StrictlyVC: November 13, 2013

110611_2084620_176987_imageHi, and thank you for reading! Hope you have a wonderful Wednesday. I’ll be on a field trip with two dozen 6-year-olds, so if StrictlyVC seems a little off tomorrow, you will know why. In the meantime, reach out anytime at, or @cookie.


Top News in the A.M.

In terms of ad revenue, Google is now bigger than both the newspaper and magazine industries.

I Listened to the Winklevii So You Don’t Have To

Yesterday, at the New York Times’ annual Dealbook conference, financial columnist Andrew Ross Sorkin sat down with Cameron and Tyler Winklevoss, who long ago moved on from their battle with Facebook to become enthusiastic backers of the digital currency bitcoin.  

Little wonder: The twins began buying bitcoins at $9 apiece in the summer of 2012.  As of April, the value of bitcoins had shot to $120, making their investment worth $11 million. Fast forward to today, when bitcoins are trading at around $385 each, and you begin to appreciate the brothers’ fondness for this latest, financial phenomenon. Indeed, the twins – who hope securities regulators will let them move forward with an exchange-traded fund that would hold only bitcoins – say that they now believe bitcoins could enjoy up to a $500 billion market cap.

At the outset of yesterday’s interview, Sorkin offered that he’s still “perplexed” by bitcoin. Because a few of you might be, too, it seemed worth sharing some of the brothers’ insights.

* Speaking about the history of bitcoin, Cameron Winklevoss recalled the story of pseudonymous programmer Satoshi Nakamoto, who in 2009 released the source code of bitcoin to the world. “Effectively, it [created] a digital currency with a fixed set of bitcoins at 21 million that’s divisible out to eight decimal points,” he said. In an effort to simplify his point, Winklevoss added that there’s no reason to be concerned by the apparently limited supply of bitcoin, as it’s “divisible out to a large, large amount.”


New Fundings

Clearleap, a six-year-old, Duluth, Ga.-based company whose software is designed to solve and simplify the logistics of managing large video libraries of content, then distributing them to any platform or device, has raised $20 million in funding led by Susquehanna Growth Equity. The round also included existing investors Trinity Ventures and Noro-Moseley. The round brings the company’s total amount raised to $36 million, it says.

Legend3D, a 12-year-old, Carlsbad, Calif.-based digital media and visual effects company, has raised $3 million in new funding, according to a new SEC filing. The funding appears to bring the company’s total $30 million. Previous investors include Augustus Ventures and Northwater Capital.

MAG Interactive, a three-year-old, Stockholm-based app maker behind a highly popular, word-finding game called Ruzzle, has raised $6 million in Series A funding led by Nokia Growth Partners.

Maxta, a four-year-old, Sunnyvale, Calif.-based company, has raised $10 million from Andreessen Horowitz to “simplify and redefine enterprise storage by eliminating the need for specialized physical storage arrays,” reports the Wall Street Journal, which does a deep dive of Maxta here.

PasswordBox, a  year-old, San Francisco-based password startup that allows users to manage all of their online credentials from a single point of service, has closed a $6 million Series A round led by Omers Ventures. Other participants in the round included BOKU chief executive Mark Britto, and Facebook’s head of e-commerce, Lee Linden.

Scoopshot, a three-year-old, Helsinki, Finland-based on-demand photography marketplace, has raised $3.9 million in Series A funding from Conor Venture Partners and Finnish Industry Investment. By GigaOm’s calculation, the new round of funding brings the startup’s total funding to approximately $11 million.

SmartThings, an 18-month-old, Washington, D.C.-based company that helps people control items in their homes through their smartphones, has raised $12.5 million in Series A funding from Greylock Partners and Highland Capital Partners. The company had raised $3 million in seed funding last December from a long line of investors, including First Round CapitalSV Angel, and A-Grade Investments. SmartThings had separately garnered $1.2 million from nearly 5,700 backers on Kickstarter in the summer of 2012.

Solarflare Communications, an eight-year-old, Irvine, Calif.-based company that develops networking software and hardware, has raised a fresh $5 million in debt, according to an SEC filing. The company has now raised at least $30 million in debt, and another $150 million in equity, according to Crunchbase. Some of its venture investors include Intel CapitalAnthem Venture Partners, and Oak Investment Partners.

Solicore, a 12-year-old, Lakeland, Fla.-based maker of lithium polymer batteries, has closed what it’s calling Preferred Series A-1 financing. The new funding was led by New Science Ventures, which committed $4 million in capital. Previous investors R.R. DonnelleyRogers CorporationDraper Fisher JurvetsonBraemar Energy VenturesFirelake CapitalOPG Ventures and Hydro-Quebec CapiTech, also participated in the financing. Solicore has raised about $28 million in equity over the years and $5 million in debt, according to Crunchbase.

Visible Technologies, an eight-year-old, Bellevue, Wash.-based social media monitoring company, has raised $1.4 million in debt and other securities, according to an SEC filing. Visible has raised nearly $80 million from VCs over the years, including from In-Q-Tel and Ignition Partners.

Walkbase, a three-year-old Helsinki, Finland-based retail analytics company, has raised $3.86 in Series A funding from SBT Venture Capital and Olli-Pekka Kallasvuo, a former CEO of Nokia.


New Funds

Five-year-old FirstMark Capital, the New York-based early stage venture firm, announced yesterday that it has closed its third fund with $225 million in commitments. The fund is exactly the same size as the firm’s second fund, which closed in late 2011. You can learn more about the new fund here. FirstMark’s highest-profile portfolio company right now is Pinterest. FirstMark participated in the company’s $500,000 seed round in early 2010, and it has participated in each of Pinterest’s five, subsequent funding rounds, including its whopping $225 million Series E round, which was led by Fidelity Investments last month. That new funding pegged Pinterest’s current valuation at $3.8 billion.



GeNO Healthcare, a seven-year-old Waltham, Mass.-based company that’s developing inhaled nitric oxide products to treat pulmonary and cardiac diseases, filed an S-1 yesterday to raise up to $50 million. Its biggest outside shareholder is the publicly traded biopharmaceutical company The Medicines Company, which owns 13.9 percent of its shares.

The eight-year-old, Santa Clara, Calif.-based textbook rental company Chegg goes public today on the New York Stock Exchange. Yesterday, the company priced its shares at $12.50; it’s expecting to raise around $180 million, at a valuation of roughly $1.1 billion. Chegg has raised nearly $200 million over the years. Its biggest shareholders include Foundation Capital (it owns 6.5 percent), Gabriel Ventures (it owns 10.3 percent), Insight Venture Partners (it owns 14.3 percent) and Kleiner Perkins Caufield & Byers (which owns 11.7 percent)



Alan Dabbiere, the chairman of Airwatch, whose software helps companies securely manage their employees’ mobile devices, is interested in acquiring a similar business from BlackBerry, he told the Atlantic Journal-Constitution yesterday. He added that Airwatch hasn’t made a bid but that it’s been making “overtures” to Blackberry for nearly six months. In February of this year, 10-year-old Airwatch raised $200 million in funding in Series A funding from Insight Venture Partners.

Shane Smith, co-founder and CEO of VICE Media, tells Business Insider why going public may be the only exit for the fast-growing media company.

In Silicon Valley, there’s a new law firm in town. The Philadelphia firm Pepper Hamilton has just opened an outpost in Redwood City with three intellectual property litigators poached from Goodwin Proctor: Gregory BishopThomas Fitzpatrick, and Andy Chan.



Tomorrow, the L.A. Tech Summit gets underway in Santa Monica. The one-day conference will feature Mark Suster of Upfront Ventures, Factual founder Gil Elbaz, Tinder founder Sean Rad and L.A. Mayor Eric Garcetti. You can find out more here.

Meanwhile, today is the last day of Business Insider’s Ignition conference in New York. On the lineup this afternoon: Spark Capital’s Mo Koyfman, Samsung’s David Eun, and Gawker’s Nick Denton among others.

And yet another O’Reilly conference begins today. This time it’s Velocity, in London. You can find more details here.



CB Insights has published a bit of data around the increasing M&A interest that corporates like Cisco are showering on network virtualization startups. You can check out its findings here.


Job Listings

Adams Street Partners is looking for a Chicago-based associate to join its direct investment team, which plugs between $5 million and $30 million into late-stage venture capital and growth equity companies in healthcare and tech. This particular role is for a  pre-MBA candidate who will be expected to head off to business school or to one of the firm’s portfolio companies after a couple of years. To apply, you need two to four years of experience in investment banking, tech consulting, or with a venture or private equity firm.


Essential Reads

Apple maps: how Google lost when everyone thought it had won.

Elon Musk’s new blue sky idea: electronic supersonic airplanes.



John Cheever’s first short story, “Expelled.” (The story, written when Cheever was 18, fictionalizes his own expulsion from prep school.)

Washington, D.C. has the largest collection of “super zips” — neighborhoods that rank the highest on income and college education — in the U.S. “It’s a megalopolis of eggheads,” says a demographer.

Alexander Graham Bell’s first five phone calls.


Retail Therapy

Cycling can be a pain in the you-know-what; this $195 vulcanized rubber bike seat designed by IDEO can help.

Are you a rakishly handsome European money launderer who skis in Verbier? We have the perfect sweater for you if so.


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* On how bitcoins are digitally “mined,” Cameron Winklevoss noted that while an individual could, theoretically, mine a bitcoin, there are “a lot of mining outfits that are building huge data centers and computers with applications that are specifically built toward trying to mint bitcoins.” (Put another way, he suggests leaving the mining to the professionals.)

* On how they got into bitcoin investing, Tyler Winkelvoss said the brothers were on vacation in Ibiza (of course), when a friend of a friend suggested they look into the digital currency. They followed up and soon realized it was a “pretty incredible invention.” (I was hoping for more from this anecdote, but there you have it.)

* On why bitcoin might be used to transfer money, rather than good old-fashioned dollars, Tyler Winklevoss compared the technology to email. “Bitcoin is a protocol, and just like [email protocols]…allow you to send an email free and instantly, you can now send money from [the U.S.] to anywhere for free, as opposed to wiring money through Western Union [and] paying a 10 percent clip, or going through banking systems that take maybe three to five days. The old legacy rails of the banking system…are slow, inefficient, and costly. So the promise of bitcoin is to bring technology to financial services like it did for email…”

* On regulation around bitcoin — or the lack thereof — Cameron Winklevoss said, “That’s the point. It’s based on your trust in math and cryptography. It’s not based on trust in an individual, or the back-room dealings of, let’s say, the Federal Reserve… This is an open-source code; everyone knows what’s going on. The rules are set in stone.”

* On whether bitcoin features an anti-government strain, Tyler Winklevoss acknowledged that there is “definitely a libertarian strain [of individuals] that gravitates toward this, [along with] certain economic schools of thought…But it’s more a response to a financial system that’s frankly very buggy. I don’t think it’s a bet against the dollar,” he said. “I think it’s a healthy check and balance that makes it better.”

* Asked about concerns that bitcoin isn’t traceable and therefore likely to be used for illicit purposes, both twins smiled. (They’d been waiting for this softball.) Tyler Winklevoss quickly noted that “you can’t track cash,” either.

* On what happens if U.S. regulators determine that bitcoin is too risky, Cameron Winklevoss suggested that the U.S. will be left behind if they do. China, he noted, “has implicitly given its blessing to bitcoin,” including by allowing Chinese search engine Baidu to accept it as a form of payment. He also noted that bitcoin has been declared “legal, private money” in Germany and that other countries, including Belgium, see “no problem with it. Said Winklevoss, “If there’s a scenario where bitcoin is regulated out of existence in the U.S., I think bitcoin continues to thrive in other places in the world.”

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