StrictlyVC: January 30, 2015

Happy Friday, everyone. Hope you have a super weekend. (Web visitors, this version of today’s morning email is easier to read than what you see below.)


Top News in the A.M.

AOL is cutting 150 employees. More details here.

Google‘s fourth quarter results missed the mark yesterday.


Mike Rothenberg: Virtual Reality is Not a Sector, People

Late last year, three-year-old Rothenberg Ventures announced it would be launching a startup accelerator, River, that planned to provide $100,000 in seed funding to virtual reality companies expressly. To some, it might have seemed like a calculated, and possibly unwise, bit of counterprogramming. After all, by backing a variety of startups, most accelerator programs are able to hedge their bets and reduce the risk that a whole batch will fall out of fashion.

Yet the San Francisco firm argues that the the 13 companies it has selected, from roughly 200 applicants, is as diverse as any early Y Combinator class. An eye-mounted head-tracking display that helps the physically challenged with daily tasks? Check. Virtual reality technology that changes the way people experience news events? Check. “Everyone keeps calling it a ‘sector,’” says the firm’s founder, Mike Rothenberg. “But just as the Internet is ubiquitous, virtual reality will be ubiquitous in 10 or 20 years. This technology is really going to change everyone’s life.”

We talked about it yesterday.

You’re about to welcome 13 companies into your new accelerator program, which will run from February through May. What was the criteria for acceptance?

We were really looking for the most innovative applications across every industry. We also wanted a mix of hardware and software. We didn’t know what we’d get, but we have companies coming from Japan, South Africa, New Zealand France — companies building great companies in education, in pain management . . .

How far along are they?

They’re pretty mature companies for the most part. Some have been building their companies for eight to ten years. Fove, which makes an eye-tracking head mounted display that lets users navigate using their eye movements, has a complete product that works and is amazing.

Have these companies raised capital in the past?

Some of them have some capital. [Fove, for example, passed through Microsoft Ventures Accelerator in London last summer.] But in general, venture capital hasn’t been focused on virtual reality too much yet, so in some cases, the companies hadn’t raised anything prior. We have a South African company that bootstrapped and figured out a way to get customers to pay for VR from the beginning.

What size stake are you taking in exchange for your $100,000?

We aren’t disclosing that. We looked at Y Combinator and other accelerators and incubators and tried to learn [from what they do].

Just two companies you’ve accepted are hardware companies. Is that by design? Do you think most people will be creating virtual reality technology for platforms like Samsung Gear VR and the upcoming Oculus Rift?

We didn’t have set targets, but in my opinion, the big companies know what they’re doing. There’s a lot of good hardware being built by great tech companies with deeper pockets; smartphone use will become more common, too. So software and content companies might be a little more of a fit [for this program].

We also just saw so a lot of mind-blowing applications. We have a company, Psious, a smartphone-based tool that’s solving phobias by simulating heights and plane travel and spiders. Another, DeepStream, tackles pain management. Burn victims enter into a world of snow and it lessens their pain. A third company, Emblematic Group in L.A., is doing immersive journalism, showing reporters what it can feel like to be on the streets when a bomb goes off and hopefully making them more empathic in the process.

Why announce the companies now? Why not wait until they’re ready to meet with investors at a demo day you’re staging in May?

We want them to take advantage of their affiliation with River while they’re here in America. Some of them are already planning to move to San Francisco. Many of them are here for three months alone, and we want them to meet with the people they want to meet, including investors.

Those investors will invariably be conjuring up exit scenarios. Aside from Facebook and its subsidiary Oculus, which acquired two VR companies last month, do we know what companies are actively shopping for VR technologies?

The smartest companies. It’s the same for everything. Who’s going to buy the 360-degree action sports camera? Whoever is making cameras and wants to stay in business.

(For a full list of River’s companies, click here.)


New Fundings

Anews, a two-year-old, Russia-based international news aggregation platform, has raised $2.7 million in venture backing, including from include TMT Investments, Run Capital, and 101Startup.

Aspire Bariatrics, a four-year-old, King of Prussia, Pa.-based company that’s commercializing a reversible, minimally invasive weight loss device for obesity, has closed on $12 million in venture debt financing from Hercules Technology Growth Capital. According to an SEC filing, the company had separately raised $5 million in equity last summer.

Atlas Genetics, a 10-year-old, U.K.-based company that makes molecular diagnostics tests for infectious diseases, has raised $20 million in Series C funding led by RMI Partners, with participation from return backers Novartis Venture Funds, Consort Medical, Johnson & Johnson Innovation, BB Biotech Ventures and South West Ventures Fund.

Bench, a 2.5-year-old, Vanouver, B.C.-based online platform that pairs users with bookkeepers and bookkeeping software, has raised $7 million in Series A funding led by Altos Ventures with participation from Contour Venture Partners. The company has now raised $10 million to date, shows Crunchbase.

BioNano Genomics, a 12-year-old, New York-based company whose nanoscale imaging and analytic platforms are used to analyze DNA and other genome-related peptides and proteins, has raised $68.4 million in funding, according to an SEC filing — an amount that reportedly includes $53 million that BioNano raised in Series C funding last November. Legend Capital and Novartis Venture Fund co-led the round and were joined by Federated Kaufmann Fund and Monashee Investment Management. Earlier investors Domain Associates, Battelle Ventures, and Gund Investment Corporation also participated.

The 7.5-year-old parent company of CarDekho, a 6.5-year-old, Jaipur, India-based online marketplace for new and used cars, has raised $50 million from the Chinese investment firm Hillhouse Capital and the Hong Kong-based hedge fund Tybourne Capital. Earlier backer Sequoia Capital — which had provided the company with $15 million in Series A funding in 2013 — also participated. VCCircle has more here.

Cargomatic, a 1.5-year-old, Venice, Ca.-based company that enables users with shipping jobs to find truckers who are available to move their cargo, has raised $8 million led by Canaan Partners, with participation from Volvo Group Venture Capital, Morado Venture Partners, SV Angel, Sherpa Ventures, Structure Capital, and numerous angel investors. The company has now raised $10.6 million altogether, shows Crunchbase.

Cyanogen, a 5.5-year-old, Palo Alto, Ca.-based company that distributes smartphone software based on Google’s Android mobile operating system, is raising a $70 million round of financing that values the company in the “high hundreds of millions,” and Microsoft is poised to be a minority investor in that round, reports the WSJ. (The Information had published a smart piece about Cyanogen back in October.)

D-Wave Systems, the 16-year-old, British Columbia-based quantum computing company, raised $29 million Canadian dollars ($23 million) late last year from an unnamed “large institutional investor,” reports Venture Capital Dispatch. According to Crunchbase, the company has now raised roughly $124 million from investors, including Business Development Bank of Canada, DFJ, and Goldman Sachs.

Depop, a two-year-old, U.K.-based mobile marketplace that enables individuals to buy and sell their items, has raised $8 million in Series A funding led by Balderton Capital and Holtzbrinck Ventures. The company has raised $10.3 million to date, shows Crunchbase.

FullContact, a five-year-old, Denver-based company that sells a suite of suite of cloud-based contact management solutions for businesses and individuals, has raised $7 million in Series B funding led by earlier backer Foundry Group, with participation from earlier investors 500 Startups and Blue Note Ventures. The company has raised $16.2 million altogether, shows Crunchbase.

Giphy, a two-year-old platform that makes it easy to search and share GIFs, has raised $17 million in Series B funding led by Lightspeed Venture Partners, with participation from General Catalyst Partners and earlier investors, including Lerer-Hippeau Ventures, betaworks, RRE Ventures, and CAA Ventures. Of the round, $225,000 has been set aside for accredited investors who might be interested in acquiring a stake in the company via the crowdfunding platform Alphaworks. The company had previously raised $2.5 million from investors.

The parent company of Grabhouse a two-year-old, Mumbai, India-based online rental accommodation site, has raised $2.5 million in Series A funding from Kalaari Capital and Sequoia Capital. LiveMint has more here.

Handpick, a 1.5-year-old, San Francisco-based company whose iOS app provides users access to more than 10 million socially shared food posts from Instagram, food blogs and recipe sites, has raised $3 million in funding led by ClearVue Partners, with participation from angel investors.

MaestroIQ, a 1.5-year-old, New York-based recommendation engine app used by marketers to help drive app engagement, has raised $1.75 million in seed funding from Foundation Capital, Deep Fork Capital, KEC Ventures, First Round Capital, Crosslink Capital, angel investor Jim Pallotta, and Eniac Ventures, where the company was incubated.

Ouya, a three-year-old, Santa Monica, Ca.-based game-console maker, has raised $10 million from Alibaba, which has discussed incorporating Ouya’s software and library of more than 1,000 games into Alibaba’s set-top box, according to WSJ sources. Ouya had previously raised $15 million from investors, including Kleiner Perkins Caufield & Byers, Mayfield Fund, Shasta Ventures and chipmaker Nvidia; it had also famously raised $8.6 million on Kickstarter.

Spotify, the 8.5-year-old, Stockholm, Sweden-based music streaming service, is working with Goldman Sachs Group on a new round of private fundraising, potentially putting off an IPO for another year, reports the WSJ. The amount to be raised and the valuation are yet to be settled, says the story, but talks include T. Rowe Price.

Swipe, a new social networking app that combines aspects of Instagram, Tinder, and Snapchat, has raised $6.5 million from Sherpa VenturesFirst Round Capital, Lowercase Capital and Binary Capital at a $50 million pre-valuation. Just two months ago(!), the company had raised $1.7 million in seed funding at a $10 million valuation (we’re not sure if that’s pre- or post). TechCrunch has the story here.

Ttyongche, a year-old, Beijing-based carpool mobile app maker, has raised roughly $10 million in Series B funding from Sequoia Capital, which had provided it with $3 million in Series A funding last June, according to Chinese media reports.


New Funds

Cyber London (CyLon), a new startup accelerator based in London, hopes to launch a new wave of cyber-security technology companies from across Europe, reports The Guardian. Its first 13-week program kicks off in April. More here.

Utah-based Kickstart Seed Fund has closed a $39 million fund to fund very-early-stage startups in the state. It’s the firm’s third, and largest, fund. TechCrunch has more here.



Spark Therapeutics, a company that’s developing a treatment for rare blindness, hit the pubic market this morning. We’ll tell you on Monday how things go.



DMG Media, owner of, is acquiring the U.S.-based news website Elite Daily for undisclosed terms. According to Crunchbase, the three-year-old, New York-based startup had raised $1.5 million in a convertible note from Social Starts, Red Sea Ventures, Vast Ventures, and Greycroft Partners. According to Daily Mail, Elite Daily now boasts 74 million monthly unique visitors, mostly between the ages of 18 and 34.

SnipSnap, a 3.5-year-old, Philadelphia, Pa.-based company that makes a mobile couponing app, has been acquired by Toronto-based Slyce for $6.5 million in cash and stock. SnipSnap had raised $2.8 million from mostly individual investors. Slyce, a visual product search platform, has raised $28.7 million from investors, shows Crunchbase. Its backers include Beacon Securities, Cormark Securities, Salman Partners, and Canaccord Genuity Corp.



Chrys Bader, one of the co-founders of the anonymous messaging app Secret, is leaving the company a year after its launch. Bader “won’t go away empty handed,” reports the WSJ. He and cofounder David Byttow collected roughly $6 million as part of a $25 million funding round last year, says the outlet.

Bain Capital Ventures has lost Boston-based managing directors Todd MacLean and Jeff Crisan, reports Fortune’s Dan Primack; he says the pair plans to launch a new venture capital firm with Jim Quagliaroli, who has stepped down as a managing director with Spectrum Equity. More here.

Billionaire Jim Clark, who left the tech scene in Silicon Valley more than a decade ago to build condos in Miami, is on a new real estate buying spree. According to the New York Post, Clark and wife Kristy Hinze just paid $37 million for the 40-foot-wide, eight-bedroom, 11,000-square-foot Mellon mansion on New York’s Upper East Side. (That’s down from the original asking price of $46 million in 2013.) Clark also recently shelled out $27.5 million for the Westchester, N.Y., mansion of director Ron Howard, a 17,000-square-foot property with pool, horse barn, greenhouse and much more.

Former Yahoo COO Jeff Mallett is ready to make a deal, apparently. According to, in 1999, Mallet bought an estate in Napa, Ca., that includes a private, USGA-member nine-hole golf course, and he’s been trying to sell it since 2012. Mallett was originally asking for $17.5 million. With no one coming “even close to making par on the offer,” says the outlet (ha, ha), Mallet has slashed the price by $8 million, meaning you can now acquire his vast property for $9.5 million should you be so inclined. More here.


Job Listings

PayPal is looking to hire a director into its growth and special operations team. The job is in San Jose, Ca.

SoftBank is reportedly looking to set up a five-member team in India. The firm is meeting with people now, says the Economic Times.


Essential Reads

Rap superstar Jay-Z is about to take on Beats and Spotify. More here.



Your shopping habits are one in a million — literally.

How Nick Hornby keeps his writing fresh.

The pursuit of beauty: Solving a pure math mystery.


Retail Therapy

Measuring Paris wall sticker (great for the kids’ room).

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