• StrictlyVC: June 3, 2015

    Happy Wednesday, everyone!

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    Top News in the A.M.

    Pinterest, the richly valued visual bookmarking site, said yesterday that it’s launching a “buyable pin,” a feature that will turn some of the 50 billion images posted by users into a shopping catalog. The WSJ has much more here. The New York Times goes on to note that Pinterest won’t take a cut from each sale but rather make money selling promoted-pins advertisements to retailers, who can then insert buyable pins into those ads.

    Amazon is now offering free shipping on small items to all of its customers, without requiring a minimum order. (Delivery will take four to eight days.)

    Amazon has also been trying to join the mobile pay party, reports The Information. (Subscription required.) The service would potentially allow people to pay for things in physical stores by using mobile devices.

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    A French VC Shows Off a New Fund — and Growing Interest in Europe

    Frédéric Court has been a venture capitalist for about 15 years, but it was only recently that he hit the fundraising trail for the first time.

    The experience went well, apparently. This morning, Court, a longtime partner with the European venture firm Advent Venture Partners, is taking the wraps off his own, London-based venture fund, Felix Capital, which he says raised $120 million in just a few months.

    That might not be terribly uncommon in Silicon Valley, but it doesn’t happen very often in Europe. More unusual, Court is the sole managing partner, though he has enlisted longtime Advent colleague Less Gabb as his finance partner and Antoine Nussenbaum – formerly of Atlas Global – as principal.

    Earlier this week, we talked with Court about why he has struck out on his own, and whether his debut fund says anything more broadly about what’s happening in Europe.

    Why leave Advent after all these years? 

    Our last fund is doing extremely well, but Advent is now a life sciences fund [which closed its newest, life sciences fund last fall with $235 million]. It’s a bit like what happened at Atlas Venture. The tech partners were going to raise a tech fund from scratch and I decided instead to start something quite new and have a sector-focused and thematic approach.

    Your new theme is “operating at the intersection of technology and creativity.” What does that mean? 

    It means investing in more creative businesses like digital brands, especially in markets like commerce and media, in sectors like fashion, and beauty and wellness more generally. Some fantastic global brands have been built in Europe, and we think there’s a generation of new companies to be built that are digital first – companies like FarFetch [an e-commerce site featuring designer apparel from hundreds of boutiques], which we backed at Advent and is in our portfolio now at Felix, as well.

    Are you looking to fund European companies alone?

    They’ll either be in Europe or have a European angle. We have one [still-undisclosed] investment in New York where we’ve been helping them expand across the pond. We did that at Avent with companies like [the mobile payment company] Zong, which we helped move from Switzerland to Palo Alto [where the company was acquired in 2011 by eBay], and [social media marketing company] Vitrue, which is based in Atlanta and we helped expand into Europe.

    What size checks will you be writing?

    We have the flexibility to invest from $100,000 up to $10 million in a later-stage round, though our sweet spot will be $2 million to $4 million in Series A and B rounds.

    You’re announcing three companies as part of the launch. For curious readers, what are they?

    There’s FarFetch. We’ve also funded the Business of Fashion, which started pretty much like your newsletter and over the last seven or eight years has become one of the most authoritative media brands in the online fashion industry. Along with [coinvestors] Index Ventures and LVMH, we’re helping the founder turn it into a platform. Our third investment is in Rad, a Paris-based online street wear brand that’s a bit like Urban Outfitters and is expanding across Europe.

    This new fund closed with $40 million more than you were targeting. Are LPs loosening their purse strings in Europe more broadly?

    There is capital in Europe, but the delta between the opportunity and available capital is significant. It’s still a fraction of the available capital in the U.S.

    But you’re also seeing more U.S. firms like Insight Venture Partners enter Europe and take stakes in high-growth companies.

    They typically come in much, much later. What we’ve seen in the past two or three years is a reduction in competition from U.S. firms because the market is so competitive in the U.S.; firms just don’t have the bandwidth to fly to Europe unless one of their trusted friends mentions a deal to them. Also, when you’re talking about Insight and [Technology Crossover Ventures] and DST [Global], they’re looking to write checks of $50 million to $70 million, and the number of companies that can take that much capital is much lower here than in the U.S.

    Is Europe seeing more corporate investors? They’ve sort of filled a hole in the U.S., especially when it comes to Series B rounds.

    We see some corporate money, though much less than in the U.S.. We’re more seeing local sovereign funds step in, where governments have realized that a lack of capital [to startups is a disadvantage]. One of the biggest backers is [the French government’s] Bpifrance.

    Are things fairly collegial among traditional early-stage investors then?

    There are firms that we know well – Accel, Index – and they were very helpful to me in raising my new fund, and in introducing me to their LPs. In the early stages in Europe, there isn’t the kind of competition you see in the U.S., while in parallel, we’re seeing the quality of talent rise in both founders and people joining startups. These will be very interesting years to invest.

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    New Fundings

    Anthem Vault, a four-year-old, Las Vegas, Nv.-based provider of retail gold and silver bullion and vaulting services, has raised $3.2 million in funding from unnamed investors. The company says it will use the capital to launch HayekGold, an open digital gold payment platform. More here.

    Arkin, a two-year-old, Mountain View, Ca.-based operations platform for converged infrastructure and software-defined data centers, has raised $15 million in Series B funding from earlier backers Nexus Venture Partners and other strategic investors. The company has now raised $22 million altogether.

    Atomwise, a three-year-old, New York-based drug discovery platform, has raised $6 million in seed funding led by Data Collective, with participation from Khosla Ventures, DFJ, AME Cloud Ventures and OS Fund. TechCrunch has more here.

    CounterTack, an eight-year-old, Waltham, Ma.-based real-time endpoint threat detection company, has raised $15 million in Series C funding led TenEleven Ventures, with participation from EDBI, Mitsui & Co., and unspecified earlier investors. The company has now raised roughly $50 million altogether, including from Razor’s Edge Ventures, Goldman Sachs, Siemens Venture Capital and Fairhaven Capital.

    DataScience, a year-old, Culver City, Ca.-based company that analyzes corporate data using a mix of technology and human expertise, has raised $4.5 million in Series A funding led by Greycroft Partners, with participation from earlier investors Pelion Ventures Partners, Crosscut Ventures andTenOneTen. The company has now raised $6 million altogether. Fortune has more here.

    Doorman, a 1.5-year-old, San Francisco-based on-demand package delivery company that schedules drop-offs after office hours, has raised $1.5 million in seed funding led by Motus Ventures, with participation from Western Technology Investment, MicroVentures, and VGO Ventures. TechCrunch has more here.

    Entropix, a months-old, L.A.-based computational imaging company developing super-resolution video surveillance technology for enterprise customers, has raised $1 million in seed funding from undisclosed backers. More here.

    FullStory, a three-year-old, Atlanta, Ga.-based platform that enables businesses to visualize, search, analyze, and react to their users’ online experiences via a script that records all interactions during a visit, has raised $9 million in Series A funding led by Kleiner Perkins Caufield & Byers, with participation from Google Ventures and Atlanta investor Tom Noonan. The company — founded by former Google engineers — has now raised $10.6 million altogether. The Atlanta Business Chronicle has more here.

    HWTrek, a 1.5-year-old, Taipei-based platform that pairs manufacturing experts with project creators to help deliver high-quality products quickly, has raised $4 million in Series funding led by WI Harper and ITIC. Legend Star Capital, JD.com, and the Tokyo-based venture firm Global Brain also participated.

    LawnStarter, a nearly two-year-old, Austin, Tex.-based online platform for homeowners to schedule lawn mowing, fertilization, bush trimming and other lawn care services, has raised $6 million in Series A funding led by Binary Capital. The company has now raised $7.25 million altogether, including from Gary Vaynerchuk and other angel investors. Silicon Hills News has more here.

    Mic, a four-year-old, New York-based media company focused on news for millennials (and formerly known as PolicyMic), has raised $17 million in Series B funding led by previous investor Lightspeed Venture Partners, with participation from media giant Axel Springer, Lerer Hippeau Ventures, Netscape cofounder Jim Clark, Advancit Capital, Red Swan Ventures and the John S. and James L. Knight Foundation. The company has now raised more than $32 million altogether. TechCrunch has more here.

    Mirror, a four-year-old, San Francisco, Ca.-based online bitcoin exchange, has raised $8.8 million in Series A funding led by Route 66 Ventures, with participation from existing investors including RRE Ventures, Crosslink Capital, Battery Ventures and Tim Draper. The company has raised $12.8 million altogether.

    Mishi, a six-month-old, Hangzhou, China-based mobile app that pairs foodies with in-house chefs (it has been compared to EatWith), has raised $15 million in Series B financing round led by Sequoia Capital, with participation from earlier backer Morningside Ventures. China Money Network has more here.

    Nantero, a 15-year-old, Waltham, Ma.-based nanotechnology company that uses carbon nanotubes to develop semiconductor devices, has raised $31.5 million in Series E funding from CRV, DFJ, Globespan Capital Partners and Harris & Harris Group. The company has now raised $73 million altogether, shows Crunchbase.

    PillPack, a two-year-old, Cambridge, Ma.-based pharmaceutical delivery startup, has raised $50 million in Series C funding led by CRV, with participation from Accel Partners, Menlo Ventures, Atlas Venture, and Sherpa Ventures. PillPack has now raised a total of $62.75 million. TechCrunch has more here.

    Purch, a 12-year-old, Ogden, Ut.-based digital media firm with a suite of technology content and ecommerce websites, has raised $135 million in equity and debt funding led by Canso Investment Counsel. The company has now raised roughly $175 million altogether, including from Village Ventures, ABS Capital Partners, and Highway 12 Ventures. More here.

    Urban Massage, an 18-month-old, London-based on-demand mobile massage service, has raised an undisclosed amount of funding led by Firestartr, with participation from Samos, LCIF, numerous unnamed angel investors, and earlier investor Passion Capital. TechCrunch has more here.

    Virtual Software Systems, a nine-month-old, Waltham, Ma.-based cybersecurity startup, has raised $2 million in seed funding from Bulldog Investors, Sequel Capital Management, and a number of unnamed private investors.

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    New Funds

    Business Growth Fund, a four-year-old, London-based outfit backed by five of the U.K.’s main banking groups, including Barclays, HSBC, and Lloyds, is launching a new £200 million ($307 million) venture capital fund for early-stage tech UK companies. The fund, which will open for business this fall, is being spearheaded by Rory Stirling and Harry Briggs, formerly of MMC Ventures and Balderton Capital, respectively, as well as Simon Calver, former chief executive of LOVEFiLM. More here.

    Point Nine Capital, the four-year-old, Berlin-based early stage venture firm, has closed its third fund with $60 million. According to TechCrunch, the capital will be used to invest up to $1 million in roughly 40 startups across Europe and North America. More here.

    Revolution, the four-year-old, Washington, D.C.-based investment firm formed by former AOL execs Steve Case, Donn Davis and Ted Leonsis, is raising a $450 million fund — Revolution Growth III — shows an SEC filing. Washington Business Journal has more here.

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    IPOs

    Nivalis Therapeutics, an eight-year-old, Boulder, Co.-based company that’s developing a complementary small molecule therapy for cystic fibrosis,revealed plans this morning to raise $60 million by offering 4.3 million shares at a price range of $13 to $15. At the midpoint of the proposed range, the company would be valued at $200 million. Some of the company’s biggest outside shareholders include Deerfield Management, Wellington Management Company, Tiger Partners, and RA Capital Management.

    Sophos Group, a 30-year-old, Abington, England-based internet security firm, plans to raise about $100 million from a float on the London Stock Exchange, reports the WSJ. More here.

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    Exits

    Avalara, an 11-year-old, Bainbridge Island, Wa.-based provider of cloud-based software for sales tax and other transactional tax compliance, has acquiredEZtax, an 18-year-old, Overland Park, Kansas-based company that makes tax compliance software for the telecom industry. No financial terms were disclosed. EZtax doesn’t appear to have raised institutional capital. Avalara has raised roughly $224 million from investors, shows Crunchbase; its backers includeWarburg Pincus and Technology Crossover Ventures.

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    People

    BuzzFeed has hired longtime PepsiCo marketing executive Frank Cooper as its chief marketing officer and chief creative officer, reports AdAge. Cooper will reportedly oversee BuzzFeed’s creative services team, which makes sponsored content for brands. He’ll also manage BuzzFeed’s market research, business-to-business and consumer marketing, as well as work with marketers and advertising executives on forming partnerships.

    Tim Cook: Apple “doesn’t want your data.” The company doesn’t think “you should ever have to trade it for a service you think is free but actually comes at a very high cost.”

    RRE Ventures, the New York City-based venture capital firm, has brought aboard Raju Rishi as a general partner. Rishi joins the firm from Sigma Prime Ventures, which he’d joined after cofounding a company called Rave Mobile Security. RRE has also promoted Alice Lloyd George to the role of associate. She joined the firm last year as an analyst.

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    Essential Reads

    The California Senate on Monday approved a bill that requires the University of California to release performance data for 10 funds from Sequoia Capital and Kleiner Perkins Caufield & Byers. The bill now goes to the state Assembly, where it must win approval before being sent to the governor for his signature. More here.

    Let the snooping resume: the Senate just revived Patriot Act surveillance measures.

    —–

    Detours

    Wall Street billionaire John Paulson just gave Harvard the biggest gift in its history.

    The original selfie.

    —–

    Retail Therapy

    Mark Cuban clothes for the aspirational. We’re definitely buying the “If I Can Do It You Can Do It” T-shirt and wearing it everywhere to be obnoxious. (H/T: Alex Wilhelm)

    Connie

  • A French VC Shows off a New Fund — and Growing Interest in Europe

    Felix CapitalFrédéric Court has been a venture capitalist for about 15 years, but it was only recently that he hit the fundraising trail for the first time.

    The experience went well, apparently. This morning, Court, a longtime partner with the European venture firm Advent Venture Partners, is taking the wraps off his own, London-based venture fund, Felix Capital, which he says raised $120 million in just a few months.

    That might not be terribly uncommon in Silicon Valley, but it doesn’t happen very often in Europe. More unusual, Court is the sole managing partner, though he has enlisted longtime Advent colleague Less Gabb as his finance partner and Antoine Nussenbaum – formerly of Atlas Global – as principal.

    Earlier this week, we talked with Court about why he has struck out on his own, and whether his debut fund says anything more broadly about what’s happening in Europe.

    Why leave Advent after all these years? 

    Our last fund is doing extremely well, but Advent is now a life sciences fund [which closed its newest, life sciences fund last fall with $235 million]. It’s a bit like what happened at Atlas Venture. The tech partners were going to raise a tech fund from scratch and I decided instead to start something quite new and have a sector-focused and thematic approach.

    Your new theme is “operating at the intersection of technology and creativity.” What does that mean? 

    It means investing in more creative businesses like digital brands, especially in markets like commerce and media, in sectors like fashion, and beauty and wellness more generally. Some fantastic global brands have been built in Europe, and we think there’s a generation of new companies to be built that are digital first – companies like FarFetch [an e-commerce site featuring designer apparel from hundreds of boutiques], which we backed at Advent and is in our portfolio now at Felix, as well.

    Are you looking to fund European companies alone?

    They’ll either be in Europe or have a European angle. We have one [still-undisclosed] investment in New York where we’ve been helping them expand across the pond. We did that at Avent with companies like [the mobile payment company] Zong, which we helped move from Switzerland to Palo Alto [where the company was acquired in 2011 by eBay], and [social media marketing company] Vitrue, which is based in Atlanta and we helped expand into Europe.

    What size checks will you be writing?

    We have the flexibility to invest from $100,000 up to $10 million in a later-stage round, though our sweet spot will be $2 million to $4 million in Series A and B rounds.

    You’re announcing three companies as part of the launch. For curious readers, what are they?

    There’s FarFetch. We’ve also funded the Business of Fashion, which started pretty much like your newsletter and over the last seven or eight years has become one of the most authoritative media brands in the online fashion industry. Along with [coinvestors] Index Ventures and LVMH, we’re helping the founder turn it into a platform. Our third investment is in Rad, a Paris-based online street wear brand that’s a bit like Urban Outfitters and is expanding across Europe.

    This new fund closed with $40 million more than you were targeting. Are LPs loosening their purse strings in Europe more broadly?

    There is capital in Europe, but the delta between the opportunity and available capital is significant. It’s still a fraction of the available capital in the U.S.

    But you’re also seeing more U.S. firms like Insight Venture Partners enter Europe and take stakes in high-growth companies.

    They typically come in much, much later. What we’ve seen in the past two or three years is a reduction in competition from U.S. firms because the market is so competitive in the U.S.; firms just don’t have the bandwidth to fly to Europe unless one of their trusted friends mentions a deal to them. Also, when you’re talking about Insight and [Technology Crossover Ventures] and DST [Global], they’re looking to write checks of $50 million to $70 million, and the number of companies that can take that much capital is much lower here than in the U.S.

    Is Europe seeing more corporate investors? They’ve sort of filled a hole in the U.S., especially when it comes to Series B rounds.

    We see some corporate money, though much less than in the U.S.. We’re more seeing local sovereign funds step in, where governments have realized that a lack of capital [to startups is a disadvantage]. One of the biggest backers is [the French government’s] Bpifrance.

    Are things fairly collegial among traditional early-stage investors then?

    There are firms that we know well – Accel, Index – and they were very helpful to me in raising my new fund, and in introducing me to their LPs. In the early stages in Europe, there isn’t the kind of competition you see in the U.S., while in parallel, we’re seeing the quality of talent rise in both founders and people joining startups. These will be very interesting years to invest.

    Photo of Less Gabb, Frédéric Court, and Antoine Nussenbaum (left to right), courtesy of Felix Capital.

    Connie

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  • StrictlyVC: June 2, 2015

    Happy Tuesday, dear readers!

    —–

    Top News in the A.M.

    All United Airlines flights in the U.S. were grounded this morning for nearly an hour over “dispatching information.” Wired has more here.

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    Bessemer’s Byron Deeter on the Future of Cloud Companies

    Like many venture firms, Bessemer Venture Partners provides all manner of perks for its CEOs, including a day of race-car driving and wine tasting.

    Today, in San Francisco, the firm will be providing its CEOs with a different kind of perk. Together with Salesforce Ventures, Bessemer is hosting a day-long “cloud” summit that brings together CEOs backed by the two outfits to share best practices, let them learn from each other, and to dazzle them with speakers like quarterback-turned-investor Steve Young and the futurist Ray Kurzweil.

    Yesterday, we caught up with longtime Bessemer partner Byron Deeter, who organized the event, and who has led deals in numerous high-flying cloud companies — including the online storage service Box, the app-building software service Twilio, and the digital signatures specialist DocuSign – to learn more.

    What are you hoping these CEOs will learn today?

    Part of the event is just understanding where we are. Analysts are now predicting that midway through next year, the majority of application revenue in [customer relationship management] will be cloud-based, which is a tipping point we’ve long been predicting. More broadly, we’ve beentracking public cloud companies for a while now, and based on our data analysis, we’ve come to believe this group will have a combined market cap of half a trillion dollars by 2020, up from $180 billion today — which is itself up from $40 billion three years ago.

    As an investor looking to make two bets per year, roughly, where are you spending your time? What sub themes do you think are most interesting right now?

    I’ve personally been most active in industry cloud and enterprise mobile, which is finally coming of age.

    Industry cloud?

    Industry cloud is really this notion of the “verticalization” of software and the opportunity for a large vendor like Veeva [which makes cloud-based software for the life sciences industry] or Athena Health [which provides its customers with electronic health records, revenue cycle management, and more] or Shopify [which juggles all kinds of store management issues for its retailer customers] to create dedicated [cloud-based] software for a dedicated industry group. And these models can have massive success.

    And enterprise mobile? We have to admit that long-suffering Good Technology [among the first startups to provide email access via mobile devices] still springs to mind whenever we hear those words.

    We founded Visto [which acquired Good in 2009 and took its name] at Bessemer [in 1996]. Early investors lost money, but out of the wreckage has emerged a valuable business. It represents some of the challenges of entering a market before it’s ready. Being early is the same as being wrong if you’re just too aggressive and run out of money before the market comes to you. Now, with the penetration of smart phones, internet usage is tipping to mobile and empowering a workforce of people who have smart phones but don’t sit in front of a PC all day. And this is just the early days of that opportunity.

    How are valuations?

    Privately held cloud companies are trading at multiples well above their public market counterparts. It’s about double the public company multiples for the hottest late-stage private companies, which is unusual in that private companies used to trade at a discount to public comps because they were illiquid.

    Does this now years-long trend concern you?

    Well, it’s very hard to lead new investments in late-stage cloud companies because many are priced to perfection. You have all these groups – late stage investors, private equity investors, crossover public investors – that want exposure to hypergrowth and that are being aggressive about it, and they’re combining to drive up valuations. In many cases, they’ve been rewarded for their actions, too, with very positive, profitable returns.

    But companies are also staying private longer as a result.

    I think you need to disconnect the two. Investors can invest at any stage and, within reason, still have very positive results. That’s separate from when the company chooses to go public.

    Does it make sense to wait [on an IPO]? I do think companies are overthinking it and waiting too long. When they have strong businesses with proven business models, waiting to grow from $2 billion to $10 billion in market cap makes less sense. Many are staying private for the right reasons, though, [such as] to work through business model and strategic issues.

    Bessemer is the largest shareholder in Pinterest. Does it make sense for Pinterest to go public any time soon?

    It doesn’t. Pinterest is still refining its business model, and that’s best done as a private company, where you can take a lot of risk and not have to report on every action in a public setting.

    —–

    New Fundings

    Aspire Health, a four-year-old, Nashville-based palliative care start-up co-founded by former Senator Bill Frist, has raised $15 million in Series C funding led by Oak HC/FT. More here.

    Batuta, a 2.5-year-old, Ramallah, Palestine-based Arabic online travel site, has raised $2.5 million in Series A funding led by Siraj Palestine Fund I. More here.

    Beabloo, a seven-year-old, Barcelona, Spain-based digital marketing and digital signage specialist, has raised €10 million ($11.1 million) in funding led bySoftbank, with participation from Baozun Commerce and an unnamed individual investor. More here.

    Bee Cave Games, a three-year-old Austin, Tex.-based social casino and mobile game developer, has raised $5.5 million in Series A funding from earlier investor Matrix Partners. The company has now raised more than $10 million altogether, including from Dragonrise Capital.

    Canary, a three-year-old, New York-based “smart” home security company, has raised $30 million in Series B funding led by Walden Riverwood Ventures, with participation from Cota Capital, Khosla Ventures, Flextronics, Two Sigma Ventures and Western Technology Investment. TechCrunch has more here.

    Coupa Software, a nine-year-old, San Mateo, Ca.-based suite of financial cloud-based spend-management applications for companies, has raised $80 million at a reported $1 billion valuation led by T. Rowe Price Associates, Iconiq Capital and Premji Invest. Earlier backers Battery Ventures, Crosslink Capital and El Dorado Ventures also joined the round. Recode has more here.

    Cyphort, a four-year-old, Santa Clara, Ca.-based threat protection platform, has raised $30 million in Series C funding led by Sapphire Ventures, with participation from earlier backers Trinity Ventures, Foundation Capital, and Matrix Partners. The company has now raised more than $53 million altogether.

    HireVue, an 11-year-old, Salt Lake City, Ut.-based online hiring platform that employs predictive analytics and video, has raised $45 million in new funding led by Technology Crossover Ventures, with participation from earlier backers Sequoia Capital, Granite Ventures, Investor Growth Capital, Peterson Ventures and Rose Park Advisors. The company has now raised around $92 million altogether, shows Crunchbase. VentureBeat has more here.

    KURE Corp., a year-old, Charlotte, N.C.-based vape and e-cigarette company, has raised $4.7 million in funding from unnamed investors. More here.

    Lully, a year-old, San Francisco-based Y Combinator-backed startup that spun out of Stanford Biodesign and whose first product aims to prevent children’s night terrors, has raised $2.1 million in seed funding from unnamed investors.More here.

    Lvmama, a seven-year-old, Shanghai, China-based tourism and travel booking and service company, has raised $80 million in funding from Jinjiang International, one of the largest state-owned hotel operators in China. The company had previously raised at least $65 million from investors, including Sequoia Capital, South River Capital, and CDH Investments. China Money Network has the story.

    Nanosys, a 14-year-old, Milpitas, Ca.-based company that builds nanotechnology materials to improve LCD display color performance and battery storage, has raised an undisclosed amount of funding from Samsung Ventures, which had made an earlier investment in the company. More here.

    Payfirma, a four-year-old, Vancouver, Canada-based multi-channel payment platform (think mobile phone app, iPad point-of-sale, web-based terminals, etc.) for small and mid-size companies, has raised $13 million in Series A funding led by Dundee Capital Markets. The company has now raised $23.5 million to date, shows Crunchbase.

    Propel(x), a two-year-old, Redwood City, Ca.-based online investment platform connecting accredited investors with tech startups needing capital, has raised $1.5 million in seed funding from Capital Partners, Zhen Fund, TEEC Angels, TBN Network, CLI Group, and unnamed senior executives at Lending Club. More here.

    Qunar, a 10-year-old, Beijing-based company that’s become one of China’s largest online travel booking platforms, has raised $500 million in new funding led by Silver Lake in the form of $330 million in convertible bond purchases. The rest of the capital comes from an undisclosed investor. Qunar, which went public in 2013, also counts the Chinese search giant Baidu as a major stakeholder. (As of March’s end, Baidu owned 51.4 percent of its outstanding shares.) The WSJ has more here.

    Saama Technologies, an 18-year-old big data company, has raised $35 million from Carrick Capital Partners in its first institutional funding. Venture Capital Dispatch has more here.

    Sublime Skinz, a 2.5-year-old, Paris, France-based ad tech company specializing in digital skin-based advertising, has raised $5 million in funding from ISAI, the French entrepreneurs’ fund. More here.

    Udemy, the five-year-old, New York-based online course marketplace, has raised $65 million in new funding led by the New York City-based investment firm Stripes Group, with participation from earlier investors Norwest Venture Partners and Insight Venture Partners. The company has now raised $113 million altogether, including from MHS Capital, Lightbank, and other investors. Fortune has more here.

    —–

    New Funds

    The Airbus Group, the European aerospace and defense giant, has established a $150 million corporate venture capital fund called Airbus Group Ventures; it’s also opening a technology and business innovation center in Silicon Valley. Leading the venture group as CEO: Tim Dombrowski, who spent the last four-and-a-half years as an enterprise-focused partner at Andreessen Horowitz and before that was a director of global business development at Hewlett-Packard. Leading the innovation center as CEO: Paul Eremenko, who joins the company from Google, where he was director of engineering in the company’s Advanced Technology and Projects group.

    Harbert Management, a Birmingham, Alabama-based investment management firm focusing on alternative assets, has raised its first European private debt fund, closing it with €122 million ($135.9 million) in commitments. The fund’s strategy is to to invest €5‐25m in European small‐to medium‐size enterprises; it has already committed €86m in 23 loan facilities, it says.

    —–

    IPOs

    Legend Holdings, the Hong Kong-based Chinese conglomerate that is the largest shareholder in Lenovo Group, is planning to seek approval for an IPO of as much as $2 billion from the Hong Kong stock exchange. (All companies wanting to list on the city’s exchange go through the same process.) If it gets the green-light, Legend will reportedly list by the end of this month, giving curious investors insights into one of China’s oldest state-linked conglomerates. The WSJ has the story here.

    Natera, an 11-year-old, San Carlos, Ca.-based genetic testing company whose tests diagnose fetal disorders based on maternal blood samples (it’s also developing tests that detect breast, ovarian, and lung cancer), has filed for an IPO. The company has raised roughly $154 million from investors, shows Crunchbase; according to its S-1, its biggest outside shareholders include Sequoia Capital, which owns 20.2 percent of the company; Claremont Creek, which owns 19.3 percent; Lightspeed Venture Partners, which owns 10.4 percent; and Sofinnova Ventures, which owns 6.1 percent.

    —–

    Exits

    6Wunderkinder, a five-year-old, Berlin-based startup behind the Wunderlist to-do list app, has been acquired by Microsoft for between $100 million and $200 million, according to the WSJ. The purchase is reportedly part of Microsoft’s new effort to enhance its line of mobile apps.

    Mixamo, a seven-year-old, San Francisco-based online platform that enables developers and artists to customize and create 3D character animations, has been acquired by Adobe for undisclosed terms. The company plans to integrate Mixamo’s 3D technology directly into Photoshop. According to Crunchbase, Mixamo had raised $11.8 million in debt and equity from backers, including Keynote Ventures and Granite Ventures. Gamasutra has the story here.

    —–

    People

    Cisco’s co-presidents plan to resign on July 25 as incoming CEO Chuck Robbins implements a flatter organizational structure. Network World has more here.

    Tom Georgens is stepping down as chairman and CEO of the data storage company NetApp less than two weeks after the company said it would lay off 500 workers and issued a disappointing financial forecast, reports the WSJ.

    Jawbone, the San Francisco-based maker of fitness trackers, has laid off 20 employees or about 4 percent of its workforce. A Jawbone spokesman tells The Information that the layoffs are part of an ongoing restructuring.

    The head of Lenovo Group‘s mobile business — Liu Jun — is stepping down, though the company isn’t saying why. The WSJ has the story here.

    Tesla CEO Elon Musk saidyesterday that an L.A. Times article claiming his companies received government subsidies “makes it seem as though my company is getting some huge check, which is fundamentally false,” he told CNBC. According to the article, Musk’s three companies, Tesla, SolarCity and SpaceX, have collectively received $4.9 billion in government subsidies. Musk says that none were “necessary  but they are all helpful.” Asked if he wanted to defend the story, the paper’s deputy business editor, Brian Thevenot, told CNBC: “I’m actually surprised that [Musk] had such a sensitive reaction to this story because, really at its core, it’s basically a business strategy story that’s merely factual.”

    Ellen Pao is not giving up on her gender discrimination case against Kleiner Perkins Caufield & Byers. More here.

    Business Insider has taken down numerous stories about a new biography about Elon Musk after author (and Bloomberg Businessweek tech reporter) Ashlee Vance repeatedly complained that the site was going overboard in mining the book for blog posts. More here.

    —–

    Jobs

    Canaan Partners is looking to hire an investment analyst. The job is in Menlo Park, Ca.

    —–

    Essential Reads

    Facebook is bolstering its artificial-intelligence expertise. More here.

    Medium, the publishing platform started by Twitter cofounder Ev Williams, is gutting some of its most popular sites.

    —–

    Detours

    The case for killing the performance review.

    At lunch with the author who introduced the Upper East Side “wife bonus.”

    —–

    Retail Therapy

    The Ninebot self-balancing scooter. It doesn’t seem like the easiest thing to master, but we’d try!

    Connie

  • Bessemer’s Byron Deeter on the Future of Cloud Companies

    Byron DeeterLike many venture firms, Bessemer Venture Partners provides all manner of perks for its CEOs, including a day of race-car driving and wine tasting.

    Today, in San Francisco, the firm will be providing its CEOs with a different kind of perk. Together with Salesforce Ventures, Bessemer is hosting a day-long “cloud” summit that brings together CEOs backed by the two outfits to share best practices, let them learn from each other, and to dazzle them with speakers like quarterback-turned-investor Steve Young and the futurist Ray Kurzweil.

    Yesterday, we caught up with longtime Bessemer partner Byron Deeter, who organized the event, and who has led deals in numerous high-flying cloud companies — including the online storage service Box, the app-building software service Twilio, and the digital signatures specialist DocuSign – to learn more.

    What are you hoping these CEOs will learn today?

    Part of the event is just understanding where we are. Analysts are now predicting that midway through next year, the majority of application revenue in [customer relationship management] will be cloud-based, which is a tipping point we’ve long been predicting. More broadly, we’ve been tracking public cloud companies for a while now, and based on our data analysis, we’ve come to believe this group will have a combined market cap of half a trillion dollars by 2020, up from $180 billion today — which is itself up from $40 billion three years ago.

    As an investor looking to make two bets per year, roughly, where are you spending your time? What sub themes do you think are most interesting right now?

    I’ve personally been most active in industry cloud and enterprise mobile, which is finally coming of age.

    Industry cloud?

    Industry cloud is really this notion of the “verticalization” of software and the opportunity for a large vendor like Veeva [which makes cloud-based software for the life sciences industry] or Athena Health [which provides its customers with electronic health records, revenue cycle management, and more] or Shopify [which juggles all kinds of store management issues for its retailer customers] to create dedicated [cloud-based] software for a dedicated industry group. And these models can have massive success.

    And enterprise mobile? We have to admit that long-suffering Good Technology [among the first startups to provide email access via mobile devices] still springs to mind whenever we hear those words.

    We founded Visto [which acquired Good in 2009 and took its name] at Bessemer [in 1996]. Early investors lost money, but out of the wreckage has emerged a valuable business. It represents some of the challenges of entering a market before it’s ready. Being early is the same as being wrong if you’re just too aggressive and run out of money before the market comes to you. Now, with the penetration of smart phones, internet usage is tipping to mobile and empowering a workforce of people who have smart phones but don’t sit in front of a PC all day. And this is just the early days of that opportunity.

    How are valuations?

    Privately held cloud companies are trading at multiples well above their public market counterparts. It’s about double the public company multiples for the hottest late-stage private companies, which is unusual in that private companies used to trade at a discount to public comps because they were illiquid.

    Does this now years-long trend concern you?

    Well, it’s very hard to lead new investments in late-stage cloud companies because many are priced to perfection. You have all these groups – late stage investors, private equity investors, crossover public investors – that want exposure to hypergrowth and that are being aggressive about it, and they’re combining to drive up valuations. In many cases, they’ve been rewarded for their actions, too, with very positive, profitable returns.

    But companies are also staying private longer as a result.

    I think you need to disconnect the two. Investors can invest at any stage and, within reason, still have very positive results. That’s separate from when the company chooses to go public.

    Does it make sense to wait [on an IPO]? I do think companies are overthinking it and waiting too long. When they have strong businesses with proven business models, waiting to grow from $2 billion to $10 billion in market cap makes less sense. Many are staying private for the right reasons, though, [such as] to work through business model and strategic issues.

    Bessemer is the largest shareholder in Pinterest. Does it make sense for Pinterest to go public any time soon?

    It doesn’t. Pinterest is still refining its business model, and that’s best done as a private company, where you can take a lot of risk and not have to report on every action in a public setting.

    Connie

  • StrictlyVC: June 1, 2015

    Hi, good Monday morning, everyone!

    —–

    Top News in the A.M.

    Intel has acquired fellow chip maker Altera for $16.7 billion in cash. It’s the latest sign of consolidation in the semiconductor industry, which has been under pressure from Wall Street to fatten its revenues, notes the WSJ.

    —–

    A Bitcoin Entrepreneur Fights Through a Fog of Uncertainty

    Kraken is a San Francisco-based bitcoin exchange that last year stepped in to help return money to customers of the bitcoin exchange Mt. Gox after it abruptly shut down. Now Kraken, known for its cautious approach around regulations, is navigating the vicissitudes of the bitcoin market in the hope of keeping its own doors open for many years to come.

    One of the challenges it’s facing is U.S. authorities, who’ve long struggled to understand bitcoin and have yet to figure out exactly how to regulate it. California and New York, for example, are still in the midst of passing virtual currency-specific licensing requirements, rules that many thought would be finalized by now. Like other bitcoin companies, Kraken has also seen many formerly bullish investors turn weary now that it’s apparent bitcoin’s story will take longer than imagined to unfold.

    The week before last, we chatted with Kraken founder and CEO Jesse Powell about what a bitcoin entrepreneur is to do in the current market. Our chat has been edited for length.

    Who is using your exchange?

    We have clients in more than 130 countries, but our customers are mostly Europeans. With have a partnership with Fidor Bank in Germany, and it can receive and make same-day payments within the eurozone for 9 cents, which is kind of hard to beat. That relationship has allowed us to flourish in Europe.

    Are those mostly wealthy Europeans? What’s the use case? 

    There are certainly some wealthy people using the exchange, but it’s more like middle-to-upper class Europeans who are using bitcoin and trading bitcoin. It’s a bit of a luxury item; people who are trading hopefully have some discretionary income.  It’s still a risky asset to be playing with, so I expect most [users] aren’t living paycheck to paycheck.

    Do you have any partnerships with U.S. banks?

    We don’t operate in the U.S. because the regulatory situation is much more open abroad and we have regulatory coverage there. Unlike virtually every other bitcoin business, we’ve chosen not to operate here until we have the licenses required. Competitively, that’s difficult, because other services are serving U.S. clients. Whether they’ll pay the price in the long run, we’ll see, but they’re exposing their companies and investors to huge liabilities. It’s not a risk we’re comfortable taking.

    [Editor’s note: After our chat, Kraken announced that it has hired a chief compliance officer to help it prepare for regulatory changes in the U.S. and elsewhere.]

    What kind of feedback have you been receiving from investors? Do you gather they’ve run out of patience already?

    In some cases. You have to be a believer in bitcoin. We don’t know when bitcoin is going to become a success or what that will look like, but if you believe it’s inevitably going to happen – as we do – it’s a good time to get in. If the price goes to $1,000 again or hits $10,000, some companies, including ours, won’t need investment [because they’ll be collecting much more off each trade], and they’ll be worth far more. A client base of 100,000 users today could be 100,000 millionaires when the price of bitcoin increases tenfold.

    What about other digital currencies? We talked about a year ago and you seemed unconvinced that bitcoin would be the undisputed king.

    Most of those [other digital] currencies have lost a tremendous amount of value and I don’t see any of them regaining traction.

    Does this feel like an early tipping point for the industry?

    There’s definitely some consolidation happening right now. We’ve seen some exchanges fold recently. It’s getting to be a problem for the smaller players, especially in a down market, where bitcoin has been relatively flat for the last six months. That’s definitely had an effect on a lot of business [whose customers] might have chosen to speculate on bitcoin. Also, because the price is down [trading at roughly $230, from a 2013 peak of $1,240 per bitcoin], if you’re taking a percentage of each transaction as a fee, you’re taking in less revenue. Meanwhile, the infrastructure required to maintain an exchange or a wallet is high. There are very few businesses that are actually profitable right now, other than those who’ve done no compliance or shown little consideration of the regulatory requirements.

    Why do you think some startups are operating without the regulatory requirements? 

    Maybe they’ve received special off-the-record exceptions through the right connections. It’s kind of like, ‘We’ll look the other way until we figure out what we want to do.’

    —–

    New Fundings

    Arsenal Medical and 480 Biomedical, two four-year-old, Watertown, Ma.-based companies that share lab space, resources, and CEO Maria Palasis, have raised a combined $26.5 million in funding from Polaris Partners, North Bridge Venture Partners, and Intersouth Partners. Arsenal Medical, a company developing novel, polymer based foam and nanofiber products, raised $16 million; 480 Biomedical, a clinical-stage company developing innovative bioresorbable scaffold products, raised $10.5 million. Both rounds included a conversion of debt, in addition to new equity financing.

    Funderbeam, a two-year-old, Tallinn, Estonia-based subscription service for startup intelligence, has raised €500,000 ($547,700) in new funding from the London-based investment firm Rockspring and early Skype engineer Jaan Tallinn. The company has now raised $1.4 million altogether, shows Crunchbase.

    Hedvig, a 2.5-year-old, Santa Clara, Ca.-based distributed storage platform founded by long-time Silicon Valley software engineer Avinash Lakshman, has raised $18 million in Series B funding led by Vertex Ventures, with participation from earlier investors True Ventures and Atlantic Bridge. The round comes just two months after Hedvig announced its $12.5 million Series A led by Atlantic Bridge Capital, with participation from True and Redpoint Ventures. Venture Capital Dispatch has more here.

    Klook, a nine-month-old, Hong Kong-based service that helps tourists find interesting activities to do when they travel overseas in Asia, has raised $1.5 million in seed funding led by Tencent executive Xiaoguang Wu and Shuren Hu, formerly a vice chairman at the China National Tourism Administration. TechCrunch has more here.

    LendKey, an eight-year-old, New York and Ohio-based online lending platform that connects borrowers with credit unions and banks, has secured an $8 million venture debt line from Silicon Valley Bank. Crunchbase shows the company had earlier raised roughly $24 million in debt and equity, including from TTV Capital, Updata Partners, Gotham Ventures, and DFJ.

    Nexar, a six-month-old, Tel Aviv, Israel-based “connected driving” startup that centers on improving driving behavior via a network of machine sensors, has raised $4 million in funding led by Aleph, with participation from Slow Ventures and angel investors.

    Paddle8, a four-year-old, New York-based online auction house, is raising up to $30 million in new funding, shows an SEC filing that states the company has already secured $22 million. Paddle8 had previously raised $17 million in equity and debt across three rounds, shows Crunchbase; previous backers include Haystack, Founder Collective, artist Damien Hirst, Mousse Partners, the Mellon Family and Winklevoss Capital. More here.

    Snapchat, the four-year-old, Venice, Ca.-based messaging service, revealed Friday in a filing with SEC that it has raised about $537 million in new funding from investors — money that values the company at $16 billion, reports the WSJ. An unusual stipulation of the round, says its report, is that its investors, including Alibaba and two hedge funds, received common stock, instead of preferred stock, which offers downside protection to investors. Much more here.

    Sumo Logic, a five-year-old, Redwood City, Ca.-based cloud-native machine data analytics platform, has raised $80 million in new funding led by DFJ Growth, with participation from Institutional Venture Partners and earlier backers Greylock Partners, Sequoia Capital, Sutter Hill Ventures and Accel Partners. The company has now raised $160.5 million altogether. Fortune has more here.

    Yhat, a two-year-old, New York-based data science technology company that helps organize data scientist teams, has raised $1.5 million in new funding from more than 20 individual investors, including Parse cofounder Ilya Sukhar and Twitch cofounder Justin Kan. TechCrunch has more here.

    Yonder,  a two-year-old, Woodstock, Vt.-based outdoor recreation mobile app and platform used by outdoor enthusiasts to connect and share adventures, has raised $2 million in seed funding led by Vermont Seed Capital Fund, Monster Worldwide and angel investors. More here.

    —–

    New Funds

    Formation 8, the nearly four-year-old, Palo Alto, Ca.-based venture firm, is looking raise up to $100 million for a fund focused exclusively on hardware. Its strategy, outlined for investors, was sent to BuzzFeed News over the weekend; you can check it out here.

    Geodesic Capital, a two-month, Palo Alto, Ca.-based late-stage venture firm, has raised $250 million for its debut fund, which could raise up to $400 million shows a new SEC filing first flagged by Fortune. Geodesic’s founders include Ashvin Bachireddy, who spent the last four years as the head of growth investing at Andreessen Horowitz and had been an investor at Lightspeed Venture Partners and 3i Venture Capital previously; and John Roos, a former U.S. ambassador to Japan and formerly the CEO of law firm Wilson Sonsini Goodrich & Rosati.

    —–

    IPOs

    Teladoc, a 13-year-old, Dallas, Tex.-based telehealth services company providing medical care via video conferencing or telephone consultations, has publicly filed its official paperwork to debut on the public markets. The company has raised raised more than $100 million from investors, including Jafco Ventures, Greenspring Associates, the Mellon Family Foundation, QuestMark Partners, FLAG Capital Management, Cardinal Partners, HLM Venture Partners, Kleiner Perkins Caufield & Byers, New Capital Partners and Trident Capital. According to its S-1, the only firms with stakes in the company meeting or exceeding five percent include Cardinal, HLM, KPCB, and entities affiliated with Icon Ventures.

    —–

    Exits

    AppLift, a nearly three-year-old, Berlin, Germany-based mobile app marketing platform, has acquired 1.5-year-old Bidstalk, a Singapore-based self-service, white label mobile DSP. Bidstalk had raised just $500,000 in seed funding, shows Crunchbase. AppLift has meanwhile raised $20 million from Prime Ventures.

    Tempo, a 3.5-year-old, Menlo Park, Ca.-based company that leveraged years of Stanford Research Institute’s artificial intelligence research to create a “smart” calendar app, has been acquired for undisclosed terms by Salesforce. Tempo had raised $12.5 million in funding from investors, including Relay Ventures, Sierra Ventures, Mayfield Fund, Horizon Ventures, Qualcomm Ventures, SingTel Innov8, Miramar Venture Partner, Golden Venture Partners, Seavest Capital Partners and ENIAC Ventures. TechCrunch has more here.

    Accel Partners has sold all of its shares in Supercell, the Finnish mobile gaming giant, to existing investor SoftBank, which now owns 73.2 percent of the company. TechCrunch has more here.

    —–

    People

    Early Facebook employee-turned-venture capitalist Kevin Colleran recently delivered the commencement address at his alma mater, Babson College. Colleran, who nearly died after being hit by a van whilewalking in Boston earlier this year, shared among other lessons that, “You do not need to work for yourself and start your business to be an entrepreneur.”  More here.

    Ed Gilligan, the 55-year-old president of American Express, died Friday after becoming ill on an overseas flight to New York from Tokyo. Gilligan began working as an intern at the firm while a student at NYU. He was named vice chairman in 2007 and president in 2013, overseeing digital initiatives, including a partnership reached last year with Uber. More here.

    Ross Ulbricht, the 31-year-old founder of Silk Road, a notorious global drug bazaar, was sentenced to life in prison Friday in Federal District Court in Manhattan. Dealbook has much more here.

    Jessica Verrilli is stepping down as director of corporate development and strategy at Twitter to join Google Ventures as a partner, reports Fortune. Earlier this year, Verrilli joined six other female Twitter executives in forming an angel investing group called #Angel. It isn’t yet clear if she’ll be able to invest independently in her new role.

    A disagreement between West Coast investor Chris Sacca and New York’s beloved Fred Wilson spilled into view over the weekend. Seemingly, it began when Sacca — known for aggressively buying up Twitter before its IPO — blogged two weeks ago that he plans to go public soon with constructive feedback for Twitter. On Saturday, Wilson, who also invested in Twitter early on, threw his support behind Twitter CEO Dick Costolo in his own blog post, adding, “I do not plan to be more critical of Twitter in the coming months.” Sacca picked up on the apparent dig, tweeting to Wilson: “Thanks for the thinly veiled slam on me. Maybe wait until I post something and then critique that? . . . Meantime, thanks again for selling me all that Twitter stock well before the IPO. You’re such a loyal investor.”

    George Zimmer, the ousted founder of Men’s Wearhouse, is back with a new company, zTailors, that connects on-demand tailors with people needing helptout de suite. “It’s Uber for tailors,” he tells Dealbook.

    —–

    Jobs

    Airbnb is looking for a corporate development manager. The job is in San Francisco.

    Electronic Arts is looking for a corporate development associate. The job is in Redwood City, Ca.

    Viacom is looking for a corporate development manager. The job is in New York.

    —–

    Essential Reads

    Rothenberg Ventures’ lavish parties are the firm’s primary strategy, but it’s unclear if the plan is sustainable, reports Bloomberg Businessweek in a profile of the three-year-old, San Francisco-based firm.

    Uber has unveiled images detailing what its new, 420,000-square foot office in San Francisco will look like.

    Guess who doesn’t fit in at work? (Take note, VCs.)

    —–

    Detours< Who owns London’s most expensive mansion?

    —–

    Retail Therapy

    Footwear sketch books. This is also fun if you’re into shoes.

    Connie

  • A Bitcoin Entrepreneur Fights Through a Fog of Uncertainty

    krakenKraken is a young, San Francisco-based bitcoin exchange that last year stepped in to help return money to customers of the bitcoin exchange Mt. Gox after it abruptly shut down. Now Kraken, known for its cautious approach around regulations, is navigating the vicissitudes of the bitcoin market in the hope of keeping its own doors open for many years to come.

    One of the challenges it’s facing is U.S. authorities, who’ve long struggled to understand bitcoin and have yet to figure out exactly how to regulate it. California and New York, for example, are still in the midst of passing virtual currency-specific licensing requirements, rules that many thought would be finalized by now. Like other bitcoin companies, Kraken has also seen many formerly bullish investors turn weary now that it’s apparent bitcoin’s story will take longer than imagined to unfold.

    We recently chatted with Kraken founder and CEO Jesse Powell about what a bitcoin entrepreneur is to do in the current market. Our chat has been edited for length.

    Who is using your exchange?

    We have clients in more than 130 countries, but our customers are mostly Europeans. With have a partnership with Fidor Bank in Germany, and it can receive and make same-day payments within the eurozone for 9 cents, which is kind of hard to beat. That relationship has allowed us to flourish in Europe.

    Are those mostly wealthy Europeans? What’s the use case? 

    There are certainly some wealthy people using the exchange, but it’s more like middle-to-upper class Europeans who are using bitcoin and trading bitcoin. It’s a bit of a luxury item; people who are trading hopefully have some discretionary income.  It’s still a risky asset to be playing with, so I expect most [users] aren’t living paycheck to paycheck.

    Do you have any partnerships with U.S. banks?

    We don’t operate in the U.S. because the regulatory situation is much more open abroad and we have regulatory coverage there. Unlike virtually every other bitcoin business, we’ve chosen not to operate here until we have the licenses required. Competitively, that’s difficult, because other services are serving U.S. clients. Whether they’ll pay the price in the long run, we’ll see, but they’re exposing their companies and investors to huge liabilities. It’s not a risk we’re comfortable taking.

    [Editor’s note: After our chat, Kraken announced that it has hired a chief compliance officer to help it prepare for regulatory changes in the U.S. and elsewhere.]

    What kind of feedback have you been receiving from investors? Do you gather they’ve run out of patience already?

    In some cases. You have to be a believer in bitcoin. We don’t know when bitcoin is going to become a success or what that will look like, but if you believe it’s inevitably going to happen – as we do – it’s a good time to get in. If the price goes to $1,000 again or hits $10,000, some companies, including ours, won’t need investment [because they’ll be collecting much more off each trade], and they’ll be worth far more. A client base of 100,000 users today could be 100,000 millionaires when the price of bitcoin increases tenfold.

    What about other digital currencies? We talked about a year ago and you seemed unconvinced that bitcoin would be the undisputed king.

    Most of those [other digital] currencies have lost a tremendous amount of value and I don’t see any of them regaining traction.

    Does this feel like an early tipping point for the industry?

    There’s definitely some consolidation happening right now. We’ve seen some exchanges fold recently. It’s getting to be a problem for the smaller players, especially in a down market, where bitcoin has been relatively flat for the last six months. That’s definitely had an effect on a lot of business [whose customers] might have chosen to speculate on bitcoin. Also, because the price is down [trading at roughly $230, from a 2013 peak of $1,240 per bitcoin], if you’re taking a percentage of each transaction as a fee, you’re taking in less revenue. Meanwhile, the infrastructure required to maintain an exchange or a wallet is high. There are very few businesses that are actually profitable right now, other than those who’ve done no compliance or shown little consideration of the regulatory requirements.

    Why do you think some startups are operating without the regulatory requirements? 

    Maybe they’ve received special off-the-record exceptions through the right connections. It’s kind of like, ‘We’ll look the other way until we figure out what we want to do.’

    Connie

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