StrictlyVC: October 3, 2014

Hello, Friday, old pal!

Have a terrific weekend, everyone. See you back here on Monday.:)

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Top News in the A.M.

Facebook is plotting its first steps into the “fertile field of healthcare,” Reuters is reporting this morning.

Meanwhile, Apple is asking music labels for a price cut on streaming subscriptions. (Hah. Good one, Apple.)


Made in Japan: Osuke Honda on the Evolving Startup Scene

Osuke Honda is having a good week. In 2010, the DCM partner bet on Kakao Talk, Korea’s biggest messaging app, and on Wednesday, Kakao acquired Korea’s second biggest Internet company, Daum Communications, which was already public. Now the combined company, Daum Kakao, is expected to list on the Korean stock exchange in a couple of weeks with a market cap of roughly $10 billion.

It’s quite a feather in Honda’s cap, though he’s had a pretty prosperous career all along. We talked the other day about his work and, largely, the evolving startup scene in Japan, where Honda was born and lives today. Our chat has been edited for length.

You were born in Japan, but you’ve always been a global citizen.

I was born in Japan but came to the U.S. when I was eight months old because my dad was transferred here. We lived in Houston, then L.A. I went to Tokyo for my undergraduate degree [at Hitotsubashi University], then grad school [at Wharton] in Philadelphia.

Why head to Japan for college?

I always identified as Japanese, but I didn’t really know Japan. I’d spent a month and a half there in the summers, but that was it, and I wanted to know where my family is from. I’d also started doing martial arts when I was 11 and figured if I wanted to get better at Judo, I should go. I figured if I didn’t like it, I’d just come back, but I liked it.

Your first job was at Mitsubishi. What was that like?

Very Japanese – kind of like Samsung in Korea. It was the kind of company everyone wanted to get into. I spent seven years there and was lucky enough to be part of a new organization that in 1999 was [tasked] with figuring out the e-commerce thing in Japan, which Mitsubishi’s CEO recognized was going to be the Next Big Thing.

You were eventually lured into venture capital, first at Apax Globis Partners, then, in 2007, at DCM.

Yes, one deal I was involved in was Gree, the largest mobile gaming platform in Japan, which went public in 2008 and was valued at $5 billion at its market peak. There isn’t a big venture community in Japan and you get to know people, and [during that time, DCM’s] David Chao and I started talking about what we thought was a successful VC model moving forward, which is cross-border [investing]. And we eventually joined forces.

What shifts have you seen in your time as a VC in Japan? Are founders still seen as, well, crazy?

Relative to five years ago, things are changing very quickly for the good.
In the past, raising money in Japan was a challenge. That was one reason people didn’t do startups. But especially because the IPO market has been very good, a lot of corporate VCs are being established. And as [more capital emerges], the mindset of entrepreneurs is changing, too.

Is hiring still a challenge? I sometimes hear that more people are willing to start companies, but that it’s hard to extricate employees from their comparatively safe jobs to work for them.

I think it depends on the sector. When it comes to consumer Internet, I see a lot of folks [joining startups] if there’s a hot entrepreneur involved, especially someone from Google or Rakuten or Yahoo or Gree. They’re very much able to attract smart, capable people.

I noticed you’ve backed a number of people to come out of Google, including Daisuke Sasaki, the founder of the accounting software startup Freee, and Hiroshi Kuraoka, the cofounder of the online bookings company Coubic.

Folks who come out of Google are interesting based on what I’ve seen. Because at Google, they work across offices, their teams tend to follow what’s happening in the U.S. and other regions around the globe and to think: What can we learn from them? That mindset is very important. Also, if you’re a product manager at Google, the way it’s metric driven is a great way to be trained.

Are college graduates thinking about startups right out of school, as in the U.S.?

No. If you go to a top university and ask students what they want to do, they’ll still say they want to work for Mitsubishi. But it’s changing, and growing a company is something that people respect more these days.

Ten or 15 years ago, for example, no one could have imagined that SoftBank would own a carrier. But entrepreneurs like [SoftBank founder Masayoshi] Son are kind of encouraging people that, hey, I can do that, too. They’re looking at the CEOs of [the clothing company] Uniqlo and [e-commerce giant] Rakuten – these self-made billionaires – and getting inspired.


New Fundings

Aclaris Therapeutics, a two-year-old, Malvern, Pa.-based company that’s developing new therapies to treat skin disorders, has raised $21 million in Series B funding led by earlier investors Vivo Ventures, Fidelity Biosciences and Sofinnova Ventures. The company has now raised $42 million altogether.

Adarza BioSystems, a six-year-old, St.Louis, Mo.-based company whose immunoassay technology can identify proteins and genetic markers in medical samples like blood, has closed on $6.8 million in Series A funding led by Cultivation Capital and Siemens Venture Capital. Other participants in the round included the nonprofit organization BioGenerator in St. Louis, the St. Louis Arch Angels, Missouri Technology Corp.,Serra Capital, and numerous angel investors.

Brewbot, a 1.5-year-old, Belfast, North Ireland-based company that makes consumer-friendly, in-home beer-making machines, has raised $1.5 million in seed funding led by Bebo cofounder Michael Birch, with participation from Bullet Time Ventures, Hallett Capital, TechStart NIGalvanize, SparkLabs Global, and angel investor Federico Pirzio-Biroli. The company staged a successful Kickstarter campaign last year that netted it $194,000. You can still find that campaign here.

GoodData, a seven-year-old, San Francisco-based business intelligence platform, has raised $25.7 million in Series E funding led by Intel Capital, with participation from earlier investors Andreessen Horowitz, General Catalyst Partners, Tenaya Capital, Next World Capital, Windcrest, and Pharus Capital, among others. The company has now raised $101.2 million to date. TechCrunch has more here.

Insightpool, a 2.5-year-old, Atlanta-based marketing automation company, has raised $4 million in Series A funding led by TDF Venturesand Silicon Valley Bank, with participation from Checkfree founder Peter Kight, serial investor Steve Chamberlain, former Turner Networks president Steve Koonin, and others. The company previously raised $500,000.

SoftBank, the 33-year-old, Tokyo-based telecommunications and media company, is investing $250 million in the Hollywood production and finance company Legendary Entertainment, after reported talks about a buyout or partnership between SoftBank and DreamWorks Animation cooled. The WSJ has more here.

Locqus, a 1.5-year-old, Detroit-based company whose cloud-based software makes it easier for mobile workers to check in with their companies about everything from time cards to mileage reimbursements, has raised $2 million in seed funding from Moneris Solutions. VentureBeat has more here.

MedAware, a two-year-old, Israel-based developer of big-data analytics for the medical prescription market, has raised $1 million in Series A funding from the equity crowdfunding platform OurCrowd and GE Ventures.

NantHealth, a 6.5-year-old, Culver City, Ca.-based company that’s focused on delivering next-generation care and raised $25 million from the publicly traded drugmaker Celgene Corp. last month, has just raised an additional $250 million from the Kuwait Investment Authority. NantHealth is run by billionaire Patrick Soon-Shiong, who sold his cancer-treatment company Abraxis BioScience to Celgene in 2010.

Navdy, a 1.5-year-old, San Francisco-based company behind a Head-Up Display (HUD) unit that allows drivers to use their apps while keeping their eyes on the road, has raised $6.5 million in seed funding led by Upfront Ventures. Other participants in the round included Eniac Ventures,Lightbank, Ludlow Ventures, MESA+, Promus Ventures

ScribbleLive, a six-year-old, Toronto-based content syndication marketplace that allows brands and companies to create and distribute content for their respective audiences, has raised $12 million in Series C funding led by Waterloo Innovation Network. Other participants in the round included Georgian Partners, Export Development CanadaSummerhill Venture Partners and Rogers Venture Partners. The company has now raised $20 million altogether.

ShipHawk, a two-year-old, Santa Barbara, Ca.-based company whose app aggregates packing and shipping options, helping users determine which carriers are optimal for particular shipments, has raised $5 million in fresh funding led by DN Capital, with participation from Karlin VenturesRothenberg Ventures, and Wavemaker Partners. The company has raised $6 million altogether.

Travador, a 1.5-year-old, Munich, Germany-based online platform for short-term and adventure travel, has raised $7.3 million in Series C funding co-led by Capnamic Ventures and Iris Capital, with XAnge Private Equity participating.

Viyet, a 1.5-year-old, New York-based e-commerce site for pre-owned furniture, lighting and accessories, has raised $1.5 million in seed funding from F Cubed, Metamorphic Ventures and other, unnamed investors.

Woto, a 1.5-year-old, London-based online publishing platform that enables users to publish standalone pages and publish them via social channels, has raised $500,000 in seed funding from Ingenious Venturesand Galata Business Angels, a Turkish business angel group. More here.


New Funds

The Boston-based venture firm Atlas Venture is splitting its healthcare and IT teams into two separate groups, each with their own fund. Fortune has the story here. The healthcare team will reportedly retain the Atlas brand and plans to raise a new fund next year that would be similar in size to the $265 million that Atlas raised for its ninth fund early last year. The IT team will rebrand itself and expects its next fund to be in the range of $130 million.

Forbion Capital Partners, a seven-year-old, Netherlands-based venture capital firm, has held a first close of roughy $116 million on its new medical venture fund, reports VentureWire. The firm has raised two funds prior, a EUR200 million debut fund and EUR140 million fund that closed in 2010.



Calithera Biosciences, a four-year-old, South San Francisco, Ca.-based clinical-stage pharmaceutical company at work on small molecule drugs, saw its shares drop yesterday from $10 to $9.40 in their first day of trading. The company had initially expected to price its shares at between $13 and $15.

Wayfair, the 12-year-old, Boston-based online home-goods company, saw its share close at $37.32 yesterday, up more than 30 percent above their offering price in the company’s debut.

Fifteen-year-old Yodlee, an aggregator of financial apps for both consumers and small enterprises, is set to begin trading today. It raised $75 million in its IPO yesterday, with underwriters pricing the offering at $12 per share. Dealbook has more here.



Adaptive Path, a 13-year-old, San Francisco-based design and user experience consultancy, has been acquired by the financial firm Capital One for undisclosed terms. TechCrunch has more here.

Pure Energies Group, a five-year-old, Toronto-based energy advisory services company, has been acquired by the residential solar business NRG Energy for undisclosed terms. Pure Energies had raised $11 million from New Enterprise Associates, NGEN Partners, and Western Technology Investment.



Gazillionaire Larry Ellison is hosting a Republican fundraiser for Senator Rand Paul at his Woodside, Ca., home next Wednesday. Just $1,500-per-person, though hosts are being asked to cough up $32,400 and co-hosts have to pitch in $15,000.

During a podcast interview show last week, former Apple directors Nitin Ganatra and Don Melton dished on all the drawbacks of working at tech giant, including never truly getting time off. According to Melton, via Valleywag: “Sunday is a work night for everybody at Apple . . . This was especially worse after ‘The Sopranos’ ended because for a while there, you could count on the hour that The Sopranos was on that [former iOS leader] Scott [Forstall] wouldn’t bug you ’cause he was watching ‘The Sopranos.’ And that was your reprieve. You could go to the bathroom, you could have a conversation with your family, you know, whatever. But after that . . . And Scott was a late-night kind of guy. He was not a morning guy at all. You were basically on until, like, 2 o’clock in the morning.”

Rovio Entertainment, the Finnish maker of the “Angry Bird” franchise, said yesterday that it’s cutting 130 employees, or about 16 percent of its workforce, amid slowing growth. The Verge has more here.

Oh, it’s on. In the wake of a recent dig made by Apple CEO Tim Cook about Google’s privacy policies, Eric Schmidt, chairman of Google, took the opportunity to talk trash about Apple yesterday, telling CNN Money: “We have always been the leader in security and encryption. Our systems are far more secure and encrypted than anyone else, including Apple. They’re catching up, which is great.”



Kleiner Perkins Caufield & Byers is looking for post-graduate interns. More here.

Storm Ventures is looking for an analyst-associate. The job is on Sand Hill Road in Menlo Park, Ca.



According to a new study by New York-based equity fundraising platform SeedInvest and the data firm Crowdnetic, 4,700 U.S.-based companies have tried raising capital under the JOBS Act Title II rule in the last year, and at least 38.2 percent of them were tech companies. The WSJ has the story.


Essential Reads

It may be time for Wall Street to give the ad tech space a second chance, says Fortune.

Camera maker GoPro found a way to maneuver around its lockup restriction, but the development spooked investors and sent the stock plummeting as much as 14 percent yesterday.



The 25 most successful Wharton graduates, care of Business insider.

The most ticketed cars in the U.S.

A tourist map of laptops.


Retail Therapy

Unstructured. Neat fitting. Meet the sweazer.

Hallelujah. Ikea furniture you can assemble without losing it.

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