StrictlyVC: July 14, 2014

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Top News in the A.M.

Germany’s Federal Cartel Office has prepared a 30-page proposal with suggestions of how to cope with the growing power of Google, along with other tech giants. Treat them like a utility.


A London VC on Google’s Move to the Hood, and Why Berlin Is Just a Tad Overhyped

With the official news last week that Google Ventures is opening a London office, we decided to call American-born Rob Kniaz of Hoxton Ventures, a London-based firm that closed its first $40 million fund late last year. In the view of Kniaz — who began his career in London as a market development manager with Intel before becoming a product manager at Google, then a VC with Fidelity Ventures Capital — Google’s move to London could be just the shot of adrenaline that the city’s staid venture scene needs. Our chat has been edited for length:

had read that raising a fund was harder than you’d expected.

It took us almost three years. There’s far less appetite for funds here, so it probably took two or three times as long [as it would have in the U.S.]. But we got it closed last year, with 90 percent of it coming from individuals and 10 percent from institutions. People don’t understand the opportunity here because [some of the biggest successes] don’t seem European. People often think that Skype and Spotify are U.S. companies; they say, “I’d rather have tech exposure in California.”

What are some of the biggest challenges right now for European startups?

A lot of ideas here are comparable to ideas in the U.S. but have a harder time becoming globally competitive because they don’t have the same firepower. Because there are fewer VCs here, a company will raise $1 million, while a similar company in the U.S. raises $5 million.

There’s also a big gap in mid to senior management talent. When I went to work for Google in 2004, probably 20 percent of the managers were ex-Amazon, with another 10 percent from Microsoft [etc]. It was almost like an academy, with people bringing best practices from legacy companies. Here, that generational knowledge isn’t passed down the same way, so the biggest challenge for us is either developing that talent, or finding people who’ve learned at the Facebooks or Googles of the world and are coming here.

Does it seem like more people are moving to Europe from the U.S.?

It does. At some point, people want to come home. Especially with the cost of living in San Francisco and the housing [shortage], the city is looking less tenable to a lot of people. There’s a lot of value in California, but if you already have that network in place, it makes a lot of sense to come here, especially with the pace picking up. Ten years ago, if you were a Frenchman, you went to the Valley and you didn’t come back. Now, it’s feasible to do your company here.

You invest across Europe. Is it possible to draw broad distinctions between startups in Helsinki, Sweden and Berlin, for example?

Finland is disproportionately excellent. The Swedes are thinking internationally from day one; there’s also tons of computer science talent familiar with the programming language Erlang, which is very good for massively parallel communications and was developed at Ericsson, outside Stockholm. And Berlin is super cool, like Brooklyn. Its livability is really high. There’s a big consumer and design focus. But it’s still in that hype cycle. People are talking about it, but it hasn’t had any tremendous successes yet except for the [e-commerce company] Zalando.

Are you seeing more sophisticated angel investors in Europe?

Every city has a good group of angels. It’s very different from angels in the Valley, though, who are former engineers, product directors, [and other former operators]. Here, they’ve mostly made their money in finance or banking and they’re tech fans; they don’t have that industry background.

It all sounds a little like New York five years ago.

It feels a lot like New York five years ago. There’s a lot of interesting stuff bubbling up, but it takes a while for people and money and ideas to come together.

London has a few big firms: Index Ventures, Balderton Capital, Accel Partners. How do you feel about Google Ventures now coming to town?

I’m tremendously excited about it. That London is the first place outside of California that Google is establishing an office – ahead of New York and many other places they could set up – it’s a pretty strong signal.


New Fundings

Amplitude Analytics, a two-year-old, San Francisco-based company that provides mobile analytics to app developers, has raised $2 million in seed funding from Box GroupData CollectiveMerus CapitalQuest Venture PartnersStart FundSV AngelTencent Holdings, and individuals. Financial terms of the round weren’t disclosed. The company is an alum of Y Combinator.

Barkbox, a three-year-old, New York-based subscription service for dog treats and accessories, has raised $10 million in Series B funding from earlier investors Bertelsmann Digital Media InvestmentsBox Group,CAADaher CapitalLerer Hippeau VenturesResolute VCRRE VenturesSlow Ventures and Vast Ventures. The company also raised $5 million in debt financing from City National Bank (which seems to be working much more with startups lately). Barkbox has raised $21.7 million altogether, shows Crunchbase.

EyeVerify, a 2.5-year-old, Kansas City, Ks.-based security company that delivers mobile phone users secure authentication at a glance, has raised $6 million in new funding from Qihoo 360 TechnologySamsung ElectronicsSprint, and an unnamed bank. The company has raised $10.4 million to date, shows Crunchbase.

Fruition Partners, an 11-year-old, Chicago-based cloud-service management firm, has raised $5 million, shows a new SEC filing that lists earlier investor Trident Capital. The company has raised at least $17 million to date, shows Crunchbase., a five-year-old, Brooklyn-based company formerly known as Rap Genius, has raised $40 million in Series B funding from Andreessen Horowitz and Dan Gilbert, the billionaire owner of Quicken Loans and the Cleveland Cavaliers. The company plans to use the funding to broaden it mission from lyrics hub to “knowledge platform” for digital publishers looking to annotate things online. Business Insider has a great story about the company’s highs and lows to date here.

Issuu, an eight-year-old, Palo Alto, Ca.-based digital publishing and discovery platform, has raised $10 million in fresh funding, reports VentureWire. The company has now raised $16.3 million to date, shows Crunchbase. Its investors include Sunstone Capital.

Madwire Media, a four-year-old, Loveland, Co.-based full-service digital marketing firm, has raised $3.5 million from a single investor, according to an SEC filing.

Proofpilot, a 2.5-year-old, New York-based platform that makes online research studies faster to set up and easier to manage, has raised $1.65 million from a dozen investors, according to an SEC filing. Proofpilot participated in the Blueprint Health accelerator program earlier this year, and pitched to investors alongside other startups at the organization’s Demo Day in April.

Redpoint Global, an eight-year-old Wellesley, Ma.-based company that makes software to help marketers plan and measure their campaigns, has raised $5.2 million, according to an SEC filing that lists two (unnamed) investors. The company had raised $6.4 million in 2012, also from undisclosed investors.

RocketTrip, a 1.5-year-old, New York-based online travel management platform, has closed its Series A round of funding with $3 million, much of which was raised earlier this year, reports TechCrunch. The company’s investors include Genecast VenturesCanaan Partners, Gmail creator Paul Buchheit, and CrunchFund. The company has raised roughly $3.5 million to date.

SilkRoad Technology, an 11-year-old, Chicago-based company that makes end-to-end cloud-based HR software, has raised $14 million from existing investors, including Foundation CapitalIntel CapitalAzure Capital PartnersTenaya Capital, and Two Sigma Investments. The company has raised $192 million to date, shows Crunchbase.

VentureBeat, the nearly eight-year-old, San Francisco and New York-based technology news site, has raised $2.6 million in fresh funding, shows an SEC filing that lists founder Matt Marshall, along with Philippe Cases, the CEO of Spoke Software and a former general partner at Partech Ventures. According to the funding, 20 investors participated in the funding. VentureBeat raised its first round of funding in 2008, gathering $320,000 from Felicis Ventures, early Google employee Georges Harik and MHS Capital Partners.


New Funds

GSR Ventures, a 10-year-old, Beijing-based venture fund with offices in Hong Kong and Palo Alto, Calif., has joined with Oak Investment Partners, to create a new, independent fund called G-O Scale Capitalreports VentureWire. G-O Scale, which is expected to back clean tech companies that can scale in China, is reportedly looking to raise $500 million and has already gathered $150 million in commitments.

Sofinnova, the biotechnology investor, is looking for up to $500 million for its new Sofinnova Venture Partners IX LP fund, according to an SEC filing. The company’s last fund closed with $440 million in the fall of 2011.



Otonomy, a six-year-old, San Diego, Ca.-based biotech company that focuses on treatments for diseases and disorders of the ear, filed to go public on Friday. The company has raised $143 million in funding, including from Avalon Ventures (which incubated the company and owns 16.8 percent), OrbiMed Advisors (it owns 15.2 percent), Novo (14.4 percent),TPG Biotech (14.4 percent), Domain Associates (11.8 percent), and Rivervest Venture Partners (7.5 percent).



Caviar, a two-year-old, San Francisco-based food delivery service whose app lets users track their order on a map, is in talks to be acquired by the payments company Square for up to $100 million, sources tell TechCrunch. The company has raised $15 million from investors, including Mixt GreensAndreessen HorowitzTiger Global Management,Ironfire CapitalWinklevoss Capital, and Gmail creator Paul Buchheit.

InMage Systems, a 13-year-old, San Jose, Ca.-based startup that focuses on cloud-connectivity and data recovery for businesses, has been acquired by Microsoft for undisclosed terms. The company had raised $35.9 million from investors, including Amidzad PartnersIntel Capital, and Hummer Winblad Venture Partners. PCWorld has much more here.

mBlox, a 15-year-old, Sunnyvale, Ca.-based mobile-messaging company, has acquired two companies in an all-cash deal: NextGen Mobile, a U.K.-based company that goes by the name CardBoardFish, and Zoove, in New York. VentureWire has the story.

Newsle, a 3.5-year-old, San Francisco-based machine learning startup whose app allows users to follow real news about their Facebook friends, LinkedIn contacts, and public figures, has been acquired by LinkedIn for an undisclosed amount. The company had raised $2.6 million from investors, including Transmedia CapitalAdvance Publications,MaveronDFJBloomberg BetaSV Angel, and Lerer Ventures.

PowerCloud Systems, a six-year-old, Palo Alto, Ca.-based maker of a WiFi router and app called Skydog that lets users monitor and modify how broadband is used in their homes, has been acquired by Comcast, looks like. TechCrunch has the details here. The company, a spin-out of the Palo Alto Research Center (PARC), had raised at least $9.2 million from investors, including Walden Venture CapitalJavelin Venture Partners, and Qualcomm Ventures.

RayV, a nine-year-old, New York-based video-streaming startup, has been acquired by Yahoo for undisclosed terms. The company had raised $16 million, including from Magma Venture Partners and Accel Partners.



In the Bay Area, Google‘s real estate footprint is about to get bigger. According to the San Jose Mercury News, the company — which has purchased more than 20 buildings near its headquarters in Mountain View, Ca., in the last four years — has acquired an eight-story building and signed a lease for another in San Francisco, where the company first opened an office in 2007.

Barbak Parvix, one of the product leads behind both Google Glass and Google’s smart contact lenses is moving on to Amazon. GigaOm ha smore here.

Enrique Salem, formerly president and CEO of Symantec, has joined Bain Capital Ventures as a managing director on the West Coast.

Elle magazine profiles “Security Princess” Parisa TabrizGoogle’s top hacker, who heads up a 30-person unit in the U.S. and Europe. “Some people in other parts of the industry, they introduce themselves as, like, ‘vice president,’ with all of these certifications,” she tells the outlet. “I couldn’t give a sh*t. You could be Code Monkey Number 507, but if you’re doing cool stuff, I’m much more interested in talking to you than to whoever’s senior vice president.”

Yahoo is suddenly embroiled in a sexual harassment lawsuit. Nan Shi, a former principal software engineer, is accusing her supervisor, industry veteran Maria Zhang, of forcing her have sex against her will on multiple occasions. In her suit, Shi says that when she later refused Zhang’s advances, she was demoted, and that when she reported to the abuse, the company put her on unpaid leave, then terminated her. The lawsuit names Yahoo as a defendant and lists three causes for damages: sexual-harassment, intentional infliction of emotional distress and wrongful termination. The Mercury News has the story here.


Job Listings

Early-stage fund and startup studio Expa Capital, created by StumbleUpon and Uber founder Garrett Camp and co-run by Foursquare co-founder Naveen Selvadurai, is looking for a business analyst. The job is in San Francisco.

Spotify, the digital music company, is looking for a business development manager in New York.



Coindesk has published its newest quarterly “State of Bitcoin” report. Among its findings: VCs plugged $73 million into Bitcoin-related startups in the second quarter, up 28 percent from the first quarter, when they reportedly poured $57 million into Bitcoin companies.


Essential Reads

Will Yahoo bite the bullet and buy AOL?

What happens when digital cities are abandoned.

Does anyone outside Silicon Valley even want a smartwatch?

So much for that idea. Three parking startups that came under legal scrutiny by the City of San Francisco have suspended their service and changed business models.



“Major League Baseball is a funny little club,” a pitching guru tells the New York Times of the nearly extinct screwball. “There are people who absolutely won’t do things, no matter how much they might make sense.”

The ultimate tree house. (H/T: Fast Company)

Your Uber driver reviews you.


Retail Therapy

Passive-aggressive greeting cards.

Stare into the abyss, from the couch!


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