StrictlyVC: November 12, 2014

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Top News in the A.M.

FCC Chairman (and formerly lobbyist for wireless companies) Tom Wheeler to the Obama Administration: “I am an independent agency.”

Reuters reports that at least two of Yahoo’s biggest shareholders are “so unhappy with Chief Executive Marissa Mayer’s turnaround efforts that they are making a direct plea to AOL CEO Tim Armstrong to explore a merger and run the combined company.” The report adds that Armstrong “has been receptive to these Yahoo shareholders and acknowledged the potential benefits of a deal,” according to the shareholders.


Taking on Same-Day B2B Delivery (and Dozens of Competitors)

Sean Spector is a brave soul. Spector is the CEO and cofounder of year-old, Austin-based Dropoff, a same-day delivery service that’s targeting small and mid-size businesses that don’t necessarily want their sensitive documents being delivered by a harried bike messenger who has other places to be. Customers pay a bit more than they might to a traditional courier company but they get a high-touch service in return, from screened “agents” to a slick mobile app that providers customers real-time tracking and the ability to rate their messenger, among other things.

The company, which is launching today with $1.85 million from Austin Ventures, Silverton Partners, Mucker Labs and others, says it’s targeting an underserved niche in the $8.7 billion same-day delivery market. While it’s making food deliveries, for example, it isn’t dropping off sandwiches to office workers but rather hauling over the catering to the 200-person office party. While it’s delivering flowers, its messengers aren’t bringing them to consumers’ doorsteps but to wedding venues.

Still, Dropoff — which has made “thousands” of same-day business-to-business deliveries since it began testing its service in spring — has a good many competitors, including 39 that are listed on AngelList alone. I talked yesterday with Spector — who previously cofounded the online game rental service Gamefly — about how Dropoff breaks through the noise. Our chat has been edited for length.

How many employees do you have? Are your messengers full-time employees? How are they paid? And who owns their modes of transport?

We have 16 full-time employees, across marketing, finance, technology and sales. Our couriers are independent contractors who get a percentage of each delivery. Most of them work a full day, eight hours, seven days a week and they can earn $20 or more per hour. They own their own bikes, cars, and vans, which we use depending on the speed required of the delivery and its size; they also [pay for their] own insurance, though we [provide them with additional] insurance. All are thoroughly screened and vetted and arrive in uniform.

You’ve chosen a tough business to enter. Everyone is jumping into same-day delivery.

It may seem that way, but once you look behind the curtain, it’s very different, what we’re doing. If you think about sensitive documents, expensive medications, floral arrangements for a big wedding, different types of mission-critical things that need to be delivered and tracked, it’s a whole different process.

How do you come up with your rates?

We did a ton of research to understand how the current industry works, then modified it based on what makes the most sense for our model. But loosely, it depends on how quickly you need something, the distance we’re traveling, and the weight of what we’re delivering.

I want catering trays, I’m five miles away and I want them in two hours.

It will cost you under $20.

You raised $1.85 million in April, though you’re just announcing it today, and you have plans to expand nationally from Austin. Are you actively seeking an A round yet?

It’s fair to say we’ll be in the market in 2015.


New Fundings

Course Hero, an eight-year-old, Redwood City, Ca.-based online-learning platform that provides a variety of online resources, including crowdsourced study documents, has raised $15 million in Series A funding led by IDG Capital and GSV Capital. Earlier investors Maveron, Great Oaks Venture Capital and SV Angel, among others, also participated in the round. The company has now raised $17 million altogether., a new, Chicago-based site that’s been spun out of Discovery Communications, has raised $6 million in Series A funding from Discovery Communications, Chicago Ventures, Corazon CapitalOrigin Ventures and Pritzker Group Venture Capital.

Echo360, a seven-year-old, Reston, Va.-based learning platform that films lectures for students to watch outside the classroom, has raised $18 million in new funding led by Duchossois Capital Management and New Island Capital. Other participants in the round include SWaN & LegendClarke Enterprises-CNF, Kiddar/Metz and existing investor Revolution Growth. The company has now raised $58.6 million altogether. The Washington Post has more here.

Flowonix Medical, a nine-year-old, Mount Olive, New Jersey-based medical device company whose implanted pumps administer pain medications, has raised $40 million in equity and debt. The equity portion, $20 million, was led by Elevage Capital Management, with participation from Clarus Ventures, Hercules Technology Growth Capital and other, earlier Flowonix investors. Hercules will also provide the company with up to $20 million in debt.

Forter, a 1.5-year-old, Tel-Aviv based anti-fraud start-up, has raised $15 million in Series B funding from New Enterprise Associates and Sequoia Capital. The company has now raised $18 million altogether. Venture Capital Dispatch has more here.

Full Circle CRM, a four-year-old, San Mateo, Ca.-based online platform that offers marketing performance management services to Salesforce users, has raised $3.8 million in Series A funding led by Aligned Partners, with participation from Salesforce Ventures. The company has raised $4.3 million altogether.

Gimlet Media, a months-old, New York-based podcasting startup cofounded by longtime public-radio producer Alex Blumberg, has raised $1.5 million in seed funding from Betaworks, Knight Enterprise Fund and Lowercase Capital, along with numerous individual investors. As part of the round, the company had also raised $200,000 through an equity crowdfunding campaign. Venture Capital Dispatch has the story here.

HealthCare, an eight-year-old, Miami-based company focused on personal health insurance plans, has raised $7.5 million in Series A funding from Annox Capital and Brothers Brook. The company has now raised $9.5 million altogether.

Ineda Systems, a three-year-old, Santa Clara-based maker of low-power systems on a chip, has raised an undisclosed amount of Series B funding from Cisco, with participation from existing investors, including Qualcomm Ventures and Imagination Technologies, among others.

La Lumiere, a three-year-old, Jupiter, Fl.-based skin care company whose products use light therapy, or phototherapy to improve skin, has raised $20 million in Series B financing from investors including Johnson & Johnson, and SWaN & Legend Venture Partners.

Modernizing Medicine, a 10-year-old, Boca Raton, Fla.-based company whose electronic medical record system comes with a library of built-in medical content, has raised $15 million in a Series D round that’s expected to close with $20 million. Earlier backers Pentland Group and Summit Partners are providing the capital. The company had previously raised roughly $40 million, shows Crunchbase.

Ocho, a two-year-old, New York-based video-based social network for the iPhone, has raised $1.65 million in seed funding from billionaire investor Mark Cuban among others. Ocho users can upload eight seconds worth of video and audio (or edit down longer videos to the same length).

UTC Laboratories, a nearly two-year-old, New Orleans, La.-based DNA-analysis lab that goes by the name Renaissance RX, has received its first outside funding — an undisclosed sum from TPG Growth.

Vida, a months-old, San Francisco-based e-commerce platform that connects artists with craftspeople and manufacturers to source and design products, has launched with $1.3 million in seed funding from Google Ventures, Universal Music Group, Slow Ventures, Jesse DraperBeehive Holdings and the Valley Fund.

VisaNow, a 16-year-old, Chicago-based tech company that says it cuts the Visa application process for immigrants from months down to hours, has raised $22.1 million according to an SEC filing flagged by VentureWire. The capital comes from General Catalyst Partners.

Wannabiz, a three-year-old, Tel Aviv, Israel-based company whose marketing app is designed to help small businesses do their own online marketing “like a pro,” has raised $2.2 million in seed funding from Firstime Ventures and TheTime, along with individual investors.


New Funds

Chobani, the nine-year-old, New York-based “Greek” yogurt company, is launching a New York-based startup incubator to invest in food-related companies. Called the Chobani Food Incubator, the outfit will provide startups with commercial kitchens, office space, and collaboration with Chobani leadership over a six-month period that culminates with a demo day in front of “top chefs and food leaders.” The company will begin taking pitches from interested entrepreneurs next month, after which it will choose 10 companies for its inaugural batch. Fast Company has more here.



Virtustream, a six-year-old, Bethesda, Ma.-based company that makes cloud computing management software, is on track to generate $100 million in annual revenue and plans to file for an IPO within a year, its CEOtells Bloomberg. Virtustream has raised roughly $130 million over the years, including from SAP, TDF Ventures, QuestMark PartnersColumbia Capital, Noro-Moseley Partners, and Intel Capital.



It’s official. BrightRoll, the profitable, programmatic video-advertising platform, is selling to Yahoo for $640 million in cash. The deal will combine Yahoo’s desktop and mobile video advertising inventory with BrightRoll’s platform and publisher relationships. BrightRoll is also expected to enhance Yahoo’s profitability, given the more than $100 million in net revenue it’s expected to see this year. Variety has more here.

Funny or Die, the comedy website co-founded by actor Will Ferrell, has retained the boutique investment bank Moelis & Co. to explore a possible sale of the company, reports Bloomberg, which says the asking price is $100 million to $300 million. Crunchbase shows the 7.5-year-old company has raised at least $18 million over the years, including from Sequoia Capital, SV Angel, HBO, and LinkedIn founder Reid Hoffman.

SolarBridge Technologies, a 10-year-old, Austin, Tx.-based microinverter startup, has been acquired by SunPower Corp. for undisclosed terms. SolarBridge had raised around $105 million from the U.S. Department of Energy and investors, including Constellation Ventures, Shea Ventures, Rho Ventures, Osage University Partners and Battery Ventures.



Twitter CEO Dick Costolo is heading into his company’s first analyst day today and how he presents Twitter is “crucial,” notes a new Bloomberg report, particularly given turnover at the company and its drooping shares, down 38 percent this year.

Shirish Sathaye is the newest general partner with Silicon Valley venture capital firm Formation 8, reports Fortune. A year ago, Sathaye left Khosla Ventures, which he had joined in late 2010. Fortune notes that he’s the fourth member of the Formation 8 team to come from Khosla Ventures, including partner Jim Kim and senior advisors Gideon Yu and Pierre Lamond.


Job Listings

Yahoo‘s corporate development team is looking for two candidates. It’s in the market for a senior manager to work on its integration team — a role that helps plan, manage and lead the integration the companies that Yahoo acquires. Yahoo is also looking for an associate on the deal lead side. It hasn’t posted that job yet, but we’ll get you a link as soon as possible. (In the meantime, you might want to work your network.)


Essential Reads

Apple will have to face a U.S. lawsuit over vanishing iPhone text messages, reports Reuters.

Hampton Creek, the three-year-old, San Francisco-based startup that makes plant-based food, is planning to countersue consumer giant Unilever over the meaning of “mayo,” says a TechCrunch report. Unilever filed a lawsuit against Hampton Creek last week, saying its “Just Mayo” product acts like mayonnaise but because it does not contain eggs doesn’t meet the FDA’s definition of the product as something containing both egg yolks and oil.



How your brain decides without you.

Actor Christoph Waltz, performing a dramatic reading of the “Sesame Street” theme song.


Retail Therapy

Twelve cool mid-top sneakers.

Someone just paid $24 million for this watch. Was it you? It wasn’t us.

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