StrictlyVC: April 24, 2015

Good Friday morning, everyone! We hope you’re in for a terrific weekend.:)

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Top News in the A.M.

It’s over. Comcast has terminated its $45 billion Time Warner Cable merger agreement.

A new version of Google Glass is in the works and will be out soon, the CEO of Italian eyewear maker Luxottica said this morning.


Need a Breather? This VC is Hoping So

This week, StrictlyVC chatted with Steve Schlafman, a principal with RRE Ventures in New York who spends a fair amount of his time considering on-demand startup models. Among the deals he has led for RRE are Managed by Q, a 1.5-year-old, New York-based company that provides office cleaning and services like restocking to small businesses; and Shuddle, a year-old company in San Francisco that employs women to shuttle around children on behalf of their busy parents. (The proposed promise: the ride is safer than an Uber.)

Along with Vayner/RSE, Schlafman also led a $6 million Series A last September inBreather, a company that provides on-demand rooms in cities so that visitors can pop in to relax with friends, finish a speech, or maybe make some calls that would be harder to execute from a crowded coffee shop.

It may be Schlafman’s boldest, and riskiest, bet. Getting enough repeatable business to make profitable use of Breather’s rooms — which the company leases — would seem to be an enormous challenge. Breather also operates in a crowded sector with more than a handful of competitors, including LiquidSpace, which also invites users to find and book private spaces to rent by the hour, day or longer. (It’s raised more than $26 million, including from Shasta Ventures, Floodgate and Greylock Partners.)

Schlafman, who says Breather might look for capital later this year, isn’t concerned, telling us that it’s all in the execution. Here’s more from our chat, edited for length.

You call Breather the craziest idea you’d ever seen, yet you invested anyway. Why?

I became a user, and they’ve just completely nailed the experience of creating a fourth space. Think about it. For a long time, people had their home space and work space and there wasn’t much in between. Then along came Starbucks and cafes and public spaces that had multifunctional uses, but we believe that people need another space, so when you’re in [San Francisco’s] SOMA [neighborhood], for example, and you have two hours, you can pull out your phone, book a room, and have a business meeting or [quietly decompress].

A lot of startups now offer people an alternative to Starbucks.

A lot of companies are focused on coworking on demand, including LiquidSpace, PivotDesk and WeWork; they’re very much catering to a business user. Breather is building a tightly controlled experience that’s aesthetically pleasing. You can sell to a business user or a consumer.

How many rooms does it currently offer users?

It has 60 spaces right now – something like 15 in San Francisco, almost 40 in New York. The company just opened in Boston, too. What’s nice is that as soon as they put a space on the map, it gets to breakeven. What I love about [cofounder and CEO] Julien [Smith] is that he’s scrappy. He isn’t a Silicon Valley-type operator in a tweed jacket. He’s a child of the Internet who believes in testing, including when it comes to developing relationships with landlords. I’m not sure he’d want me to spill the beans, but he’s looking at asset-light models where Breather isn’t necessarily taking on the lease.

How many people are these rooms supposed to accommodate?

These are fairly small rooms, with a couch and a desk and a conference table with chairs and WiFi, and you can fit 5 to 10 people in them, which is great as companies can use it for overflow space or small offsite events, instead of spending a sh_tload of money on a hotel. It’s hard to wrap your head around the concept, but once you use one, you get it.

That’s a big challenge, though, getting people to think about heading somewhere new. I’d also think establishing repeatable business would be tricky. How is the company juggling that?

They’ll be introducing a smart pricing algorithm, so that not every hour is created equally. [It’ll be] upwards of $35 to $40 an hour during peak times. You’ll also be able to unlock certain services eventually. In the meantime, based on early cohorts, the payback is very fast on our marketing spend.

How does Breather ensure that there’s nothing funky going on in these rooms?

Trust is a huge factor. Every single time a room is cleaned – and we partner with a well-known cleaning service right now — there are reviews coming from the cleaning side, as well as from [the next] consumer.

Will the spaces always run on the smaller side?

That’s where we think there’s a good opportunity to build a completely new category. The idea is to have a breather in every city in the world. Will that happen in the next year or two? I don’t know, but once I tried it, I was sold.


New Fundings

Dash Robotics, a two-year-old, Sunnyvale, Ca.-based maker of hand-held, bio-inspired robots, has raised $1.4 million in seed funding led by IronFire Capital. VentureBeat hasmore here.

Datical, a three-year-old, Austin, Tx.-based company that creates database schema automation software, has raised $2.25 million in funding, extending its total Series A round to $5.9 million. The new funding was led by Mercury Fund, with participation from Austin Ventures and other investors.

EatShopLove, a year-old, Bangalore, India-based fashion e-commerce company, has raised $3.5 million in angel funding from an unnamed investor in London. The company had previously raised $1 million in seed funding last fall. More here.

Ferris, a three-year-old, Santa Monica, Ca.-based company whose app makes mobile videos more watchable — and shareable —  has raised $2 million in seed funding led by Upfront Ventures, with participation from Machinima founder Allen DeBevoise and other investors. TechCrunch has the story here.

GoFundMe, a seven-year-old, San Diego-based crowdfunding and fundraising startup, is reportedly raising its first institutional round of funding, at a $500 million valuation, with “Accel Partners” in “the mix,” reports TechCrunch. More here.Happay, a three-year-old, Bangalore-based startup that makes software to manage business expense reports, has raised $500,000 in seed funding from AngelPrime. Tech In Asia has more here.

Headout, a year-old, Mountain View, Ca.-based on-demand “mobile concierge” that helps travelers book local experiences at discounted prices, has raised $1.8 million in seed funding from Version One Ventures, Nexus Venture Partners, 500 Startups and Arena Ventures, along with individual investors, including WhatsApp vice president Neeraj Aroraand entrepreneur-investor Rick Marini. More here.

iContainers, an eight-year-old, Barcelona, Spain-based freight forwarding company offering online ocean and air quotes and bookings, recently raised $1.4 million in Series B funding, including from Kibo Ventures, Vitamina K, and GrupoRomeu. More here.

StrataCloud, a year-old, Atlanta, Ga.-based company that sells infrastructure management software for virtual, converged and cloud environments, has raised $3.4 million in Series A funding from Hallett Capital, BLH Venture Partners, Mosley Ventures and BIP Capital.

TrackTik, a five-year-old, Montreal, Canada-based company that sells security operations management software, has raised $1.5 million in seed funding led by iNovia Capital, with participation from Klass Capital. More here


New Funds

Institutional Venture Partners has officially closed its newest fund with $1.4 billion, making it the second largest venture fund formed in the U.S. this year (right behind NEA’s mammoth new fund). Forbes has much more here.



Apigee, an 11-year-old, San Jose, Ca.-based software platform that sells enterprise tools that helps companies build and scale apps, began trading publicly this morning. The company had priced its shares at $17, the midpoint of an expected range of $16 to $18, giving it a valuation of $494.5 million. The company had raised at least $173 million over the years, shows Crunchbase. Norwest Venture Partners is its largest shareholder with a 26.2 percent stake; Bay Partners meanwhile owns a 18.6 percent stake. More here.

Laureate Education, the largest for-profit college network in the world, is interviewing banks for a $1 billion IPO, according to Bloomberg sources. The company was taken private in a management-led $3.8 billion buyout in 2007, backed by an investor group including KKR and Citigroup. It would be the the biggest school chain to go public, notes Bloomberg.

Renaissance Capital offers a look at next week’s IPO calendar.



ClassPass, a two-year-old, New York-based subscription service for unlimited monthly fitness classes, has acquired two-year-old, San Francisco-based FitMob — a direct competitor — for undisclosed terms. ClassPass has raised more than $54 million, including from CRV, General Catalyst Partners, and Slow Ventures. FitMob had raised $14.8 million from investors, including QueensBridge Venture Partners, Silicon Valley Bank, and Mayfield Fund, where Fitmob CEO Raj Kapoor was formerly a managing director. TechCrunch has more here.

The publicly traded cloud business software company Netsuite is paying $200 million to acquire Bronto Software, a 13-year-old, North Carolina-based marketing software company. The deal is NetSuite’s sixth acquisition and will be its largest yet. Forbes has more here.

Publicly traded Synopsys is acquiring the 14-year-old, Oulu, Finland-based software security company Codenomicon, which had long ago raised $3.6 million from Prime Ventures and Eqvitec Partners Oy. Terms of the deal weren’t disclosed.



The file-sharing company BitTorrent laid off 40 of its 150 U.S.-based employees yesterday as part of an effort to streamline its operations and narrow its focus to a smaller suite of products. Buzzfeed has the news here.Zynga COO Clive Downie has resigned from the social gaming company and is joining the game development platform Unity Technologies as chief marketing officer, reports VentureBeat. Downie was hired by Don Mattrick, who resigned as CEO of Zynga two weeks ago. Unity is led by John Riccitiello, who says he goes back “a long ways” with Downie. (The two were executives together at Electronic Arts.)

Robert Heath, a 64-year-old software engineer rejected for a job at Google, is suing it for age discrimination, saying that when he was interviewed for a job with the company, the recruiter called 10 minutes late, was barely fluent in English, and conducted the interview over a malfunctioning speakerphone, which made it hard for the two to communicate. According to Heath’s attorneys, “Google intentionally did not allow Mr. Heath to communicate or demonstrate his full technical abilities, and did not have a sincere interest in hiring Mr. Heath.” Several years ago, Google settled a separate age discrimination claim. The Recorder has more here.

Kleiner Perkins Caufield & Byers is offering to let Ellen Pao — the former junior partner who famously lost her gender discrimination suit against the firm last month — off the hook if she promises not to pursue the case further. Otherwise, Kleiner will ask her, as the losing party in the suit, to repay the $972,815 in witness fees, deposition and court reporter costs that it spent on the case. The New York Times has more here.

Amazon revealed yesterday that its Amazon Web Services unit is a nearly $5 billion business and is profitable.



Bizarre trends in Taiwanese pet grooming.Haunting photos of abandoned factories.

How to set up your Apple Watch in 16 steps.

Retail Therapy

A look inside the Four Season’s private new jumbo jet.

The Phantom Flex4K full-featured digital cinema camera. It’ll cost you an arm and a leg, but it can do this!

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