• The Tech IPO Whisper Wars Heat Up

    chatterOn Friday, the Wall Street Journal reported that GoDaddy, which provides domain-name registration and Web hosting services to millions of customers, is “preparing for an initial public offering” and that in “coming weeks [GoDaddy] plans to interview banks” to underwrite its offering. The source was “people familiar with the matter.”

    For better or worse, such whisperings have now become the new normal, and we can expect to see much more of the same as a result of the JOBS Act and the changes it has brought to tech IPOs. (The JOBS Act permits companies to submit confidential draft registrations to the SEC and go public within 30 days of their acceptance.)

    Before the JOBS Act, filing an S-1 was much more public. Competitors knew a company was planning to go public, and any revisions by the SEC caused costly delays that could cause a company to miss its “window” to go public.

    GoDaddy was just one company that suffered through this process. In 2006, it tried to go public but later pulled its offering. Former CEO Bob Parsons, who was replaced as CEO in 2012, said at the time that he yanked the offering because he found the quiet period that came along with it “suffocating” as it prevented him for doing radio, TV, or his-then weekly Internet radio show. (The company was also losing money, according to its S-1.)

    Today, the JOBS Act gives companies much more flexibility in timing their offering, and leaking their supposed IPO plans has become a big part of the process.

    For now, the situation seems to be a win-win for everyone involved. Companies can test the public waters while simultaneously chumming for strategic acquirers, while reporters can feast on “scoops” that are hard to disprove.

    If there’s any downside, it’s that not going public after all can be, well, awkward, says Jay Ritter, a professor at the University of Florida who studies the I.P.O. market. “One of the reasons companies like confidential filings is that if they start the process, then pull back because the market isn’t as receptive to their business model as they thought, it can be embarrassing for a company, just as it might be embarrassing for someone who broadcasts that they’ve applied for a new job and gets turned down. People like to wait until the good outcome is about to occur before they announce things.”

    Conceivably, employee morale could take a hit, too, if staffers become convinced that an IPO is nearer than they thought based on press reports.

    But John Fitzgibbon, founder of the research firm IPO Scoop, says the advantages far outweigh any potential downside.

    “Before the Jobs Act,” says Fitzgibbon, “companies had to hang it out there and hope to God the market didn’t fall apart. But [the nearly two-year-old law] created market timing.”

    Now, says Fitzgibbon, “You prime the pump, get the guns lined up and, like Bunker Hill, you don’t fire until you see the whites of their eyes.”

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    ,
    , , ,

  • StrictlyVC: March 14, 2014

    Top News in the A.M.

    Almost a week after a Malaysia Airlines jet disappeared with 239 passengers and crew members on board, there’s no firm evidence to suggest where it could be.

    —–

    The Analyst: Talking with Azure Capital’s Mike Kwatinetz

    Mike Kwatinetz is old school. The cofounder of Azure Capital in San Francisco isn’t likely to call himself a “an artisan” or “venture assistant.” He’s no great fan of networking. And Kwatinetz co-manages the firm with three people he has worked alongside for 20 years, a rarity in the venture world. (The firm’s GPs all spun out together from Credit Suisse First Boston.)

    Azure emerged on the scene in 2000, just as the market was going into Internet Bubble free fall. Bolstered by early wins like VMWare, which EMC acquired for $675 million in 2003; and BillMeLater, which eBay purchased in 2008 for $945 million, Azure survived, but it had to significantly reconstitute itself in the process. Although Azure raised $540 million in its 2000 debut fund, its second fund (vintage year 2006) was only $127 million, and Kwatinetz says the firm’s third fund, closed in 2011 is “smaller,” on the scale of its immediate predecessor.

    Today Azure focuses on post-seed-stage investments. The other day, StrictlyVC caught up with Kwatinetz, an amiable straight-talker with a PhD in mathematical modeling, to talk about that shift — and what’s next. Our chat has been shortened for length.

    Azure’s team is like a band. How would its four GPs characterize one other? Who plays drums?

    Hah. I’m probably the most analytic, though Paul Weinstein is pretty similar. Cameron [Lester] is probably the best one at networking. And Paul Ferris has some very deep relationships with real superstars in his area. He’s also probably the nicest of the four of us.

    Azure had some big exits in the aughts. What are some of your most recent exits?

    Cyan, [a computer network gear company] went public last year. We also had a relatively fast exit with [travel app] TripIt [acquired by the expense and travel management company Concur for $120 million in 2011].

    We completed our distribution of stock last year of Concur, which was an unusual deal but worked out well. When Concur came to the table, it as offering much less. We said no, so Concur wound up guaranteeing us its stock would be worth a certain amount two-and-a-half years later. We had to hold on to the stock [for the duration] but it made it possible for them to give us a lot less stock, while we locked in the price we wanted.

    I’ve read about these ratchet provisions, which sound incredibly risky. Are you seeing more of them?

    Not first-hand, though I’ve heard other instances of them. This was a pretty big payday for key members of the TripIt team, though, and taking cash right away [versus agreeing to this stock deal] would have significantly reduced their payday.

    Where’s your investment sweet spot right now?

    We tend to come in at around a $10 million [pre-money valuation], so we call ourselves post-seed — that’s how we think of ourselves. We’re aiming to have three-quarters of our startups in that category and one or two earlier and one or two later.

    It seems like that stage is getting crowded all of a sudden.

    Post seed is still the least crowded. About 40 percent of seed-funded companies can’t get to their next round, so we have a tremendous volume of opportunity, though, again, we’ll make exceptions and go even earlier. We’ve already invested in the new company of TripIt’s founders, Chairish, an online consignment marketplace for furniture. It’s now reaching that post-seed stage and they’ll have to decide if they raise another round; from our view, I’d be happy if we could lead it.

    Having experienced the late ’90s dot com bubble, how are you feeling about the market right now?

    It’s wide open but the requirements are much higher than they were in the mid ‘90s, even pre-bubble. What’s interesting to us: the Toronto Stock Exchange and the London Stock Exchange are trying to fill the gap that Nasdaq has created by moving up market, so we’re looking at them. We want as many options as possible for our companies.

    What are the advantages and disadvantages of going abroad?

    There are lots of pros and cons to Toronto. The pros: you need a minimum of $10 million in [annual] revenue, not $100 million. Of course, you don’t want the to be orphaned afterward, where there’s no constituency of buyers and your company becomes a penny stock. So we’re trying to understand all of that better before we do anything in that arena.

    We’ve been studying London longer. The [revenue] threshold is higher, but there are restrictions about how you can exit that make it trickier.

    Do you think the U.S. is anti- small companies?

    I think startups that get acquired before going public cut off job creation and that the government should pay attention to that.

    300x250_Static

    New Fundings

    EnEvolv, a three-year-old Boston-based company that’s engineering microorganisms to make chemicals, enzymes and small molecules for variety of industries, has raised $1.7 million in Series A funding led by Cultivian Sandbox Venture Partners of Chicago.

    Coull, a 5.5-year-old, Bristol, England-based ad tech company whose technology allows advertisers to tag individual products within videos that can be clicked on for purchase, has raised $4 million from angel investors, says TechCrunch. The company has raised $16 million to date, all from wealthy individuals, including John Greathouse, a partner with Rincon Venture Partners, and Paul Fraser, a founder of PFC Auctions.

    Kineta, a six-year-old, Seattle-based company that’s developing drugs to treat RNA viruses like hepatitis C, influenza, and the common cold, has raised an undisclosed amount of investment from angelMD, a crowd-funding platform that connects physician investors with medical startups seeking capital investments, advisors, and users.

    Mubi, a six-year-old, Palo Alto, Ca.-based online movie website that integrates elements of social networking with on-demand video streaming, has raised $7.5 million in Series D funding, including from Floreat, MMC Ventures and White Star Capital. Mubi has raised $15.7 million to date, according to Crunchbase.

    ownCloud, a three-year-old, Lexington, Ma.-based company behind the ownCloud Project, a popular file sync and share open source project, has raised $6.3 million in Series A funding led by Devonshire Investors and earlier backer General Catalyst Partners, with participation from existing angel investors. The company has raised roughly $9.6 million altogether, shows Crunchbase.

    Premise, two-year-old, San Francisco-based company that’s building a network to track macroeconomic data in real time, has raised $11 million in Series B funding led by The Social+Capital Partnership. Earlier investors Google Ventures, Harrison Metal, Andreessen Horowitz and Bowery Capital also participated in the round, which brings the company’s total funding to $16.5 million. TechCrunch takes a look at the company here.

    Sage Therapeutics, a two-year-old, Cambridge, Ma.-based company that’s developing medicines for central nervous system disorders, has raised $38 million in Series C financing from OrbiMed Advisors, EcoR1 Capital Management, Foresite Capital Management, Third Rock Ventures and ARCH Venture Partners. The funding comes just five months after the company closed on a $20 million Series B round led by ARCH Venture Partners and Third Rock Ventures. The company has raised roughly $95 million to date.

    SiNode Systems, two-year-old, Chicago-based materials startup developed at Northwestern University, has raised an undisclosed amount of seed funding from Energy Foundry, an impact venture capital fund created out of the Illinois Energy Infrastructure Modernization Act.

    Smart Sparrow, a three-year-old, Sydney, Australia-based ed-tech start-up, has raised $10 million in funding led by London-based Yellow Brick Capital. Earlier investors OneVentures and Uniseed — which had given the company $2 million last year — also participated in the round.

    SteelBrick, a four-year-old, Palo Alto, Ca.based maker of easy-to-use apps for Salesforce.com customers, has raised $5 million backing from SteelBrick CEO Godard Abel, and Matt Gorniak, former global SVP sales/alliances from BigMachines (Abel’s last company), who will serve as a senior advisor to SteelBrick.

    Xapo, a two-year-old, Palo Alto, Ca.-based company that’s building bank vaults deep in the earth to store millions of dollars worth of bitcoin code on computer drives, has raised $20 million in first-round funding led by Benchmark. Other investors include Fortress Investment Group and payment-focused VC firm Ribbit Captial. It’s the brainchild of Wences Casares, former CEO of digital wallet company Lemon (acquired by Lifelock last December). The WSJ has much more on the company here.

    —–

    New Funds

    Binary, a new San Francisco-based, consumer-focused, early-stage venture fund, is emerging on the scene, reports Fortune. The firm, which isn’t talking yet with reporters, was founded by two VCs of other firms who’ve joined forces: Jonathan Teo and Justin Caldbeck. Teo comes to Binary after two years as a managing director at General Catalyst Partners, whose investment in Snapchat Teo reportedly led. (He also reportedly owns a personal stake in the company.) Teo was previously a principal at Benchmark Capital, where he says he originated its investments in Instagram and Twitter. (So Teo, who also logged four years as an engineering manager at Google, is a superstar, basically.) Caldbeck has meanwhile spent the last three years as a managing director at Lightspeed Venture Partners and had spent the previous six years working his way up to partner at Bain Capital Ventures. The one-time McKinsey & Company analyst has led high-profile deals for Lightspeed in numerous consumer startups, including GrubHub and TaskRabbit.

    Maiden Lane, a new, San Francisco-based firm is “expected to close its debut fund within the next week on between $20 million and $25 million,”reports Fortune. The fund’s LPs include traditional sorts, such as Top Tier Capital Partners and Venture Investment Associates. Half of the firm’s capital will be designated for AngelList syndicates, says Fortune, while the other half will flow to direct investment opportunities (or co-investments) offered via AngelList’s deal platform.

    —–

    Exits

    Appixia, a young Tel Aviv, Israel-based startup — incubated through the Microsoft Ventures Israel Accelerator program — has been acquired by the publicly traded Israeli company Wix, a cloud-based Web development platform. Terms for the deal were not disclosed. Appixia’s platform promises to make it easy for retailers to take their stores mobile and build their own native commerce apps.

    Katech, a 37-year-old, Clinton Township, Mi.-based company that specializes in the design, prototyping, testing, research and development, and making of engines, has been acquired by six-year-old EcoMotors, the venture-backed maker of advanced engines and power trains. Terms of the deal weren’t disclosed. EcoMotors has raised roughly $60 million from investors, including Khosla Ventures, Bill Gates, and Braemar Energy Ventures.

    LaunchRock, a three-year-old, Walnut, Ca.-based company that helps startups set up viral “launching soon” pages in minutes, has been acquired by Fundable, a business crowdfunding platform. Terms of the deal weren’t disclosed. LaunchRock had raised $800,000 in seed funding from 500 Startups, White Star Capital, Venture51, Quotidian Ventures andTrinity Ventures, among others.

    Zuuka, a five-year-old, Santa Barbara, Ca.-based children’s media company, has been acquired by New York-based mobile games and app developer Cupcake Digital for undisclosed terms. Zuuka had raised an undisclosed amount of funding from CFP Investments.

    —–

    People

    Bill Gates sits down with Rolling Stone for extraordinarily wide-ranging interview that’s well worth reading. Among his many keen observations, Gates says, “We take things like TV or Internet or a microwave or a refrigerator for granted, but moving people from basic lives to decent lives requires a lot less than that. You know, development sometimes is viewed as a project in which you give people things and nothing much happens, which is perfectly valid, but if you just focus on that, then you’d also have to say that venture capital is pretty stupid, too. Its hit rate is pathetic. But occasionally, you get successes, you fund a Google or something, and suddenly venture capital is vaunted as the most amazing field of all time. Our hit rate in development is better than theirs, but we should strive to make it better.”

    Serial entrepreneur Max Levchin sat down for a fireside chat with PandoDaily founder Sarah Lacy last night. Among other things, he said that his social apps company Slide “drained the crap out of me.”

    Oh, boy. Barry McCarthy is out the door of Clinkle, reports Re/code. The longtime Netflix CEO joined the stealth payments startup last fall in a move that signaled the still-stealth company was ready for prime time. In fact, McCarthy was led to believe the company’s app would launch in November. Instead, the app has only gone live in a limited beta test. “They’re not nearly as close to scaling the businesses as I thought they were when I came in the door,” McCarthy tells Re/code. “And that’s what I do.” In related, terrible news for the startup that raised what was infamously billed as the “largest seed round in Silicon Valley history,” former Twitter designer Josh Brewer has reportedly walked away from Clinkle, too, after less than a week’s time. (That’s probably some kind of record.)

    Pamela Rice has joined the alternative lending company OnDeck as its senior vice president of technology. Rice worked as a hiring manager at PayPal for nearly eight years, as a credit and payments product leader. OnDeck, in New York, just last week announced a whopping $77 million round led by Tiger Management, with earlier investors Institutional Venture Partners, RRE Ventures, SAP Ventures, Google Ventures, First Round Capital, Industry Ventures, and Peter Thiel participating.

    David Zhu, former COO of Chinese search giant Baidu, has joined GGV Capital as a venture partner in Singapore. According to his bio, he was in “charge of [Baidu’s] overall operations” from 2002 until 2007, when he left. Before joining Baidu, he was VP of one of what was one of country’s largest consulting companies, Han Consulting.

    —–

    Happenings

    It’s a couple of months away, but knowing some of you like to plan ahead: The National Venture Capital Association is hosting one of its biggest yearly events, VentureScape, on May 14 at the Westin San Francisco. The two-day event will feature GE chairman and CEO Jeff Immelt, Workday cofounder and CEO Aneel Bhusri, and former Secretary of State Condoleezza Rice, among other speakers. Learn more here.

    —–

    Job Listings

    Looks like Andreessen Horowitz is still in the market for both consumer and enterprise deal partners to help the firm’s GPs find and assess deals. (H/T: Dan Primack)

    —–

    Data

    A chart, care of CB Insights, of the top 10 (in terms of fundraising) tech companies backed by Goldman Sachs.

    —–

    Essential Reads

    Facebook CEO Mark Zuckerberg says he has called President Barack Obama to express his frustration over the government’s spying. “The U.S. government should be the champion for the Internet, not a threat,” he wrote in a post on his Facebook page yesterday.

    Leaked photos claim to show Amazon‘s new games controller, and it is ugly.

    Oops. Phone call metadata does betray sensitive details about your life, says a new study.

    —–

    Detours

    To keep teens alert, a growing number of high schools is letting them sleep in.

    Former Secretary of State Colin Powell posts a 60-year-old selfie to Facebook.

    Two guys, singing Bey’s newest album, “Beyonce,” in five minutes.

    —–

    Retail Therapy

    You have to admire creative, high-end retailers. In today’s news, Harrys of London is selling $1,500 socks crafted from deer hair. Deer hair! Says the Daily Mail, “Harrys of London claim the grey-colored fashion accessories are the ‘most exclusive in the world’ because they are crafted out of ‘light’ and ‘soft’ down hair harvested from New Zealand Red Deer.” Before readers race to the store’s site, you should know the report goes on to say that “the Today show managed to get hold of a pair and after giving them to various people to touch concluded the high price tag is ‘not justifiable.’”

    ——

    To sign up for StrictlyVC, click here. To advertise, click here.

     

    Connie

  • The Analyst: Talking with Azure Capital’s Mike Kwatinetz

    Mike KwatinetzMike Kwatinetz is old school. The cofounder of Azure Capital in San Francisco isn’t likely to call himself a “an artisan” or “venture assistant.” He’s no great fan of networking. And Kwatinetz co-manages the firm with three people he has worked alongside for 20 years, a rarity in the venture world. (The firm’s GPs all spun out together from Credit Suisse First Boston.)

    Azure emerged on the scene in 2000, just as the market was going into Internet Bubble free fall. Bolstered by early wins like VMWare, which EMC acquired for $675 million in 2003; and BillMeLater, which eBay purchased in 2008 for $945 million, Azure survived, but it had to significantly reconstitute itself in the process. Although Azure raised $540 million in its 2000 debut fund, its second fund (vintage year 2006) was only $127 million, and Kwatinetz says the firm’s third fund, closed in 2011 is “smaller,” on the scale of its immediate predecessor.

    Today Azure focuses on post-seed-stage investments. The other day, StrictlyVC caught up with Kwatinetz, an amiable straight-talker with a PhD in mathematical modeling, to talk about that shift — and what’s next. Our chat has been shortened for length.

    Azure’s team is like a band. How would its four GPs characterize one other? Who plays drums?

    Hah. I’m probably the most analytic, though Paul Weinstein is pretty similar. Cameron [Lester] is probably the best one at networking. And Paul Ferris has some very deep relationships with real superstars in his area. He’s also probably the nicest of the four of us.

    Azure had some big exits in the aughts. What are some of your most recent exits?

    Cyan, [a computer network gear company] went public last year. We also had a relatively fast exit with [travel app] TripIt [acquired by the expense and travel management company Concur for $120 million in 2011].

    We completed our distribution of stock last year of Concur, which was an unusual deal but worked out well. When Concur came to the table, it was offering much less. We said no, so Concur wound up guaranteeing us its stock would be worth a certain amount two-and-a-half years later. We had to hold on to the stock [for the duration] but it made it possible for them to give us a lot less stock, while we locked in the price we wanted.

    I’ve read about these ratchet provisions, which sound incredibly risky. Are you seeing more of them?

    Not first-hand, though I’ve heard other instances of them. This was a pretty big payday for key members of the TripIt team, though, and taking cash right away [versus agreeing to this stock deal] would have significantly reduced their payday.

    Where’s your investment sweet spot right now?

    We tend to come in at around a $10 million [pre-money valuation], so we call ourselves post-seed — that’s how we think of ourselves. We’re aiming to have three-quarters of our startups in that category and one or two earlier and one or two later.

    It seems like that stage is getting crowded all of a sudden.

    Post seed is still the least crowded. About 40 percent of seed-funded companies can’t get to their next round, so we have a tremendous volume of opportunity, though, again, we’ll make exceptions and go even earlier. We’ve already invested in the new company of TripIt’s founders,Chairish, an online consignment marketplace for furniture. It’s now reaching that post-seed stage and they’ll have to decide if they raise another round; from our view, I’d be happy if we could lead it.

    Having experienced the late ’90s dot com bubble, how are you feeling about the market right now?

    It’s wide open but the requirements are much higher than they were in the mid ‘90s, even pre-bubble. What’s interesting to us: the Toronto Stock Exchange and the London Stock Exchange are trying to fill the gap that Nasdaq has created by moving up market, so we’re looking at them. We want as many options as possible for our companies.

    What are the advantages and disadvantages of going abroad?

    There are lots of pros and cons to Toronto. The pros: you need a minimum of $10 million in [annual] revenue, not $100 million. Of course, you don’t want the to be orphaned afterward, where there’s no constituency of buyers and your company becomes a penny stock. So we’re trying to understand all of that better before we do anything in that arena.

    We’ve been studying London longer. The [revenue] threshold is higher, but there are restrictions about how you can exit that make it trickier.

    Do you think the U.S. is anti- small companies?

    I think startups that get acquired before going public cut off job creation and that the government should pay attention to that.

    Connie

    ,

  • StrictlyVC: March 13, 2014

    One more weekday to go, people; we can do this!

    Speaking of which, you’ll notice there’s no column today — meetings — but we’ll see you here again tomorrow. In the meantime, enjoy the intel below!

    —–

    Eventbrite has joined the $1 billion club. Dan Primack of Fortune is reporting this morning that the event ticketing platform has raised “around $60 million” in new venture capital funding at billion-dollar valuation just 11 months after raising $60 million from Tiger Global Management and T. Rowe Price. The company was widely expected to go public this year. Primack suggests that Tiger and T. Rowe wanted more ownership before that happens.

    FireEye, the computer security firm, warned Target that something suspicious was going on within its payments and security system before 40 million credit card numbers were stolen. “And then…” reports BusinessWeek, “Nothing happened.”

    300x250_Static

    New Fundings

    Acorns, a two-year-old, Newport Beach, Ca.-based micro-investing platform that allows people to invest in sub-dollar amounts, then rounds up those fractional shares to invest in a portfolio of index funds, has raised $5.5 million in Series B funding led by Jacobs Asset Management in New York. Clients of Digital Offering, which calls itself a “next-generation, technology-driven investment bank,” also participated in the funding. Acorns has raised $8.3 million to date.

    Azimo, a two-year-old, London-based international money transfer startup, has raised $10 million in first-round funding led by Greycroft Partners. Frontier Investments Group, eVenture, TA Ventures, RI Digital Ventures, and KRW Schindler Investments also participated in the round.

    Banjo, a three-year-old, Redwood City, Ca.-based social media startup that gives users a way to read multiple social media conversations about particular topics of news in one screen, has raised $16 million led by Balderton Capital. Other participants in the round, which bring the company’s total funding to $21 million, included BlueRun Ventures and Vegas Tech Fund.

    BrightBytes, a two-year-old, San Francisco-based analytics company that measures the effectiveness of spending, technology and more to help schools make better decisions, has raised $15 million in Series B funding. Bessemer Venture Partners led the round; earlier investors Rethink Education and Learn Capital also participated in the round, which brings the company’s total funding to $18.5 million.

    Codoon, a four-year-old, Chengdu, China-based company that makes smart fitness-tracking wearables, has raised $9.8 million in Series A funding led by Shenzhen Capital Group, with participation from CITIC Capital. The company had raised $3.6 million from the Chinese online gaming company Shanda in 2011.

    Credit Karma, a seven-year-old, San Francisco-based online credit score provider, has raised $85 million in growth-stage funding led byGoogle Capital. Tiger Global Management and earlier investors Ribbit Capital and Susquehanna Growth Equity also participated in the round, which brings Credit Karma’s total funding to $118.5 million.

    MuleSoft, a 7.5-year-old, San Francisco-based company whose software enables applications from different vendors to communicate and exchange data, has raised $50 million at a valuation of nearly $800 million, reports the WSJ. The round was co-led by three venture firms—earlier backers New Enterprise Associates and Lightspeed Venture Partners and new investor Meritech Capital Partners, which had to wait nearly a year to invest in MuleSoft because it was shut out of the last round, Meritech Managing Director Paul Madera tells reporter Deborah Gage. MuleSoft has raised roughly $130 million altogether, shows Crunchbase.

    Omniata, a two-year-old, San Francisco-based data platform that gives developers an overview on how their apps are being used and monetized, has raised $5.2 million in Series A financing led by Creandum. Sigma West, which had led a $1.6 million seed round in Omniata, also participated in the round.

    Quantenna Communications, a 7.5-year-old, Freemont, Ca.-based fabless semiconductor company, has raised an undisclosed amount of funding from Tokyo-based NTT Finance Corp, which is part of the NTT Group. Quantenna has raised more than $200 million from earlier backers, including DAG Ventures, Sequoia Capital, Sigma Partners, Southern Cross Venture Partners, Telefonica Ventures and Venrock.

    Quikr, a 6.5-year-old, Mumbai, India-based online classifieds site, has raised $90 million in funding led by Kinnevik of Sweden. Omidyar Network and Nokia Venture Partners also participated in the round, along with earlier backers Matrix Partners, Norwest Venture Partners,Warburg Pincus and eBay. Quikr has raised $136 million to date, according to Crunchbase.

    TaxJar, a year-old, San Diego-based maker of tax management software for online retailers, has raised $600,000 in seed funding, including from Dan Rose, vice president of partnerships at Facebook;Harris Barton, principal at H Barton Asset Management; and Roy Rubin, co-founder and COO at Magento. Xconomy looks at TaxJar’s opportunity in this piece.

    Tipbit, a three-year-old, Bellevue, Wa.-based company that makes a productivity-focused email app, has raised $4 million in new funding led by Ignition Partners. Tipbit has also raised money from Andreessen Horowitz in the past, shows Crunchbase.

    VeryLastRoom, a 2.5-year-old, Marseille, France-based, last-minute mobile-based hotel booking service, has raised $2.1 million funding led by the French venture firm A Plus Finance, with Extend Capital and Sigma Gestion participating. The company has raised $2.65 million to date.

    Violet Grey, a new, L.A.-based retail store (on Melrose Avenue) and high-end beauty products site, has raised $7.1 million from investors, shows an SEC filing. The company was founded by Cassandra Greyand her husband, Paramount film studio executive Brad Grey. And is launching with 400 “prestige” products, Grey told the WSJ last month.

    —–

    New Funds

    Hamilton Lane, the private markets asset management firm, yesterday announced a final close on its first dedicated fund in Brazil, called HL Brazil FIQFIP. The fund, based in Rio de Janiero, will be investing R$150 million, or $63.5 million, in primary, secondary- and co-investment deals in the country. “Brazil’s economic and investment landscape has continued to mature since our venture into the region, and the country has established itself as a key area of opportunity in private markets investing. We remain committed to the region for the long term and look forward to continuing to build on our success in Brazil and across Latin America,” said firm CEO Mario Giannini in a statement. The fund, whose LPs include Brazilian institutions, including pension funds and financial companies, has already put capital to work in six deals, all of them diversified across vintage year and strategy, says the firm.

    RiverVest Venture Partners, a 14-year-old, St. Louis, Mo.-based, early-stage venture capital firm focuses on life sciences companies, is looking to raise $150 million for its third fund, according to an SEC filing that states the fund’s first sale has yet to occur. RiverVest’s first two funds totaled $164 million in committed capital. Among the firm’s bets: Lumena Pharmaceuticals, a biopharmaceutical company that Tuesday announced it had raised $45 million in Series B funding led by New Enterprise Associates; and ZS Pharma, a Coppell, Tx.-based specialty pharmaceutical company focused on treating kidney, cardiovascular and liver disorders. Last Friday, ZS Pharma announced it had raised a $55 million round of Series D financing led by Novo A/S.

    Venrock, the 45-year-old technology and health care investor — with offices in Cambridge, Ma.; Palo Alto, Ca.; and New York City — is hoping to raise $200 million for its newest fund, Venrock Healthcare Capital Partners II LP, shows an SEC filing that says the first sale has yet to occur. Among Venrock’s more recent healthcare investments is Tesaro, two-year-old biopharmaceutical company that’s “dedicated to improving the lives of people with cancer.”

    —–

    Exits

    ChinaVision Media Group has sold a 60 percent stake in its business to Alibaba Group Holdings, for roughly $800 million, TechNode reports. ChinaVision Media oversees newspapers, produces mobile content, and manages artists directly; it also invests in movies and licenses third-party content, says TechNode, which suggests that Alibaba may hope to entice users to its Ailyun OS Android-based operating system for smart phones (and TVs) using ChinaVision content.

    Giant Media, a 4.5-year-old, Venica, Ca.-based video ad platform that gained some renown for distributing a Dollar Shave Club video that was viewed more than 13 million times, was acquired this week by Adknowledge, the privately owned digital advertising marketplace. Terms of the deal weren’t disclosed. Giant had bootstrapped its way to success; according to a PandoDaily report from last April, the company was on track to see $20 million in revenue in 2013. The deal marks Adknowledge’s 12th acquisition since its 2004 founding.

    That was fast: Google Capital two weeks ago invested $40 million in the education company Renaissance Learning, in a deal that valued it at $1 billion. This morning Hellman & Friedman announced that it’s purchasing the company from its majority owner, European private equity firm Permira, for $1.1 billion. Fortune has more here.

    Snell, a 4.5-year-old, U.K.-based broadcast production, management, and Web distribution company, has been acquired for an undisclosed amount by the 41-year-old, U.K.-based post-production and broadcast technology company Quantel. The two companies have combined revenues of $170 million.

    WorkWell, a 16-year-old, Duluth, Mn.-based company that specializes in soft tissue injury prevention and treatment, has been acquired by NextImage Medical for undisclosed financial terms. NextImage, a six-year-old, San Diego-based radiology services management company, is backed by the venture firm Chrysalis Ventures.

    —–

    People

    In its newest issue, Vanity Fair takes a long look at Google co-founder Sergey Brin’s “liaison” with Google Glass marketing manager Amanda Rosenberg, and Silicon Valley’s “relationship issues” more broadly (though it sticks mostly to those of Brin). On the culture of office romances at Google specifically, one “Atherton socialite” with “close connections to the company,” tells VF: “When you have executives dating employees, it’s like a doctor-nurse relationship—it’s not illegal, but it seems like it shouldn’t be happening. Tech is a man’s world. Most of these guys are married, and then there are these young fresh [female] sharks, and they’re smart too…It’s almost like you get a Stanford degree so you can work at Google, so you can find a husband.”

    Vanity Fair also has lunch with Twitter co-founder Biz Stone, at one of StrictlyVC’s favorite burger spots in San Francisco, Liverpool Lil’s. (Stone, a vegan, orders pear salad without the cheese, and fries.) Stone comes across as highly likable, telling the reporter, who brings up his newfound wealth: “We have everything we could need. I’m very comfortable with my dented old Volkswagen Golf. I would feel embarrassed if I bought a fancy-looking car or a new home. It would just reflect poorly on me somehow…The most important thing for me about having money is that it takes away most of the anxiety I’ve lived with my whole life.”

    And Eileen Burbidge, one of three partners of London-based Passion Capital, gets the profile treatment from VentureBeat’s Christina Farr. The Telegraph, which first published the piece, calls Burbidge “one of the most powerful forces in Silicon Roundabout, (the UK’s answer to Silicon Valley).”

    —–

    Jobs

    Co=Creation=Capital is seeking technical co-founders for a stealth, seed-funded, Menlo Park, Ca.-based company that “addresses important or at least irritating problems for busy people that happen to be carrying a smartphone.” (If you’re wondering: Co=Creation=Capital is a new incubator/investing outfit cofounded by Sean Foote, a former GP at Labrador Ventures.)

    —–

    Data

    Israeli companies aren’t seeing much funding in the local currency, the Shekel, reports the WSJ, basing its conclusion on a new report by the Tel Aviv-based IVC Research Center. According to IVC’s findings, foreign venture capital in first-time investments in Israeli startups outstrips local VC funding by almost two-thirds right now, and last year was the first time Israeli VC first investments dropped below 50 percent of the total.

    I’d asked Adam Fisher, an Israel-based partner of Bessemer Venture Partners, why things are trending the way they are for yesterday’s StrictlyVC. If you missed it, he explained that Israel firms hadn’t built strong brands like we see in the U.S, and that when “when U.S. funds with a track record came in and, especially when they put someone on the ground, it became a very alluring thing” for local entrepreneurs.

    —–

    Essential Reads

    Here’s what Goldman Sachs thinks of bitcoin.

    —–

    Detours

    Any time now, San Francisco is due for another massive earthquake. Writer Ethan Watters does a superb job of painting a worst-case scenario when it arrives. (Skip this if you want to sleep soundly tonight in the Bay Area.)

    According to a new study, the mood of your Facebook updates are directly influenced by the moods of those in your newsfeed.

    I Hope You Enjoy This Artisanal Knuckle Sandwich.

    —–

    Retail Therapy

    Not bad. (You just know everyone on this thread will be wearing one.)

    St. Patrick’s Day is coming. Get ready.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

     

    Connie

  • StrictlyVC: March 12, 2014

    Good morning, everyone! Quick weekly reminder: You can always reach out to me with tips, complaints, piercing observations, etc., at connie@strictlyvc.com or on Twitter.

    —–

    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.”

    300x250_Static

    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.ru, Horizons 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 Ventures. NGN 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 Management, RA Capital Management, Pappas Ventures, RiverVest 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 Rovio, Supercell, 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 Capital; AMC 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 Group, Berwind Private Equity, Intel Capital, Nidec 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 President. WordPress 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 Group, Foundry 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 Capital, reports 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.

    —–

    Exits

    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 Ventures, Time 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.

    —–

    People

    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 Zuckerberg, Yahoo‘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.

    —–

    Data

    Since the start of 2009, says CB Insights, Intel 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.

    —–

    Detours

    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.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • Foreign Firms Rule the Roost in Israel, Says Local VC

    Adam FisherIsrael’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.”

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , , ,

  • StrictlyVC: March 11, 2014

    Happy Tuesday, everyone.

    Hey, that time change wasn’t so bad after all, was it? (We kid! Whose wretched idea was Daylight Savings anyway?)

    —–

    Top News in the A.M.

    It’s a contagion. Whisper, the 18-month-old anonymous sharing app, is raising “just shy” of $30 million at a post-money valuation of $200 million, reports Re/code. The deal comes just six months after the company raised $21 million from investors and brings its total funding to $54 million. (Notably, it also comes hot on the heels of a $10 million round for its younger competitor Secret, whose newest round was leaked to the media on Friday.)

    Re/code reports that the new round is being led by Shasta Ventures, with Thrive Capital and China’s Tencent (which may reportedly chip another $15 million into the round) participating. Whisper’s earlier investors — they include Sequoia Capital, Lightspeed Venture Partners and Trinity Ventures — also joined the round.

    —–

    Metamorphic Ventures Closes on $70 Million to Back Post-Seed Deals

    New York’s Metamorphic Ventures isn’t one of best-known brands outside the city. That’s by design, says cofounder David Hirsch, who was Google’s second employee in New York and stayed eight years before diving into venture capital in 2009. After raising $20 million from well-connected individual investors to get started, Metamorphic needed time to start proving itself, he suggests.

    Fast forward to today, and things appear to be clicking along. The firm, which invests in digital media, commerce, payments, ad tech, software infrastructure and other Internet-enabled startups, has already enjoyed seven minor exits, and its portfolio includes promising companies like the popular crowd-funding platform Indiegogo and the retail analytics company RetailNext. More, Metamorphic has cultivated what Hirsch calls a “distributed human engine” made up of both powerful advisors (including Square’s head of product and engineering, Gokul Rajaram), individual investors (HSN Chairman and CEO Mindy Grossman), and deep-pocketed strategic investors (Advance Publications) that have collectively given Metamorphic another $50 million to “add to the cover” of that earlier, $20 million fund, says Hirsch.

    The capital will be used to invest in many more startups, but Metamorphic also raised the funds to maintain more ownership of its breakout portfolio companies, which the firm hasn’t been able to do to date. Hirsch talked with StrictlyVC about it yesterday.

    You’re looking to fund startups that have raised some money but not Series A money. Is that still an underserved segment in New York?

    We think so. The market has really shifted to where the large private equity firms like Coatue Management and Tiger Global are [making big bets on later-stage companies] and big VCs like Kleiner Perkins are moving downstream to do more A and B. But there’s still a hole in the market right now in seed. It’s the opposite of the Series A crunch; we’re seeing amazing, angel-funded companies that are hitting their growth stages that don’t want to raise these mega A rounds just yet.

    You say you made some mistakes early on. What was the biggest?

    A lot of the companies grew bigger more quickly than we anticipated, so we ended up farming out our winners to Silicon Valley. We built a great portfolio, but [our fund] was too small to have meaningful ownership. So right now, the goal is 10 percent ownership – that’s what we strive for. We raised the money in order to have that optionality that we’ve been losing.

    What size checks will you be writing now that you have more to invest?

    They’ll be anywhere from $500,000 to $1 million for that first bite.

    You have investments on both coasts. How would you characterize valuations in New York right now, compared with Silicon Valley?

    It seems more specific to the team than [rooted in geography], though it sometimes feels like the capital on the West Coast is less price sensitive than in New York. That could be a function of a lot of things. I think New York is more monetization and revenue focused. [Investors here] like more data to back into a [high] price.

    Is Metamorphic a typical New York firm in that sense?

    We’re not value investors, but we’re disciplined as far as price is concerned, and we want to make sure we’re careful. We’ll pay up for the right teams. And we do believe we’re at the next generation of Internet businesses where maybe the price increase is justified. But sometimes it’s not. Sometimes you’re dealing with bigger investors who are [offering term sheets] as a call option, and that can price up opportunities for the wrong reasons.

    Anything else you can share that you’ve learned thus far as a VC?

    Google always had this [hiring] thing called the “airport test.” Someone could be an all star, super smart, capable of helping you solve pain points. But if you missed your flight and were trapped at the airport [together], would you be excited to hang out with this person?

    Working relationships are long-term relationships; that’s true of [colleagues] as well as with investors and founders. There are always reasons to say no to deals. A lot of the business is just trusting your gut.

    300x250_Static

    New Fundings

    Drifty, a two-year-old, Madison, Wi.-based maker of tools to help mobile developers build their apps and sites, has raised $1 million in seed funding from Arthur Ventures, reports TechCrunch. The company was a participant in the TechStars Cloud 2013 incubator.

    GroundMetrics, a four-year-old, San Diego-based startup that’s working with oil, gas, mining, geothermal companies and the U.S. Department of Energy to commercialize a new class of sensor-based survey and monitoring services, has raised $2.4 million in new funding, according to an SEC filing that shows a $3 million target. The company has raised at least $3.7 million in the past, shows Crunchbase, including fromTechCoast Angels and La Costa Investment Group.

    OwnCloud, a three-year-old, Lexington, Ma.-based company that offers a commercial version of the open-source file sync and share community project of the same name, has raised $6.3 million in Series A funding led in part by earlier investor General Catalyst Partners, reports Boston Business Journal. The company has raised roughly $10 million to date, including from the Boston-based angel fund CommonAngels.

    Quill, a four-year-old, London-based content marketing company, has raised $8.3 million in funding led by Smedvig Capital, with participation from Dan’l Hewitt, formerly of Demand Media and Vice Media. The company has raised roughly $10 million to date.

    Woowa Bros, a three-year-old, Seoul, South Korea-based app developer, has raised $12 million from investors including CyberAgent Ventures,Altos Ventures and IMM Investment, according to reports. Among the company’s most popular apps is the Korean food delivery app Baedalui Minjok.

    Sanghvi, a four-year-old, Pune, India-based company that operates numerous wellness brands, has raised $10 million in funding from Tano Capital, says VCCircle. The funding represents Sanghvi’s first outside capital, according to the report.

    Shazam, a 12-year-old, London-based music app developer, has raised $20 million from a consortium of unnamed investors, reports VentureBeat. As a result of the new investment, Shazam’s valuation has increased to approximately $500 million, says the company. Shazam has now raised $92 million altogether, including from Kleiner Perkins Caufield & Byers,Institutional Venture Partners, DN Capital, Acacia Capital Partners, and Latin America’s largest wireless company, América Móvil, which invested $40 million in Shazam last June.

    Svelte Medical Systems, a 6.5-year-old, New Providence, N.J.-based maker of expandable coronary stents, has raised $5 million in funding from the West Health Investment Fund. The company has raised roughly $52 million in equity and $22 million in debt over the years, according to Crunchbase. Some of its other backers include CNF Investments and New Science Ventures.

    —–

    New Funds

    Tylt Labs, a year-old, L.A.-based early-stage fund focused on seed to A round opportunities, has raised $20 million toward its initial fund closing, the firm announced yesterday. Tylt was founded by L.A. entrepreneurs Rami Rostami and Gerard Casale and looks to invest $500,000 to $2 million per funding round per company, including consumer products, mobile platforms and services, home automation products, transaction software, clean technology, digital health and entertainment startups. (Note: StrictlyVC reported last Monday that the firm had raised $2 million, based on its SEC filing, which wasn’t the complete picture as we now know.)

    —–

    IPOs

    Globoforce, a 17-year-old, Dublin, Ireland-based company that sells its cloud-based social recognition software solutions to enterprises, announced terms for its IPO yesterday, as noted by Renaissance Capital. The company, which is majority owned by Atlas Venture and Balderton Capital, plans to raise $75 million by offering 4.4 million shares at a price range of $16 to $18. At the midpoint of the proposed range, Globoforce would be valued at $472 million.

    Matomy Media Group, a 6.5-year-old, Tel Aviv, Israel-based digital ad firm, is looking to raise $100 million in an IPO on the London Stock Exchange, reports Reuters. The company intends to issue new shares, and some of its existing shareholders, including Viola Private Equity, plan to sell some of their holdings.

    —–

    Exits

    Phoenix Age, a nearly five-year-old, San Francisco-based game studio, has been acquired by Kabam. Phoenix Age doesn’t appear to have raised outside funding. Kabam, a 6.5-year-old, San Francisco-based games company, has raised at least $125 million to date, including from Canaan Partners, Redpoint Ventures, Intel Capital, Google Ventures, andPinnacle Ventures.

    SecureForce, an 11-year-old, Sterling. Va.-based company specializing in providing cyber security engineering and compliance services to state and federal government agencies largely, has been acquired by BRTRC Federal Solutions, a similar company based in Vienna, Va. Cofounder Jonathan Perrelli left the company in 2010 to launch the Washington, D.C.-based early-stage investment firm Fortify Ventures.

    —–

    People

    Billionaire Internet investor Mark Cuban on bitcoin: “I think as an encryption technology, it’s great. I think as a transport mechanism that it’s unique and has a great opportunity in the future. I think it’s got no shot as a long-term digital currency.”

    Michael Redd, a former NBA All-Star who long played for the Milwaukee Bucks and was a star basketball player at Ohio State University, has been named a partner at the Columbus, Oh.-based venture firm NCT Ventures, reports Columbus Business First. “This is a complete stretch for me,” Redd tells the outlet. “The whole focus of the past 20 years has been basketball. To pick up another passion can be challenging, but I accept the challenge.”

    Former YouTube executive Baljeet Singh is a newly appointed product director at Twitter, where he has the major-league task of adding more video to the platform, making that video easier to find, then selling ads against it. The Verge, which reports on Singh’s new job, notes that while at YouTube, he developed those skippable pre-roll advertisements we’re all accustomed to seeing, among other projects. (He left Google last month after five years.)

    —–

    Job Listings

    Pandora, the popular music-streaming service, is looking for a VP of corporate development and a head of corporate strategy. The newly posted jobs are in Oakland, Ca.

    —–
    Data

    A new academic study finds that for venture funds, “performance persistence post-2000 remains as statistically and economically persistent as pre-2000. Partnerships whose previous VC funds are below the median for their vintage year subsequently tend to be below median and have returns below those of the public markets (S&P 500). Partnerships in the top two VC quartiles tend to stay above the median and their returns exceed those of the public markets.”

    —–
    Essential Reads

    Investor adviser Institutional Shareholder Services is on the cusp of selling to Insight Venture Partners, sources tell the WSJ. People close to the sales process have said the company could fetch around $300 million.

    The New Yorker’s James Suroweicki takes down the impending IPO of “Candy Crush” maker King Entertainment before public investors do the job.

    —–

    Detours

    President Obama hilariously sits “between two ferns” with Zach Galifinakis.

    This startup tased its intern to illustrate how its flying drone would handle unwanted houseguests. (And you thought your first job was lousy.)

    Perfect strangers kissing.

    —–

    Retail Therapy

    The already excellent Mophie iPhone battery case has just been improved on, with Mophie’s newest product not only promising users far more battery power but loads of storage, to boot.

    This is like a poor man’s “Minority Report.” (We like it.)

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    , ,

  • Metamorphic Ventures Closes on $70 Million to Back Post-Seed Deals

    David HirschNew York’s Metamorphic Ventures isn’t one of best-known brands outside the city. That’s by design, says cofounder David Hirsch, who was Google’s second employee in New York and stayed eight years before diving into venture capital in 2009. After raising $20 million from well-connected individual investors to get started, Metamorphic needed time to start proving itself, he suggests.

    Fast forward to today, and things appear to be clicking along. The firm, which invests in digital media, commerce, payments, ad tech, software infrastructure and other Internet-enabled startups, has already enjoyed seven minor exits, and its portfolio includes promising companies like the popular crowd-funding platform Indiegogo and the retail analytics company RetailNext. More, Metamorphic has cultivated what Hirsch calls a “distributed human engine” made up of both powerful advisors (including Square’s head of product and engineering, Gokul Rajaram), individual investors (HSN Chairman and CEO Mindy Grossman), and deep-pocketed strategic investors (Advance Publications) that have collectively given Metamorphic another $50 million to “add to the cover” of that earlier, $20 million fund, says Hirsch.

    The capital will be used to invest in many more startups, but Metamorphic also raised the funds to maintain more ownership of its breakout portfolio companies, which the firm hasn’t been able to do to date. Hirsch talked with StrictlyVC about it yesterday.

    You’re looking to fund startups that have raised some money but not Series A money. Is that still an underserved segment in New York?

    We think so. The market has really shifted to where the large private equity firms like Coatue Management and Tiger Global are [making big bets on later-stage companies] and big VCs like Kleiner Perkins are moving downstream to do more A and B. But there’s still a hole in the market right now in seed. It’s the opposite of the Series A crunch; we’re seeing amazing, angel-funded companies that are hitting their growth stages that don’t want to raise these mega A rounds just yet.

    You say you made some mistakes early on. What was the biggest?

    A lot of the companies grew bigger more quickly than we anticipated, so we ended up farming out our winners to Silicon Valley. We built a great portfolio, but [our fund] was too small to have meaningful ownership. So right now, the goal is 10 percent ownership – that’s what we strive for. We raised the money in order to have that optionality that we’ve been losing.

    What size checks will you be writing now that you have more to invest?

    They’ll be anywhere from $500,000 to $1 million for that first bite.

    You have investments on both coasts. How would you characterize valuations in New York right now, compared with Silicon Valley?

    It seems more specific to the team than [rooted in geography], though it sometimes feels like the capital on the West Coast is less price sensitive than in New York. That could be a function of a lot of things. I think New York is more monetization and revenue focused. [Investors here] like more data to back into a [high] price.

    Is Metamorphic a typical New York firm in that sense?

    We’re not value investors, but we’re disciplined as far as price is concerned, and we want to make sure we’re careful. We’ll pay up for the right teams. And we do believe we’re at the next generation of Internet businesses where maybe the price increase is justified. But sometimes it’s not. Sometimes you’re dealing with bigger investors who are [offering term sheets] as a call option, and that can price up opportunities for the wrong reasons.

    Anything else you can share that you’ve learned thus far as a VC?

    Google always had this [hiring] thing called the “airport test.” Someone could be an all star, super smart, capable of helping you solve pain points. But if you missed your flight and were trapped at the airport [together], would you be excited to hang out with this person?

    Working relationships are long-term relationships; that’s true of [colleagues] as well as with investors and founders. There are always reasons to say no to deals. A lot of the business is just trusting your gut.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , ,

  • StrictlyVC: March 10, 2014

    Good Monday morning, everyone! Hope you had a great weekend.

    —–

    Top News in the A.M.

    Yesterday, Google pledged to help developers create wearable devices, saying it will release an Android-based software development kit in the next two weeks.

    —–

    Josh Stein on the New DFJ

    DFJ has done what a lot of firms struggle to pull off; it has undergone a management shift without completely spooking LPs, who recently committed to give the firm $325 million for its newest fund. The transition was 18 months in the making, says Josh Stein, who joined DFJ a decade ago and who now, along with longtime partners Andreas Stavropoulos and Steve Jurvetson, runs DFJ without firm cofounders Tim Draper and John Fisher. (Draper and Fisher remain on the management committee.)

    Late last week, I talked with Stein — who has led investments for DFJ inYammer, Redfin, and Box, among other companies – to learn about the new vision for the firm. Our conversation has been edited lightly for length.

    Along with transition at the top of Draper, the firm has decided to return its focus to mostly U.S. companies, cut out clean tech as a sector of interest, and scale back on the size of its partnership. What drove the latter decision?

    DFJ had broadened pretty significantly [in numerous ways] and we thought we made better decisions when we had five or six people around the table rather than 10 or 12. We just think venture is very idiosyncratic in that it doesn’t scale very well. One person making all the decisions himself doesn’t have that cognitive diversity. But 10 or 15 [people around the table] is like a corporate meeting.

    We’re also focused on developing the next generation team, so bringing in people like Bubba [Muraka, a former product manager at both Facebook and Microsoft who joined the firm last May]. I’m 40, and [during this last fundraise], I got questions about LPs about my own succession plan. I said, “Really? I just got here.”

    You’re focusing on consumer tech, mobile, business and enterprise technology. What else should we expect to see from DFJ going forward?

    We also focus on disruptive technology, things that aren’t about building an app or putting together a Web site. Something like Uber is an incredible service with powerful network effects, but there’s no real technical innovation there. Contrast that to [DFJ-backed] Tesla or SpaceX or [biofuels startup] Synthetic Genomics or [D-Wave Systems], our quantum computing company. Just [Wednesday], we announced that we’re backing [human genome pioneer] Craig Venter in his newest endeavor, Human Longevity. [Editor’s note: Venter’s new company, which just closed a $70 million Series A round, plans to scan the DNA of as many as 100,000 people a year with the hope that the information will lead to new, life-extending therapies. Venter is also the cofounder of Synthetic Genomics.]

    Steve Jurvetson is the partner who most associate with DFJ’s more disruptive startups. Is that still the case?

    Definitely. Within our three pillars, Andreas and Bubba lead our consumer efforts, I tend to lead the firm’s enterprise efforts, and Steve leads our disruptive efforts. But it’s player-coach; we all do deals that fall into all three categories; there [just happen to be certain partners] who push the thinking forward.

    Are you seeing many disruptive deals? What’s particularly intriguing to the firm of late?

    Well, we’d love to see a third of our capital [flow to disruptive deals] but it’s less than a third [owing to lack of opportunity]. We see lots of brilliant, revolutionary ideas, but they have to be achievable within a reason period of time or they’re just science projects. Of course, sometimes, it’s counterintuitive. When we did SpaceX, a lot of people thought we were nuts, that we’d headed down a 10-year-long rat hole. Now, it’s a very big company according to every big metric.

    One thing we’re seeing a lot of innovation around right now is dynamic systems, and specifically things that are using some kind of artificial intelligence combined with sensors and actuators. A self-driving car would be the best example, or autonomous robots that can walk over uneven terrain. We don’t have a huge number of [related] bets, but we’re really excited about the ones we have.

    Is there a natural ecosystem of syndicate partners for DFJ on these types of deals? Who else is looking most closely at “out there” stuff?

    There’s a small ecosystem of investors looking. Khosla Ventures and Founders Fund are two that jump to mind. I think Google Ventures and Google as a corporate entity have also been very forward leaning. But I think [that ecosystem] is getting broader every day now that firms are seeing successes like Tesla, which is valued at $30 billion.

    DFJ raised its newest growth fund last year. Do you have thoughts about some of the seemingly crazy valuations we’re seeing for later-stage deals? What’s your gut tell you about the health of the market?

    I think people like to predict doom too fast. If the market is soft, technology is ending; it it’s hot, it’s a bubble. The truth is always somewhere in between.

    The way I think about growth investments is less about valuation but total loss of principal versus partial loss of principal. When you buy Google or Apple stock, you could say the shares are highly valued, but you won’t lose all your money. The odds of Google going out of business in the next 10 years is probably zero. Even with a massive correction, Google maybe goes down 50 percent.

    [Similarly], with Workday’s last private round [an $85 million injection in 2011, about 20 months before it went public], it was doing $100 million in revenue. With [online real estate broker] Redfin, the [still-private, DFJ-backed] company isn’t too far off from doing $100 million in revenue. These are stable businesses with recurring revenue, so there’s not a lot of capital risk there; it’s just a question of how big your return is going to be.

    The deals where you could lose all your money in at a huge valuation – a Snapchat where you could literally lose [everything] if the company doesn’t figure out a business model or the next hot thing comes along and people move on – that’s what scares me.

    300x250_Static

    New Fundings

    Brammo, a 12-year-old, Ashland, Or.-based electric motorcycle maker, has raised $9.5 million in a still-open Series D fundraising round, reports EVWorld. The new funding comes from Canadian venture firm Terracap Ventures and the international insurance company Aviva Investors. The company is targeting $16 million; it has raised $63 million to date, including from Polaris Industries, Alpine Energy, and NorthPort Investments.

    DataRPM, a two-year-old, Fairfax, Va.-based company that promises to let anyone quickly create and deploy a custom analytics platform, has raised roughly $6 million in funding, including from Interwest Partners, shows an SEC filing.

    Domain Surgical, a 6.5-year-old, Salt Lake City-based medical device company that claims to have developed an advanced surgical technology, has raised $35 million in new funding from OrbiMed Advisors andBioStar Ventures.

    Huodongxing, a Beijing-based online ticketing platform, has raised “tens of millions of U.S. dollars” in Series B financing, says China Money Network. SAIF Partners led the round, with earlier investors Qualcommand DCM — which led the company’s Series A round in 2011 — also participating.

    Illumagear, a two-year-old, Seattle-based company whose hardware product can attach to any hard hat to produce a ring of light around the wearer, has raised $1.9 million, according to an SEC filing that shows the company is targeting a round of $2.7 million. The company had previously raised $750,000 in funding.

    JD.com, the 16-year-old, Beijing-based Chinese e-commerce company, has sold a 15 percent stake in its business to Tencent Holdings, one of China’s biggest Internet companies, for $214.7 million. Tencent has also agreed to buy an additional 5 percent stake in JD.com after its planned $1.5 billion listing on the Nasdaq is completed. (JD.com filed for the offering in late January.)

    Kannact, a two-year-old, Portland, Or.-based tablet-based, healthcare collaboration tool that promises to help providers, caregivers, and patients proactively manage a patient’s health through individualized care plans and real-time video conferencing with the patient, has raised $165.3 million, according to an SEC filing that shows a target of $200 million. No investors are listing on the filing.

    Knowledge Delivery Systems, a 13-year-old, New York-based online learning platform that promises to help users further their professional development, including through state certification and master’s degree programs, has raised $6 million in funding led by Edison Ventures. The round was characterized as the company’s first institutional capital.

    Lyft, the 6.5-year-old, San Francisco-based company whose ride-sharing app competes with Uber, has partially raised a $150 million round of fresh funding, Re/code reported on Saturday after spying this filing. Re/code notes that no investor names appear in the filing, but its sources say that the private equity firm Coatue Management is among other firms that have been in advanced talks with Lyft.

    Secret, a six-month-old, San Francisco-based mobile app that lets people anonymously share information with friends, has raised $10 million in venture funding at a post-money valuation of $50 million, says TechCrunch. Google Ventures reportedly led the round, with Kleiner Perkins Caufield & Byers participating. In December, Secret raised $1.2 million in seed funding from Google Ventures, Kleiner Perkins, SV Angel,Index Ventures and others.

    ShowEvidence, a three-year-old, Santa Clara, Ca.-based company that makes cloud-based performance-assessment software (for students, professional development and more), has raised an undisclosed amount of money from Follett Corporation.

    Specialists on Call, a 10-year-old, Reston, Va.-based platform that provides hospitals with emergency telemedicine consultations with board certified specialists, has raised $31.6 million in new funding, shows anSEC filing. An affiliate of Warburg Pincus provided the funds. The company has raised roughly $37 million to date, shows Crunchbase.

    Wayfair, the 12-year-old, Boston-based online retailer of home furnishings and decor, has raised $157 million in Series B financing led by T. Rowe Price Associates. The company has now raised around $360 million to date, shows Crunchbase, including from Battery Ventures, Great Hill Partners, HarbourVest Partners, and Spark Capital.

    Workable, a 20-month-old, Athens, Greece-based company whose online platform aims to simplify the recruiting process, has raised $1.5 million in funding led by Greylock IL, an affiliated fund of Greylock Partners in Silicon Valley. Workable raised $950,000 in seed funding last year.

    —–

    New Funds

    A new investment fund has sprung up in Polson, Montana, called Frontier Angel Fund II. The founder, Liz Marchi, declined to tell the local paper how much the fund will be investing or if it’s still fundraising but said the plans to work with a syndicate of angel investment funds around the country to back regional startups, and that the operation will be based out of her barn. (Love.)

    —–

    IPOs

    Shares of the digital coupon company Coupons.com nearly doubled in their trading debut Friday, closing at $28.50 from their offering price of $16 each. Bloomberg columnist Jonathan Weil doesn’t get why.

    —–

    Exits

    Bustle, a women’s lifestyle site launched seven months ago by Bleacher Report founder Bryan Goldberg, has parted ways with one of its seed investors, Google Ventures. TechCrunch reports that Google pulled its initial funding of $100,000 out of the company in the wake of some “tone deaf” comments made by Goldberg about Bustle’s mission. PandoDaily reports that Goldberg, a regular contributor to PandoDaily, opted to buy out Google Ventures with his own money as his relationship with the outfit became strained over time.

    Yahoo may be in talks to buy a Galway, Ireland-based technology company, SindiceTech, to “gain control of the company’s know-how,”reports the Sunday Independent. According to its report, Yahoo had originally planned to buy the company in December for roughly $25 million, but the negotiations collapsed.

    —–

    People

    On Friday, Salesforce CEO Marc Benioff and the nonprofit Tipping Point took the wraps off a new initiative called SF Gives that hopes to raise $10 million over the next 60 days for Bay Area antipoverty programs. Persuading 20 companies to contribute $500,000 apiece is just the start, says Benioff, who hopes the program will ultimately raise $100 million. Not that it will be easy, he tells the San Francisco Chronicle. Though numerous tech companies have already written out checks to the program, including LinkedIn, Google, Jawbone and Box, “We still have some pretty epic companies here who have had IPOs and aren’t giving – and aren’t part of this and won’t join,” says Benioff. “There is a dark side here. We get a guy on the phone, and he will say, ‘No. No. That’s not for us. We’re not doing this.’ ”

    Paul Ceglia, who famously claimed in 2010 that he was entitled to half of Facebook, lost a bid on Friday to throw out charges that he faked a contract, destroyed evidence and created bogus e-mails in a civil suit against Facebook cofounder Mark Zuckerberg. A federal grand jury in Manhattan had indicted Ceglia in 2012 on charges of mail fraud and wire fraud, but his attorney, David Patton, has been trying to argue that federal statutes for those crimes can’t be applied to false claims made in civil litigation.

    Renowned investor Ron Conway and wife Gayle hosted a gala in San Francisco last weekend in honor of Pinterest CEO Ben Silbermann, and the tech cognoscenti showed up in full force, including Square founderJack Dorsey, Sequoia‘s Roelof Botha, and Vinod Khosla of Khosla Ventures. You can see pictures of the event at the site of Drew Alitzer, San Francisco’s favorite society photographer.

    Chris Kay, who has spent the last seven years or so as a managing director of Citi Ventures — the last four of them as its global head — just left to join the publicly traded health care company Humana. Before joining Citi’s corporate venture arm, Kay spent 12 years in various leadership positions at Target.

    Bill Maris, Google Ventures‘ managing partner, has sold a condominium in Palo Alto, Ca., that was widely reported to be located next door to Apple CEO Tim Cook. No word on who paid the $2.8 million for the property, though if Cook acquired it for privacy’s sake, he’d join a growing number of CEOs who’ve nabbed neighboring properties for the much the same reason, including Elon Musk, Mark Zuckerberg, and (maybe) Marissa Mayer.

    —–

    Happenings

    The Game Developers Conference is around the corner, taking place in San Francisco March 17th through the 21st. Speakers include Gavin Moore, the creative director of Sony Computer Entertainment, and Chris DeWolfe, CEO of SGN.

    Box‘s developers conference in San Francisco is coming up Wednesday, March 26, with informational sessions that will feature Andreessen Horowitz cofounder Ben Horowitz, Palantir cofounder Joe Lonsdale, and Evernote CEO Phil Libin, among others. Click here to register, and use the promo code nextgendev.

    Meanwhile, the SXSW festival is already well underway in Austin; if you aren’t there and want to keep up on some of what’s happening, click here.

    —–

    Pulsar Venture Capital, an early-stage venture firm firm that was founded in Russia in 2009, is looking for a venture capital associate who will be based in the Bay Area.

    —–

    Data

    Global IPO activity has leaped 70 percent to hit $28.2 billion in 2014 so far, compared with the same period last year, reports Reuters.

    —–
    Essential Reads

    Instagram has inked its first major ad deal with an agency, securing a year-long commitment from Omnicom to spend up to $100 million, but the an even bigger revenue stream for the Facebook subsidiary may be tied to e-commerce, suggests Jenna Wortham of the New York Times.

    Google was built with the help of an army of “spiders” deployed to crawl the Web, and sophisticated algorithms to rank the value of pages. But it can’t easily navigate the apps where users are spending most of their time,reports the WSJ.

    “[A]nyone working on a TorCoin, PKICoin, or other AppCoin, do get in touch,” says Andreessen Horowitz partner Balaji Srinivasan, tweeting that he and Angellist cofounder Naval Ravikant “think of this as [the] next kind of startup.” Ravikant outlines why here.

    —–

    Detours

    Tom Coates’s San Francisco home live-tweets the movements of its many gadgets, from the lighting in the kitchen to Coates’s weigh-ins. For a time,reports the Times, it also tweeted the results. “I have stopped doing that recently because I’ve put on a ton of weight,” Coates said.

    The origins of 13 “True Detective” set pieces. (Speaking of which, what’sso funny about the show anyway, asks the New Yorker.)

    Did you invent bitcoin? Take this quiz to find out.

    The activist hedge fund manager Bill Ackman bet a billion dollars on the collapse of the nutritional supplement company Herbalife, then launched an extraordinary, if unsuccessful, campaign to kill it.

    —–

    A painting that’s also a wireless speaker.

    Black playing cards.

    “Oud Wood.” “Oud Tobacco.” “Tuscan Leather.” Tom Ford, what’s next? “Humidor?” “Boat Shoe”? “Squash Ball”? We are on tenterhooks.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    , ,

  • Josh Stein on the New DFJ

    JoshSteinDFJ as done what a lot of firms struggle to pull off; it has undergone a management shift without completely spooking LPs, who recently committed to give the firm $325 million for its newest fund. The transition was 18 months in the making, says Josh Stein, who joined DFJ a decade ago and who now, along with longtime partners Andreas Stavropoulos and Steve Jurvetson, runs DFJ without firm cofounders Tim Draper and John Fisher. (Draper and Fisher remain on the management committee.)

    Late last week, I talked with Stein — who has led investments for DFJ inYammer, Redfin, and Box, among other companies – to learn about the new vision for the firm. Our conversation has been edited lightly for length.

    Along with transition at the top of Draper, the firm has decided to return its focus to mostly U.S. companies, cut out clean tech as a sector of interest, and scale back on the size of its partnership. What drove the latter decision?

    DFJ had broadened pretty significantly [in numerous ways] and we thought we made better decisions when we had five or six people around the table rather than 10 or 12. We just think venture is very idiosyncratic in that it doesn’t scale very well. One person making all the decisions himself doesn’t have that cognitive diversity. But 10 or 15 [people around the table] is like a corporate meeting.

    We’re also focused on developing the next generation team, so bringing in people like Bubba [Muraka, a former product manager at both Facebook and Microsoft who joined the firm last May]. I’m 40, and [during this last fundraise], I got questions about LPs about my own succession plan. I said, “Really? I just got here.”

    You’re focusing on consumer tech, mobile, business and enterprise technology. What else should we expect to see from DFJ going forward?

    We also focus on disruptive technology, things that aren’t about building an app or putting together a Web site. Something like Uber is an incredible service with powerful network effects, but there’s no real technical innovation there. Contrast that to [DFJ-backed] Tesla or SpaceX or [biofuels startup] Synthetic Genomics or [D-Wave Systems], our quantum computing company. Just [Wednesday], we announced that we’re backing [human genome pioneer] Craig Venter in his newest endeavor, Human Longevity. [Editor’s note: Venter’s new company, which just closed a $70 million Series A round, plans to scan the DNA of as many as 100,000 people a year with the hope that the information will lead to new, life-extending therapies. Venter is also the cofounder of Synthetic Genomics.]

    Steve Jurvetson is the partner who most associate with DFJ’s more disruptive startups. Is that still the case?

    Definitely. Within our three pillars, Andreas and Bubba lead our consumer efforts, I tend to lead the firm’s enterprise efforts, and Steve leads our disruptive efforts. But it’s player-coach; we all do deals that fall into all three categories; there [just happen to be certain partners] who push the thinking forward.

    Are you seeing many disruptive deals? What’s particularly intriguing to the firm of late?

    Well, we’d love to see a third of our capital [flow to disruptive deals] but it’s less than a third [owing to lack of opportunity]. We see lots of brilliant, revolutionary ideas, but they have to be achievable within a reason period of time or they’re just science projects. Of course, sometimes, it’s counterintuitive. When we did SpaceX, a lot of people thought we were nuts, that we’d headed down a 10-year-long rat hole. Now, it’s a very big company according to every big metric.

    One thing we’re seeing a lot of innovation around right now is dynamic systems, and specifically things that are using some kind of artificial intelligence combined with sensors and actuators. A self-driving car would be the best example, or autonomous robots that can walk over uneven terrain. We don’t have a huge number of [related] bets, but we’re really excited about the ones we have.

    Is there a natural ecosystem of syndicate partners for DFJ on these types of deals? Who else is looking most closely at “out there” stuff?

    There’s a small ecosystem of investors looking. Khosla Ventures and Founders Fund are two that jump to mind. I think Google Ventures and Google as a corporate entity have also been very forward leaning. But I think [that ecosystem] is getting broader every day now that firms are seeing successes like Tesla, which is valued at $30 billion.

    DFJ raised its newest growth fund last year. Do you have thoughts about some of the seemingly crazy valuations we’re seeing for later-stage deals? What’s your gut tell you about the health of the market?

    I think people like to predict doom too fast. If the market is soft, technology is ending; it it’s hot, it’s a bubble. The truth is always somewhere in between.

    The way I think about growth investments is less about valuation but total loss of principal versus partial loss of principal. When you buy Google or Apple stock, you could say the shares are highly valued, but you won’t lose all your money. The odds of Google going out of business in the next 10 years is probably zero. Even with a massive correction, Google maybe goes down 50 percent.

    [Similarly], with Workday’s last private round [an $85 million injection in 2011, about 20 months before it went public], it was doing $100 million in revenue. With [online real estate broker] Redfin, the [still-private, DFJ-backed] company isn’t too far off from doing $100 million in revenue. These are stable businesses with recurring revenue, so there’s not a lot of capital risk there; it’s just a question of how big your return is going to be.

    The deals where you could lose all your money in at a huge valuation – a Snapchat where you could literally lose [everything] if the company doesn’t figure out a business model or the next hot thing comes along and people move on – that’s what scares me.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , , , ,

StrictlyVC on Twitter