StrictlyVC: March 5, 2014

Hi, everyone, hope your Wednesday is off to a good start!


Top News in the A.M.

The Brussels government really doesn’t want Uber operating in the city. To reinforce its stance, it seized two private cars operated by Uber drivers this morning, reports


Study: Entrepreneurs Are Pretty Rational After All

It takes a lot to be an entrepreneur. Founders often work longer hours and for less money than people with “paid jobs.” And entrepreneurs who start companies that take off stand a very good chance of being elbowed aside at some point. According to HBS professor Noam Wasserman, who conducted a decade of extensive research into roughly 3,600 startups, 52 percent of founders are gone by the time a company raises its third round of venture funding.

Still, the common myth that entrepreneurs are an irrationally optimistic lot isn’t entirely accurate, suggests new research from Daniel Ekeblom, a PhD student (and ex M&A analyst) at Lund University in Sweden;  and renowned finance professor Ola Bengtsson (who, sadly, passed away in January).

Indeed, using a dataset of 180,814 individuals’ responses culled by the Swedish government between 1986 to 2009 — answers to questions like, “Do you think your country will be better off financially a year from now?” — the pair discovered that optimism is actually correlated with favorable beliefs about nationwide conditions. More, when entrepreneurs have more favorable beliefs about nationwide conditions, those beliefs are relatively good predictors of the future.

In a recent call, I asked Ekeblom what motivated the research. He said simply that it’s an aspect of entrepreneurship that’s almost always overlooked: what people know about the immediate environment in which they’re working. “We thought: Can we use our data to sort that out? Can we avoid that problem, eliminate it somehow?”

Ekeblom went on to call the endeavor “real science,” given that he and Bengtsson were comparing expectations to outcomes on a subject that was beyond any respondent’s domain of influence.

Either way, armed with his conclusions, I was curious to know how he viewed the current founder boom. He told me: “When I look at like Silicon Valley — and we have small clusters of startups here in Sweden as well — people are trying to make some interesting stuff, but many aren’t generating cash flow like you’d expect based on these billion-dollar valuations. There’s something that’s not really catching up.”

You could blame a glut of optimistic entrepreneurs for continuing to start viral but unprofitable companies, but Ekeblom sees a reason for it. “Maybe they’re rational, and it’s the [investors and acquiring companies] who aren’t. I’m not at all sure people are looking at or responding to pricing signals in a rational way. Meanwhile the entrepreneur is saying, ‘Free money. Let’s go.’”

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New Fundings

3CLogic, a 6.5-year-old, Rockville, Md.-based contact center software company, has raised $4.2 million in Series B funding led by Blu Venture Investors. The company has raised $5.74 million altogether, including from Maryland Venture Fund.

Aseptia, a 7.5-year-old, Raleigh, N.C.-based food processing technology company, has raised $28 million in Series C funding led by Lookout Capital, with SJF VenturesPrudential, and the F.B. Heron Foundation participating. The company has raised $38 million altogether., a 24-year-old, Irvine, Ca.-based online real estate marketplace, has raised $50 million from Google Capital. The funds bring the company’s total funding to date to roughly $142 million. Stone Point Capital of Greenwich, Conn., led a $91.7 million round of funding for in January of last year. TechCrunch has more on the funding here.

Audiam, a year-old, New York-based online service that hopes to help artists get paid when their music is used on YouTube, has raised $2 million in Series A funding from the L.A. management firm GSO Business Group and a long line of individual investors, including singers Jason Mraz and Jimmy Buffet. Dow Jones has more here.

Blend, a year-old, San Francisco-based mobile social app that’s exclusively available to college students (they “share,” “snap,” and “score” photos, earning points to score gifts from brands), has raised $2.7 million in seed funding led by New Enterprise AssociatesTrinity Ventures,Foundation CapitalLerer VenturesMaveronBoxGroupXG Ventures, and SparkLabs Global Ventures also participated in the round.

Borro, a 6.5-year-old, London-based online platform that lets people borrow cash against their art, jewelry, and other high-end goods, has raised an enormous new round of $112 million, which is coming primarily from Victory Park Capital. Borro has now raised roughly $150 million altogether, including from Canaan PartnersEden VenturesEuropean Founders FundAugmentum and Ribbit Capital. TechCrunch has more on how the business works here.

Clinicient, a 10-year-old, Portland, Or.-based maker of revenue cycle management software for outpatient rehabilitation therapy businesses, has raised $15 million in Series C funding from the growth equity firm Catalyst Investors. The company has raised roughly $22 million altogether, shows Crunchbase.

ClassDojo, a three-year-old, San Francisco-based company whose behavior management software is meant to help keep students on track, has raised $8.5 million in Series A funding from Shasta VenturesYuri MilnerGeneral CatalystSoftTech VC, and SV Angel. The company has raised more than $10 million to date.

DocuSign, the 11-year-old, San Francisco-based electronic-signature software company, has raised $85 million in new funding that values the company at roughly $1.6 billion, according to WSJ sources. DocuSign had previously raised more than $100 million in venture capital, and the round is considered a likely precursor to an IPO. The company’s many investors include Scale Venture PartnersSalesforceSigma PartnersIgnition PartnersFrazier Technology VenturesKleiner Perkins Caufield & ByersAccel PartnersComcast VenturesSAP Ventures, and Google Ventures.

Neos Therapeutics, a 20-year-old, Dallas-based oral drug delivery company with a pipeline of products for ADHD, has raised $15.5 million in new funding, including from Burrill Life Sciences Capital Fund IIICAC LLCCMEA CapitalCrabtree Partners, and Delaware Street Capital. Neos has raised at least $53 million in recent years, shows Crunchbase., a two-year-old, San Francisco-based startup that aims to make it easier to plan out travel itineraries, has raised $5 million in fresh funding, including from Brad Gerstner of Altimeter Capital and Jeff Fluhr, a cofounder of StubHub, reports Dealbook. They join Eric Schmidt of Google and Jack Dorsey of Twitter and Square, who’d participated in the company’s $1.25 million seed round and reinvested in the company’s latest financing.

Play-i, a two-year-old, Mountain View, Ca.-based educational toy developer, has raised $8 million in Series A funding led by Madrona Venture Group and Charles River Ventures. The company has raised $9.4 million altogether.

Reflektion, a two-year-old, San Mateo, Ca.-based retail analytics startup that tries predicting what shoppers are going to buy next, has raised $8 million in Series B funding led by Intel Capital and Nike. Reflektion has raised more than $11 million to date.

ServiceMax, a 6.5-year-old, Pleasanton, Ca.-based field service management company, has raised $71 million in new funding led by Meritech Capital, with participation from Kleiner Perkins Caufield & Byers and other new investors. Earlier investors Emergence Capital PartnersMayfield FundTrinity VenturesCrosslink CapitalAdams Street Partners and Salesforce also participated in the financing, which brings ServiceMax’s total funding to $120 million.

Slyce, a two-year-old, Toronto-based visual product search platform has raised $10.8 million in new funding led by Beacon SecuritiesPI FinancialSalman PartnersHarrington GlobalAlphaNorth Asset Management and other private investors also participated in the round. Slyce has raised roughly $14. 5 million altogether, according to Crunchbase.

StreamLink Software, a 5.5-year-old, Cleveland, Oh.-based maker of SaaS management products designed for nonprofits and the public sector, has raised $3.5 million in Series A funding led by a group of Ohio angel investors. Chicago-based firms Hyde Park Venture Partners and Hyde Park Angels also participated in the round, along with Blu Venture Investors from Virginia.

Vennli, a year-old, South Bend, In.-based SaaS company whose products are designed for sales and marketing executives, has raised more than $1.3 million in financing from Elevate Ventures1st Source Bank, and numerous individual investors.

Vinculum, a 6.5-year-old, Noida, India-based SaaS company whose software includes analytics functions designed to help e-commerce and multi-channel retailers, has raised an undisclosed amount of Series B funding from IvyCap Ventures. Earlier investor Accel India Ventures also participated, reports VC Circle, which has more here.

Weft, a year-old, Burlington, Mass.-based startup that uses hardware and software to track the shipping of goods worldwide, has raised a seed round of less than $1 million led by Andreessen Horowitz and Data Elite, a months-old structure that provides startups with funding, three months of workspace, and mentoring.


New Funds

Accelerant Ventures, a new, New York-based venture fund, is looking to raise between $5 million and $10 million this year to invest in early- to late-stage startups operating in the services, mobile, software, and security arenas. But Israeli startups only need apply. VentureBeat has much more on the story.



Corium International, a 19-year-old, Menlo Park, Ca.-based biopharmaceutical company focused on commercializing specialty transdermal pharmaceutical products, has filed an S-1 that shows the firm plans to raise $50 million. Corium has raised at least $40 million from investors, through a a 2010 Series C funding. According to its S-1, Corium’s biggest backer is Essex Woodlands Health Ventures, which owns 55.9 percent of the company. Barr Laboratories owns another 10 percent.

Moelis & Co., a 6.5-year-old, New York-based investment bank, unveiledpaperwork for its IPO today. Given typical IPO timing, observes the WSJ, the shares could begin trading this spring.


Exits, a trading platform developed that allows users to trade across various digital-currency exchanges, has been acquired for an undisclosed amount by Blockchain, whose ZeroBlock app provides bitcoin prices across several exchanges The transaction was completed entirely in bitcoin, said CEO Nic Cary on Bloomberg TV. PandoDaily has more here.

Topspin Media, a 6.5-year-old, Santa Monica, Ca.-based marketing software company that helps artists and their partners build their brands, has been acquired by Beats Music for an undisclosed amount. Topspin Media has raised two rounds of of undisclosed amounts, first fromRedpoint Ventures, then from Foundry Group.

The assets of Touchstone Semiconductor, a four-year-old Milpitas, Ca.-based maker of high-performance, low-power analog IC products, have been acquired by publicly traded Silicon Labs for $1.5 million. Touchstone had raised $12 million in Series A funding from Opus Capital and Khosla Ventures in 2011.

CNN has sold its news reader appZite, to Flipboard, the social magazine application for a reported $60 million. CNN had acquired the app in 2011 for roughly $20 million. Writes TechCrunch: “The move is a sign of ongoing consolidation in the space and comes in the wake of Facebook launching a Flipboard competitor called Paper. It’s also a signal of how CNN has fallen into the same trap as other, older media companies of being unable to develop new media services effectively.”



Kent Thexton has joined OMERS Ventures, the venture capital investment arm of the OMERS pension plan, as a managing director. He’ll be responsible for leading investments in the North American market in the technology, media, and telecommunications sectors. Thexton has held a number of founder and operational management roles over the years, including as the chief data and marketing officer of the telecom firm O2 Group, which sold to Telefonica S.A. in 2005 for $35 billion.

Fredric Vinna is joining Spotify from Beats Music, where he was head of product, engineering and design, reports CNet. The two are direct competitors; Spotify launched it service roughly six years ago; Beats Music launched less than two months ago.



Morgan Stanley’s Technology, Media & Telecom Conference is in day three at San Francisco’s Palace Hotel. If you aren’t going, you can register for its Webcast here.

The 11th annual Media Summit conference is also underway for a second day in New York. Here‘s the agenda.

One last reminder that the SXSW Festival kicks off on Monday. Planning to attend, at least virtually: former NSA contractor Edward Snowden, who will via video in conversation with the ACLU’s Ben Wizner and Christopher Soghoian. The panel kicks off at 11 a.m. Central Time. (The Texas Tribune will stream it live.)



Pew Research takes a deep dive into the “selfie” phenomenon, reporting that “more than half of Millennials” have shared one on a social media site, compared with (still astonishingly high) 26 percent of all Americans, who have shared a “selfie” on a photo-sharing or social networking site.

On the heels one of the strongest investment years for angel and venture capital commitments in the U.K., the outlet GrowthBusiness looks at which firms were the busiest across seed, early venture, and growth-stage startups.

Twitter helped Goldman Sachs secure first place in the annual Bloomberg Markets ranking of equity underwriters, says the outlet. The bank earned an estimated $1.72 billion in fees in 2013 — a year in which companies raised $56 billion through IPOs in the U.S., the most since 2007, according to Bloomberg data. That’s a jump from the $41 billion in stock issued via IPOs in 2012.


Job Listings

Thiel Capital is looking for a quantitative analyst in San Francisco. You need extensive programming skills, but a college degree is not required, naturally.


Essential Reads

U.S. Attorney Preet Bharara has busted Wall Street insiders (including Galleon Group’s Raj Rajaratnam and SAC’s Steve Cohen) and dark Web drug dealers (Silk Road owner Ross Ulbricht). Now, reports Fast Company, Bharara intends to do what “Marc Andreessen, the Winklevoss twins, and cryptocurrency nuts can’t.” He intends to clean up bitcoin.

Which acquirer pays the most for startups? Redpoint Ventures‘ numbers whiz Tomasz Tunguz breaks it down.

As Arab startups get more serious, so too does VC investment, reports the WSJ. (StrictlyVC talked about the scene with one regional investor, Hummingbird Ventures, last week.)



Singapore is now the world’s most expensive city, according to new report by the Economist Intelligence Unit.

According to a new study, 11 percent of Americans think HTML is a communicable disease.

Confessions of an Upworthy editor. (You won’t believe what he has to say.)


Retail Therapy

We’d be more than happy to make this Mercedes Benz our headquarters.


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