StrictlyVC: February 10, 2014

110611_2084620_176987_imageGood Monday morning! Welcome back.


Top News in the A.M.

This morning, Chinese e-commerce giant Alibaba offered to buy 72 percent of publicly traded AutoNavi Holdings, which holds a rare mapping license from the Chinese government. The unsolicited takeover bid is one of Alibaba’s biggest-ever acquisition attempts.


Big Data Hasn’t Hit CEO Searches, But It’s Coming

“People analytics,” applying predictive analytics to people’s careers, is here to stay. Perhaps the most recent indicator is LinkedIn’s brand-new acquisition of venture-backed Bright for $120 million — its biggest acquisition to date.

Bright uses machine-learning algorithms to recommend particular roles to job seekers. But plenty of other companies have sprung up with formulas to help with the hiring process. Evolv, a San Francisco startup, uses data science to advise companies on hiring and managing hourly workers. Knack, in Palo Alto, Ca., uses computer games to test cognitive skills, working memory, and risk aversion. And San Francisco-based Gild helps companies find software engineers.

Jon Holman, a renowned recruiter who has been placing VCs and CEOs at Silicon Valley startups for more than 30 years, thinks big data will eventually impact CEO searches, as well. (“Hopefully, I’ll be retired by then,” jokes Holman.) We talked Friday; our chat has been edited for length.

What’s one interesting example of how companies are using this science?

Take Marriott, the big hotel chain. It has a game that it uses, sort of like “FarmVille,” to hire kitchen managers. They have hundreds, if not thousands, of [these employees], so they’re trying to predict whether someone will be good at the job through this game, which requires them to keep six things in their head at the same time and moves faster as it progresses.

It seems like most startups using analytics or gamification are still targeting hourly workers. Is that true?

For now, these startups are largely peddling their technologies to companies like Walmart that are looking to reduce turnover by 1 percent, which is a huge cost savings. But that’s changing. More [companies] will say, “Geez, that worked so well here, let’s start to apply it to students in management training programs.” Then, “Let’s try this with mid-level executives and product managers and accounting managers and sales executives.” And it will work its way up the food chain. It’s hard to imagine that it won’t happen.

Will it reach the corner office?

I think so. It hasn’t come to CEO searches yet because the numbers aren’t big enough. No one is hiring lots of CEOs, so there’s no easy way to gather the right kind of data.

What would be a good starting point for a startup willing to try?

Well, when it comes to hiring CEOs, it all comes down to reference checks. No one has interviewed more senior execs than I have, and it’s impossible to know based on an interview if someone is honest, if they work hard, if they get along with other people. Any senior exec knows how to answer questions about their collaborative style. In fact, 98 percent of the people I interview make perfectly credible presentations.

Ultimately, you get the data you need by talking with the people they’ve worked with – not just the names that they give you but four or five others they didn’t. And you do that because most people will be 10 percent more positive about the person than they really feel, and they probably won’t tell you if the person is an alcoholic or has harassed someone in the workplace because they know that person won’t be hired.

Is there a way to institutionalize the types of questions you ask?

I’m not sure how to incorporate it into a software system, but the secret to reference checking is not to let people get away with generalizations. You’ll hear of someone, “Jon was really nice to work with.” You then have to ask that person: “How many bosses have you had?” If they’ve had 11, you say, “Obviously, you’ve liked some more than others. Was Jon the best boss you’ve ever worked for and if not, what differentiates him from the best boss?”

You force [the references] to do forced ranking, to come up with something that’s less good about someone they thought highly of. You’re forcing them into conversations about negatives. That’s the secret to reference checks.


New Fundings

Abe’s Market, a 4.5-year-old, Chicago-based online marketplace that helps makers of organic products sell their goods, has raised $10 million in funding led by Mistral Equity Partners, with the Israel-based crowd-funding platform OurCrowd participating, along with Beringea andBearing Capital. The company has raised close to $20 million to date, including from Index VenturesCarmel Ventures, and Accel Partners.

Alphaworks, a months-old, New York-based, still-stealth company has raised $1 million in debt, as part of a $1.5 million fundraise, shows an SEC filingBetaworks‘ CFO Joshua Auerbach is listed on the filing, along with Nicholas Chirls, who leads seed investment for Betaworks, and Jonathan Chin, who works in Betaworks’ finance department.

Blend Systems, a two-year-old, Los Altos, Ca.-based company whose app tries matching college students with the brands trying to connect with them, has raised $2.4 million in debt, options and warrants, according to an SEC filing. The company has raised $3.7 million to date.

CloudOne, a 3.5-year-old, Indianapolis-based software development platform, has raised $2.8 million in Series C funding led by Bootstrap Venture Fund of San Diego.

Edinburgh Molecular Imaging (EMI), a new spin-out of the University of Edinburgh, has raised $6.5 million in Series A funding from Epidarex Capital and the Scottish Investment Bank, the investment arm of the Scottish Enterprise. EMI is developing an optical molecular imaging technology to help in the diagnosis and monitoring of several major diseases.

First Aid Shot Therapy, a four-year-old, Burlingame, Ca.-based company that sells what it describes as FDA-compliant, single-dose medicines for pain and upset stomach symptoms, has raised an undisclosed amount of Series B funding led by Sofinnova Ventures and Redmile Group. Other participants in the round included Sofinnova HealthQuestClearwell Group and Mark Rampolla, founder and former CEO of ZICO Beverages. Last May, Sofinnova Ventures led an undisclosed amount of Series A funding for the company, whose product comes in a can and looks like a sports drink.

Igenica, a six-year-old, Burlingame, Ca.-based biopharmaceutical company that’s developing cancer antibody therapeutics, has raised $7 million as part of a round that’s targeting up to $14 million, shows an SEC filing. The company has raised at least $60 million so far, according to filings; its investors include Third Rock VenturesOrbimed Advisors, and 5AM Ventures.

Quantum Technology Sciences, a 23-year-old, Cocoa Beach, Fla.-based security and surveillance tech company, has raised $2.3 million from unnamed private investors to commercialize its technology, which employs sensors to detect threats from the air, water, land and underground and is designed primarily for the energy industry. According to an SEC filing, the company is targeting $4.9 million for the round.

Skytap, a seven-year-old, Seattle -based creator of SaaS test environments for the enterprise, has raised a $6.45 million extension of its Series C round. All of its existing Series C investors, including OpenView Venture PartnersIgnition PartnersMadrona Venture Group, and Washington Research Foundation, participated. The company has raised roughly $30 million to date.

SportPursuit, a 2.5-year-old, London-based flash sales site for sports enthusiasts, has raised $8.2 million in Series B funding from DFJ Espirit, with participation from Silicon Valley Bank and a long line of individual investors. The company has raised roughly $10.5 million do date.

TNG Pharmaceuticals, a three-year-old, Louisville, Ky.-based company that develops animal pharmaceuticals, has raised $4.6 million in Series A financing led by Yearling Fund, with participation from Angel Investor Investment Management GroupBluegrass AngelsCommonwealth Seed CapitalGoose Society of Texas, the Ogle FoundationTexas Halo Fund and the University of Louisville Foundation. TNG is developing a vaccine, FlyVax, that immunizes cattle against the horn fly, a pest that reportedly costs the beef cattle and dairy industry an estimated $1 billion in lost production annually.

Togethera, a year-old, London-based family-photo-sharing app, has raised roughly $320,000 in seed money from numerous individual investors in both Europe and the U.S. TechCrunch has more here.


New Funds

Kaszek Ventures, a three-year-old, Buenos Aires-based venture firm, has raised a new, $135 million fund, reports Dealbook. The firm’s founders are Hernán Kazah and Nicolás Szekasy, the cofounder and first CFO of MercadoLibre (considered to be Latin America’s eBay), respectively. The new fund is more than 30 percent larger than the firm’s last, $95 million, fund closed in 2011. According to Dealbook, Kaszek’s LPs include Horsley Bridge PartnersSequoia Heritage, the fund of funds linked with Sequoia Capital; and Kevin Efrusy of Accel Partners.


IPOs, the U.K.’s largest online kitchen retailer, is gearing up to go public at a valuation of between $1.3 billion and $2.3 billion, sources tell the Financial Times. As part of that effort, the company has just appointed Brian McBride, a former managing director of Amazon in the U.K. to its board. McBride is also the chairman of Asos, one of the U.K.’s biggest online-only fashion and beauty stores.

GoPro, the 10-year-old, San Mateo, Ca.-based maker of action cameras, announced on Friday that it plans to go public after the SEC completes “the review process initiated by GoPro’s confidential submission on Friday February 7, 2014 of its draft registration statement.” According to WSJ sources, GoPro and its bankers are expected to begin pitching the deal to investors by the end of the first half of the year and they’re aiming for a valuation well north of the $2.3 billion valuation that GoPro was assigned in 2012, when Foxconn International provided $200 million in exchange for a 9 percent stake in the company. The company has raised roughly $288 million altogether, including from Steamboat Ventures,Walden International, and U.S. Venture Partners, where GoPro founder Nick Woodman‘s stepfather, Irwin Federman, is a longtime general partner. (The Journal had an interesting piece on Woodman’s family ties last summer.)

PubMatic, a 7.5-year-old, Redwood City, Ca.-based company that automates the buying and selling of digital advertising space, has tapped bankers for a potential IPO, say WSJ sources. It will aim for a valuation of more than $1 billion. Pubmatic has raised $76 million, according to Crunchbase. Its investors include August CapitalDraper Fisher JurvetsonNexus Venture PartnersNokia Growth Partners, andHelion Venture Partners.



CloudSquads, a 4.5-year-old, Sunnyvale, Ca.-based enterprise social apps platform, has been acquired by Persistent Systems, a 24-year-old company in Pune, India that develops software for a wide variety of verticals. Terms of the deal aren’t being disclosed. CloudSquads hadn’t publicly disclosed any venture backing.

Target Compiler Technologies, a Leuven, Belgium-based maker of software tools to design and program application-specific instruction-set processors (ASIPs), has been acquired by publicly traded Synopsys for undisclosed terms. Synopsys makes software used to design computer chips. Target was privately held.



Jerry Hill, a Democratic state senator from San Mateo, Ca., is ratcheting up the pressure on venture capitalist Vinod Khosla, who has blocked public access to Martins Beach in Half Moon Bay since buying the property for $37.5 million.

Joy Marcus, a managing director at Gotham Ventures in recent years, has joined the 5.5-year-old, online platform Bloglovin as CEO, replacing former CEO and cofounder Mattias Swenson, who will continue to lead product development as the company’s chief product officer. Bloglovin, based in New York, helps users discover and easily follow their favorite blogs. The company has received funding from BetaworksLerer VenturesRRE Ventures, and White Star Capital, among others. Marcus will remain a venture partner with Gotham.



Tom Perkins will speak with Fortune’s Adam Lashinsky about the war on the 1 percent this Thursday night at the Commonwealth Club in San Francisco. (Sigh.)


Job Listings

GE is looking for a business development and ventures associate.



Boom times: The latest MoneyTree Report reported that investment in Internet companies last year hit the highest level since 2001. Meanwhile, software companies garnered 37 percent of total venture capital in 2013, the highest percentage since the MoneyTree Report began in 1995. The San Jose Mercury News has more here.

Venture-back healthcare deals are also still sizzling hot, notes CB Insights, which compiles a list of the dozen related companies that have already gone public in 2014.


Essential Reads

Apple‘s iPhone: The new international currency.

The outlet 9to5mac has created a detailed list of all “pertinent” recent Apple hires to provide clearer insight into Apple’s future wearable technologies.

It was once the only serious bitcoin exchange on the Internet. But now, just a year later, Japan’s Mt. Gox is in shambles. Relatedly, SecondMarket has taken its first step to becoming a bitcoin exchange, the company’s founder and CEO Barry Silbert has suggested.

Twitter‘s “other” growth problem: Keeping the users it already has.



The billionaire boys’ club that helped Vladimir Putin build the Sochi Olympics.

Oh, come on. Professional athletes aren’t just better at sports; they may be better looking than the rest of us, too, says Swiss biologist Erik Postma of the University of Zurich.

Comic writer Andy Borowitz on Twitter, and mostly jumping off it: “I was an extremely prolific tweeter. But my wife, for one, said that she felt that Twitter was this sort of third party in our relationship. Like, instead of just saying something to her, I would say, ‘Oh, I should tweet that.’ But for a long time, I was pushing back, saying, ‘No no no, it’s not invasive at all.’”


Retail Therapy

Behold the Vespa Segway. In fact, we pretty much love everything by this design house.

“House of Cards.” Second season, babies. It returns Friday.


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