StrictlyVC: December 9, 2014

Good morning, everyone!


Top News in the A.M.

Uber launched in Portland, Or., last Friday, despite not having the permits and inspections required by the city for a taxi service. Now Portland has filed a lawsuit against the transportation startup.

Spain and Thailand just banned Uber, too.


Data Detectives Seek Up to $15 Million in Series B Funding

Big data is often used to sell consumers “stuff,” but it has plenty of truly helpful applications, too. One company trying to gather and sift through data to catch bad guys, for example, is Forensic Logic, a 10-person, San Francisco-based company behind a growing law enforcement data sharing platform. With information from roughly 600 local enforcement agencies around the country, users of its platform can, say, track down anyone who has ever been associated with a particular license plate, or every incident related to a certain kind of shell casing, all within seconds.

Getting buy-in from those agencies hasn’t been a walk in the park. For the most part, 11-year-old Forensic Logic’s bottom-up approach has meant convincing one agency at a time of its merits, starting with a “hub” city. Take the police department of Oakland, Ca., which began using Forensic Logic’s technology to disrupt criminal networks. Once information from its massive police department was poured into Forensic Logic’s repository, its database became more compelling to neighboring city police departments, including Vallejo, Ca., where it’s now a lot easier to track down a robber who might dump his getaway vehicle on one of its streets.

The company has also had to fend against plenty of competitors, including IBM, which helps many police departments process crime-related data. (IBM acquired Forensic Logic’s most direct competitor, CopLink, in 2011 for an undisclosed amount.)

But Forensic Logic has reached a tipping point, says its cofounder and CEO, Bob Batty, who’s about to begin seeking $15 million in funding for the company, which has so far raised $3.5 million from individual investors.

For one thing, the company has struck a a growing number of partnerships with federal agencies, among them them the FBI, the U.S. Drug Enforcement Agency, and the Bureau of Alcohol, Tobacco, Firearms and Explosives or ATF, whose data Forensic Logic has been extracting digitally and scanning, making it searchable by any law enforcement officer with an Internet connection.

Looking at the broader market opportunity, there are roughly 18,000 U.S. law enforcement agencies altogether that employ about one million people. Forensic Logic, which operates under FBI criminal justice system regulations and so must be able to record every single user (and every keystroke he or she makes), charges $300 per person per year for its technology.

Forensic Logic is broadening into other markets, too. It has pilot programs to identify shoplifters in place with Walmart, Kohl’s and Target. (Using facial recognition technologies, Forensic Logic can send names and other information to the companies’ loss-prevention departments in real time, it says.)

It’s also working with tobacco companies to stop tobacco counterfeiting, which has become a $34 billion business. (Up to 20 percent of cigarettes sold in the U.S. are made illegally in China and smuggled in.)

Indeed, says Batty, the money the company will look to raise will stretch across six categories, including a field organization to get more of its software installed within local law enforcement agencies, and a retail group.

It seems like a lot to take on. Batty insists otherwise, though.

“What we’re selling is bits,” he says. “And we can we sell them many times to many people.”


New Fundings

Adagene, a four-year-old, Sozhou, China-based antibody discovery and engineering company, has raised $8 million in Series A financing from Fidelity Biosciences, Fidelity Asia Growth, and WuXi Venture Fund.

Altiscale, a three-year-old, Palo Alto, Ca.-based company that’s selling what it calls Hadoop as a service — open-source Hadoop delivered over the Web so that users can focus on using the software instead of maintaining it — has raised $30 million in Series B funding, reports Venture Capital Dispatch. Northgate led the round, with participation from earlier backers Sequoia Capital and General Catalyst Partners. The company has now raised $42 million altogether, including from Accel PartnersAME Cloud Ventures and Boston Seed Capital, along with individual investors.

DataGravity, a two-year-old, Nashua, N.H.-based big data automation platform, has raised $50 million in funding led by new investor Accel Partners. The company has now raised $92 million altogether, including from General Catalyst Partners, CRV, and Andreessen Horowitz. Fortune has more here.

DigitalOcean, a three-year-old, New York-based, fast-growing cloud hosting startup that raised $37.2 million in Series A funding in January, has secured a $50 million credit facility from Fortress Investment Group, reports Venture Capital Dispatch. More here.

Dynamics, a seven-year-old, Pittsburgh, Pa.-based company that designs and manufactures intelligent battery-powered payment devices and advanced payment platforms, has raised $70 million in Series C funding from MasterCard and CIBC, with participation from earlier backers Bain Capital Ventures and Adams Capital Management. The company has now raised roughly $110 million altogether, shows Crunchbase.

Errplane, a two-year-old, New York-based service that helps developers monitor their applications’ performance, custom metrics, and exceptions, has raised $8.1 million in funding from Mayfield and Trinity Ventures. The company had also raised an undisclosed amount of seed funding from Y Combinator last year.

Foap, a three-year-old, Sweden-based company that lets users upload and sell their their smartphone photos through its marketplace, has raised $2.3 million in funding, including from VaynerMedia cofounder Gary Vaynerchuk, CNN President Jeff Zucker, and Delivery Hero CEO Niklas Ostberg. TechCrunch has more here.

Grofers, a year-old, Gurgaon, India-based online hyper-local delivery service that connects offline retailers with customers, has raised an undisclosed amount of seed funding from Sequoia Capital. VC Circle hasmore here., a two-year-old, San Francisco-based talent marketplace that focuses largely on software engineers, has raised $15 million in fresh funding from Silicon Valley Bank, Comcast Ventures and Lumia Capital, along with earlier backers Crosslink Capital, Sierra VenturesSoftTech VC and Sherpa Ventures. The newest round reportedly values the company at $200 million. The company — which raised $15 million in March at a $60 million valuation — has now raised $32.7 million altogether.

Insikt, a two-year-old, San Francisco-based origination and syndication platform for alternative lending products, has raised $16 million in Series B funding led by Revolution Ventures. First Mark Capital, which led the company’s Series A round, also participated, along with Serengeti Asset Management, Peterson Ventures and strategic investors Jefferies and Atalaya Fund Management. Insikt has also secured $65 million in credit facilities, it says.

Kitchit, a three-year-old, San Francisco-based company that provides personal chefs on demand, has raised $7.5 million in Series A funding led by Javelin Venture Partners. The company has now raised $8.1 million altogether.

Nginx, a three-year-old, San Francisco-based company behind a popular open-source web server used to run websites, has raised $20 million in new funding led by New Enterprise Associates, with, Index Ventures, Runa Capital, and the startup’s chief executive, Gus Robertson, participating. To date, Nginx has raised $33 million.

Nok Nok Labs, a three-year-old, Palo Alto, Ca.-based security platform providing fingerprint and multi-factored authentication to organizations, has raised $8.25 million from undisclosed investors in a still-open Series C round. To date, the company has raised $40 million, including a $16.5 million Series B round led by Lenovo Group. Others of the company’s investors include DCM and ONSET Ventures.

Off Grid Electric, a three-year-old, Arusha, Tanzania-based pay-as-you-go solar power provider, has raised $16 million in new funding from the solar finance and installation giant SolarCity, with participation from Vulcan Capital and Zouk Capital. The company has now raised $23 million to date, shows Crunchbase. TechCrunch has more here.

RezNext, a three-year-old, Bangalore-based company whose software gives hotels a way to update their inventory in real-time, has raised $5 million from New Enterprise Associates.

Sckipio Technologies, a three-year-old, Ramat Gan, Israel-based chipset maker, has raised $17 million in Series B funding led by Pitango Venture Capital, with participation from earlier backers Gemini Israel Ventures,Genesis Partners, Amiti Ventures and Aviv Ventures. The company has now raised $27 million altogether.

Seeo, a seven-year-old, Hayward, Ca.-based maker of advanced lithium polymer batteries, has raised $17 million in Series E funding fromSamsung Ventures, along with earlier backers Khosla Ventures and GSR Ventures. The company has now raised $40.6 million altogether, shows Crunchbase.

SoftWear Automation, a five-year-old, Atlanta-based maker of robotic sewing technologies for the garment industry, has raised $3 million in Series A funding from CTW Venture Partners.

SuiteHop, a six-month-old, Denver-based marketplace for luxury suites at sport and entertainment venues across the United States, has raised $1 million from undisclosed sources.

ThousandEyes, a five-year-old, San Francisco-based IT performance management company, has raised $20 million in Series B funding led by Sutter Hill Ventures, with Salesforce Ventures, and earlier backer Sequoia Capital participating alongside angel investors.

Transcriptic, a nearly three-year-old, Menlo Park, Ca.-based company that uses spectrometers, robotic liquid handlers, centrifuges, incubators, cytometers, chromatographs and other sophisticated machines to perform scientific experiments for biotech companies, has raised funding and struck a partnership with Y Combinator. (It will offer Y Combinator’s biotech companies $20,000 worth of laboratory work time.) Venture Capital Dispatch has the story. Y Combinator’s investment in the company is part of a bigger Series A round that Transcriptic is currently raising. Its seed backers, which have provided the company with $4 million already, include Google Ventures, Founders Fund, IA Ventures and Data Collective.

UpCounsel, a 2.5-year-old, San Francisco-based online workplace for businesses to find and hire attorneys, has raised $2.4 million in seed funding led by Crosslink Capital and Metamorphic Ventures, with participation from earlier backer Homebrew. The company had previously raised a $1.5 million seed round, including from SV Angel, Collaborative Fund, Bobby Yazdani, and other angels.

Wagepoint, a three-year-old, Waterloo, Ontario-based company that makes payroll software for small and mid-size businesses, has raised $2 million in seed funding led by Extreme Venture Partners, with Business Development Bank of Canada, Atlantic Canada Opportunities Agencies, and Canadian and U.S. angel investors participating.



LendingClub, the San Francisco-based peer-to-peer lender, revealed yesterday that it could raise up to $929 million in its IPO, with price targets that are up nearly 17 percent from the targets set a week ago. More here from the Silicon Valley Business Journal.



DataGardens, an Edmonton, Alberta-based vendor specializing in disaster recovery for on-premises infrastructure, has been acquired by the telecommunications and Internet provider CenturyLink for undisclosed terms. Eweek has more here.

PassOmatic, a 2.5-year-old New York-based startup that had created automatic password change technology, has been acquired by Dashlane, a five-year-old, New York-based startup behind a password manager and secure digital wallet. Terms weren’t disclosed. PassOmatic had never disclosed outside funding. Dashlane has raised $30 million from investors, including FirstMark Capital, Rho Ventures, and Bessemer Venture Partners.



Microsoft cofounder Paul Allen is donating $100 million to help create the Allen Institute for Cell Science, a new Seattle-based non-profit organization that will study how information coded in human genes becomes a living cell, and what prompts disease. Geekwire has more here.

Dan Held is joining the micropayment infrastructure company ChangeTip as VP of Product. ChangeTip recently raised $3.5 million in funding led by Pantera Capital. Held had previously cofounded ZeroBlock, a real-time market data and aggregated news feeds company that was acquired by the web-based bitcoin platform Blockchain.

Board members of the blood-test business Theranos are “clearly charmed” by its 30-year-old founder, Elizabeth Holmes, writes Ken Auletta in a New Yorker profile of Holmes, her company, and the challenges it’s facing. Writes Auletta: “She is a careful listener, and she is unnervingly serene; employees say that they can’t remember an instance when she raised her voice.”

Snapchat, the mobile messaging company, has hired star tech banker Imran Khan, the former head of tech banking at Credit Suisse, as its first chief strategy officer, reports the WSJ. Khan will report directly to Snapchat CEO Evan Spiegel, says the report.


Essential Reads

Amazon, which recently began testing delivery drones in the U.K., is warning U.S. officials it will move even more of its drone research abroad if it doesn’t get permission to test-fly in the states soon.

Amazon has also been testing the idea of using bike messengers to help deliver packages within an hour in New York City, sources tell the WSJ.

Oh, and in other Amazon news, you can now barter with Amazon sellers.



How to win a breakup on the Internet.

How to make a roller coaster in one week.

Colleges are embracing e-sports, even offering the same sort of scholarships given to athletes playing soccer, football and ice hockey.


Retail Therapy

Ornaments for geeks.

Artic Force snowball blaster. (Oh, yeah, things are about to get real.)


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