StrictlyVC: January 29, 2014

110611_2084620_176987_imageHi, good morning, everyone!


Top News in the A.M.

President Obama made a push for an expanded high-tech manufacturing base in the U.S. during his State of the Union address last night, proposing the creation of six new high-tech manufacturing hubs this year.


A Silicon Valley Firm for Startups That are Eyeing Europe

Most Bay Area venture firms don’t pay much attention to Europe. That’s just fine with Next World Capital, a four-year-old, expansion-stage firm backed by the European clients of Next World Group, an affiliated investment advisory firm with offices in Paris and Brussels.

Though Next World’s cofounder Craig Hanson tells me these ties are a small part of the firm’s value to entrepreneurs, he admits that it’s a point of intrigue for at least 80 percent of the startups he meets with – a much higher percentage than he’d anticipated when endeavoring to start the firm. We talked recently in the firm’s airy office building in San Francisco (atop which sits one exceedingly nice roof deck). Our conversation has been edited for length.

You’ve kept your profile somewhat low until recently. Why?

We’ve been building the organization; we wanted to establish a reputation with entrepreneurs first. Now, we’re hiring and staffing up, and we’re in a good place to tell the story of who we are for the first time.

You’ve been investing a $200 million debut fund, writing initial checks of between $7 million and $12 million. How many companies have you funded so far, and have you had any early exits?

We’ve funded 10 companies and had two fantastic exits so far. We invested in [the private cloud management software company] DynamicOps [which sold in 2012 to VMWare for an undisclosed amount, after raising $16.3 million]. A year later, NexGen Storage, a flash storage system company that we’d gotten involved with [leading its Series B round] was approached by [It acquired NexGen, which had raised $10 million from investors, for roughly $120 million.]

How did you break into deals as a new fund in the Valley?

We did it by going directly to companies rather than rely on investor relationships. Once we had the meeting with the CEO…we were able to have in-depth conversations right off the bat. It wasn’t, “Give us your PowerPoint.” We’d say, “We’ve talked with 20 vendors, experts, and customers in the space and we’d love to trade notes.” At that first meeting, we were having second- or third-meeting [types] of conversations.

How strongly do you pitch CEOs on your European ties, including a Paris-based partner? Is your ability to help abroad a big or small selling point?

We thought it’d be useful in niche cases. We found instead that it’s a core, strategic priority for most companies, and that it’s happening much faster in their development than it used to. Particularly for cloud-based, SaaS companies, and mobile companies, they’re getting pulled to expand internationally much faster than companies used to.

What are early considerations these CEOs need to make as they look to Europe?

Well, among other things, you need to consider when to enter the European market, where specifically you go, and how you orient your positioning around the product, which, in a lot of cases, is slightly different than how you’d approach the U.S. market.

If you had to generalize, what are some of the distinctions between regions that U.S. entrepreneurs should know?

Germany is a very large and sophisticated market, for example, so you have to have credibility there, either by investing in employees and resources there, and/or having strong partnerships with credible local firms. If you’re trying to sell a sophisticated infrastructure software product or enterprise app into that market, trying to do that by just flying people out occasionally from a London hub isn’t going to be as effective. There’s a similar dynamic in France.

The Benelux countries or Nordic countries are more open and used to vendors not having a specific office in their country; they’re used to looking at vendors and relationships and partners across Europe.

It’s interesting. We tend to hear so much about the importance of expanding into Asia Pacific.

There’s more cultural and business familiarity in working with European markets. They’re very large economies, and in term of enterprise IT spend, it’s the next largest market to go after [following the U.S.].


New Fundings

BrightFarms, a three-year-old, New York-based company that designs, finances, builds and operates hydroponic greenhouse farms at, or near, supermarkets, has raised $4.9 million in Series B funding from a group of investors, including NGEN PartnersEmil Capital Partners, BrightFarms founder Ted Caplow. The company has raised $9.2 million to date, according to Crunchbase.

CloudLock, a seven-year-old, Waltham, Mass.-based cloud data security company, has raised $16.5 million in Series C funding led by Bessemer Venture Partners. Existing investors Cedar Fund and Ascent Venture Partners participated in the round, which brings the company’s total funding to around $28 million.

Cotap, a year-old, San Francisco-based enterprise mobile messaging service, has raised $10 million in Series B financing led by Emergence Capital Partners. Earlier backer Charles River Ventures also participated in the fundraising, which brings the company’s total funding to $15.5 million. Cotap’s founders are former Yammer execs Jim Patterson and Zack Parker. (I’d written a short profile about the company last year.)

Ensighten, a four-year-old, Cupertino, Ca.-based tags management company that helps sites track data for third party services, has raised $40 million in Series B funding from Insight Venture Partners. The round brings the company’s total funding to $55 million. Previous investors include Volition CapitalLead Edge CapitalFloodgateThe Halo Fund, and Eastern Advisors Private Fund.

Health Catalyst, a 5.5-year-old, Salt Lake City, Ut.-based data warehousing and analytics company, has raised $41 million in Series C funding existing investors, including Sequoia CapitalNorwest Venture Partners, and Kaiser Permanente Ventures. The company has raised nearly $100 million to date.

Fitbay, an eight-month-old, Copenhagen-based social network for clothes shopers, has raised $400,000 in seed funding from entrepreneur-investorJesper Buch and the Nordic venture capital firm Creandum.

GoCardless, a three-year-old, London-based service that enables smaller merchants to more easily set up interbank transfers for customers, has raised $7 million in Series B funding led by Balderton Capital. Others of the company’s backers include Accel Partners and Passion Capital. The company has raised $11.8 million altogether, according to Crunchbase.

GutCheck, a four-year-old, Denver-based company whose tools facilitate one-to-one dialogue between businesses and their target customers, has raised $4 million in funding led by Icon Venture Partners and existing investors. The money comes on the heels of a $4 million Series B round announced last May. GutCheck has raised $10 million altogether, including from Grotech VenturesHighway 12 VenturesVillage Ventures, andCrawley Ventures.

Madison Reed, a year-old, San Francisco-based e-commerce company focused on delivering salon-quality hair care products to consumers’ front doors, has raised $12 million in Series B funding led by Norwest Venture Partners, which was joined in the round by True Ventures and Maveron. Madison Reed had raised $3.9 million in Series A funding from True and Maveron last April. The company’s CEO and cofounder is Amy Errett, who spent several years as a partner at Maveron beginning in 2008 and who was previously CEO of the lifestyle company Olivia.

Medium, the 18-month-old, San Francisco-based collaborative publishing startup cofounded by Twitter cofounders Ev Williams and Biz Stone, has raised $25 million led by Greylock Partners, which was joined in the funding by a long list of investors, including: Google Ventures,BetaworksCode AdvisorsCAA VenturesScienceRon Conway,Chris SaccaPeter CherninTim O’ReillyMichael Ovitz, and Gary Vaynerchuk. The round marks the company’s first outside funding, reports Re/code.

Mercatus, a four-year-old, San Jose, Ca.-based company whose analysis and decision-making platform is designed for solar energy investors, has raised an undisclosed amount of Series A funding led by Trepp, an information, analytics and technology company. Other investors in the round include Vision Ridge PartnersAugment Ventures and Shah Capital.

PowerVision, a 12-year-old, Belmont, Ca.-based company thats developing an intraocular lens, has raised $20 million in Series D funding from earlier investors VenrockJohnson & Johnson Development Corp., MedtronicAdvanced Technology VenturesLexington Capitaland Frazier Healthcare Ventures. PowerVision plans on raising an additional $10 million as part of the Series D funding round. To date, the company has raised around $77 million.

Rocketmiles, a 14-month-old, Chicago-based travel booking site that offers customers incentives, has raised a $6.5 million Series A round led by August Capital, with participation from Peterson VenturesLink VenturesAtlas VentureChicago Ventures and entrepreneur-investor Sam Yagan.

Simple Energy, a three-year-old, Boulder, Co.-based company whose software platform aims to engage customers and drive energy savings through social game mechanics, has raised $6 million in Series B funding led by the Westly Group. The company has raised just less than $9 million to date, including from TechstarsVision Ridge PartnersGreen Tree EquityJove Equity Partners, and Valero Capital.

Yiftee, a three-year-old, Menlo Park, Calif.-based service for sending local gifts to friends, has raised $2.1 million in Series A funding fromTransPacific Ventures; Intuit co-founder Scott CookBurt Sugarman and his wife, TV personality Mary HartAsset Management CompanyBroad Strategy Fund; and Michael Levinthal. The company previously raised $1 million in seed funding in 2012.


New Funds

Hearst Corp., owner of Cosmopolitan magazine and part owner of ESPN, is making a bigger push into healthcare by creating a new division calledHearst Health, a division that reportedly consists of five healthcare-information companies, an innovation lab and a $75 million venture fund to back early-stage providers of health-care information products.



Another day, another company that’s eyeing the public markets. This time, it’s seven-year-old, Cambridge, Ma.-based online marketing company HubSpot. As the company told the Journal‘s Lizette Chapman, it saw $77 million in revenue last year, a 50 percent annual jump. The company has raised $100 million from investors, including General Catalyst PartnersAltimeter CapitalCross Creek CapitalCharles River VenturesSequoia Capital, and Google Ventures.

Fantex, a start-up looking to sell stocks tied to athletes’ future earnings, is “getting back in the game after taking a couple of hits,” reports Dealbook. The company said yesterday that it’s moving forward with a planned IPO linked to San Francisco 49ers tight end Vernon Davis.

Trevena, a six-year-old, King of Prussia, Pa.-based venture-backed biotech that’s developin treatments for pain and acute heart failure,lowered its proposed deal size for its IPO today, saying it planned to raise $60 million by offering 8.5 million shares at $7 per share, rather than its original plan to sell 5.8 million shares at a range of $12 to $14.



Wesley Chan, a general partner at Google Ventures since 2009 (and a Google project manager before that), has taken a role as an entrepreneur-in-residence at the organization, reports Fortune‘s Dan Primack. At the moment, Chan isn’t discussing what drove the move, saying instead to “stay tuned.”

Steven Chu, the former Secretary of Energy, just joined the board ofAmprius, a Stanford spinoff that’s developing high energy and high capacity lithium-ion batteries. (The company had announced a $30 million round of funding a couple of weeks ago.)

Facebook CEO Mark Zuckerberg spoke yesterday to an audience of engineers in San Jose, and his stated goals, says the New York Times, “paint a picture of someone who wants to do more than just be the king of social media. He wants to change the high-tech business, all the way to the guts of the data center. And he thinks he’s on his way to doing it.” (Illuminating, and short, piece.)


Job Listings

Orbimed Advisors, the New York-based, life sciences focused investment firm, is in the market for a senior associate, a job designed to last two to three years. In early November, Orbimed raised $735 million for its largest venture capital partnership to date.



In the third quarter of last year, VCs invested a record $1.12 billion across 150 U.S.-based mobile and telecom deals. CB Insights takes a look at where it all went.


Essential Reads

Airbnb will soon start adding new services to its home-rental business, said CEO Brian Chesky in an interview in Davos. He also said Airbnb won’t be going public any time soon. “We are not going public this year. We will do it at a time when it benefits the company. When we have a good reason.”

Here come the Google Glass videogames.



The cities where people own the fewest cars.

The “homeless billionaire” settles down.

In the spring of 2015, Alex Bellini will fly to Greenland, jump on an iceberg, and live there until it melts. (We fear this will not end well.)


Retail Therapy

Authentic, vintage gear from the 1980 Winter Olympic Games. Just in time for your big Olympics-themed party next month. Get some before it’s gone.


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