StrictlyVC: March 12, 2014

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Top News in the A.M.

The European Parliament has overwhelmingly passed a large package of laws intended to strengthen data protection. GigaOm writes on what startups (and their investors) should expect.


Foreign Firms Rule the Roost in Israel, Says Local VC

Israel’s startup scene has probably never looked quite so promising to investors. In 2013, five venture-backed companies headquartered in the country netted $2.7 billion at the time of their respective exits, says CB Insights. Within that group: Google acquired the social mapping service Waze for $1.1 billion; the Web development platform company Wix went public (its market cap is currently $670 million); and Cisco acquired the mobile networking firm Intucell for $475 million.

The country’s prospects this year look just as bright. Last month, for example, Israeli-run Viber, a voice and messaging service with a development center in the country, was sold to Rakuten of Japan for about $900 million. Around the same time, Covidien, the health care company, completed its acquisition of Given Imaging for $860 million. (Given makes a capsule with a camera that is swallowed, allowing doctors to see patients’ intestinal tracts.)

“Three years ago, the [Israeli] press was complaining about a lack of big, $500 million exits,” recalls Adam Fisher, who co-manages the Herzliya, Israel office of Bessemer Venture Partners. “Now billion-dollar exits are growing boring to [reporters]. That’s good news.”

It’s good news for global firms like Bessemer, at least, which set up an office in 1992 and in 2007 plucked Fisher out of Jerusalem Venture Partners, which he joined straight out of Georgetown Unversity. Fisher says he has led “15 or so” investments for Bessemer and that roughly half have produced stellar returns, including Intucell and Wix.

From where he’s sitting, both Israeli venture firms and U.S. firms without a local presence could miss out on Israel’s maturation into a mainstream tech market – which, by the way, is just fine with him.

“Israeli funds had proprietary deal flow” during the last bubble, but “I don’t think any Israeli fund ever created a strong brand,” he says. “Why work with a small, no-name fund when you can work with Bessemer?”

I ask Fisher if things might change. For example, the country’s former Finance Ministry Director General Haim Shani and the former head of Microsoft’s R&D operations in Israel, Moshe Lichtman, are reportedly close to raising $250 million for a new venture fund. Another Israeli venture firm called Stage One is raising $100 million for a second fund that has reportedly already closed on roughly $75 million. Isn’t it likely that competition will increase?

Fisher notes that activity is picking up but says that in many cases, Israeli VCs are “going for the scraps.” Bessemer, he says, has “50 odd professionals across the U.S. working at deals – networking. We have a huge trove of competitive industry information that no local fund can compete with.”

As for U.S. investors who might be tempted to spend more time in the region right now, Fisher says the venture community is “welcoming,” but “It’s a tight network … I’ve been here 15, 16 years, and those of us who are active literally know everybody, along with who they’ve worked with, and who was in the army with them.”

Language is an issue, too. “Everyone speaks in English, but if you don’t speak Hebrew, you’ll be a few steps behind, no question about it.”

To be a successful investor in Israel also “takes a certain culture,” he adds.

“I fit here in Israel. I fit there [in the U.S],” says Fisher, who has twice lived in the U.S. “There aren’t many people who fit that profile.”


New Fundings

Adbrain, a year-old, London-based artificial intelligence startup whose tracking and analysis software is primarily used by advertisers, has raised $7.5 million in Series A funding led by Octopus Investments, with participation from earlier investor Notion Capital. The company has raised $9 million in funding to date.

Advanced Mem-Tech, a 3.5-year-old, Tel Aviv, Israel-based company that develops thin membranes that can filter bacteria, microbes and parasites and which are used in commercial and residential water treatment, has raised $5 million. The funding came from SEB Alliance, the corporate venture unit of Groupe SEB, and Uzi Halevy, a Texas-based investor.

Beats Music, the Santa Monica, Ca.-based subscription-based music streaming service spun out of Beats Electronics last year, has raised a second round of funding of between $60 million and $100 million from existing investors, sources tell Bloomberg. Billionaires Len Blavatnik, Marc Rowan, James Packer and entities affiliated with Lee Bass first provided $60 million a year ago. Last week, Beats Music agreed to acquire Topspin Media for undisclosed terms.

Breezy, a four-year-old, Oakland, Ca.-based company whose cloud-based mobile printing software ostensibly makes printing anything from any device to any printer easy, has raised $2.7 million in funding, according to an SEC filing that shows a target of $3.3 million. The company had previous raised $750,000 in seed funding.

Complete Solar Solution, a 12-year-old, Foster City, Ca.-based company that sells a wide variety of solar products, has raised $5 million led by Ecosystem Integrity Fund, a young, San Francisco-based venture capital fund focused on so-called sustainability start-ups.

Cortica, a 6.5-year-old, Ramat-Gan, Israel-based image identification technology company, has raised $20 million in Series C funding from earlier investors Mail.ruHorizons Ventures, and Ynon Kreiz, chairman of Maker Studios. Cortica has raised $38 million to date.

Exosome Diagnostics, a 5.5-year-old, New York-based biotech company focused on developing and commercializing blood-based cancer molecular diagnostics, has closed $27 million in Series B financing led by new investors QIAGEN and Arcus VenturesNGN Capital and Forbion Capital Partners, which led Exosome’s $20 million Series A round in 2010, also participated in the new funding.

L2, a four-year-old, New York-based subscription business intelligence service that benchmarks the “digital competence” of brands, has raised a growth round of $16.5 million from General Catalyst Partners. The financing appears to be the company’s first institutional investment.

Lumena Pharmaceuticals, a three-year-old, San Diego-based biopharmaceutical company focused on rare liver diseases and serious metabolic disorders, has raised $45 million in Series B financing led byNew Enterprise Associates. Other investors in the round included Adage Capital ManagementRA Capital ManagementPappas VenturesRiverVest Venture Partners and Alta Partners. The company has raised roughly $70 million to date, according to Crunchbase.

Luxola, an 18-month-old Singapore-based online beauty store, has raised $10 million in Series B funding led by Japanese corporate investor Transcosmos, with participation from earlier investor GREE Ventures. Luxola appears to have raised roughly $13 million to date.

MicroDimensions, a three-year-old, Munich, Germany-based company whose software specializes in microscopic image processing, has raised an undisclosed amount of seed funding from High-Tech Gruenderfonds,Bayern Kapital and individual investor Adriaan Hart de Ruijter.

Next Games, a year-old, Helsinki, Finland-based games company founded by design veterans from RovioSupercell, and Disney, has raised $6 million in Series A funding co-led by IDG Ventures and the company’s original investor, Jari Ovaskainen, who was also an early investor in Supercell. Other participants in the round included Lowercase Capital; Asia-based IDG CapitalAMC Networks Ventures; and York Ventures, an early-stage venture firm backed by Alec, Tom and Sam Gores.

Persimmon Technologies, a four-year-old, Wakefield, Ma.-based maker of vacuum robotics for the semiconductor and solar equipment markets, has raised $14 million from investors, including ABB GroupBerwind Private EquityIntel CapitalNidec Sankyo, and the Bernard Gordon Charitable Remainder Trust.

Public Good Software, a year-old, Chicago-based startup that’s aiming to bring data-driven campaigning to nonprofits, has raised just less than half a million dollars, reports Tech PresidentWordPress founder Matt Mullenweg led the round. Jason Kunesh, Obama 2012’s former director of user experience, is the company’s CEO.

Rover, a 3.5-year-old, Seattle-based platform that connects dog owners with dog sitters, has raised $12 million in Series C funding from earlier investors Madrona Venture GroupFoundry Group and Petco. The company has now raised roughly $27 million to date. (If you’re interested in learning more, StrictlyVC interviewed Rover CEO Aaron Easterly last fall.)

Trulioo, a 4.5-year-old, Vanouver-based identify verification startup, has raised $6 million in Series A funding led by Tenfore Holdings, with participation by BDC Venture Capital and earlier investor Blumberg Capital. The round brings the company’s funding to $8.3 million.

Ulmon, a 3.5-year-old, Vienna, Austria-based maker of travel apps and city guide apps, has raised $5 million in seed funding from Global Founders Capitalreports TechCrunch.

VIPtela, an 18-month-old, San Jose, Ca.-based networking startup, has raised $33 million in funding from Sequoia Capital, the company announced yesterday in a press release. AllThingD had reported on the funding in early December, though at the time, the company refused to confirm the amount.

Webflow, an 18-month-old, Mountain View, Ca.-based startup that makes it easier for creative professionals to design and host their own websites (without needing to know how to code), has raised $1.5 million in seed funding, says TechCrunch. Investors include Khosla Ventures, venture capitalist Tim Draper, various angels, and Y Combinator, whose program the startup passed through last summer.

WorldRemit, a 4.5-year-old, London-based online platform that allows migrants and expats to send low cost remittance to families and friends abroad, has raised $40 million in Series A funding from Accel Partners. The funding is the company’s first venture investment.



Dax, a 6.5-based Culver City, Ca.-based company that helps major film studios manage their digital work flow needs, has been acquired by Prime Focus, a Mumbai, India-based post-production and media technology company. Prime will pay up to $12.5 million over three years to acquire Dax’s assets. Dax, formerly known as Sample Digital, had raised what it characterizes as a “major round of funding” from unnamed investors back in 2007. The acquisition will help Prime expand its North American business, reports the L.A. Times.

Maker Studios, a 4.5-year-old, Culver City, Ca.-based company that develops and publishes YouTube entertainment videos, could sell to media giant Disney for $500 million or more, report Re/code sources. If the sale goes through, notes the outlet, it would be by far the biggest bet by a traditional media company in a company built on top of YouTube. Maker has raised around $70 million to date, including from Greycroft Partners,Upfront VenturesTime Warner Investments, and Northgate Capital.

Qlika, a two-year-old, Israeli company whose ad technology targets consumers in small geographic areas and presents them with specific search results based on their location, has been acquired for $3 million in cash by Priceline, reports The Times of Israel. Qlika had raised roughly $1.7 million in funding from mostly individual investors and participated in a Silicon Valley accelerator program for young Israeli companies called UpWest Labs.

Software Advice, an 8.5-year-old, Austin, Tx.-based platform that offers detailed reviews, comparisons, and research to organizations searching for the right software for their employees, has been acquired by the publicly traded research giant Gartner. Terms of the deal weren’t disclosed. Software Advice doesn’t appear to have raised institutional funding.



Forbes has produced a list of what it considers to be the “most powerful CEOs under 40 based on the 20 publicly traded companies with the highest market caps as of market close March 5. In the number one slot:Larry Page of Google, who is 40 this year. Coming in at second, third, and fourth are Facebook‘s Mark ZuckerbergYahoo‘s Marissa Mayer, and Icahn Enterprise CEO Keith Cozza, who just stepped into the role last month.

Atman Binstock has joined two-year-old Oculus VR, maker of a much-about buzzed-virtual reality headset. Binstock is joining the company from Valve, a Seattle-based entertainment technology company. Binstock, whose new title is chief architect, will lead an R&D team based in Seattle,reports Re/code.

Rami Branitzsky has joined SAP Ventures as its newest managing director. Branitzsky was most recently CEO of the machine learning startup Grok Solutions (formerly Numenta), but he has a long history with SAP, spending a decade at the company beginning in 2002, including as managing director of SAP Labs North America.

Chris Petrovic has been appointed the head of corporate development at the free-to-play gaming company Kabam. Petrovic, who will be overseeing M&A, joins the video game retailing giant GameStop Digital Ventures, where he led the company’s digital strategy.

Facebook‘s billionaire COO Sheryl Sandberg is reportedly “having conversations” about becoming Disney‘s CEO. Business Insider has more here on the latest speculation about Sandberg’s next move.


Job Listings

CalSTRS, the second largest public pension fund in the country, has five positions open, from various-level investment officers to a portfolio manager.



Since the start of 2009, says CB InsightsIntel Capital has seen the highest number of portfolio exits among corporate venture capital arms, butSAP Ventures has seen the highest percentage of IPO exits. Here are the top 15 corporate venture arms by exit activity since 2009, according to CB Insights.

According to Pitchbook, the median valuation of companies at IPO throughout the early 2000s was approximately 3x larger than it was for companies that were acquired. But the difference has been widening in recent years—greater than 5x each year since 2008 and hitting 6.5x in 2013. Pitchbook dives into why here.


Essential Reads

Sources tell Re/code that Qatalyst Partners, the investment bank led by Frank Quattrone, has been shopping around Jive Software for five months and that Oracle, SAP and Workday have all passed. Jive has had a difficult run since its 2011 IPO, says Re/code, as customers lose interest in social software for the enterprise.

Google is opening its first-ever retail store in Manattan.

What you think you know about the Web is wrong, says the CEO of Chartbeat.

Everywhere one turned at SXSW, people were talking about television, says Quartz. More here.



The CIA has been spying on our investigation into the CIA, complains the Senate Intelligence Committee.

A “youth bias” makes us think the most important events happen when we’re young, suggests a pair of Danish psychologists.

Jimmy Fallon and Jon Hamm expertly photobomb tourists in New York City.

New latte art, brought to you by Kazuki Yamamoto.


Retail Therapy

Diamonds that really are, gulp, the family jewels.


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