StrictlyVC: March 8, 2016

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Top News in the A.M.

Sorry, Chamath, Michael Bloomberg says he won’t run for president in 2016.


Subleases Spike in Number, as SF Startups Downsize

In January, office rents in San Francisco eclipsedthose of New York to become the most expensive in the country.

Two months later, there are signs the San Francisco may not maintain its dubious position for long. The biggest indicator? There’s suddenly 1.7 million square feet of sublease space available in San Francisco, up more than 50 percent from 1.1 million square feet in November, according to CBRE Group, a commercial real estate services and investment firm.

That kind of jump in four month’s time suggests ripple effects from a funding slowdown that stretch beyond a small but growing number of layoffs.

If the trend isn’t giving local landlords flashbacks of the late ‘90s, it may soon. The Bay Area’s real estate market enjoyed an historically active 2015, with San Francisco accounting for the world’s highest rent growth at 14 percent, according to brokerage Cushman & Wakefield. (Oakland saw the third biggest jump in rent nationally, said the brokerage.)

The last time San Francisco surpassed New York in price per square footage, says CBRE, it was 2000, the same year that the tech market famously peaked then abruptly imploded.

Of course, today’s volatility in the public tech sector pales in comparison to the tech market nosedive that followed the dot com boom of 16 years ago. The slowdown in venture investing isn’t as sudden or severe, either, making it “too early to tell” if the economy has turned in a meaningful way, says Colin Yasukochi, director of research and analysis at CBRE.

Still, says Yasukochi, “There are definitely signs of change. It’s mostly a question of how severe they are, and how they evolve.”

Bay Area brokers, landlords and tenants appear to be in a kind of discovery stage at the moment. On the one hand, despite the dramatic increase in subleased space that’s become available, new tenants aren’t seeing a huge discount, which is usually an indication of a weak market.

“It depends on how long the lease is – one, two or five years or more – in terms of cost,” says Yasukochi. “But if you compare a good quality sublease space to a good, quality space direct from its owner, you’re seeing maybe a 10 percent markdown.”

It’s when discounts rise to 30 and 40 percent that a market is officially in trouble, says Yasukochi.

Much more here.


New Fundings

AlphaSense, an eight-year-old, San Francisco-based search engine for financial professionals, has raised $33 million in funding from Tribeca Venture Partners, Triangle Peak Partners, and Quantum Strategic Partners. Forbes has more here.

AreaMetrics, a 1.5-year-old, Seattle-based consumer analytics platform for brick-and-mortar retailers, has raised $2 million in seed funding co-led by Startup Capital Ventures and Quest Venture Partners, with participation from Seraph Group, Social Starts, and previous angel investors. Vator hasmore here.

Disruptive Multimedia, a 2.5-year-old, New York-based SMS commerce startup founded by rapper and music producer Ryan Leslie, has raised $1.5 million in seed funding from VC-operator Ben Horowitz, Betaworks, and others. TechCrunch has more here.

Spotinst, a year-old, Tel Aviv-based SaaS optimization platform that aims to ease the management of cloud computing purchasing options, has raised $2 million in funding led by PICO Venture Partners. TechCrunch has more here.

Tiqets, a three-year-old, Amsterdam-based mobile ticketing platform for tourists, has raised $4 million in Series A funding led by the Dutch venture capital firm Capital Mills. Tnooz has more here.

Wunder Capital, a two-year-old, Boulder, Co.-based startup that promises to make solar financing work for businesses, has raised $3.6 million in Series A funding led by Techstars Ventures, with participation from Fenway Summer Ventures and FinTech Collective. Venture Capital Dispatch has more here.

Zenstores, a 14-month-old, Bristol, U.K.-based startup whose cloud-based shipping software targets the “long tail” of e-commerce, has raised £400,000 ($570,000) in seed funding led by Downing Ventures. TechCrunch has more here.


New Funds

500 Startups has announced a $10 million fund in Vietnam. The effort is led by Binh Tran and Eddie Thai, two partners who 500 Startups hired last year. TechCrunch has more here.

Entrepreneur First, a nearly five-year-old, London-based startup acceleration space, is looking to raise a £40 million ($57 million) fund to invest in companies that are created on its turf. Founded by Matt Clifford and Alice Bentinck, the outfit provides technical talent with £17,000 in pre-seed funding in exchange for an 8 percent equity stake in the company that’s created. TechCrunch has more here.



Seven surprises from last year’s dismal IPO market.



Atom Bank, a Durham, England-based still-stealth, online-only startup, has acquired Grasp, a design and development house based out of the north of England. Terms of the deal are not being disclosed. Much more here., a four-year-old, New York-based digital media company catering to millennials, has acquired a 10-month-old, Berlin-based mobile video aggregation app called Hyper for an undisclosed amount. Mic has raised $32 million in funding, shows CrunchBase. Its backers include Lightspeed Venture Partners and Netscape cofounder Jim Clark. Hyper had meanwhile raised $1.1 million in seed funding, including from Advancit Capital and Broadway Video Ventures. The WSJ has more here.

UserZoom Technologies, a nine-year-old, San Jose, Ca.-based UX research and testing SaaS platform, has acquired YouEye, a Mountain View, Ca.-based research platform that automates in-person interviews for digital products. Financial terms weren’t disclosed. UserZoom has raised roughly $36 million from investors, shows CrunchBase. Its backers include TC Growth PartnersTrident Capital and StepStone Group. YouEye had raised $7.5 million from investors, including Signatures Capital, Stardust Venture Partners, and FundersClub.

Veeqo, a Wales-based company that makes e-commerce inventory software, has acquired London-based parcel delivery startup ParcelBright to bolster its shipping features. Terms of the deal weren’t disclosed. According to CrunchBase, ParcelBright had raised $1 million, including from Talis Capital. TechCrunch has more here.



GV isn’t investing in India, but Google Capital has apparently spent the last year setting up a local presence, and it’s reportedly set to announce former Sequoia Capital investment analyst Kaushik Anand as the head of that outpost. The Economic Times has more here.

Apple CEO Tim Cook, Google co-founder Larry Page, Napster cofounder Sean Parker, and Tesla Motors and SpaceX honcho Elon Musk joined other billionaires, CEOs, and top members of the Republican establishment at a confab last weekend on a private island off the coast of Georgia. The main topic: How to stop Donald Trump.

Facebook has paid $15,000 (€13,600) to an independent security researcher who discovered a simple method of resetting passwords for other accounts, setting a new passphrase, and effectively taking over profiles. More here.


Essential Reads

Amazon just launched its first live show and, no surprise, it’s akin to a QVC for the YouTube generation.

SoftBank, the Tokyo-based telecoms and tech giant, said it plans to separate its Japanese business from its global growth operation, which includes stakes in Alibaba and Sprint. The latter company will be led by Nikesh Arora, the former Google executive.

In San Francisco and rooting for a tech slowdown.



Revealed: the 30-year economic betrayal dragging down Generation Y’s income.

The world’s least efficient thief steals $200,000 — in quarters.

What Hollywood doesn’t understand about virtual reality.


Retail Therapy

No more voicemail? There’s an app for that.

One awfully pricey boat slip.

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