StrictlyVC: May 29, 2015

How great are short weeks? Hope you have a wonderful weekend, everyone. See you back here Monday.


Top News in the A.M.

At its annual developer’s conference yesterday, Google introduced a service to store and organize an unlimited number of photos and videos — for free. The Google Photos app will be available on both Android and Apple devices and support pictures of up to 16 megapixels and 1080p high-definition video. More here.

Google also unveiled Android Pay yesterday to take on Apple Pay, which allows iPhone 6, 6 Plus, and Apple Watch users to make purchases on their device or in brick-and-mortar stores. More here.

You know what? Just — here’s everything Google announced yesterday in one handy list.


Four VCs on What’s Happening Now in On-Demand Startups

Last week, at the new On-Demand conference in San Francisco, we interviewed a panel of venture investors about the many companies they’re seeing – and funding — that deliver food, massages, and medical advice in real-time. We talked about the opportunity presented by these startups, as well as the many open questions that on-demand companies have created.

Each of the panelists – Patricia Nakashe of Trinity Ventures, Satya Patel of Homebrew, Simon Rothman of Greylock Partners, and Steve Schlafman of RRE Ventures – had thoughtful points of view. And while our recording of the event wasn’t crystal clear owing to the room’s acoustics, we were able to piece together parts of that discussion below.  Hope you enjoy it.

So many on-demand companies have now been funded. How is that impacting what you’re seeing? Are there fewer on-demand startups knocking on your doors or more?

SR: I actually counted. If you look at marketplaces, [we’ve been pitched] by about 1,000 of them in the last 18 months.

SS: We’re seeing them every single day. It’s across the board: B2B, B2C, infrastructure, some more horizontal apps in platforms; we’re not seeing any let up at all.

SP: We see 200 new companies each month and probably a quarter are related to the on-demand economy.

What are they centered around? Anything really novel?

TN: They come in cohorts, seemingly, so a couple of weeks ago, it was alcohol delivery on-demand and on-demand massage startups. But we’re also seeing more companies in transportation, in food delivery, in health and wellness and finance.

SP: We’re not seeing any slowdown in transportation [and food delivery] companies. We’re kind of seeing things in every single vertical.

Does that make sense? Is there enough untapped opportunity to support more food-delivery startups, for example? Where are we in the grand scheme of things?

SR: There’s definitely too much money [funding these me-too startups]. The odds of  five companies ahead of you falling apart is probably not a good business [strategy]. It’s okay not to be the first in a space, but once a space feels like [earlier companies are] approaching liquidity [meaning they’ve established both supply and demand], it’s probably time to move on to another space.

How narrow can these startups go?  Would you back a startup that’s say, delivering dairy products exclusively?

TN: It’s the age-old debate from the software world: Do you invest in a platform or a best-of-breed solution, and I think it depends on how big the problem is that you’re solving. I think you can go too narrow to justify a standalone service, but does Uber eat the whole world? No, I don’t believe that.

SS: It’s not just obvious industries like transportation and food. Pretty much every industry where there are service-based professionals is up for grabs. One of the craziest ideas [I’ve heard] is private investigators [which is] this weird market that exists probably on Craigslist and on the web and [a startup is now] taking it and making an experience out of it.

Certain white collar professionals might argue that their industries can’t be too thoroughly disrupted because of their relationships with clients.

SP: I don’t think there’s any professional service or product field that can’t benefit from improved efficiency.

SR: It’s about quality. Take medicine, as an example. The outcome matters; it can mean the difference between life and death. Not everyone lives in a market where you can get a great doctor. Technology can remotely deliver that care, giving you truly efficient access to the world’s best [physicians], and I think that trumps anything having to do with your relationship with a mediocre doctor.

Would you rather fund a telemedicine or other business that doesn’t require rolling out locally, versus a startup that’s physically expanding city by city?

SR: It’s a lot easier. Anyone who has tried to build a marketplace nationally will tell you [that] every local marketplace is almost like doing another startup. You [may have] a playbook, but you have to get supply and demand in every city over and over again, you have to customize it, sometimes you have to have a local team. The footprint may be smaller of [that distributed] team, and the demand may be centralized, but you still have decentralized supply.

For companies that do go the city-by-city route, what are the top things they should have down before expanding into new markets?

SR: Well here’s the one thing to avoid. I think everyone is trying to take Uber’s local rollout playbook and just copy it, but it doesn’t work.

For more of this conversation, click here.


New Fundings

Beepi, a two-year-old, Los Altos, Ca.-based online platform for buying and selling used cars, is raising at least $300 million in fresh funding at a $2 billion valuation, reports Venture Capital Dispatch. The company has raised roughly $80 million to date. Its investors include Yuri MilnerSherpaVentures, and Foundation Capital.

CyberFlow Analytics, a two-year-old, San Diego, Ca.-based maker of security behavior analytics software, has raised $4 million in seed funding from Toshiba America Electronic Components, Siemens Venture Capital, and angel investors. Xconomy has more here.

Ingogo, a four-year-old, Sydney, Australia-based taxi app and mobile payments platform, has raised AU$12 million in new funding ($9.1 million), bringing the company’s total funding to AU$28 million ($21.4 million). More than a third of its new round was raised on the crowd-equity platformVentureCrowd. Financial Review has more here.

NewsWhip, a four-year-old, Dublin, Ireland-based company that tracks and predicts the stories, events and people getting engagement on social networks, has raised more than $1.6 million in funding from The Associated Press, 500 Startups,, Matter, Social Starts, and others. According to Crunchbase, the company had previously raised three rounds of seed funding, including a $1.1 million round in 2013.

Postmates, the three-year-old delivery platform that primarily delivers food, is raising more than $50 million at a roughly $400 million valuation, reports The Information, which says many of the company’s earlier backers are participating in the deal. To date, Postmates has raised $58 million, including from AngelPadMatrix PartnersCrosslink CapitalSpark Capital, and SoftTech VC.

Twenga, a nine-year-old, London-based e-commerce site centered around fashion, has raised €10 million (nearly $11 million) from Idinvest Partners. Rude Baguette has more here.

Wealthminder, a two-year-old, Reston, Va.-based digital wealth platform that includes financial planning and automated investment advice tools, as well as connects consumers with financial advisors, has raised $1.45 million in seed funding, including from Green Visor Capital, Signatures Capital and other angel investors.


New Funds

Generali, which is Europe’s third-largest insurer, has announced it will indirectly invest 1.25 billion euros in emerging financial technology by 2019 and it will work with a group  of venture capital funds, including Ribbit Capital, toward that end.  “This is an industry that has been lagging behind every other industry — it has been paralyzed,” CEO Marco Greco tells the Financial Times. “Either you understand it and you move towards the forefront of change […] or this industry will disappear.”

Passion Capital, a four-year-old,  London-based venture capital firm backed partly by the government, has raised a new £45 million ($68.7 million) fund to invest in U.K.-based tech and digital companies. TechWorld has more here.



Apple has acquired Metaio, a 12-year-old, Munich, Germany-based augmented reality startup that launched originally as an offshoot of a project at Volkswagen. TechCrunch has the story here.

Hewlett-Packard has acquired ConteXtream, a nine-year-old, Mountain View, Ca.-based network virtualization company for undisclosed terms. According to Crunchbase, ConteXtream had raised at least $23.8 million from investors, including Verizon Ventures, Comcast Ventures, Benhamou Global Ventures, Sofinnova Ventures, Gemini Israel Ventures, and Norwest Venture Partners.

Path, the 4.5-year-old, San Francisco-based social network for smaller communities, disclosed yesterday that it’s being acquired by Daum Kakao, the Korean Internet company formed by the merger last year of Korean Internet company Daum Communications and the mobile messaging service KakaoTalk. It doesn’t sound like the entire company is being swallowed up. Rather, Path’s founder and CEO Dave Morin announced the sale of Path’s flagship social network, Path, and Path Talk, a separate app that lets users chat with local businesses as well as with other users. Fortune has much more here on the deal. (Meanwhile, it looks like investors weren’t informed of what happens next — at least, not straightaway. Last night, entrepreneur investor Kevin Rose tweeted to Morin, “What does this mean for Path investors? I think we’re in the dark here.” Rose, who cofounded the once-popular user-driven social news site Digg, quickly added in a more conciliatory tone: “Silicon Valley dances around failure. It’s how we learn/improve.  Digg was a failure, Path was a failure. Embrace it and try again, ya know?”



Yesterday, during the last day of the Code Conference, three CEOs of so-called “unicorns” — Slack’s Stewart Butterfield, Houzz’s Adi Tatarko and Stripe’s Patrick Collison — spoke candidly about how rich valuations are impacting their respective startups. “One is the impact it has on motivation,” said Butterfield, whose business messaging service is valued at $2.8 billion. “The bigger problem for us is avoiding the feeling of okay, we’ve done it.” (Video here.)


Essential Reads

Amazon is getting into the private-label business like many mass-market retailers before it. Among the items planned: milk, cereal, baby food and household products. The WSJ has more here.

Netflix now accounts for almost 37 percent of North American Internet traffic.

Jay Z’s Tidal streaming music company has been a disaster. Bloomberg Business week lays out why.



The birth of the Congratulatron.

Why some of your best anecdotes are probably stolen.


Retail Therapy

Lenovo has created a pair of shoes that it claims can show a person’s mood. But what about their sole, Lenovo. (Too easy?)

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