StrictlyVC: July 8, 2014

Good Tuesday morning, dear readers!

So, wow. Some of you did not like yesterday’s column. Here is some reader feedback if you’re interested, including from Google’s 25th employee, David desJardins.


Top News in the A.M.

A potato salad has so far raised $38,000 on KickstarterHere’s how.


Mitch Kapor on Dropcam and Data Collection

Lotus Software founder Mitch Kapor is well-known for his philanthropy, including through the Kapor Center for Social Impact, which funds startups as one prong of a strategy to strengthen underrepresented communities.

But Kapor has also made many bets on companies based purely on their technology and teams. Among them is the home surveillance startup Dropcam, acquired last month by Google’s Nest Labs for $555 million. In fact, Kapor was its first investor.

Late last week, we talked about how that deal came together, and how Kapor feels about the outcome.

How did you find Dropcam five or so years ago?

I came across it through a third founder who left very early, Anson Tsai, who went on to found Cardpool, a market for buying and selling gift cards. Cardpool was acquired by [the payments network] Blackhawk early and very successfully. I’d met Anson socially through [entrepreneur and popular blogger] Andrew Chen.

I don’t think people realize there was a third founder.

Yes, with Greg [Duffy] and Aamir [Virani], who’d worked together at [the email startup] Xobni, which was just shut down by Yahoo, ironically [roughly a year after it was acquired for undisclosed amount]. I think the chemistry wasn’t right, so Anson left to start his own company, but I liked Greg and Aamir and what they were doing and thought they were riding some good themes so invested.

Were you privy to any of Dropcam’s conversations with Google? I always wonder which investors know what and when.

Our relationship as seed investors is heavily concentrated from the time we first make an investment up through a Series A. In Dropcam’s case, the Series A came pretty early, because, to his credit, Sameer [Gandhi] of Accel saw something in the company [and led the company’s Series A round in 2011]. Once Dropcam had a board, our relationship changed. I was involved, but more on demand, when Greg or Aamir wanted coaching or advice or introductions. In fact, I found out about the sale by reading about it in my Twitter stream and getting congratulated, and that’s typical if you don’t have a board seat. Seed investors often find out about big events as they’re happening or sometimes just before.

What kind of return did you see on your investment? More than 100x?

Definitely more than 100x. It was a big return.

As a big believer in the company, do you think selling to Google was the best outcome for Dropcam?

The right outcome has to do with the founders who are in place and deciding the right thing to do. Sometimes, they think it’s the right time to sell because being part of something bigger helps in achieving strategic objectives and getting [a financial] outcome. There are tradeoffs, too, if you stay on your own. You enjoy your independence and you can maybe build something larger, but it comes with a lot of headaches.

I’m surprised people aren’t more concerned by certain companies’ moves to dominate the connected home, given their growing reach into other aspects of our lives. Do you have any thoughts about why that is?

I think ultimately there will be some kind of new social contract backed up by laws that will put some restrictions on what companies that collect a lot of data on people can do with that information, and that would include Google, Apple, and Facebook. I believe it will be a long and messy road to get there, but if we look at what’s going on today, we see the outlines of how it will happen. For a number of years, for example, Silicon Valley companies resisted releasing their employment data. Google gets credit for its willingness to put it out there, though. It was difficult, because its diversity numbers are terrible. But the time had come for the company to take a step forward and it has.

When do you think we’ll see these protective regulations?

Probably 5 or 10 years from now, and I think it will come from unhappiness among consumers and other forces that convince Google that its long-term interests are better served by agreeing to do something that previously it found difficult or impossible to do.

People will have to get more upset about the whole subject of large amounts of personal information being collected. But change happens. Consider gender issues. There’s been one embarrassing scandal after another, with TinderGithub, and others. I don’t think there’s more of that going on now than before, but people are more aware that it’s going on now, it’s covered more, and there’s more of a climate that this isn’t right. It’s an issue that’s no longer ignored.

We’re not there yet on data collection, but I think we’ll get there. It will happen.


New Fundings

Adtile, a nearly four-year-old, San Diego, Ca.-based mobile ad tech company that develops more interactive ads, has raised $4.5 million in Series A funding from undisclosed investors. The company had previous raised $2.7 million, reports TechCrunch.

Box, the nine-year-old, Los Altos, Ca.-based online-storage startup, has raised $150 million in funding from private-equity firm TPG and hedge fund Coatue Managementaccording to the WSJ, which says the financing values Box at about $2.4 billion. Box has now raised around $565 million altogether from investors, including General AtlanticDFJNew Enterprise AssociatesBessemer Venture PartnersThe Social+Capital PartnershipSAP Ventures, and Scale Venture Partners.

Cloudian, a 2.5-year-old, Foster City, Ca.-based cloud storage company that features a two-tiered pricing system, has raised $29 million in Series C funding from Innovation Corporate Network of JapanFidelity Growth Partners Japan, and earlier investors, including Intel Capital and Goldman Sachs.

Curse, an eight-year-old, Huntsville, Al.-based gaming services company that offers in-game voice communications platforms, among other things, has raised $10 million in Series B financing led by new investor GGV Capital. The company says it has now raised $22 million to date, including from VentechSoftTech VC, and IDInvest Parters.

FishBrain, a four-year-old, Gothenburg, Sweden-based social network for anglers, has raised $2.4 million in funding led by Northzone and Active Venture Partners. Other participants in the round included new investors GP Bullhound and Edastra Venture Capital, along with earlier backers.The company has raised $3.9 million to date, says TechCrunch. (Readers might recall that Fishidy, another social startup that provides fishing information to anglers, just raised $1.5 million in Series A funding last month.)

Fuisz Media, a three-year-old, Santa Monica, Ca.-based company behind a new commerce-enabled interactive video technology, has raised $2.1 million in seed funding led by Metamorphic Ventures and Lerer Hippeau Ventures. Other investors include Science Inc.WGI GroupUnited Talent AgencyMesa+, and numerous individual investors.

mBlox, a 14-year-old, Sunnyvale, Ca.-based mobile marketing company, has just raised $43.5 million in new funding, including from ComericaHorizon Technology FinanceNorwest Venture PartnersScale VenturesAvantiTridentStratem and Saints Capital. The company, which has now raised at least $120 million over the years, tells VentureWire that it’s using the money to rebrand its service by adding many new features.

Mint Solutions, a four-year-old, Iceland-based hardware startup whose scanning device aims to ensure that healthcare workers provide each patient with the right medicine and dosage levels, has raised $6 million in Series A funding led by the European investment firm Life Sciences Partners and Seventure Partners. TechCrunch has more here.

OpenDoor, a new, San Francisco-based company that aims to to make buying homes as simple as clicking a few buttons, has just closed $9.95 million in an ” insane party round,” as TechCrunch puts it, one that was led by Khosla Ventures. The company, which has yet to launch, was cofounded by Eric Wu, the former head of geo and social products at real estate listings platform Trulia, and Keith Rabois, the former Square COO turned venture capitalist. More on OpenDoor’s long list of investors here.

Racemi, a 13-year-old, Atlanta-based company whose cloud migration software helps automate the process of migrating workloads to public, private and hybrid clouds, has raised $10 million in Series C funding led by Milestone Venture Partners. Earlier investors Harbert Venture Partners and Paladin Capital Group also participated in the round. The company has now raised roughly $25 million altogether, shows Crunchbase.

Regent Education, an eight-year-old, Frederick, Md.-based company that makes financial aid management and enrollment optimization software for higher ed institutions, has raised $9 million in venture and debt funding. The company closed a $4 million Series C round from new investor New Markets Venture Partners, which joined by earlier investor Chrysalis Ventures. Meanwhile, Ares Capital provided $5 million in debt financing. Regent has now raised roughly $23 million to date, shows Crunchbase.

Robin, a months-old, Boston-based company that’s developing a service for presence sensing and automation in the office, has raised $1.4 million in seed funding led by Atlas Venture. Other participants in the round included Deep Fork CapitalBoldstart Ventures and Space Pirates, a seed venture group. BostInno has more here.

Spark Labs, a 2.5-year-old, Minneapolis, Mn.-based company that sells a Wi-Fi development kit to engineers and designers who develop connected hardware products, has raised $4.9 million in Series A funding led by Lion Wells Capital and O’Reilly AlphaTech Ventures. Other participants in the round included Collaborative Fund, and SOSventures. The company has raised $4.9 million to date, it tells the WSJ.

TranServ, a four-year-old, Mumbai, India-based prepaid payments company, has raised an undisclosed amount in Series B round led by Faering Capital, with earlier investor Nirvana Venture Advisors also participating. The Economic Times has more here.

WordStream, a seven-year-old, Boston-based search-marketing software company, has raised $9 million in Series C funding led by Baird Capital of Chicago, with earlier investor Sigma Partners participating. The company also raised an addition $3 million in venture debt from City National Bank. According to Crunchbase, WordStream has raised $28.4 million to date.

Xapo, a two-year-old, Palo Alto, Ca.-base “bank” for bitcoin, has raise $20 million from Greylock Partners and Index Ventures, which were joined by Emergence Capital PartnersMax LevchinYuri Milner, and Jerry Yang. The company has raised $40 million to date. TechCrunch has more here., an eight-month-old, Beijing, China-based online retailing platform for second-hand cars, has raised $10 million in Series A funding led by IDG Capitalaccording to China Money Network, which says the company previously raised “several million RMB” in seed funding from Zhen Fund last December when the company was founded.


New Funds

DST Global, the nine-year-old investment firm cofounded and controlled by Russian billionaire Yuri Milner, is raising its fourth fund, DST Global IV, according to an SEC filing that doesn’t list a target. Milner, whose bets through DST have included FacebookTwitter, and Spotify, among others, talked with Forbes late last year about some of those past investments and where DST planned to spend some of its time in 2014. VentureBeat has more here.

HomeAway, the nine-year-old, Austin-based vacation rental marketplace, is thinking about ways to formalize its startup investing, reports TechCrunch. The company’s cofounder and CEO Brian Sharples tells the outlet: “There are lots of entrepreneurs in the travel space — and now in particular around the vacation rental space . . .We’re very actively looking at [investing]. Historically we have either bought companies outright or bought a joint position.” The company has already made roughly 20 acquisitions since its founding.



TubeMogul, a nearly seven-year-old, Emeryville, Ca.-based video ad platform that filed its S-1 in March, looks to be proceeding with its plans to go public, despite a choppy market for ad tech companies. The company has raised more than $50 million in funding. Its biggest shareholders include Trinity Ventures (which owns 26.5 percent of the company prior to the IPO), Foundation Capital (22.7 percent), and Northgate Capital (8 percent). TechCrunch has more here.

Yodle, a nine-year-old, New York-based online marketing platform for small businesses, has filed to go public. The company has raised at least $40 million from investors, shows Crunchbase. Its biggest shareholders are Bessemer Venture Partners, which owns 29.7 percent of the company; DFJ, which owns 24.4 percent; JAFCO Technology Partners, which owns 8.7 percent; and David Rubin, formerly the CEO of ProfitFuel, which Yodle had acquired. Rubin owns 5 percent.



Newport Media, a nine-year-old, Lake Forest, Ca.-based fabless semiconductor company, has been acquired for $140 million by the publicly traded semiconductor company Atmel as Atmel shifts more of its focus toward smart connected devices. Newport had raised $66 million over the years, shows Crunchbase, including from Oak Investment PartnersGlobal Catalyst PartnersVenrockPinnacle VenturesDAG Ventures, and Benchmark. VentureBeat has more here.



Fortune profiles John Arrillaga, the billionaire real estate developer (and father-in-law to Marc Andreessen), who “grew up one of five children in a lower-middle-class home in Inglewood, Calif.” and whose mother “kept the kids full with pieces of bread stuffed with lettuce. When Saturday ‘steak night’ rolled around, the seven of them shared one flank.”

Apple CEO Tim Cook is reportedly looking for some fresh faces to add to Apple’s board. According to a WSJ story, “Mr. Cook is actively seeking new directors to add to Apple’s eight-person board, known for its loyalty to Mr. Jobs. Six of the seven outside directors are aged 63 or older. Four of them have served for more than a decade, including two who have been on the board since the late 1990s: former Intuit Corp Chief Executive Bill Campbell and J. Crew Group Chief Executive Millard S. “Mickey” Drexler.”As 9to5mac notes, most of the Apple’s current board members were hand-picked by Steve Jobs, with Cook adding only Disney CEO Bob Iger and promoting Art Levinson to non-executive Chairman of the Board.

Katie Stanton, previously VP of international market development at Twitter, is stepping into the role of the company’s media chief, weeks after the departure of her predecessor, Chloe Sladden. Stanton, reports Variety, was already running the company’s international media division; in her new role, she be overseeing the U.S. division, too.


Job Listings

Frost Data Capital is looking for a summer associate (this is an unpaid eight-week internship). The firm is in San Juan Capistrano, Ca.


Essential Reads

Meet the ex-Google hacker who’s taking on the world’s spy agencies.

Young Israelis are suddenly flocking to Germany to start their businesses, says Newsweek.

Reminder: The SEC is due to review the definition of accredited investor this summer.



Yada, yada, yada: Larry David looks back at 25 years of “Seinfeld” in aQ&A with Rolling Stone.

Spectators jumping into the road to snap selfies are becoming a giant pain in the arse, say Tour de France riders.

Are you smart enough to get into a private New York City kindergarten?


Retail Therapy

An iPhone charger that looks like an umbilical cord. (It’s horrifying, but you kind of have to see it.)


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