StrictlyVC: November 5, 2013

110611_2084620_176987_imageHappy Tuesday morning!  Please forgive any and all typos; StrictlyVC is a little zonked, having attended a fun dinner last night flanked by Carl Ledbetter, a creative director of Xbox industrial design, and Bernhard Seefeld, the product management director of Google Maps. Both are speaking at a GigaOm conference in San Francisco today, by the way. You can find details about the event below.


Top News in the A.M.

It’s election day. Don’t forget to vote.

How the Washington Post knows the NSA had access to internal Google and Yahoo cloud data, despite the agency’s denials.


NEA’s Ravi Viswanathan on the Firm’s Concerns, Processes, and Next Big Fund

New Enterprise Associates may be big, but it isn’t unwieldy. Not according to the picture painted by Ravi Viswanathan, who joined NEA nine years ago from Goldman Sachs to co-head the firm’s growth equity effort. I sat down with Viswanathan last week at the expansive Sand Hill Road offices of the 35-year-old firm, which has raised $13.3 billion over its history, including $2.6 million it raised for its 14th fund last year. (It’s one of the largest funds in venture capital history.)

We chatted about where the firm has seen some of its biggest hits in recent years (think WorkdayTableau SoftwareCvent); why it hasn’t made a single late-stage investment in 2013; and how the organization — which employs more than 100 people, including 12 general partners — decides on a deal. Our conversation has been edited for length.

NEA does deals of all sizes out of a single global fund. What’s its investing range?

We’ll do a $200,000 seed deal, [involving] two guys out of a Stanford class, all the way to a $50 million to $75 million check. We’ve written $100 million checks a couple of times – probably about 10 years ago, including for a semiconductor investment. But if I look at the last 10 growth deals, I’d say our sweet spot is in the neighborhood of $25 million to $50 million.

You have offices in Silicon Valley, Washington, D.C., China and India. How much of your fund are you investing abroad?

We invest up to 25 percent [abroad], though in the last five years, the number is less than 20 percent, because there’s been so much going on in the U.S. and, at the same time, there have been political and economic headwinds in China and India.

How much consensus do you need to make an investment? Can you ever act autonomously?

No, ultimately everything goes to the full partnership. Some of the smaller deals may occasionally get delegated [to a smaller group] but for growth deals, because it’s bigger checks, they always go up [to the general partnership for approval].

How many votes do you need to get a deal done?

You need a quorum; you need seven or eight partners to vote on it. But usually, if there’s more than one or two no’s, the deal almost never gets done. We don’t have a hard and fast blackball rule, but if there are serious reservations, we just [back off].

As a firm, we have off-sites four times a year to spend time together, so the East Coast and West Coast knows each other really well; we’re very integrated. So if a partner calls me and says, “Here are three things that really bother me about the deal you presented,” it helps you arrive at the right decision. Of course, sometimes you have to say, “This is a great investment; we should go for it.” And we’re trusting enough of each other that if someone has that much conviction, [the others can be convinced to go along].

You’ve made 24 growth investments in recent years, but none this year because of soaring valuations. Do valuations look more reasonable at the earlier financing stages? Do you have your pick of B stage companies to fund?

Series B deals concern us. The quality deals — those that have the great syndicate, the great team — you have to pay up for them. On the flip side , people have paid up and been validated, because the Series C round has been that much higher. But broadly speaking, I think valuations are pretty rich here and in New York. In Chicago, meanwhile, we’re seeing full valuations, but they aren’t astronomical.

Among the biggest venture capital firms, more seem to be adopting an agency type model. Would we see NEA embrace the same?

We have a quasi-agency model. When we invest, rarely if ever do you get one person; you get two, three, or four people: A GP, an associate, a principal. And those folks spend a lot of time with the company. Do we have an army of biz dev people and marketing people and recruiters? No. We’ve thought about it; we know some firms are having great success with it. But we haven’t made any decisions. What’s important to us is making sure that we’re convincing [founders] with data that we’re adding value above and beyond our peers.

You raised $2.6 billion last year. When will you be back in the market, and might NEA raise an ever bigger fund the next time around?

We’ll be back in the market in 2015, plus or minus a couple of quarters. As for size, we go in with a pretty open mind, but [$2.5 billion] is the default. The question we have is: what’s the right thing for the companies and the LPs? We’ve spent a lot of years figuring out this model. But every fund is a new discussion.


New Fundings

ADial Pharmaceuticals, a six-year-old, Charlottesville, Va.-based developer of therapies for addiction diseases and disorders has raised $1.8 million from Cato BioVentures, the venture arm of the Cato Research organization.

AetherPal, a four-year-old, South Plainfield, N.J.-based company whose software enables mobile carriers to remotely access users’ smartphones for customer support issues, has raised $6 million in Series A funding. The round was led by New Enterprise Associates and Point Judith Capital.

Bambeco, a four-year-old, Baltimore-based company that makes home furnishings and décor for eco-conscious customers, has officially raised $4.5 million in funding led by New Atlantic Ventures, with participation from Maryland Venture Fund and numerous angel investors. (StrictlyVC reported on this funding on October 18, based on an SEC filing, so if it looks vaguely familiar…)

ContaAzul, a three-year-old, Brazil-based maker of easy-to-use SaaS accounting and invoicing software, has raised an undisclosed amount of Series B funding led by its lead Series A backer, Ribbit Capital. Other participants in the round included Valar Ventures and existing investors Monashees Capital and Napkn Ventures.

CyPhy Works, four-year-old, Danvers, Mass.-based maker of Unmanned Aerial Vehicles (UAVs), has raised $7 million led by Lux Capital, with participation from General Catalyst PartnersFelicis Ventures and several undisclosed angel investors. CyPhy’s founder and CEO is Helen Greiner, one of the three founders of publicly-traded iRobot Corp.

Hinge, a 2.5-year-old, Washington, D.C.-based maker of a mobile dating app, has raised $4 million in Series A funding led by Great Oaks Venture Capital. Among the many other investors to participate in the funding were Social+Capital PartnershipRed Swan Ventures500 StartupsEniac VenturesFortify VenturesGraph VenturesMiddleland CapitalMilitello Capital and angel investors.

IID, a 17-year-old, Tacoma, Wash.-based company that protects data from cyber attacks, has raised $8 million in Series A funding from Bessemer Venture Partners. IID, a 65-person company that counts enterprises and government agencies among its customers, has never taken institutional funding before.

Lob, a months-old, Sunnyvale, Calif.-based company that calls itself the Amazon Web Services for printing (it will print and mail users’ content, as well as help developers integrate shipping and printing into their own apps), has raised $2.4 million. The money comes from a long list of angel investors, including Kevin HaleDalton CaldwellSam AltmanJoshua Schachter, and Alexis Ohanian. The company has previous raised money from Y Combinator, whose program it passed through last summer.

MediaSpike, a two-year-old, Mountain View, Calif.-based company that runs a marketplace for in-game product placement, has raised $5.2 million in Series A funding led by CMEA Capital. Other new participants in the round include Andreessen HorowitzInspovation Ventures, and individuals, including entrepreneurs Jonathan AbramsOthman LarakiRick Marini and Naval Ravikant. Existing investors to also participate included 500 StartupsGoogle Ventures, and Raptor Capital.

Midatech, a 13-year-old, clinical-stage biotech company based in Abingdon, England, has raised $15.2 million in new funding that boosts the total amount the company has raised to $24.9 million. The financing was led by Ippon Capital SA, a Geneva-based private equity firm. Midatech is focused on cancer and diabetes treatments.

NeuroSky, a nine-year-old, San Jose, Calif.-based company that sells body and mind monitoring and analysis software and hardware, has raised an undisclosed amount of funding from SoftBank Corp. As part of the investment, NeuroSky is forming a strategic partnership with SoftBank Mobile Corp.

Terrajoule, a four-year-old, Redwood City, Calif.-based startup, has raised $11.5 million. The money comes from strategic investor Air Liquide, along with early investor New Enterprise Associates and individual investors who include Jim Bochnowski and Craig Winkler. Terrajoule is an energy storage and solar startup whose technology employs an old-fashioned steam engine design. Greentech Media has more on the company here.

TicTasks, a four-year-old, San Francisco-based company behind a productivity app, has raised $1.1 million, including from Kapor Capital, according to an SEC filing.


New Funds

Apple Tree Partners, a 14-year-old, Princeton, N.J.-based venture capital firm that invests in pharmaceuticals, biotech, and healthcare services, has raised $13.5 million for an annex fund to its second fund, according to an SEC filing. The firm’s second fund, which the firm began raising in 2008, had targeted roughly $30 million, an SEC filing shows.



Yesterday, Twitter became the 16th pre-IPO company to boost its price range ahead of its launch this year, according to Dealogic.



Sold, an 18-month-old, Boston-based company that aimed to simplify e-commerce by handling the shipping of goods and their payment, among other things, has been acquired by Dropbox. Terms of the deal were not disclosed. Sold had raised just $1.2 million from investors, including Google VenturesGreylock PartnersMatrix Partners and Boston Seed. TechCrunch has much more on the acquisition here.

Velti, a 12-year-old, San Francisco-based company that was considered a mobile ad giant just two years ago, is selling off its mobile marketing businesses in the U.S., UK, and India to Blackstone‘s credit division GSO Capital Partners. Under terms of the deal, Velti has filed for chapter 11 while GSO has committed to provide up to $25 million to restructure the company. Velti went public in 2011 in an offering that valued the company at $800 million. By this summer, its market cap had dropped to roughly $70 million. Among its numerous problems, says Reuters: the company was “particularly hit by the meltdown in Greece and Cyprus, two countries where it wrote down more than $100 million in receivables in the second quarter ended June.”



MacKenzie Bezos doesn’t think much of Brad Stone‘s new book about her husband. Posting her feedback on Amazon (of course), she writes: “‘Bezos felt…’ ‘Bezos believed….’ ‘Bezos wanted….’ ‘Bezos fixated…’ ‘Bezos worried….’ ‘Bezos was frustrated…’ ‘Bezos was consumed…’ ‘In the circuitry of Bezos’s brain, something flipped…’ When reading phrases like these, which are used in the book routinely, readers should remember that Jeff was never interviewed for this book…” (In response, Stone notes he has interviewed Bezos numerous times for articles; he also interviewed 300 other people for the book.)

Lady Gaga and her longtime manager Troy Carter are splitsville, sources tell The Hollywood Reporter. The separation could negatively impact Carter as he raises a new $75 million venture capital fund, notes TechCrunch.

Anthony and Jay Robert Pritzker, brothers and heirs to the Hyatt Hotels Corp. and the Marmon Holdings’ manufacturing fortune, have turned from family feuding to deal-making.



It’s the first day of the GigaOm Roadmap conference in San Francisco, where you can catch Square’s Jack Dorsey and Nest’s Tony Fadell among others. Click here for more details.

It’s also day one of the App Developers Conference at the Los Angeles Convention Center (which could be good for poaching). You can learn more about it here.

Kicking off tomorrow, also in San Francisco, is Fast Company’s Innovation Uncensored conference, with an all-star line-up of its own that includes Pinterest CEO Ben Silbermann; Yelp CEO Jeremy Stoppleman; PayPal cofounder Max Levchin; and designer Hartmut Esslinger. You can check out the agenda here.


Job Listings

Amazon is looking for a business development manager to zero in on the venture capital community. Specifically, says the company, the right person will help the company identify “appropriate VCs to target” and influence to use Amazons’ AWS cloud services as the basis for their portfolio companies’ infrastructure. (Sounds a little evil, doesn’t it?) Among the preferred qualifications of the job: 10 or more years in business development or strategic partnerships, and experience within the VC industry, as well as the Silicon Valley startup ecosystem. The job is in San Francisco.


Essential Reads

Silicon Valley probably needs the rest of the nation more than the rest of the nation needs Silicon Valley, argues WSJ columnist Farhad Manjoo.

The three reasons Twitter didn’t sell to Facebook.

Google’s executive chairman Eric Schmidt said yesterday that the company plans to tap into Hong Kong’s “natively entrepreneurial” culture.



Want your employees to work harder? Try cash bonuses. They’re more effective than raises, say Harvard researchers.

A look inside the global junk trade.

The Atlantic investigates: Does Balthazar, the 16-year-old, 180-seat, New York brasserie need bathroom attendants? You bet your ass it does, says one longtime employee. Otherwise, customers “take five of [paper towels]. Nobody wants that. I give one, but if no one here, they take five.” Another common atrocity to occur when no one is monitoring the bathroom: “If there’s not somebody here, people come in, drop the paper, pee, no flushing,” whispers the employee. “Make kaka, no flushing. Very very very messy.”


Retail Therapy

It’s nearly winter. Time for a new glencheck blazer by Gant.

This book about “unnecessary” quotation marks is a fun “read.”

We’re not sure why anyone would acquire a giant motorcycle, but we howled, looking through images of this monster sitting beside a normal-size motorbike. (We’d say it’s thoroughly American, but the bikes are actually made in Eppingen, Germany.)


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