• Elad Gil on the Angel Investing Lifecycle

    Elad GilBy Semil Shah

    Elad Gil is like a lot like other smart, accomplished Silicon Valley angel investors. His credentials include an advanced degree from M.I.T. He has worked at both small and big companies, from Plaxo to Google (where the mobile wireless team he started acquired Android). He’s also an entrepreneur himself, starting Mixer Labs, a service that helped developers build geo-location apps.

    When Twitter acquired the company in 2009, Gil stayed on as a Twitter VP for two-and-a-half years, becoming an active angel investor — or a “startup helper,” as he describes himself on LinkedIn — more than two years ago. Unlike a lot of his peers, Gil is content to remain an angel investor for the foreseeable future, too, for a variety of reasons. We’ll delve into some of them early next week. In the meantime, here’s Gil on why angel investors tend to pursue certain, predictable trajectories.

    There aren’t many true individual angels left. Why is that?

    It seems like there is a natural lifecycle to individual angel investors, especially if they stop being operators. At some point many individual angels who were successful investing chose one of two paths — raise your own fund, or join a traditional venture firm. This isn’t something I’m planning on, but many have, and I think this transition has a few drivers:

    1.) People want leverage on time or run out of capital. If you’re an individual angel writing small checks, eventually you may realize you are investing an enormous amount of time working hard for your portfolio companies. But you may not have a lot of skin in the game relative to other, less engaged investors. In my own case, there are a number of companies I am involved with where I have put in a lot more work then people with 10X or even 100X the financial position. At some point, angels may want to have more leverage on their time. If an angel is putting in so much work, why not also participate more in the upside by investing a larger amount? Or, an angel may want to expand their role to be able to lead seed or larger rounds and to set terms. This is actually starting to be enabled by AngelList.

    Alternatively, you may at some point tap out financially or be too illiquid to keep investing your own money. This supposedly happened to Elon Musk for a period when he had all his capital tied up in SpaceX and Tesla and neither company was public. So raising a fund or joining a VC is a way to keep investing without tying up all your own cash.

    2.) People want to learn or do something new. Some institutional venture capitalists have a really strong process or perspective on investing. Benchmark and Sequoia are two that come to mind. Some individual angels feel they have a lot to learn at these institutions. [It’s also the case] that many individual angels don’t take board seats or get involved with other aspects of a company, and joining a traditional venture firm allows them to do things they have not done before.

    3.) People stop operating. Running a company can be exhausting. Many individual angels are often former operators. Once an entrepreneur or executive gives up their day job, they may want to still to be involved with startups day to day. A firm — either their own or one they join — provides them with a regular outlet and a job without the soul-crushing 24/7 grind of an operating role.

    4.) People get lonely. It’s nice to have other people to bounce ideas off of. As an individual angel, if you spend time bouncing investment ideas off of other angels, you may be violating the confidentiality of the startup — or you may fall into group think. An institution provides people with a framework for tapping into other folks regularly and having a firm and culture to be part of. (That said, I hear that many VCs feel they are “lone wolves” and the job of the VC is not one where you spend a lot of time with your partners. I guess all things are relative.)

    5.) Prestige. Some people are really attracted the societal prestige associated with being a venture capitalist. It is sort of like the people who join Goldman Sachs straight out of school so they can brag about it to their friends.

    One of the cool things about Silicon Valley is the ongoing cycle of capital and talent. The pool of individual angels keeps getting renewed and refreshed as entrepreneurs or early hires at breakout companies make enough money to start angel investing. A small handful of these folks end up either generating a sizable brand or a good return and reputation, many of whom then transition into VC. (Of course many individual angels end up loosing money and dropping out before building a reputation, so there is also the “dark side” of being an angel).

    Y Combinator has its own interesting version of this, where a number of YC alumni cycle back as partners at YC and/or raise their own funds. So YC is functioning as a farm system for its own investors, which reenforces it.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

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  • StrictlyVC: August 13, 2014

    Good Wednesday morning, everyone. Semil Shah here, filling in for Connie while she takes a little time off. If you want to chat about today’s column or anything else, you can always find me on Twitter at @semil.

    —–

    Top News in the A.M.

    Tech giants are at odds over how the government should protect users in the era of big data, with Microsoft among those calling for new federal standards, and Facebook, Google, and Yahoo arguing for self-regulation. The Hill has more here.

    ——

    Chatting with Tommy Leep of Rothenberg Ventures

    Earlier this year, Tommy Leep joined San Francisco-based Rothenberg Ventures as a partner after spending more than two years at Floodgate as its “chief connector,” helping entrepreneurs get their startups off the ground. We recently chatted with Leep — who was once a product manager at Intuit — about the move, as well as the role that serendipity often plays in the career of the investor.

    You recently finished up a tour of duty with Floodgate to join Rothenberg Ventures. Walk us through your transition, what you learned, and why you ended up where you did.

    At Floodgate I learned that I love being a “connector.” I love connecting startup founders with people who can resolve their needs. The problem is that no one focuses on recruiting connectors. It doesn’t sound tangible enough. So I had to figure out how I could keep doing this thing I love.

    At first, I thought it may be a big tech company. I considered a corporate development role with one company and a community role with another, both of which excited me but [were] too focused on [each] company’s outcome. Those conversations helped me realize that I work best with a broad set of constituents that includes founders, investors, big companies and startup supporters. Then I realized that the best opportunity for me was right under my nose [with] my roommate and Stanford friend Mike Rothenberg, [who] had founded Rothenberg Ventures.

    Can you retell the story of how you fell into the venture world? I think it could be instructive for younger folks out there, given how random it is and how much of it is driven via personal relationships.

    I met Mike Maples at the Orange Bowl in Miami in January 2011. Before the game there was a rumor going around that Bon Jovi was performing at a private tailgate in a big tent. A friend who had been the Stanford Tree band mascot somehow got wristbands to this tailgate, so we went in. (I was also a Stanford Tree.) We were grabbing burgers when I ran into Weston McBride, a Sigma Nu fraternity friend from undergrad. Weston had pitched Mike a couple weeks earlier, and he offered to introduce me to him there.

    We connected over Sigma Nu, which Mike helped restart when he was at Stanford. We talked about Stanford football and this shirt I was wearing that said “I Believe in Stanford Football” . . .[and] Mike asked for one and he emailed me a reminder on the spot. . . A month later we met for breakfast at Hobee’s at Town & Country in Palo Alto for the shirt hand-off, and after that he interviewed me to become Floodgate’s first associate.

    Mike and Ann from Floodgate have legendary reputations in the world of early-stage investing. You had a front-row seat. Briefly, what sticks out in your mind about what makes them so good?

    Mike and Ann stick to first principles. They do right by the founders they work with. They have deep expertise in giving founders strategic guidance to build their businesses. They measure and learn from their investments and misses. And supporting founders is authentic to their personal missions.

    At Rothenberg Ventures, how is the fund and platform set up? How do you work to attract the best founders to your firm?

    At Rothenberg Ventures, we are very different from most other firms. We don’t spend Mondays in meetings and we don’t sit on boards. . . We offer on-call advisory to our founders, connect with almost all of them each month, and help connect our founders to the people they need to meet to help build their businesses. We believe in extreme giving . . . Our capital comes from a hundred founders and investors who also love giving back to founders and the venture community. We facilitate interactions through dozens of tech talks, dinners, small gatherings, and events like [a recent event for founders at AT&T Park in San Francisco]. . . For example, one of our recent initiatives is a co-working space in SOMA where we work side by side with 60 entrepreneurs. Our founders identify with us because we look like them — we’re a startup investing in other startups.

    ——

    New Fundings

    360fly, a 16-year-old, Pittsburgh, Pa.-based company that makes a single-lens camera and software platform that captures stitchless 360-degree video, has raised $17.8 million in Series B funding led by Qualcomm Ventures, Catterton, Voxx International and Steve Altman, former president and vice chairman of Qualcomm.

    Acupera, a three-year-old, San Francisco-based maker of analytics and workflow management software for medical teams, has raised $4 million in Series A funding led by Lightspeed Venture Partners, with Whittemore Collection participating.

    AdStage, a two-year-old, San Francisco-based ad management platform, has raised $6.25 million in Series A funding from Verizon Ventures, Digital Garage, Newbury Ventures, Freestyle Capital, and Chris Noble and Neal Dempsey of Bay Partners. The company has now raised $8.75 million altogether, shows Crunchbase.

    Electric Imp, a three-year-old, Los Altos, Ca.-based company whose chip, “imp,” provides WiFi and cloud-based internet connectivity services to any electrical device, has raised $15 million in Series B funding from new investors Foxconn Technology Group, PTI Ventures and Rampart Capital. Earlier investors Redpoint Ventures and Hugo Fiennes, chief executive and co-founder of Electric Imp, also participated in the round, which brings the company’s total funding to $22.9 million.

    GetTaxi, a four-year-old, Tel Aviv-based, Uber-like mobile app that operates in 24 cities in Israel, has raised $150 million in new funding, reports Globes. One-sixth of the funding comes from the Swedish fund manager Vostok Nafta Investment, which tells Globes that “[a]lthough competition is ripe everywhere, we think a conservative scenario is that GetTaxi becomes the leading player in Russia and Israel,” giving GetTaxi a potential valuation of more than $2 billion in “a couple of years.”

    Lookout, a seven-year-old, San Francisco-based security software maker for mobile devices, has raised $150 million in Series F funding, led by T. Rowe Price, which was joined by new investors Morgan Stanley, Goldman Sachs, Bezos Expeditions and Wellington Management Company. Earlier backers Andreessen Horowitz, Accel Partners, Index Ventures, Mithril Capital Management and Khosla Ventures also participated in the round, which brings the company’s total funding to roughly $282 million.

    Niveus Medical, a six-year-old, Palo Alto, Ca.-based company whose medical device uses electrodes to keep muscle groups strong during patient recovery, is raising $3.6 million in new funding, shows an SEC filing that was first flagged by MedCity News. The company had previously raised $2 million from a syndicate that included Band of Angels, Life Science Angels, Sand Hill Angels and others.

    RelayRides, a six-year-old, San Francisco-based peer-to-peer car sharing marketplace, has raised $10 million in new funding just six weeks after initially closing a $25 million Series B round. The new capital comes from Trinity Ventures; earlier investors in the Series B included Canaan Partners, August Capital, Google Ventures and Shasta Ventures. The company has raised at least $43.2 million to date, according to Crunchbase, which lists at least one round that included an unknown amount of funding.

    Seventh Sense Biosystems, a six-year-old, Cambridge, Ma.-based company behind a new type of blood collection and diagnostics platform, has raised $16 million in Series B financing from new investors, including Siemens Venture Capital, Novartis, and Laboratory Corporation of America Holdings. Earlier investors Flagship Ventures and Polaris Partners also participated in the round, which brings the company’s total funding to $26 million, shows Crunchbase.

    —–

    IPOs

    The WSJ looks at the public offering of Israeli drug development company Vascular Biogenics, calling it “one of the most creatively botched IPOs in memory.”

    —–

    Exits

    Onswipe, a four-year-old, New York-based startup that allows publishers to create tablet- and smartphone-optimized versions of their websites, has been acquired by the ad tech company Beanstock Media for an undisclosed amount of cash and stock. Beanstock is self-funded. Onswipe had raised $6 million from investors, including Lerer Hippeau Ventures, SV Angel, Morado Venture Partners, Eniac Ventures, Thrive Capital, and Spark Capital.

    Zofari, a two-year-old, San Francisco-based local recommendation app that helps match users with places they’re likely to enjoy visiting, has been acquired by Yahoo. Terms of the deal aren’t being disclosed, but Zofari’s four employees are joining Yahoo, reports TechCrunch.

    —–

    People

    Edward Snowden gives NSA whistleblower James Bamford the most extensive interview about his story to date, saying he intended to make it fairly clear to the NSA which documents he took and copied, so he would be seen as a whistle-blower and not a spy for a foreign government. “I figured [the NSA] would have a hard time” finding his trail of digital bread crumbs, Snowden says. “I didn’t figure they would be completely incapable.”

    According to BuzzFeed, a standoff between the Winklevoss twins and debtholders killed the discount-tracking app they’d invested in, Hukkster. More here.

    —–

    Job Listings

    Amazon is looking for a director of corporate development to focus on Amazon Web Services. The job is in Seattle.

    —–

    Essential Reads

    Amazon has unveiled its own mobile card readers and — surprise — it “savagely” undercuts both Square and PayPal on price.

    LinkedIn expects to create a new billion-dollar business in three years. Business Insider has the details.

    —–

    Detours

    Chinese scientists have used x-rays to image the blood vessels in a heart with unprecedented detail. The trick? Injecting it with liquid gallium.

    Why it’s probably best to avoid antibacterial soaps.

    Audrey Hepburn’s granddaughter, photographed by Richard Avedon’s grandson.

    —–

    Retail Therapy

    A handy wind-up shredder, for, you know, orgami art, destroying documents on the fly, etc.

    Now you can fly private, on the cheap.

    —-

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    ,

  • Chatting with Tommy Leep of Rothenberg Ventures

    Tommy LeepBy Semil Shah

    Earlier this year, Tommy Leep joined San Francisco-based Rothenberg Ventures as a partner after spending more than two years at Floodgate as its “chief connector,” helping entrepreneurs get their startups off the ground. We recently chatted with Leep — who was once a product manager at Intuit — about the move, as well as the role that serendipity often plays in the career of the investor.

    You recently finished up a tour of duty with Floodgate to join Rothenberg Ventures. Walk us through your transition, what you learned, and why you ended up where you did.

    At Floodgate I learned that I love being a “connector.” I love connecting startup founders with people who can resolve their needs. The problem is that no one focuses on recruiting connectors. It doesn’t sound tangible enough. So I had to figure out how I could keep doing this thing I love.

    At first, I thought it may be a big tech company. I considered a corporate development role with one company and a community role with another, both of which excited me but [were] too focused on [each] company’s outcome. Those conversations helped me realize that I work best with a broad set of constituents that includes founders, investors, big companies and startup supporters. Then I realized that the best opportunity for me was right under my nose [with] my roommate and Stanford friend Mike Rothenberg, [who] had founded Rothenberg Ventures.

    Can you retell the story of how you fell into the venture world? I think it could be instructive for younger folks out there, given how random it is and how much of it is driven via personal relationships.

    I met Mike Maples at the Orange Bowl in Miami in January 2011. Before the game there was a rumor going around that Bon Jovi was performing at a private tailgate in a big tent. A friend who had been the Stanford Tree band mascot somehow got wristbands to this tailgate, so we went in. (I was also a Stanford Tree.) We were grabbing burgers when I ran into Weston McBride, a Sigma Nu fraternity friend from undergrad. Weston had pitched Mike a couple weeks earlier, and he offered to introduce me to him there.

    We connected over Sigma Nu, which Mike helped restart when he was at Stanford. We talked about Stanford football and this shirt I was wearing that said “I Believe in Stanford Football” . . .[and] Mike asked for one and he emailed me a reminder on the spot. . . A month later we met for breakfast at Hobee’s at Town & Country in Palo Alto for the shirt hand-off, and after that he interviewed me to become Floodgate’s first associate.

    Mike and Ann from Floodgate have legendary reputations in the world of early-stage investing. You had a front-row seat. Briefly, what sticks out in your mind about what makes them so good?

    Mike and Ann stick to first principles. They do right by the founders they work with. They have deep expertise in giving founders strategic guidance to build their businesses. They measure and learn from their investments and misses. And supporting founders is authentic to their personal missions.

    At Rothenberg Ventures, how is the fund and platform set up? How do you work to attract the best founders to your firm?

    At Rothenberg Ventures, we are very different from most other firms. We don’t spend Mondays in meetings and we don’t sit on boards. . . We offer on-call advisory to our founders, connect with almost all of them each month, and help connect our founders to the people they need to meet to help build their businesses. We believe in extreme giving . . . Our capital comes from a hundred founders and investors who also love giving back to founders and the venture community. We facilitate interactions through dozens of tech talks, dinners, small gatherings, and events like [a recent event for founders at AT&T Park in San Francisco]. . . For example, one of our recent initiatives is a co-working space in SOMA where we work side by side with 60 entrepreneurs. Our founders identify with us because we look like them — we’re a startup investing in other startups.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , , , ,

  • StrictlyVC: August 12, 2014

    Good morning, everyone. Semil Shah here filling in for Connie until next Monday. If you’d like to chat about today’s column or anything else, you can always find me on Twitter at @semil.

    —–

    Top News in the A.M.

    New York Senator Chuck Schumer wants the FTC to investigate the data gathering and sharing practices of makers of personal fitness devices and applications. Without federal regulations restricting the companies from reselling the health data to third parties, users could be in for a “privacy nightmare,” says Schumer.

    —–

    Nakul Mandan on His New Role at Lightspeed, and What He Was Recruited to Do

    Nakul Mandan has spent most of the last five years as a VP at Battery Ventures. Earlier this summer, though, he quietly joined Lightspeed Venture Partners, where he’s focusing on early- and growth-stage software-as-a-service investments as a “principal partner.” We asked him about some of the considerations involved in switching from one powerful venture firm to another, and what he was recruited to do.

    You recently moved from Battery Ventures to Lightspeed. What’s it like to switch firms on Sand Hill?

    In a way, it’s more of the same in terms of the daily routine – figure out thesis areas you like, invest in teams attacking those areas, and then support them in every way possible. But each firm has its own DNA in terms of how they think of risk-reward, the nature of risks they’re comfortable taking, and how the investment team works together pre- and post-investment. Understanding that DNA and finding alignment is key.

    The other aspect of the switch is to ensure a smooth transition for the entrepreneurs you’re working with, within the portfolio and outside. This is extremely important. You want to make sure that there is somebody to take over an ongoing relationship — board role, or otherwise — and represent the firm in the same way as you would have.

    You were recruited to Lightspeed to help build the firm’s SaaS practice. Is SaaS still hot after the public SaaS companies were hurt in public markets in March? What has the industry learned from that slight correction?

    I’m not sure I’d make a good investor if I invested in early-stage startups based on the current public market reaction to a particular category. Just a year or so ago, consumer was supposed to be out of vogue because the long-awaited Facebook IPO didn’t do well initially. But now Facebook, Twitter, Uber, and Airbnb are all kicking ass and so consumer is back.

    I’m sure SaaS, or for that matter any other category, will see similar ups and downs. But if the business is fundamentally creating value for its customers, and customers are willing to pay a price for that value that eventually leads to strong profitability, then the business can see through those ups and downs in valuations.

    What do you see as the key differences between web-based versus mobile-only SaaS opportunities today?

    Similar to the consumer world, in mobile, less is more. For mobile apps to be useable, they need to be extremely easy to navigate and focused on a couple of core features that they’re great for. Sometimes that requires trimming the functionality down. For instance, collaboration software on mobile will look closer to Whatsapp than Facebook. For companies trying to redefine existing workflows like CRM or sales productivity or collaboration on mobile, that’s something to keep in mind.

    The challenge is how do you deliver enough value while keeping it simple to use on mobile. To that extent, I think there’s more opportunity for mobile-first rather than mobile-only SaaS startups. A lot of enterprise use cases can benefit from the ease of use of a mobile app focused on one or two core features but also need a more comprehensive workflow that is better delivered via a web app to support the end-to-end needs of the business user.

    We always hear about seed deals for consumer startups. How do you see the seed ecosystem working for enterprise-focused founders?

    I think it’s a pretty robust ecosystem. There are lots of good angels and seed funds that are focused on enterprise startups. There’s also a lot of good talent coming out of all the recently acquired enterprise companies, like Eloqua, Yammer, ExactTarget, Successfactors, etc.

    My sense is that enterprise will never be the area that gets written about the most in tech blogs, but it continues to be the area where most of the early-stage investment dollars go, and where a lot of innovation is happening.

    What’s the biggest change you’ve seen in your five years on Sand Hill Road? And, why is this important for both investors and founders to understand?

    The biggest change for me is how much more mature startups are, and are expected to be, by the time they pitch their Series A. With the cost of building a product going down, and a greater influx of seed-stage capital, I’m regularly seeing startups raise seed rounds that give them two-plus years of runway. This gives them more time to tweak their initial product, and get more feedback from customers before they hit the road for a Series A. Founders need to keep that in mind as they think about the timing of their Series A. And investors need to accordingly adjust their expectations on valuations and round size, given that startups are coming to them with more proven out.

    —–

    New Fundings

    CyberLightning, a four-year-old, Oula, Finland-based company whose software platform helps energy, infrastructure, and other companies analyze data being created through strategically placed sensors, has raised $4.2 million in funding from investors, including Inventure, TEKES (the tax payer-funded Finnish Funding Agency for Innovation), and other EU tax payer-sponsored funds. TechCrunch has much more here.

    EverString, a two-year-old, San Mateo, Ca.-based company whose predictive analytics platform helps companies better leverage their sales data, has raised $12 million in Series A funding led by Lightspeed Venture Partners. Earlier investors Sequoia Capital and IDG Ventures also participated.

    Hireology, a four-year-old, Chicago-based company whose technology platform helps companies organize their hiring processes, has raised $10 million in Series B funding from Bain Capital Ventures. The company has now raised $13 million altogether, including from earlier backers Lightbank and FireStarter Fund.

    JoyTunes, a four-year-old, Tel Aviv-based company that develops music-related games and applications that aim to shorten the process for users learning to play music, has raised $5 million in Series A funding led by the venture firms Aleph and Formation 8, with participation from earlier investor Genesis Partners. The company has now raised $7 million to date.

    Nasuni, a five-year-old, Natick, Ma.-based storage services provider, has raised $10 million in new funding from earlier backers Flybridge Capital Partners, North Bridge Venture Partners, Sigma Partners, and a strategic investor. The new financing brings Nasuni’s total funding to $53 million.

    Vyome Biosciences, a four-year-old, Delhi, India-based dermatology company focused on developing treatments for refractory skin conditions like persistent dandruff and skin fungal infections, has raised $ 8 million in Series B funding led by Sabre Partners, with earlier investors Kalaari Capital and Aarin Capital participating.

    —–

    Exits

    Benchmark returned roughly 5.3 million shares of Twitter stock to its limited partners on Friday, according to documents filed with SEC yesterday. Recode has the story here.

    Bubbly, a once-popular, Singapore-based social network that had received $39 million from prominent venture firms, including Sequoia Capital, Singtel Innov8, JAFCO Asia, and others, is being dismantled after a few acquisition deals failed to work out. Tech in Asia has the story here.

    Ooyala, a seven-year-old, Mountain View, Ca.-based streaming video distribution and monetization platform, is being acquired by one of its earlier investors, Telstra, which will operate it as a wholly owned subsidiary. The Australian telecommunications company is investing $270 million, for a 98 percent ownership stake in the company, up from the 23 percent it owned through a previous investment round. TechCrunch has the story here. Ooyala had raised $122 million from backers, including Google Ventures, CID Group, ITOCHU Corporation, Sierra Ventures, Rembrandt Venture Partners, and angel investor Ron Conway.

    Saatchi Online, a four-year-old, L.A.-based online gallery focused on connecting people with art and artists, has been acquired by publicly traded Demand Media for $17 million in cash and stock. Saatchi had raised $11.2 million from investors, including Balderton Capital and Project A Ventures, shows Crunchbase.

    Twitter has disclosed in a quarterly filing that it paid $134.1 million in mostly cash for Gnip, a data partner it agreed to acquire in April. The WSJ has more here.

    —–

    People

    Greylock Partners‘s John Lilly talks app constellations — the good, the bad, and the ugly.

    Buffalo Bills fans hoped venture capitalist Chris Sacca might buy the team and keep it from the clutches of Jon Bon Jovi, who’d like to move it to Toronto. It’s not going to happen, though. Writes Sacca to Fortune’s Dan Primack: “Not a buyer. The head injury fallout is going to get much worse. I don’t even enjoy watching knowing the trauma to those guys.”

    The White House announced a new, “U.S. Digital Service” team yesterday to improve government websites and upgrade U.S. technology infrastructure. The team of seven to 10 will include Mikey Dickerson, a former Google website manager. Recode has more here.

    —–

    Job Listings

    Box, the pre-IPO storage company, is looking for a corporate strategy associate. The job is in Los Altos, Ca.

    —–

    Data

    The return distribution of biopharmaceutical VC financings.

    —–

    Essential Reads

    A bill requiring smartphone makers to include antitheft software on devices sold in California is one step away from becoming law.

    Uber rival Lyft says Uber employees have ordered, then canceled, roughly 5,500 Lyft rides over the last 10 months.

    Forbes takes a long look at the “big data startup factory” created by Frost Data Capital.

    —–

    Detours

    Set up to fail: How bosses create their own poor performers. (This paper dates back to 1998, but it’s making the rounds again because of its timeless findings.)

    Growing embryos are now being tracked with genetic precision that will change pregnancies forever.

    RIP, Robin Williams.

    —–

    Retail Therapy

    It’s late to the party, but the Polaroid Cube is hoping to make up for lost time with cuteness. (H/T: Uncrate)

    Cloud file solutions, brought to you by people with a good sense of humor.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • Nakul Mandan on His New Role at Lightspeed, and What He Was Recruited to Do

    Nakul MandanBy Semil Shah

    Nakul Mandan has spent most of the last five years as a VP at Battery Ventures. Earlier this summer, though, he quietly joined Lightspeed Venture Partners, where he’s focusing on early- and growth-stage software-as-a-service investments as a “principal partner.” We asked him about some of the considerations involved in switching from one powerful venture firm to another, and what he was recruited to do.

    You recently moved from Battery Ventures to Lightspeed. What’s it like to switch firms on Sand Hill?

    In a way, it’s more of the same in terms of the daily routine – figure out thesis areas you like, invest in teams attacking those areas, and then support them in every way possible. But each firm has its own DNA in terms of how they think of risk-reward, the nature of risks they’re comfortable taking, and how the investment team works together pre- and post-investment. Understanding that DNA and finding alignment is key.

    The other aspect of the switch is to ensure a smooth transition for the entrepreneurs you’re working with, within the portfolio and outside. This is extremely important. You want to make sure that there is somebody to take over an ongoing relationship — board role, or otherwise — and represent the firm in the same way as you would have.

    You were recruited to Lightspeed to help build the firm’s SaaS practice. Is SaaS still hot after the public SaaS companies were hurt in public markets in March? What has the industry learned from that slight correction?

    I’m not sure I’d make a good investor if I invested in early-stage startups based on the current public market reaction to a particular category. Just a year or so ago, consumer was supposed to be out of vogue because the long-awaited Facebook IPO didn’t do well initially. But now Facebook, Twitter, Uber, and Airbnb are all kicking ass and so consumer is back.

    I’m sure SaaS, or for that matter any other category, will see similar ups and downs. But if the business is fundamentally creating value for its customers, and customers are willing to pay a price for that value that eventually leads to strong profitability, then the business can see through those ups and downs in valuations.

    What do you see as the key differences between web-based versus mobile-only SaaS opportunities today?

    Similar to the consumer world, in mobile, less is more. For mobile apps to be useable, they need to be extremely easy to navigate and focused on a couple of core features that they’re great for. Sometimes that requires trimming the functionality down. For instance, collaboration software on mobile will look closer to Whatsapp than Facebook. For companies trying to redefine existing workflows like CRM or sales productivity or collaboration on mobile, that’s something to keep in mind.

    The challenge is how do you deliver enough value while keeping it simple to use on mobile. To that extent, I think there’s more opportunity for mobile-first rather than mobile-only SaaS startups. A lot of enterprise use cases can benefit from the ease of use of a mobile app focused on one or two core features but also need a more comprehensive workflow that is better delivered via a web app to support the end-to-end needs of the business user.

    We always hear about seed deals for consumer startups. How do you see the seed ecosystem working for enterprise-focused founders?

    I think it’s a pretty robust ecosystem. There are lots of good angels and seed funds that are focused on enterprise startups. There’s also a lot of good talent coming out of all the recently acquired enterprise companies, like Eloqua, Yammer, ExactTarget, Successfactors, etc.

    My sense is that enterprise will never be the area that gets written about the most in tech blogs, but it continues to be the area where most of the early-stage investment dollars go, and where a lot of innovation is happening.

    What’s the biggest change you’ve seen in your five years on Sand Hill Road? And, why is this important for both investors and founders to understand?

    The biggest change for me is how much more mature startups are, and are expected to be, by the time they pitch their Series A. With the cost of building a product going down, and a greater influx of seed-stage capital, I’m regularly seeing startups raise seed rounds that give them two-plus years of runway. This gives them more time to tweak their initial product, and get more feedback from customers before they hit the road for a Series A. Founders need to keep that in mind as they think about the timing of their Series A. And investors need to accordingly adjust their expectations on valuations and round size, given that startups are coming to them with more proven out.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , ,

  • StrictlyVC: August 11, 2014

    Hi, everyone, Semil Shah here, filling in with a shortened version of StrictlyVC while Connie is out for a couple of weeks. If you want to chat about today’s newsletter or anything else, you can reach me on Twitter at @semil.

    —–

    Top News in the A.M.

    BuzzFeed, the eight-year-old, New York-based digital content company, has raised $50 million in new funding from Andreessen Horowitz, with general partner, Chris Dixon — an early angel investor in BuzzFeed — joining BuzzFeed’s board. Buzzfeed now reaches more than 150 million people per month and will generate “triple-digit-millions” in revenue this year, Dixon wrote in a blog post published yesterday. The round brings BuzzFeed’s total funding to $96 million. Previous investors includeFounders Collective, Hearst Ventures, Lerer Hippeau Ventures, New Enterprise Associates, RRE Ventures, SoftBank Capital and SV Angel.

    —–

    Ryan Sarver on Life as a VC, Twitter’s Future, and Why Startup Spillover Out of SF is Inevitable

    It’s been nearly a year since Redpoint Ventures appointed Ryan Sarver, Twitter’s former Director of Platform, as a partner. At the time, Sarver was making the occasional angel investment, but he has spent the last 10 months or so getting up to speed as a formal, full-time investor. We caught up with him last week to find out how it’s going.​

    You recently left Twitter for Sand Hill Road. What was the process like talking to VC firms? What about the process do folks on the outside perhaps not fully appreciate?

    Originally my plan when I left Twitter last year was to take three to four months off and then start something on my own. I had a few ideas brewing that I was curious about and if you had asked me, there was no doubt in my mind that was what I was going to do.

    When I signaled that I was leaving Twitter, a few firms reached out to talk — some about EIRing and some about doing investing full time. I was still pretty focused on starting something in the fall, but after spending the summer getting to know the Redpoint team, I started to seriously consider the role. I spent a lot of time thinking back through my career to what I felt most fulfilled by and realized that I most enjoyed the early, foundational days of a company. Team building, vision setting, figuring things out when you have almost no information and no resources. I didn’t enjoy being part of a larger organization as much and realized that venture could be a way for me to do more of the parts that I loved and less of the parts that I didn’t.

    I think the most unique thing about the hiring process is that, unlike a startup, you’re being hired into a partnership which makes the process fairly complicated. There isn’t a single hiring manager but many, and your time horizon is much, much longer. It’s a more complex process in many ways, but rightfully so.

    What are your first few deals as a VC, and how did you go from “interested” to “having conviction” as an investor?

    I’ve done two deals so far, but only one, Secret, has been announced. I think the idea of having and maintaining conviction has been one of the hardest parts for me in the role. It’s much easier when you’re an individual making angel investments to find founders and companies that you get passionate about. It’s a whole other thing to do it as part of a partnership with much bigger checks. To me the difficulty is in the lack of information and time in a deal. Founders are dealing with very imperfect information and they are living and breathing the space. As an investor, you’re getting to spend very little time with a team before you have to make a call. Naturally, I’ve found the deals that I have the most conviction about are the ones where I am coming to the deal with a lot of background in the space. There are a million reasons companies can fail, so you have to find the few things about the team and their approach that you can hang your hat on and that give you optimism that this one is going to beat the odds.

    As someone with deep experience at Twitter, do you believe Twitter can grow its user base?

    I think of it like “could Twitter as a product be valuable to more than 300 million people” and I have no doubt that that’s true. In many ways, I think it can be more widely applicable than Facebook even. Twitter is a real-time information service, similar to news, with messaging layered on top of it. Twitter’s biggest problem is twofold. First, it needs to better explain itself to the masses so that the next billion users know why they should be using Twitter. Everyone has heard of Twitter, but most people have no idea what role it fills in their lives. For those of us who have figured it out, it’s magical, invaluable and addictive.

    Second, the product itself has to be more understandable to the masses without losing its soul. Tons of people have signed up for the service only to churn out because they don’t get value from Twitter. I don’t think this is a reflection of whether or not they can get value from Twitter, but instead a failing of the product to make it easy for the average user to get that value. Really it comes down to helping them find great accounts and delivering relevant content to them quickly. They have a huge challenge in front of them to accomplish those things, and I don’t think there is a silver bullet for them, but I feel strongly that it’s a product that could touch a billion users.

    Give us an idea of how much time you spend in San Francisco versus the Valley.

    I’ve gotten asked this a lot recently and I think the prevailing thought is that all deals have moved up to the city and out of the Valley. While it’s definitely true that there has been a big shift to the city, I’m still seeing some great deals down in the Valley. An overwhelming majority of consumer and mobile deals have moved to the city, so if those are the only deals you’re looking at, then you’re in the city 90 percent of the time. With that being said, we’ve seen some great deals down in the Valley [that] are typically more focused on b2b and infrastructure. RelateIQ and Jaunt, two of our more recent b2b deals, are both based down in the Valley, for example, whereas Secret, Coin, and HomeJoy are three recent consumer deals up in the city. On an average week, I’m probably splitting my time between Menlo [Park] and San Francisco.

    Residential and commercial real estate in the city continues to get crazier and crazier, and I do think you’re going to see that trend push some new companies to open their first offices outside of San Francisco.

    —–

    New Fundings

    Fiverr, a four-year-old, Tel Aviv-based online marketplace offering tasks and services (starting at $5), has raised $30 million in new funding led byQumra Capital, with participation from earlier backers Bessemer Venture Partners, Accel Partners and individual investors. The company has now raised $50 million altogether. The WSJ has much more here.

    FoodPanda, a two-year-old, Berlin-based food delivery service incubated by Rocket Internet, has raised a fresh $60 million in funding from existing investors Falcon Edge Capital and Rocket Internet,reports TechCrunch. The round brings FoodPanda’s total funding to $108 million. Earlier backers include iMENA Holdings, Investment AB Kinnevik, and Phenomen Ventures.

    MagForce, a Berlin-based medical device company, has raised $15 million in funding from Mithril Capital Management for its subsidiary, MagForce USA, whose new medical device aims to treat solid brain and prostate cancer tumors. Mithril, led by Peter Thiel and Ajay Royan, has the option to double the size of the round, according to reports.

    Weddington Way, a three-year-old, San Francisco-based social shopping site for wedding parties, has raised $9 million in Series A funding led by Javelin Ventures. Earlier investors Battery Ventures, Felicis Ventures, and Trinity Ventures also participated in the round, which brings the company’s total funding to $11.5 million.

    —–

    New Funds

    From today’s WSJ: “Boutique investment bank Moelis & Co. plans to launch an Australian initial public offering of a company that will give local investors access to global equities via partnerships with U.S. fund managers. Global Wealth Partners Fund is seeking to raise between 100 million Australian dollars ($93 million) and A$300 million before fees ahead of a late-September listing . . .The company has been marketing the offering over the past three weeks.”

    —–

    People

    Alex Haislip, a reporter and marketing executive who has long written about venture capital (he was a favorite colleague of Connie’s at Reuters), has suffered a major brain hemorrhage caused by a large tumor. Haislip has been in and out of consciousness but right now has significant paralysis on his right side and his former classmates have organized a fundraiser for his young family. (His disability benefits cover just 60 percent of his pay.) If you’d like to pitch in to help the Haislips, please click here for more information.

    Brian Jorgenson, a 32-year-old, former Microsoft employee, was sentenced to two years in prison on Friday for an insider trading scheme in which he passed along information gleaned in his role as a corporate finance manager to a former colleague who traded stocks and options. The two made more than $400,000 from their partnership. The judge who handed down Jorgenson’s sentence said it was “important that you serve as a public example.” Reuters has more here.

    —–

    Jobs

    Cultivation Capital of St. Louis, Missouri, is hiring a director of operations who will double as a “fund principal,” receiving some ownership in the fund and helping make decisions on its behalf.

    —–

    Data

    CB Insights has published a list of “most active VCs by year” since 2004.

    —–

    Essential Reads

    The New York times gives readers a glimpse into Apple University, the tech giant’s secretive, six-year-old internal training program.

    Wired’s Mat Honan “liked” everything he saw on Facebook for 48 hours. Here’s how the experiment played out.

    In case you missed it Friday, that reported Alibaba investment in Snapchat isn’t happening, reports Recode.

    —–

    Detours

    Why Zero Freitas is buying up all the vinyl records in the world.

    An analyst who “nailed” the housing crash is quietly revealing the Next Big Thing.

    First-person hyperlapse videos.

    How Times Square works. (H/T: MediaREDEF)

    —–

    Retail Therapy

    Handmade oil paintings of your digital images.

    Kiravan, when you’re serious about exploring the world.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • Ryan Sarver on Life as a VC, Twitter’s Future, and Why Startup Spillover Out of SF is Inevitable

    Ryan-Sarver5By Semil Shah

    It’s been nearly a year since Redpoint Ventures appointed Ryan Sarver, Twitter’s former Director of Platform, as a partner. At the time, Sarver was making the occasional angel investment, but he has spent the last 10 months or so getting up to speed as a formal, full-time investor. We caught up with him last week to find out how it’s going.​

    You recently left Twitter for Sand Hill Road. What was the process like talking to VC firms? What about the process do folks on the outside perhaps not fully appreciate?

    Originally my plan when I left Twitter last year was to take three to four months off and then start something on my own. I had a few ideas brewing that I was curious about and if you had asked me, there was no doubt in my mind that was what I was going to do.

    When I signaled that I was leaving Twitter, a few firms reached out to talk — some about EIRing and some about doing investing full time. I was still pretty focused on starting something in the fall, but after spending the summer getting to know the Redpoint team, I started to seriously consider the role. I spent a lot of time thinking back through my career to what I felt most fulfilled by and realized that I most enjoyed the early, foundational days of a company. Team building, vision setting, figuring things out when you have almost no information and no resources. I didn’t enjoy being part of a larger organization as much and realized that venture could be a way for me to do more of the parts that I loved and less of the parts that I didn’t.

    I think the most unique thing about the hiring process is that, unlike a startup, you’re being hired into a partnership which makes the process fairly complicated. There isn’t a single hiring manager but many, and your time horizon is much, much longer. It’s a more complex process in many ways, but rightfully so.

    What are your first few deals as a VC, and how did you go from “interested” to “having conviction” as an investor?

    I’ve done two deals so far, but only one, Secret, has been announced. I think the idea of having and maintaining conviction has been one of the hardest parts for me in the role. It’s much easier when you’re an individual making angel investments to find founders and companies that you get passionate about. It’s a whole other thing to do it as part of a partnership with much bigger checks. To me the difficulty is in the lack of information and time in a deal. Founders are dealing with very imperfect information and they are living and breathing the space. As an investor, you’re getting to spend very little time with a team before you have to make a call. Naturally, I’ve found the deals that I have the most conviction about are the ones where I am coming to the deal with a lot of background in the space. There are a million reasons companies can fail, so you have to find the few things about the team and their approach that you can hang your hat on and that give you optimism that this one is going to beat the odds.

    As someone with deep experience at Twitter, do you believe Twitter can grow its user base?

    I think of it like “could Twitter as a product be valuable to more than 300 million people” and I have no doubt that that’s true. In many ways, I think it can be more widely applicable than Facebook even. Twitter is a real-time information service, similar to news, with messaging layered on top of it. Twitter’s biggest problem is twofold. First, it needs to better explain itself to the masses so that the next billion users know why they should be using Twitter. Everyone has heard of Twitter, but most people have no idea what role it fills in their lives. For those of us who have figured it out, it’s magical, invaluable and addictive.

    Second, the product itself has to be more understandable to the masses without losing its soul. Tons of people have signed up for the service only to churn out because they don’t get value from Twitter. I don’t think this is a reflection of whether or not they can get value from Twitter, but instead a failing of the product to make it easy for the average user to get that value. Really it comes down to helping them find great accounts and delivering relevant content to them quickly. They have a huge challenge in front of them to accomplish those things, and I don’t think there is a silver bullet for them, but I feel strongly that it’s a product that could touch a billion users.

    Give us an idea of how much time you spend in San Francisco versus the Valley.

    I’ve gotten asked this a lot recently and I think the prevailing thought is that all deals have moved up to the city and out of the Valley. While it’s definitely true that there has been a big shift to the city, I’m still seeing some great deals down in the Valley. An overwhelming majority of consumer and mobile deals have moved to the city, so if those are the only deals you’re looking at, then you’re in the city 90 percent of the time. With that being said, we’ve seen some great deals down in the Valley [that] are typically more focused on b2b and infrastructure. RelateIQ and Jaunt, two of our more recent b2b deals, are both based down in the Valley, for example, whereas Secret, Coin, and HomeJoy are three recent consumer deals up in the city. On an average week, I’m probably splitting my time between Menlo [Park] and San Francisco.

    Residential and commercial real estate in the city continues to get crazier and crazier, and I do think you’re going to see that trend push some new companies to open their first offices outside of San Francisco.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , ,

  • StrictlyVC: August 8, 2014

    Happy Friday, everyone. So, my first week filling in for Connie (if that’s actually possible!) is coming to an end. Three interviews spread across four days, now in the books. Today, and then again on Friday next week, I’ll write the column here for the newsletter. If you’d like to chat about it or anything else, you can find me on Twitter at @semil.

    In the meantime, stay tuned for some more great interviews next week, including with Ryan Sarver of Redpoint Ventures and entrepreneur and investor Elad Gil.

    —–

    Top News in the A.M.

    The Apple versus Samsung patent-battle may have ended overseas, but it’s still going strong in the U.S., reports CNET.

    —–

    Four Ways to Break Into Investing

    Last night, I asked the crowd on Twitter what they’d like to hear about in today’s column. Entrepreneur John Petersen wrote back asking questions about what it’s like to get into early-stage investing, as more people want to get into the game on some level (and I believe they will, particularly if there are more liquidity options available in the future).

    Regarding my own investing experience, I’m making it up as I go along, but here’s what I believe someone has to think through before diving into this kind of investing:

    First, is the person able and willing to see an investment nosedive to zero? There are reasons that regulations require that potential investors have a certain level of income before investing like this. It’s hard to get money back from early-stage investments, and even if money does come back, it may take a long, long time. This is obvious to most, but not all — so it bears repeating.

    Second, assuming a person is able to lose the money earmarked for investing, does that person want to invest directly into startups or as a limited partner via someone else’s fund, or start a fund (or a syndicate)?

    Option 1: Direct investing may appear to be the most fun, but it’s hard to gain direct access to these early-stage opportunities, and founders are savvy, seeking to partner with people who can help them. It’s also possible to use AngelList or other crowdfunding platforms to directly invest, but often there’s a charge on carry associated with it, and not everyone is allowed into each syndicate to which they apply.

    Option 2: Many others put their money to work by investing in a fund that will deploy that money across a portfolio, spreading out their risk. Generally, the individual LP pays the fund a fee to invest the money but stays at arm’s length. In some situations, though, LPs will strike agreements with a fund’s GPs to co-invest alongside them and pay a bit in that carry but save on fees. This sounds good in theory but often in the most competitive deals, even the GPs are fighting for their allocations. (AngelList has also started to create industry-specific syndicate funds that investors can back, in addition to applying to back other funds on the platform.)

    Option 3: Creating a new fund is a third option. It’s costly and time-consuming, though, requiring intricate tax and accounting setup, fundraising activities to recruit LPs, and a strategy to deploy and manage the funds invested.

    Option 4: Creating an AngelList syndicate is a bit easier but not easy, either. Typically, the individual needs to be investing his or her own funds, building a syndicate against his/her reputation, and then harnessing the syndicate to move in step with each check, enjoying financial leverage with carry along the way.

    So much of investing depends on the individual, including how much access they have to great founders and how much they want to work to find investments and manage money (and relationships). But for those who are really serious about the topic, it’s worth reading, and bookmarking, and reading again this short but insightful 2012 post by Andy Rachleff, who cofounded both Benchmark and Wealthfront and teaches at the Stanford Graduate School of Business. Today, I tried to lay out some options for folks who are interested in dabbling; in Andy’s post, he soberly tells it like it really is based on years of experience. It is required reading.

    —–

    New Fundings

    Casper Sleep, a 10-month-old, New York-based online mattress retailer, has raised $13.1 million in Series A funding led by New Enterprise Associates, with A­-Grade Investments, Queensbridge Venture Partners, Slow Ventures, Lerer Hippeau Ventures, SV Angel and numerous others participating.

    Movile, a 16-year-old, São Paulo, Brazil-based mobile commerce platform, has raised $35 million in Series D funding led by Innova Capital, with earlier investor Naspers participating. The company has also landed $20 million in long-term financing through FINEP — Brazil’s Funding Authority for Studies and Projects within the Ministry of Technology. TechCrunch has more here about the company, whose best-known app is PlayKids, a subscription-based mobile and tablet only children’s entertainment platform.

    Plated, a two-year-old, New York-based company that home-delivers 30-minute gourmet recipes and ingredients, has raised $15 million in fresh funding, shows an SEC filing. The round brings the company’s total funding roughly $21 million; its backers include Great Oaks Venture Capital, Founder Collective, Lerer Ventures, and ff Venture Capital.

    SmartNews, a two-year-old, Tokyo-based news aggregation app, has raised $36 million in new funding led by Atomico and the mobile-social gaming company Gree. The company has now raised $40.2 million altogether, shows Crunchbase. Recode has more here.

    —–

    Exits

    CardSmith, an 11-year-old, Doylestown, Pa-based company that provides campus cards and card program management services to hundreds of institutions, has been acquired by the education software giant Blackboard for undisclosed terms.

    —–

    People

    Marc Andreessen agrees to an interview via Twitter, revealing, among other things, that if Andreessen Horowitz ever breaks its “‘one office” rule, it’s pretty likely office #2 would be in Israel.”

    Serial entrepreneur Stewart Butterfield is back on top with his newest business, Slack. Its ambition, he says: “Be the next Microsoft.”

    Matt Melymuka has joined Greycroft Partners as a senior associate in its New York office. Melymuka previously worked as an associate at Investor Growth Capital, a growth-stage venture capital firm. He also worked earlier as an investment banking analyst at Piper Jaffray.

    —–

    Job Listings

    Starbucks is looking for a senior financial analyst to work in its corporate development group. The job is in Seattle.

    —–

    Essential Reads

    Silicon Valley arrogance is good, writes BusinessWeek.

    —–

    Detours

    The plot thickens as 900 writers battle Amazon.

    Restoration Hardware’s mail-order extravagance.

    What fish does to the brain.

    —–

    Retail Therapy

    Will it waffle? You might be surprised.

    Connie

  • Four Ways for Founders (and Anyone Else) to Break Into Investing

    yes or noBy Semil Shah

    Last night, I asked the crowd on Twitter what they’d like to hear about in today’s column. Entrepreneur John Petersen wrote back asking questions about what it’s like to get into early-stage investing, as more people want to get into the game on some level (and I believe they will, particularly if there are more liquidity options available in the future).

    Regarding my own investing experience, I’m making it up as I go along, but here’s what I believe someone has to think through before diving into this kind of investing:

    First, is the person able and willing to see an investment nosedive to zero? There are reasons that regulations require that potential investors have a certain level of income before investing like this. It’s hard to get money back from early-stage investments, and even if money does come back, it may take a long, long time. This is obvious to most, but not all — so it bears repeating.

    Second, assuming a person is able to lose the money earmarked for investing, does that person want to invest directly into startups or as a limited partner via someone else’s fund, or start a fund (or a syndicate)?

    Option 1: Direct investing may appear to be the most fun, but it’s hard to gain direct access to these early-stage opportunities, and founders are savvy, seeking to partner with people who can help them. It’s also possible to use AngelList or other crowdfunding platforms to directly invest, but often there’s a charge on carry associated with it, and not everyone is allowed into each syndicate to which they apply.

    Option 2: Many others put their money to work by investing in a fund that will deploy that money across a portfolio, spreading out their risk. Generally, the individual LP pays the fund a fee to invest the money but stays at arm’s length. In some situations, though, LPs will strike agreements with a fund’s GPs to co-invest alongside them and pay a bit in that carry but save on fees. This sounds good in theory but often in the most competitive deals, even the GPs are fighting for their allocations. (AngelList has also started to create industry-specific syndicate funds that investors can back, in addition to applying to back other funds on the platform.)

    Option 3: Creating a new fund is a third option. It’s costly and time-consuming, though, requiring intricate tax and accounting setup, fundraising activities to recruit LPs, and a strategy to deploy and manage the funds invested.

    Option 4: Creating an AngelList syndicate is a bit easier but not easy, either. Typically, the individual needs to be investing his or her own funds, building a syndicate against his/her reputation, and then harnessing the syndicate to move in step with each check, enjoying financial leverage with carry along the way.

    So much of investing depends on the individual, including how much access they have to great founders and how much they want to work to find investments and manage money (and relationships). But for those who are really serious about the topic, it’s worth reading, and bookmarking, and reading again this short but insightful 2012 post by Andy Rachleff, who cofounded both Benchmark and Wealthfront and teaches at the Stanford Graduate School of Business. Today, I tried to lay out some options for folks who are interested in dabbling; in Andy’s post, he soberly tells it like it really is based on years of experience. It is required reading.

    Connie

  • StrictlyVC: August 7, 2014

    Hi, everyone, Semil Shah here, filling in with an abbreviated version of StrictlyVC while Connie takes a little time off. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.

    —–

    Top News in the A.M.

    Watch out Amazon? Starting today, Google and Barnes & Noble are teaming up on the fast, cheap delivery of books.

    —–

    Chris Douvos: LPs Secretly Think “Certain Types” of Operational Experience are Overrated

    Earlier this week, we featured a Q&A with Chris Douvos of Venture Investment Associates, a straight-shooting LP whose career began at Princeton University Investment Company more than a dozen years ago. Because the interview ran a bit long, and because Douvos is a smart guy with interesting insights, we decided to run the rest of our interview with him here today.

    Are LPs starting to look for different kinds of backgrounds in the partnerships they back? If so, how?

    In terms of backgrounds, there’s not a lot of change; I think that classically trained LPs like to see some operational experience among their GPs, but there’s also a belief that certain types of knowledge and experience get stale quickly.

    There are a lot of people coming straight out of “hot companies” right now looking to raise funds, and I think that history teaches us that a lot of these funds will have unfulfilling results. In fact, some of the best investors out there — real titans of the VC world — had little operational experience.

    But there are many different routes to success. I think the flavor of the month right now is “the platform.” A position that a bunch of funds seem to be adding right now is “VP of Platform” or something similar. The archetype in this regard for me was Brett Berson at First Round. For years, I called him the unsung MVP of the venture business. And indeed, [First Round founder] Josh [Kopelman] and the whole First Round team have done an amazing job of conceptualizing, building, and iterating their platform. The True [Ventures] guys have done an admirable job, as well. Of course, Andreessen Horowitz has built something special, too. But having known all those guys since the beginning, I see how significant an investment the building of these platforms has been, and I think it’ll be challenge to replicate.

    What’s the one thing you believe founders should know about LPs in general?

    LPs are putting their GPs under an enormous amount of pressure right now as they evaluate if they even want to invest in venture capital. Aside from the [roughly] dozen firms that don’t need to worry about fundraising, everyone seems to be on the “watch list” right now. Proof points — whether they’re nice exits or strong telltales of progress — can mean the difference between an easy fundraise and a protracted slog for that stressed-out board member of yours.

    ——

    New Fundings

    All Def Digital, a year-old, L.A.-based online comedy and music network co-founded last year by hip hop mogul Russell Simmons, has raised $5 million led by Greycroft Partners. Other participants in the round included Advancit Capital, e.ventures, and Nu Horizons Investments, created by Simmons and his ex-wife, Kimora Lee Simmons-Leissner. Deadline has more here.

    RedPoint Global, an eight-year-old, Wellesley Hills, Ma.-based maker of data management and digital marketing software, has raised $5.2 million in new funding led by Grotech Ventures, with participation from Sagamore Ventures. The company has raised $11.6 million altogether, shows Crunchbase.

    Rocket Internet, the seven-year-old, Berlin-based incubator founded by the renowned Samwer brothers, has collected $446 million from Philippine Long Distance Telephone in exchange for a 10 percent stake in its business. Rocket Internet has helped form — as well as made early investments in — a long list of companies since its founding. Included in its porfolio: online fashion retailers Dafiti, Lamoda, Jumia, and Zalando, which target customers in Latin America, Russia, Africa, and Europe, respectively.

    Splice Machine, a two-year-old, San Francisco-based company whose transactional database sits on top of the Hadoop file system, has added $3 million to its Series B round from Correlation Ventures, Roger Sippl and Roger Bamford. The funding brings the round to $18 million. Earlier investors in the financing included Interwest Partners and Mohr Davidow Ventures. Splice Machine has now raised $22 million altogether, shows Crunchbase.

    Two Tap, a 1.5-year-old, Palo Alto, Ca.-based platform that helps publishers of mobile apps or websites sell products directly in their applications, has raised $2.7 million in seed funding. Its backers include Digital Garage, Green Visor Capital, Initialized Capital, Khosla Ventures, SV Angel, Transmedia Capital and individual investors.

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    IPOs

    Ten charts that shows us something new about the IPO boom.

    iDreamSky Technology, a Chinese publishing platform for games played on mobile devices, has raised $116 million by offering 7.7 million ADSs at $15, above the expected $12 to $14 range. More here.

    Microlin Bio, a diagnostic and therapeutics biotech, postponed its IPO yesterday. Renaissance Capital has more here.

    Tobira Therapeutics, a biotech developing an immunotherapy treatment for liver disease and HIV, has also postponed its IPO. More here.

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    Exits

    Emu, a two-year-old, Palo Alto, Ca.-based company whose messaging app can monitor chats and infer what people are talking about, has been acquired by Google for undisclosed terms. The company had raised $1.5 million in seed funding, including from TriplePoint Capital, Menlo Ventures, DFJ, and Kleiner Perkins Caufield & Byers. Wired analyzes the deal here.

    Directr, a 1.5-year-old, Boston-based mobile app company that makes it easy for users to create movies on their phones, has been acquired by Google for undisclosed terms. The company had raised $1.7 million in seed funding from a long list of investors, including Advancit Capital, NextView Ventures, Boston Seed Capital, and Reddit cofounder Alexis Ohanian. TechCrunch has more here.

    Ringadoc, a four-year-old, L.A.-based cloud-based physician call-back service, has been acquired by the electronic health records company Practice Fusion for undisclosed terms. The company had raised at least $1.9 million, including from Founders Fund, Siemer VC, and Telegraph Hill Group, and Practice Fusion CEO Ryan Howard. RIngadoc was incubated at Practice Fusion’s San Francisco headquarters. MobiHealthNews has more here.

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    People

    Former Yahoo president Sue Decker gives HBR an insider’s account of the Yahoo-Alibaba deal that she helped broker in 2005.

    Mike Kail is Yahoo‘s newly appointed chief information officer and SVP of infrastructure, a role that will see him leading Yahoo’s IT and data center operations. Kail was previously VP of IT operations at Netflix.

    A court has ruled that Hong Kong tycoon Albert Yeung can sue Googleover its autocomplete results suggesting he has links to organized crime. More here.

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    Job Listings

    Universal Music Group is recruiting an analyst and an associate for its corporate development and strategy group. The jobs are in Santa Monica, Ca.

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    Data

    In 2005, 31 firms raised funds of between $100 million and $250 million. The top performers of that bunch are Skyline Venture Partners Fund IV, Storm Ventures Fund III, and Union Square Ventures 2004, according to Pitchbook, which says the funds’ median IRR is -0.04 percent and the top-quartile IRR hurdle rate is 4.96 percent.

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    Essential Reads

    Netflix now has more subscription revenue than HBO.

    Foursquare has begun tracking users everywhere they go, even when the app is closed.

    The San Jose Police Department doesn’t think it needs federal authorization in order to fly a $7,000 Hexacopter drone it procured earlier this year. The FAA thinks otherwise.

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    Detours

    A good way to wreck a local economy? Build casinos.

    Is a more prestigious college worth the money?

    The unauthorized letter that’s been passed to elite MBAs for decades.

    A Meteorologist Works Out Some Personal Issues During His Forecast.

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    Retail Therapy

    Good old leather Jack Purcells.

    Connie

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