StrictlyVC: March 27, 2014

Good Thursday morning, everyone!


Top News in the A.M.

Twitter is turning into Facebook.

Pew has released a new “State of the News Media” report. Among its findings: 30 percent of U.S. adults get some of their news through Facebook, 10 percent through YouTube (which may be the biggest surprise), and 8 percent from Twitter.


Chamath Palihapitiya: Don’t Get Left Behind (Again): Buy Bitcoin

Chamath Palihapitiya, a former Facebook executive who opened his own investment firm, Social+Capital Partnership, in 2011, wants all of us to get rich on bitcoin. Such was his repeated message yesterday during a sit-down with reporter Brad Stone at a packed bitcoin conference in San Francisco. In fact, he argued that everyone should have “1 percent” of their assets in the digital currency, so that when it appreciates even more wildly, most people won’t be left even further behind economically.

Of course, Palihapitiya has plenty of reasons to be evangelizing the importance of bitcoin. In fact, he has around 100,000 of them. (That’s roughly how many bitcoin Palihapitiya said he controls, and at a cost basis of less than $100. One bitcoin is worth $522 as of this morning.)

For readers who might have missed the discussion and want a better idea of Palihapitiya’s thinking, below are some of the arguments he made yesterday.

On investing directly in the currency, versus investing in mining hardware companies and the like:

“My background is in [electrical engineering], [some of the mining entrepreneurs I’d met with] didn’t even know what the [term] ‘tape out’ was…you know, I didn’t want to spend $20 million to $40 million to tape out a chip that could be obsolete by the time they got it out of the fab.

All along, I’ve been specific that I think bitcoin as a store of value has immense more ability to appreciate than any company necessarily. It doesn’t mean that investing in a company is bad; it just means that, if given the choice – and I have that flexibility [with Social+Capital] – I chose to just invest in the bitcoin.”

On how owning bitcoin “effects change,” which is partly the mission, Palihapitiya has said, of Social+Capital:

“It’s progressing a set of financial changes that fundamentally empower a distributed class and disadvantages entrenched interests, and from that perspective, I think we should absolutely want that type of thing to win. So when I specifically buy bitcoin, what I’m thinking to myself is: I’m using my own personal capital to hopefully prop up and support something that would rip apart the existing financial system, and if it does, God bless it.

What will happen is [that] individuals on the right side of history, on the right side of justice, will benefit. Individuals will be able to get access to capital easier…to transact cheaper..and not get cheated. Example: for those of us who are not white and weren’t born here, who send money back to a third world country, you will know there are thugs who stand outside these money depots and will basically charge you like a cover charge to go inside and get your [cash]. So when I send money to Sri Lanka, my uncle or my cousin may only get $70 because he has to [pay] just to get through the front door. And that’s bulls__t.”

On whether he’s optimistic about alternatives to bitcoin, like the payment service Ripple:

“No. That’s kind of like saying, ‘You’ve had a taste of the Internet; [now] I’d like you to go back to these AOL chat rooms.’ It’s like, who cares. Let’s focus our energy on the thing that’s [most likely to make it] …Fundamentally, people are just arbitraging a trend. I think it’s fine if some people can speculate and make some money off it. Whatever. But the overwhelming majority of our money and time and intellectual horsepower should be allocated to bitcoin … because it has the chance.”

On whether there were growth patterns at Facebook that Palihapitiya is seeing replicated with bitcoin:

“Absolutely. One of the projects I worked on very early on [at Facebook] was our platform, and we had a way of looking at our platform API usage to kind of think about what was happening in the ecosystem as a corollary to what would happen to our user growth. And [at Social + Capital] we’ve been doing a lot of that same analysis here, and we see a lot of similar patterns [with bitcoin], and we think that’s really constructive. When you look at bitcoin and its distributed use [and the numbers of developers writing to it], it’s really impressive.”

On future plans:

“I’d like to buy more…Honestly, it’s probably the single biggest high beta investment opportunity of all. That’s why I really think it should be owned by as many people as possible, because if we look back, 30 years [from now] and these things are a million [dollars] a coin, I think it would be better if many people had shared in that appreciation instead of a few. That’s why I’m evangelical about it … We should all participate in this upside. Because I think it’s going to happen, and what shouldn’t happen is that a few should control all [of it].”


New Fundings

AppGyver, a three-year-old, San Francisco-based HTML5-centric development platform for quickly building mobile apps, has raised $2.5 million in funding led by Initial Capital of London, with participation fromOpen Ocean Capital, based in Helsinki.

BlueVine, a year-old, Palo Alto-based small business financing startup that just launched its beta service, has raised $4 million in new funding led by Lightspeed Venture PartnersGreylock ILCorrelation VenturesKreos Capital, and Kima Ventures.

Circle Internet Financial, a year-old, Boston-based company that’s trying to increase the mainstream adoption of digital currencies like Bitcoin through its payment platform for consumers and merchants, has raised $17 million in Series B funding investors that include Breyer CapitalAccel PartnersGeneral Catalyst PartnersPantera Capital, and Barry Silbert, founder and CEO of SecondMarket. Oak Investment Partners also participated in the funding, which brings the company’s total capital to $26 million.

Embrane, a five-year-old, Santa Clara, Ca.-based company that provides application-centric network services to its customers, has raised $14 million in Series C funding led by Cisco. The round also includes new investor Presidio Ventures and earlier investors Lightspeed Venture PartnersNew Enterprise Associates and North Bridge Venture Partners. The company has raised $41 million to date.

Everest Edusys, a three-year-old, Chennai, India-based venture focused on experiential science education for children from all income levels, has raised Series A funding of Rs 5.7 crore led by Lok Capital, with Chennai Angels participating. The Times of India says the capital will be used to set up state-of-the-art science labs in schools across Tamil Nadu, Karnataka and Kerala, as part of Everest’s plans to take science to poorer communities.

FlexMinder, a three-year-old, Seattle-based company that automates the healthcare reimbursement process, has raised $1.2 million in funding, including from WRF CapitalFounders Co-opAOARudy Gadre and Walt Winshall. The company has raised about $2.8 million altogether, shows Crunchbase.

GoCoin, a nine-month-old Singapore-based international payment platform for digital currencies, has raised $1.5 million in Series A funding led by Bitcoin Shop and former Facebook COO Owen Van NattaCrypto Currency Partners also participated in the round, along with individual investors Andrew Frame, who founded Ooma; TV producer David Neuman; and others.

High Fidelity, a year-old, San Francisco-based stealth virtual reality startup from Second Life founder Philip Rosedale, just raised $2.5 million, shows a new SEC filing. The round appears to bring the company’s funding to $6.45 million, per Crunchbase’s records. Its investors to date include True VenturesGoogle VenturesKapor Capital, and Linden Lab (the company behind Second Life).

HourlyNerd, a year-old, Boston-based company that connects MBA students and alumni to companies that need temporary or occasional help, has raised an undisclosed Series A round of financing. As part of the deal, says the Boston Herald, Dan Nova of Highland Capital Partners will join the board of directors, and Bill Helman of Greylock Partners will be named a key adviser. Last year, HourlyNerd raised $750,000 in seed funding, including from billionaire Mark Cuban.

LanzaTech, an 8.5-year-old, Roselle, Il.-based gas fermentation technology business that was was launched in Auckland, New Zealand, has raised $60 million in Series D funding led by Mitsui & Co, with participation from Siemens Venture Capital, and CICC Capital. Earlier investors also joined the round, including Khosla VenturesQiming Venture PartnersK1W1 and the Malaysian Life Sciences Capital Fund. The company has raised $119 million to date, shows Crunchbase.

LeanData, a two-year-old, Sunnyvale, Ca.-based startup focused on lead management software, has raised $5.1 million in Series A funding led by Shasta Ventures. Other participants in the round included Felicis VenturesCorrelation Ventures and the Funders Club.

LiveSafe, a two-year-old, Arlington, Va.-based mobile safety technology that connects users with safety officials through a real-time, two-way communication system, has received $6.5 million in Series A funding led by IAC.

Ometria, a year-old, London-based ecommerce intelligence startup, has received $1.5 million in seed funding from a long line of individual investors, including Huddle co-founders Alastair Mitchell and Andy McLoughlin.

Payward, a 2.5-year-old, San Francisco-based company that runs an alternative coin exchange called Kraken, has raised $5 million in Series A funding led by the European venture firm Hummingbird Ventures. Other investors include SecondMarket founder Barry Silbert. Kraken’s platform, writes TechCrunch, supports margin trading, advanced ordering, fast deposits and withdrawals through a partnership with the German online bank Fidor Bank.

scPharmaceuticals, a year-old, Lexington, Ma.-based company that’s developing pharmaceutical products for subcutaneous delivery, has raised $16 million in Series A funding co-led by 5AM Ventures and Lundbeckfond Ventures.

SmartAsset, a two-year-old, New York-based technology platform that promises to provide instant, personalized answers to complex financial questions, has raised $5.2 million in Series A funding led by Javelin Venture Partners, with participation from SV Angel and individual investors.

TakeLessons, a 7.5-year-old, San Diego-based online marketplace for finding private instructors, has raised $7 million in Series C funding led by Lightbank, with participation from earlier investors Crosslink Capital,SoftTech VC, and Triangle Peak Partners. New investor Moore Venture Partners, also participated in the round, which brings the company’s total funding to $11.8 million, shows Crunchbase.

TinderBox, a 3.5-year-old, Indianapolis, In.-based maker of sales workflow software, has raised $3 million in Series C funding led by Allos Ventures, with participation from Hyde Park Venture Partners and existing investors. The company has raised $4.3 million to date.


New Funds

TV Capital, a 16-year-old, financial-tech-focused, growth equity firm with offices in San Francisco and New York, has closed a $700 million fourth fund, FTV IV. The firm says it was initially targeting $500 million. Among its newest portfolio companies is World First UK Limited, a London-based maker of foreign exchange, international payment and hedging software, which closed a minority growth investment led by FTV, with participation from Industry Ventures and StepStone Group, last November.

Noesis Energy, a 4.5-year-old, Austin, Tex.-based company whose software helps commercial and industrial customers measure and compare energy consumption, has raised a $30 million fund to to help finance the energy efficiency projects of its customers, reports TechCrunch. Noesis will be writing checks ranging from $300,000 to $1 million. The company isn’t yet disclosing who is behind its new debt vehicle. Noesis, which is backed by Austin Ventures and Black Coral Capital, has itself raised $20.5 million in two rounds of funding since its launch.

Nyca Partners, a new venture firm founded by former Visa president Hans Morris, has sprung up to invest in financial technology startups, reports peHUB. Morris, who is investing his own money for now, expects to invest $10 million to $15 million a year in startups focused on merchant payments services, alternative credit networks and tools, and financial services infrastructure. Nyca already has five startups in its portfolio through both direct investments and equity that Morris has received as a board member. They include Lending ClubCardWorksGlobal AnalyticsAffirm and one stealth company. Before Visa, Morris spent 27 years at Citigroup and its predecessor companies in numerous operating and management roles, including as CFO.



King got crushed yesterday — though it could have been worse. The company behind the game “Candy Crush Saga” debuted on the New York Stock Exchange yesterday with its shares priced at $22.50 a piece. They closed the day at $19.

Spotify could take itself public some time in the fall of 2014, reports Quartz, saying the six-year-old music-streaming company has “participated in informal chats with some of the investment banks likely to fight for a role in a potential IPO” and that it “may start holding formal meetings as early as next month in anticipation of an offering in autumn.”

TubeMogul, a 6.5-year-old, Emeryville, Ca.-based video ad platform, filed its S-1 yesterday, disclosing plans to raise up to $75 million in an IPO . TubeMogul has raised more than $50 million in funding. Its biggest shareholders include Trinity Ventures (which owns 26.5 percent of the company prior to the IPO), Foundation Capital (22.7 percent), andNorthgate Capital.



It’s official. Social score startup Klout has been acquired by Lithium Technologies, a provider of social customer experience solutions for the enterprise, in a deal valued at nearly $200 million, reports Fortune.



Forbes released its annual Midas List of top venture capitalists yesterday. Sequoia Capital’s Jim Goetz nabbed the top spot, after WhatsApp’s sale to Facebook for $19 billion. In descending order, Forbes ranked Marc Andreessen of Andreessen Horowitz second, Benchmark’s Peter Fenton third, Peter Thiel of Founders Fund fourth, Jim Breyer of Accel Partners fifth, Sequoia’s Doug Leone sixth, Greylock Partners’ Reid Hoffman seventh, Steve Anderson of Baseline Ventures eighth, Paul Madera of Meritech Capital Partners ninth, and Scott Sandell of New Enterprise Associates tenth. TechCrunch breaks down the list a bit more here.

Venture capitalist Tim Draper says he is getting “close” to collecting the necessary 800,000 signatures needed to get his “Six Californias” measure before state voters in 2014 — even while his own internal polling shows Silicon Valley is opposed to the idea of splitting the state into six parts. “It’s bizarre,” he tells the San Francisco Chronicle.



It’s the second and final day of the Ad: Tech conference in San Francisco. Learn more here.


Job Listings

Apple has re-posted a listing for a corporate development analyst to help evaluate and execute on acquisitions and partnerships.


Essential Reads

Gamers and developers do not approve of Oculus VR‘s sale to Facebook, with some would-be Oculus developers pledging to cancel their orders for the company’s latest development kits. (Oculus VR’s earliest supporters on Kickstarter aren’t too excited about the outcome, either, evidently.)

Which is more terrifying: Facebook or Google?

Sequoia Capital “doesn’t display its heritage with the well-heeled pride you might find at other top-tier venture firms, let alone the likes of JPMorgan or KKR. At Sequoia the historic IPO filings are crammed into drab, drugstore-quality frames. Sequoia partners don’t enjoy luxurious private offices; instead they toil at stand-up desks in a big open hall. Conference rooms are adorned with cheap plastic wastebaskets. It’s as if Sequoia’s partners haven’t fully realized that they might be rich.”



Eight things you never knew your iPhone’s headphones could do.

musical experiment that turns happy songs into sad ones and vice versa.

The least valuable college degrees.


Retail Therapy


Go old school with this cool Bell Bullitt motorcycle helmet.


A tricycle, for grown-ups.


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