StrictlyVC: October 24, 2014

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Top News in the A.M.

Airbnb is discussing a new round that could total more than $50 million and value the company at $13 billion, reports the WSJ, which says the company wouldn’t use the cash for itself but rather to allow investors to buy employee shares. The round hasn’t yet closed and the funding amount and valuation could still change, says the report.

The last legal hope of television streaming service Aereo was dashed yesterday.

Amazon‘s quarterly earnings report yesterday has Wall Street spooked. Bloomberg BusinessWeek has more here.


Bill Gurley: Earlier Warnings are Making an Impact

Venture capitalist Bill Gurley appeared on CNBC’s “Squawk Alley” show earlier this week to clarify some of the comments he’d made in mid-September to the Wall Street Journal – comments that Gurley thinks were misconstrued in follow-on reports that confused risk with valuations. “I was talking about risk and I didn’t say a word about valuations,” said Gurley. “I don’t see radically insane valuations.”

Gurley went on to say that the pubic market is right now “more discerning” than the late-stage venture market, where investors are “cram[ming] almost unnecessary levels of capital into these private companies.” Gurley also told CNBC that he believes his earlier warning in the Journal is having a “positive” impact on the private market. Here’s Gurley, in his own words:

“It’s a four or five-year trend . . . of late-stage companies raising rounds that are larger than historic IPO rounds, and because there’s no capital intensity – we’re not buying stores, we’re not building factories – when you take that amount of capital and try and put it to use, the only way to do that is to increase your burn rate.

“The problem is this growth-at-all-costs mentality causes almost a subsidization of survival. It’s almost easier to execute unprofitably than profitably. So if I say, ‘Hey, go grow a company to $100 million,’ and one company is told they have to be profitable and the other is told they can lose $30 million, it’s much easier to do the latter. So I think we end up with more companies with higher revenue rates where their business models still may be open to question . . .

“I think the public markets are being more discerning than the late-stage private markets in terms of trying to figure out whether a company has a potential long-term business model and has the ability to generate profitability over the long term.

“[In fact,] I think having that conversation a couple of weeks ago has had two positive impacts. One, I’m starting to hear more and more people tell me at board meetings, ‘Hey, we’re talking about this; we’re thinking more about this. We’re going to be smarter going forward.’

“Second, in the public markets, you’re seeing some discernment. In the same week, [you’ll see] two companies go public and two delay because of ‘market conditions.’”


New Fundings

51Talk, a three-year-old, Beijing-based online English language education service, has raised $55 million in Series C funding led by Sequoia Capitalsays China Money Network. Other participants included earlier investorsDCM and Shunwei Capital founded by Lei Jun, founder of the smartphone maker Xiaomi.

Blockstream, a 10-month-old, Quebec-based company at work on a new way of transferring assets across multiple block chains (which work like digital spreadsheets shared by everyone in a decentralized network), has raised $15.8 million in funding, shows an SEC filing that was flagged by Coindesk. The filing names Reid Hoffman of Greylock Partners as a director. Talking with Coindesk, Blockstream’s CEO Austin Hill said the round is still open and that the company will provide more details once it’s complete.

Charlie, a 2.5-year-old, Chicago-based mobile app that promises to arm users with important information about their contacts right when they need it (like before a big meeting), has raised $1.75 million in seed funding led by Lightbank, with participation from Confluence Capital Partners, Hyde Park Venture Partners and several individuals.

DormChat, an Hoboken, N.J.-based geolocal communication service for college students, has raised an undisclosed amount of seed funding from ff Venture Capital.

Ello, the year-old, Burlington, Vt.-based social network that promises to keep advertising off its site, has raised $5.5 million in funding from Foundry Group, Bullet Time Ventures and FreshTracks Capital. Betabeat has more here.

ExecOnline, a 2.5-year-old, New York-based company that partners with schools to develop online executive education programs, has raised $5 million in Series A funding led by Osage Venture Partners, with Kaplan Ventures, Militello Capital, New Atlantic Ventures and others participating. The company has now raised $6.9 million to date, shows Crunchbase.

Fountain, a year-old, San Francisco-based company whose on-demand question-and-answer app addresses gardening and home-improvement questions (for now), has raised $4 million in Series A funding led by Shasta Ventures, with participation from First Round Capital. TechCrunch has more on the company — cofounded by Mint founder Aaron Patzerhere.

KouDai, a Beijing-based mobile e-commerce platform that recommends targeted products to users, has raised a whopping $350 million in Series C funding led by the Internet giant Tencent Holdings, according to China Money Network. Other investors in the round include Tiger Global Management and DST Global. The three investors also previously backed the now-public Chinese e-commerce platform KouDai, which means “pockets” in Chinese, counts Chengwei Venture FundMatrix Partners, and Warburg Pincus among its earlier investors.

Luxe Valet, a year-old, San Francisco-based on-demand valet service, has raised $5.5 million in seed funding from Google Ventures, Sherpa Ventures, Redpoint Ventures, Lightspeed Venture Partners, Upfront Ventures, Foundation Capital, BoxGroup, Slow Ventures, Data Collective, Eniac Ventures, Rothenberg Ventures and others. VentureBeat has much more here.

Mogl, a four-year-old, San Diego-based loyalty rewards app, has raised $11 million in funding from Austin Ventures, Avalon VenturesCorrelation Ventures and Sigma West. The company has now raised at least $21.7 million to date, shows Crunchbase.

Oneflare, a 2.5-year-old, Sydney, Australia-based local services marketplace, has raised $1 million AUD (about $876,000), bringing its total funding so far to $1.5 million AUD (about $1.3 million). Investors include Equity Venture Partners, Sydney Seed Fund and The Strategy Group. TechCrunch has more here.

Phreesia, a nine-year-old, New York-based healthcare point-of-service platform, has raised $30 million in new funding led by LLR Partners, with participation from HLM Venture Partners and Ascension Ventures. The company has raised $72.7 million altogether, shows Crunchbase.

Portal Instruments, a new Cambridge, Ma.-based company that’s developing a computerized needle-free drug delivery system, has raised $11 million in Series A funding led by Sanofi, PBJ Capital, and a major, unnamed medical device company.

Slack, the five-year-old, San Francisco-based enterprise collaboration platform, is reportedly raising a new round of funding at a valuation of between $800 million and $1 billion, just six months after raising nearly $43 million. (To date, the company has raised $60 million.) Sequoia Capital and Kleiner Perkins Caufield & Byers are involved in the newest funding, says one report from TechCrunch. The company’s earlier investors include Andreessen Horowitz, Accel Partners, and The Social+Capital Partnership. More here.

Soft Machines, an eight-year-old, Santa Clara, Ca.-based semiconductor company, has raised $125 million in funding, including from two former senior Intel executives (Albert Yu and Richard Wirt); well-known chip entrepreneur and investor Gordon Campbell; Samsung VenturesAdvanced Micro Devices; and Mubadala, the Abu Dhabi investors backing chip manufacturer Globalfoundries. The WSJ has the story here., a 1.5-year-old, Sydney, Australia-based social network that was previously known as Formspring, has raised $5 million in debt and equity, including from Right Click Capital, Tank Stream VenturesNextec Strategic Capital, and Rubicon Project founder Craig Roah. TechCrunch has more on how and why the company is rebranding itself.

TaskEasy, a three-year-old, Salt Lake City, Ut.-based company that provides on-demand exterior home services like leaf raking, said it has raised $7 million in Series A funding from Access Venture PartnersGrotech Ventures and KickStart Seed Fund. The company has raised $9.6 million to date, shows Crunchbase.

Telcare, a six-year-old, Bethesda, Md.-based company that develops cellular-enabled glucose monitors and a cloud-based companion system, has raised $32.5 million in Series C funding led by Norwest Venture Partners, with Mosaic Health Solutions and earlier investors Sequoia Capital and Qualcomm participating. The company has now raised $63.5 million altogether, shows Crunchbase.

Vestorly, a 2.5-year-old, New York-based content marketing platform for financial services professionals, has raised more than $2 million in seed funding from AlphaPrime Ventures, Formation 8, and Gaspar Global Ventures.

Zignal Labs, a three-year-old, San Francisco-based real-time media monitoring and analytics company, has raised $10.7 million in Series B funding from earlier investors, including Figtree Partners, Ross Investment Associates and company co-founder Jim Hornthal. The company has now raised $14.9 million altogether, shows Crunchbase.


New Funds

Founders Circle Capital, a 2.5-year-old, San Francisco-based firm that buys back stock from founders, executives, employees and early backers, has raised $195 million across two funds, beating a target of $125 million, says the firm. More here.



Microsoft co-founder Paul Allen is pledging at least $100 million to help fight the spread of Ebola, reports USA Today. The funding will go to the State Department to develop medevac containment units to evacuate health professionals from West Africa and to offer training, medical workers and equipment in Liberia, one of the nations hardest hit by the Ebola epidemic. (This video about the epidemic in Liberia should win an award. H/T: Matt Mireles.)

Nicolas Debock has joined Balderton Capital as a principal. He’ll focus largely on fintech, consumer-to-consumer marketplaces and SaaS. Prior to joining Balderton, Debock worked at XAnge, a Paris-based venture firm. He has also worked as the head of startup-relationships at La Poste, the French postal service, and at the IT and management consultancy Logica.


Job Listings

Google is newly looking for a corporate development strategy manager.



Total funding to on-demand mobile services startups has hit $1.46 billion in the last four quarters, says CB Insights, which says nearly 20 deals per quarter in 2014 have been money invested into “Uber for X” type companies. More here.

A New York venture capital and funding report, by AlleyWatch.


Essential Reads

Facebook introduces its first product that allows you to ditch your real name.



Inside the crazy, and big, business of pet body shaming.

When introverts should avoid coffee.


Retail Therapy

Holy smokes.

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