StrictlyVC: August 18, 2016

Hi, everyone — we didn’t forget about you. We were working on a story about the current struggles of an unusually ambitious young venture firm. In fact, we don’t have much more for you today, but there’s always tomorrow(!).

Happy Thursday.:)


Top News in the A.M.

Uber‘s first self-driving fleet arrives in Pittsburgh this month. Bloomberg has the story here.


At Rothenberg Ventures, the Rise and Fall of a Virtual Gatsby

Rothenberg Ventures, the four-year-old, San Francisco-based seed-stage venture firm, may be on the brink of implosion, say several sources close to the firm.

We reported yesterday that several high-level employees had parted ways with Rothenberg, including its director of finance and the head of its SF office, who happen to be father and son (Tom and Tommy Leep). We’ve subsequently learned that firm departures run far more widely. Other top executives who’ve left include the company’s chief revenue officer, who quit yesterday; the company’s chief financial officer, who left in June; general manager James Taylor, who left very recently; and Fran Hauser, a former president of digital at Time Inc. Hauser was brought in with some fanfare as a venture partner in May 2014. Yesterday she updated her LinkedIn profile to reflect that she left Rothenberg in July.

Messages to Rothenberg have not been returned. According to one source, Rothenberg Ventures founder Mike Rothenberg has told those remaining that “very few people will be left.” In what appears to be a related development, the firm’s site has been down since last night.

Why the mass exodus? According to one source, Rothenberg Ventures is answering questions from the SEC after a lower-level employee alerted the agency to what this person reported as wire fraud and breach of fiduciary duty. This same source says the employee was subsequently fired and is now suing the firm for retaliation.

All SEC investigations are conducted privately. An investigation does not mean that the agency will file a case in federal court or bring an administrative action.

Either way, a much thornier issue for Rothenberg Ventures, say numerous former employees, is founder Rothenberg himself, who has sometimes seemed to live more like a billionaire than the manager of a modest venture fund — spending lavishly to attract moneyed individuals as investors and, over time, growing increasingly focused on becoming as famous as some of them.

Making a millionaire

It all began as a minor but inspirational story, proof that the American Dream can still come true.

Rothenberg, an Austin native who says he comes from humble means — “no one in my family has any money,” he once told us — was smart enough to nab undergraduate and graduate degrees from Stanford, then bootstrap a real estate fund with his brother before moving on to Harvard to secure an MBA.

Soon afterward, inspired by business leaders he had met while at Stanford, Rothenberg planted himself in San Francisco and got down to the business of trying to shake up the stodgy venture industry. Step one involved raising a $5 million fund from “friends, family, and former roommates,” as reported in a Bloomberg story about Rothenberg last year.

His timing was ideal as these things go. In 2012, the market was in the middle of a three-year upswing, following the financial crisis of late 2008. Some newer faces were also beginning to gain prominence in the venture industry, along with the trust of so-called limited partners — the individuals and institutions that fund venture firms.

Rothenberg is also a natural salesperson, and, as such, quickly evolved his pitch for Rothenberg from yet another seed-stage fund to a thought-leading outfit willing to make big bets on virtual reality before most people in Silicon Valley saw it as a major opportunity.

More here.


New Fundings

DriveTribe, an eight-month-old London-based digital media platform, has raised $5.5 million in Series A funding led by Breyer Capital, with participation from Atomico and individual angels. More here.

Heap, a three-year-old, San Francisco, Ca.-based analytics infrastructure company, has raised $11 million in Series A funding led by New Enterprise Associates, with participation from Menlo Ventures and seed-stage investors SV Angel, Initialized Capital and Pear (formerly known as Pejman Mar Ventures). The company has now raised $13.2 million altogether. More here.

ID Experts, a 13-year-old, Portland, Ore.-based company that makes software and services for cyber breach and identity fraud protection, has raised $27.5 million in funding including from Peloton Equity, Trident Capital Cybersecurity, BlueCross BlueShield Venture Partners and the Sandbox Advantage Fund. More here.

Instavest, a two-year-old, Mountain View, Ca.-based social investing site, has raised $1.7 million in seed funding from Y Combinator, Skype co-founder Jaan Tallinn, Cherubic Ventures and others. TechCrunch has more here.

NextHealth, a three-year-old, Denver, Co.-based health IT startup that works with payers to reduce avoidable healthcare costs, has raised $8.5 million in Series A funding from Norwest Venture Partners. MedCity News has more here.

VUV Analytics, a seven-year-old, Austin, Tex.-based spectroscopy tech company, has raised $6.5 million in Series B funding led by New Science Ventures, with participation from S3 Ventures. AustinInno has more here.



Uber has acquired Otto, a months-old, San Francisco-based startup that’s been working on a technology intended to automate parts of the drive on highways. Uber isn’t commenting on terms of the deal. But according to the New York Times, Uber will pay roughly 1 percent of its most current valuation — a sum worth about $680 million after the inclusion of its most recent fund-raising — if certain internal benchmarks are met by the Otto team. Much more here.



PewDiePie, the biggest star on YouTube, wants people to stop coming to his house.


Essential Reads

Twitter says it has suspended 235,000 accounts that promoted terrorism over the last six months. The New York Times has more here.

Venture-funded Yik Yak is trying to get its yak back. The Verge has more here.



This Rio phenom would be a lock for a gold medal — if there were one for slacklining.


Retail Therapy

Know that person who can always count on an intentionally terrible gift from you — even anticipates it? This is for that person.

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