StrictlyVC: July 17, 2014

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Top News in the A.M.

Ouch. Microsoft just announced plans to cut up to 18,000 jobs this year, which is nearly 15 percent of its workforce.


Alibaba Banker: Better to Price Your Offerings Low (Natch)

Earlier this week, at Fortune’s Brainstorm Tech conference, a trio of industry luminaries — Jimmy Lee, the vice chairman of JPMorgan Chase; Jim Breyer, CEO of Breyer Capital; and Josh Kopelman, founder of First Round Capital — talked with Fortune’s Dan Primack about the booming tech M&A market and what happens when we invariably see another downturn.

As you might expect, each stuck to their knitting. Breyer, known for making an early bet on Facebook, raved about the number of billion-dollar-plus digital currency companies he expects to see five to ten years from now. Seed-stage investor Kopelman talked about the Series A crunch and why, if he had to start a new firm from scratch, he’d zero in on that underserved segment of the startup market.

Lee, meanwhile, focused on IPOs, arguing that the investors and entrepreneurs in the audience should aim for opening share prices that have room to grow, even if that means leaving money on the table.

JPMorgan has an obvious interest in shares that are priced to move: underwriters who deliver shares that rocket out of the gate are a lot more likely to secure more trading business. Still, Lee sounded like someone who has experienced his share of flops (Chegg comes to mind) in highlighting the “super asymmetrical” fallout that ensues when shares fall on opening day.

“The typical banker on the typical IPO wants to tell management, ‘You’re handsome, you’re beautiful, you’re spectacular, your company is amazing’ … all of which may be true. [But] what happens is you can get this momentum that looks positive but can then be negative …”

“If you price the deal too high, and the stock falls out of bed,” Lee continued, “management is unhappy, the employees are unhappy, the shareholders are unhappy…” It can also “do damage to your brand.” And “you just don’t know how long it’s going to take [to turn things around],” he warned.

Indeed, after Facebook’s so-called “flop” of an IPO, it took the companyroughly a year to regain the trust of public shareholders.

On the flip side, said Lee, “If you price the deal too low …you can still increase the size of the deal, the price of the deal, and so on and still get the deal done . . .”

Ultimately, he said, startups “really have to think about what [they] want at 4 pm. EST on Day One” of life as a public company and manage to that outcome.

Paradoxically, Lee also advised entrepreneurs not to dwell on going public.

“You can’t let the IPO define the company, define the brand, define the vision; that’s what the management team does,” said Lee, whose firm is among half a dozen lead underwriters who will be pricing Alibaba’s high-profile stock sale. “An IPO is a sale of securities. That’s all it is.”


New Fundings

Boomerang Commerce, a two-year-old, Santa Clara, Ca.-based startup that helps companies manage their frequently changing online prices, has raised $8.5 million million in Series A funding from Madrona Venture Group and Trinity Ventures.

Conversocial, a nearly five-year-old, New York-based software company that helps businesses to manage social media as a large-scale customer service channel, has raised $5 million in Series B funding led by earlier investors Octopus VenturesDFJ Esprit and angel investor Matt Arnold. The company has raised roughly $12 million to date.

Crowdcube, a four-year-old, Exeter, England-based crowdfunding platform, has raised $6.5 million in new funding led by Balderton Capital. TechCrunch has more here.

Elliptic Enterprises, a year-old, London-based bitcoin storage company, has raised $2 million from Octopus Investments. Coindesk has much more here.

Funding Circle, a five-year-old, London-based peer-to-peer lending network, has raised $65 million in new funding led by Index Ventures. The company has raised $123 million to date, including from Accel PartnersUnion Square Ventures and Ribbit Capital. Dealbook has more here.

Immatics Biotechnologies, a 14-year-old, Tuebingen, Germany-based clinical-stage biopharmaceutical company focused on immunotherapies that fight against cancer, has raised $29.7 million in Series D funding, including from dievini Hopp Biotech holdingWellington PartnersAT Impf GmbH and others.

Nosto Solutions, a three-year-old, Helsinki-based company whose SaaS offering helps retailers personalize their online stores, including through on-site recommendations and personalized emails, has raised $5.5 million in new funding led by Wellington Partners. Earlier investors Open Ocean CapitalSanomaVentures, and Tekes, the Finnish Funding Agency for Innovation, also participated.

OpenEd, a two-year-old, Los Gatos, CA-based company that provides teachers and parents with a free tool to find videos, games and assessments that help students in class or at home, has raised $2 million in seed funding led by PivotNorth Capital.

Patience, an eight-month-old, Berlin-based company whose white-label solution allows educators to create and manage their own online learning applications and sell their courses through their own websites, has raised an undisclosed amount of Series A funding from Holtzbrinck DigitalRI Digital Ventures, and others, reports Venture Village. More here.

Pond5, an eight-year-old, New York-based online marketplace for video footage and stock media, has raised $61 million in funding from Accel Partners and Stripes Group.

PredictionIO, a 1.5-year-old, Palo Alto, Ca.-based company whose open source machine learning server helps software developers create predictive features, has raised $2.5 million in seed funding from QuestVP,Azure CapitalCrunchFundStartX FundKima VenturesIronFire,Sood Ventures and XG Ventures. (If you’re interested, here’s a product video showing how its technology works.)

PropelAd, a two-year-old, Dublin, Ireland-based company that helps e-commerce merchants advertise their products on Facebook and track the sales each ad generates, has raised $650,000 in seed funding led byColm Long, a former Facebook vice president of global operations. The Irish venture capital firm and Enterprise Ireland also participated in the round. The Irish Times has more here.

Relcy, a year-old, Bay Area startup that’s building a mobile-only search engine which indexes the content inside apps, has raised $9 million in funding from Khosla Ventures and Sequoia Capital. You can read more about it here.

Señor Pago, a nearly four-year-old, Mexico City, Mexico-based mobile point of sale service, has raised $1 million in seed funding from investors, including Silicon Valley serial entrepreneurs Jay Adelson and Barrett Lyon.

Singular, a months-old, San Francisco-based SaaS mobile marketing platform, has raised $5 million in seed funding from General Catalyst Partners.

Tado, a three-year-old, Munich-based company whose heating app controls residential heating and cooling temperatures, has raised $13.6 million in Series A funding from earlier investors Target Partners and Shortcut Ventures GmbH. The company has raised $16.2 million to date, shows Crunchbase.

TradeBlock, a 1.5-year-old, New York-based online cryptocurrency data company that aggregates data and sells products for analyzing pricing trends and other research tools, has raised $2.8 million in funding led byAndreessen Horowitz. Other investors in the round include Devonshire InvestorsFinTech Collective, and SecondMarket founder Barry Silbert. The WSJ has more here.

Urban Ladder, a two-year-old, Bangalore-based online furniture company, has raised $21 million in Series B funding led by Steadview Capital, along with existing investors SAIF Partners and Kalaari Capital. The company has raised $27 million to date. The Business Line has more here.

Virobay, an eight-year-old, Menlo Park, Ca.-based clinical-stage pharmaceutical company that’s developing treatments for neuropathic pain, autoimmune disease and fibrosis, has closed an expanded Series B second tranche financing of $8 million, bringing its Series B round (raised over the last four years) to $18 million. Its investors include Perceptive AdvisorsTPG Biotechnology PartnersAlta PartnersSutter Hill Ventures, and AbbVie.

XMarket, a months-old, Brazilian online marketplace for real estate, vehicle and second hand items, has raised $850,000 in seed funding from individual investors, including Dror EfratMarc Green and Yoram Yaeli.


New Funds

Coent Venture Partners, a new, Japan-based, micro VC firm is announcing a $10 million fund that’s backed solely by its founders, Japanese businessmen Shuhei Morofuji and Hideki Fujita. Morofuji founded SMS, a 13-year-old, publicly traded healthcare information service for the elderly. Fujita comes out of the social mobile company Gree, where he was the head of M&A; he worked previously at the investment firm Jafco. Tech In Asia has more here.

Plymouth Ventures, an Ann Arbor, Mi.-based investment firm, has raised more than $60 million for a new growth-stage fund focused on companies in the Great Lakes region. Among the firm’s newest investments: five-year-old 365 Retail Markets of Troy, Mi., which has created a self-checkout vending technology and that raised an undisclosed amount of Series A funding from Plymouth earlier this year.

SherpaVentures, the San Francisco-based venture firm launched last year by entrepreneur-investor Shervin Pishevar and former Goldman Sachs banker Scott Stanford, has officially closed its first fund with $154 million. Some of its bets so far include the shipping services company Shyp; the visual storytelling app Storehouse; and Munchery, a company offering same-day food delivery services.



InnoPharma, a nine-year-old, Piscataway, N.J.-based pharmaceutical company, has been acquired by Pfizer for $225 million in cash, with the potential for another $135 million, contingent on certain milestones. InnoPharma had raised at least $43 million from investors, shows Crunchbase, including Athyrium Opportunities FundComerica Bank,NXT Capital, and Thomas, McNerney & Partners.

Mezeo, a six-year-old, Houston-based software company that provides secure file sharing and cloud storage capabilities for its customers, has been acquired by Zimbra, the Palo Alto, Ca.-based unified collaboration software company, for undisclosed terms. Mezeo had raised $4 million in venture funding, including from Helion Venture Partners.

Retsly, a year-old, Vancouver, B.C.-based startup that helps developers access real-estate data from multiple listing services, has been acquired by Zillow for undisclosed terms. The company had raised $540,000 in seed funding, including from BDC Venture Capital and individual investors Eric Stegemann and Klaas Lameijer. TechCrunch has more here.



Kamran Ansari has just been promoted to principal at Greycroft Partners. Ansari had joined the firm in 2012, after serving as head of corporate and business development for MyYearbook/MeetMe, the social networking platform. Ansari has also logged time at Oak Hill Capital and Lehman Brothers Venture Partners, where he was also on the founding team of its successor fund, Tenaya Capital.

Venture capitalist Jim Breyer thinks Google could have a market capitalization of $1 trillion in 10 years, he said at a conference in New York yesterday. Bloomberg has more here.

Since 2009, 23andMe founder Anne Wojcicki and her estranged husband, Sergey Brin, have been quietly sprucing up downtown Los Altos, Ca., through a real estate company called Passerelle Investment Co. Now, she’s going public with more of the details.

Maria Zhang, the Yahoo executive sued for sexual harassment by one of her female employees, has filed a cross-complaint against her accuser, Nan Shi, alleging defamation and claiming Shi was trying to “extort” Yahoo. Valleywag has more here.

The 100 best-paid general counsels—and what they make.


Job Listings

Square 1 Bank is looking for a new venture banker to evaluate lending opportunities to startups. The job is in Boston.



Y Combinator has published its latest portfolio stats.


Essential Reads

Airbnb showed off a redesign yesterday that, erm, had everyone talking.

Yahoo is wary of startups backed by corporate venture funds, says its M&A chief. “When we look at companies backed at those funds we always ask, ‘Why are they selling and why not selling to their own sibling?’”

Inside the artificial brain that’s remaking the Google empire.



Apparently, eating sugar doesn’t make kids hyper after all.

The rise of the non-working rich.

The trouble with Floyd Mayweather.


Retail Therapy

Luggage for globe-trotters.

The iPad of vacuums.

zombie, just for you.


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