StrictlyVC: December 13, 2013

110611_2084620_176987_imageHappy Friday the 13th, everyone! StrictlyVC ran out of time for a planned column but you can find a bunch of good stuff here next week. In the meantime, we hope you’re in for a fun-filled holiday weekend.


Top News in the A.M.

The European Union today added to a string of recent warnings about the safety of using and investing in Bitcoin. The warning comes after China last week restricted its banks from using Bitcoin as currency because of concerns about money laundering and a threat to financial stability.



Tony Fadell: Patent the Hell Out of Everything

Earlier this week, at the Le Web Paris conference, Nest Labs founder Tony Fadell shared his unambiguous advice when it comes to patents. File for them early. File for them often. Then file some more.

As a longtime exec at Apple, where Fadell was instrumental in creating both the iPod and iPad, Fadell is accustomed to both filing for patents and getting sued by other patent holders. Indeed, faced with a patent infringement suit from Honeywell last year relating to Nest’s first product, a smart thermostat, Fadell hired Apple’s former chief patent counsel Richard Lutton as Nest’s own VP and general counsel.

Now fending off a second lawsuit relating to newest product, a smart smoke alarm, Fadell seems both incensed and ready for battle. (He says Nest already has 100 patents, 200 on file, and “another 200 that are going to be on file.”)

Fadell also had plenty of patent-related advice for other entrepreneurs (and their investors).

1.) Expect to be sued. It will happen. As Fadell noted, companies “don’t like some little upstart coming in [and] disturbing some business that they’ve had for 40 years … Instead of innovating, they litigate.”

2.) Expect unscrupulous tactics by incumbents. “We’ve had all kinds of weird things thrown at us — very dirty tactics, very dirty, because they’re trying to keep us out,” he said. (As one small example, he mentioned “plants” paid to give Nest’s products terrible customer review online.)

3.) Plan a very long time in advance for these lawsuits and other maneuvers. “When you see a lot of these Kickstarter and Indiegogo projects,” said Fadell, “there are passionate people behind them, but they don’t always necessarily understand what they’re getting themselves into. They’ll say, ‘Okay, I’m going to get in [to X market] and build [this one product].’ Well, you can build one of anything. To manufacture something and make 100,000 [exact replicas] is a whole other scale of problems you have to face.”

More, once you “get to market, you have all kinds of litigation issues and other competitive issues. You really have to plan a year or two in advance for what really could be coming,” said Fadell. “Most people are like, “Whoa, we got there, we made the goal!” [once their product is out the door]. No, you’re just getting started…and if you didn’t plant those seed early enough to protect yourself [from legal threats etc.], you’re going to [face] a whole world of hurt.”


New Fundings

Bitstrips, a six-year-old, Toronto-based company whose app allows users to create avatars, assemble comic strips, and then share the end product with friends, has raised $3 million in Series A funding from Horizons Ventures.

Estimote, an 18-month-old maker of wireless sensors used to detect the location of smartphones, has raised $3.1 million from Innovation Endeavors, Betaworks, Bessemer Venture Partners, Birchmere Ventures, and Valiant Capital Partners. The company, which has offices in Krakow, Poland, and Walnut Creek, Calif., has raised $3.4 million altogether.

Filip Technologies, a three-year-old, New York-based startup that makes a wearable “smart locator” and phone for kids, has raised $8 million in funding from Horizons Ventures, KEC Ventures and The Social+Capital Partnership.

Highlight, a two-year-old, San Francisco-based app that provides users information about the people around them, has raised $4 million in new funding led by Draper Fisher Jurvetson, which was joined by Greycroft Partners, Haystack, and individual investor Dave Morin. Existing investors Benchmark and Crunchfund also participated in the round, reports TechCrunch.

Koru, a young, Seattle-based education startup that’s targeting the “college-to-career” demographic, has raised $4.35 million led by Maveron. Other participants in the financing include Battery Ventures, First Round Capital and Andreessen Horowitz.

Norse, a 3.5-year-old, San Mateo, Calif.-based cyber security startup, has raised $10 million in Series A funding from Oak Investment Partners. Norse’s technology continuously collects and analyzes real-time Internet traffic to identify the sources of cyber attacks and fraud.

Oculus VR, 18-month-old, Irvine, Calif.-based company that produces virtual reality goggles for video games, has raised $75 million in funding, led by Andreessen Horowitz. Other investors in the round include previous investors Spark Capital, Matrix Partners, and Formation 8. VentureBeat has much more on the giant round here.

Phononic, a four-year-old, Raleigh, N.C.-based company whose thermoelectric semiconductor chips capture waste heat and convert it into usable electric power, has raised $21 million in Series C financing. Beijing-based Tsing Capital led the round with participation from National Bank Financial and existing investors Venrock and Oak Investment Partners. The company has raised roughly $33 million to date from investors., a nearly four-year-old, Fort Worth, Tex.-based ad tech company, has raised $16 million in new funding, led by Frontier Capital. Contour Venture Partners also participated in the financing, which brings’s total funding to $22.3 million, according to Crunchbase., an eight-year-old, Santa Monica, Calif.-based car pricing information and analysis website, has raised $30 million from Vulcan Capital. The company has raised a stunning $350 million to date, including from Anthem Venture Partners, Upfront Ventures,Capricorn Management, Passport Capital, and Allen & Co.

Zubie, an 18-month-old, Charleston, S.C.-based startup that makes a “connected car” app that allows users to track and share their location with others, has raised $10 million in Series A funding. Investors includeCastrol innoVentures, Comporium and OpenAir Equity Partners.


New Funds

Dell Ventures is launching a new, $300 million venture capital fund called Strategic Innovation Venture Fund to focus on storage, cloud computing, big data, security, mobility and next-generation data center companies, reports Venture Capital Dispatch. A previous, $60 million fund established in 2012, Dell Fluid Data Storage Fund, is being folded into the newer pool.

LiveOak Venture Partners, a three-year-old, Austin, Tex.-based venture firm, has so far raised $64.3 million of a fund that is targeting $100 million, according to an SEC filing. LiveOak was cofounded by Venu Shamapant and Krishna Srinivasan, both of whom were most recently general partners at Austin Ventures. A third cofounder, Ben Scott, was previously a venture partner at Austin Ventures. LiveOak has already made numerous investments; its newest portfolio company is NSS Labs, which analyzes information security products. The Austin-based company raised an undisclosed amount of Series A funding from LiveOak earlier this month.



Two high-profile VCs at Accel Partners are cutting back their roles, reports Reuters. Kevin Efrusy, whose profile soared after bringingFacebook to the attention of the firm, won’t be a managing member of Accel’s next venture fund, saying he wants less involvement in making decisions at the firm level. “I’m here, I’m doing investments, I’m not retiring. I’m working full-time,” he told Reuters. (Asked for more detail about the surprising news, Efrusy told StrictlyVC that there’s “not much more to talk about beyond what’s in the report.”)

Theresia Gouw Ranzetta, who joined Accel 14 years ago, has told her portfolio start-up companies that she, too, will pass on a managing member role with the firm’s next fund. She’ll also stop making new investments. Ranzetta didn’t respond to a request for comment from StrictlyVC, but a source told Reuters that Ranzetta was dialing back her involvement because she wanted more free time. Either way, as the Reuters report observed, the move places Accel in the company of many other venture firms without a female managing member.

Top Google executives saved millions of dollars by flying their private jet fleet on discounted fuel purchased from the federal government that they weren’t entitled to buy, says the inspector general of the National Aeronautics and Space Administration. Apparently, the execs were authorized to buy the discounted fuel for government business, but instead, for six years(!) they were allowed to purchase it for private flights, too.

Michelle Lee, a former deputy general counsel and head of patents and patent strategy at Google, has been chosen to run the U.S. Patent and Trademark Office beginning next month, says the agency. Lee is currently head of the USPTO’s Silicon Valley outpost.

Steve Mollenkopf, the COO of Qualcomm, will become the company’s CEO in March, the company has announced. As TechCrunch observes, the news comes hours after a Bloomberg report said Microsoft was considering Mollenkopf as CEO.


IPOs, the seven-year-old, Waltham, Mass.-based platform that connects families with caregivers, has filed to go public. The company, which is listing on the NYSE, expects to raised $80 million. Over the years, has attracted more than $100 million in venture capital, including from Matrix Partners (which owns 22.2 percent of the company), Trinity Ventures (14.4 percent), New Enterprise Associates (13.4 percent), and Institutional Venture Partners (10.2 percent)., the 15-year-old, Mountain View, Calif.-based online coupon company, plans to go public next year and has picked Goldman Sachs Group to lead the offering, says Bloomberg. In a $200 million round in 2011, was valued at $1 billion, says one Bloomberg source. The company’s backers include Passport Capital and Greylock Partners.

Nimble Storage, a five-year-old, San Jose, Calif.-based company that sells hybrid flash/disk storage arrays to enterprises, begins trading on the public market today. The company had raised roughly $80 million in venture funding over the years, including from Accel Partners, Lightspeed Ventures Partners, and Sequoia Partners. A proud Jim Goetz of Sequoia writes here about Nimble’s “bet-the company pivot.”


Job Listings

Andreessen Horowitz is looking for a corporate development partner to join its Sand Hill Road offices. The job involves identifying and managing relationships with senior corporate, strategy, and M&A officers at major tech companies, along with helping the venture firm’s consumer Web startups with their corporate development activities. Applicants should have 10 years of corp dev (or similar experience), along with a strong network in Silicon Valley and beyond.



CB Insights has published a list of the 26 private tech companies that are now valued at $1 billion or more, including Airbnb and Palantir Technologies. Forbes ports them into a snazzy slideshow.

Pitchbook has looked at the 14 fund-of-funds that closed on between $500 million and $1 billion in 2005, finding that the median IRR of the group is 5.10 percent. The top performers based on IRR are Adams Street Partnership Fund 2005 US, Mesirow Private Equity III, andSiguler Guff Distressed Opportunities Fund II.


Essential Reads

Yesterday, Instagram introduced a new app feature that enables people to receive private (or “direct”) photos both from friends and complete strangers. As Time observes, that means one thing, and we’re pretty sure you don’t want to see it.

Real-time information streams are here to stay, but people are beginning to like them less, suggests Alexis Madrigal of The Atlantic, noting that we may have seen a tipping point this year.



The Hollywood Reporter spends a couple of hours with longtime publicist Pat Kingsley, the entertainment industry’s once-most-feared woman. (Great profile.)

In leased mansions, apartment buildings, and converted residential hotels, tech employees are quietly living in communes all over San Francisco.

Want to live longer? Eat nuts.


Retail Therapy

Twenty-five hundred bucks is a bit much for a toboggan, though we might make an exception for this incredibly sleek, high-performance, carbon fiber Snolo Sled.

We love the aesthetic of Filson, though $130,000 for a Jeep seems — how to say it? — ambitious. Even with those spiffy Horween leather seats.


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