StrictlyVC: January 28, 2014

110611_2084620_176987_imageHappy Tuesday, everyone!


Top News in the A.M.

Indiegogo, the six-year-old, San Francisco-based, popular crowdfunding platform, has raised $40 million in Series B funding led by Institutional Venture Partners and Kleiner Perkins Caufield & Byers. (More in “New Fundings.”)


Futurist Paul Saffo: This Backlash is Just Beginning

In October 2011, I wrote a story featuring renowned futurist Paul Saffo, who voiced concern about the widening economic gulf between Silicon Valley and the rest of the U.S. — as well as the growing divide between the haves and the have-nots in the Bay Area itself.

“All my instincts as a forecaster tell me this has the feel of something very big happening,” he’d said. “I’m standing on the beach and noticing the water heading back out toward the horizon.”

At the time, everyone was having too much fun to pay much attention to some gloomy forecaster. Unfortunately, Saffo was right to be worried. San Francisco County and its neighboring counties, Marin and San Mateo, are now home to more millionaires per capita than anywhere else in the state thanks to the tech industry. The more troubling outcomes we’re seeing as a result of this wealth generation – the displacement of earlier residents, anxiety, and, now, protests – are just the tip of the iceberg, too, says Saffo, who I spoke with again yesterday. Our conversation has been edited for length.

There are so many dimensions to what we’re seeing right now. Where to start?

There are really three dimensions. One is that living in the Bay Area is more expensive than ever. Another is that post-Internet-bubble wealth is very different than the old money. In the ‘80s, the motto was “Show no chrome.” I can remember [Intel cofounder] Gordon Moore driving a beat-up station wagon forever. Though there’ve always been a couple of flashy types, if you had a lot of money, you didn’t flash your wealth.

The income gap wasn’t so great in the past, either. If you worked for Apple, you had a comfortable life, but you still owned a rancher in Cupertino. Now, money is going much further down into some of these workforces. An engineer at Google might be getting paid $5 million. So the wealth differential is greater; more people are wealthy, and because they’re coming into this money at a younger age, they don’t have the good sense to keep their mouth shut.

So what happens next?

In the short term, people who can afford it are going to continue to buy houses in San Francisco, and people who can’t will go elsewhere in the Bay Area.

That means that everyone will have longer commutes, including schoolteachers who can’t afford to live in San Francisco on their salaries. That means civil servants who’ve lived in San Francisco their entire professional lives.

Eventually, that could also mean Facebook and Google employees [who are less wealthy than their peers], as well as contractors who don’t have stock. This inequality has a certain unpredictable whimsy to it. It’s not just the haves and have-nots but the lucky and the unlucky.

How can we shift the momentum here, practically speaking?

There’s no one answer, but the big local companies really need to engage locally. There needs to be transportation for everyone; even you aren’t using public transportation, it’s in everyone’s interest to have it. They need to step up and do things that build strong community, including mixed communities of different wealth levels. You don’t want your schoolteachers or your police force living 50 miles away. I’d bet 70 percent of San Francisco’s firefighters already live in the East Bay. You do not want that in an earthquake.

Do you really think companies will go down that path?

I’m genuinely optimistic. I think Silicon Valley companies will eventually get very engaged in this issue at a corporate level and that their employees will get engaged, too. [Their employees] are basically decent people who haven’t considered themselves privileged or special. But all this attention is leading to self-reflection, and I think that will drive social entrepreneurship within these companies. Frankly, I think if these companies applied just a tiny fraction of the vision they apply to their business mission to social issues, we’d see dramatic results.

In the meantime?

Well, in the very long run, we’re going to have to have a national conversation about wealth redistribution. I’m not a Marxist but [Oxfam] just reported that the world’s 85 richest people own as much as half the world’s population. I’m a forecaster, and I know when something isn’t sustainable.


New Fundings

AutoGrid Systems, a three -year-old, Redwood Shores, Calif.-based analytics company focused on the energy industry, has raised $12.75 million in Series C financing led by a consortium of investors, including the European utility E.ON, along with existing investors Foundation CapitalVoyager Capital and others. The company has raised $21.8 million to date, according to Crunchbase.

AMCS Group, a decade-old, Limerick, Ireland-based software company that sells to the recycling and waste management industry, has raised $32.1 million in funding from Highland Capital Partners Europe.

CDI, a 33-year-old, Markham, Ontario-based company that refurbishes and sells IT equipment to schools, has raised an undisclosed amount of funding from H.I.G. Growth Partners, an affiliate of the private equity firm H.I.G. Capital.

Igenica, a 5.5-year-old, Burlingame, Calif.-based company that’s developing cancer treatment therapies, has raised $14 million in Series C extension funding. All major existing investors participated in the funding round, including The Column Group5AM VenturesOrbiMed Advisors and Third Rock Ventures. The company has raised slightly more than $70 million altogether.

Indiegogo, the six-year-old, San Francisco-based, popular crowdfunding platform, has raised $40 million in Series B funding led by Institutional Venture Partners and Kleiner Perkins Caufield & Byers. Earlier investors Insight Venture PartnersMHS CapitalMetamorphic Ventures and ff Venture Capital also joined the round, which brings the company’s total funding to $56.5 million.

Mixamo, a 5.5-year-old, San Francisco-based game animation technology developer, has raised $3.2 million in a mix of equity, options, and other securities, according to an SEC filing that shows a target of $3.7 million. The company had previously raised $8.7 million in mostly equity, including from Granite Ventures and Keynote Ventures.

MyActivityPal, a months-old, Seattle-based company whose mobile messaging and social networking app is slated to launch in April, has raised an undisclosed amount of Series A funding from Sameer Gehlaut, the chairman and co-founder of Indiabulls, an Indian business conglomerate headquartered in Gurgaon.

PricePanda, a two-year-old, Berlin-based price comparison site that addresses a number of South Asian markets, including Indonesia, Malaysia, and Singapore, has raised $3 million in funding from the German retail company Tengelmann Corp.reports TechCrunch. The company reportedly has close ties to Rocket Internet, the Samwerbrothers’ investing vehicle, though it has never official disclosed any funding from them.

Shockwave Medical, a five-year-old, Bellevue, Wa.-based maker of intravascular devices for patients with calcified cardiovascular disease, has raised $12.5 million in Series A funding led by Sofinnova Partners.

ToutApp, a 3.5-year-old, San Francisco-based sales lead software company, has raised $3.35 million in Series A funding led by Sigma West. Earlier investors, including Founder Collective500 Startups,Launch Fund and angel investors like Esther DysonEric Ries andScott Banister, also participated.

Upstart, a 20-month-old, Palo Alto-based funding platform that pairs investors with people who’ve finished college and are looking for relatively small amounts of money, is raising $2.5 million in debt, shows an SEC filing. Upstart, founded by former Google executive Dave Girouard, has raised $7.65 million in equity to date, including fromKleiner Perkins Caufield & ByersNew Enterprise AssociatesFirst Round Capital, and Google Ventures.

Yoyocard, a 1.5-year-old, San Francisco-based company that’s operating in stealth mode, has raised $960,000, according to an SEC filing that lists its target as $1.9 million. The form lists Christopher Gottschalk of Blumberg Capital and Joyce Kim of Freestyle Capital. Its CEO, Sean Safahi, has a background in payments industry marketing and product development. Yoyocard’s site says the service will debut this year.


New Funds

500 Luchadores, a Mountain View, Calif.-based seed fund focused on Mexico-based startups, has raised $2 million, according to an SEC filingthat shows the fund is targeting $5 million. The fund’s managing member is Dave McClure, the founder of the technology incubator and investment program 500 Startups.

Draper Triangle Ventures, a 14-year-old, Pittsburgh-based early-stage venture firm that backs both IT and healthcare companies, is opening two offices in Michigan, as it looks to establish a wider footprint in the Midwest; the firm is currently investing its third fund, a $75 million pool to which it hopes to add another $25 million. (The firm’s second fund closed on another $72.5 million.) Crain’s Detroit Business has more.

A “high” tech startup boom could grow around the pot plant, andEmerald Ocean Capital, an eight-month-old, Newport Beach, Calif.-based firm is aiming to help fund it. It just needs $25 million to get started.

We told you about the new fund of Silicon Valley venture capitalist Gen Isayama last Monday; now, BusinessWeek takes a closer look at Isayama’s plans.



LendingClub, the six-year-old, San Francisco-based peer-to-peer lending platform is planning to go public this spring, its CEO tells the WSJ. The company was valued at $2.3 billion when it last raised a round of capital last October, a $57 million secondary deal involving DST Global and Coatue Management. LendingClub has raised roughly $220 million altogether, including from its earliest investor, Amidzad Partners. Other investors include Norwest Venture PartnersCanaan Partners,Foundation CapitalMorgenthaler VenturesUnion Square Ventures,Google Ventures, and Kleiner Perkins Caufield & Byers.



Yahoo is in talks to acquire the 18-month-old, San Francisco-based business app developer Tomfoolery for about $16 million, say WSJ sources, who peg the price at $16 million. Tomfoolery has raised about $1.7 million from a long line of investors, including former Twitter engineer Sam Pullara and Andreessen Horowitz. The Journal suggests the hire would primarily be a talent grab. The company’s CEO is Kakul Srivastava, a seven-year veteran of Yahoo who helped manage photo-sharing site Flickr;

UserEvents, a two-year-old, Fredericton, Canada-based company whose flagship product, CxEngage, aggregates and processes customer feedback from different channels like social, web, mobile, and voice calls, has been acquired by LiveOps, the contact center and customer service company. Terms of the acquisition weren’t disclosed. Yesterday, LiveOps announced it had raised a fresh $30 million in debt funding. You can read more about the deal here.



Paul Palmieri has joined New Enterprise Associates as a venture advisor, the firm announced yesterday. Palmieri is the founder and former chairman and CEO of the Baltimore-based ad tech companyMillennial Media, founded in 2006. Palmieri announced his resignation from the company yesterday. Michael Barrett, a former Yahoo executive, replaced him. Millennial went public in March 2012, its shares priced at $13; after a promising debut, they began slipping and trade at $7.36 as of this writing.

Kleiner Perkins Caufield & Byers cofounder Tom Perkins talked yesterday with BloombergTV about his comparing the Bay Area’s simmering class tensions to Nazi Germany’s persecution of the Jews. Among other things, Perkins reiterated his feeling that the “creative 1 percent is threatened.” He also insisted that his firm co-founder Eugene Perkins would have agreed with his letter and its point.


Job Listings

Disgruntled LP readers, take note: Toronto-based Canadian Pension Plan Investment Board, which was managing close to $200 billion in assets as of last September, is looking for an associate.



China’s market is heating up. Venture capital firms invested in 106 deals in the third quarter of 2013, marking the busiest period of the year, according to DJX VentureSource. Deal flow in the fourth quarter was also 66 percent higher than in the same period a year earlier. More here.

Pitchbook tracks the 30 funds that raised between $100 million and $250 million in 2007 and finds that the median IRR is 12 percent and the top quartile IRR “hurdle rate” is 24.9 percent. The top performers, as of today, are: Avalon Ventures VIIIEmergence Capital Partners Fund II,Flagship Ventures Fund 2007 and Foundry Venture Capital 2007.


Essential Reads

Apple paid out $2 billion to developers in the first fiscal quarter of 2014. That’s three to four times the amount Apple paid developers during the same period last year, notes TechCrunch.

Re/code takes a much deeper look at DeepMind, Google’s newest acquisition.



Angry Birds and Dreamy Smurfs are watching you. (Yes, you.)

A school in New Zealand lets its students do whatever they want during playtime. Are American parents ready to endorse a similar policy here?

New York’s first $100 million apartment is coming soon, but it’s only been in the last decade or so that prices have reached anywhere near that price, observes Departures magazine.


Retail Therapy

Neat. Nearly 200 dog breeds in a single chart. (H/T: Maria Popova.)

Luxury car makers evidently want to strengthen their relationship with you. We showed you Bugatti’s $84,000 belt buckle a couple of weeks ago. Now, Bentley is getting into the home furnishings business, in partnership with the upholstered furniture company Club House Italia. Hey, as long as everyone’s throwing money around anyway, right? (We do kind of love this nearly $10,000 armchair from the collection.)


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