StrictlyVC: June 25, 2014

Hi, all, hope your Wednesday is off to a great start.


Top News in the A.M.

A source tells TechCrunch that Facebook is building an enterprise product.

The FAA has released guidelines that explain when hobbyists can fly drones legally. Amazon says they won’t ground its drone delivery fleet.


Eric Hippeau on His Firm’s New Fund and Where It’s Shopping Now

Lerer Hippeau Ventures announced yesterday that it has closed its fourth seed-stage fund with $62 million, up meaningfully from the $36 million it raised for its third fund. According to Eric Hippeau, one of the firm’s four managing directors, the firm plans to hire more support staff and its first checks to startups will likely grow from between $300,000 and $600,000 to between $400,000 and $800,000. Little is changing structurally, though.

What is shifting a bit is what interests the four-year-old, New York-based firm, whose bets include Warby ParkerBuzzfeed, and LiveIntent, among many others. Hippeau, a longtime venture capitalist and the former CEO of Huffington Post, told me more yesterday. Our chat has been edited for length.

You’ve been out fundraising numerous times in your career. What’s it like out there right now?

By design, we fundraise every 16 to 18 months, so it can’t be a long fundraising cycle; it’s about a three-month-plus period. We’re very fortunate in that we have very supportive existing [investors] who tend to reinvest with us. We do attract new LPs every time we raise a fund, so there’s a due diligence process with new LPs.

What was most important to the new LPs?

Every fund has to have a point of view and a differentiated position to succeed; that’s what new LPs are looking for. In our case, a number of things differentiate us. We’re seed-first investors . . and 70 percent our investments are in New York, with the rest tending to be in Silicon Valley.

I do think venture is increasingly intriguing to LPs; I think there’s recognition that something important is going on that’s more than just building technology for technology’s sake – that technology is, in fact, disrupting a huge number of sectors and touching people’s lives in a much broader way today than ever before and . . . creating new wealth. So if you have a unique proposition, it’s a good time to be talking with LPs.

You’ve said that just two partners need to agree to move forward on a deal, partly because it would be more time-consuming otherwise. Is the firm having to make quick decisions right now? How would you characterize the pace of deal-making?

Deal flow is the strongest I’ve seen since we started in 2010, both in terms of quantity and quality. In New York, things tend to slow down in the summer, which is fine; it give us a chance to catch up on other things. But we’ve been seeing super-high-quality companies coming through.

As seed investors, how much “there” should be there when you’re looking at a startup?

It doesn’t have to have a finished product but we do need to see a product. There are always exceptions. If it’s a repeat entrepreneur, and someone we know well, [or] if it’s [a] [business-to-business] enterprise startup, the product doesn’t have to be as far along.

Looking out six to 12 months, what might you be investing in that you’re less focused on today?

I think we’ll look more at [financial tech startups], because New York has a lot of relevant experience and because, for the most part, to this day, fin tech is built on proprietary technology, and our sense is that it will use the same consumer tech we use every day in our pockets.

You have a lot of media investments as a firm. Can you share some general thoughts about the future of the news business? Do you think, like Marc Andreessen, that it will grow 10x or more from where it is today?

We invested in content way before people on the West Coast did and [remain] very bullish on it. We believe, for example, that there’s a ton of new platforms that need native content. If you look at Instagram or Snapchat or WhatsApp or social mobile, all of these platforms are opportunities for people to consume more content, and those opportunities allow for new brands.

We also start content companies ourselves, [among them the animal-themed site] TheDoDo and NowThis News, which are short-form videos on Instagram.

Is content the dominant theme of your portfolio?

People think it is because of the Huffington Post and investments like Buzzfeed. It actually represents less than 20 percent of our portfolio.


New Fundings

Aerospike, a five-year-old, Mountain View, Ca.-based flash optimized, in-memory and NoSQL startup, has $20 million in Series C funding led by New Enterprise AssociatesColumbus Nova Technology PartnersAlsop Louie Partners and Regis McKenna also participated in the round, which brings the company’s total known funding to $22 million. (It raised an undisclosed amount of Series B funding in 2012.) GigaOm has more here.

eCurv, a 2.5-year-old, Cambridge, Ma.-based company that’s rolling out a patented way to reduce electricity charges for commercial customers, has raised $2.5 million in Series A funding led by Constellation Technology Ventures. Other investors include Vodia Ventures and Massachusetts Clean Energy Center.

Epoxy, a two-year-old, Venice, Ca.-based company that builds tools to help YouTube startups and other video creators deepen their relationship with audiences, has raised $6.5 million in Series A funding led by Upfront Ventures and Time Warner Investments. Earlier investors, including Advancit CapitalBertelsmann Digital Media InvestmentsGreycroft Partners and Robert Downey Jr.’s Downey Ventures, also participated in the round, which brings the company’s total funding to $14 million.

Helpshift, a young, San Francisco-based company that provides customer support for mobile apps, raised $10 million in Series A funding led by Intel CapitalVisionnaire Ventures and earlier investors True Ventures and Nexus Venture Partners also participated in the round. The company has now raised $13.2 million altogether.

Kreditech, a two-year-old, Hamburg, Germany-based company that applies big data to score the creditworthiness of customers, has raised $40 million in Series B funding led by the private equity firm Värde Partners. Earlier investors Blumberg Capital and Point Nine Capital also participated in the funding, which brings the total capital raised by the company to $63 million. TechCrunch has more here.

MyOptique Group, a nine-year-old London-based online optical retailer, has raised roughly $27.2 million in Series C funding from KorysBeringeaCipio PartnersSilicon Valley BankActon Capital Partners,Highland Capital Partners, and Index Ventures. The company has raised $55.4 million to date, shows Crunchbase.

Next Step Living, a six-year-old, Boston-based company whose energy diagnostics services aim to help individuals and organizations to be more energy-efficient, has raised $25 million in Series D funding led by Braemar Energy Ventures, with earlier investors VantagePoint Capital Partners and Black Coral Capital. The company has now raised $61.7 million to date, shows Crunchbase.

Numerate, a seven-year-old, San Bruno, Ca.-based company that streamlines pharmaceutical production pipelines and intellectual property protections, has raised $8 million in new funding led by Atlas Venture and Lilly Ventures, with participation from existing investors. The company has raised at least $13.7 million to date, shows Crunchbase. Others of its investors include Foundation Capital and Lanza TechVentures.

OMsignal, a 2.5-year-old, Montreal-based “smart” clothing maker, has raised $10 million in Series A funding led by Bessemer Venture Partners. Earlier investors, including Real VenturesMistral Venture Partners,Golden Venture Partners, Techstars managing director David CohenFlextronics, and Primera Capital also participated in the round. The company had previously raised $1 million in seed funding.

One Month, a year-old, New York-based online education company that offers one month’s worth of tutorials on front-end Web development, growth hacking, Web security, and more (the idea is to teach users just enough to get a Web app up and running), has raised $770,000 in seed funding from Winklevoss CapitalInnovation WorksAndreessen HorowitzGeneral CatalystStart FundOliver JungLew MoormanY Combinator,FundersClub, and the crowdfunding platform WeFunder. The company is a Y Combinator alum; it passed through the program last year.

Schoology, a five-year-old, New York-based learning management system that helps educators use apps and other tech more effectively to teach and manage their classwork, has raised $15 million in Series C funding led by Intel CapitalGreat Oaks Venture Capital and Great Road Holdings also participated in the round, alongside earlier investors FirstMark Capital and Meakem Becker Venture Capital. The company has now raised at least $23 million altogether, shows Crunchbase.

SmashFly Technologies, a 6.5-year-old, Stow, Ma.-based maker of recruiting software, has raised $9 million in Series A funding led by OpenView Venture Partners.

Tasktop Technologies, a seven-year-old, Vancouver-based maker of so-called software lifestyle integration software, has raised $11 million in Series A funding led by Austin VenturesYaletown Venture Partners also participated in the round.

Vessel, a new startup founded by former Hulu CEO Jason Kilar, has raised $75 million from BenchmarkBezos Expeditions and Greylock Partners, sources tell Re/code, which says the still-stealth venture will “focus on content, and particularly on video.” More here, though it sounds like Kilar won’t be revealing much until year end.

WebPT, an eight-year-old, Phoenix, Az.-based company that says its Web-based medical records software is now used by more than 35,000 rehabilitation therapists in the U.S. and Canada, has raised an undisclosed amount of funding from Battery Ventures.

ZocDoc, a nearly seven-year-old, New York-based online medical care scheduling service, is raising a new round of funding worth $152 million, valuing the company at $1.6 billion, according to a Delaware Certificate of Corporation filing pulled by VC Experts and flagged by Fortune. ZocDoc had previously raised $97.9 million in funding, including from Goldman SachsDST GlobalFounders FundKhosla VenturesSV Angel and prominent individuals that include Jeff Bezos and Marc Benioff.


New Funds

General Electric and the four-year-old, San Juan Capistrano, Ca.-based venture firm Frost Data Capital are setting up a new incubator for industrial technologies. Called Frost I3, it expects to help advance ten companies per year over the next three years. VentureWire has the story here (subscription required). A two-week-old SEC filing shows that Frost Data has raised at least $38.4 million for its Frost VP Early Stage Fund II LP. Frost typically partners with major corporations to identify gaps in their big data analytics arsenals, has spun out a number of companies, including Predixion Software, Cirro, and OspreyData. The firm was founded by Stuart Frost, the founder of DatAllegro, a maker of data warehouse appliances that Microsoft acquired in 2008 for $275 million.



Cyber-Ark Software, a 15-year-old, Petach Tikva, Israel-based cybersecurity software company, has publicly filed for an IPO. According to an earlier Dow Jones report, Goldman Sachs Group led an investment round of $40 million in Cyber-Ark in 2011, buying out many of the previous investors. J.P. Morgan invested in the company in earlier rounds. The company’s prospectus shows that its largest shareholders today are Jerusalem Venture Partners, which owns 46.6 percent of the company; Goldman, which owns 24.2 percent; Vertex Venture Capital, which owns 11.6 percent; and Cabaret Security, which owns 7.7 percent.



Carbon Design Group, a 19-year-old, Seattle-based industrial design and product engineering company, has been acquired by OculusVR, the virtual reality company now owned by Facebook. Terms of the deal were not disclosed. Carbon Design Group is known for designing the XBox 360 controller, among other things.

Youbibi, a four-year-old, Shenzhen, China-based travel search startup that compares flights, hotels, and holiday packages for the China market, has been acquired by 11-year-old Skyscanner, itself a global travel search company that’s headquartered in Edinburgh, Scotland but has offices throughout the world, including in Beijing and Miami. Youbibi, with 20 employees, doesn’t appear to have raised venture backing. Skyscanner, a 500-person company, had raised $5.2 million from Scottish Equity Partners back in 2007. Last year, it went on to raise an undisclosed amount of funding from Sequoia Capital.



TechCrunch founder-turned-venture capitalist Michael Arrington says he has dropped his defamation lawsuit against a former inamorata who made explosive, public accusations against him in early 2013. Arrington says she has “retracted her statements and apologized, which is the very relief I sought before filing this action.”

Steven Burrill, the high-profile healthcare investor accused of fraud and wrongful termination by a former employee in a civil lawsuit, has canceled his annual speech at the biotech industry’s biggest convention, being held in San Diego this week. A spokeswoman for Burrill, who is lying low for now, said his lawyers should file a response to the lawsuit by July’s end.

James Conlon has been promoted to partner at the seed-stage firm Bullpen Capital in the Menlo Park, Ca. Conlon, who joined Bullpen as a principal in 2012, has one of the more interesting backgrounds we’ve seen. In addition to cofounding the venture-backed company Venture Scanner, Conlon has worked as a legal analyst at RPX Corp., spent a year implementing robotics education programs in Philadelphia schools as a member of AmeriCorps, and made a living for more than two years as a professional poker player. (He also has a law degree from American University.)

French billionaire and active tech investor Xavier Niel tells BusinessWeek that France’s economy isn’t a hopeless case, despite appearances in recent years. “You can say it’s worse in France than it is in other countries . . . We have too much debt, of course, and we had very bad management of the country. But we created a company with a market valuation of $19 billion. That’s not so bad, right? It is possible here.”

Businessweek calls Sundar Pichai, the new chief of Google’s Android division, “the most powerful man in a mobile.” He’s also eminently likable, say colleagues. “I would challenge you to find anyone at Google who doesn’t like Sundar or who thinks Sundar is a jerk,” says Caesar Sengupta, a vice president who has worked with Pichai for eight years.

Mike Randall, the global director of Facebook’s preferred marketing developer program, has been lured away by Snapchat, which has made him the company’s new VP of business and marketing partnerships. TechCrunch has much more here.

Oof. Kevin Rose of Google Ventures has abandoned his plans to demolish a century-old, Portland, Or., home he purchased earlier this year, after facing increasing pressure from his new neighbors to leave it intact. After much drama yesterday, with demolition trucks sitting outside the house, a cash offer from a neighbor who is a developer, and a general contractor who reportedly said he was told to proceed with the demolition despite the neighbor’s offer, Rose agreed by day’s end to sell the home and look elsewhere in Portland.

Full footage of that Kanye WestSteve Stoute and Ben Horowitz talk at Cannes Lions 2014 has been posted online; you can watch it here.


Job Listings

Orbimed, the healthcare investment firm, is looking for a senior associate in New York.

Teknos Associates, a San Francisco-based valuation firm that works with technology companies and their VCs, is looking for an associate.



The Google I/O two-day conference kicks off today in San Francisco. Here’s what to expect.



The researchers at Datafox were intrigued by this week when Andreessen Horowitz handed over $90 million to Tanium, a 6.5-year-old, Berkeley, Ca.-based enterprise management startup that helps companies manage and secure the devices on their network via a Web browser. It decided to use DataFox to research Tanium and its competitive space; here’s a step­-by­-step walkthrough of what it uncovered.


Essential Reads

It isn’t your imagination. BuzzFeed is watching you.

Venture-backed Bitcoin miner manufacturer CoinTerra is facing legal action for not fulfilling an order when it originally promised to. It’s the third Bitcoin-related startup to face litigation for breach of contract and/or fraud in recent months, reports Ars Technica.



Balloon rides in Turkey.

Soccer organizations in the U.S. suggest that coaches start teaching children to head the ball only after those players turn 10.

The sociology of sorry.


Retail Therapy

Flags, just in time for the big day.

We also like this amphibious camper, though we feared someone was going to be ghoulishly dispatched in its promotional video.


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


Filed Under:

Don’t Miss Out!

Sign up today to receive a free daily email with everything you need to start your day. Plus, keep track of the companies and personalities that will shape the industry in the months and years to come. Let StrictlyVC be your very own venture capital concierge.

StrictlyVC on Twitter