StrictlyVC: March 5, 2015

Happy Thursday, everyone! Hope it’s off to a great start.

Thanks, by the way, to the many of you who nabbed tickets yesterday to our second INSIDER Series event, coming up May 13 in San Francisco. It’s going to be great. If you happened to miss our announcement about it, the details are here and tickets are here.


Top News in the A.M.

Just one week after the U.S. government voted to enforce net neutrality, the European Union is considering the opposite: permitting Internet providers to create a tiered Internet service with paid fast lanes.

Apple, which has seen stagnating iPad sales, will delay making a larger-screened version of the tablet, sources tell Bloomberg.


At Zetta, a Next-Gen Partnership

It used to be that institutional investors wanted to see a long and fruitful relationship between VCs looking to create a new fund together. These “emerging managers” would need that established chemistry to take on entrenched firms, went the conventional wisdom.

If that thinking persists, LPs made an exception for Zetta Venture Partners, a San Francisco-based early-stage firm that specializes in data analytics startups and closed its debut fund with $60 million last month.

The firm pairs veteran venture investor Mark Gorenberg, long of Hummer Winblad Venture Partners, with Ash Fontana, a former banking analyst and entrepreneur who most recently worked at AngelList, where he launched online investing and created the first startup index fund to enable the platform’s users to invest in a basket of nascent startups.

The two “met through a friend” says Fontana, adding that “we live across the road from each other, too, as it turns out.”

Of course, there’s much more to the partnership, new as it is by traditional standards. The two have strong ideas about the future of data analytics for one thing, says Fontana. They also have highly complementary networks. Says Fontana, “Mark has fantastic deal flow with entrepreneurs like Josh James,” who cofounded the successful web analytics company Omniture before creating the business intelligence company Domo in late 2010. The company, which Gorenberg backed in 2011, has since raised $250 million from investors.

Fontana, meanwhile, has deal flow from the thousands of entrepreneurs he’s been interacting with at AngelList in recent years, he notes.

He also knows better than almost anyone how to sift through and capitalize on AngelList’s various products, including its jobs platform, which features more than 150,000 candidates, and its company search tool. (“Simply tagging your customers” on the platform can send a widespread message to interested parties and drive sales, Fontana says.)

As for whether the duo will elbow any of Zetta’s deals onto AngelList’s Syndicates platform for the purpose of gathering additional co-investors, that’s not necessarily likely right now, both say. “We’ll be more of a traditional fund focused on the analytics space,” says Gorenberg, “meaning we’ll mostly be the largest shareholder, though we’ll also be leaning toward the idea of syndicating with others. We want to play well with the industry.”

Gorenberg points to the Zetta portfolio company EventBoard in Salt Lake City, Ut., which is trying to reinvent the way meetings are run and facilities should be designed. Zetta led the two-year-old company’s $1.5 million seed round last year, but it brought plenty of other investors into the fold, including Josh James.

In another of its eight investments to date, Lucid, an 11-year-old, Oakland, Ca.-based company whose operating systems make commercial buildings more efficient, Formation 8 led the company’s Series B. That was just fine with Zetta, too. “They wanted an analytics-focused fund for the syndicate and invited us in,” says Gorenberg.

Gorenberg talks at length of the advantages of smaller, more focused fund, in fact, arguing they give VCs “exceptional” deal flow and allow them to add more value to companies than larger funds that are often “more reactive” to opportunities that come through the door.

Asked about the spate of data-focused funds already up and running — IA Ventures and Data Collective among them — Gorenberg says he doesn’t see them as a threat, nor think Zetta is perceived as one.

“This is such a massive space. There’s room for all three of us and more focused funds to do extremely well.”


New Fundings

Aura Biosciences, an eight-year-old, Cambridge, Ma.-based developer of treatments of rare cancers of the eye, has raised $21 million in Series B funding led by Advent Life Sciences, with participation from Chiesi Ventures, Ysios Capital, and Alexandria Venture Investments. Earlier backers, including LI-COR Biosciences and former Genzyme CEO Henri Termeer, also joined the round. The company has now raised $34 million altogether, shows Crunchbase.

First Insight, an eight-year-old, Sewickley, Pa.-based predictive analytics platform that helps retailers and manufacturers identify winning new products and optimize their entry prices, has raised $14 million in Series B funding led by Updata Partners. The company has now raised $23.4 million altogether, shows Crunchable.

Geofeedia, a 3.5-year-old, Chicago-based company whose software enables location-based analysis of social media, has raised $3 million in Series A4 funding led by earlier backer Hyde Park Venture Partners, with participation of earlier individual investors, including former ExactTarget CMO Tim Kopp. The company has now raised $6.8 million altogether.

HoneyBook, a nearly two-year-old, San Francisco-based invite-only service for event professionals, has raised $22 million in Series B funding led by Norwest Venture Partners, with participation from Aleph and Hillsven. The company has now raised $32 million altogether.

Macrolide Pharmaceuticals, a year-old, Newton, Ma.-based company that’s developing antibiotics to treat life-threatening bacterial infections, has raised $22 million in Series A funding led by Novartis Venture Fund,Gurnet Point Capital, Roche Ventures, and SROne. BioPortfolio hasmore here.

OneDrop, a new, New York-based diabetes management platform, has raised $1 million in seed funding from investors Jason Calcanis and other angel backers. The company’s founder is Jeff Dachis, who earlier in his career cofounded the digital marketing company Razorfish. More here.

Refinery29, an 11-year-old, New York-based fashion and lifestyle site for women, is seeking up to $50 million in new funding, reports Fortune, which says the capital would mostly come from strategic investors, including existing shareholder Hearst Corporation. The company has raised roughly $30 million to date, shows Crunchbase. Its backers include Stripes Group, Lead Edge Capital, Floodgate, First Round Capital, and Lerer Hippeau Ventures.

Salesfusion, an eight-year-old, Atlanta, Ga.-based company that sells marketing-automation software, has raised $5 million from earlier backers. The company has now raised $18.5 million altogether, including from Hallett Capital, Noro-Moseley Partners, and BLH Venture Partners.

Stance, a 4.5-year-old, L.A.-based company that sells high-end socks through select retailers and plans to expand into undergarments, has raised $50 million in Series C funding led by August Capital and Kleiner Perkins Caufield & Byers, with participation from earlier backers Menlo Ventures, Shasta Ventures, Sherpa Ventures, Science, and Mercato Partners. The company had previously raised $36 million. Venture Capital Dispatch takes a nice look at the company — and the broader market in which it’s competing — here.

TerraLUX, a 12-year-old, Longmont, Co.-based company that installs light-emitting diode lamps in a variety of commercial settings, has raised $11 million in growth funding led by EnerTech Capital, with participation from Generation Investment Management, Crawley Ventures, Emerald Technology Ventures, GC&H Investments, and its founder, Anthony Catalano. The company has now raised $44.9 million to date, shows Crunchbase.

Tricida, a two-year-old, Menlo Park, Ca.-based company that’s focused on developing therapies for complications of kidney disease, has closed $30 million in Series B funding led by OrbiMed Advisors, with Limulus Venture Partners and Sibling Capital Ventures participating. All had backed the company previously. To date, Tricida has raised $44.5 million.

TriLumina, a four-year-old, Albuquerque, N.M.-based company that’s developing sensing technology for use by self-driving cars, has raised $8.5 million in Series A funding led by Stage 1 Ventures, with participation from earlier backers Cottonwood Technology Fund and Sun Mountain Capital. The company has raised $10 million to date.

Vanhawks, a 4.5-year-old, Toronto-based company that has developed a sleek, “connected,” carbon fibre bicycle, has raised $1.6 million from Real Ventures and various angel investors. The company had also raised more than $820,000 on Kickstarter last year.


New Funds

SaaS Capital, a 2.5-year-old, Cincinnati, Oh.-based investment firm that provides debt financing to software-as-a-service companies, has closed its second fund with $58 million. Its debut fund closed at $22.5 million. GeekWire has more here.



Etsy, the 10-year-old, Brooklyn-based online marketplace that specializes in crafts and other items, has filed to go public. It’s become a “significant business,” notes the New York Times, with $195.6 million in sales last year, up 56 percent from the previous year, and nearly 700 employees, most of them based in Brooklyn. Etsy has raised roughly $100 million over the years. Some of its biggest outside shareholders include Accel Partners, which owns 27 percent of the company; Union Square Ventures, which own 15.2 percent; Index Ventures, which owns 12.8 percent; and Tiger Global Management, which owns 7.3 percent.



AlchemyAPI, a 10-year-old, Denver-based artificial intelligence software company, has been acquired by IBM for undisclosed terms. The company looks to have raised just $2 million from an outside investor, Access Venture Partners, in 2013.

eXelate, an eight-year-old, New York-based data and technology company that helps digital advertisers better target online advertising, has been acquired by the measurement giant Nielsen for undisclosed terms that WSJ sources peg at $200 million. The company had raised $32 million in venture funding from investors, including Carmel Ventures, Menlo Ventures, NewSpring Capital, and Trident Capital.

FitStar, a nearly three-year-old, San Francisco-based personal training app with a small but high-profile user base, has been acquired by the fitness hardware maker Fitbit. Terms of the deal aren’t being disclosed. FitStar had raised $5 million from investors, including Mesa VenturesFloodgate, Trinity Ventures, Google Ventures, and Advancit Capital.

Quandoo, a 2.5-year-old, Berlin-based restaurant reservation service that competes with OpenTable, is being acquired by Recruit, a 52-year-old, Japan-based conglomerate, for 27.11 billion yen ($219 million). Quandoo had raised $39.5 million from investors, including Piton Capital, HV Holtzbrinck Ventures, Sixt Family, and Texas Atlantic Capital. TechCrunch has more here.

SocketPlane, a year-old, Sunnyvale, Calif.-based software-defined networking startup that was seemingly bootstrapped, has been acquired by Docker, a San Francisco-based open-source engine for lightweight app deployment. Terms of the deal aren’t being disclosed. Docker has raised $55 million from investors, including Sequoia Capital, BenchmarkGreylock Partners, Insight Ventures, Trinity Ventures and Jerry Yang. GigaOm has more here.

Subspace, a two-year-old, Berkeley, Ca.-based company that helps employees securely collaborate from any device, has been acquired by Box. No financial terms were disclosed. More here.

SuppreMol, a 13-year-old, Munich-based biopharmaceutical company, has been acquired by Baxter International for about 200 million euros. The company had raised roughly $38 million from investors, including Bayern Kapital, BioMedPartners, Santo Holding, and FCP Biotech Holding.



Microsoft cofounder Paul Allen said earlier this week that his luxury yacht and underseas exploration vessel, Octopus, has discovered the wreck of Japan’s biggest World War II battleship, Musashi, off the coast of the Philippines. More here. (Business Insider has more on the yacht itself here.)

Confluence Capital, a two-year-old, Minneapolis, Mn.-based early stage firm, has rebranded itself as Matchstick Ventures and also added a couple of new advisory board members. Seth Levine is a cofounder of Foundry Group. Joy Lindsay is the president of StarTec Investments and the newly created Sofia Fund.

When Wen Hsieh, a Kleiner Perkins Caufield & Byers partner, took the stand yesterday in the high-profile trial of former partner Ellen Pao, he “seemed to represent everything Ellen Pao was not,” writes The Recorder. More here.

Two former and four current Twitter execs, all women, announced a new investment group yesterday called #Angels. They’ll be investing together and apart, but lending their collective expertise in product development, partnerships, fundraising, acquisitions, internationalization, platforms, media, legal, corporate governance and policy to the startups they work with. (One catch: those companies can’t compete with or potentially be acquired by Twitter.) More here.


Job Listings

Foursquare, the location-based recommendations and social networking company, is looking for a director of business development. The job is in New York.

Teledoc, a venture-backed telehealth services company, is looking for a director of business development. The job is also in New York.


Essential Reads

The backstory of Meerkat, a side project that’s taking off — at least for now.

Aspiro, the dangerously unprofitable Swedish parent company of streaming services Tidal and WiMP, is seemingly trying to wring more money out of Jay Z, a month after the famed rapper put in a $56 million offer to buy the company. (To that, we say, good luck.)



One twin exercises, the other doesn’t.

Hermit crabs upgrading their homes.


Retail Therapy

Smartwatches for kids.

21.3-feet of total luxury. Oh, yeeeaaah.

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