StrictlyVC: April 11, 2014

As you know, we love Fridays! Hope you have a great weekend, everyone, and we’ll see you Monday morning.:)


Top News in the A.M.

Intellectual Ventures, often described as a patent troll, has persuaded Microsoft and Sony to invest in its latest acquisition fund, reports Reuters. Apple and Intel, which invested with Intellectual Ventures previously, declined to participate again, say the outlet’s sources.

The price of bitcoin fell to below $400 yesterday, more than 60 percent off its all-time high. (Here is where it’s looking at the moment.)


Creatively Destroying Medicine

Med tech has a long history of boom and bust. But yesterday, at a stellar half-day conference in Mountain View called Strictly Mobile, listening to famed cardiologist Eric Topol address the crowd, it was easy to believe that the pattern will be shattered. In fact, Topol, author of “The Creative Destruction of Medicine,” argued persuasively why little about today’s healthcare system will look the same in less than a decade.

Receiving remote medical care is already becoming more common as technologies improve, as he noted. Startups like American Well and Doctors on Demand produce apps that allow users to video-chat with doctors to get medical help in real time. Scanadu makes a puck-shaped scanner that’s packed with sensors designed to read your vital signs, including heart rate, blood pressure, temperature, and blood oxygen levels. (The company, which recently began shipping the product, halted production last week to fix a manufacturing glitch.)

Other companies hoping to make traditional medical instruments obsolete include EyeNetra, whose device, the Netra-G, can measure the refractive error of the eye using a smartphone and a cheap pair of plastic binoculars that anyone can use. (The alternative: a $5,000 machine called an autorefractor.) Similarly, CellScope turns a smartphone into an otoscope that provides a magnified view of the middle ear, allowing parents to see for themselves whether their child has an ear infection — instead of first dragging him to the doctor’s office.

Naturally, there are plenty of obstacles between now and the day when hospitals can focus on therapeutics and leave more of the diagnostics to us. For one thing, not everyone wants to know more about their health. (Scanadu cofounder Sam De Brouwer, who was also at the conference, attributed such attitudes to consumers’ “lack of tools.” Noting that the only medical tool in most homes, still, is a thermometer, she suggested that people will grow very attracted to medical apps once they realize their power. “There’s something deeply fascinating about our body,” she told the assembled attendees.)

A much bigger obstacle, said Topol, is the American Medical Association, which has a vested interest in maintaining the status quo and that has one of the largest lobbying budgets in the U.S.

Here, Topol suggested that the best shot at change will come from directly from consumers demanding it, along with “employers with big-time purchasing power.” It’s an uprising that Topol fully expects as more information about healthcare costs becomes available. (Steven Brill’s 26,000-word piece in Time last year, highlighting the exorbitant prices we pay for hospital gauze and Tylenol tablets, was a good start, Topol noted.)

A cynic might say that the picture Topol paints sounds too rosy and lacks specifics. Indeed, asked about the legal liabilities for already risk-averse doctors, Topol’s answer seemed optimistic. Doctors who’ve been freed by new technologies will likely develop stronger relationships with their patients, making them less inclined to sue, Topol suggested.

Investors could also lose interest in digital health if it doesn’t take off fairly quickly. As veteran health care investor Terry McGuire of Polaris Ventures told me back in January, ““On the life sciences side, billion-dollar exits aren’t as common as on the tech side … So you go through these wonderful moments as now, when everyone is again a healthcare investor, but in three years, they won’t be.”

I hope the skeptics are wrong. It was exhilarating to hear someone talk about mobile technologies that can help patients and doctors do so much more. The doctor will Skype me now? I’m ready.


New Fundings

Decisyon, an 8.5-year-old, Stamford, Conn.-based maker of collaborative business intelligence software, has raised $22 million in Series B funding from VCs, along with roughly $4 million in debt. The financing was led by Catalyst Investors and brings the company’s total funding to $32 million.

Fundbox, a two-year-old, San Francisco-based company that helps small businesses out with short-term loans, has raised $17.5 million in Series A funding led by Khosla Ventures. Other participants in the round include SV Angels and individual investors, including former Citigroup CEO Vikram Pandit.

Genesis Media, a four-year-old, New York-based ad company that shows video ads on its customers sites (that must be watched in order to access the free content), has raised $6 million in new fund. The round was led by Blue Chip Venture Capital, with participation from Crown Predator Holdings. TechCrunch has more here.

The Hunt, a year-old, San Francisco-based fashion shopping app, has raised $10 billion in Series B funding led by Khosla Ventures, which was joined by earlier investors Javelin Venture Partners. the Hunt has now raised roughly $16 million to date. Founder and CEO Tim Weingarten had told StrictlyVC in January that he was in the market for new funding.

Interfolio, a 15-year-old, Washington, D.C.-based SaaS platform for hiring in higher education, is looking to raise a $5 million Series B round, says the outlet ElevationDC. Reportedly, more than 200,000 scholars use Interfolio to manage their careers.

Last, a new, San Francisco-based company founded by Josh Williams, a co-founder of the location-based service Gowalla, has raised $2.1 million in seed funding led by Freestyle Capital. Other participants in the round include Greylock PartnersFounders FundGoogle VenturesSherpa VenturesDesigner FundBoxGroupLaunch FundSV AngelFuel CapitalSlow VenturesRuchi SanghviPete CashmoreTom Conrad,Todd JacksonTom Watson, and Semil Shah. Gowalla’s team was acquired by Facebook in late 2011, which shut down the service several months later.

Munchery, a three-year-old, San Francisco-based online food delivery business that produces some of the food it delivers, has raised $28 million in Series B funding led by Sherpa Ventures. Other participants in the round included earlier backers and Menlo Ventures, as well as individual investors. The company has now raised close to $36 million to date, shows Crunchbase.

Runscope, a 16-month-old, San Francisco-based company that makes debugging and testing tools for API developers, has raised $6 million in Series A funding led by General Catalyst Partners, with participation from True Ventures and Lerer Ventures.

Smule, a 5.5-year-old, San Francisco-based maker of popular social music apps, has raised $16.6 million in new funding led by Roth Capital Partners. Earlier backers Bessemer Venture PartnersShasta Ventures, and Granite Ventures also participated in the round, which brings the company’s total funding to $42 million.

Spinifex Pharmaceuticals, a nearly nine-year-old, Melbourne, Australia-based clinical-stage biotech company that’s developing pain treatment products, has raised $45 million in Series C funding led by Novo A/S. Other participants in the round included new investor Canaan Partners and earlier investors GBS Venture PartnersBrandon Capital PartnersUniseed and UniQuest. The company has raised at least $64 million to date, according to Crunchbase.

Spoonrocket, a year-old, Berkeley, Ca.-based company that promises to deliver $8 meals to Bay Area customers’ doors in 15 minutes or less, has raised $10 million from Foundation Capital and General Catalystsays TechCrunch. The company has raised $12.5 million altogether.

Zesty, a 1.5-year-old, London-based healthcare appointment booking platform, has added $2 million more to its seed round from TA Venturesand ABRT Fund. Zesty’s prior seed was secured back in January 2013, led by Mangrove Capital, though the size of that earlier funding hasn’t been disclosed, reports TechCrunch.


New Funds

Menlo Ventures, the 38-year-old, Sand Hill Road venture firm, is looking to raise $400 million for its twelfth multistage venture fund, say Bloomberg sources. Menlo Ventures’s last fund, closed in September 2011, was also a $400 million pool. (As Bloomberg notes, as of Sept. 30, its IRR was 18 percent, per Washington State Investment Board data.) Menlo had originally targeted $600 million to $800 million for that eleventh fund, according to Bloomberg. Menlo’s tenth fund, closed in 2005, was a $1.2 billion vehicle.



Ruh roh. From USA Today: “All three of the initial public offerings that started to trade Thursday, lender Ally Financial and drugmakers Adamas Pharmaceuticals and Cerulean, all fell below their offering prices …. Ally Financial broke by falling 4.7 percent below its $25 a share offering price, while Adamas plunged 12 percent from its $16 a share IPO price and Cerulean lost 6.6 percent from its $7 IPO price …. While it’s unusual to see three IPOs break in one day, the number of such troubled deals continues to mount. There are now 58 IPOs priced within the past 12 months that are trading below their IPO prices, says John Fitzgibbon of That means a quarter of all deals priced in the period are now broken.”



Zumbox, a 6.5-year-old, L.A.-based provider of digital postal mail services, is shutting down. The company had raised more than $28 million from investors, including Shelter Capital PartnersCompushare, and The Tornante Company, which is the investment firm of former Walt Disney Co. chief executive Michael Eisner. More here.



Amazon CEO Jeff Bezos‘s annual shareholder letter is out and Business Insider highlights some of its most interesting details, including that Amazon will pay unhappy employees to quit.

Rupert Murdoch sits down with Fortune’s billionaire whisperer, Pattie Sellers, for a wide-ranging interview, including about his divorce from Wendi Deng and repairing his relationships with his adult children. He also tells Sellers that Mark Zuckerberg approached him about potentially acquiring Facebook in 2005. “I remember Mark coming down to visit my ranch. He was a very shy, quiet young man of about 20 or 21. And he was all for us getting together. And I didn’t take him up on it. I think he’s done a brilliant job,” Murdoch says.

Six months after the debacle, U.S. Health Secretary Kathleen Sebelius is out the door. Officials insist that Sebelius made the decision to resign and was not forced out. (Though they did turn off the heat in her office in January.)

Mark Vranesh, who has served as Zynga‘s CFO for the last six years, is leaving the company, a move that Zynga says was in the works since late last year. Vranesh will be replaced by David Lee, who was most recently a senior VP of finance at Best Buy. TechCrunch has the story here.

Danny Zappin, the former chief executive of Maker Studios, isn’t giving up the fight. Last June, Zappin, along with Maker founders Scott Katz,Derek Jones, and Will Watkins filed a lawsuit against Maker Studios, several of the its other co-founders, board members, investors, lawyers and others over an alleged conspiracy to take control of the digital media company and divert assets. On Wednesday, they filed a separate lawsuit alleging that a judge should delay the upcoming vote on Disney’s proposed $500 million acquisition of Maker because Maker didn’t provide material information about the first lawsuit to its shareholders.


Job Listings

Octopus Investments in looking for an investment manager to concentrate primarily on debt-related investments. The job is in London.


The Variety Entertainment and Technology Summit is coming up in Marina Del Ray May 5th through May 8th. You can find the agenda here.

Xconomy‘s Napa Summit Event is coming up June 2nd and 3rd and will feature former GM CEO Rick Wagoner, EA founder Trip Hawkins, and TaskRabbit founder and CEO Leah Busque, among other speakers.

Salil Deshpande of Bain Capital Ventures is putting on a small open-source conference on April 22nd in San Francisco. He’s expecting 150 to 200 people to attend the talks and another 350 to 400 people to swing by for the happy hour and drinks portion. He’s looking for one last investor or two to speak at the event, so if you’re interested, either email him directly or write us and we’ll connect you.



Despite growing momentum in the SoCal tech ecosystem and some notable recent exits, the first quarter of this year saw the gap between L.A.’s ecosystem and the Bay Area widen in terms of both funding and the number of deals completed, says CB InsightsMore here.


Essential Reads

record-setting 40 percent of early adopters would buy a bigger iPhone, according to a new survey.

The look at three Asian messaging apps that, like WhatsApp, could conceivably exit for multiple billions of dollars.



Yes, this wedding trailer is absurd, but we kind of love that an attorney couple made it. (Who says lawyers are boring?)

A Washington, D.C.-based consumer group has just published a list of the most complained-about airlines.

Billionaire James Dyson on how to fire someone.


Retail Therapy

Credit-card size Go-Comb gives new meaning to the words “pick pocket.” Ba-dum-bum. (All kidding aside, we just ordered one.)

Skully Helmets. They’ll make you want to ride a motorcycle.


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