StrictlyVC: November 20, 2013

110611_2084620_176987_imageHappy Wednesday, and thank you for reading!


Top News in the A.M.

Tim Draper is leaving Draper Fisher Jurvetson, but not forever, he says, as was reported by Fortune yesterday afternoon. In an email to StrictlyVC last night, Draper said that Fortune “got it wrong. I am not leaving DFJ. Ever. I am just skipping a fund to do some work building Draper University and experimenting with new models for venture capital. I expect both my experimenting and my continued angel investing will provide great intelligence and deal flow to our team at DFJ. I will of course be an investor in any new fund we create.”

Asked whether he will now be more involved with his personal investing vehicle, Draper Associates, which focuses on seed-stage opportunities, Draper wrote, “I started as an angel investor, and I continued throughout my career. It helps with deal flow, intelligence, etc.”

Fortune reported yesterday that Draper isn’t the only one to be parting ways with the firm in the near future. According to its sources, cofounder John Fisher is also leaving, as are longtime managing directors Jennifer Fonstad and Don Wood and China investment chief Hope Chen. You can learn much more here. (Incidentally, StrictlyVC authored the now infamous cover story for which Draper posed as Captain America. For what it’s worth, it was the photographer’s last-minute idea, and Draper was very sporting about the whole thing.)


In VC, Going it Alone, with Plenty of Company

A growing number of venture firms have been springing up around a single general partner, including PivotNorth, led by Tim Connors; Acero Capital, led by Rami Elkhatib; Cowboy Ventures, led by Aileen Lee; and K9 Ventures, led by Manu Kumar.

Now add to the list Cindy Padnos, the lone GP of Illuminate Ventures, an Oakland, Calif.-based outfit that is today announcing a new, enterprise-focused, $20 million fund. In a call on Monday, Padnos said she was able to raise the new pool after investing a “few million dollars” in an earlier, proof-of-concept “Spotlight Fund” that has taken off.

Two of Spotlight’s five portfolio companies have been acquired: 3D game design platform Wild Pockets was purchased by Autodesk in 2010, and data and audience management platform Red Aril was acquired in 2011 by Hearst Corporation. (Terms of both deals remain private.) Meanwhile, the fund’s three other portfolio companies have been marked up considerably since Padnos invested. Among them: the SEO management platform company BrightEdge, which Illuminate backed as a Series A investor; the startup has gone on to raise nearly $62 million altogether, including from Battery Ventures, Intel Capital, and Insight Venture Partners.

Padnos – a Booz, Allen consultant turned operator turned venture capitalist – gives a lot of credit for her success thus far to a venture partner in Seattle and an advisory counsel of roughly 40 people whom she has assembled over the years.

She also believes she has struck on a strategy that clicks in a today’s market, investing in enterprise startups that are bootstrapped or angel financed but not quite ready for a large-scale Series A rounds.

Indeed, Padnos — who says her “sweet spot” is writing initial checks of $500,000 as part of $1 million to $3 million rounds — has already made several new investments out of her new fund: Hoopla, a company that makes “workplace gamification” software; Influitive, a marketing company that analyzes data around social media; and Opsmatic, the newest startup by former Digg CEO Jay Adelson.

Asked whether she is seeing any particularly interesting trends, Padnos tells me she’s most closely watching the “whole world of enterprise mobile.”

But the growing group of single-founder firms that Illuminate has joined is fairly interesting, too.


New Fundings

ALOHA, a two-year-old, New York-based company that makes nutritional supplements, has raised more than $4 million from a long list of investors, including First Round CapitalHighland Capital PartnersFF AngelKhosla Ventures and Forerunner Ventures. ALOHA’s funding comes just one month after a similar product, out of San Francisco-based Soylent, attracted $1.5 million in seed funding.

Apartment List, a two-year-old, San Francisco-based company that consolidates the apartment listings of numerous services into a vast, searchable database, has raised a $15 Million Series A investment round led by Matrix Partners.

August, a year-old, San Francisco-based maker of a “smart” lock for doors that can be controlled through a smartphone, has raised $8 million in Series A funding. Maveron led the round with participation from Cowboy VenturesIndustry VenturesRho Ventures and SoftTech VC. The company previously raised $2 million in seed funding from long line of angel investors.

FinanceIt, a three-year-old, Toronto-based company whose software platform enables its customers to offer point-of-sale financing to their own customers, has raised a $13 million Series A round from TTV CapitalInter-Atlantic Group, and Second City Capital.

LittleBits, a two-year-old, New York-based company that makes modular electronics that snap together for good-old user enjoyment, has raised a new, $11 million round of funding, according to an SEC filing that lists Joi Ito, True Ventures, and new investor Foundry Group. The funding appears to bring the capital that LittleBits has raised to date to around $15.5 million.



Chris Dixon, the angel investor-turned-VC, talked with investor-entrepreneur Semil Shah this past weekend about why he no longer tweets as actively as he once did. “I actually think Twitter has changed,” said Dixon. “Part of it is Twitter just got more popular…For me, the golden days of Twitter were 2010 maybe, 2011, where it was a bunch of early adopter/startup people…now, everyone realizes that if you say something wrong, it’s going to be excerpted and put on Business Insider…so I just think everyone is vastly more on guard, and it’s just not as fun.” (Click here to watch more of Dixon’s sit-down with Shah.)

Andy Rachleff, the former Benchmark GP turned CEO of Wealthfront, argues against being stingy when it comes to follow-on equity grants for employees. Here’s what he specifically suggests.



Yesterday, China‘s top securities regulator reiterated the country’s commitment to easing control over the IPO process, but he added that the government will intensify its audits of startups in order to prevent “more junk stocks.” (Reuters has much more here.) Last October, of course, the Chinese government banned IPOs because of volatility in the stock market and investor concerns over the financial reporting of some newly public companies.

Trevena, a six-year-old, King of Prussia, Pa.-based clinical-stage biopharmaceutical company whose lead therapy is an intravenous treatment for acute decompensated heart failure, is scheduled to go public today. The offering is expected to raise $75 million and establish the company’s market cap at around $290 million. Trevena’s biggest shareholders include Alta PartnersHealthCare VenturesNew Enterprise Associates, and Polaris Venture Partners.



Tier 3, a seven-year-old, Bellevue, Wash.-based enterprise cloud management startup, has been acquired by the Louisiana-based telecommunications heavyweight CenturyLink. Terms of the deal were not disclosed. Tier 3 had raised $18.5 million over the years from Intel CapitalIgnition Partners, and Madrona Venture Group.



Goldman Sachs Private Internet Company Conference gets underway in Las Vegas today. TechCrunch has its top-secret agenda, featuring the event’s speakers — who typically represent the startups that Goldman deems the most promising pre-IPO candidates. Unsurprisingly, the execs to present this year include Dave Goldberg of SurveyMonkey, Robert Hohman of Glassdoor, Carrie Dolan of LendingClub, Dave Gilboa of Warby Parker and, yes, Evan Spiegel of Snapchat.

USB‘s annual, three-day Global Technology and Services Conference rolls into its second day in Sausalito, Calif. You can find the agenda here.



According to CB Insights, all these investments in “quantified self” companies — startups whose technologies monitor consumers’ fitness and stress levels, among other things — are starting to add up. In fact, the research firm says venture investments in both hardware and software-related startups have reached $318 million over the last year. You can find more data on the trend here.


Job Listings

FT Partners, the San Francisco-based investment bank, is looking for an associate to join its SF office in a role that begins next July. According to the firm, associates are involved in “all aspects of originating and executing live transactions, including extensive financial modeling and analysis, company valuation, corporate and industry research, strategic analysis and recommendation, identification of business development opportunities, due diligence” etc. (You get the idea.) To apply, you need previous experience in investment banking, strategic consulting, venture capital, or in a similar industry that requires assigning value to companies.


Essential Reads

Let’s face it. We don’t know a single useful number about the hottest company in tech.

FacebookPinterest? Puh-lease. Venture-backed Wanelo is where the action is happening now, suggests Buzzfeed.

Touring the new, New York offices of payments startup Square.

It’s too soon to break out the champagne, but two separate but similar patent troll bills are moving their way up in the Senate and House of Representatives.



George W. Bush is a surprisingly good artist, judging by this portrait of his daughter’s cat, Eleanor.


Retail Therapy

Japanese company EntreX created a chip dispenser for people who get their arms stuck in Pringles cans. Alas, the dispenser was recently discontinued; apparently the market wasn’t big enough, which is unfortunate, as you could see the product being a good fit for members of Congress. (Zing!)


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