StrictlyVC: August 1, 2014

Hello, and happy Friday, everyone! If you missed yesterday’s newsletter in your inbox, it’s here. For the email version today’s newsletter (it’s easier to read), click here.

Also, a quick reminder that we’re stepping away for two weeks beginning this Monday for some downtime at home with the kiddos. In our place, we’re excited to feature Semil Shah, a smartypants when it comes to consumer products, a consultant to various venture firms, and an investor with Haystack Fund. He’ll be publishing an abbreviated version of the newsletter and if you don’t like it, feel to complain to him on Twitter at@semil. (Just kidding! Keep your complaints to yourself.) You can see some of the good stuff he has lined up here. Thank you again, Semil.:)


Top News in the A.M.

Microsoft has to fork over customer’s e-mails held in a server overseas, a federal judge ruled yesterday. Writes the Washington Post, “”The case — the first of its kind in the United States — is a test of whether the government can assert a right to digital content wherever in the world it is stored.” More here.


Homer is a Good Idea; Now, Will it Work?

A week ago, the latest creation to come out of Max Levchin’s R&D lab, HVF, was publicly released. Unfortunately for Levchin, a widely read review suggested the app, called Homer, was “creepily intimate” because it allows users to view other people’s home screens.

Given that users have to choose to make a conscious decision to upload their own home screens with Homer and have full control over what apps they share, it’s hard to see how the app is truly intrusive. On the contrary, in an era where an endless supply of apps now compete for attention, Homer can help users discover useful new apps that their friends enjoy. It also comes with more privacy protections than that initial review suggested.

Homer’s bigger problem, seemingly, is that it wasn’t ready for prime time when it launched. Though some VCs immediately began talking up the iOS app, users weren’t so charitable, giving Homer three out of five stars. Two called it “very buggy,” and a third commented, “Nice concept but can’t even use the app.” Perhaps not surprisingly, HVF says it doesn’t have a timeline for an Android version.

In an interview earlier this week, Homer’s creators, fellow Stanford grads Elliot Babchick and Jason Riggs, quickly volunteered that the app, which they began working on in April, isn’t perfect. “We’re still working on it full-time,” said Riggs. “There’s still plenty to do, like making it faster and fixing bugs … this is basically a [minimum viable product], and we’re making it better.”

The question is whether they’ll get another shot from users. Apple’s approval process can take days; it can also take weeks. That’s a lot of time for a buggy app to be out in the wild.

There’s also a slight risk that Apple will decide it doesn’t like the app after all, especially given the early public impression that it’s somehow meddlesome. Babchick noted that while “someone at Apple did check a box and let us through,” its guidelines are somewhat squishy. “Years ago, the rule was that you weren’t allowed to feature any other app within your app. Since then, the clause has evolved to say that you can’t promote an app unless it’s to a specific set of people for a specific use case.” Apple, he added, “is leaving itself the opportunity to interpret [new apps] how they wish.”

HVF is a member of Apple’s affiliate program — reason for the team to feel some degree of confidence. In fact, Homer can “technically be making money off apps that we refer people to,” though “we’re not doing that yet,” Babchick says.

Asked how long it makes sense to give an app a chance, Babchick told me, “We don’t set an arbitrary guideline that we’ll work on [this or that project] for an amount of time and if it doesn’t make it, [we’ll move on]. Once you start seeing solid retention, for a significant period of time, that’s when you know you have a thing. For something that [came out last Friday], we don’t have the answer.”


New Fundings

Efficient Drivetrains, an eight-year-old, Beijing-based maker of hybrid and electric drivetrains, has raised $3.5M in Series A funding led by Jinyuan Development Company, with participation from Silicon Valley China Venture Partners and the Shanghai Gui Guo Assets Management Partnership.

Forage, a new, San Francisco-based meal-kit delivery startup focused on chef-approved recipes that customers can create at home in 20 minutes, has raised an undisclosed amount of seed funding, reports Venture Capital Dispatch. Its investors include Twitter and Medium cofounder Evan WilliamsWhole Foods Market, and Hass Hassan, founder of the U.K.-based organic food retailer Fresh & Wild, a chain acquired by Whole Foods a decade ago.

Geekatoo, a four-year-old, Walnut Creek, Ca.-based platform for in-home tech support, has raised $1.7 million in seed funding from investors, including Eric RiesDave MclureParker Thompson of 500 Startups, and Mikihiro Yasuda of DeNA.

Gen9, a five-year-old, Cambridge, Ma.-based synthetic biology company, has raised $25 million in new funding, shows an SEC filing flagged by the Boston Business Journal. The company has now raised at least $50 million from investors, shows Crunchbase.

Kabam, an eight-year-old, San Francisco-based mobile gaming company, has raised $120 million in strategic funding from the China-based giant Alibaba, money that Kabam plans to use to acquire other companies in Asia and other regions, the company tells the WSJ. Kabam had previous raised roughly $125 million from investors, including Canaan PartnersRedpoint VenturesIntel CapitalPinnacle VenturesGoogle VenturesSK Telecom Ventures, and Performance Equity Management.

KnowledgeVision Systems, a four-year-old, Concord, Ma.-based maker of interactive and multimedia software, has raised $1.2 million from undisclosed investors. The company had previous raised $8 million, including from GrandBanks Capital, shows Crunchbase.

Portea Medical, a 2.5-year-old, Bangalore-based provider of in-home healthcare and emergency medical services in India, has raised an undisclosed amount of funding from Qualcomm Venturesreports LiveMint. Last December, the company raised $8 million from Accel Partners and Ventureast, a Bangalore-based venture firm. The company is looking to raise another $50 million in the next six to eight months, its CEO tells LiveMint.

Portfolium, a 1.5-year-old, San Diego-based startup whose online platform is designed to help students visually showcase their skills, projects and experiences to employers, has raised $900,000 in seed funding from Tech Coast Angels and others.

Qiniu, a three-year-old, Shanghai-based cloud storage service provider, has raised “tens of millions” of dollars in Series C funding led by CBC Capitalsays China Money Network. Earlier investors Matrix Partners and Qiming Venture Partners also participated in the round.

Settle, a new, Ukraine-based mobile payment service for restaurant patrons, has raised $1.5 million funding round from the Moscow-based venture fund Life.SREDA. TechCrunch has more here.

Vakast, a year-old, Newport Beach, Ca.-based online travel agency for vacation rentals, has raised $1.3 million in seed funding led by Blackstone Group senior managing director Chinh Chu and Ken Pansuria, a founder of the Fine Hospitality Group. Nicky Nguyen, founder of NJ Enterprises, also invested in the round.

ViralGains, a two-year-old, Boston-based video marketing platform for brands, ad agencies, marketers, and media buyers, has raised $2.8 million of what it expects to be a $3.3 million seed round of funding. Its investors include Hub Angels, investor Dave McClure, and rapper Nas, among many others.

Wantable, a two-year-old, Milwaukee, Wi.-based e-commerce company that sends customers personalized beauty and fashion accessories, has raised $1.5 million in Series A funding from local angel investors. The company says it has raised $2.3 million altogether so far.


New Funds

AOL has plans to invest in more Israeli startups. Nautilus, its new program, will invest $100,000 in as many as 10 projects at a time, according to an earlier Reuters report out of Jerusalem that notes AOL already has a development center in Israel. Merav Rotem-Naaman, formerly of Better Place, is directing the program. More information is coming soon, suggests Nautilus’s new site.

Canaan Partners, the 27-year-old venture firm, with offices in the U.S., Israel, and India, is raising a $600 million fund with a $650 million cap, reports peHUB. “The fundraising will go fast, their numbers are really good,” one unnamed LP tells the outlet. The firm closed its ninth and most recent fund with $600 million in 2012.

Venrock, the 45-year-old venture firm that began life, investing on behalf of the Rockefeller family, has just closed its seventh fund with $450 million in commitments. Venrock closed its last fund in 2010 with $350 million. TechCrunch has much more here.



Mitro, a two-year-old, New York-based that stores and allows users to share cloud service credentials, has been acquired by Twitter, Mitro announced yesterday. The terms were undisclosed, but as TechCrunch notes, Twitter isn’t shutting down the service. Instead, Mitro is becoming an open source project, at least through year end. Mitro had raised $1.2 million in seed funding from Google Ventures and Matrix Partners.

Propeller, a one-year-old, San Francisco-based mobile startup that helps users create their own apps, has been acquired by the data analysis company Palantir for undisclosed terms. Propeller had raised $1.25 million in funding from investors, including Andreessen HorowitzMenlo VenturesFoundation CapitalSubtraction CapitalGreat Oaks Venture CapitalMax LevchinAshton KutcherKeith RaboisScott BanisterJason PortnoyLee LindenRothenberg VenturesAlfred Mandel, and ffAngel, the seed fund of Founders Fund, cofounded by Peter Thiel, who has also backed Palantir, as Fortune notes. The deal marks the second acquisition that Palantir has announced this week. It’s other purchase: Poptip, a two-year-old, New York-based startup that helps companies conduct social media surveys and analyze online conversations and other unstructured conversation. Palantir has raised nearly $900 million from investors over its 10-year history, including a $107.5 million round last year that valued the company at $9 billion.

Simbionix, a 17-year-old, Cleveland, Oh.-based maker of 3D virtual reality surgical simulation and training, has been acquired for $120 million in cash by publicly traded 3D Systems. The company had raised at least $7 million from investors, shows Crunchbase. Its backers included River Cities Capital FundsEarly Stage Partners, and Western Reserve Partners. MedCity News has more here.

TOA Technologies, an 11-year-old, Beachwood, Oh.-based company that specializes in cloud services that coordinate customer service with field operations, is being acquired by Oracle for undisclosed terms. The company had raised roughly $96 million over the years, according to Crunchbase. Its investors included Draper AssociatesNovitas CapitalEarly Stage PartnersDraper Triangle VenturesIntel CapitalFort Washington Capital Partners Group, and Sutter Hill Ventures. ZDNet has a bit more here.



All right, eBay. Finally, a tech giant that’s not so white, and not so male.

Venture capitalist Tim Draper is profiled in BusinessWeek, which reports that his father, Bill Draper, is “skeptical about [the younger Draper’s] Six Californias plan but has learned not to doubt his son. ‘He got hit three times by automobiles on his bicycle. He’s kind of a lucky guy as well as a risk-taker,’ he says, going on to recount a time when, in China, Tim at midnight walked up to a street vendor who was selling what he claimed was snake blood that would improve one’s brain. Tim downed a cup and was fine. ‘Tim has a way of getting away with murder, almost,’ Bill says.”

Snapchat’s VP of Engineering, Peter Magnusson, has left the company just six months after being lured away from Google. It’s not clear yet what happened, but TechCrunch has much more here.

Stanford’s StartX class has begun; here’s a bit of background about the founders and other participants taking part in the program.

Tinder CEO Sean Rad keeps pretending he’s the head of a self-funded startup, despite that Tinder is owned by IACsays Valleywag. Writes Sam Biddle, “They want so badly to play startup, to trade on that image of entrepreneurial autonomy, like teens who insist on being dropped off a couple blocks away from the party.”


Job Listings

Twitter is looking to hire a business development manager to help build and scale its commerce initiatives. The job is in San Francisco.



Pitchbook has published one of its “Daily Benchmark” summaries — this time about the 13 U.S. venture funds that closed in 2006 with between $500 million to $1 billion in commitments. Pitchbook says their median IRR is 10.1 percent; their top quartile IRR hurdle rate is 12.4 percent, and they’ve distributed an average of $227 million to their investors. The top performers of the bunch, based on net IRR: Caduceus Private Investments IIIDCM V, and M/C Venture Partners VI.


Essential Reads

Looks like Google is getting out the barge business.

Payment processor Stripe has launched an open source, decentralized payment network and protocol called Stellar. Unlike Bitcoin, reports VentureBeat, it supports traditional currencies, too.

Yo is evidently fed up with the numerous clones that have emerged, primarily to poke fun at the application. Says one developer of her app, whose interface is nearly identical, “YOLO is entirely different from Yo.



Thirteen strange things that can prompt people to fall in love.

Surreal photography by Oleg Oprisco.

When his wife refused to take maternity photos, this guy posed for them himself.


Retail Therapy

You’ve probably heard that Grover Norquist is going to Burning Man this year. If you plan to go with your friends anyway, this could come in handy

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