• Duo Security Raises $30 Million More, Led by Redpoint

    Jon OberheideDuo Security, a five-year-old, 100-person company that sells its cloud-based two-factor authentication software to thousands of organizations, including Facebook, Twitter, NASA and Uber, has just raised $30 million in Series C funding led by Redpoint Ventures, with participation from Benchmark, Google Ventures, Radar Partners and True Ventures. (The Ann Arbor, Mi.-based startup has now raised around $50 million altogether.)

    Last week, we chatted the Duo Security’s cofounder and CTO, Jon Oberheide, about how his company is using mobile devices as a second form of authentication, and what comes next.

    Some major company’s information is breached every week it seems, yet there are also other two-factor authentication services out there tackling the problem. What makes yours different?

    First, we think the existing security is broken. Underlying information technology has shifted out underneath existing security technologies and they aren’t relevant anymore. In the past few decades, your security model was built within the physical walls of your organization, then people began accessing the same device but they weren’t necessarily in the building, which made phishing for those employees’ names and passwords easy. Poor hygiene across multiple sites was the problem we were trying to solve, and we succeeded in ensuring that your identification couldn’t be stolen.

    Then mobile devices came along and now everyone uses their own favorite products.

    Yes, and those mobile devices aren’t under the control of an IT administrator. You have these cloud services that are being controlled by third parties. IT departments have gone from saying “no,” to partnering with [various parties] to ensure their [devices’] secure enablement.

    And you have a new edition that you say works even better than what your customers have been using. How so?

    Our new platform edition allows companies to establish what security policies are acceptable and customize protection at the point of entry. It can stop break-ins regardless of whether hackers have a user’s name or password by analyzing a company’s policies for each log-in attempt, including the location of the user, the reputation of the IP address, and what level of device health they want to admit into their enterprises. It addresses, for example, the employee who might forget his phone at the bar. A company can require that a full encryption and screen lock [are activated] to prevent someone else rom picking it up and trying to access corporate information. Or, if you’re a domestic company whose employees primarily log-in from Starbucks, you might want to block access to China or Russia, where a lot of hackers come from. You just click a box and it’s done.

    How much more will this new edition cost customers?

    On a per user, per month basis, we currently charge $3; our platform edition wil cost $6 per user per month because we’re providing a lot more value to companies that we think justifies [the price hike]

  • StrictlyVC: April 13, 2015

    Good morning, dear readers!

    We’re happy to announce that Charles Hudson of SoftTech VC has just joined our upcoming program on May 13 in San Francisco, making an already terrific line-up even better. Thank you, Charles! And giant thanks to Personal Capital, Amazon Web Services, and Galvanize for helping us produce the evening. We’re getting excited to see everyone.

    No column today. (Busy morning.)

    —–

    Top News in the A.M.

    Chip maker Qualcomm is under pressure from activist investor Jana Partners to consider a breakup to boost its sagging stock price.

    Twitter is reportedly encouraging its celebrity users to dump the live broadcasting app Meerkat and use its product, Periscope, instead.

    Yesterday, the first four episodes of the “Game of Thrones” were leaked and promptly downloaded more than 100,000 times in just the first few hours following. As Forbes notes, the leak is bad news for HBO, which just rolled out a standalone streaming service that costs customers $15 per month.

    —–

    New Fundings

    4i, a six-year-old, Amsterdam-based TV app development company, has raised $2 million in funding from investors, including Newion Investments.

    CradlePoint, an 11-year-old, Boise, Id.-based wireless networking company, has raised $48 million in Series B funding from new investorsSorenson Capital, Delta-v Capital and the Caprock Group, reports VentureWire. The company has raised $65.5 million altogether over the years, shows Crunchbase. Earlier backers include OVP Venture Partners and Highway 12 Ventures.

    Crowd Supply, a 2.5-year-old, Portland, Oregon-based crowdfunding and product development platform for hardware engineers and product designers, has raised $585,000 in seed funding led by Portland Seed Fund, with participation from SOSVentures, Inspiration Ventures, and a consortium of angels. The company had previously raised $500,000 in seed funding.

    Embera NeuroTherapeutics, a 10-year-old, Sudbury, Ma.-based development-stage pharmaceutical company focused on developing treatments for smoking cessation and other addictions, has raised $2 million in A-2 funding from earlier investors and HRA Pharma, a Paris-based specialty pharmaceutical company. The company has now raised at least $7 million from investors, including Louisiana Ventures and Themelios Ventures.

    Estimize, a four-year-old, New York-based startup that crowdsources estimates from more than 4,500 hedge funds, brokerages and independent analysts, has raised $3 million in Series B funding led by WorldQuant Ventures, with participation from Agilic Partners, numerous individual investors, and earlier backer Contour Venture Partners. The company has now raised roughly $5.6 million altogether, shows Crunchbase.

    Fliptu, a two-year-old, L.A. company whose suite of social aggregation tools help brands curate their best brand and fan social content into visualizations, has raised $1.2 million in seed funding from Scout Ventures and numerous angel investors.

    Khorus, a three-year-old, Austin, Tex.-based company that makes business management software for CEOs, has raised $4 million in seed funding from company founder Joel Trammel and angel investor Tom Greig, a senior managing director at the New York-based private equity firm Liberty Partners. The company has raised $6 million altogether. Austin Business Journal has more here.

    Magency Digital, a four-year-old, Paris, France-based company that makes event apps for everything from small training seminars to large conferences, has raised €3M ($3.7M) in Series A funding led by Alliance Entreprendre and Sigma Gestion.

    ScoreStream, a three-year-old, San Diego, CA-based platform for crowdsourcing scores and photos for local sporting events, has raised $2 million in seed funding led by Sinclair Digital Ventures, with participation from previous investors Avalon Ventures and New Enterprise Associates, Sagamore Ventures, and Paul Palmieri.

    Spotify, the nine-year-old, Stockholm, Sweden-based music streaming service, is nearing a deal to raise $400 million at a $8.4 billion valuation, according to the WSJ, which says that Goldman Sachs and an Abu Dhabi sovereign-wealth fund have agreed to invest in the round.

    Stem, a six-year-old, Millbrae, Ca.-based startup that uses batteries and software to help businesses reduce their electricity bills, has raised $12 million in Series C funding from Mitsui & Co. The company tells VentureWire that it expects to raise between $25 million and $30 million before closing the round, which also includes participation from earlier backers Angeleno Group, Constellation Energy, Iberdrola SA, and General Electric.

    UCloud, a three-year-old, Shanghai, China-based cloud service provider, has reportedly raised roughly $100 million in Series C funding led by Legend Capital, with the participation from VMS Legend Investment Fund, DCM, Bertelsmann and GX Capital. The company, founded by former Tencent executives, had previously raised an undisclosed amount of Series A funding in 2013 and $50 million in Series B funding last year.

    UgenTec, a year-old, Hasselt, Belgium-based laboratory software developer whose products aim to trace respiratory infections and certain types of cancer, among other things, has raised $1.4 million in funding led by an unnamed Belgian investor group; IWT, a government agency; and the Belgian investment company LRM (which provided provided $105,000 in debt).

    UXP Systems, a four-year-old, Toronto, Ontario-based company whose software helps telecommunication and cable operators simplify user registration from any screen and for any member of their customers’ households, has raised an undisclosed amount of funding from cable and media veterans John Malone and John Risley.

    Vacatia, a two-year-old, San Francisco-based resort marketplace for vacationing families, has raised $7 million in funding led by Javelin Venture Partners. The company has now raised $12 million altogether, shows Crunchbase. Earlier backers include Maveron, Bee PartnersPeterson Ventures, and operator-investor Erik Blachford.

    Videoo, a six-month-old, Miami-based company that plans to sell crowdsourced video products to brands and advertisers, recently raised $1.6 million in seed funding, including from the Miami-based angel network Accelerated Growth Partners. The Miami Herald has more here.

    Voyager Therapeutics, a year-old, Cambridge, Ma.-based company that focuses on treatments for fatal and debilitating diseases of the central nervous system, has raised $60 million in Series B funding led byBrookside Capital and Partner Fund Management, with participation from Wellington Management, Casdin Capital and two undisclosed investment funds. Voyager spun out of Third Rock Ventures last year, raising $45 million in Series A funding from Third Rock in the process.

    Wingz, a 16-month-old, San Francisco-based ride-sharing app that invites users to book prescheduled rides to and from the airport, has raised $2 million in funding led by Binux Capital, Blue Angel Ventures and Florence Venture Partners, with participation from Ocotea Holdings, Big Bloom Investments, Olive Tree, and investor Larry Marcus of WaldenVC.

    Zeemi.tv, a year-old, Indonesia-based live-streaming video platform, has raised $1 million in seed funding from DeNA and 500 Startups. TechCrunch has more here.

    —–

    New Funds

    New Atlantic Ventures’s managing partner John Backus and True Ventures’s cofounder John Burke are raising a $300 million fund together, according to Washington Business Journal. From its report: “People familiar with the plans behind the fund say it would effectively make a proxy investment in a company on behalf of a smaller fund, but only when the smaller fund lacked the capital for a follow-on investment. The investment would be in exchange for half of the profits. In theory, this means the smaller fund would have the opportunity to earn additional returns without having to put down any additional money.”

    OrbiMed, a 26-year-old, New York-based investment firm that backs both private and publicly traded life sciences companies around the world, is raising a second Israel-focused fund and it’s targeting $200 million to $250 million for the effort, reports the Globes. OrbiMed raised its first, $203 million, fund in Israel in 2010. According to documents obtained by the Globes, it has since invested that capital across 19 companies and exited (or partially exited) from six of them, establishing a current internal rate of return of 21.4 percent.

    Pelion Venture Partners, a 29-year-old, Salt Lake City, Ut.-based early-stage venture firm that focuses primarily on enterprise software and cloud computing startups, is looking to raise up to $200 million for its sixth fund, shows an SEC filing that states its first sale has yet to occur.

    SWaN and Legend Venture Partners, a three-year-old Leesburg, Va.-based venture capital firm, is looking to raise up to $150 million for a third fund, according to an SEC filing that states its first sale has yet to occur. The firm was cofounded by longtime colleagues Fred Schaufeld, Clifford White and Anthony Nader and has already made dozens of bets, among them Optoro, which helps retailers get rid of their distressed inventory; SocialRadar, which makes a location-based social app (StrictlyVC featured it out of the gate), and Tango Card, a rewards platform company. With the new fund come apparent changes. White is no longer listed anywhere at the site; meanwhile, David Bosserman has recently joined as a managing director and the firm’s chief financial officer.

    There’s a new fintech accelerator on the scene called the TCF-PnP Program. The effort is a joint venture between The Co-Foundry, a venture accelerator in Singapore, and Plug and Play, the Silicon Valley-based accelerator. It aims to support financial tech startups with up to $200,000 (if they’re truly nascent), and up to $1 million if they’re further along. The startups, which will spend between 6 and 12 months with the program, can work out of either Singapore or Sunnyvale, Ca. Much more here.

    —–

    IPOs

    Aduro Biotech, a 15-year-old, Berkeley, Ca.-based company that’s developing drugs that aim to teach the body’s immune system to fight cancer, expects to raise up to $93 million in an IPO this week by issuing 5 million shares at $14 to $16 per share. (It’s offering another 750,000 shares to underwriters.) Aduro has raised roughly $140 million from investors over the years. Some of its biggest shareholders include Morningside Ventures, which owns 37.8 percent of the company; Fidelity Investments, which owns 7.9 percent; and Johnson & Johnson, which owns 6.6 percent.

    Etsy, the 10-year-old, Brooklyn-based marketplace for mostly handmade and vintage items, and Virtu, the seven-year-old, New York-based high-speed trading firm, are planning to go public this week. Virtu is the better bet, argues Crain’s New York, which has more details about both.

    KemPharm, a nine-year-old, Coralville, Ia.-based specialty pharmaceutical company, plans to raise $60 million in IPO this week by issuing 4.6 million shares at between $12 and $14 per share.

    —–

    Exits

    Elto, a three-year-old, San Francisco-based online marketplace that pairs business owners with web developers and marketers to help them grow their online presence, has been acquired for undisclosed terms by by GoDaddy, the now publicly traded web hosting company. Elto reportedly raised less than one million dollars, including from the Australian fund Blackbird Ventures. More here.

    Sunstorm Games, a six-year-old, Las Vegas-based maker of casual gaming apps for kids, has been acquired for by TabTale, an Israel-based kids’ gaming and educational app publisher that has raised $13.5 million from Qualcomm Ventures, Magma Venture Partners, and Vintage Investment Partners. Terms of the deal haven’t been disclosed, but TechCrunch sources peg it at $6 million.

    —–

    Job Listings

    Bessemer Venture Partners is looking to hire an associate for its Menlo Park, Ca., office.

    —–

    Data

    European and Israeli VC trends in the first quarter of this year.

    —–

    Essential Reads

    Yahoo CEO Marissa Mayer announced a major reorganization of the company’s product teams on Friday. More here.

    Venture-backed DataSift faces a new, and very big, problem — along with other third parties that have been reselling firehose data from Twitter.

    More on the burgeoning battle over home services. (Tweeted venture capitalist Bill Gurley last night: “This will be messier than everyone realizes.”)

    —–

    Detours

    Why people care more about their pets than other humans.

    The Terminator is back. Again.

    Gym membership packages: an overview.

    —–

    Retail Therapy

    Candylab cars.

    A new toothbrush subscription service. (Unlike GoodMouth, this one focuses on electric toothbrushes.)

  • StrictlyVC: April 10, 2015

    It’s Friday! To our Greek friends, Kali Anastasi! To the rest of our Orthodox friends, Happy Easter.:)

    Have a great weekend, everyone — we’ll see you soon.

    —–

    Top News in the A.M.

    Hope you snuck your order in; according to 9to5Mac, all models of Apple Watch have now almost entirely sold out.

    —–

    One of Craiglist’s Biggest (Only) Threats to Date: VarageSale

    It’s accepted wisdom that nothing and no one can destroy Craiglist, the San Francisco-based local classifieds marketplace whose success has continued unhampered for roughly 20 years, despite many newer entrants with far snazzier technologies.

    VarageSale might just be different. At least, the 50-person, Toronto-based outfit is gaining enough traction that last month, Sequoia Capital and Lightspeed Venture Partners sank $34 million into its operations.

    What makes the startup, which claims to have millions of users, so promising? A few things, according to cofounder Carl Mercier, who sold an antispam company to security-software maker Websense in 2009 and founded VarageSale with his wife, Tami Zuckerman, in 2012. For starters, users have to be accepted onto the platform by volunteer moderators in the many communities in which VarageSale now operates. (The company has quietly spread to cities in 42 states and in every Canadian province.)

    As key, seemingly, the conversations that happen behind the scenes between Craigslist users — the harried “I’ll take it!” emails, along with the privately asked questions and price haggling — are instead displayed in Twitter-like feeds at VarageSale. It helps build interest in users’ items, suggests Mercier; it also builds community.

    We talked with Mercier this week. Our conversation has been edited for length.

    You say VarageSale has millions of users. Is that single-digit millions? And how many items are selling on the platform each month or year?

    We have millions of users who view billions of items of month. For competitive reasons, we’d rather not be more specific. But 50 percent of our mobile users open the app every day, which is very unusual for a commerce app.

    What are they returning to check out?

    Typically people are coming to the site for information about a specific category they’re following — like clothes for a two-year-old boy, or smartphones. They also come back all the time because they want to make sure they don’t miss that treasure, or because they posted an item and there are 10 people who’ve expressed an interest in it.

    Do you do anything to slow the pace of transactions to foster those conversations? It’s interesting that people don’t just sell to the first interested party.

    It’s more akin to people putting their towel on a beach chair at 6 a.m to reserve it. Maybe the first person to express an interest [lands the item], but once they ask a question, then we see other people become interested — sometimes tens of them.

    You don’t enable people to transact through the site, though. Like Craigslist, that happens offline. Might that change?

    We really want to focus on building up our local communities right now — growing our user base and coverage. That’s where we feel like we’ll have the biggest impact.

    I’d read about VarageSale meet-ups. How do most people come together?

    It really depends on the people and the communities. Sometimes people meet in a parking lot or at their house; sometimes, our moderators organize events every one or two weeks.

    Given your emphasis on community, VarageSale sounds like a hybrid of a number of things, including Craigslist and NextDoor. Maybe even Airbnb? Are people selling home items alone, or are you starting to see other things, like neighbors alerting others to their available in-law unit?

    Hah, no. Airbnb is really good at that. Some people are renting properties [on the platform], but we mostly focus on physical goods.

    You’ve just raised a lot of money. Is this an employee-intensive business? How will you use the capital?

    Building strong communities isn’t something that we can just press a button and it happens. It’s definitely hard work that involves a lot of human intervention. We probably won’t be hiring 1,000 people, but we think we’ll add 30 to 40 employees in the next year. We already have a small presence in Europe, Australia, and Japan that we’re growing.

    Will your eventual business model center on transaction fees? Local advertising?

    Revenue isn’t a priority for us. We want to focus on improving user experience and we have great partners [in our venture investors]. With the money we now have in the bank, we have runway for a few years.

    —–

    New Fundings

    1366 Technologies, an eight-year-old, Bedford, Ma.-based maker of inexpensive silicon wafers, has added $5 million to an earlier Series C round. Haiyin Capital led the new funding, with participation from earlier backers Vorndran Mannheims Capital, Tokuyama, Energy Technology Ventures, Polaris Partners, VantagePoint Capital Partners, and North Bridge Venture Partners & Growth Equity. The company has raised $66.5 million altogether, shows Crunchbase.

    Asqella, a 3.5-year-old, Helsinki, Finland-based maker of advanced imaging systems for security screening applications, has raised 1.8 million euros ($1.9 million) in funding led by Shenzhen Lietou Fund and VTT Ventures Oy.

    Aviso, a nine-month-old, Palo Alto, Ca.-based predictive insights software company for sales management, operations and forecasting, has raised $15 million in Series B funding co-led by Scale Venture Partners and Next World Capital, with participation from earlier backers including Shasta Ventures, First Round Capital, Bloomberg Beta and Cowboy Ventures. The company has now raised $23 million altogether, shows Crunchbase.

    Carbon 3D, a two-year-old, Redwood City, Ca.-based company that uses something called liquid interface production technology to advance 3D printing from basic prototyping to manufacturing, has raised $10 million in venture funding from the Autodesk Spark Investment Fund. The company had earlier raised $41 million in two rounds of venture funding led by Sequoia Capital and SilverLake Kraftwerk, says VentureWire.

    Clypd, a 2.5-year-old, Boston-based programmatic TV startup, has raised $19.4 million in Series B funding led by RTL Group, with participation from Atlas Venture, Data Point Capital, Duke University, TiVo, Transmedia Capital and Western Technology Investment. According to Crunchbase, the company has raised roughly $31 million to date.

    DemoChimp, a two-year-old, Salt Lake City, Ut.-based company whose software automates custom product demos to accelerate sales, has raised $2.8 milion in seed funding from Seed Equity Ventures, Peak VenturesAlbion Financial, and individual investors.

    EBR Systems, a 12-year-old, Sunnyvale, Ca.-based medical-technology company that makes a wireless implantable simulator for the heart, has raised $20 million in Series E funding led by Emergent Medical Partners, with participation from earlier investors Split Rock Partners, SV Life Sciences, Delphi Ventures and St. Paul Venture Capital. The company has now raised at least $81 million to date, shows Crunchbase.

    Edge Therapeutics, a six-year-old, New Providence, N.J.-based company with a drug delivery system for brain hemorrhaging and other acute neurological conditions, has raised $72.5 million in Series C funding, including a C-2 round led by Venrock, with participation from Sofinnova Ventures, Janus Capital Management, New Leaf Venture Partners and BioMed Ventures, and a first tranche that closed in December and came from individuals, family offices and private foundations. MedCity News hasmore here.

    Maven Clinic, a year-old, New York-based company whose mobile applications connect women with health-care providers via video, has raised $2.2 million in seed funding from Great Oaks Venture Capital, Box Group, Female Founders Fund and angel investors.

    Niara, a 1.5-year-old, Sunnyvale, Ca.-based stealth security analytics company, has raised $20 million in Series B financing led by Venrock, with participation from New Enterprise Associates and Index Ventures. The company has now raised roughly $30 million altogether.

    PeerIQ, a year-old, New York-based credit risk analytics firm that helps financial institutions analyze risk in the peer-to-peer lending sector, has raised $6 million in seed funding led by Uprising and John Mack, former chairman and CEO of Morgan Stanley. Other participants in the round include Vikram Pandit, former Citigroup CEO; Arthur Levitt, former SEC chairman; former Bloomberg CEO Dan Doctoroff ; and Eric Schwartz, former co-CEO of Goldman Sachs Asset Management.

    Rubicon Labs, an 8.5-year-old, Austin, Tx.-based cybersecurity company that’s developing secure communication technologies for cloud-based data centers, has added Akamai Technologies as an investor in its Series A financing. The round, which now exceeds $11 million, also includes participation from Third Point Ventures and Pelion Ventures.

    Stanza, a three-year-old, Redwood City, California-based company whose “button” lets users add online events to their personal calendar, has raised $4.3 million in seed funding from Metamorphic Ventures, Founder Collective, Tekton Ventures, Western Technology Investment, and Stanford-StartX Fund, along with a group of angel investors.

    Urban Ladder, the 2.5-year-old, Bangalore, India-based e-commerce store that claims to be India’s largest online seller of furniture and home accessories, has raised $50 million in new funding led by Sequoia Capital and TR Capital, with participation from earlier backers Steadview CapitalSAIF Partners, and Kalaari Capital. The company has now raised $77 million altogether. TechCrunch has more here.

    VendOp, a 1.5-year-old, San Francisco-based review site where professionals can share opinions on business and industrial vendors, has raised $1.1 million in seed funding from individual investors.

    Vulcun, an 11-week-old fantasy e-sports site, has just raised $12 million in Series A funding led by Sequoia Capital, with participation from Matrix Partners, Universal Music Group, Battery Ventures, Creative Artists Agency, Crosscut Ventures, and a long list of notable angel investors, including AngelList cofounder Naval Ravikant, Zynga cofounder Mark Pincus, and Joe Kraus of Google Ventures. More here.

    —–

    New Funds

    Illuminate Ventures, an Oakland, Ca.-based early-stage venture that focuses on enterprise cloud and mobile computing startups, is targeting a second, $30 million fund, suggests a new SEC filing that states a first sale has yet to occur. StrictlyVC talked with Cindy Padnos, the founder of Illuminate Ventures, when she closed her last, $20 million fund, roughly 15 months ago.

    According to the Times of India, Sequoia Capital has added another $210 million to its existing $530 million India-focused fund, giving the firm a “bigger war chest and a substantial leg up over other VCs amid rising valuations of tech companies” in the country.

    ——

    IPOs

    Etsy is crafting an “artisanal public offering,” reports the WSJ, whose sources say the Brooklyn, N.Y.-based online marketplace is making a big effort to attract small investors and fewer big investors.

    ViewRay, an 11-year-old, Oakwood Village, Oh.-based company that markets an FDA-approved MRI-guided radiation therapy system, postponed its IPO yesterday.

    The Nasdaq debut of Wowo — a three-year-old, Beijing, China-based company that operates the Groupon-like, Chinese group-buying site — didn’t wow investors this week. That could prove problematic for other, smaller tech IPOs, suggests The Street.

    —–

    Exits

    Collegefeed, a two-year-old, Mountain View, Ca.-based company that helps college students and recent grads find jobs, has been been acquired by rival AfterCollege in San Francisco for an undisclosed sum. Collegefeed had raised $1.8 million from investors, including Accel Partners and Silicon Valley Angels. AfterCollege has raised an undisclosed amount of equity funding from Flywheel Ventures; it has also raised an undisclosed amount of debt funding, according to Crunchbase.

    Shoefitr, a five-year-old, Pittsburgh, Pa.-based company whose 3-D technology helps consumers purchase footwear online by providing measurements pertinent to fitting, has been acquired by Amazon for undisclosed terms. Shoefitr looks to have raised $1.3 million in funding from Vital Venture Capital, Innovation Works, and AlphaLab. TechCrunch has more here.

    —–

    People

    Analysts at Morgan Stanley say that Yahoo, which has fired up to 900 employees since last fall, needs to reduce its headcount by another 11 percent just to keep earnings flat between 2014 and 2015. That’s about 1,400 more employees.

    People Magazine could go to trial for misidentifying an entrepreneur as the mistress of Google co-founder Sergey Brin, based on an April 3 court decision. More here.

    What do Pharrell, Drake and Katie Perry have in common (well, besides being international celebrity entertainers)? They’re already wearing the Apple Watch.

    Meet the Amazon Web Services mafia.

    —–

    Job Listings

    General Catalyst Partners is looking to hire an investment associate in Cambridge, Ma.

    Snapchat is hiring a business analyst. The job is in Venice, Ca.

    —–

    Essential Reads

    Here’s what it looks like when a startup wins big at Y Combinator.

    —–

    Detours

    Meet Walnut, the crane who fell in love with her zookeeper.

    Where the white people live.

    —–

    Retail Therapy

    Out with gray. In with blue. (Blue, blue, blue, we’re telling you.)

  • One of Craigslist’s Biggest Threats to Date: VarageSale

    VarageSaleIt’s accepted wisdom that nothing and no one can destroy Craiglist, the San Francisco-based local classifieds marketplace whose success has continued unhampered for roughly 20 years, despite many newer entrants with far snazzier technologies.

    VarageSale might just be different. At least, the 50-person, Toronto-based outfit is gaining enough traction that last month, Sequoia Capital and Lightspeed Venture Partners sank $34 million into its operations.

    What makes the startup, which claims to have millions of users, so promising? A few things, according to cofounder Carl Mercier, who sold an antispam company to security-software maker Websense in 2009 and founded VarageSale with his wife, Tami Zuckerman, in 2012. For starters, users have to be accepted onto the platform by volunteer moderators in the many communities in which VarageSale now operates. (The company has quietly spread to cities in 42 states and in every Canadian province.)

    As key, seemingly, the conversations that happen behind the scenes between Craigslist users — the harried “I’ll take it!” emails, along with the privately asked questions and price haggling — are instead displayed in Twitter-like feeds at VarageSale. It helps build interest in users’ items, suggests Mercier; it also builds community.

    We talked with Mercier this week. Our conversation has been edited for length.

    You say VarageSale has millions of users. Is that single-digit millions? And how many items are selling on the platform each month or year?

    We have millions of users who view billions of items of month. For competitive reasons, we’d rather not be more specific. But 50 percent of our mobile users open the app every day, which is very unusual for a commerce app.

    What are they returning to check out?

    Typically people are coming to the site for information about a specific category they’re following — like clothes for a two-year-old boy, or smartphones. They also come back all the time because they want to make sure they don’t miss that treasure, or because they posted an item and there are 10 people who’ve expressed an interest in it.

    Do you do anything to slow the pace of transactions to foster those conversations? It’s interesting that people don’t just sell to the first interested party.

    It’s more akin to people putting their towel on a beach chair at 6 a.m to reserve it. Maybe the first person to express an interest [lands the item], but once they ask a question, then we see other people become interested — sometimes tens of them.

    You don’t enable people to transact through the site, though. Like Craigslist, that happens offline. Might that change?

    We really want to focus on building up our local communities right now — growing our user base and coverage. That’s where we feel like we’ll have the biggest impact.

    I’d read about VarageSale meet-ups. How do most people come together?

    It really depends on the people and the communities. Sometimes people meet in a parking lot or at their house; sometimes, our moderators organize events every one or two weeks.

    Given your emphasis on community, VarageSale sounds like a hybrid of a number of things, including Craigslist and NextDoor. Maybe even Airbnb? Are people selling home items alone, or are you starting to see other things, like neighbors alerting others to their available in-law unit?

    Hah, no. Airbnb is really good at that. Some people are renting properties [on the platform], but we mostly focus on physical goods.

    You’ve just raised a lot of money. Is this an employee-intensive business? How will you use the capital?

    Building strong communities isn’t something that we can just press a button and it happens. It’s definitely hard work that involves a lot of human intervention. We probably won’t be hiring 1,000 people, but we think we’ll add 30 to 40 employees in the next year. We already have a small presence in Europe, Australia, and Japan that we’re growing.

    Will your eventual business model center on transaction fees? Local advertising?

    Revenue isn’t a priority for us. We want to focus on improving user experience and we have great partners [in our venture investors]. With the money we now have in the bank, we have runway for a few years.

  • StrictlyVC: April 9, 2015

    Hi, happy Thursday, everyone!

    —–

    Top News in the A.M.

    LinkedIn is spending $1.5 billion in cash and stock to acquire Lynda.com, a 20-year-old, Carpinteria, Ca.-based online learning company that teaches business, technology and creative skills to aspiring professionals. It’s LinkedIn’s biggest deal to date, and the company explains the tie-up here. Lynda had raised roughly $290 million across two rounds fromSpectrum Equity, Meritech Capital Partners, and Accel Partners.

    —–

    Joya Raises $5 Million to Make Messaging More Fun

    Three years ago, Michal and Vlada Bortnik, former Microsoft employees who met on a soccer field in Seattle, had a host of problems every time they gathered up their two young daughters and tried communicating online with far-flung family members.

    The couple decided to do something about it, founding Joya, a mobile video communications company whose two newest messaging apps allow users to record playful messages of up to 30 seconds in length. One app, FlipLip, allows users to play with their voice and insert their face in a variety of county-fair-like digital cut-outs; the other, Cleo, invites people to make video selfies using filters designed to make them appear more attractive.

    Whether the apps take off remains to be seen, but Facebook certainly thinks they’re promising. The couple was among 39 other developers to work with the company in advance of the rollout last month of its Messenger Platform, for which it hopes developers will build apps that integrate with Facebook Messenger.

    Facebook’s apparent endorsement could prove especially meaningful as it attempts to turn Messenger into its own ecosystem. (Yesterday, as you likely read, Facebook launched a standalone Messenger app for the web with the hope that people will use Messenger both inside and outside of the social network.)

    Certainly, Joya’s traction caught the attention of Battery Ventures and Altos Ventures, which have just provided the now seven-person company with $5 million in Series A funding.

    As for what’s next, the pair — now based in Palo Alto, Ca. — say to expect more apps this year that will continue their focus on making quick, online messaging easier and more enjoyable.

    They add that for now, they plan to make their existing (free) apps better and more tightly integrated with Messenger.

    “It’s very rare that platforms like this come out with such large audience,” says Michal Bortnik, noting that according to Facebook, Facebook Messenger now has more than 600 million monthly active users.

    “We’ve developed many concepts that never saw the light of day,” he says, “but we now have a clear product and a clear story: How can we make communications more personal and fun . . . We have something that’s growing.”

    —–

    New Fundings

    Annapurna Microfinance, a six-year-old, Bhubaneswar, India-based microfinance venture, has raised $4.2 million in Series C funding from earlier investor Samridhi Fund. VCCircle has more here.

    ApplePie Capital, a year-old, San Francisco-based online loan business focused on franchise financing, has raised $6 million in Series A funding led by Signia Venture Partners, with participation from Freestyle Capitaland QED Investors. (All three had backed the company last July, when it raised $3.7 million in seed funding.) Ron Suber, president of the lending marketplace Prosper, also invested in the new round. StrictlyVC talked ApplePie CEO Denise Thomas last November about how the company works.

    CliQr, a five-year-old, Santa Clara, Ca.-based hybrid cloud management vendor, just raised $20 million in Series C funding from Polaris Partners, along with earlier backers Foundation Capital, Google Ventures andTransLink Capital. The company has now raised $38 million altogether.More here from Forbes.

    Conversion Logic, a year-old, L.A.-based company whose software helps advertisers track the effectiveness of their ads across devices and channels, has raised $4 million in seed funding led by Rincon Venture Partners, with participation from Crosscut Ventures, Founder Collective, Lerer Hippeau Ventures, Raptor Ventures and TenOneTen. The company previously raised $1.1 million in seed funding.

    DiabetOmics, a seven-year-old, Beaverton, Or.-based diagnostics company that makes a saliva-based glucose monitoring test for diabetes patients and an early detection test for gestational diabetes and pre-eclampsia, has raised $4 million in funding led by Ventureast. Crunchbase shows the company has now raised $10 million altogether, including fromRogue Venture Partners. More here.

    Domo, a 4.5-year-old, American Fork, Ut.-based SaaS business founded by Josh James of Omniture fame, has raised $200 million in Series D funding at a $2 billion valuation led by BlackRock, with participation fromCapital Group and Glynn Capital. Earlier backer GGV Capital also reportedly contributed five times its pro rata. Domo previously raised $259 million from investors, including TPG Growth, Salesforce, T. Rowe Price,Fidelity Investments, Morgan Stanley, Viking Ventures, Dragoneer Investment Group, Greylock Partners, Institutional Venture Partners and Mercato Partners. The WSJ has the new funding details.

    Engagio, a new, San Mateo, Ca.-based company that’s building an account-based marketing automation platform, has raised $10 million in Series A funding led by FirstMark Capital, with participation from Storm Ventures and First Round Capital. Its cofounder, Jon Miller, founded Marketo, which went public in May of 2013 and currently has a market cap of more than $1 billion.

    Brainbees Solutions, a five-year-old, Pune, India-based company that operates the baby- and kids-focused e-commerce site FirstCry, has added $10 million to its Series D round from New Enterprise Associates. Last month, it had closed the round with $26 million led by Valiant Capital Partners, with participation from earlier backers IDG Ventures India, Temasek’s VC arm Vertex and SAIF Partners. FirstCry has now raised nearly $70 million altogether. VCCIrcle has the story here.

    Global Fashion Group, a four-year-old, Luxembourg-based cluster of five of its Rocket Internet’s emerging market fashion sites that consolidated into one bigger operation last year, has raised $35 million at a $3 billion post-money valuation led by Tengelmann Ventures and Verlinvest. The company has also recruited as CEO Romain Voog, the former head of Amazon France. TechCrunch has more here.

    Lili & Beauty, an eight-year-old, Shanghai, China-based cosmetics e-commerce platform, has raised $100 million in Series B funding led by Crescent HydePark, with participation from Milestone Capital and New Access Capital. China Money Network has more here.

    Meican, a four-year-old, Beijing, China-based online food ordering platform, has raised $23 million in Series C funding led by the Yelp-like review site Dianping.com, with participation from earlier backers KPCB China, Nokia Growth Partners, and Trustbridge Partners, reports China Money Network.

    Nabriva Therapeutics, a 14-year-old, Vienna-based biotechnology company focused on a new class of antibiotics for the treatment of serious bacterial infections that cause pneumonia, has raised $120 million in Series B led by Vivo Capital and OrbiMed, and with participation fromEcoR1 Capital, Boxer Capital of Tavistock Life Sciences, and earlier investor HBM. MedCity News has more here.

    Opendorse, a 2.5-year-old, Lincoln, Ne.-based company that pairs athletes and brands seeking social media endorsements, has raised $1.75 million in funding led by Flyover Capital. Altogether, the company has raised $2.1 million from investors since its launch, it says. Forbes hasmore here.

    Pixability, a seven-year-old, Boston-based video advertising startup, has raised $18.2 million in Series C funding from undisclosed investors. The company has now raised $28.2 million altogether. BetaBoston has more here.

    Prosper, the nine-year-old, San Francisco-based peer-to-peer lending marketplace, has raised $165 million in Series D funding led by Credit Suisse NEXT Investors, part of Credit Suisse Asset Management. Additional participants included J.P. Morgan Asset ManagementSunTrust Banks, a subsidiary of USAA, BBVA Ventures, Neuberger Berman Private Equity Funds, Passport Capital, Breyer Capital, and others. According to Crunchbase, the company has now raised $355 million from investors. Dealbook has more here.

    Qingchifan, a year-old, Beijing, China-based dating app for meeting up with strangers for dinner dates, has raised an undisclosed amount of Series B funding led by Vertex Ventures, with participation from Sequoia Capital. Tech in Asia has more here.

    Seismos, a three-year-old, Austin, Tex.-based company whose data analytics software focuses on real-time subsurface fluid flow for oil and gas production monitoring, has raised $4 million in funding led by Javelin Venture Partners, with participation from Osage University Partners and other oil and gas technology-focused investors, including Kemal Farid, founder of Merrick Systems; Donald Kendall, CEO of Blue Earth Capital; and Geoff Hicks, founder of Hicks Oilfield.

    Testlio, a 2.5-year-old, Austin, Tex.-based community of expert test engineers that test mobile apps, has raised $1 million in seed funding fromTechstars Ventures, Galvanize, Geekdom Fund and individual investors.

    The RealReal, the four-year-old, San Francisco, Ca.-based online luxury consignment site, has raised $40 million in Series D funding led by Industry Ventures, with participation from Greycroft Growth, e.ventures Growth, DBL Partners and earlier backers Canaan Partners and InterWest Partners. The company has now raised $83 million to date. StrictlyVC visited one of the company’s warehouses last summer.

    —–

    New Funds

    Kalaari Capital, the three-year-old, India-based venture capital fund, is planning to raise $300 million for its second tech-focused fund, reports DealCurry. Kalaari was created in 2012 by the partners behind Indo US Venture Partners (IUVP, also known as IndosUS). Its portfolio consists of numerous fast-growing e-commerce companies, including SnapdealFlipkart, and Urban Ladder.

    —–

    IPOs

    Adaptimmune Therapeutics, a U.K.-based clinical-stage biopharmaceutical company focused on cancer immunotherapy products, has filed to go public in the U.S., following on the heels of other IPOs in the field, including Juno Therapeutics, Bellicum Pharmaceuticals, and Kite Pharma. Investors Business Daily has more here.

    aTyr Pharma, a 10-year-old, San Diego-based biotherapeutics company that discovers and develops protein biologics for human therapeutics, and which just announced $76 million in Series E funding nine days ago, has filed to go public. Major shareholders include Fidelity Investments, which owns 13.5 percent of the company, Domain Associates (10.5 percent),Polaris Partners (10.5 percent), Alta Partners (10.3 percent), Cardinal Partners (10.1 percent), Sofinnova Ventures (8.9 percent), and Baker Brothers Life Sciences (8.9 percent). Xconomy has more here.

    —–

    Exits

    Apple quietly bought Dryft, a startup that develops keyboard apps, last year, reports TechCrunch.

    Coinsetter, a New York-based bitcoin exchange that targets institutional and professional traders, acquired Canadian Virtual Exchange, a bitcoin trading platform that recently shut down due to security breaches. The deal was valued at $2 million, reports Reuters.

    —–

    People

    Hillary Rodham Clinton has hired longtime Google executive Stephanie Hannon to oversee her likely presidential campaign’s technology development and build new ways for Clinton to engage with voters, reports the Washington Post.

    Golden Venture Partners, a Toronto-based mobile-focused seed and early stage venture capital fund, has hired Ameet Shah as a partner and Bert Amato as a venture partner. In 2011, Shah cofounded Tira Wireless alongside Matt Golden, Golden Venture’s founder; he then sold his next startup, Five Mobile, to Zynga. Amato, cofounded Delrina, which was acquired by Symantec. More here.

    Less than two years after Don Mattrick was installed as CEO of the online games company Zynga, he’s abruptly out the door and founding CEO Mark Pincus is back. No outside word yet about what happened, though the New York Times notes notes the a “long-running turnaround plan that [Mattrick] set in motion at Zynga had yet to take flight.” Mattrick, a longtime Electronic Arts executive who later ran Microsoft’s Xbox business, walks away roughly $15 million richer for leaving the company, notes VentureBeat. Meanwhile, the market doesn’t love the news of Pincus’s return.

    The institutional investor HarvourVest Partners is opening an office in Toronto, and it just hired Senia Rapisarda, a former vice president at BDC, as a principal to help run it. The firm notes that it has a long history of investing in Canadian companies through primary and secondary investments; this is its first Canadian office, though.

    Anthony Watson, the former CIO of Nike, has joined the San Francisco-based fiat-to-bitcoin exchange BitReserve as president and COO. Bitreserve was founded last year by CNET cofounder Halsey Minor. Fortune has much more here.

    —–

    Job Listings

    Bank of America Merrill Lynch is looking to hire an associate of venture capital coverage for its Palo Alto, Ca.-based tech investment banking division.

    —–

    Essential Reads

    Yahoo is planning a big reorganization that will bring Tumblr more closely into the company. More here.

    Google is planning a service to connect users with plumbers, electricians, roofers and other home-service providers, reports the WSJ. The development comes eight months after Google Capital led a $100 million investment in the local services site Thumbtack. (Thumbtack CEO Marco Zappacosta is speaking at our event next month. We’ll ask him about it!)

    Genius (formerly Rap Genius) now enables users to annotate any web page. More here.

    —–

    Detours

    Futuristic subway stations.

    The return of sad sack “Louie.”

    What’s going on with Tiger Woods?

    —–

    Retail Therapy

    Hu$tle.

  • Joya Raises $5 Million to Make Messaging More Fun

    JoyaThree years ago, Michal and Vlada Bortnik, former Microsoft employees who met on a soccer field in Seattle, had a host of problems every time they gathered up their two young daughters and tried communicating online with far-flung family members.

    The couple decided to do something about it, founding Joya, a mobile video communications company whose two newest messaging apps allow users to record playful messages of up to 30 seconds in length. One app, FlipLip, allows users to play with their voice and insert their face in a variety of county-fair-like cut-outs, including a princess, ninja and bear; the other, Cleo, invites people to make video selfies using filters designed to make them appear more attractive.

    Whether the apps take off remains to be seen, but Facebook certainly thinks they’re promising. The couple was among 39 other developers to work with the company in advance of the rollout last month of its Messenger Platform, for which it hopes developers will build apps that integrate with Facebook Messenger.

    Facebook’s apparent endorsement could prove especially meaningful as it attempts to turn Messenger into its own ecosystem. (Yesterday, as you likely read, Facebook launched a standalone Messenger app for the web with the hope that people will use Messenger both inside and outside of the social network.)

    Certainly, Joya’s traction caught the attention of Battery Ventures and Altos Ventures, which have just provided the now seven-person company with $5 million in Series A funding.

    As for what’s next, the pair — now based in Palo Alto, Ca. — say to expect more apps this year that will continue their focus on making quick, online messaging easier and more enjoyable.

    They add that for now, they plan to make their existing (free) apps better and more tightly integrated with Messenger.

    “It’s very rare that platforms like this come out with such large audience,” says Michal Bortnik, noting that according to Facebook, Facebook Messenger now has more than 600 million monthly active users.

    “We’ve developed many concepts that never saw the light of day,” he says, “but we now have a clear product and a clear story: How can we make communications more personal and fun . . . We have something that’s growing.”

  • StrictlyVC: April 8, 2015

    Hi, good morning, everyone! Thanks to those of you bought tickets yesterday for our fast-approaching event next month in San Francisco. We’re looking forwarding to seeing you soon.:) Thanks again, too, to our top sponsors Personal Capital and Amazon Web Services.

    (For East Coast readers who might be wondering: We’re back to figuring out Boston in June. We’ll let you know more as we do.)

    —–

    Top News in the A.M.

    Russian hackers accessed sensitive White House information last year, including real-time (non-classified) details of president’s schedule. More here.

    Google appears to be developing a teleconferencing tool called GMeet.

    Twitter is experimenting with more search filtering options.

    —–

    First Data Waves Its Flag in Silicon Valley

    Soon after Frank Bisignano joined the payment processing giant First Data as CEO two years ago, Bisignano — who was formerly co-chief operating officer of JPMorgan Chase — set his sights on beefing up the company’s corporate venture firm. Among his first steps: appointing Pete Donat, a longtime VP at First Data (and a VP at both Visa and MasterCard before that), to lead a four-person team that now assesses startups and alerts different unit heads within the 23,000-person company to technologies that might benefit them.

    “Frank really wanted to put extra emphasis on innovation in Silicon Valley,” says Donat, “so we hired a team out here, and we’ve been increasingly active over the last year.”

    “Active” is somewhat subjective. The team saw 300 companies last year and invested in six – not exactly the blistering pace one might expect from the company, which has been owned by KKR since 2007.

    Then again, First Data — which has struggled to find new areas of growth in recent years — is in the middle of a turnaround that involved a $3.5 billion private placement in the company last year, including more capital from KKR.

    Some of the capital freed by that investment is now streaming into startups that the company hopes will help it develop more products. Among them is Booker, a four-year-old, New York-based online booking platform that helps small businesses sell their services online. “It’s a really cool company with lots of great potential and synergies that fit with First Data and our merchant clients,” says Donat.(First Data participated in Booker’s $35 million Series C round last month.)

    That private placement should also help First Data when it comes to acquisitions, which are clearly of interest to the company. Over the last two-and-a-half years, First Data has acquired three startups: the cloud-based payment software developer Clover Network; Perka, a digital rewards-program designer; and the mobile-gift-card company Gyft. It also created Insightics, a business unit it developed with the analytics company Palantir Technologies to glean more insights into customer spending from its merchant customers’ credit-card records.

    As for startups looking to get on First Data’s radar, approaching as a partner seems to be the best course. Donat says his team finds most of its investment opportunities from people who “knock on our door and say, ‘I need one of your capabilities.’” When the team does “go outbound,” he continues, “we go out with a short shopping list and the likelihood of a us doing a deal goes up.”

    Asked if his group might adjust its pace to invest more actively, Donat says 2015 might see “slightly” more deals from the group, but that he doesn’t expect things to “change dramatically. Once we [back] a deal, we want to ensure that we’re supporting that company. We probably overinvest in the amount of time we spend, helping [founders use First Data] to grow their revenue.”

    Either way, Donat notes, First Data is “very committed” to its venture arm and “very committed to growing its presence in the Bay Area.”

    Indeed, he says that when he opened First Data’s office in Palo Alto in early 2013, there were three people in the office. Today, he says, between Gyft, Clover, Insightics, and a separate digital commerce unit, the office is home to more than 100 employees.

    —–

    New Fundings

    IIX, a four-year-old, Palo Alto, Ca.-based Internet infrastructure company, has raised $20 million in fresh funding from TriplePoint Capital. The company also acquired smaller rival IX Reach for undisclosed terms. According to Crunchbase, IIX has raised roughly $36 million altogether, including from New Enterprise Associates.

    Alzheon, a two-year-old, Framingham, Ma.-based clinical-stage biopharmaceutical company focused on brain health, memory and aging, has raised $10 million in Series A funding led by Ally Bridge Group, with participation from other (unnamed) new and earlier investors.

    DealStruck, a two-year-old, Carlsbad, Ca.-based online lending platform that caters to small businesses, has raised $58.3 million — $8.3 million in venture funding from Trinity Ventures, and a $50 million credit facility from Brevet Capital. The company had previously raised an undisclosed amount of seed funding from Peterson Ventures and Blackbird Ventures.

    Euclises Pharmaceuticals, a four-year-old, St. Louis, Mo.-based company that’s developing pain and cancer medications, has added $700,000 to its Series A round, bringing its total haul to $2 million. Investors include BioGenerator, Cultivation Capital and St. Louis Arch Angels.

    FirstFuel Software, a 3.5-year-old, Lexington, Ma.-based company whose software helps electric utilities manage energy use and businesses reduce energy bills, has raised $23 million in Series C funding led by Next World Capital, with participation from Electranova Capital, and earlier investors Battery Ventures, Rockport Capital, Nth Power and E. ON. The company has now raised roughly $44 million altogether, shows Crunchbase.

    Folloze, a 1.5-year-old, Palo Alto, Ca.-based prospect engagement platform for B2B sales and marketing, has raised $3.3 million in seed funding led by New Enterprise Associates, Cervin Ventures and TriplePoint Ventures, with participation from unnamed angel investors.

    FreeAgent, an eight-year-old, Edinburgh, Scotland-based online accounting and money management tool for freelancers and small businesses, has raised $5 million in debt financing from SaaS Capital. The company had previously raised an undisclosed amount of money from investors, including Lightbank, The Accelerator Group, and IRIS Software Group in the U.K.

    Haystack TV, a two-year-old, Redwood City, Ca.-based personalized video news service, has raised $1.7 million in seed funding, including from Endeavor Global founder Peter Kellner, Flycast Networks cofounder Larry Braitman, and Stanford’s StartX Fund. TechCrunch has more here.

    Kyriba, a 15-year-old, San Diego, Ca-based company whose software helps treasury departments plan for market volatility, regulation and more, has raised $21 million in Series C funding from HSBC, with the participation of earlier backers BRED Banque Populaire, Daher CapitalIris Capital, and Upfront Ventures.

    MobiKwik, a 5.5-year-old, Gurgaon, India-based mobile wallet company, has raised $25 million in new funding from the hedge fund Tree Line Asia Master Fund, Cisco Investments, American Express Ventures, and Sequoia Capital. Forbes has more here.

    NSONE, a two-year-old, New York-based DNS and traffic management company, has raised $5.35 million in Series A funding co-led by Flybridge Capital Partners and Sigma Prime Ventures, with participation from Founder Collective and Center Electric.

    Palerra, a two-year-old, Santa Clara, Ca.-based cloud-security company, has raised $17 million in Series B funding led by new investor August Capital, with participation from earlier backers Engineering CapitalNorwest Venture Partners and Wing Venture Capital. The company has now raised $25 million to date.

    Patch of Land, a two-year-old, L.A.-based crowdfunding platform for real-estate financing, has raised $23.6 million in Series A funding led by SF Capital Group, with participation from individual investors. According to Crunchbase, the company had raised $1.2 million in seed funding in 2013.

    Point.io, a two-year-old, Boston and Philadelphia-based company whose software platform aims to get mainstream enterprises into the API economy quickly and cheaply, has raised $4 million in Series B funding from unnamed strategic customers, Philadelphia “institutions,” and high net worth individuals. The company, which has now raised about $6.3 million altogether, has no traditional institutional investors, it says.

    RealtyShares, a two-year-old, San Francisco-based online marketplace for real estate investing, has raised $10 million in Series A funding led by Menlo Ventures, with participation from earlier backer General Catalyst Partners. The company previously raised two rounds of seed funding, including a $1.9 million round last year.

    RefME, a months-old, London-based book-barcode scanning app that speeds up the task of creating, formatting and managing citations, references lists and bibliographies, has raised $5 million in funding led by GEMS Global, a subsidiary of the education company Varkey Group. TechCrunch has more here.

    Sharecare, a 5.5-year-old, Atlanta, Ga.-based company whose Q&A platform allows people to ask and learn about health and wellness issues, has raised $20 million in funding from Wellington Management. The company has now raised $160 million altogether, including from Heritage Group, TomorrowVentures, Galen Partners, and New Evolution Ventures.

    Soha Systems, a two-year-old, Sunnyvale, Calif.-based cloud security startup, has raised $9.8 million in funding from Andreessen HorowitzCervin Ventures, Menlo Ventures and Moment Ventures. More here.

    Temando, a nearly six-year-old, Brisbane, Australia-based supply chain startup, has raised $50 million in Series B funding from Neopost S.A. The company had earlier raised $6 million in funding, including from Ellerston Capital.

    TriPlay, a 10-year-old, New York-based developer of cloud services that enable people to consume music and other media across different devices, has raised $11 million from funds managed by Fortress Investment Group, as well as earlier backer Kenges Rakishev. The company has raised $16 million altogether, according to Crunchbase.

    Vidme, a 16-month-old, L.A.-based online video sharing platform that has emerged as the go-to video platform on Reddit, has raised $3.2 million in new funding from Upfront Ventures, First Round Capital, Initialized (a fund from Reddit cofounder Alexis Ohanian), SV Angel, Lowercase Capital, Mucker Capital, and Launchpad Capital. Variety has more here.

    Yeloha, a new, Boston-based peer-to-peer solar-sharing network created by the Israeli company Generaytor, has raised $3.5 million in Series A funding led by Carmel Ventures. Venture Capital Dispatch has more here.

    —–

    Exits

    Informatica said yesterday that it will go private in a deal valued at about $5.3 billion. The enterprise data integration vendor is being acquired by the private equity firm Permira, and the Canadian Pension Plan Investment Board, for $48.75 a share. (The development is very good for venture-backed MuleSoft, argues Business Insider.)

    Reserve, the San Francisco-based restaurant reservation company that launched this past fall, has acquired two fellow startups in the dining space: Zurvu, a New York-based startup that also manages online restaurant reservations; and HAIL, an L.A.-based startup whose app helps diners split the check. TechCrunch has more here.

    Singapore Telecommunications is acquiring Trustwave, a Chicago-based managed-security services specialist, in a deal valued at $810 million. Morningstar has more here.

    Sprinklr, the social media management firm, has acquired GetSatisfaction, an online community platform used to connect customers and companies. Terms of the deal aren’t being disclosed. GetSatisfaction had raised nearly $21 million from investors, shows Crunchbase. Its backers include InterWest Partners, Azure Capital Partners, O’Reilly AlphaTech Ventures, and First Round CapitalMore here.

    —–

    People

    “I’m going to end up with a lot more money than I feel like I’m entitled to given how hard I work,” Slack founder and CEO Stewart Butterfield tells Inc. in a candid interview. More here.

    Billionaire investor Mark Cuban on why he’s betting on specific ed tech startups: “There are going to be a lot of universities that go out of business. I’m not talking about the Apollos and the University of Phoenix, but [traditional, brick-and-mortar] schools.” More here.

    Orrick Herrington & Sutcliffe partner Lynn Hermle shares whether she thinks the Ellen Pao case — which she argued for Kleiner Perkins — will have the outsize impact on Silicon Valley that many expect: “It’s not going to happen. Cases don’t change industries. That’s not what they’re about; that’s not what they do.”

    —–

    Job Listings

    Microsoft is hiring a senior tech evangelist who will work within its Microsoft Ventures group and engage with “thought leaders” in the venture industry. The job is in Redmond, Wa.

    —–

    Essential Reads

    Uber now accounts for nearly half of all ground transportation business expenses at many companies in North America.

    Ride, a two-year-old, New York-based service for organizing co-workers at the same company into carpooling groups, opened to U.S. businesses yesterday and launched a new app for Apple devices. The WSJ has the story about the company — which is majority owned by TPG Growth and employs Uber’s first technology chief, Oscar Salazarhere.

    “Let’s just get this out of the way: the Apple Watch, as I reviewed it for the past week and a half, is kind of slow. There’s no getting around it . . .”

    —–

    Detours

    Rolls-Royce takes the first step in building . . . an SUV.

    Seth Myers brings Jon Snow to a dinner party.

    What is a species, really?

    —-

    Retail Therapy

    Icon Trucks. [Heart flutter.] More here.

  • First Data Waves Its Flag in Silicon Valley

    first-data-logoSoon after Frank Bisignano joined the payment processing giant First Data as CEO two years ago, Bisignano — who was formerly co-chief operating officer of JPMorgan Chase — set his sights on beefing up the company’s corporate venture firm. Among his first steps: appointing Pete Donat, a longtime VP at First Data (and a VP at both Visa and MasterCard before that), to lead a four-person team that now assesses startups and alerts different unit heads within the 23,000-person company to technologies that might benefit them.

    “Frank really wanted to put extra emphasis on innovation in Silicon Valley,” says Donat, “so we hired a team out here, and we’ve been increasingly active over the last year.”

    “Active” is somewhat subjective. The team saw 300 companies last year and invested in six – not exactly the blistering pace one might expect from the company, which has been owned by KKR since 2007.

    Then again, First Data — which has struggled to find new areas of growth in recent years — is in the middle of a turnaround that involved a $3.5 billion private placement in the company last year, including more capital from KKR.

    Some of the capital freed by that investment is now streaming into startups that the company hopes will help it develop more products. Among them is Booker, a four-year-old, New York-based online booking platform that helps small businesses sell their services online. “It’s a really cool company with lots of great potential and synergies that fit with First Data and our merchant clients,” says Donat. (First Data participated in Booker’s $35 million Series C round last month.)

    That private placement should also help First Data when it comes to acquisitions, which are clearly of interest to the company. Over the last two-and-a-half years, First Data has acquired three startups: the cloud-based payment software developer Clover Network; Perka, a digital rewards-program designer; and the mobile-gift-card company Gyft. It also created Insightics, a business unit it developed with the analytics company Palantir Technologies to glean more insights into customer spending from its merchant customers’ credit-card records.

    As for startups looking to get on First Data’s radar, approaching as a partner seems to be the best course. Donat says his team finds most of its investment opportunities from people who “knock on our door and say, ‘I need one of your capabilities.’” When the team does “go outbound,” he continues, “we go out with a short shopping list and the likelihood of a us doing a deal goes up.”

    Asked if his group might adjust its pace to invest more actively, Donat says 2015 might see “slightly” more deals from the group, but that he doesn’t expect things to “change dramatically. Once we [back] a deal, we want to ensure that we’re supporting that company. We probably overinvest in the amount of time we spend, helping [founders use First Data] to grow their revenue.”

    Either way, Donat notes, First Data is “very committed” to its venture arm and “very committed to growing its presence in the Bay Area.”

    Indeed, he says that when he opened First Data’s office in Palo Alto in early 2013, there were three people in the office. Today, he says, between Gyft, Clover, Insightics, and a separate digital commerce unit, the office is home to more than 100 employees.

  • StrictlyVC: April 7, 2015

    Hi, and happy Tuesday, everyone!

    —–

    Top News in the A.M.

    Consumer and child advocacy groups are today asking the FCC to investigate Google’s new YouTube Kids application, arguing that the company is unfairly and deceptively targeting toddlers with advertising on tablets and smartphones. More here.

    —–

    A VC Adds a Thesis: “Wrist First”

    Peter Relan, a veteran of Hewlett-Packard and Oracle, has spent the last decade nurturing young companies at his YouWeb incubator in Mountain View, Ca. At first, he focused on mobile social gaming companies, investing $2 million across a variety of startups and enjoying at least one big hit when OpenFeint, a social gaming network, was acquired in 2011 by the Japan-based Internet media company Gree for $104 million.

    In 2013, Relan raised a separate $10 million from wealthy individuals for a sub-brand of YouWeb called 9+, an incubator and accelerator that focuses on marketplaces, wearables, and so-called Internet of Things technologies.

    A number of highly promising companies are again emerging from the outfit, insists Relan, including the online video gaming company Hammer & Chisel, launched by OpenFeint founder Jason Citron. (It has raised $12 million in funding from 9+, IDG Ventures, Accel Partners, Benchmark, and Tencent.)

    Relan also points to GotIt, a seed-funded photo-based on-demand marketplace that’s begun talking with investors about a Series A, and the “connected kitchen” startup Camellia Labs, founded by former Salesforce senior engineering manager Guarav Chawla. (“Everybody in Silicon Valley who’s in the design business is stumbling over themselves, trying to be the product design shop for [Chawla],” says Relan.)

    Still, what’s capturing much of Relan’s attention these days, he says, are “wrist-first” technologies — apps developed expressly for smartwatches, which he expects will represent a huge opportunity over the next couple of years as the Apple Watch streams into the marketplace.

    One of his bets, for example, is on a nascent company called Awear, whose app enables users to send and receive SMS messages with a couple of clicks. It doesn’t sound terribly revolutionary, but it represents a “10x” leap in terms of speed, says Relan, who notes that it’s a lot easier to tap a watch than “fish a phone out of your pocket or handbag, then unlock it, open the right app, and respond.” (Awear first launched on the Pebble smartwatch and 10 percent of Pebble customers have downloaded the app, says Relan.)

    Relan thinks the possibilities extend far beyond communications, too. “Think of games that are easy to play in one or two clicks. Or the B2B app that notifies an executive that he received 400 orders during an important meeting. Or an app that can deliver an EKG to your doctor with the tap of a button.”

    Smartwatches may have low computing power, he notes, but smartwatches combined with the power of the cloud begin to look pretty compelling.

    More, says Relan, he has seen this movie before.

    “When the iPhone was just being introduced [and we began focusing on mobile social gaming], the hard-core gamers laughed at us. They said, ‘[The phone] is tiny. It has no keyboard, no controls.’ But I said it would be 10 times more convenient to play, and now mobile social gaming is multibillion-dollar industry.”

    “Whenever a new platform succeeds, it’s because it improves [on the status quo] by at least a factor of 10,” Relan continues. The Apple Watch might not be 10 times better than the smartphone, but he fully expects it to let users do things 10 times faster — and that’s enough to get him excited about what’s next.

    —–

    New Fundings

    AssetAvenue, a 1.5-year-old, L.A.-based online peer-to-peer platform focused on the commercial real estate market, has raised $11 million in Series A funding led by DCM, with participation from earlier backers Matrix Partners, NetEase, and Prosper Marketplace CEO Ron Suber. The company has now raised at least $15 million to date, shows Crunchbase.

    CoreOS, a two-year-old, San Francisco-based company that builds a lightweight version of the operating system Linux, helping reduce the amount of hardware needed to run applications in big data centers, has raised $12 million in funding led by Google Ventures, with participation by Kleiner Perkins Caufield & Byers, Fuel Capital and Accel Partners. The company has now raised $20 million altogether. TechCrunch hasmore here.

    Custora, a four-year-old, New York-based predictive analytics company that helps brands anticipate and influence their customers’ spending, has raised $6.5 million in fresh funding led by Foundation Capital, with participation from Greycroft Partners and Valhalla Partners. The company, a Y Combinator alum, had earlier raised $1 million in seed funding. Venture Capital Dispatch has the story here.

    D3O, a 14-year-old, U.K.-based developer of shock-absorbing smart materials that are used in products across the motorcycle, sport, footwear, electronics, military and work-wear sectors, has raised $19 million in funding led by Beringea, with participation from Entrepreneurs Fund.

    Livongo Health, a year-old, Chicago-based digital health company whose cloud-enabled glucose meter helps people (and their family, friends, and physicians) manage their diabetes, has raised $20 million in funding from Kleiner Perkins Caufield & Byers, DFJ, and earlier backer General Catalyst Partners. The company had previously raised $10 million, including from Slow Ventures.

    Natera, an 11-year-old, San Carlos, Ca.-based company whose technology diagnoses genetic diseases with a noninvasive DNA test, has raised $55.5 million led by new investor Sofinnova Ventures, with participation from Capital Research and Management, Franklin Templeton Investments, Jennison Associates, RA Capital Management, HealthCor Partners, and OrbiMed Advisors. The company has now raised $154.1 million, according to Crunchbase.

    OYO Rooms, a two-year-old, Bangalore, India-based platform for low-cost, standardized hospitality bookings throughout SouthEast Asia, has raised $25 million in funding from Lightspeed Venture Partners, Sequoia Capital and Greenoaks Capital Management. More here.

    Placester, a five-year-old, Boston-based marketing-automation platform that gives real-estate agents and brokers tools to build websites and mobile sites for $10 per month, has raised $15 million in new funding led by New Enterprise Associates, with participation from previous investor Romulus Capital. The company has now raised $22 million altogether.

    Quikr, a seven-year-old, Mumbai, India-based classified ads site that helps people find and sell products and services, has raised $150 million in new funding from Steadview Capital, as well as earlier investors Tiger Global Management and Investment AB Kinnevik. The company has now raised $350 million altogether. TechCrunch has more here.

    RebelMouse, a three-year-old, New York-based content publishing platform, has raised $16 million in Series B funding from previous investors Softbank Capital and Oak Investment Partners, with additional participation from Buddy Media cofounder Mike Lazerow. The round quietly closed earlier this year, TechCrunch reported yesterday. The company has now raised $18.8 million altogether.

    RedSeal, an 11-year-old, Sunnyvale, Ca.-based cybersecurity company, has raised $17 million in Series C funding from Tyco International, MATH Venture Partners, DRW Venture Partners, and Pallasite Ventures, along with earlier backers Icon Ventures, Leapfrog, Olympic VenturesSutter Hill Ventures and Venrock. Ray Rothrock, a former Venrock partner and former chair of the National Venture Capital Association, came out of retirement last year to relaunch the then-troubled company. Silicon Valley Business Journal has more here.

    True North Therapeutics, a two-year-old, South San Francisco, Ca.-based biotechnology company that’s developing therapies for rare hematologic, renal, and neurological diseases, has raised $35 million in Series B funding led by OrbiMed, with the participation of earlier investors Kleiner Perkins Caufield & Byers, MPM Capital, SR One, and Baxter Ventures.

    WaterSmart Software, a six-year-old, San Francisco-based software company that helps utilities better understand and use the information they glean from millions of water meters, has raised $7 million in Series B funding from an unnamed family office, with participation from earlier backers Apsara Capital, DFJ, Physic Ventures and The Westly Group. The company has now raised $13.9 million altogether. Venture Capital Dispatch has more here.

    —–

    New Funds

    Google’s former Android boss, Andy Rubin, has launched a new firm called Playground Global that plans to help hardware entrepreneurs with “distribution, manufacturing, financing and ways to integrate their devices with remote computing resources” in exchange for equity in their companies, reports the WSJ. (It will not make direct investments.) The outfit has raised $48 million from investors, including Google, Hewlett-Packard, Hon Hai Precision Industry, Tencent Holdings, Seagate Technology, and Redpoint Ventures, a venture-capital firm where Rubin will also be spending one day a week as a venture partner. The WSJ has much more here.

    —–

    IPOs

    Cidara Therapeutics, a three-year-old, San Diego-based company that’s developing therapies for fungal infections, announced terms for its IPO yesterday, revealing plans to raise $60 million by offering 4 million shares at a price range of $14 to $16.

    —–

    Exits

    Boundless, a four-year-old, Boston-based online textbook publishing startup, has been acquired by online education company Valore for undisclosed terms. Boundless had raised roughly $10 million in funding from Venrock, NextView Ventures, Kepha Partners, Founder Collective and SV Angel. Boston Business Journal has more here.

    OttoCat, an Oakland, Ca.-based startup that was founded in 2012 to organize the App Store into lots of categories and make finding good apps easier, was quietly acquired by Apple “some time ago,” reports TechCrunch. In fact, adds its report, the company might have been acquired as long ago as 2013. (It’s still something, right?)

    —–

    People

    Institutional Venture Partners has made a couple of hires that we’d forgotten to mention yesterday: Roseanne Wincek joins the late-stage growth firm as a VP from Canaan Partners, where she was a principal. The firm has also hired Alexander Lim, who joins as an associate; Lim previously worked in the tech investment banking group at Credit Suisse.

    Matt Murphy, a general partner at Kleiner Perkins Caufield & Byers who recently became known as the person who gave Ellen Pao her walking papers, is leaving the venture firm after 16 years to pursue a new opportunity, he says. Murphy — who was moved from Kleiner’s early-stage group to its growth investing team in 2013 — tells the WSJ that he’s taking his inspiration from several friends and former colleagues who’ve launched their own “smaller, more focused funds” in recent years, including Chi-Hua Chien, who recently cofounded Goodwater Capital, and Aileen Lee, who founded Cowboy Ventures in 2013. More here.

    —–

    Job Listings

    Capital One Ventures is looking to hire an associate in New York.

    —–

    Essential Reads

    Microsoft is working on its own Apple Pay.

    —–

    Detours

    Ray Rice’s redemption campaign.

    Planes without pilots.

    Child spa.

    How to supercharge your iPhone in only five minutes.

    —–

    Retail Therapy

    It’s a flashlight. It’s a flask. It’s, erm, the flasklight!

    A smart stove knob from Pinterest’s former head of engineering. (We’d use one of these.)

  • A VC Adds a Thesis: “Wrist First”

    Peter RelanPeter Relan, a veteran of Hewlett-Packard and Oracle, has spent the last decade nurturing young companies at his YouWeb incubator in Mountain View, Ca. At first, he focused on mobile social gaming companies, investing $2 million across a variety of startups and enjoying at least one big hit when OpenFeint, a social gaming network, was acquired in 2011 by the Japan-based Internet media company Gree for $104 million.

    In 2013, Relan began raising a separate $10 million from wealthy individuals for a program within YouWeb called 9+, an incubator and accelerator that focuses on marketplaces, wearables, and so-called Internet of Things technologies.

    A number of highly promising companies are again emerging from the outfit, insists Relan, including the online video gaming company Hammer & Chisel, launched by OpenFeint founder Jason Citron. (It has raised $12 million in funding from 9+, IDG Ventures, Accel Partners, Benchmark, and Tencent.)

    Relan also points to GotIt, a seed-funded photo-based on-demand marketplace that’s begun talking with investors about a Series A, and the “connected kitchen” startup Camellia Labs, founded by former Salesforce senior engineering manager Guarav Chawla. (“Everybody in Silicon Valley who’s in the design business is stumbling over themselves, trying to be the product design shop for [Chawla],” says Relan.)

    Still, what’s capturing much of Relan’s attention these days, he says, are “wrist-first” technologies — apps developed expressly for smartwatches, which he expects will represent a huge opportunity over the next couple of years as the Apple Watch streams into the marketplace.

    One of his bets, for example, is on a nascent company called Awear, whose app enables users to send and receive SMS messages with a couple of clicks. It doesn’t sound terribly revolutionary, but it represents a “10x” leap in terms of speed, says Relan, who notes that it’s a lot easier to tap a watch than “fish a phone out of your pocket or handbag, then unlock it, open the right app, and respond.” (Awear first launched on the Pebble smartwatch and 10 percent of Pebble customers have downloaded the app, says Relan.)

    Relan thinks the possibilities extend far beyond communications, too. “Think of games that are easy to play in one or two clicks. Or the B2B app that notifies an executive that he received 400 orders during an important meeting. Or an app that can deliver an EKG to your doctor with the tap of a button.”

    Smartwatches may have low computing power, he notes, but smartwatches combined with the power of the cloud begin to look pretty compelling.

    More, says Relan, he has seen this movie before.

    “When the iPhone was just being introduced [and we began focusing on mobile social gaming], the hard-core gamers laughed at us. They said, ‘[The phone] is tiny. It has no keyboard, no controls.’ But I said it would be 10 times more convenient to play, and now mobile social gaming is multibillion-dollar industry.”

    “Whenever a new platform succeeds, it’s because it improves [on the status quo] by at least a factor of 10,” Relan continues. The Apple Watch might not be 10 times better than the smartphone, but he fully expects it to let users do things 10 times faster — and that’s enough to get him excited about what’s next.

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