It’s Friday! [Does backflips, cartwheels, jumping jacks, lunges.]
—–
Top News in the A.M.
Britain’s electronic spying agency, in cooperation with the NSA, reportedly hacked into the networks of the world’s largest SIM card maker in order to eavesdrop on mobile phones worldwide. The Intercept has a bombshell report about what’s gone on here.
—–
Naval Ravikant on AngelList’s 2015 Game Plan
Last week, at StrictlyVC’s inaugural event, AngelList cofounder Naval Ravikant joked about the trials and tribulations of entrepreneurship. He also gave those gathered a comprehensive look at the near-term future of AngelList, a fast-moving, 22-person, San Francisco-based company that’s perhaps become best-known for its pop-up venture funds called Syndicates that allow angel investors to syndicate investments themselves. Indeed, according to Ravikant, more than 243 companies raised $104 million through the platform last year, making AngelList the “largest seed fund in the world.” And AngelList is hoping to double or triple those numbers this year.
More from our chat that evening, edited for length, here.
You say of the $104 million that your 15-month-old Syndicates program funneled toward startups last year, $7 million, or just less than 7 percent, was from institutions. Are you happy with that number?
No. [Laughs.] Obviously, institutional investors come later to the game. They need more certainty, more diligence. It takes more time.
A few venture firms now actively use Syndicates, including Foundry Group, which did something like 40 deals last year on your platform. Have you also talked with big mutual funds that now make big bets on later-stage startups and that might diversify even more by getting into earlier-stage investing?
They have no idea what this is. I’ve tried to explain it to them and it’s too bleeding edge for them. Sometimes we’re too far out ahead of the curve.
Where are these angels coming from – the Bay Area primarily?
A lot of them are [from the] Bay Area. A lot are entrepreneurs, angels, or maybe individual VC partners who are backing each other. We also have hedge fund managers, oil traders, people in the finance industry who have made some money but aren’t in Silicon Valley. There are definitely the dentists and radiologists, who the finance industry seems to hate – I don’t know why. And they do try and come on and we either reject them or we put them into [a new series of index funds] that are managed by us so they can invest in 100 startups at a time [and hedge their bets].
You have Syndicates. You have these index funds and other products. What do people use the most at AngelList?
Actually, [they mostly use] the recruiting site, which we started on a lark in early 2012 when we noticed that people were raiding failed companies on AngelList for employees. That’s by far the highest activity thing on the site, because everyone is looking to hire. We have around 7,000 companies recruiting on AngelList, of whom more than 3,000 log-in every single week and go through . . . 120,000 candidate profiles that are active.
Are you ever going to make money off those listings?
That’s the obvious source of cash. But it works because it’s free for the startups. If we do monetize that — and we’re running some experiments — it will be at the high end for people who have more money than time.
Last year, angel investor Gil Penchina raised $2.8 million via Syndicates to invest in Beepi, a used car marketplace, alongside DST Global. Was that the biggest syndicate to date by far?
We’ve had a couple of others that were over a million bucks. It’s relatively constrained because you’re gathering checks from individuals, so when you collect $2.8 million, that’s 90 different checks and wire transfers and so on, and we’re limited because we form a special purpose vehicle to invest in each company, and that SPV is limited to 99 unit holders by law. So I would not extrapolate and say, okay, $2.8 million today; tomorrow, it will be $10 million, then $20 million. It’s fun to think it could go to that range, but I don’t think so, not yet.
Penchina recently told the WSJ that he has poured his entire life savings into AngelList. Does that concern you? What if things go south for him?
That might have been an exaggeration. [Laughs.] But sure, it’s never good when someone loses their shirt, that’s true of any startup.
Has anyone come after you over a deal that didn’t go as expected?
No. In the entire history of AngelList, we’ve never had a single related case of fraud or a lawsuit threat. We follow the rules, we have a no-action letterfrom the SEC, we have disclaimers, we’re trying to deal only with sophisticated people. This is America, and anyone can sue you and someone eventually will. But so far so good.
How do you keep people from getting in over their heads?
We look at what angel investments they’ve done before, and if they don’t have a history of doing them, then we’ll run them through a questionnaire that asks them: What percentage of your net worth are you putting in, what kind of return do you expect, how liquid do you think these investments are, how big a basket of these do you think you need to assemble? And based on their responses, we’ll either reject them, we’ll cap the amount they can invest, or we’ll move them into one of the index funds and say, “You can put a small amount in here.” Or we’ll say, “Go offline, go to your local angel association and lose some money there, then come back to us.” The test we’re looking for is: have you lost money before.
How much of someone’s net worth would you advise investing in nascent startups? Up to 10 percent?
No, I would say anything more than 5 percent is probably silly. Obviously, I’m personally far more leveraged than that – I’m “all in” on startups — but that’s because I’m living in Silicon Valley and I’ve bought into the dream.
For much more on AngelList, and its next moves (including, potentially, into secondaries), click here.
New Fundings
17hats, a six-month-old, L.A.-based maker of business management software for micro businesses, has raised $1.25 million in seed funding led by Wavemaker Partners, with participation from unnamed angel investors. VentureBeat has more here.
AgileCraft, an eight-year-old, Georgetown, Tx.-based software management suite built to support scaled agile software development, has raised $10 million in Series A funding led by the Houston private equity firm Crane Nelson, with participation from angel investors.
ArmorText, a 4.5-year-old, Reston, Va.-based secure messaging app for businesses, has raised $2 million in funding led by Cervin Ventures.
ContaAzul, a four-year-old, Joinville, Brazil-based maker of SaaS accounting and invoicing software for small and mid-size businesses, has raised an undisclosed amount of Series C round of funding from earlier backer Ribbit Capital, with participation from Tiger Global Management and other previous investors, including 500 Startups, Monashees Capital, and Valar Ventures. ContaAzul hasn’t disclosed the amount of any of its rounds.
DealDey, a four-year-old, Lagos, Nigeria-based e-commerce platform that aggregates discounted goods and services, has raised $5 million from earlier backer Kinnevik, the Swedish investment firm. TechCabal has more here.
Helijia, a nearly two-year-old, China-based company whose app helps users browse for and book beautify appointments across numerous cities in China, has raised $50 million in Series C funding led by an undisclosed “first-rate” VC firm, with participation from earlier backers IDG Capital Partners and CBC Capital. Tech in Asia has more here.
Lifecode, a four-year-old, Foster City, Ca.-based next-generation molecular diagnostics company, has announced a previously undisclosed $20.5 million Series A round led by Sequoia Capital, with the The Mayo Clinic and Mayo Ventures participating. More here.
LiveFyre, a five-year-old, San Francisco-based company that makes social-media and other content-management tools for large enterprise customers, has raised $47 million in funding from new investors Adobe Ventures and Salesforce Ventures, along with earlier backers Cue Ball Capital, Greycroft Partners, Hillsven Capital and U.S. Venture Partners. The company has raised $67.3 million to date, shows Crunchbase.
Practo, a nearly seven-year-old, Bangalore, India-based platform used to find and book doctors’ appointments, has raised $30 million in Series B funding from Matrix Partners and earlier backer Sequoia Capital, which had provided the company with $4 million in Series A funding in 2012.
Sqrrl Data, a 2.5-year-old, Cambridge, Ma.-based company whose database detects and responds to cybersecurity threats, has raised $7 million in Series B funding led by Rally Ventures, with participation from earlier backers Atlas Venture and Matrix Partners. The company has now raised $14.2 million to date, shows Crunchbase.
Synack, a two-year-old, Redwood City, Ca.-based security startup that takes the concept of bug bounty programs at big companies and makes them more widely accessible via a network of freelance security researchers, has raised $25 million in Series B funding from GGV Capital and Icon Ventures, bringing the two-year-old company’s total funding to $34 million. Forbes has more here.
—–
New Funds
Moneta Ventures, a Folsom, Ca.-based venture fund, has closed its debut fund at $25 million, with help “in the low millions” from entrepreneur Kevin Nagle, part owner of the NBA team the Sacramento Kings. Moneta, which focuses on Sacramento-area startups, was founded by Lokesh Sikaria, a technology entrepreneur who’d earlier cofounded Sparta Consulting. That company sold for $38 million in 2009 to India-based KPIT Cummins Infosystems. The Sacramento Bee has more here.
—–
IPOs
SolarEdge, a nearly nine-year-old, Freemont, Ca.-based company whose electronics improve the performance of solar panels, has filed to raise up to $125 million in an IPO. The company has raised $85 million from investors over the years. According to its S-1, its biggest shareholders include the development firm ORR Partners, which owns 5.8 percent of the company; Opus Capital, which owns 14.64 percent; Genesis Partners, which owns 14.64; PacVen Walden Ventures, which owns 14.64 percent; Vertex, which owns 5.94 percent; Norwest Venture Partners, which owns 10.56 percent; and Lightspeed Venture Partners, which owns 11.52 percent.
Twilio hasn’t set a date for an IPO yet, but the eight-year-old company — which sells an API to developers who want to add call, voice, text and picture messaging to their apps and that logged $100 million in revenue last year — tells Venture Capital Dispatch that it’s putting the necessarily internal processes in place. Twilio has raised $104 million from investors, including Bessemer Venture Partners, Redpoint Ventures, and Union Square Ventures. It was valued around $500 million during its last funding round in July 2013.
—–
Exits
ActoGeniX, a venture-backed, Belgium-based biopharmaceutical company, has sold for $30 million in cash and another $30 million in common stock to publicly traded Intrexon Corp. ActoGenix had raised at least 35.5 million euros in two financing rounds from Aescap Venture,Baekeland Fund, Biotech Fund Flanders, Biovest, Gimv Life Sciences Partners and Ventech, according to VentureWire.
Exclusively.com, an India-based online luxury fashion business, has been acquired by the e-commerce giant Snapdeal for an undisclosed amount. Exclusively was originally acquired by Snapdeal’s rival Myntra in 2012 but Myntra reportedly sold back its entire stake in the company to its founder, Sunjay Guleria, the following year. Under the partnership with Snapdeal, Exclusively will continue to function as an independent site. MediaNama has more here.
GoPop, an eight-month-old, San Francisco-based startup whose app stitches together media into animations, has been acquired by BuzzFeed for undisclosed terms.
—–
People
Rene Alegria has joined the Burlington, Vt-based social network Ello as its first chief marketing officer. Alegria was previously CEO of Mamiverse, a digital entertainment and news platform devoted to Latina moms and their families. Ello, founded in 2013, raised $5.5 million from investors last October, including Foundry Group, Bullet Time Ventures and FreshTracks Capital.
—–
Data
CB Insights has just published an extensive review of 2014’s financing activity to venture-backed European tech companies. You can check it out here.
—–
Essential Reads
Exploding Kittens, a simple card game that sees players draw cards until someone draws an exploding kitten card, sought $10,000 on Kickstarter. Instead, it has raised $8,782,571, breaking every record on the platform to date.
—–
Detours
Like coffee? Drink up.
The incredible shrinking Wall Street population.
Why men often think women are flirting with them.
—–
Retail Therapy
Game of Thrones action figures. For the kids, of course.