StrictlyVC: April 2, 2014

Happy Tuesday, everyone!


Top News in the A.M.

Apple is back in U.S. court with Samsung this week, suing the Korean software maker for $2 billion. Here’s a quick look at the five reasons why.


Accel Backs Father-Son Team in Sookasa

Sookasa, a 2.5-year-old, 12-person startup in San Mateo, Ca., is taking the wraps off its business today, as well as unveiling $5 million in Series A funding led by Accel Partners, which it closed on last August.

No doubt Accel was attracted to the startup’s technology, which promises to dramatically simplify the protection of sensitive files across popular cloud applications and mobile devices. As services like Dropbox and Box become increasingly ubiquitous and more employees use them to share files with each other and people outside their companies, businesses in particular need a better way to manage and protect that data. Sookasa, a cloud-based offering, says it make the process of encryption so easy that even a sole practitioner can get up and running as easily as he or she can sign up for Dropbox itself.

Yet Sookasa is interesting for another reason. In addition to cofounders Madan Gopal and Chandra Shetty — both senior engineers from Cisco, formerly — Sookasa’s founders are a father and son who serve as CTO and CEO, respectively. Israel Cidon was long a professor at Technion in Israel; he also founded four prior companies, including Actona Technologies, acquired in 2004 by Cisco. Asaf Cidon, a PhD candidate at Stanford, spent a year working in R&D at Google after spending three years in the intelligence section of the Israel Defense Forces.

Asaf Cidon talked with StrictlyVC the other day about the company and what it’s like to work with his dad.

You want to allow professionals in regulated industries, like health care, finance and legal, to use their favorite cloud services in a secure way. How is your service different from what already exists?

The issue with other types of solutions is that they’re only good as long as you’re accessing the cloud through a company computer or company network. If you’re sharing with someone outside of company, they can’t access the files. We encrypt files anywhere they go.

What was the impetus for the company?

Dad and I are both geeks who’ve been mucking around for years on crazy ideas and we were [storing] a lot of our documents on Dropbox. And we asked ourselves: Where is our data? Where are all the copies of these files and who can access them? What we found was those are really hard questions to answer. These services keep a lot of different copies and it isn’t clear who can access them. It’s an interesting problem to address for consumers, but even more so for businesses, where you can get fined $5 million for a HIPAA breach, for example.

Not many entrepreneurs launch companies with their dads. What it’s like?

There probably aren’t many cases where founders have started a tech business with family members — though Mendel Rosenblum cofounded VMWare with his wife [Diane Greene], which is an even more precarious situation. [Laughs.] My dad and I really get along, though. We’re also very different. He’s a professor who’s really interested in hard problems; he’ll obsess for a week over [some aspect of] encryption architecture. I love the business side and how we find the right business positioning and sales, which I didn’t always know I would.

You raised $5 million in Series A funding in August, after raising $1.7 million in seed funding in 2012. Why announce it now?

First, we had to go through extensive security and HIPAA audits by [the audit firm] Praetorian, to [ensure we meet all the technical safeguard requirements]. We also wanted to wait until the product was simple enough for the public to use. We have customers, but an encryption product isn’t necessarily easy to explain to a doctor or nurse or even a lawyer. Now the product is in a state where you put your folder in Dropbox and it’s encrypted, it’s done. You don’t even know it’s there.

For inquiring minds, will be you be in the market for more funding this year?

We’re not right now looking for a Series B, but we’ll need funding to expand. We’ll probably need inside sales [staff] pretty soon. With our ambitions, we’ll be going through at least one more round — to put it mildly.


New Fundings

Bima, a 3.5-year-old, Stockholm, Sweden-based company providing mobile-delivered insurance to emerging markets, has raised $22 million from its earlier investors Kinnevik New MediaLeapFrog Investments, and Millicom Systems.

Boatbound, a 1.5-year-old, San Francisco-based peer-to-peer boat rental marketplace, has raised $2.5 million in funding led by Brunswick Corp., with participation from the Israeli crowdfunding platform OurCrowd and angel investors. The company has raised $4.3 million to date, shows Crunchbase.

Buzz Points, a 4.5-year-old Austin, Tex.-based loyalty and rewards programs company, has raised $19 million in new Series D funding led by Lead Edge VenturesDiscover Financial Services, along with earlier backers KEC Ventures and Greycroft Partners, also joined the round.

Cabify, a 1.5-year-old Madrid, Spain-based on-demand car service in Spain and Latin America, has raised $8 million in Series A funding led by Seaya Ventures. The company has raised roughly $10 million to date, including from Red Swanthe Hit ForgeEmerge, and Resolute Partners.

ClassPass, a 10-month-old, New York-based fitness membership startup has raised $2 million in seed funding from angel investors including SV AngelFritz LanmanHank VigilBlake KrikorianGordy Crawford, and Dave Tisch. ClassPass enables users go to any class at any gym with a monthly $99 subscription.

DerbySoft, a12-year-old Shanghai-based travel information technology company, has raised more than $9 million in Series B funding from DCM, according to Chinese media reports. DerbySoft raised $6.5 million series A funding from Northern Light Venture Capital in 2009 and “tens of millions” of dollars from Northern Light and Keytone Ventures in 2011.

Intarcia Therapeutics, a 17-year-old Boston-based biotechnology company that’s developing match-stick-size mini-pumps that subcutaneously deliver the company’s new type 2 diabetes and obesity drug, has raised $200 million in funding. New investor RA Capital led the round, and was joined by Farallon Capital ManagementForesite CapitalFranklin TempletonFred Alger ManagementNew Leaf Venture PartnersQuilvest, and three institutional investors that weren’t identified. Intarcia has raised roughly $390 million in equity to date, according to Crunchbase.

PayStand, a 4.5-year-old, Santa Cruz, Ca.-based online payment and e-commerce checkout system, has raised $1 million in seed funding, including from Cervin VenturesSerra VenturesCentral Coast Angels, and TiE LaunchPad.

Transcend Medical, an eight-year-old, Menlo Park, Ca.-based medical device company focused on treating glaucoma, has raised $22 million in Series C funding from existing investors, along with an unnamed pharmaceutical and medical device company. Some of the company’s backers include Finistere VenturesHLM Venture PartnersKaiser Permanente VenturesLatterell Venture PartnersMorgenthaler VenturesSplit Rock Partners, and Technology Partners.


New Funds

Foresite Capital, a 2.5-year-old, San Francisco-based growth equity firm focused on healthcare investing, has closed its second fund with $300 million in capital commitments. The company’s debut fund closed with $100 million in January of last year. Foresite was founded by Jim Tananbaum, who was previously a partner with Prospect Ventures and, earlier in his career, Sierra Ventures.

Intel is creating a new, $100 million fund focused on China, reports the WSJ. At an event for developers today, the company is announcing that Intel Capital will establish the fund to help accelerate the creation of new devices that use its chips. Intel says it is also setting up an innovation center in Shenzhen, where the gathering is being held.



GrubHub, the 10-year-old, Chicago-based online food delivery services company, yesterday raised the expected price range for its IPO to $23 to $25 per share from $20 to $22. The offering of 7 million shares is now expected to raise about $176 million, based on the top end of the price range. GrubHub, backed by Lightspeed Venture PartnersBenchmark Capital and Origin Ventures, among others, is valued at about $1.95 billion at the top end of its expected price range.

Imprivata, a 14-year-old, Lexington, Ma.-based company whose software that helps doctors access IT systems and patients’ electronic health records in a fast, secure way, has filed its S-1 paperwork for a proposed $115 million IPO. The company has raised around $50 million over the years; General Catalyst PartnersHighland Capital Partners, and Polaris Partners each own 25.3 percent of the company, shows the filing.



Apple is reportedly in talks with Japan’s Renesas Electronics to take over a unit that designs chips for smartphone displays. Says the Nikkei Asian Review: “With its share of the smartphone market slipping, Apple seems to want to bring this core technology in-house rather than cede development to the supplier as the U.S. company has for much of its growth.”

Lovely, a three-year-old, San Francisco-based online rental marketplace, has been acquired for $13 million in cash by RentPath, a vertical search company for apartment and home renters. Lovely had raised two rounds of funding, only one of which –a $2 million seed round — was publicly disclosed. (The company raised its second round last November in connection with its own acquisition of a startup called Rentmatic.) Lovely’s backers include Felicis VenturesFounder Collective, and Keith Rabois, among others. RentPath is a TPG portfolio company., a music playlist app, has been acquired by the hardware company Jawbone, Jawbone confirmed yesterday to TechCrunch, saying the deal closed last year. had raised an $865,000 seed round in 2011 when it was called Noise Toys. Its backers included DCM, Guitar Hero cofounder Charles Huang, and Andie Simon, a former VP of Warner Music.

Telentrada, a nearly 20-year-old ticketing sales service, has been acquired for an undisclosed amount by the four-year-old Spanish ticketing startup Ticketea. Telentrada was owned by the Spanish bank CatalunyaCaixa, which is shedding its non-banking activities, reports TechCrunch. Ticketea has raised roughly $5.7 million from investors, including Seaya Ventures.

Twitter yesterday announced that it has acquired two companies: 2.5-year-old, Bristol, England-based SecondSync and three-year-old, Paris-based Mesagraph, both TV analytics firms that track social chatter about broadcasts. Neither company had reported outside funding. Both will now work out of Twitter’s London office.



Kevin Bitterman, a PhD who joined Polaris Partners 10 years ago, has been promoted to partner at the firm. Before joining Polaris, Bitterman cofounded Sirtris Pharmaceuticals (sold to Glaxo Smith Kline in 2008) and Genocea Biosciences, which is now publicly traded. Bitterman is currently the interim CEO of Polaris-backed Editas Medicine.

Marc Diouane has joined Zuora, the subscription commerce, billing and finance company, as its EVP of global field operations. Diouane was most recently the EVP of global services and partnerships at the 2D and 3D design software company PTC.

Pavel Durov, the founder of, announced yesterday that he has stepped down as the head of the social network — Russia’s largest, with over 100 million users — after ownership changes put pressure on its freedom of speech ethic. TechCrunch has the story here.

Brendan EichMozilla‘s new CEO, talks with CNet about growing calls for him to step down over his 2008 donation to Proposition 8, an effort to ban gay marriage in California. “I prefer not to talk about my beliefs,” says Eich, who adds that he isn’t going anywhere. “I am CEO, and I’m confident I am the best person for the job right now. I serve at the board’s pleasure. If that should change, I’ll do something else. I don’t think it’s good for my integrity or Mozilla’s integrity to be pressured into changing a position.”

Konstantin Guericke, a co-founder of LinkedIn, has joined the Berlin-based early-stage venture firm Earlybird as a Palo Alto, Ca.-based partner, after spending the last two years as a venture partner with the firm. Guericke, who is helping the firm’s four other partners invest a $200 million fund, says he’ll be looking at ways to help European startups make as big a splash globally as possible. (StrictlyVC talked at some length with Guericke about his new role, so stay tuned for more in coming days.)

Lars Fjeldsoe-Nielsen, who spent more than three years at Dropbox and, before that, held numerous roles in mobile business development elsewhere, has been snapped up by Uber, says Re/code, which has much more here.



DEMO Enterprise gets underway in San Francisco tomorrow and the agenda looks strong.

The University of Waterloo’s Innovation Summit takes place April 14th and 15th and will feature YouNoodle cofounder Rebeca Hwang andPebble Technology founder Eric Migicovsky among others. You can check out the agenda here.

Digital Hollywood is coming up May 5th through May 8th at the Ritz Carlton Hotel in Marina del Rey, Ca. Learn more here.


Job Listings

Canaan Partners is looking for an analyst in its New York office.



Pitchbook has come up with a first-quarter infographic that features a few surprises. First, four funds garnered more than 50 percent of the capital raised in the first three months of this year. (Guess we know where entrepreneurs needing later-stage capital will be heading.) The first quarter also saw the most capital invested in a single quarter in the history of venture capital(!), says Pitchbook. Not last, we’ve just seen the most IPOs in a single quarter since the fourth quarter of 2007.

In fact, according to a new report by Thomson Reuters and the NVCA, 36 venture-backed IPOs raised $3.3 billion during the first quarter of 2014, a 50 percent increase, by number of new listings, compared to the previous quarter. The first quarter also marked the fourth consecutive quarter to see 20 or more venture-backed IPOs.


Essential Reads

One-third of U.S. consumers who have owned a wearable product stopped using it within six months, says the strategy consultancy Endeavor Partners. More, says the firm, while one in 10 American adults own some form of activity tracker, half of them no longer use it.

Amazon has quietly rolled out a new service to let customers return unwanted merchandise using large metal lockers it has installed for deliveries in garages, convenience, and grocery stores in major metropolitan areas.

Yesterday a federal judge dismissed a neuroscience company’s lawsuit claiming that venture capitalists, including Kleiner Perkins Caufield & Byers, tried to abscond with its intellectual property and cheat it of payments for a new heart drug.



Virtu Financial, partly owned by Silver Lake Partners, has decided to postpone its IPO by at least a week, a move that comes as high-frequency trading firms have been put in the spotlight by Michael Lewis’s new book, “Flash Boys.”

Why organizations pay so much for star performers.

The definitive list of things that teenagers on Reddit think are cool, including — wait, what? –cell phone lanyards.

A reporter’s cat mug is confiscated by the NCAA. This is his dramatic story.

The creepiest thing you’ll see today. (We hope.)


Retail Therapy

On your next flight, reclaim your leg room.

Ten modern board games that don’t suck. (Our favorite: “Cards Against Humanity: A Party Game for Horrible People.”)


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