StrictlyVC: February 28, 2014

Have a terrific weekend, everyone.

Also, a quick note that we’ve been having some technical issues this week that we haven’t quite figured out. If you missed any editions, you can always check out our archives here.


Top News in the A.M.

Well, that’s that. The bitcoin exchange Mt. Gox says it’s filing for bankruptcy protection after losing almost 750,000 of its customers’ bitcoins.

Amazon is reportedly talking to labels about its own music streaming service.


Talking Turkey with Hummingbird Ventures

From a distance, venture capital in Turkey and the broader Middle East seems to be taking off. Among other things, in December, a Dubai-based investing duo announced they were forming a new, early-stage venture capital firm called Emerge Ventures to focus on Middle East startups. In January, renowned angel investor and entrepreneur Fadi Ghadour disclosed plans to launch a new venture fund to support startups in the Middle East and North Africa. And Earlybird Venture Capital, the 17-year-old, Berlin-based early-stage venture firm, announced that it’s raising a fund to focus on companies in Turkey and Central and Eastern Europe. (It has closed on $110 million so far; it’s targeting $130 million.)

To get a better sense of what’s going on, StrictlyVC talked with Pamir Gelenbe, a venture partner with Hummingbird Ventures, a young, early-stage firm with offices in London, Antwerp, and Instanbul. Among the firm’s investments are Turkish game developer Peak Games, which has raised $18 million to date; and the invite-only shopping site MarkaVIP, which is based in Amman, Jordan, and has raised $15 million.

So what’s happening in the Middle East? Why is there more activity suddenly?

I don’t think there’s been any sudden step change. In fact, we’re excited about that part of the of world because we pretty much have no competition. There are a few funds (including recent entrant Doğa Ventures, founded in late 2012 by famous Turkish businessman Fethi Şimşek). But the competitive intensity in the Bay Area is probably one hundred times what we’re facing.

Are you seeing much innovation? And how’s your deal flow?

It’s okay, but you have to be patient. Some startups copy earlier successful models. A few have developed something truly innovative, and we advise them to move their headquarters to the Bay Area to develop their go-to-market approach and maybe to get acquired, because that isn’t going to happen if you’re sitting in Turkey or the Middle East.

In the grand scheme of things, the scene is pretty small, but entrepreneurship is definitely on everybody’s mind. In Turkey, there are probably two or three entrepreneurship conferences every week. It’s become a big thing. And there are maybe a dozen local VCs in Turkey who are serious and another dozen external VCs who are looking on a regular basis.

What about the rest of the Middle East?

Halve those numbers. The Middle East is very fragmented; it’s 20 countries or so, so unless you’re in digital media, where regulation is immaterial as long as you don’t show profane pictures, you’re fine. But if you’re dealing with e-commerce, you’re dealing with customs and every state’s regulations, and it becomes pretty hard.

In Turkey, e-commerce was really hot then cooled somewhat. Why?

Turkey has a strong logistics network, with the largest fleet of trucks in Europe and very good roads that cover the whole country. It also has a great payments infrastructure. It’s much better than in the U.K., where until recently, you couldn’t send instant transfers between banks but had to wait two days instead. [Turkey] has just leapfrogged all this legacy technology that people have in Western Europe.

But e-commerce has become extremely competitive, with razor-thin margins across the board, so it’s less exciting [to us] as investors.

What have been some of the bigger exits out of Turkey?

eBay bought the Turkish eBay clone [GittiGidiyor in 2011]; Naspers bought [the private online shopping club] Markiphoni [in 2011 for a reported $200 million]. Just this month, a British mobile payments company called Monitise, a public company, announced that it’s acquiring [the Turkish mobile commerce company] Pozitron for $100 million.

You just spent a year living in Instanbul with your family. What were your impressions of it? There’s obviously been a lot of unrest.

Turkey is seeing a crazy pace of urbanization, driven by developers with fairly limited supervision from the government, so there’s no green space in Istanbul. I worry that they’ve built this thing that’s unlivable.

The macro [picture] is also very hard. There are questions about the application of the rule of law. It’s been a rocky 12 months in terms of internal politics.

At the same time, it has good fundamentals, a pretty good infrastructure and an educated population. And people are very fast in Turkey about getting things done. Maybe people are jumpy because they’ve been rocked by economic crises over the years, so people know that you get things done now — you don’t wait until tomorrow. That’s the way things work there, though. My clock speed always goes up a few notches when I’m there.


New Fundings

Bruin Biometrics, a 4.5-year-old, L.A.-based medical device company whose lead product is a scanner device used to detect pressure ulcers, has raised $10 million round in funding from undisclosed sources. The company has raised $14 million to date.

Dash, a 3.5-year-old, New York-based mobile payment app for restaurants, bars, and clubs that allows users to check-in, view, split, and pay their tab, has raised $1.2 million in second seed round bringing its total funding to $1.9 million. Investors include New York AngelsCaerus Ventures and numerous individuals.

Mobvoi, a 1.5-year-old, Shanghai-based company behind the mobile voice search service Chumen Wenwen, has raised nearly $10 million in Series B financing led by SIG. The company had previously received $1.6 million of Series A funding from Sequoia Capital and ZhenFund in 2012. Similar to Apple’s Siri, Chumen Wenwen will respond with a WeChat message containing the answer to questions asked. Founder Zhifei Li spent 2.5 years as a research scientist at Google before launching the company.More here.

Nok Nok Labs, a 3.5-year-old, Palo Alto, Ca.-based maker of authentication software, has raised $16.5 million in Series B funding led by Lenovo Group, which was joined by earlier investors DCM and ONSET Ventures. The round brings the company’s total funding to date to $31.5 million.

NxThera, a 6.5-year-old, Maple Grove, Mn.-based company that’s working on a minimally invasive treatment for benign prostatic hyperplasia, a noncancerous enlargement of the prostate gland, has raised more than $25 million in Series C funding from investors that were not disclosed. The firm’s previous backers include American Medical SystemsArborteum Ventures and Aberdare Ventures.

Ramen, a new, Boulder, Co.-based startup that’s developing an online crowdfunding service specifically aimed at software products, has raised an undisclosed amount of seed funding, including from Jason Calacanis,Naval Ravikant, and Matt Cutler. Ramen’s site includes both a fundraising platform as well as tools to let potential customers collaborate with teams to develop their products.

Revionics, a 12-year-old, Austin, Tx.-based maker of business intelligence software for retailers, has raised $5 million in funding from Motorola Solutions. The company, which employs 120 employees and moved last fall from California to Texas, has raised roughly $27 million altogether, including from Sierra Ventures.

Snapdeal, a four-year-old, New Delhi, India-based company that runs one of India’s largest online e-commerce marketplaces, has raised $133.77 million in funding led by eBay, which had made a $50 million investment in the company nine months ago. Other investors in the round included Kalaari CapitalNexus Venture PartnersBessemer Venture Partners,Intel Capital and Saama Capital. Snapdeal operates as a marketplace for small merchants; that sets it apart from FlipKart, another leading e-commerce site in India, which stocks and sells its own inventory.

Smarterer, a 3.5-year-old, Boston-based company whose online platform is designed to showcase the skills of job seekers, has raised $1.6 million in funding from Rethink EducationDeborah Quazzo, founder and managing partner of GSV Advisors; and earlier investor True Ventures. The company has raised $4.6 million altogether, including from Google Ventures and a long list of individual investors.



Identified, a 3.5-year-old, San Francisco-based predictive analytics company focused on HR, has been acquired by Workday. No financial terms were disclosed. Identified had raised around $22.5 million, according to Crunchbase. Its backers include DeeBek Venturesff Venture Capital,VantagePoint Capital PartnersCapricorn Investment Group,Innovation Endeavors and Transmedia Capital.



Gus Hunt, a former chief technology officer for the CIA, has been named an advisor at the 12-year-old, San Francisco-based investment firm Artis Ventures. A release about the appointment stated that on Hunt’s recommendation, the CIA “made a $600 million, 10-year investment in Amazon’s AWS cloud computing platform in 2013 that set a bold path forward for the agency.”

Nas, the popular rapper, talks with Fortune about his friendship with venture capitalist Ben Horowitz, who seems to feel nearly as passionately about hip hop as he does investing. Says Nas: “The people that think it’s gimmicky are the people who don’t know Ben. It’s funny for me to hear that because I know Ben. You can’t play with Ben with hip-hop. He’ll school you about it. Ben schools me about hip-hop, and I know a lot about it. He’s only true to who he his, and that’s what makes him stand out. There’s nobody else out there were he is at. Hip-hop is an extension of him and him of it. What you see is what you get from Ben.”

Heidi Roizen, the longtime VC who has been a venture partner with DFJ since 2012, has been promoted to a new operating partner position at the firm, following the close of its newest, $325 million, fund. In her new role, Roizen will oversee talent, marketing, business development and investment support roles , as well as work with DFJ’s portfolio companies to provide strategic advice, manage portfolio investments and help identify new investment opportunities. Roizen had founded an early personal computer company, before joining Apple as VP of worldwide developer relations in 1996. She became a VC in 1999, become a managing director of Mobius Venture Capital (where Foundry Group’s Brad Feld also got his start in VC).

James Swartz, a cofounder of Accel Partners, has, with his wife, donated $10 million to Carnegie Mellon University. The gift follows a $67 million gift in November from investor David Tepper to create a new academic hub; the gifts will be used for the construction of a 295,000 square-foot facility in the “Tepper Quad” that will house a number of entities, including the university’s Tepper School of Business.



Disrupt NY is coming up on May 5. The three-day conference will featureFred Wilson of Union Square VenturesNiklas Zennström, who cofounded by Skype and the venture firm Atomico; and Secret co-founders David Byttow and Chrys Bader-Wechseler, among others. More here.



Chart of the day: The 10 largest VC-backed cyber security exits since 2012, care of CB Insights.

Meanwhile, Pitchbook looks at the performance of the 21, 2006 vintage U.S. venture funds that raised between $250 million and $500 million to see how they’re performing. According to Pitchbook’s research, the median IRR is currently 1.8 percent, and the top performers based on net IRR areBay Partners XIGlobespan Capital Partners VPsilos III, and TPG Biotechnology Partners II.


Job Listings

Dropbox is hiring a junior corporate development person in San Francisco. Apply here.


Essential Reads

Google said yesterday that it will fund two years of free transit rides for San Francisco youth. The $6.8 million grant is said to be one of the largest private donations in the city’s history and signals that pressure on tech companies to make a larger contribution to their surrounding communities is having an impact, notes The Verge.

How a hacker intercepted FBI and Secret Service calls with Google Maps.



The 127-year-old startup: Visiting Mercedes-Benz’s four-month-old Silicon Valley R&D facility.

A bachelor party house in Singapore.

Fifty strange Google Street View photos.

New dating apps for 2014.


Retail Therapy

The 360Fly camera; it films what’s in front of you, as well as 360 degrees horizontally and 240 degrees vertically.

Another way to bring your Instagram photos to life.


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