StrictlyVC: July 28, 2014

Hi, everyone, hope you had a terrific weekend.

Two quick things. First, it looks like up to a third of you didn’t receive Friday’s email, featuring Roy Bahat of Bloomberg Beta. You can check it out here if you like.

Also, StrictlyVC is going to be taking two weeks off beginning next Monday. Investor, operator, and longtime TechCrunch columnist Semil Shah will be publishing an abbreviated version of the newsletter in our absence (thank you, Semil!); he has some great interviews lined up for you, so stay tuned.


Top News in the A.M., the two-year-old, Mountain View, Ca.-based company behind Swell, a Pandora for talk radio, is on the cusp of being acquired by Apple for $30 million, Recode is reporting this morning. The company had raised $7.2 million altogether, including from DFJGoogle Ventures, and InterWest Partners. The company’s founder and CEO, Ram Ramkumar, sold his last company, SnapTell, to Amazon in 2009.

On the heels of reports last week, Zillow and Trulia have made it official; Zillow is acquiring Trulia for $3.5 billion in a stock-for-stock transaction, the company announced this morning. The deal is expected to close next year.


The PhD VC

Some VCs scout out the best mobile apps. Shahin Farshchi tends to contemplate, well, harder stuff.

“I stay away from the rent-your couch or parking space [startups],” says Farshchi, who joined Lux Capital as a principal in 2006 and was made a partner last month. “I have a semiconductor background, so I spend time looking at technology in the hardware space, from materials that enable higher-performance electronics, to devices like transistors and memories, to systems and software to run on those systems.”

Given his education – including a PhD in electrical engineering from UCLA – it’s no wonder. I recently caught up with Farshchi over an egg-white brunch at the Creamery in Palo Alto, Ca. There, we talked more about his new job and how he plans to put his stamp on the industry.

First, let’s get readers up to speed on Lux Capital. Give us the broad brushstrokes.

Sure, we’ve been around for 14 years, and we’ve invested in more than 35 companies over three funds, including a $250 million fund we closed last year. Until recently, we focused on cutting checks in the millions [of dollars] as the Series A or B lead; over the last 12 months, we’ve also been experimenting with a seed-stage strategy to monitor companies closely and bring value to them [as a front-seat passenger], with the goal of converting those seed positions into Series A positions.

Our biggest check would be in the higher single digits, but we set aside $10 million to $15 million per company; we want to maintain double digital ownership of [any] billion dollar outcome.

You focus largely on chips, which aren’t really being built in the U.S. anymore. So what’s happening here that’s interesting to you?

It’s true that a lot of core technology is moving to Asia. A lot of fabless semiconductor companies, Qualcomm, Broadcom – all their manufacturing is taking place in Asia, and a lot of bleeding edge technology companies in semiconductors are Asian companies.

But there’s still a lot of innovation that needs to be done, and you’d be surprised by how much is happening here. One of my companies, Molecular Imprints, [an Austin, Tx.-based company] which makes a next-generation semiconductor manufacturing technology [called nanoimprint lithography], sold to Canon earlier this year.

How do these next-generation technologies get around or reduce the considerable expense — which is something like $100 million, right? — involved in designing a new chip?

I just invested in a stealth company that’s playing into this challenge — the $100 million upfront cost associated with building a new chip. If you’re a semiconductor company making a chip, it has to go into every single one of these smartphones [that we all use]. Otherwise, you aren’t going to make money. But not all products have the same requirements, so you wind up making a chip that’s okay for most of the devices out there but not optimized for anything [specific].

This stealth company is introducing software programmable silicon, where you can configure that portion that you need, so the chips become far less like Sunday papers of yore, where you threw out a lot of sections, and more like iPads, where you’re actually viewing and getting what you want.

This technology doesn’t already exist today?

It does, with field programmable data arrays. But they come at a huge expense in terms of area and power and make no sense unless you’re making a $10,000 chip that will go into a Cisco switch. But this [startup’s] technology is making it accessible for [a broader array of technologies].

It’s also much cheaper. Right now, it costs orders of magnitude more in terms of price and power and performance to make something programmable instead of hard-baking it, so it makes better sense to make things redundant versus having things programmable. But this technology makes things programmable without the huge cost and performance penalties.

Lux was founded in New York and only opened an office here a year or so ago, but it seems like the firm is succeeding in raising its profile on the West Coast. What’s that process been like?

For years, I was working out of my car and basically borrowing office space. We had a $100 million fund, so the economics didn’t support [a second office]. I basically spent all my time walking up and down the halls of Stanford, Caltech, UC Berkeley, UCLA. My first deals were all university spin-outs. Now, we have an office and we’ve become more broadly founder focused. That’s maybe why you’re hearing more about us.


New Fundings

Birdi, a year-old, Brooklyn, Ny.-based company that makes a smart smoke detector that also gauges air quality, has raised $700,000 in new seed funding, including from Jason Calacanis and his AngelList syndicate; Kapor CapitalEric Ries; and John Galbraith. Venture Capital Dispatch has the story.

CrowdCurity, a year-old, San Mateo, Ca.-based crowdsourced marketplace that pairs site owners with security testers who can scrutinize the sites’ vulnerabilities, has raised $1 million in new funding led by earlier investors Tim Draper and Kima Ventures. Strategic investors, including Gerhard Eschelbeck, chief technology officer and senior vice president of Sophos; Fengmin Gong, co-founder of Cyphort; and 500 Startups, also participated. The company has now raised $1.5 million altogether, shows Crunchbase.

Emulate, a new, Cambridge, Ma.-based company that aims to prove that pharmaceutical companies and biotechs can use its thumbnail-sized microchips in preclinical drug tests (versus testing their drugs on animals or in petri dishes), has raised $12 million in Series A funding led by NanoDimensionCedars-Sinai Medical Center and Swiss billionaire Hansjorg Wyss, the founder of the Wyss Institute, are also participating in the round. Xconomy has much more here.

Epis, a 17-year-old, Portland, Or.-based company that makes an electricity market forecasting tool, has raised $2.7 million in equity and debt, according to an SEC filing that shows a $3.3 million target.

FanMode, a two-year-old, London-based social application for sports fans, who can communicate during matches and whose sentiments can then be broadcasted online and shown on stadium screens, has raised $2.4 million in seed funding from undisclosed angel investors.

Hobby, a new, still-stealth company by Tapulous founder Bart Decrem, has raised roughly $920,000 in funding for a new company called Hobby, shows an SEC filing first flagged by TechCrunch.

Home Chef, a year-old, Chicago-based ingredient and recipe delivery service, has raised an undisclosed amount of seed funding led by Guild Capital.

Intelomed, a nine-year-old, Wexley, Pa.-based medical device company that focuses on real-time, non-invasive cardiovascular system monitoring, has raised $3.85 million in funding from unnamed angel investors. The company has now raised $10.7 million to date, shows Crunchbase.

Marinanow, a two-year-old, Sardinia, Italy-based company that helps people book berths in marinas around Europe, has raised roughly $630,000 in seed funding from the European venture firm United Ventures. TechCrunch has more here.

NewsCastic, a year-old, Albuquerque, N.M.-based company that invites businesses to sponsor local news stories that are then made available to journalists as paying assignments, is in the process of raising a $500,000 round, shows an SEC filing.

SportsManias, a two-year-old, Miami-based mobile sports startup, has raised $3.5 million in Series A funding led by earlier investor Jorge Mas of Mas Equity Partners. The company has raised $4.5 million to date, says Forbes, which has more here.

Tracksmith, a year-old, Wellesley, Mass.-based “premium performance” running apparel company, has raised $1.6 million from Lerer Hippeau VenturesIndex Ventures, and numerous angel investors.

VidAngel, a year-old, Salt Lake City, Ut.-based company that’s creating a platform that combines tech and crowdsourcing to tag potentially offensive content in Web video, has raised $600,000 in seed funding, including from Alta VenturesKickstart Seed Fund and Stonewall Capital.


New Funds

Bam Ventures, a five-month-old, L.A.-based seed-stage venture firm, is looking to raise $10 million for a debut fund, shows an SEC fiing. The firm was founded by Brian Lee, a co-founder of Legalzoom, Shoedazzle and The Honest Company. A second managing director listed on the filing is Richard Jun, who spent four-and-a-half years as the general counsel of Shoedazzle. The firm says it is focused on early-stage opportunities across a variety of sectors, with a particular focus on L.A.- and Southern California-based companies.



Ocular Therapeutix, an eight-year-old, Bedford, Ma.-based biopharmaceutical company that’s developing therapies for diseases and conditions of the eye, including a gel to treat glaucoma, saw its shares rise 1.5 percent on Friday, its first day of trading on the Nasdaq. The company sold 5 million shares at $13 per share.

This week, 22 U.S. IPOs are planned. Here’s a look at what’s coming.



BookLamp, a seven-year-old, Boise, Id.-based book recommendation service, has been acquired by Apple for between $10 million and $15 million, reports TechCrunch.



Y Combinator president Sam Altman talks to EconTalk host Russ Roberts about Y Combinator’s strategy for discovering, funding, and coaching startups and Silicon Valley’s attitude toward entrenched firms.

You might think so from the daily headlines, but Silicon Valley’s highest paid female executive is not Marissa MayerMeg Whitman, or Sheryl Sandberg.

Lyft president John Zimmer on the the company’s New York debut, regulation, and the taxi industry: “The Department of Financial Services reached out a few weeks ago. We met with them, and we thought the meeting went very well. But then, when we tried to reach back out, we weren’t hearing anything.”


Job Listings

Dropbox is looking to add someone who is well-versed in mobile partnerships to its strategic partner development team. The job is in San Francisco.



Half of iOS developers and 64 percent of Android developers earn less than $500 in revenue per app per month, with just 1.6 percent of developers generating most of the app store revenue.

European startups raised more than $2.8 billion in the second quarter, the highest quarterly total since 2001, according to data from Dow Jones VentureSource.


Essential Reads

Amazon is launching a Web store for 3D customizable products.

Psst, illicit drugs are part of Silicon Valley work culture.

SpaceX‘s lawsuit against the Air Force is gaining steam.

Bitcoin mining can be a giant pain in the arse. Here’s one would-be miner’s firsthand account.



Twenty-five of the most beautiful doors around the world.

This is what people look like shooting out of a water slide. (It’s a summer thing.)

Rise and shine”: They’re going to force you to play baseball today.


Retail Therapy

When drinking a glass of whisky is just too easy.

Tesla’s Model 3.

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