StrictlyVC: March 3, 2015

Hi, everyone, happy Tuesday!


Top News in the A.M.

The NASDAQ Composite index passed the 5,000 mark yesterday for the first time since the late ’90s technology boom.


Ray Lane, Under Oath

Ray Lane, an emeritus partner at Kleiner Perkins Caufield & Byers, came across as a good guy yesterday during his testimony in the trial of former partner Ellen Pao, who is suing Kleiner for gender discrimination. But he didn’t do Kleiner any favors, at times seeming to blame himself for mistakes and, at others, undermining Kleiner attorney Lynn Hermle as she tried painting a picture of Pao as too inexperienced for a promotion.

Much of Lane’s testimony centered on his handling of the complaints of both Pao and Kleiner partner Trae Vassallo, both of whom turned to him before anyone else at the firm to discuss former partner Ajit Nazre.

Pao had a short-lived but intimate relationship with Nazre, which she confided in Lane in 2007 after hearing Lane remark to Nazre in her presence that it was nice to see him with his wife and children at the Ritz Carlton in Half Moon Bay. (Nazre, Pao told Lane, led her to believe that he had split up with his wife.)

Roughly four years after that exchange, Nazre showed up in a hotel doorway of Vassallo’s in his bathrobe during a work trip. Vassallo – married with children — also went to Lane before talking with anyone else at the firm.

In Lane’s testimony about both situations — which he said he viewed as “two very different incidents” — Lane came across as a well-meaning mentor who wasn’t necessarily equipped to handle the information he was being given.

In one 2007 exchange with Lane, for example, Pao wrote, “Thank you for your help in working through a difficult issue. It’s a really awkward situation. In the interest of moving forward and avoiding more unpleasantness, I’m willing to live with some disagreement over what happened if Ajit can be professional and collegial . . . I’m relieved to able able to put it behind me, glad that you were listening.”

Lane wrote back that, “I really believe ‘stuff happens’ and both of you are terrific people. . . . this should not be offset by common human behavior. No bridge were burned, mistakes were made, apologies offered, and it’s up to us to move forward, and not shoot ourselves in both feet.” He also encouraged Pao and Nazre to “talk about working together [and moving] forward . . . you both have enormous mutual respect, despite any personal liabilities.”

Lane’s initial advice to Vassallo similarly seemed to reflect the culture of a small firm unaccustomed to dealing with thorny personal issues. The day Vassallo told him about Nazre’s unwanted advances, said Lane, he suggested that she discuss the matter with the husband so that the couple could decide on a course of action together.

Lane explained that he thought whatever followed should be up to Vassallo and not Kleiner. Still, said Lane, he worried at the time about Vassallo’s safety – noting that “things could have gone another way, [Nazre] could have pushed his way in” to her hotel room – and expressed regret yesterday at not starting an investigation straightaway.

“It was my mistake,” he said of waiting until Vassallo wrote a formal complaint about Nazre to Lane and other Kleiner partners roughly one week after coming to Lane.

It wasn’t the only mistake Lane appeared to acknowledge making.

Asked by Pao’s attorney why Nazre was promoted to senior partner in 2008, despite Nazre’s relationship with Pao and, crucially, though Nazre lied to Lane when first confronted about it, Lane answered, “Good question.” He went on to explain that Nazre “quickly” confessed to his relationship with Pao, and that Nazre, in Lane’s view, was very knowledgeable about green tech and “an important part” of the firm’s team.

Perhaps unsurprisingly, Kleiner’s attorney, Lynn Hermle, tried steering Lane to the larger point of whether or not Pao should have received the promotion that Pao is arguing she deserved. Toward that end, Hermle pulled up two emails relating to different CEOs who expressed displeasure in working with Pao.

One CEO had apparently resorted to ignoring Pao, who recognized she’d have to find another way to win him over and wrote to Lane of the executive: “Frank is hierarchy focused and not as comfortable dealing with me directly so I need to be more ‘velvet-gloved’ (note the number of times it took to get him to copy me on emails).”

Asked about the exchange, Lane described the CEO as a “difficult character” who is “more than 60 years of age” and “very set in his ways.”

Hermle also produced an email exchange involving Workday cofounder and co-CEO Aneel Bhusri, who’d been talking with Kleiner about a late-stage investment before Workday went public in 2012.

Wrote Bhusri to Lane, who forwarded his note to partner Ted Schlein: “Frankly, Ellen seems pretty clueless, can someone else take the lead?” Wrote Lane to Schlein, under Bhusri’s comment, “I kind of agree with him.” Schlein then responded: “She ran the names of folks by me, for diligence. I can’t say I paid too close attention so could be my fault.” Lane then responded to Schlein, “I will talk to [Bhusri] live tomorrow, but we have to put somebody else in or I will handle personally. I did the same as you, allowed Ellen to work it alone.”

Was this a “major problem?” Hermle asked Lane on the stand. “No,” said Lane. “I don’t think it was a major problem.” Added Lane, “I thought [Pao] wasn’t being sensitive that this was a company that was already valued at more than a billion dollars.” But the bigger issue, Lane suggested, was that Bhusri didn’t like Kleiner’s technical review of Workday, which involved talking with “just a few customers.”

Said Lane, “Mr. Bhusri disagreed with the approach. I thought the approach was fine.”


Ballou PR

New Fundings

Booker, a 4.5-year-old, New York-based platform for booking appointments, has raised $35 million in Series C funding led by Medina Capital. Other participants in the round included First Data, Jump Capital, and Signal Peak, as well as previous backers Bain Capital Ventures, Revolution Ventures and Grotech Ventures. The company has now raised $77 million altogether.

Cheyipai, a six-year-old, Beijing-based second-hand car trading platform, has raised $110 million in Series D funding led by the Chinese social networking company Renren, with participation from Sequoia CapitalMatrix China, Morningside Ventures and CITIC Capital. The company has now raised $185 million altogether, shows Crunchbase.

Clearbit, a nine-month-old, San Francisco-based startup that’s building business intelligence APIs to help with sales lead-scoring, among other things, has raised $1.5 million in seed funding from SVAngel, S2 CapitalFirst Round Capital, Box Group and Zetta Venture Partners. Clearbit had previously raised $500,000 in seed funding from numerous individuals, including AngelList cofounder Naval Ravikant. (Clearbit represents the first venture investment for Ash Fontana, AngelList’s former head of fundraising projects; he recently joined Zetta as a managing director.)

Jia, a 10-year-old, Shanghai-based home furnishings e-commerce platform, has raised $160 million in Series D funding from undisclosed investors, according to an official announcement on its Weibo account. China Money Network has much more here.

Linkable Networks, a four-year-old, Boston-based offers company capable of providing coupons at the individual product level, has raised $11.7 million in new funding led by Blue Chip Venture Company, with participation from angel investors and earlier backers CommonAngels Ventures and Kepha Partners. Linkable has now raised more than $40 million in funding. BetaBoston has more here.

Man Crates, a 2.5-year-old, Redwood City, Ca.-based startup offering unusual gifts for men, has raised $3.1 million in seed funding from Corazon Capital, OVO Fund, Rothenberg Ventures, Sovereign Capital and Tekton Ventures, among others, reports Venture Capital Dispatch.

Mersana Therapeutics, a 10-year-old, Cambridge, Ma.-based maker of antibody-drug conjugates, has raised $35 million in Series B-1 funding led by earlier backer New Enterprise Associates. New investors Rock Springs Capital and Elliott Sigal, the former head of R&D at Bristol-Myers Squibb, also participated, along with earlier investors Fidelity Biosciences and Pfizer Venture Investments. The company has now raised $110 million altogether, shows Crunchbase., a 6.5-year-old, New York-based company whose web analytics platform is used by digital publishers looking for audience insights, has raised new funding in the “mid six figures” from The New Republic Fundreports Mashable. The New Republic Fund, formed last fall, is financed entirely by New Republic owner Chris Hughes.

RockYou, a nine-year-old, San Francisco-based interactive media company that owns and partners with dozens of game titles, has raised $23 million in fresh funding led by Columbia Capital. The company has now raised $172 million altogether, including from Partech VenturesDCM, and SoftBank Capital.

Tempered Networks, a 2.5-year-old, Seattle-based company whose technology protects industrial control systems equipment, has raised $15 million in Series A funding led by Ignition Partners, with participation from IDG Ventures. The company has now raised $17 million to date.

ToutApp, a nearly four-year-old, San Francisco-based company that makes toolsets for salespeople, has raised $15 million in Series B funding led by Andreessen Horowitz, with participation from earlier backers Sigma West, Founder Collective, 500 Startups, and Launch Fund. The company has now raised $19.6 million to date.


New Funds

Y Combinator will likely raise a fund that could be several billion dollars is size, say Business Insider’s sources. The idea: to compete with the hedge funds and mutual funds that have been pouring capital into its more mature portfolio companies like Airbnb. Y Combinator is in “very preliminary-stage discussions” says one BI source of discussions between the accelerator and investors.



RainDance Technologies, an 11-year-old, Billerica, Ma.-based company that makes genomics-research tools, has filed to go public. The company said it could raise up to $60 million in the offering. Its biggest outside shareholders include Alloy Ventures, which owns 13.3 percent of the company; Quaker BioVentures, which owns 18.5 percent; Mohr Davidow Ventures, which owns 34.4 percent; Acadia Woods Partners, which owns 8 percent; and NCD Management, which owns 6.1 percent.

Veracode, an 8.5-year-old, Burlington, Ma.-based cybersecurity company, is planning to go public in May, reports Fortune. Veracode has raised more than $110 million from investors, including Wellington ManagementAtlas Venture, .406 Ventures, StarVest Partners, Cross Creek Advisors, Meritech Capital Partners, Polaris Partners, In-Q-Tel,Symantec, and Rovi Corp.



Fab, the nearly four-year-old, New York-based e-commerce company, has officially sold to PCH, which isn’t disclosing final terms of the deal. More here.

Mavenir, a 9.5-year-old, Richardson, Tx.-based mobile infrastructure company, has been acquired by the Ottawa-based business communications company Mitel in a cash and stock deal worth $560 million. Mavenir had gone public in late 2013 after raising just more than $100 million from investors, including Austin Ventures, North Bridge Venture Partners and Alloy Ventures. The WSJ has more here.

Paydiant, a five-year-old, Wellesley, Ma.-based payments startup that licenses a technology platform used by big retail chains to create their own mobile wallet apps, has been acquired by PayPal, the eBay payment unit, for around $280 million. The company had raised roughly $35 million from investors, including Sands Capital Ventures, Stage 1 Ventures, North Bridge Growth Equity & Venture Partners, and General Catalyst Partners. Recode has more here.

Prismatic, a 4.5-year-old, San Francisco-based company whose app recommends news articles to users based on what their connections are enjoying, is on the block and Microsoft is the front runner to acquire it, reports TechCrunch. More here.

Square 1 Financial, the Durham, N.C.-based publicly traded venture capital-focused lender, is being acquired by L.A.-based PacWest Bancorp for about $790 million in stock.



Mary Lou Jepsen, who spent the last three years running the Display Division at Google X, is joining Facebook-owned Oculus VR sometime this month, reports Recode. Jepsen reported directly to Google co-founder Sergey Brin.

Kirt McMaster, the CEO of Cyanogen, a startup that allows users to add new features and themes to their Android phones without compromising performance, has fighting words the mobile titans. “The tier one OEMs like Samsung are going to be the next generation Nokias in the next five years,” he tells Business Insider. “They’re going to be slaughtered. We think long term Apple itself will have problems because they’re just not good at competing at the low end.”


Essential Reads

The sparkle in bitcoin: data security.

Twitter videos are now embeddable on websites.

A Goldman Sachs-backed messaging and social networking service is planning to roll out broadly to Wall Street this summer.



The best tennis clubs in the U.S.

Fat? Sick? Blame your grandparents’ bad habits.


Retail Therapy


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