StrictlyVC: June 22, 2015

Good morning, everyone, and welcome back! Hope you wonderful dads out there had a great Father’s Day yesterday.


Top News in the A.M.

Hours after singer Taylor Swift criticized Apple in an open letter yesterday, the company said it will pay royalties to artists and record labels for music played during a free, three-month trial of its new streaming music service. The WSJ has more here.


Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

Last week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

What’s the craziest business you’ve been pitched?

Well, I did see bodyguards on demand. [Laughs.]

Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

[Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.


New Fundings

Advanced Cell Diagnostics, an eight-year-old, Hayward, Ca.-based molecular pathology company developing cell- and tissue-based diagnostic tests for personalized medicine, has raised $22 million in Series C funding led by Summit Partners, with participation from Kenson Ventures and return backers Morningside Ventures and New Leaf Venture Partners. The company has now raised $40.8 million altogether.

Airbnb, the seven-year-old, San Francisco-based community marketplace for people to list and book personal spaces, is reportedly raising $1 billion in funding at a $24 billion valuation. According to Crunchbase, the company has already raised almost $800 million from investors, including SherpaCapitalTPG Growth, T. Rowe Price, Dragoneer Investment Group, Founders Fund, CrunchFund, and Sequoia Capital. The WSJ has the story here.

Ant Financial, Alibaba’s Hangzhou, China-based online payments affiliate, has completed an undisclosed amount of fundraising that values the company at between $45 billion and $50 milion, according to the Financial Times. Ant Financial operates Alipay, the PayPal-like online payments company that handled $778 billion in the year ended June 2014, according to Alibaba. As the Financial Times notes, that’s three times the amount handled by PayPal over the same period. Ant Financial’s main shareholder is Jack Ma, Alibaba’s chairman. Dealbook delved into its business late last year. Much more here.

Are You A Human, a four-year-old, Detroit, Mi.-based startup that enables anyone offering commerce, services, or ads online to know they are addressing a human (versus a bot), has raised $4.2 million in Series A funding led by Detroit Venture Partners, with participation from MDC Dream VenturesFoundry Group Angels and NCT Ventures.

Artesian Solutions, the nine-year-old, U.K.-based platform that provides companies with better intelligence on their B2B customers and future prospects, has raised $8 million in Series B funding led by Kreos Capital and previous investor Octopus Investments. The company has now raised at least $11.2 million altogether, shows Crunchbase.

Bond Street, a 1.5-year-old, New York-based company that makes loans to small businesses, has raised $110 million in equity and debt capital led by Spark Capital and the Jefferies investment bank, with individual investors including Nathan Blecharczyk, co-Founder of Airbnb; David Chang, chef and owner, of Momofuku; and others. David Haber, co-founder of Bond Street, left Spark Capital to start the company. New York Business Journal has more here.

Case Wallet, a 15-month-old, New York-based company behind a credit-card-size device used to securely store and send bitcoin, has raised $1.5 million in seed funding led by FuturePerfect Ventures, with participation from RRE Ventures, High Line Venture Partners and the Rochester Institute of Technology Fund.

CropX, a nearly two-year-old, Tel Aviv, Israel and San Francisco-based startup whose sensors and app measure soil moisture and temperature levels to help farms adjust their irrigation systems, has raised $9 million in Series A funding. Finistere Ventures led the round, joined by Innovation EndeavorsGreenSoil Investments and the company’s earlier backers, including OurCrowd. Venture Capital Dispatch has more here.

Cryptzone, a 13-year-old, Waltham, Ma.-based maker of context aware encryption software, has raised $15 million in Series B funding led by Kayne Partners, with participation from earlier backer Medina Capital. More here.

Cure Forward, a year-old, Cambridge, Ma.-based company seeking to connect cancer patients with clinical trials, has raised $15 million in Series A funding from Apple Tree Partners. BetaBoston has more here.

DIDiT, a two-year-old, New York-based mobile-first social platform that enables users to discover, connect and plan lifestyle experiences, has raised $2 million in seed funding led by BRaVe Ventures, with participation from numerous angel investors. More here.

FreedomPop, a four-year-old, L.A.-based upstart freemium mobile carrier, has raised $30 million in funding led by European venture capital Partech Ventures, with participation from an unnamed strategic investors and previous backers DCM and Mangrove Capital. The company has now raised $49.3 million altogether, shows Crunchbase. Recode has more here.

Knyttan, a two-year-old, London-based on-demand fashion startup, has raised £2 million ($1.6 million) in seed funding led by Connect Ventures, with participation from Felix Capital, Playfair Capital, and Ballpark Ventures. TechCrunch has more here.

Komprise, a year-old, Campbell, Ca.-based company selling data management-as-a-service, has raised $6 million in Series A funding led by Canaan Partners. TechCrunch has more here.

LiveIntent, a six-year-old, New York-based company that makes technology for in-email display advertising, raised $32.5 million in a funding round led by FTV Capital, with participation from Battery Ventures, First Round Capital and Shasta Ventures. The company has now raised $65.1 million altogether, shows Crunchbase. TechCrunch has more here.

Mapbox, a five-year-old, Washington, D.C.-based mapping platform for developers that makes it easier for location to be core to any mobile or online application, has raised $52.4 million in Series B funding led by DFJ Growth, with participation from Thrive Capital, Pritzker Group, Promus Ventures and former Goldman Sachs Group co-president Jon Winkelried.

Mayvenn, a 2.5-year-old, Oakland, Ca.-based e-commerce company that enables beauticians to sell hair extensions and other products without having to purchase, store or ship any inventory themselves, has raised $10 million in Series A funding led by Andreessen Horowitz, with participation from Trinity Ventures, Core Innovation Capital, Troy Carter’s Cross Culture VenturesImpact America, and numerous individual investors, including Jimmy Iovine and Serena Williams.

Moovo, a seven-month-old, Delhi, India-based on-demand logistics booking platform, has raised seed funding from YouWeCan Ventures and angel investors. YourStory has more here.

Namely, a three-year-old, New York-based HR software platform that offers cloud-based applications has raised $45 million in Series C funding led bySequoia Capital, with participation from earlier backers Matrix Partners,True Ventures, Lerer Hippeau Ventures and Greenspring Global Partners. The company has now raised $77.8 million altogether, shows Crunchbase. Recode has more here.

Oxford Sciences Innovation, a months-old, Oxford, England-based company that funds spinoffs from Oxford University’s tech and science departments, has raised an undisclosed amount of capital from Google Ventures’ European branch. The company is looking to raise upwards of $500 million altogether. More here.

Sano, a three-year-old, San Francisco-based company making a wearable device that monitors metabolic activity, has raised $10.3 million in seed funding led by True Ventures and Intel Capital, with participation from Felicis Ventures, Elevation Capital, Floodgate, and Rock Health. TechCrunch hasmore here., a two-year-old, San Francisco-based patient engagement and chronic disease monitoring platform centered around a virtual medical assistant, has raised $2.2 million in Series A funding. Backers include Launchpad Digital Health, Fenox Venture Capital and TA Ventures. The company has now raised $3.5 million altogether, shows Crunchbase.

Smart Vision Labs, a two-year-old, New York-based company whose first device aims to make eye exams cheap and accessible worldwide, has raised $6.1 million in funding led by Techstars Ventures, with participation from Heritage Group, Connectivity Capital, and Red Sea Ventures. Forbes has much more here.

Tamr, a 2.5-year-old, Cambridge, Ma.-based startup that helps companies understand and unify all of their disparate databases, has raised $25.2 million in Series B funding from Hewlett Packard Ventures, Thomson ReutersMassMutual Ventures and other unnamed participants, with participation from earlier backers New Enterprise Associates and Google Ventures. The company has now raised $42.4 million altogether. More here.

Tech In Asia, a four-year-old, Singapore-based news site that reports on Asia’s tech ecosystem, has raised $4 million in funding to turn the site into a community hub that includes a Crunchbase-like database and paid-for analytics service. Backers include SB ISAT Fund, Walden InternationalMarvelstone, and M&S Partners, along with individual investors. The company had previously raised $2.89 million over several small rounds, including from East Ventures, Fenox Venture Capital and Simile Venture Partners. TechCrunch has more here.

Tidemark, a six-year-old, Redwood City, Ca.-based enterprise financial planning software company, has raised $25 million in funding from the management software vendor Workday, along with earlier backers Andreessen Horowitz, Greylock Partners and others. Tidemark has now raised $118.4 million altogether, shows Crunchbase. Recode has more here.

Vox Mobile, a nine-year-old, Independence, Oh.-based company that helps businesses adapt their products to mobile platforms, has raised $6.7 million in a round led by TELUS Ventures, Mutual Capital Partners Funds, Edison Partners and Permal Capital. Forbes has more here.


New Funds

Arboretum Ventures, a 13-year-old, Ann Arbor, Mich.-based venture firm, is looking to raise $215 million for its fourth fund, shows an SEC filing that was filed last week and states the first sale has yet to occur.

RezVen Partners, a new, Newport Beach, Ca.-based early-stage venture firm focused on software and digital and social media companies, has closed a new fund with $50 million in capital commitments. More here.



Campus, a two-year-old, San Francisco-based startup that rented out rooms in some 34 houses in the San Francisco Bay Area and New York, is no more — meaning its more than 150 residents need to find somewhere else to live before the official closure on August 31st. The company was founded by Thiel fellow Tom Currier and presumably raised money beyond the $100,000 that Peter Thiel gives budding entrepreneurs to drop out of school. Still, it managed never to disclose as much in various reports about the company (that StrictlyVC has read, anyway).  Business Insider has more here.



Politico published a meaty piece on businessman and former New York City mayor Mike Bloomberg, and among the many nuggets it holds is a breakdown of just how reliant Bloomberg Media is on those lucrative Bloomberg terminals: Per Politico: the company’s “many layers of ‘added value’ . . . the magazines, the TV channels, the specialized verticals . . . generally lose money. Lots of it. Businessweek, easily the most appealing product to consumers, reportedly burns almost $30 million a year. The TV operation has lost about $100 million a year for the past decade.”

John Doerr says he “felt sick” when he first saw the gender discrimination charges brought against his firm, Kleiner Perkins, by former partner Ellen Pao. Last week, in an interview with Bloomberg TV, Doerr said, “I think it was an error to promote Ellen into an investing partner role. That didn’t work out for her. She was a really good chief of staff but not a good investor.” Video from that interview here.

Alex Stamos, the world-renowned cybersecurity expert and vocal NSA critic who now commands Yahoo‘s team of “Paranoids” to protect the company from all manner of threats, says the “vast majority of people are not safe using the internet everyday.” Vice Media profiles him here.

Facebook CEO Mark Zuckerberg with wife Priscilla Chan have donated $5 million to a scholarship program that helps young undocumented students attend college. Called TheDream.US, the program is geared toward students who come to the U.S. as children with no authorization and wish to pursue higher education. The program was cofounded in 2013 by Donald Graham, CEO of the Graham Holdings Company and a former Facebook director. USA Today has more here.



Capital One Ventures is looking to hire a junior-level manager. The job is in San Francisco.


Essential Reads

Alipay is a phenomenon that’s difficult to fathom outside of China. Its president, Jingling Li, explains it to Fortune here.



Twenty-one amazing photos of Saturn.

Why reading can make you happier.

Here’s everyone you probably Googled last night during “True Detective.”


Retail Therapy

A vegetable-tanned English Bridle leather six-pack carrier, for your craft beers. (Warning: Bringing this to a party will get you punched in the face, or it should.)

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