StrictlyVC: November 1, 2016
Hi, happy Tuesday, everyone (and happy November). Not sure what it says about us that we woke up thinking it was Thursday(!).
Top News in the A.M.
Gannett, publisher of USA Today among other properties, has ended its monthslong attempt acquire its rival, Chicago Tribune publisher Tronc, over terms it deemed to be unacceptable. The WSJ has more here.
Fantasy sports sites DraftKings and FanDuel are closing in on a merger, says Recode, which reports that FanDuel CEO Nigel Eccles will become chairman of the new company and DraftKings CEO Jason Robins will run the entity as CEO, if and when a deal gets done.
How to Sell Your Company to China
Michael Levit knows a thing or two about China. As an executive vice president at the e-commerce services company Vendio, he stayed with the company for six months after Alibaba agreed to acquire it in 2010. (It marked the Chinese conglomerate’s first U.S. acquisition.)
Levit says it was long enough to develop a consumer shopping project called Dealio that Alibaba had no interest in owning. So, he helped spin it off, renamed it Spigot, and eventually turned it into an application advertising company. (Users installing one app would receive a suggestion for another.) Roughly a year ago, Spigot also sold to a China-based company, publicly traded Genimous, for a reported $252 million.
Now Levit is taking the lessons learned from those experiences, and turning it into his next startup. Specifically, he has teamed up with longtime friend and advisor Rick Marini — cofounder of Tickle (sold to Monster) and Branch (picked up by Hearst) — to form Dragonfly Partners, a new advisory firm that’s matching U.S. companies looking to get sold with China-based companies that are hungry for revenue.
They’ve also brought in a third partner, Gary Hsueh, who was most recently Yahoo’s global head of search partnerships and an investment banker with Goldman Sachs before that.
I sat down with Levit yesterday to learn more about the business, and how it might help Silicon Valley founders who might be ready to hand over the keys.
TC: This business sounds perfectly timed. What inspired it?
ML: Selling Spigot was wonderful, but the sales process was very challenging and tedious, and partially that’s because there aren’t many people who understand cross-border transactions and specifically how you take a U.S. company and sell it to China. Thankfully, I still have a number of friends from my Alibaba days, including David Wei (who was Alibaba’s CEO when Vendio was bought). He remains one of my mentors and helped us through that process.
TC: How many companies have you been working with, and have you sold anything yet?
ML: The first two companies that we advised informally are [the ad tech company] Media.net, sold to a Beijing-based company called Miteno for $900 million in August, and [mobile ad tech company] AppLovin, which sold last month to the private equity firm Orient Hontai Capital for $1.4 billion.
TC: You’re not an investment bank, but it sounds like you’re not far afield from one.
We’re akin to being an investment bank, though frankly there are a lot of people on the ground in China who are formal investment bankers [working with us]. What [we’re more focused on is talking with entrepreneurs about] whether China is real, what do the numbers look like, what do [China-based companies] want, how do you create your financial forecast, how do you create the right PowerPoint presentation, and help put those materials together before you even meet with a bank. Then we make the introduction to the bank.
TC: Which banks are you working with?
ML: There are a couple that we work with, including CV Capital. We’re also starting to work with [the private equity firm] CSC Venture Capital [the private equity firm that has committed to invest $400 million on the AngelList platform].
You have massive pools of capital in China that want to be deployed in the U.S.; you have entrepreneurs in the U.S. who want do business in China. What’s missing is a level of trust and understanding of how the two sides do business with each other. CSC solved that problem in part by partnering with AngelList. We’re doing something similar for much bigger deals and for M&A.
Frankly, some companies in China will promise you the sun, moon, and stars, and won’t give you any of it. Conversely, there are other companies that are soft-stated and that you’d never find and that have $90 billion [in market cap]. There are multiple entities like that because of the scale of China. We want to be the trusted layer that helps founders find those entities.
AirPR, a five-year-old, San Francisco-based company that provides analytics, insights, and measurement tools to the PR industry, has raised $5 million in Series B funding led by Storm Ventures, with participation from Salesforce Ventures and earlier backers Mohr Davidow and Correlation Ventures. The company has now raised $10 million altogether. TechCrunch has more here.
Cirina, a two-year-old, San Francisco-based startup developing non-invasive tests for early cancer screening, has disclosed $12 million in Series A funding led by Shanghai-based Decheng Capital. More here.
Classy, a 10.5-year-old, San Diego, Ca.-based fundraising platform for social enterprises, has raised $30 million in Series C funding led by JMI Equity, a growth equity firm. Earlier backers Bullpen Capital, Galileo Partners, Mithril Capital Management and Salesforce Ventures also joined the round. TechCrunch has more here.
Cross River Bank, an eight-year-old, Fort Lee, N.J.-based community bank that’s become a major player in the marketplacing lending space, has raised $28 million in growth-equity funding led by Battery Ventures, with participation from Andreessen Horowitz and Ribbit Capital. The WSJ has more here.
CounterTack, a nine-year-old, Waltham, Ma.-based maker of endpoint detection and response technologies for the enterprise, has raised $10 million in new funding from TenEleven Ventures, Fairhaven Capital, Goldman Sachs, Razor’s Edge, ManTech International, Siemens Venture Partners, Alcatel-Lucent, EDBI, and Mitsui & Co. More here.
Emissary, a three-year-old, New York-based service that connects salespeople with executives at companies they are targeting, has raised $10 million in Series A funding co-led by Canaan Partners and G20 Ventures. The company has now raised $12 million altogether. More here.
Freshdesk, a five-year-old, San Bruno, Ca.-based startup whose software enables companies to provide multichannel support via phone, email, chat, website, social networks and mobile apps, has raised $55 million in new funding led by Sequoia Capital India, with participation from earlier backer Accel Partners. The company has now raised $150.5 million altogether. TechCrunch has more here.
Gauzy, a seven-year-old, Tel Aviv-based startup that develops liquid crystals that can double as both glass surfaces and computer screens, has raised $7 million in Series B funding led by Lazarus Fund. More here.
GoMeta, a three-month-old, San Diego-based augmented reality startup started by former Google group product manager Dmitry Shapiro, has raised $2 million in seed funding from angel investors, including former Disney CEO Michael Eisner, Science Inc. cofounder Mike Jones and others. Variety has more here.
Graphcore, a nearly year-old, Bristol, England-based company whose server hardware system aims to accelerates the processing of complex machine learning models, has raised $30 million in Series A funding led by Robert Bosch Venture Capital, with participation from Samsung Catalyst Fund, Amadeus Capital Partners, C4 Ventures, Draper Esprit, Foundation Capital, and Pitango Venture Capital. More here.
Headset, a 1.5-year-old, Seattle-based market research and analysis service for the marijuana industry, has raised $1 million in seed funding, says Fortune. More here.
Hubble Contacts, a six-month-old, New York-based startup offering more affordable disposable contact lenses, has raised $7.2 million in seed funding from Founders Fund, Greycroft Partners, Wildcat Capital Management, Two River, and two individual angels: Oscar Salazar, a cofounder of Uber, and Brian Levy, formerly Bausch and Lomb’s chief medical officer. TechCrunch has more here.
Hungry Marketplace, a months-old, Arlington, Va.-based service that connects professional chefs with consumers, has raised $2.5 million in seed funding from private equity firm Timeless Capital. More here.
Ministry Brands, a four-year-old, Lenoir, Tn.-based company that sells software as a service to churches and private schools, has raised an undisclosed amount of funding from Insight Venture Partners, in a transaction valued at north of $1 billion, according to the WSJ. The company already had backing from Genstar Capital and Providence Equity Partners. More here.
Nurx, a two-year-old, San Francisco-based drug prescription and delivery app, has raised $5.3 million in Series A funding led by Union Square Ventures, with participation from six Y Combinator partners and other angel investors. Mashable has more here.
Lilt, a 1.5-year-old, Palo Alto, Ca.-based machine translation service, has raised $2.35 million in seed funding co-led by Redpoint Ventures and Zetta Venture Partners, with participation from XSeed Capital. VentureBeat has more here.
Ola, the six-year-old, India-based ride hailing startup, is reportedly in talks to raise about $600 million and may close the deal by year end, says Bloomberg. More here.
Paktor, a three-year-old, Singapore-based Tinder-like dating app, has raised $32.5 million in new funding led by U.S.-Asia-based K2 Global and Indonesia’s MNC Media Group, with participation from other, undisclosed investors. Paktor’s previous investors include Yahoo Japan-affiliate YJ Capital and Singapore’s Vertex Ventures. TechCrunch has more here.
Postmates, a five-year-old San Francisco-based on-demand delivery company, has officially closed its newest round of funding with $140 million led by Founders Fund. (TechCrunch had reported the company was fundraising last month, in case this sounds familiar.) The company’s post-money valuation is $600 million. More here.
Promethera Biosciences, a seven-year-old, Belgium-based cell therapy and regenerative medicine company focused on treating liver diseases, has raised €10 million ($11 million) in additional Series C funding round. Investors include Vesalius Biocapital, SRIW, Fund+, MGI Global Fund, Mitsui & Co., Boehringer Ingelheim Venture Fund, SMS Investments, Mitsubishi UFJ Capital, Cell Innovation Partners, and LifeLiver in South Korea. More here.
Terra’s Kitchen, a two-year-old, Baltimore-based fresh meal delivery kit startup that uses eco-friendly packaging, has raised an undisclosed amount in funding from KiwiVenture Partners. More here.
Tiff’s Treats, a 16-year-old, Austin, Tex.-based warm cookie delivery company, has raised a fresh $11 million in funding, led by Dallas-based CIC Partners. The company had previously raised $14 million in August 2014. More here.
uBiome, a four-year-old, San Francisco-based company whose platform helps users understand their microbiomes, including through testing the DNA of microorganisms found in their fecal matter, has raised $22 million in Series B funding led by 8VC, with participation from Slow Ventures, Stanford’s StartX Fund, and various angel investors. The company has now raised $27 million altogether. TechCrunch has more here.
Unbabel, a three-year-old, San Francisco-based translation startup, has raised $5 million in Series A funding co-led by Notion Capital and Caixa Capital.
Israel-based equity crowdfunding platform OurCrowd is launching a sector specific fund fully focused on digital health and touting it as Israel’s first fund with such a focus. The fund, called OurCrowd Qure, will invest in early-stage startups at the seed and Series A level. Fundraising is starting now, with a target of $50 million for the first raise. TechCrunch has more here.
Nitrous.io, a four-year-old, San Francisco-based cloud development platform, is shutting down. The company had raised roughly $7 million from investors, including from Bessemer Venture Partners. TechCrunch has more here.
Brad Garlinghouse, who joined the payments company Ripple as president and COO last year, is becoming its CEO, as longtime CEO Chris Larsen stepping into a role as executive chairman of the company. Garlinghouse was previously CEO of Hightail, as well as a former AOL and Yahoo senior executive. TechCrunch has more here.
San Francisco’s most expensive home on the market has been sold to 30-year-old tech entrepreneur Kyle Vogt, who paid more than $21 million. Vogt cofounded the autonomous driving startup Cruise Automation, which sold to GM back in March for reportedly more than $1 billion. Vogt also founded the “ESPN of gaming,” Twitch, which sold to Amazon for $1.1 billion in 2013. NBC Bay Area has more here.
Prehype, a six-year-old venture development firm in New York, is looking to hire a venture associate. More here.
Female CEOS get more tough press than male leaders do, according to a new analysis by the Rockefeller Foundation and public-relations and research firm Global Strategy Group. It finds that nearly 80 percent of media stories about companies in crisis cited the CEO as a source of blame when the company’s leader was a woman, compared with 31 percent of stories assigning blame to male CEOs. The WSJ has more here.
Palantir Technologies has won a second chance at a contract to build the next phase of the U.S. Army’s integrated combat data system, an undertaking potentially worth hundreds of millions of dollars.
“In a stunt that begs to be spoofed by Mike Judge for his HBO series ‘Silicon Valley,’ Menlo Ventures portfolio company Flirtey delivered socks from the sky above the Rosewood Hotel during the firm’s annual limited partner meeting,” reports TechCrunch. More here.
LeBron James hosts a Warriors-themed Halloween party.
How hitting the snooze button messes with your mind.
Mahabis slippers. They got soles. (H/T: Uncrate.)