StrictlyVC: February 17, 2015

Hi, and welcome back, everyone! Hope you had a great long weekend. (We realize that half of the Bay Area is still enjoying “ski week.” Thanks for reading in between runs.)

Also, some of you had asked if we had photos from last week’s INSIDER event. We’ve put together a short slide show here.


Top News in the A.M.

“Microsoft is truly becoming open. A huge win for customers and the industry. And a huge loss for Microsoft jokes.” — Box CEO Aaron Levie

Apple has asked its suppliers to make up to six million units of its three Apple Watch models ahead of the product’s release in April, according to WSJ sources.


Keith Rabois to Startups: Go Public Already

Last week, at a StrictlyVC event San Francisco, investor-writer Semil Shah interviewed Keith Rabois of Khosla Ventures in a wide-ranging chat. Among the issues raised was why companies are staying private longer, and whether founders, investors and the institutions that finance venture capitalists should be concerned.

Rabois – a former lawyer who’d earlier served as COO of Square, and was an executive at PayPal, LinkedIn, and Slide — didn’t equivocate. He said he thinks companies that delay their public offerings are making a mistake, and he traces the trend to “his PayPal friends” and specifically to PayPal cofounder Peter Thiel.

Said Rabois: “My views are a little bit more like [fellow VC] Bill Gurley’s than Marc Andreessen’s or Peter Thiel’s, [which is] that companies should go public earlier rather than later [for] a variety of reasons. One is that you actually get a lot of cash, and that cash gives you leverage to do things. Secondly, you have a currency, and you have a price on your currency and you can acquire things, which is very difficult to do as a private company.”

Continued Rabois, “Some of the reasons that people don’t want to go public are just excuses. The founder doesn’t want to have scrutiny, doesn’t want transparency.” Other oft-cited reasons that management teams give for pushing off an IPO include concerns over employee retention and flagging morale, said Rabois, who called all of them “bad reasons” not to go public.

As for the common complaint that employees begin obsessively watching their company’s ticker after a public offering, for example, Rabois noted that companies’ shares “go up and down” and that staffers can “get a little miffed and annoyed” by those gyrations. But he added that management can also respond proactively to those swings, saying that they’re ultimately among a long list of “soft things” that affect employee satisfaction.

“If you actually manage people, you know the things that are going to distract the people in your office [are things like] the food you serve,” Rabois told the gathered attendees. “I actually had a revolt [at a former company] because I took away bacon because it’s not good for you. All the engineers barfed [at the move] and I didn’t know why they were all annoyed at me until someone asked a question [about my decision] at a company meeting.”

As for retention, Rabois shared a story about the online review site Yelp, on whose board of directors Rabois served for roughly eight years. (He stepped down in January 2014.)

According to Rabois, Yelp co-founder and CEO Jeremy Stoppelman — who’d worked as an engineer at PayPal earlier in his career — “was very nervous about going public because he’d gotten all this advice from Peter [Thiel] and my PayPal friends,” who had themselves gone through a “searing experience” when PayPal staged its IPO in 2002.

“[PayPal] was one of two companies in technology that went public that year – the other being Netflix – we [filed our S-1] the day after [the terrorist attacks of] 9/11, and people had a lot of emotional reactions to all the things we went through,” said Rabois. “The state of Louisiana suspended us the week before we went public [owing to customer service complaints. We had numerous other issues]. So Peter and other friends of mine started telling everyone that it’s terrible to go public,” and the “Facebook crowd kind of bought into that,” he said.

So have a lot of other entrepreneurs, said Rabois, characterizing today’s accepted wisdom about the dangers of going public as a “derivative sort of consequence” of that “mess.”

It’s a shame, suggested Rabois, who said that once Yelp did go public, in March 2012, it became “the best thing ever for the company. Morale improved, actually, the year before we went public. Retention post going public is significantly better than the two years before going public. I’d argue that innovation [at Yelp] is better. We’ve also been able to acquire a couple of strategic assets, one in Europe, one just last week . . . one maybe could have been done as a private company but the others surely couldn’t have been.”

Said Rabois, “All the most innovative companies on the planet are public. Apple – nobody is more innovative than Apple — Amazon, Google. If you have the right founder, you can innovate. Every other answer is an excuse.”


New Fundings

Applicaster, a six-year-old, Tel Aviv-based online platform that helps TV broadcasters to engage with viewers via their mobile devices (including via games and polls), has raised $10.5 million in Series B funding led by Pitango Venture Capital, with participation from earlier backer 83North (formerly Greylock IL). The company has now raised $18.5 million altogether.

Carmudi, a two-year-old, Philippines-based car classifieds site focused on emerging markets, has raised $25 million in Series B funding from Asia Pacific Internet Group (a joint venture between Rocket Internet and Ooredoo), Holtzbrinck Ventures, Tengelmann Ventures, and an undisclosed private investor. The company has now raised $35 million altogether.

Invuity, an 11-year-old, San Francisco-based company that makes illumination and visualization products for minimally invasive surgical field applications, has raised $20 million in fresh funding led by Wellington Capital Management, with participation from earlier backers HealthCare Royalty Partners, InterWest Partners, Kleiner Perkins Caufield & Byers, and Valence Life Sciences. According to Crunchbase, the company has now raised at least $96.2 million to date.

Laguna Pharmaceuticals, a 6.5-year-old, Cleveland, Oh.-based company that’s been developing small molecule pharmaceuticals to treat atrial fibrillation, a common arrhythmia that can cause heart attacks and strokes, has raised $30 million Series B funding co-led by Versant Ventures and Frazier Healthcare. BioMed Ventures and earlier backer Sante Ventures also participated in the round. The company has raised $31.2 million altogether, shows Crunchbase.

Luxury Garage Sale, a four-year-old, Chicago-based online and offline upscale consignment startup, has raised $1.5 million in seed funding led by Chicago Ventures and angel investors, including Trunk Club cofounder Brian Spaly and Lon Chow of Apex Venture Partners.

Michelson Diagnostics, a 8.5-year-old, Kent, U.K.-based medical device company whose tissue-imaging system allows users to non-invasively see below the surface of the skin, has raised £2.5 million ($3.8 million) in a first tranche of Series B funding led by the medical technology company Smith & Nephew. Kent County Council also joined the round, as well as earlier backers, which include Octopus Investments, Catapult Ventures, and angel Investors. The company has now raised $10.8 million altogether, shows Crunchbase.

Mobeewave, a 3.5-year-old, Montreal, Quebec-based company whose technology turns NFC-enabled mobile devices into point-of-sale systems without additional hardware, has raised $6.5 million in Series A funding led by SBT Venture Capital.

News In Shorts, a 1.5-year-old, New Delhi-based news platform that provides web and mobile users with 60-word synopses of stories from a wide variety of outlets, has raised $4 million in Series A funding led by Tiger Global Management. The Japan-based firm Rebright Partners and earlier investors, including Flipkart founders Sachin Bansal and Binny Bansal, also joined the round. Two weeks ago, Bangalore-based Newshunt, a similar news aggregation app, raised $40 million in Series C funding led by the New York-based hedge fund Falcon Edge Capital. TechCrunch has more here.

Notey, a two-year-old, Hong Kong-based startup that promises to direct users to the best blogs about more than 500,000 topics, has raised $1.6 million in seed funding from a long list of angel investors, including Infoseek and CoinTrust founder Steve Kirsch, Xiaomi VP Hugo Barra, and Hootsuite CEO and founder Ryan Holmes. More here.

RoboCV, a 2.5-year-old, Moscow-based maker of warehouse robots, has raised $3 million in Series A funding from Almaz Capital, Columbus Nova Technology Partners, I2BF Global Ventures, LETA Capital and VTB Capital. The company has raised $3.7 million altogether, shows Crunchbase.

WeTransfer, a five-year-old, Amsterdam-based cloud service that enables users to send files to each other that are too large to send as email attachments, has raised $25 million in its first funding round from Highland Capital Partners Europe.


New Funds

500 Startups, the five-year-old, Mountain View, Ca.-based investment firm and accelerator known for funding startups across the world, has launched a $10 million fund called 500 TukTuks that will be dedicated to funding startups in Thailand. TechCrunch has more here.

Shunwei Capital Partners, a four-year-old, Beijing-based venture capital firm focused on early to mid-stage start-ups in China’s Internet and technology industry, has closed a RMB1 billion ($160 million) RMB fund. Last year, the firm had separately raised $525 million for two new venture funds that it closed in June. Shunwei was created by Lei Jun, founder of Chinese smartphone maker Xiaomi, and Tuck Lye Koh, a Stanford grad and investor who’d worked previously at Deutsche Bank and Starr International. The new RMB fund brings the firm’s total assets under management to $910 million. China Money Network has more here.



Valeritas, an 8.5-year-old, Bridgewater, N.J.-based medical-device company that’s focused on treating Type 2 diabetes, could raise up to $90 million in an IPO, according to its newly filed S-1. One of the company’s biggest outside shareholders is the private equity firm Welsh, Carson, Anderson, & Stowe, which owns 11.6 percent of the company.

ViewRay, an 11-year-old, Cleveland, Oh.-based company that’s been developing an advanced radiation therapy technology to treat cancer, has filed to raise up to $69 million in an IPO. The company’s biggest outside shareholders include Aisling Capital, Beacon Bioventures, and OrbiMed, which each own 21.3 percent of the company; and Kearny Venture Partners, which owns 12.2 percent.



Panaya, an 8.5-year-old, Menlo Park, Ca.-based company whose software helps reduce the cost and risk of making changes to ERP systems, has been acquired by Infosys for $200 million. Panaya had raised roughly $60 million from investors, including Benchmark, Gemini Israel VenturesBattery Ventures, Hassno Plattner Ventures, the Tamares Group, and Israel Growth Partners. Geektime has more here.

Oneflare, a local services directory based in Sydney, Australia, has acquired WOMO, which claims to be the country’s largest customer reviews site. The amount of the deal was undisclosed. TechCrunch has more here.



Pavel Durov, founder of the Russian social network VKontakte, talks with Vice about being forced to part ways with his company — and with Russia. “I am very happy that my life/career in Russia is over.”

Jony Ive, the famed Apple senior VP of design, granted access to Apple’s industrial design studio to Ian Parker of the New Yorker, who reports that “team members work twelve hours a day and can’t discuss work with friends. Each project has a lead designer, but almost everyone contributes to every project, and shares the credit.” As for Ive himself, Parker concludes, “It’s hard to mount a challenge to the consensus that Ive, however vexed and self-conscious, is a good egg.”

Even by today’s standards, that was fast: Dan Lyons is leaving his new post as editor of Valleywag just six weeks into the job.

President Obama returned to the White House last night after a busy weekend in California. Among his stops: talking with Recode’s Kara Swisher and playing golf at Porcupine Creek in Rancho Mirage, owed by Oracle cofounder Larry Ellison.

New York Post sources suggest that Snapchat cofounder and CEO Evan Spiegel is interested in snapping up Scott Borchetta’s Big Machine label, which houses Taylor Swift.

Yahoo laid off between 100 and 200 employees last Thursday, and staffers knew it was coming. The tell-tale sign, they tell Business Insider: conference rooms that were suddenly reserved for HR, with all previously scheduled meetings in the rooms canceled.



What’s getting funded on Kickstarter, via the data visualization company Silk.


Job Listings

Strava, maker of the popular fitness training app, is looking for a CFO. The job is in San Francisco. Send resumes to patricia at redfinsearch dot com.


Essential Reads

Apple‘s electric car dreams may bring Detroit’s auto industry nightmares, reports Bloomberg.

Kaspersky Lab, the Russian cybersecurity firm, says the United States has found a way to permanently embed surveillance and sabotage tools in computers in countries including Iran, Russia, Pakistan and China.

The Atlantic investigates just how little traffic Twitter actually contributes to websites.

Yik Yak‘s growth has flatlined in the months following a giant Sequoia Capital investment in its business. We flagged this issue in a piece last week, but GigaOm takes the time to ask what’s happening.



A tour of Dubai, from top to bottom.

Seven things Greek Americans know to be true (starring — yes — our cousins’ cousin).


Retail Therapy

We like these canvas bags.

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