StrictlyVC: July 21, 2014

Hi, everyone, welcome back! Happy Monday.


Top News in the A.M.

The Seoul city government said today that it will seek a ban on Uber’s car-hailing smartphone app, joining a global battle by municipalities and traditional taxi services against the service.


A VC for Hard-Core Developers to Love

StrictlyVC recently visited General Catalyst Partners in Palo Alto, Ca., as readers who’ve caught our interviews with Niko Bonatsos and Neil Sequeira know. Today, we conclude our General Catalystorm™ with Steve Herrod, a managing director who joined the firm last year after spending a dozen years with VMWare, the software giant that specializes in virtualization.

Herrod was VMWare’s chief technology officer for his last five years with the company; he also has a PhD in computer engineering from Stanford. Thankfully, he can also speak plainly when seated opposite an English major. Here’s a bit of our chat, edited for length:

You invest solely in companies that sell products to enterprises. What’s your primary focus right now?

Mobile-first infrastructure. Everyone talks about apps in the consumer world, but enterprises still don’t think about every one of their customers accessing their information through a mobile device. Knowing that all enterprises will move to mobile in a very aggressive way, [I think a lot about] what are the second and third order changes that have to happen.

What’s among the biggest of those changes?

How companies actually write applications. Every company has a Web application; it’s what you use when you ask for help or your HR report. But when creating new mobile applications, companies and vendors quickly realize that they have to do something different with all the data and systems behind it — that more formal APIs [or side doors for developers into their machinery] are essential. To create a formal way that a mobile app and a Web app can access customer data is a pretty big transition, so I’m focusing on tools that help people create and use these APIs for the first time.

What’s a portfolio company that illustrates your point?

Runscope is helping companies formalize how they create and test and make these APIs safe for the rest of the world.

I think all the core assets of companies are going to be things they can monetize or [otherwise make more accessible to external parties], so it’s a bet that formal APIs are the future for all companies.

Who are Runscope’s customers?

It just signed a great deal with Adobe as Adobe becomes a cloud company that provides a lot of access to things [on a subscription basis]. [The wearable device company] Fitbit uses Runscope. Target is another example [of a customer]. All are trying to formalize access to use of their data safely and securely. In the traditional world, you own an application and are responsible for it working. When you move to an API world, you have all these external people who are accessing your stuff, and if you do something that breaks it, you’ve now broken a bunch of other people’s stuff. So it’s almost more important that you use new tools on these APIs to prevent the external world from falling apart.

You were with VMWare for many years. Has it been easier or more difficult than you’d imagined to transition into VC?

My first few months [as a VC] was a tour to meet other VCs and ask [their advice], and everyone was very collaborative and helpful. [But] I definitely wanted to take a different angle to venture than I’d seen in my own work on the M&A side at VMWare. I come from a very technical background . . .I don’t think too many [other VCs] come from that background . . so [I] end up bringing hopefully something unique to the table . . . In the enterprise world, it’s amazing how many people make investments without actually trying out products.


New Fundings

Aspire, a 10-month-old, Washington, D.C. -based startup that allows employees to select their own company perks and benefits from an online marketplace, has raised $400,000 in seed funding from K Street CapitalAcceleprise and other unnamed investors, reports the Washington Post.

Beehive Industries, a three-year-old, Lincoln, Ne.-based company that makes asset and infrastructure management software for state and local government, utilities, construction, telecommunications and other industries, has raised $2.5 million in Series A funding led by Advantage Capital Partners. The JournalStar has more here.

Cerecor, a three-year-old, Baltimore-based clinical-stage biopharmaceutical company developing treatments for patients suffering from nervous system disorders, has raised the first tranche of a $32 million Series B round led by New Enterprise AssociatesApple Tree Partners, and MPM Capital.

DesignMedix, an eight-year-old, Portland, Or.-based biotech startup that develops drugs to treat diseases caused by drug-resistant pathogens, has raised $1.5 million in angel funding from the Portland Seed Fund and numerous angel investors. According to Crunchbase, the company has now raised $12.7 million in venture and angel funding and federal grants.

Epion Health, a three-year-old, Roseland, N.J.-based company that has developed a software-as-a-service patient engagement platform that begins with the patient check-in process, has raised $4.5 million in Series A funding led by Deerfield Management Company.

Essence Group Holdings, a seven-year-old, Maryland Heights, Mo.-based developer of cloud-based technologies for the health care industry, has raised $71 million from Kleiner Perkins Caufield & ByersCamden Partners, and Sandbox Industries, among others. The company, which operates as Lumeris, has now raised $141 million, shows Crunchbase.

GeneCentric Diagnostics, a three-year-old, Durham, N.C.-based company that develops and commercializes molecular diagnostic tests for oncologists and patients, has raised $5 million in Series A funding, according to an SEC filing that lists earlier investor Hatteras Venture Partners., a four-year-old, Beijing-based third-party push notification service provider, has raised “tens of millions” of dollars in Series B funding led by SAIF Partners, according to a company announcement picked up China Money Network. Earlier investors, including WI Harper, also participated in the round.

ParkWhiz, a seven-year-old, Chicago Heights, Il.-based startup whose site enables people to find and reserve parking spaces, has raised $10 million in Series B funding led by Jump Capital. Earlier investors Hyde Park Venture Partners, Reddit co-founder Alexis Ohanian, former Nokia CTO Amreesh Modi, and former Technology Crossover Ventures partner Henry Feinberg also participated in the round, which brings the company’s total funding to $12 million.

PuzzleSocial, a four-year-old, New York-based gaming studio, has raised $1.1 million in new funding, including from former HBO and Time Warner Cable president Thayer Bigelow, shows an SEC filing. PuzzleSocial had raised at least $600,000 in seed funding last year.

Resy Network, a months-old New York-based company whose app invites users to pay for restaurant reservations (yes, another one), has raised $1.9 million in debt, shows an SEC filing that lists co-founder Ben Leventhal and investor-entrepreneur Gary Vaynerchuk. Business Insider had written about the company in May.

Secoo, a six-year-old, Shanghai, China-based online consignment store for luxury goods, has raised more than $100 million in Series D funding led by CMC Capital Partners, with the participation of earlier investors that include IDGVentech ChinaCrehol Meaningful Capital, and Vangoo Capital PartnersSilicon Valley Bank also reportedly provided an “eight-digit” credit line to the company, which has now raised $150 million altogether. TechNode has the story here.

Swoon Editions, a 2.5-year-old, London-based designer and seller of furniture that offers members one chance a day to pre-order items before they’ve left the workshop, has raised $6.8 million in Series A funding,reports TechCrunchOctopus Investments led the round, with the participation of Index Ventures. The company had earlier raised a $1.8 million seed round with Index leading and Octopus filling out the funding.

Threadflip, a three-year-old, San Francisco-based online consignment marketplace for women’s clothing, has raised $13 million in Series B funding led by Norwest Venture Partners. Earlier investors Baseline VenturesFirst Round Capital and Shasta Ventures also participated in the round, which brings the company’s total funding to $21.1 million.

Unbabel, a year-old, Lisbon, Portugal-based online translation service that combines artificial intelligence with crowd post-editing, has raised $1.5 million in seed capital from about 20 investors, including Matrix PartnersFundersClubGoogle Ventures, and Digital Garage.

Urban Compass, a two-year-old, New York-based marketplace for renting and buying apartments, has raised $40 million in Series B funding led by Advance Publications and Salesforce CEO Marc Benioff. Other participants in the round included Thrive CapitalFounders Fund.406 Ventures and American Express CEO Kenneth Chenault. The company has now raised $73 million altogether. Bloomberg has the story here.

Yo, a months-old, L.A.-based notification app (that just says “yo”), has raised $1.5 million in seed funding led by the founders of China’s Tencent, who chipped in more than $250,000; Mashable founder Pete CashmoreBetaworks; and other angel investors. Business Insider has more here.



Sage Therapeutics, a four-year-old, Cambridge, Ma.-based biopharmaceutical company that’s developing a drug for a life-threatening seizure condition, went public at $18 per share on Friday and its shares closed the day up 67 percent, at $30.10 per share.

Trupanion, a 14-year-old, Seattle-based company that provides medical insurance for dogs and cats, went public on Friday with its shares trading at $10 initially; they closed the day at $11.40.

TubeMogul, a 6.5-year-old, Emeryville, Ca.-based video ad platform whose shares went out at $7 a piece on Friday, saw them close at $11.50. As noted in the WSJ, in an unusual twist, the company’s longtime backers Trinity Ventures and Foundation Capital spent $5 million and $20 million, respectively, to acquire shares in the offering, boosting their holdings to 21 percent and 18 percent.



A look at 14 countries’ richest tech tycoons, care of Business Insider.

NBA star Carmelo Anthony has partnered with long-time family friend Stuart Goldfarb, former chief executive of Bertelsmann Direct North America, to form a seed-stage fund called M7 Tech Partners. The WSJ says the two were introduced to the startup scene by investor Ben Horowitz. You can learn more here.

Adam Besvinick has joined Deep Fork Capital, a 6.5-year-old, San Francisco-based early-stage venture firm, as a principal. Besvinick previously led partnership efforts at Wanelo, a two-year-old digital “mall.” Besvinick also worked part time for Lowercase Case Capital and a couple of startups while getting his MBA from HBS last year. Besvinick tells StrictlyVC that he’ll be based in New York City but returning to San Francisco on a monthly basis.

Nakul Mandan has quietly joined Lightspeed Venture Partners as a “principal partner.” Mandan, who’s been with the firm since June, is focused on early and growth stage software-as-a-service investments. Mandan was previously a vice president at Battery Ventures, which he joined in 2009; earlier in his career, he was an associate with the India-focused fund Blue River Capital.

Last Thursday night, Insight Ventures Partners managing director Deven Parekh and his wife, Monika, reportedly hosted an “intimate fund-raiser” for President Obama in their New York home. They also gave plum seating to Tumblr founder David Karp, who was placed next to the president but “remained largely quiet in the discussion, which started after Obama took a private phone call from Secretary of State John Kerry about Malaysia Airlines Flight 17,” reports Page Six.

Y Combinator has beefed up its ranks yet again, announcing a number of appointments late last week. Among them: Reddit founder Alexis Ohanian, who was formerly Y Combinator’s “ambassador to the East,” is now a partner. So is founder Dalton Caldwell, who was already a part-time partner, and Talkbin founder Qasar Younis, who was also previously a part-time partner. Meanwhile, HomeJoy founder Adora Cheung has signed on with the organization as a part-time partner.

On Saturday, a group of bitcoin backers, include RRE Ventures and Tally Capital, announced they’ve formed a trade association to represent the industry’s interests in Washington.


Job Listings

Lyft, the San Francisco-based ride-sharing company, is looking for a government relations manager. To apply, you need at least five years of biz dev experience and a law degree from a top school.



Everything you need to know about Apple, the day before its earnings call.

In the second quarter of 2014, Israeli tech startups raised a record-breaking $930 million in venture capital, says the IVC Research Center.


Essential Reads

The biggest beneficiary of Y Combinator‘s success isn’t Y Combinator; it’s Sequoia Capital, argues the Priceonomics blog.

Buzzfeed cracks the Pinterest code.

How Google hopes to speed up the Web, one image at a time.



This is why your Comcast rep is yelling at you.

Detroit’s stunning evolution in 19 GIFs.

Here’s what $4,000 in monthly rent will get you in New York City.

Fun with optical illusions.


Retail Therapy

Startup Guy” is now an official line of business casual attire at Banana Republic.

As of today, there are 147 potato-salad-related projects to fund on Kickstarter, including a video of someone destroying potato salads. “Because I really hate them.”

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