StrictlyVC: August 23, 2016

Hi, everyone, hope your Tuesday is off to a great start.:) We were just handed a delicious croissant, which has greatly improved our late morning and fortified us for the Tesla product announcement that’s coming out at noon PST today.


Top News in the A.M.

Find a comfortable seat; here’s a quick look at all 44 startups that launched yesterday on day one of Y Combinator‘s 16th Demo Day.


For HBS Students, a Study in What Not to Do

At Harvard Business School, students pay top dollar to learn everything from how to manage international trade to scaling technology ventures. They’re also schooled in the art of venture capital. Among the case studies they learned last year is the story of Rothenberg Ventures (RV), a four-year-old seed stage firm.

Whether the San Francisco outfit should have been part of their curriculum is an open question.

Though RV was founded by HBS graduate Mike Rothenberg, the firm, which has raised at least $47 million over the years and employed upwards of 60 people at its peak, is on the brink of imploding owing to a “lack of controls,” in the words of one of its investors.

That the firm isn’t a breakaway success story isn’t necessarily the issue. Many case studies center of companies that make missteps. A larger problem, seemingly, is that the study about RV – which was funded by HBS before the firm’s troubles publicly surfaced last week — was also co-authored by two professors who have a “significant financial interest in Rothenberg Ventures,” as stated prominently in a curriculum footnote. (The study is available for purchase here.)

One of those professors has since left HBS and is now a visiting associate professor at MIT’s Sloan School of Management. He didn’t respond to a message seeking more information.

Asked about attracting students’ attention to a venture firm that he has funded, Professor Ramana Nanda, another of the study’s co-authors, wrote us yesterday that HBS has numerous, strict guidelines governing the relationship between professors and students, the most relevant in this case being that professors aren’t allowed to invest in ventures started by current students or to contract with them while students to invest after they graduate. Dr. Nanda notes that he made an investment in RV after Rothenberg graduated from HBS, as he sometimes has with other HBS alums.

Stringent ethicists might quibble with whether that’s sufficient, given that many HBS students attend the school with an eye toward getting a startup off the ground and that introducing them to certain brands may make it more likely that students will approach them.

It’s easy, too, to imagine a fund using the support of HBS professors (not to mention an HBS case study) to gain legitimacy with future investors.

More here.


New Fundings

Bitfinder, a three-year-old, Palo Alto, Ca.-based maker of an air quality monitor, has raised $4.5 million in Series A funding led by Altos Ventures, with participation from Samsung Ventures. TechCrunch has more here.

Centricient, a year-old, Bozeman, Mt.-based customer service messaging management toolkit, has raised $6.5 million from Venrock and Next Frontier Capital. TechCrunch has more here.

Coda Payments, a five-year-old, Singapore-based alternative payment gateway that enables merchants to accept payments from cardless customers in Southeast Asia, has raised $2 million in new funding. Earlier backers GMO Global Payment Fund, Skype co-founder Toivo Annus and Golden Gate Ventures provided the capital. TechCrunch has more here.

Lemonade, a year-old, New York-based peer-to-peer insurance carrier, has raised an undisclosed amount of funding from XL Innovate. More here.

LendUp, a five-year-old, San Francisco-based direct lender focused on non-prime borrowers, has raised $47.5 million in Series C funding led by the Y Combinator Continuity fund. Other participants in the round include GVThomvest Ventures, QED Investors, Data Collective, Susa VenturesRadicle Impact, Bronze Investments and SV Angel. 

Logikcull, a 12-year-old, San Francisco-based legal intelligence startup, has raised $10 million in funding led by OpenView Venture Partners, with participation from earlier backer Storm Ventures. TechCrunch has more here.

MediaBrix, a five-year-old, New York-based developer of in-app advertising compaigns, has raised $6.5 million in new funding from Edison PartnersRevel Partners and Horizon Technology Finance. More here.

RedShelf, a 4.5-year-old, Chicago-based e-textbook comapny, has raised $4 million in Series B funding from Coniston Capital, with participation from existing investors, including the National Association of College StoresMore here.

ThreatQuotient, a three-year-old, Reston, Va.-based threat intelligence platform, has raised $12 million in Series B funding led by New Enterprise Associates, with participation from return backers Blu Venture Investors and the Center for Innovative Technology. DCInno has more here.

Vyome Biosciences, a six-year-old, New Delhi, India-based company that makes treatments for skin diseases caused by resistant microbes, has raised $14 million in Series C funding led by Perceptive Advisors, with participation from Romulus Capital and return backers Kalaari Capital, Sabre Partners and Aarin Capital. The Economic Times has more here.


How HotelTonight went from burning millions of dollars to reportedy planning an IPO, in Bloomberg.



In a bid to grow its retail sector reach, IBM is reportedly in discussions to acquire Revel Systems, which makes an iPad point-of-sale system. Bloomberg has more here. Revel has raised roughly $127 million, shows CrunchBase. Its backers include DCM Ventures; Welsh, Carson, Anderson & Stowe, and Rothenberg Ventures, among others.

Pinterest is acquiring the team behind eight-year-old, New York-based Instapaper, which will continue operating as a separate app. TechCrunch has more here.

And now we know: One Kings Lane, once valued at more than $900 million, sold for less than $30 million, says Recode. More here.



Vadim Lavrusik, a former Facebook product manager who worked on the company’s live video feature, just debuted a new service, Alively, that allows users to share live-streamed or recorded footage with select friends and family. VentureBeat has more here.

Sir Ian McKellen reportedly turned down $1.5 million to officiate Sean Parker’s “Lord of the Rings” themed wedding. “I said, ‘I am sorry. Gandalf doesn’t do weddings.’” Vanity Fair has more here.

Michael Steinmetz, a longtime healthcare venture capitalist who co-founded Clarus Ventures in 2005, has passed away. Fortune has more here.


Essential Reads

How Google keeps familiar former engineers close to the fold.



In insider trading case that pit father against son.

Why we judge parents for putting kids at perceived, but unreal, risk.


Retail Therapy

Freak out your office guests with these.

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