StrictlyVC: May 20, 2014

Good Tuesday morning, dear readers!


Top News in the A.M.

U.S. authorities have just opened a new front in their investigation into bitcoin exchanges and other businesses that deal in the online currency, says the WSJ.


Rebecca Lynn on the Power of Second Movers

In venture capital, there’s a lot of talk about “first-mover advantage.” Too much, says Rebecca Lynn, a general partner at Canvas Venture Fund (which spun out of Morgenthaler Ventures last year).

“If you look at my portfolio, I’m usually not [backing] the first company with an idea,” Lynn observes. “I let that company break its pick and [zero in on] the second mover, the one that figures out the model when the market is ready for it.”

Even though Lynn is a chemical engineer with both an MBA and JD from UC Berkeley, she doesn’t fit the conventional VC mold. For starters, neither of her parents went to school. Raised in a farming town in Missouri, Lynn learned computer programming beginning in third grade as part of her small school’s program for gifted students.

Though Lynn has led just seven deals, she has assembled an impressive portfolio, including what could be a career-making bet on the online lending marketplace LendingClub. Her key criteria is whether she could imagine herself working at the company.

Lynn’s approach clearly resonates with entrepreneurs. In fact, over dinner in 2009 to discuss the LendingClub’s Series B round, founder Renaud Laplanche told Lynn’s colleague, Gary Little, that he would accept Morgenthaler’s term sheet only if Little gave Lynn — then a principal — Morgenthaler’s board seat. “To Gary’s credit,” she says, “he didn’t do what a lot of VCs might have, which is spend the next half hour convincing Renaud why it should be him. He just said, ‘Of course she’ll be on your board.’”

Here’s a bit more from our conversation yesterday afternoon:

You’ve had a lot of careers, a product, you half-kiddingly say, of having ADD. You’ve been a nuclear engineer, worked in new product development all over the world for Proctor & Gamble, and been a marketing VP for NextCard, one of the first online credit card issuers. What haven’t you done that you wanted?

I always wanted to start a [tech] company. I ran the business plan competition at [the Haas School of Business at Berkeley] with the idea of meeting people at the school and starting something, but I ended up meeting the guys at Morgenthaler at one of those events. Even [after joining the firm], I thought, I can meet people to add to my team or get them to fund me or pick whatever company [seeking funding] is most interesting and join them. . . After that dinner with Renaud, I thought, “Now I’m in venture.”

How would you describe your pacing right now, given that Canvas closed a $175 million fund last fall?

I’m funding a couple of companies a year. Because the angel environment has been so hot in recent years and you can now invest in so many Series A or B deals, the bar is pretty high, which is hard because there are so many interesting companies coming up, it’s difficult not to do more.

You’ve been a VC for five or six years now. Have you established that elusive “pattern recognition” that VCs say they develop over time?

When we were spinning out Canvas, they put us through this test that determined that I’m half intuitive and half analytical, and I’d say the same is true of venture. You can get through the analysis: Is this a big market, is this company going to disintermediate an offline business, is this a CEO with a chip on his or her shoulder? These are all things you look for. But the biggest piece is the intuitive piece, which is hard to verbalize but I do think gives women a leg up in venture. With every one of my investments, I’ve had a thesis, I’ve mapped out the space, and said, “This is the company I want to bet on.”

You bring up gender. You think it’s an advantage, being a woman in this field?

I do. I think women overall are pretty good investors and that this intuitive piece is an interesting string to pull on. Some industry stats have said that women make up 11 percent of venture firms, but that’s bullsh_t. If you subtract out Cisco and Intel and focus on the people at firms who are leading at least a deal a year, that number drops to 3 percent, the same percentage of female-led startups that raise venture funding. It’s pretty interesting how closely the two mirror each other.


New Fundings

ALung Technologies, a 17-year-old, Pittsburgh, Pa.-based maker of medical devices that treat acute and chronic respiratory disorders, has raised $10 million in new funding from an undisclosed group of investors. ALung is a spin-out of the University of Pittsburgh. It has raised at least $72.5 million to date, shows Crunchbase.

Centrify, a 10-year-old, Sunnyvale, Ca.-based maker of identity management and “single sign-on” software, has raised $42 million in funding, including from Samsung VenturesFortinet, and Docomo Capital. The company has raised at least $94 million to date, shows Crunchbase.

Coherus BioSciences, a four-year-old, Redwood City, Ca.-based biologics company focused on the treatment of oncology and inflammatory diseases, has raised $55 million in Series C funding from KKRVenrockRA Capital ManagementRock Springs Capital and Fidelity Biosciences, along with earlier investors Sofinnova VenturesLilly Ventures and Vivo Capital. Coherus has now raised more than $220 million from equity and non-dilutive licensing fees and milestones, it says.

Context Relevant, a two-year-old, Seattle-based company that sells prepackaged applications intended to solve specific, data-related business problems, has raised $21 million in Series B funding led by Formation 8. Earlier investors Madrona Venture GroupBloomberg BetaVulcan Capital, and numerous Seattle-area angels also joined in the round, as well as one of the largest banks and one of the largest insurance companies in the U.S. (neither of which is being publicly disclosed). The round brings the company’s total funding to date to $28 million.

Earnest, a year-old, San Francisco-based company that provides small loans to individuals based on their earning potential rather than their credit history, has raised $15 million in funding from Andreessen Horowitz,Atlas Venture and Maveron. Cofounder Louis Beryl was a former quant options trader at Morgan Stanley and Lehman Brothers who was hired as a partner at Andreessen Horowitz in 2012.

G2 Crowd, a two-year-old, Chicago-based online platform for user reviews of business software, has raised $2.3 million in seed funding from Chicago VenturesHyde Park Venture PartnersG2 Crowd co-founders Godard Abel and Matt Gorniak, who provided the initial seed financing; and numerous other angel investors. The company has raised $4.3 million million to date, shows Crunchbase.

Jibe, a four-year-old, New York-based SaaS company that aims to simplify the process of applying for a job from a smartphone or tablet, has raised $20 million in Series C funding led by SAP Ventures. The funding boosts the company’s total capital raised to $37 million. Others of its investors include Longworth Venture PartnersLerer VenturesDFJGotham VenturesThrive CapitalPolaris PartnersZelkova Ventures, andSilicon Valley Bank.

LuckyFish Games, a two-year-old, Ramat Gan, Israel-based maker of casino-like social games for mobile devices and social networks, has raised $1.6 million in Series A funding from Carmel Ventures.

Niche, a 10-month-old, New York and San Francisco-based network for social media creators and the brands that want to engage with them, has raised $2.5 million in seed funding led by SoftTech VC. Other investors in the round included Lerer VenturesBox GroupAdvancit CapitalSV AngelKevin ColleranWilliam Morris Endeavor, and Gary Vaynerchuk.

NoWait, a 3.5-year-old, Pittsburgh, Pa.-based company whose wait list app and seating tool enables restaurants to notify patrons via text when their table is ready, has just raised $10 million in funding led by Drive Capital. The company, which says its app is being used by more than 1,000 restaurants in North America, has raised $15.5 million altogether, including from Birchmere VenturesCarnegie Mellon UniversityOpen Field Entrepreneurs FundInnovation Works and Sand Hill Angels.

Sumo Logic, a four-year-old, Redwood City, Ca.-based log management and analytics company, has raised $30 million in new funding led by Sequoia Capital. Earlier investors Greylock PartnersSutter Hill Ventures and Accel Partners also participated in the round, which brings the company’s total funding to $80.5 million.

Survios, a year-old, L.A.-based virtual-reality company focused on gaming applications, has raised $4 million in funding led by Shasta Ventures. Other investors include Michael Chang of Mavent Partners, Gen Isayama of World Innovation Lab, and Renata Quintini of Felicis Ventures.

Tamr, a year-old, Cambridge, Ma.-based big-data startup founded by entrepreneur Andy Palmer and MIT professor Michael Stonebraker, has raised $16 million in funding led by Google Ventures and New Enterprise Associates. Tamr says it can root out meaningful enterprise data from (and for) its business customers in days or weeks versus months or quarters.

Tripping, a 3.5-year-old, San Francisco-based metasearch platform for travelers to access and book vacation and rental homes, has raised between $5 million and $10 million in Series A funding led by Recruit Holdings and Quest Venture Partnerssources tell Business Insider. The company had raised $1 million in seed funding previously.

Yummy77, a year-old, Shanghai, China-based food delivery site, has raised $20 million in funding from Amazonreports TechNode. It’s reportedly the first time Amazon has invested in a Chinese company since entering the Chinese market ten years ago.


New Funds

Bain Capital Ventures is looking to raise $625 million for its latest fund, Bain Capital Venture Partners 2014according to marketing documents viewed by Bloomberg News. Bain Capital Ventures invests in infrastructure software, health-care technology, as well as consumer-focused companies, including those in e-commerce. Bain Capital started a dedicated venture arm in 2000 and the unit raised its first fund the following year. For the latest fund, says Bloomberg, the firm will charge a 2.5 percent management fee and take a 25 percent cut of profits. Bain Capital Ventures closed its last fund, a $601 million pool of capital, in 2012. (If you’re interested in learning more, StrictlyVC profiled the firm in November.)

Insight Venture Partners has closed a $510 million vehicle called Insight Venture Partners Coinvestment Fund III, which it established to invest alongside Insight Venture Partners VIII, closed with $2.57 billion in May 2013.



Ardelyx, a 6.5-year-old, Fremont, Ca.-based company at work on therapeutics that treat cardio-renal, gastrointestinal and metabolic diseases, has filed for IPO. Some of its biggest shareholders include New Enterprise Associates, which owns 45.89 of the company; CMEA, which owns 28.72 percent; and Amgen Ventures, which owns 6.03 percent.

GoPro, the 11-year-old, San Mateo, Ca.-based maker of wearable cameras that have become popular with professional athletes, has publicly revealed its paperwork for an initial public offering of stock. The San Jose Mercury News has a solid overview of what the filing shows here.

Kite Pharma, a 4.5-year-old, Santa Monica-based company that is developing cancer immunotherapies, has filed for an IPO. The company’s principal shareholders include the Israel-based venture capital firm Pontifax Ventures, which owns 8.5 percent of the company, and Alta Partners, which owns 8.3 percent.



Assembly Pharmaceuticals, a two-year-old, Lucerne Valley, Ca.-based biopharmaceutical company that’s been developing drugs to treat chronic hepatitis B virus infection, is being acquired by publicly traded Ventrus Biosciences in an all-stock transaction. Ventrus will issue approximately 23 million shares of common stock to the Assembly’s venture stockholders, which include BioCrossroadsJJDCTwilight Ventures, and Luson Bioventures. Ventrus’s stock was trading at less than $1 yesterday.

Cognea, an Australian-founded startup that makes virtual assistants for enterprise customers, has been acquired by IBM’s Watson group. Morehere.

Divide, a mobile-device-management startup, is being acquired by Google for an undisclosed amount. The idea is to help the Internet giant’s Android business reach more business customers. Divide, formerly called Enterproid, has raised $25 million from investors, including Google VenturesComcast VenturesQualcomm VenturesGlobespan Capital Partners and Harmony Partners.

Twitter is considering a deal to acquire SoundCloud, the 6.5-year-old, Berlin-based music and audio-sharing company, according to Re/code’s sources.



New York City Mayor Bill de Blasio kicked off the Internet Week New York festival yesterday by announcing a $10 million “tech talent pipeline” that aims to train thousands of New Yorkers for high-tech jobs. Funded over three years from city, state, federal and private sector investors, including JP Morgan Chase, the initiative will put New York on the path to becoming “undoubtedly one of the great tech hubs of the entire world,” he said.

Shruti Gandhi, who spent the last two years as a principal at Samsung Ventures, has joined True Ventures as a investor. She announced the move on the online identity site (a True Ventures portfolio company).

Lu Guanqiu, the Chinese billionaire who bought Fisker Automotive Holdings at a bankruptcy auction, is now planning to take on Tesla Motors in both the U.S. and in China with his own electric vehicles. “I’ll burn as much cash as it takes to succeed, or until [my holding company] Wanxiang goes bust,” he tells Bloomberg.

Tom Perkins the cofounder of Kleiner Perkins Caufield & Byers, is in the headlines again, this time for providing $2.5 million to UC San Francisco to endow a professorship in oncology research, reports the San Francisco Business Times. Perkins lost his first wife, Gerd Thune-Ellefsen, to cancer in 1994, UCSF said yesterday in a statement about the gift.

Sten Tamkivi, long a general manager at Skype, and Andreessen Horowitz general partner Balaji Srinivasan, have formed a still-stealth startup called Teleport that’s beginning to raise the curtain, slowly. (Tamkivi spent the last 10 months working as an entrepreneur in residence at Andreesseen Horowiz.) TechCrunch has more here.

The Winklevoss twins, who’ve become major-league bitcoin boosters, tell The Guardian that bitcoin will be bigger than Facebook. “Bitcoin potentially could be more impactful because being able to donate 50 cents to someone across the world has more impact than potentially sharing a picture,” says Tyler Winklevoss. “But they’re very different. . .”


Job Listings

New York University’s seed-stage venture capital fund, Innovation Venture Fund, is looking for an associate.


Essential Reads

Why tech’s best minds are very worried about the so-called Internet of Things.

Venture capitalist Ron Conway‘s tech alliance,, is going to start sending people from its 900-member companies to volunteer in San Francisco’s 116 public schools, and the companies sound legitimately excited about it. “I suspected that our team would receive the program well, but even I was surprised by how excited everyone is that we’re doing this,” Steve Sarner, vice president of marketing for the social-network company Tagged, tells the San Francisco Chronicle. “We had over 40 of our 180 employees volunteer right off the bat – asking to participate versus having me have to ask.”



Every rooftop bar in New York City worth knowing about, just in time for summer. (H/T: Shai Goldman)

Jordan Belfort, “The Wolf of Wall Street,” told conference goers in Dubai yesterday that he expects to make more money this year than he “ever made in my best year as a broker . . . My goal is to make north of $100 million so I am paying back everyone this year.”

Ira Glass doesn’t know or care who edits the New York Times.

“Last Week Tonight with John Oliver” has an hilarious take on the new European law that would allow people to erase themselves from Internet search engines.


Retail Therapy

AgLocal. Pasture-raised meats for that Memorial Day cookout. (H/T: InsideHook.)

A beer foamer for people, plainly, who do not drink beer.


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