StrictlyVC: October 29, 2015

Hi, happy Thursday, everyone.:)


Top News in the A.M.

PayPal stumbled yesterday in its first earnings call since splitting from eBay.

GoPro also took a dive yesterday after releasing Q3 financials that disappointed street expectations.

Meanwhile, Yelp disclosed its third quarter earnings, too, and they look far better than the previous quarter.


Pay to Play: How Investors Get Burned in a Downturn

Earlier this year, the law firm Fenwick & West published a report analyzing the financing terms of 37 U.S.-based venture-backed companies that raised money at valuations of $1 billion or more in the 12-month period ending March 31.

The report’s headline-grabbing conclusionwas that in all cases, the investors had received significant downside protection in case the companies’ value declines. (Called a liquidation preference, the companies’ later-stage investors basically received the right to get paid ahead of other investors, as well as the companies’ management teams and employees.)

The findings were a revelation, but they didn’t provide a complete picture of what could happen in a downturn. In fact, there’s a giant hitch the report did not touch on, and that’s pay-to-play provisions, which became routine during the dot com bust of 15 years ago and could well become commonplace again if things head south.

“VCs, especially people who’ve been in the business a long time, understand them,” says attorney Barry Kramer, who authored the Fenwick & West report and more recently wrote on Mediumabout pay-to-play provisions. “It’s part of their calculation. I’m not sure that a good chunk of newer investors, whether non-traditional or because they’re just younger or whatever, have this scenario in mind.”

They should.

More here.


New Fundings

Brandwatch, an eight-year-old, Brighton, U.K.-based social media monitoring firm that says it crawls more than 80 million sites, has raised $33 million in Series C funding led by Partech Ventures, with participation from earlier investors Highland Capital Partners Europe and Nauta Capital. TechCrunch has more here.

Digital Currency Group, an eight-month-old, New York-based holding firm that was created by SecondMarket founder Barry Silbert and focuses on investing and developing businesses that deal in bitcoin and other cryptocurrencies, has raised an undisclosed amount of funding from some big U.S. financial names, including Bain Capital Ventures, MasterCard, New York Life Insurance Company, and CIBC. Reuters has more here.

Enlitic, a year-old, San Francisco-based company applying machine learning to X-rays, MRIs and other medical images to radiologists, has raised $10 million in Series B funding led by Capitol Health Limited, an Australian radiology company that operates imaging centers in Australia and some Asian markets. Enlitic previously raised $5 million in Series A funding from Amplify PartnersData Collective, and individual investors. Venture Capital Dispatch has the story here.

Gobble, a four-year-old, Palo Alto, Ca.-based company that delivers weekly “dinner kits” — meals that can be prepared in 10 minutes or fewer, using just one pan — has raised $10.75 million in Series A funding led by Trinity Ventures, with participation from Andreessen Horowitz, Fenox VCInitialized Capital and Trinity Ventures entrepreneur-in-residence Anjula Acharia-Bath. More here.

Qvella, a six-year-old, Toronto-based molecular diagnostics company, has raised $20 million in Series A financing co-led by RA Capital Management and Whitecap Venture Partners, with participation from Hatteras Venture Partners and Sands Capital Ventures. More here.

Two Bit Circus, a three-year-old, L.A.-based company that produces interactive, experiential tech exhibits, has raised $6.5 million in funding co-led by Techstars Ventures and Foundry Group. Venture Capital Dispatch has more here.


New Funds

Frazier Healthcare Partners, a 24-year-old healthcare-focused venture firm with offices in both Menlo Park, Ca., and Seattle, has raised $262 million for its eighth fund. The vehicle is substantially smaller than its predecessor fund, a $375 million pool raised in 2013. We’ve talked with longtime general partner Jamie Topper about why that is. More here.



A new ruling clears the way for a trial of Facebook shareholder Ernesto Espinoza’s allegations that Facebook allowed directors to award themselves excessive pay in 2013, when non-employee directors received an average of $461,000 in stock. That’s as much as 43 percent more than its industry peers, says Espinoza’s complaint. Bloomberg has the story here.

Nirav Tolia, co-founder and CEO of the neighborhood social networking site, met with a group of activists in Oakland, Ca., yesterday to discuss concerns about racial profiling on the website; he told them that Nextdoor plans to add a “racial profiling button” to allow users to flag inappropriate posts. East Bay Express has more here.

Jon Winkelried, who previously served as president and co-chief operating officer of Goldman Sachs, has been named Co-CEO of TPG Holdings, where he’ll work alongside TPG cofounder and current CEO Jim Coulter. David Bonderman, who co-founded TPG with Coulter, will continue on as chairman of TPG. The Wall Street Journal has more here.



Redpoint Ventures is looking to hire a data-driven analyst for its early-stage investing team. The job is in both San Francisco and Menlo Park, Ca. To apply, write to


Essential Reads

IT is using wireless signals to identify people through walls.

Amazon is planning to release its own QVC-like shopping channel, and purchases can be done right from the screen. More here.

An interesting new virtual reality startup is trying to bring professional decorating to the masses. More here.



Expectant dad photographer.

How the 1 percent says, “Boo!”


Retail Therapy

Frappula, the Halloween drink of your nightmares (if you are scared of chocolate sauce and raspberry syrup).

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