StrictlyVC: February 23, 2015

Good morning, everyone! Hope you had a wonderful 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.

Google has just launched YouTube Kids.

Twitter gets behind the FCC’s “net neutrality” proposal.

To eliminate bugs within iOS, Apple is reportedly planning to launch the first-ever public beta program for it, beginning with the iOS 8.3 next month. What that means: any iPhone user will be able to give Apple’s unreleased iPhone software a test run before its final release (though the program will be restricted to 100,000 people).


Kathryn Gould: The Kingmaker in the Background

Most venture capitalists don’t curse like sailors. Most can’t boast a 90 percent internal rate of return over the course of their investing careers, either. Kathyrn Gould — the inimitable founder of Foundation Capital, who today spends much of her time today on her vineyard in the foothills of California’s Sierra mountain range — is known for both.

In select circles, Gould, who got her start in VC in the late ’80s at the now-defunct firm Merrill, Pickard, Anderson & Eyre, is also known for mentoring up-and-coming investors. We talked recently about her views on the industry – and which VCs she’s betting on right now.

You used to make angel investments, including a $50,000 investment in the software business Demandforce that returned $2 million when the company was acquired by Intuit in 2012. Why stop?

I made three angel investments, and I wouldn’t say I won’t do more, but I’m a perfectionist and for me, making angel investments [requires as much time and effort] as running a firm. My lifetime IRR is 90 percent and I’m not going to mess with my numbers just to screw around.

[Early-stage Investor] Mike Maples and I put our personal money into Demandforce before we started Floodgate, but chance favors a prepared mind, and while I could still [make angel bets], I don’t want to.

When you say that “we” started Floodgate, what do you mean?

Mike [who logged time at Silicon Graphics and Trilogy Software, then cofounded a company, Motive, that went public in 2004] briefly floated through Foundation Capital [in the early 2000s] so I knew him, and we used to strategize about what was happening in venture business.

He’d started to dabble with his own money, including investing in Twitter, which wasn’t an obvious winner. I’d retired [from Foundation in 2006], but I said, “If I were to do [another fund], I’d raise a small amount of money” [because of the changing economics of startups]. And we said, “Sh_t, let’s put together a business plan and do this thing.” So we mapped out how we’d do it, I helped him with his slides, and I introduced him to my three best investors at Weathergage, Horsley Bridge Partners, and the University of Chicago, and there he was.

Are you an LP in Floodgate?

Yes, though I help these guys, then invest in their firms, but I don’t get any special treatment.

Who else have you helped get started?

We [at Foundation] were investors in [entrepreneur-investor] Mar Hershenson’s companies. We invested in her [analog circuit company Barcelona Design], and when she developed this consumer penchant and hooked up with [angel investor] Pejman Nozad to launch their venture fund, I said, “Let me help you; I know classy institutional investors that will invest.” Even though I loved what they were doing, their written business plan was a goddamned mess. It was very random. And your slides have to be credible to go raise money from decent investors. I still see [Nozad and Hershenson] all the time to talk about things that are happening and give them ideas, and I’m an investor [in their fund].

Most recently, I worked with Ashmeet Sidana, who was a GP at Foundation Capital for [nine years] and [left in September 2013] and started doing his own angel investing. We’d get together at a coffee shop in Portola Valley and I’d ask him what he was doing, and I was like, “This stuff is f_cking great, you should be doing this in a bigger way.” So we wrote his business plan, created his slides, I introduced him to several of his investors – he also has several Indian investors – and he just closed his first solo fund with $33 million. I think his firm, Engineering Capital, will be very successful.

People will read this and start reaching out to you for introductions.

I don’t want people calling me. I’m not going to help you raise your super sucky fund. I’ve know Mar for 20 years, Maples for 15. I’ve known Ashmeet for 15 years.

I feel like I’m in the best of the best [of these small funds]. I think all the good ones are getting started or have started.

For more of our interview with Gould, including the advice she always gives newer investors, click here.


Ballou PR


New Fundings

AlleyNYC, a two-year-old, New York-based co-working space, has raised $16 million in funding led by Vandewater Capital Holdings, with participation from Entrepreneur Media.

Brickell Biotech, a six-year-old, Miami, Fl.-based pharmaceutical company focused on acquiring, developing, and commercializing drug therapies for skin conditions, has raised $10 million in Series C financing from undisclosed investors. The company has now raised $25.4 million altogether, including from Palisade Capital Management and the South Korean beauty products company AmorePacific Ventures.

DriverUp, a newly launched, Dallas-based company that hopes to draw accredited investors into the business of auto lending, has raised $50 million in Series A funding led by Emerald Development Managers and RRE Ventures. You can check out its site here.

Grabble, a 1.5-year-old, London-based social fashion discovery and commerce platform, has raised £1.2 million ($1.9 million) in funding from a long list of mostly European angel investors.

M4JAM (Money For Jam), a 10-month-old, Cape Town, South Africa-based platform that breaks large projects into smaller jobs and enlists independent contractors to complete them, has raised an undisclosed amount of funding from Tencent Holdings and Naspers, via their joint WeChat Africa venture. TechCrunch has more on why the deal is strategically interesting here.

Main Street Hub, a 4.5-year-old, Austin, Tx.-based company that helps small, independently run businesses manage their social media marketing, has received $20 million in debt financing from Silicon Valley Bank. The company has now raised a total of $40 million, including from Harrison Metal and Bessemer Venture Partners. TechCrunch has more here.

NoBroker, a two-year-old, Bangalore, India-based peer-to-peer property listings startup that aims to squeeze brokers out of the rental process, has raised $3 million in Series A funding from SAIF Partners and Fulcrum Ventures. According to TechCrunch, the company had previously raised an undisclosed amount of seed funding. More here.

OrbitHCI, a five-month-old, Boston-based company that’s developing a watch and a tablet that aim to make it easier for the elderly to remotely see and communicate with loved ones, has raised $1 million in seed funding from Google Ventures and Atlas Venture. Venture Capital Dispatch has much more here.

Pepperfry, a four-year-old, Bangalore, India-based home and lifestyle e-commerce platform, is reportedly talking with new and earlier investors about a $70 million to $80 million Series D round. The company has so far raised $28 million across three rounds to date, including from Norwest Venture Partners and Bertelsmann. BusinessLine has the story here.

Philz Coffee, a 12-year-old, San Francisco-based chain of coffee shops, has raised $15 million in Series B funding led by earlier investor Summit Partners, with participation from Cowboy Ventures, Crunchfund and individual investors. The company has now raised $30 million altogether.

Postmates, a nearly four-year-old, on-demand delivery service, has raised $35 million in Series C funding from earlier backer Spark Capital, reports Techcrunch. Postmates is a service that lets users order anything from local stores and have it delivered directly to their home for a small delivery fee. The company has raised a total of $58 million, including from Matrix Partners, SoftTech VC, Crosslink Capital, Scott Banister, Naval Ravikant, Russell Simmons, Thomas Korte, Shervin Pishevar, Dave Morin and David Sacks., a year-old, Palo Alto, Ca.-based company that turns panoramic photos into virtual tours, has raised a $3 million in funding led by April Capital. TechCrunch has more here.

Tilson Technology Management, an 18-year-old, Portland, Me.-based company that builds telecommunications networks, has raised $2.2 million in funding from Rand Capital, a Buffalo-based venture firm, and CEI Ventures of Maine. The company has raised $2.9 million altogether, it says.

TrueFacet, a 14-month-old, New York-based platform that sells pre-owned jewelry, has raised $1.7 million in seed funding from Founders’ Co-Op,Maveron, Social Leverage, Trilogy Equity Partners and individual investors. The company had earlier raised $118,000 in funding from Techstars.

Urban Airship, a five-year-old, Portland, Ore.-based mobile marketing company, has raised $21 million in Series D funding, including from Franklin Park & Associates and QuestMark Partners. The company has now raised $67.6 million altogether, including from August CapitalFoundry Group, True Ventures and Verizon Ventures.

Viv Labs, a 2.5-year-old, TK-based artificial-intelligence startup whose three cofounders also cofounded the virtual personal assistant company Siri (famously acquired by Apple in 2010), has raised $12.5 million in Series B funding. The round was led by Iconiq Capital, with participation from earlier backer Horizon Venture and Pritzker Group Venture Capital. The company has now raised $22.5 million altogether, reports TechCrunch.


New Funds

Homebrew, the nearly two-year-old, San Francisco-based early-stage venture firm cofounded by Hunter Walk and Satya Patel, has closed its second fund with $50 million, up from the $35 million it had raised for its inaugural fund. Walk, who says the firm has backed 17 startups to date, writes about the firm’s new fund here. Among Homebrew’s newest investments is Eero, a year-old, San Francisco-based company whose routers aim to blanket its customers’ homes in fast, reliable WiFi.



eASIC, a 16-year-old, Santa Clara, Ca.-based integrated-circuits company, has filed to raise up to $75 million in an IPO, despite an inhospitable environment for chip companies. One analyst tells the San Jose Mercury News that it has a “tough row to hoe.” Says another: “I’m not sure this IPO is going to go through, to be honest with you.” The company’s biggest backers include Seagate, which owns 14.6 percent of the company;Khosla Ventures, which owns 20.8 percent; Crescendo Ventures, which owns 15 percent; and Kleiner Perkins Caufield & Byers, which owns 8.8 percent. More here.



Airpost, a two-year-old, Toronto-based startup that helps IT managers monitor their employees’ cloud applications, has been acquired by Box for undisclosed terms. More here.

Flexus Biosciences, a two-year-old, San Carlos, Ca.-based immune-oncology company, has been acquired by Bristol-Myers Squibb in a deal worth up to $1.25 billion, including an $800 million up-front payment and up to $450 million in future payments depending on various milestones. Flexus has raised just $38 million from investors, including the publicly traded drug maker Celgene, Kleiner Perkins Caulfield & Byers, and The Column Group. Xconomy has more here.



Austin Ventures is closing shop.

Jon Bradford, the head of TechStars London, is leaving the network, reports TechCrunch. Bradford has been involved in accelerator programs for years, including as founder of a U.K.-based accelerator called Ignite and cofounder and CEO of Springboard Cambridge & London. No word yet on his next move.

Josh Miller, a product manager at Facebook, is among a growing number of privacy-minded “Tweet deleters,” reports Fusion. Explains Miller of why he wrote a piece of code that deletes his tweets after seven days, “My opinions aren’t permanent in my head (I often change my mind over time), and they’re not permanent when shared around the dinner table (nobody is recording our conversations) . . . So it just doesn’t make sense to me that they would be permanent online.”

Facebook CEO Mark Zuckerberg talks with Bloomberg about the company’s mission to get everyone in the world online: “The reality is just that a lot people can’t afford to pay for data access in some of these areas; then they probably aren’t ad markets, and it’s probably not going to be a place where it’s going to be particularly profitable [for Facebook] in the near term. In fact, we’ll probably lose a bunch of money—just because supporting Facebook as a service, and storing the photos and content that people want to share, costs money. We probably won’t offset it by making much.”



Twilio is looking for a new head of corporate and business development. The job is in San Francisco.

Zynga is looking for a director of corporate development. The job is in San Francisco.


Essential Reads

Google’s Android Auto team built its own driver distraction lab to help determine which tasks people do frequently while driving, and which should be banned, reports the New York Times. According to its story: “Music is most definitely in. Streaming video? Most definitely not. Most social media will also be blocked, and texts can be sent only with voice commands.”

How Etsy alienated crafters and lost its soul.



New, fascinating work by the digital artist Erik Johansson.

How we talk about our teachers.

Going commando takes on new meaning.


Retail Therapy

You could buy a second home in Healdsburg. A castle outside of Paris would be more interesting, though.

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