ve seen plenty of cycles. Where are we in this one?

    To me, there’s never been storms or halos. Someone is always reinventing something. These young people can see through time. Who ever thought that Facebook would be what it is — or Amazon, or Google, or Twitter?

    Change is continuous and every four or five or six years, there’s a paradigm shift to where smart people think the new deals will be and as part of that readjustment, you get rid of the old things. Maybe you shouldn’t bail out. But you can’t hold on to everything forever.

    JamBase

    New Fundings

    Appoxee, a 2.5-year-old mobile engagement platform based in Tel Aviv, has raised $1.8 million in seed funding led by Lazarus Israel Opportunities Fund and individual investor Mosche Lichtman. Previous investors Cyhaw Ventures and Oryzn Capital also contributed to the funding, which brings the total amount raised by the company to $2.4 million.

    Basis Science, a two-year-old, San Francisco-based smartwatch maker, has raised $11.8 million as part of a Series B round it began raising earlier this year, when it collected $11.5 million. Together, with the company’s Series A funding, Basis Science has raised $32.3 million from investors, including Mayfield Fund, DCM, Norwest Venture Partners, Intel Capital, Dolby Family Trust, Stanford University and Peninsula-KCG.

    Pacejet Logistics, a 36-year-old, Columbus, Oh.-based company whose shipping software connects a customer’s order processing system to a network of shipping carriers, has raised $4.5 million in Series C funding led by Athenian Venture Partners.

    Personalis, a two-year-old, Menlo Park, Calif.-based company that sells genome sequencing and analysis services to life-sciences researchers, has raised a $22 million B round that brings its total funding to $42 million. Investors in the company include Lightspeed Ventures Partners, Mohr Davidow Partners, and life science investor Abingworth.

    Sparkcentral, a two-year-old, San Francisco-based company whose customer service platform aims to help big companies monitor and manage complaints from social media sources, has raised $4.5 million in Series A funding led by Sigma West. Previous backers also participated in the round, including Social+Capital Partnership, Graph Ventures and Sebastien de Halleux, co-founder of Playfish.

    Swirl Networks, a year-old, Boston-based developer of a location-based iPhone app that helps retailers engage with consumers while they shop, has raised $8 million led by Hearst Ventures. The round also included funds from previous investors SoftBank Capital and Longworth Venture Partners.

    ——

    New Funds

    Montage Capital, an early-stage firm focused on investing in financial services, e-commerce, and resources (like energy, food and water) companies that are between their angel and Series A rounds, has raised $2.2 million in funding, according to an SEC filing. Montage, based in Menlo Park, Calif., was founded by Todd Kimmel, who was most recently a general partner at Mayfield Fund, which he joined in 2009. Before Mayfield, Kimmel worked as a principal at Advanced Technology Ventures.

    Thrive Capital Partners, a Peoria, Ill.-based firm that looks to develop and buy companies that offer a positive social impact, is seeking up to $10 million for a new fund, according to an SEC filing. The outfit, which began fundraising late last month, has so far raised $450,000​.

    The Entrepreneurs’ Fund III (TEF3), a San Mateo, Calif.-based, early-stage, IT-focused venture fund, is looking to raise $100 million for a fund called Entrepeneurs’ Fund IV, shows an SEC filing. TEF3 was founded by Jeffrey Webber, a founding partner of R.B. Webber & Co., a Mountain View, Calif.-based management consulting firm that went out of business in 2004, 13 years after it was founded.

    ——-

    Exits

    Publicly traded ad management company Digital Generation has acquired a four-year-old, Santa Monica, Calif.-based company called Republic Project for $1.4 million in cash. Republic Project operates an ad campaign platform and raised $1 million in funding last year from 500 Startups, Google Ventures, Venture 51 and individual investors.

    ——

    IPOs

    Reuters takes a look at how hard it is for even professionals to make money off IPOs once a company is out.

    The hot IPO market isn’t doing much to boost M&A, either, reports Venture Capital Dispatch.

    —–

    People

    Jason Goldberg and Nishith Shah, the CEO and CTO of troubled online retailer Fab.com, have told staffers (and AllThingsD) that they are forfeiting their 2014 salaries. Fab has raised more than $300 million in venture capital from Menlo Ventures, Andreessen Horowitz, and Atomico among many others; the company has raised another $30 million in debt.

    John Martin, a Baker Botts attorney who has been serving as chair of the firm’s technology practice, was just named Partner in Charge of the firm’s Palo Alto office.

    ——

    Happenings

    Place, a day-long conference centered around indoor marketing, starts around 9 a.m this morning in San Francisco. You can find details here.

    If you’re in the Bay Area, you might also want to hit up the Ritz Carlton at Half Moon Bay, for the second day of Venture Alpha West, which kicks off at 8:15 with a keynote by Tim Draper of Draper Fisher Jurvetson.

    ——

    Job Listings

    The pharmaceutical company Merck announced last week that it’s laying off 8,500 employees and cutting $2.5 billion in costs over the next two years. But, good news: it’s still looking for an associate director for its Digital Innovation and Outreach team — a role that requires building relationships with venture capitalists, startups, academia and “thought leaders.” A bachelor’s degree and some exposure to venture capital or private equity is required. The job is in Palo Alto, Calif.

    —–

    Essential Reads

    Twitter could be valued at as much as $20 billion once it begins trading.

    Facebook is building a 394-unit residential community for its employees, just a stone’s throw from its Palo Alto campus. Aside from the creepiness factor (and undeniably, there is one), you might be interested in knowing exactly what the development’s plans look like.

    Nest could help transform people’s homes —  if they don’t choke over the $129 price — says Wired’s Steven Levy.

    Google‘s executive chairman, Eric Schmidt, tells a crowd that Android is “more secure than the iPhone.” (The crowd does not buy it, seemingly.)

    ——

    Detour

    More evidence that you should eat five times a day.

    Amazing pictures by photographer, world traveler, and serial trespasser Bradley Garrett.

    Whatever you think of Supreme Court Justice Antonin Scalia, this is a great interview with him.

    ——-

    Retail Therapy

    In our youth, we had a place for these kinds of sweaters: the Ugly Sweater Drawer. Still, if you’re easy on the eyes and under 35, you can probably pull off one of these retro numbers. (Older than that and the look is really no longer ironic.)

    This is pretty cool, though we don’t advise it for the office. You’d probably feel pretty stupid, getting yourself fired for shooting a rubber band, or 600 of them, at your coworker.

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

    Related articles

    Connie

    , , , , , ,

  • Running Two Companies? Even Silicon Valley’s “Undertaker” is Doing It

    37 - Graveyard - HARMSSEN ANDREA - germanyEveryone in Silicon Valley seems to be wearing more than one hat these days. Venture capitalists are active startup founders. Active startup founders are raising venture funds. 

    Even Sherwood Partners  – a 30-person company that industry insiders long ago coined “the undertaker” because of its decades-long history of shuttering companies – has launched a second business. Called AgencyIP, it’s a platform for selling the patents, trademarks, and other intellectual property of failed startups that Sherwood unwinds.

    I caught up with Sherwood founder Marty Pichinson yesterday at his Mountain View office to learn more, as well as see how Sherwood is doing in these boom times.

    When we last talked a couple of years ago, people thought so-called “winter” was coming for startups. It did not. Has that been bad news for Sherwood?

    Not at all! After more than 20 years in the business, we now have VCs bringing us in earlier where they really want management to focus on tomorrow and let us take care of hiccups or financial problems that can take a company off track. We’ve been doing a lot more corporate restructuring.

    What kind of hiccups are you ridding companies of?

    It can be anything. Sometimes they made a bad deal for equipment, or they paid people to [take the company one direction] and now they’re going another way. VCs will bring us in before raising a new round so we can help reduce any unsecured debt first.

    Beyond renegotiating equipment leases and analyzing who to cut, what else can you do in this kind of roaring economy? Is it impossible to work out cheaper rent right now, given low vacancy rates?

    Nothing is impossible. We’re kind in what we do. If you’re a jerk in life, people don’t want to work with you. Even though we’re renegotiating debt, maybe you’re talking about a few months. If everyone pitches in a little, there’s a better chance that the company will make it.

    What’s the failure rate right now? Has it changed because of all the seed-funding we’ve been seeing?

    Nah. About 2,000 companies are funded per year and about 20 percent of those companies exit, meaning 1,600 [fail]. Maybe it’s because your customers aren’t coming in fast enough, or another player has beat you to market, or your board members don’t have the resources to re-up anymore and they’d sooner walk away and save their dry powder.

    Right now, I’m closing a 12-year-old company that raised $227 million. It needs $40 million more but its investors are tired. Do you put it in this company or put it another? It’s all about placing bets.

    Why launch AgencyIP?

    We probably sell more orphaned [intellectual property] than anyone around. We launched the company eight months ago and we already represent more than 1,800 patents, including from CBS and Showtime and other Fortune 500 companies. We’re like William Morris, negotiating the best deals possible for the IP we have [along with finding ways to repackage it]. We can take two patents that aren’t the best in the world, for example, and put them together and they can become better.

    Who’s buying what, and what’s the range of how much they are willing to pay? 

    Our offices are full of people all the time, so we have excellent relationships with everyone. And we’ve had IP sell for $500,000 and we’ve sold it for between $25 million and $30 million.

    You’ve seen plenty of cycles. Where are we in this one?

    To me, there’s never been storms or halos. Someone is always reinventing something. These young people can see through time. Who ever thought that Facebook would be what it is — or Amazon, or Google, or Twitter?

    Change is continuous and every four or five or six years, there’s a paradigm shift to where smart people think the new deals will be and as part of that readjustment, you get rid of the old things. Maybe you shouldn’t bail out. But you can’t hold on to everything forever.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Related articles

    Connie

  • StrictlyVC: October 7, 2013

    110611_2084620_176987_imageHi, everyone, hope you had a great weekend!

    Top News in the A.M. 

    We’re entering week two of the shutdown with no end in sight. On talk shows yesterday morning, House Speaker John Boehner rejected continued calls to reopen the government and raise the federal debt limit unless President Obama plays ball, saying, “He knows what my phone number is. All he has to do is call.” [Eye roll. Hair pull. Screams.]
    ——-

    Dick Costolo’s Joke Bombs, on Twitter

    Over the weekend, Twitter CEO Dick Costolo finally did something that millions of Twitter users have done before him: He tweeted a comment that’s attracting unwanted attention.

    The tweet was prompted by a New York Times report that Twitter has just one woman among its top officials. The story includes comments from academic Vivek Wadwha, who ascribed Twitter’s gender imbalance to “elite arrogance” and the “same male chauvinistic thinking” that permeates Silicon Valley. Costolo took to Twitter Friday night to call Wadwha the “Carrot Top of academic sources.”

    Coming from anyone else, the tweet might have been mildly amusing if a bit mean-spirited — typical Twitter fare, in short. Coming from Costolo, it was a surprising misstep. Twitter is in its quiet period. Within weeks, it will be a public company. So why not just keep quiet until then?

    In shooting the messenger and not addressing the message itself, Costolo also inadvertently helped feed people’s worst perceptions of Twitter, including that it’s not always a friendly place to hang out. As Josh Constine observed in a recent TechCrunch piece, many users already avoid or abandon Twitter because of its competitive undertones and the pressure they feel to be “thought leaders.”

    Half a day after Costolo published his tweet, one such thought leader, the blogger-entrepreneur Anil Dash, decided to challenge him on it. Tweeting to his 477,525 followers, Dash said that he was “sorely disappointed to see @dickc respond defensively to criticisms of industry sexism. Why not just lead, as Twitter does on free speech?”

    After a few defensive exchanges with Dash and others on the topic, Costolo suggested that he’s very mindful of the gender issue at Twitter, tweeting: “I *think* I have an acute understanding of the topic & host of related issues. Of course, proof is in deeds.”  (In a display of deference to Costolo that has also become de rigueur among Twitter’s most astute users, Dash “favorited” each of Costolo’s responses before responding to them.)

    Whether there will be lingering damage from Costolo’s tweet remains to be seen. Plenty of people have lost their jobs over less, but Twitter doesn’t seem inclined to ditch its star CEO any time soon.

    As for Carrot Top, a comic long known for his red hair and his use of props, no one yet knows how he feels about being dragged into the conversation. His publicity team didn’t respond to questions sent to them yesterday morning.

    It’s worth noting that Costolo himself once tried to be a stand-up comic, an effort that led to zero job offers, as he shared during an on-stage interview in May. “It was one part of [my career] strategy,” he’d said, as the crowd erupted with laughter.

    JamBase

    New Fundings

    ERN, a two-year-old, London-based “big data” company focused on helping its banking customers create loyalty programs, has raised $1 million from undisclosed sources, bringing the total amount of capital raised by the company to date to $5.6 million.

    Fastacash, a two-year-old, Singapore-based social payments platform, has raised $3 million in Series A funding from Jungle Ventures, Spring Singapore, and Spring SEEDS Capital.

    Lark, a three-year-old, Mountain View., Calif.-based maker of a smart wristband and app, has raised $3.1 million of a $3.6 million round of funding, according to an SEC filing. According to TechCrunch, which spied the filing on Friday, Lark has previously raised $1 million from Lightspeed Venture Partners, CrunchFund and others.

    Loom, a two-year-old, San Francisco-based startup that’s taking on Apple’s iCloud as a better storage solution, has raised $1.4 million from Google Ventures, Great Oaks VC, Tencent and numerous angel investors among others.

    MongoDB, a six-year-old, New York-based data management company, has raised $150 million from new investors Altimeter Capital, Salesforce.com and T. Rowe Price. The firms were joined by existing investors Intel Capital, New Enterprise Associates, Red Hat and Sequoia Capital. To date, MongoDB has raised roughly $230 million from investors.

    Silk, a year-old, Amsterdam-based Web data-crunching platform designed for so-called knowledge workers, has raised $1.6 million in seed funding, led by New Enterprise Associates and Atomico. The company has previously raised $435,000, including from Atomico.

    Swoon Editions, a two-year-old, London-based company, has raised $1.93 million in new funding from Index Ventures, Octopus Investments and angel investors. The company, formerly known as Decoholic, is a platform for handcrafted furniture makers to sell their wares.

    ——–

    Exits

    Lexmark International of Lexington, Ky., has acquired the healthcare software company Pacsgear, whose technology helps customers manage and share medical images, as well as integrate them with their picture archives and electronic medical records. The 13-year-old, Pleasanton, Calif.-based company was purchased for $54 million in cash and will be folded into the Lexmark subsidiary Perceptive Software.

    ——–

    IPOs

    Potbelly Sandwich Shop, the sandwich chain, saw its shares, priced at $14, soar during their first day of public trading on Friday, closing at $30.77, or up 120 percent for the day. The company’s biggest shareholders are Maveron, American Securities, Oak Investment Partners, Oxford Capital Group, and Benchmark Capital, whose pre-IPO stakes were 28.2 percent, 12.9 percent, 12.2 percent, 7.9 percent, and 7.7 percent, respectively.

    GlycoMimetics, a 10-year-old, Gaithersburg, Md.-based clinical-stage biotech company that is developing treatments for orphan diseases, filed to go public on Friday. The company’s biggest shareholder is New Enterprise Associates, which owns 75.2 percent of the company. Genzyme Corporation owns another 11.6 percent. The company is looking to raise up to $86 million.

    Mavenir Systems, an eight-year-old, Richardson, Tx.-based company focused on mobile communications infrastructure, filed to go public on Friday in an effort to raise around $85 million. Its biggest shareholders include North Bridge Venture Partners, Austin Ventures, Alloy Ventures, August Capital, and Cisco Systems, which own 24.5 percent, 23.1 percent, 17.1 percent, 16.3 percent, and 10.9 percent of Mavenir, respectively.

    Karyopharm Therapeutics, a four-year-old, Newton, Mass.-based cancer drug company, also filed to go public on Friday. Karyopharm’s biggest shareholders include Chione, Ltd., which Karyopharm’s CEO has described as a Cyprus-based investment vehicle for an unnamed individual. Chione owns 46.8 percent of the company. Other major shareholders include Plio Limited, which owns 14.6 percent, Foresight Capital, which owns 9.4 percent, and Delphi Ventures, which owns 8.2 percent. Karyopharm is looking to raise $80 million.

    ———

    People

    Jeff Haughton, a 15-year veteran of Goldman Sachs, who rose through the ranks to become co-head of Goldman’s Global Financial Technology group, has left to join 12-year-old FT Partners, a boutique bank in San Francisco that focuses exclusively on financial services and technology. Haughton’s title is managing director.

    ——–

    Happenings

    ——–

    Starting today in New York, the New York City Economic Development Corporation and the US Israel Business Council will be partnering for a few days to present 14 Israel-based startups to early-stage investors. More information here.

    ——–

    Job Listings

    Earlier this year, Microsoft co-founder Paul Allen’s investment arm, Vulcan Capital, opened a new office in Palo Alto. Now, it’s looking to hire an associate director to help manage the team’s existing investments and support and identify other investment opportunities. Candidates have to have a tech background and/or investment management experience at a venture capital firm or a related business. Abhishek Agrawal, a former principal at General Atlantic, heads up the office.

    ——–

    Essential Reads

    You’ll probably never read a better story than this about the iPhone.

    In San Francisco, entrepreneurship operates on a “much more campaign-based model, where you’re going to crush it for a few years and then be absent for a while,” venture capitalist Roy Bahat tells New Yorker writer Nathan Heller, in this newest examination of the city’s ballooning power.

    New York isn’t done with Airbnb. The state’s attorney general has now subpoenaed data about all Airbnb hosts within New York to determine how many are violating New York law, and Airbnb is supposed to turn over the data today, reports The Verge.

    ——–

    Detour

    How realistic is “Homeland”? When it comes to Carrie, pretty realistic, actually, says a former CIA agent, weighing in on last night’s episode.

    The broken lives of Fukushima in pictures.

    “It’s Decorative Gourd Season, Mother*#%#ers.”

    ——–

    Retail Therapy

    For the cultural anthropologist in your life, here’s an attractive book that documents the fashion, food, and interiors of airlines in different countries across the years.

    Check out this very elaborate chart designed to help you find beer based on what you already like. (If you’re really serious about beer, you can order a framed copy for 90 smackers.)

    ——–

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

    Connie

  • Dick Costolo’s Joke Bombs, on Twitter

    Dick-Costolo-002Over the weekend, Twitter CEO Dick Costolo finally did something that millions of Twitter users have done before him: He tweeted a comment that’s attracting unwanted attention. 

    The tweet was prompted by a New York Times report that Twitter has just one woman among its top officials. The story includes comments from academic Vivek Wadwha, who ascribed Twitter’s gender imbalance to “elite arrogance” and the “same male chauvinistic thinking” that permeates Silicon Valley. Costolo took to Twitter Friday night to call Wadwha the “Carrot Top of academic sources.”

     

    Coming from anyone else, the tweet might have been mildly amusing if a bit mean-spirited — typical Twitter fare, in short. Coming from Costolo, it was a surprising misstep. Twitter is in its quiet period. Within weeks, it will be a public company. So why not just keep quiet until then?

    In shooting the messenger and not addressing the message itself, Costolo also inadvertently helped feed people’s worst perceptions of Twitter, including that it’s not always a friendly place to hang out. As Josh Constine observed in a recent TechCrunch piece, many users already avoid or abandon Twitter because of its competitive undertones and the pressure they feel to be “thought leaders.”

    Half a day after Costolo published his tweet, one such thought leader, the blogger-entrepreneur Anil Dash, decided to challenge him on it. Tweeting to his 477,525 followers, Dash said that he was “sorely disappointed to see @dickc respond defensively to criticisms of industry sexism. Why not just lead, as Twitter does on free speech?”

    After a few defensive exchanges with Dash and others on the topic, Costolo suggested that he’s very mindful of the gender issue at Twitter, tweeting: “I *think* I have an acute understanding of the topic & host of related issues. Of course, proof is in deeds.”  (In a display of deference to Costolo that has also become de rigueur among Twitter’s most astute users, Dash “favorited” each of Costolo’s responses before responding to them.)

     

    Whether there will be lingering damage from Costolo’s tweet remains to be seen. Plenty of people have lost their jobs over less, but Twitter doesn’t seem inclined to ditch its star CEO any time soon.

    As for Carrot Top, a comic long known for his red hair and his use of props, no one yet knows how he feels about being dragged into the conversation. His publicity team didn’t respond to questions sent to them yesterday.

    It’s worth noting that Costolo himself once tried to be a stand-up comic, an effort that led to zero job offers, as he shared during an on-stage interview in May. “It was one part of [my career] strategy,” he’d said, as the crowd erupted with laughter.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Related articles

    Connie

    ,
    , ,

  • StrictlyVC: October 4, 2013

    110611_2084620_176987_thumbnailGood morning! Hope you’re in for an outstanding Friday. As always, I’m at connie@strictlyvc.com if you’d like to gossip or talk shop; to sign up for the newsletter, you can click right here.

    ——-

    Top News in the A.M.

    It’s going to be all Twitter all day (and probably all month), so let’s jump right into it. Here’s Twitter’s S-1, made publicly available for the first time yesterday. Here’s its letter to investors, and here’s the best piece I’ve read about its upcoming offering so far.

    Speaking of Twitter, what follows is a feature on one of Twitter’s early investors (Institutional Venture Partners, aka IVP) that I’d promised a couple of days ago. IVP doesn’t qualify as one of Twitter’s “principal shareholders,” unlike Benchmark Capital, Spark Capital, Union Square Ventures, DST Global and Rizvi Traverse Management, all of which own at least 5 percent of the company. But IVP did co-lead Twitter’s $35 million Series C round in January 2009, so it’s probably safe to say that if Twitter’s public offering does well, IVP will make out handsomely, too.

    ——-

    The Rise of Old-Fashioned IVP

    When Twitter goes public shortly, you can bet it will be a proud moment for Institutional Venture Partners. But it will be icing on the cake for its investors. Already, 95 of IVP’s 300 portfolio companies have gone public, and IVP’s 32-year internal rate of return (dating back to its 1980 founding) is a stunning 43.2 percent.

    Interestingly, IVP has pulled off this hat trick by operating in as proudly an old-fashioned manner as possible.

    Unlike many of its peers on Sand Hill Road, for example, IVP’s walls aren’t filled with contemporary art but rather dotted by the same, framed antique prints and maps of Santa Clara Country that have hung there for years.

    By design, IVP doesn’t have celebrity investors. Its oldest partner is Norm Fogelsong, a former programmer at Hewlett Packard who joined IVP in 1989 and has remained virtually unknown outside of venture capital circles ever since.

    IVP also eschews the popular wisdom that operators make the best venture capitalists. In a recent sit-down, Fogelsong calls venture an “apprenticeship business that you learn over time.” In fact, unlike many firms that cycle their associates out the door after a few years, IVP sends them off to business school, then brings them back and promotes them.

    “Assembling a multi-generational team is one of the secrets to our success,” says Todd Chaffee, the IVP general partner who has largely assembled IVP’s current team of six general partners — along with its bench of associates, principals and vice presidents. “It gives us different eyes on every deal, and combines the energy and hustle from the younger team with the experience and insights of the older people.”

    Yet there are other ways in which IVP has distinguished itself from the pack.

    Though its investments used to run the gamut, the firm decided in 2000 to focus on one area almost exclusively: later-stage companies with between $10 million and $100 million in revenue. Likely, the move has paid off better than the firm could have imagined. During the go-go dot com era, emerging companies with between $10 million and $30 million in revenue could go public with the help of a boutique bank. But today’s companies need revenue in the $100 million range to go public, meaning they often need late-stage capital from firms like IVP.

    More, unlike some industry peers that have collected billions of dollars from their limited partners in recent years, IVP has grown steadily, its fund sizes slowly expanding as its commitments to later-stage companies have grown. Over its last five funds, IVP has raised $225 million, $300 million, $600 million, $750 million, and $1 billion, a sum it closed on last year.

    The money still adds up. Three billion dollars of the $4 billion that IVP has raised in its entire history has poured in over the last 13 years. But Fogelsong shrugs off any suggestion that it could jeopardize IVP’s continued ability to deliver big returns. “If you’re going to be a late-stage investor, investing $30 million at a time, you can’t do that with a $100 million fund.”

    Which raises one final point. IVP makes just 10 to 12 investments annually, each chosen from the pool of roughly 2,000 companies it sees each year. Pacing itself means turning down some attractive deals. But sounding every bit the Stanford engineering student he once was, Fogelsong says the “idea is to make three to five times our money in three to five years, for a 41 percent internal rate of return. We don’t care how much of a company we own. What we want is to get our capital deployed properly in the best companies at a proper valuation.”

    Fogelsong shoots me a confident smile. “We have a very tight, well-defined investment strategy,” he says.

    It’s not not flashy. It’s not novel. Very plainly, though, it works.

    JamBase

    New Fundings

    9Slides, a two-year-old, Redmond, Wa.-based company that makes online presentation software, is raising $1 million in debt, according to an SEC filing. Earlier this year, the company raised $500,000 in seed funding from 500 Startups and individual investors, including Terrapass co-founders Karl Ulrich and Tom Miner.

    Gobstopper, a year-old, San Francisco-based company whose e-learning tools help educators create questions and quizzes within the text of a digitized assignment, has raised $1.5 million in a round led by Relay Ventures, according to an SEC filing.

    Koality, a year-old, San Francisco-based company whose tools helps engineers test their products, has raised $1.8 million in seed funding led by Founders Fund. Other investors in the round include Webb Investment Network, Index Ventures, UJ Ventures, Felicis Ventures and numerous angel investors.

    SimplyInsured, a year-old, Mountain View, Calif.-based company that helps consumers and businesses review competing health insurance plans to estimate their out-of-pocket costs, has raised $750,000 in seed funding from Y Combinator, along with a line of individual investors.

    ZoomCar, an India-based car rental company, has raised an undisclosed amount of seed funding led by Empire Angels of New York. Other investors in the round include Funders Club, Basset Investment Group and Lady Barbara Judge, the former SEC commissioner. The company has raised $1.6 million to date, including from former Treasury secretary Larry Summers.

    ——-

    Exits

    Cue, a three-year-old, San Francisco-based company that makes a personal assistant app, has been acquired by Apple for between $40 million and $60 million, reports TechCrunch. The company had raised $4.7 million from Sequoia Capital, Lerer Ventures, Index Ventures, and SV Angel among others.

    AdReady, a seven-year-old, Seattle-based online advertising company that had raised $17.8 million over the years, has been acquired by CPXi, a digital media holding company. Terms of the transaction weren’t disclosed, though the companies said that AdReady will operate as an independent division of CPXi. AdReady’s investors include Madrona Venture Group, Bain Capital, and Khosla Ventures.

    ——-

    IPOs

    Goldman Sachs has jumped to the top of the U.S. technology media and Internet IPO rankings this year, with Morgan Stanley second, says Bloomberg.

    ——-

    People

    OnDeck, a six-year-old, small business lender with offices in New York, Virginia and Colorado, has named Aimee Fearon as VP of financial planning and analysis, and Lorna Hagen as VP of people operations. Fearon comes to Ondeck from Clear  Channel Media and Entertainment, where she was VP of finance; Hagen joins from  where she served as VP of finance. And, prior to joining OnDeck, Hagen was at Ann Inc., the parent company of Ann Taylor and Loft, where she was VP of human resources.ANN INC., where she served as VP of Human Resources. Ondeck has raised more than $100 million over the years, including from RRE Ventures, First Round Capital, Google Ventures, SAP Ventures, and Institutional Venture Partners.

    ——–

    Job Listings

    Comcast Ventures, the venture arm of Comcast Corporation, is looking for an an associate in New York City. You can learn more here.

    ——–

    Essential Reads

    Vanity Fair’s New Establishment is out and it’s boringly predictable as always yet impossible not to read. In one interesting twist, Vanity Fair threw Zynga founder Mark Pincus overboard this year but included his wife, Ali Pincus, cofounder of the online home marketplace One Kings Lane. Pincus, writes Vanity Fair, “has long played second fiddle in the tech press to her husband.” Expect that to change if One Kings Lane eventually stages a more successful IPO.

    When Twitter goes public, one of the biggest winners will be 47-year-old financier Suhail Rizvi, who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his picture from the Internet, says Reuters.

    Claire Cain Miller of the New York Times reports on a very interesting detail in Twitter’s filing. Though cofounder Evan Williams relinquished day-to-day control of Twitter two years ago, he managed to hold on to all the voting rights associated with the shares owned by cofounder Jack Dorsey. (Dorsey, readers likely recall, was pushed out of the company in 2008, but rejoined it the same month that Williams left.)

    ——–

    Detour

    Your status updates give away your gender and, for the most part, your age, according to the largest ever study of language use and personality by researchers at the University of Pennsylvania.

    Here’s a fascinating look at the extensive help that American pig breeders provide to visiting farmers from China, where the average person consume 86 pounds of pork per year.

    Behind Siri, there is a real woman. This is that woman.

    ——–

    Retail Therapy

    You might feel a little like you’re wearing clown shoes, but running experts say these Hoka One Ones are great for absorbing shock.

    We just finished this collection of short stories and highly recommend it. (So does the New York Times.)

    Finally(!), an ice scraper for the car owner who means business.

    ——-

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

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    Connie

  • The Rise (and Rise) of Old-Fashioned IVP

    Reading-Ticker-Tape-ManWhen Twitter goes public shortly, you can bet it will be a proud moment for Institutional Venture Partners. But it will be icing on the cake for its investors. Already, 95 of IVP’s 300 portfolio companies have gone public. Already, IVP’s 32-year internal rate of return, dating back to its 1980 founding, is a stunning 43.2 percent. 

    IVP has pulled off this hat trick by operating in as proudly an old-fashioned way as possible.

    Unlike many of its peers on Sand Hill Road, for example, IVP’s walls aren’t filled with contemporary art but rather dotted by the same, framed antique prints and maps of Santa Clara County that have hung there for years.

    By design, IVP doesn’t have celebrity investors. Its oldest partner is Norm Fogelsong, a former programmer at Hewlett Packard who joined IVP in 1989 and has remained virtually unknown outside of venture capital circles ever since.

    IVP also eschews the popular wisdom that operators make the best venture capitalists. In a recent sit-down, Fogelsong calls venture an “apprenticeship business that you learn over time.” In fact, unlike many firms that cycle their associates out the door after a few years, IVP sends them off to business school, then brings them back and promotes them.

    “Assembling a multi-generational team is one of the secrets to our success,” says Todd Chaffee, the IVP general partner who has largely assembled IVP’s current team of six general partners — along with its bench of associates, principals and vice presidents. “It gives us different eyes on every deal and combines the energy and hustle from the younger team with the experience and insights of the older people.”

    Yet there are other ways that IVP has distinguished itself from the pack.

    Though its investments used to run the gamut, the firm decided in 2000 to focus on one area almost exclusively: later-stage companies with between $10 million and $100 million in revenue. Likely, the move has paid off better than the firm could have imagined. During the go-go dot com era, emerging companies with between $10 million and $30 million in revenue could go public with the help of a boutique bank. But today’s companies need revenue in the $100 million range to go public, meaning they often need late-stage capital from firms like IVP.

    More, unlike some industry peers that have collected billions of dollars from their limited partners in recent years, IVP has grown steadily, its fund sizes slowly expanding as its commitments to later-stage companies have grown. Over its last five funds, IVP has raised $225 million, $300 million, $600 million, $750 million, and $1 billion, a sum it closed on last year.

    The money still adds up. Three billion dollars of the $4 billion that IVP has raised in its entire history has poured in over the last 13 years. But Fogelsong shrugs off any suggestion that it could jeopardize IVP’s continued ability to deliver big returns. “If you’re going to be a late-stage investor, investing $30 million at a time, you can’t do that with a $100 million fund.”

    Which raises one final point. IVP makes just 10 to 12 investments annually, each chosen from the pool of roughly 2,000 companies it sees each year. Pacing itself means turning down some attractive deals. But sounding every bit the Stanford engineering student he once was, Fogelsong says the “idea is to make three to five times our money in three to five years, for a 41 percent internal rate of return. We don’t care how much of a company we own. What we want is to get our capital deployed properly in the best companies at a proper valuation.”

    Fogelsong shoots me a confident smile. “We have a very tight, well-defined investment strategy,” he says.

    It’s not not flashy. It’s not novel. Very plainly, though, it works.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

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    Connie

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