StrictlyVC: February 28, 2017

Hi, all! Sorry this is a bit late — lots o’ calls again today. Hope you’re enjoying your Tuesday.:)

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Top News in the A.M.

Perhaps you’ve heard? Amazon AWS S3 storage service outage is breaking things for a lot of websites and apps right now. Amazon says it’s working on it.

Kabam’s Roller Coaster Ride to an $800 Million Sale

The Game Developers Conference kicked off in downtown San Francisco yesterday, and consolidation is a central theme for this year’s attendees.

Late last week, we talked with Kevin Chou, co-founder and CEO of the gaming company Kabam, about his own both stressful and euphoric experience in running a gaming startup for roughly a decade before selling most of its assets in December to South Korea’s Netmarble Games for a reported $700 million to $800 million.

His earliest investor, Maha Ibrahim of Canaan Partners, joined the conversation to share her perspective on the company’s highs, lows and in-between moments, too. Our conversation has been edited for length and clarity.

Kevin, you spent a little time working for Maha as a junior investor at Canaan before founding Kabam. In fact, Kabam was incubated at Canaan’s offices. At what point did you know you wanted to create a gaming company?

KC: I was definitely excited about what was happening with the consumer internet. This was in 2006, when Facebook was still mostly focused on college students. I wanted to start a social network for young professionals, but after some twists and turns, it became a gaming company.

MI: Kevin and his three co-founders were trying to build a better LinkedIn, but we found out with the seed money that we gave the company that it wasn’t working. I told him he could either give back the $250,000 we’d given him or find something else to do with it. So that first pivot was called Watercooler. It was a social network for sports and TV and movie fans.

KC: It grew on the back of Facebook. At its peak, it was getting 2 billion page views per month, but we couldn’t monetize it at all. So we dabbled a bit more in fantasy sports.

MI: I’d given the company a Series A at that point, and there was this moment at this café in Mountain View where Kevin was totally stressed out. He’d taken up smoking again because he couldn’t figure out how to make money off [Watercooler]. So it was around this time — right, Kevin? — that he pivoted into becoming a Facebook game provider, with Kingdoms of Camelot, which became a massive hit.

So two pivots so far.

KC: At first, Facebook said [to game developers], “You’ll keep all the revenue, but we own the real estate around the frame,” so the economics were built on that type of relationship. Then, [in a later, somewhat infamous development] Facebook said we’re going to take 30 percent of everyone’s revenue. To be fair, Apple and other [platform companies] were also taking a 30 percent revenue share, but the way that Facebook had tried to build out platform — the way they used real estate — made it very difficult to operate a full-fledged game. You couldn’t control the entire experience. And then with that 30 percent tax, it became a very different business for us. We went from being very profitable to very not profitable overnight.

More here.

New Fundings

Atzuche, a 3.5-year-old, Shanghai, China-based peer-to-peer car rental start-up, has raised $58 million in Series C funding from China Pacific Insurance, China Equity Group, Hangzhou Financial Investment Group, China Securities, Matrix Partners China, Hearst Capital and Ivy Capital. Beijing Business Today has more here.

Belong, a 2.5-year-old, Bangalore, India-based predictive outbound hiring platform provider, has raised $10 million in Series B funding led by Sequoia Capital India, with participation from earlier backer Matrix Partners India. IndiaWeb2 has more here.

Bluegogo, a 1.5-year-old, Tianjin, China-based smart bike sharing platform, has raised $58.2 million in Series C funding led by Black Hole Capital, with participation from Smart Xintong, a Shenzhen-based healthcare equipment developer. China Money Network has more here.

CloudMinds, a 1.5-year-old, Beijing, China-based start-up focused on the development of cloud-intelligence-based applications, has reportedly raised $100 million in Series A funding, but it isn’t disclosing from whom. The company had previously raised $31 million in funding from SoftBank Group, Hon Hai Precision Industry Co., Walden International and Keytone Ventures. China Money Network has more here.

Getaway, a 1.5-year-old, Brooklyn-based designer and operator of “tiny house” rentals, has raised $15 million in funding from L Catterton. More here.

Insilico, a 2.5-year-old, Baltimore, Md.-based startup that employs genomics, big-data analysis and advanced algorithums to research and develop new age-related drugs, has raised $10 million in new funding from so-far undisclosed sources. The Baltimore Sun has more here.

Maihuolang, a 2.5-year-old, Beijing-based e-commerce platform serving China’s rural communities, has raised $150 million in funding from Shenzhen New Industry Venture Capital, Shenzhen Weiji Investment Company and Qianhai Great Wall Fund Administration. China Money Network has more here.

MomentFeed, a seven-year-old, Santa Monica, Ca.-based mobile customer experience management platform, has raised $16.3 million in funding led by Level Equity, with participation from earlier backers Signia Venture Partners, Draper Nexus and DFJ Frontier. FinSMEs has more here.

PartySlate, a 1.5-year-old, Chicago-based online platform to connect event providers with people looking to plan meetings and celebrations, has raised $1.6 million in fresh funding led by Hyde Park Venture Partners, with participation from Hyde Park Angels, InvestHER Ventures, WaveMaker Partners, Jump Investors and Halogen Ventures. The company has now raised $2.6 million altogether. Crain’s Chicago Business has more here.

PebblePost, a 2.5-year-old, New York-based startup that offers programmatic direct mail, has raised $15 million in Series B funding led by RRE Ventures, with participation from Greycroft Partners and Tribeca Ventures. TechCrunch has more here.

Pypestream, a 1.5-year-old, New York-based messaging platform that connects businesses to their customers to engender satisfaction and loyalty, has raised $15 million in Series A funding. Rick Braddock, former CEO of Priceline and former COO of Citibank, led the round, with participation from The Chatterjee Group and an unnamed hedge fund. TechCrunch has more here.

ResearchGate, a nine-year-old, Berlin, Germany-based company that operates a network for scientists to connect and share research, has raised $52.6 in Series D funding. Investors in the round include Wellcome Trust, Goldman Sachs, Four Rivers Group, Ashton Kutcher, LVMH, Xavier Niel, Bill Gates, Benchmark, and Founders Fund. TechCrunch has more here.

Sunlight Financial, a 2.5-year-old, Teaneck, N.J.-based company that provides loans for residential solar systems, has raised $130 million in funding from Route 66 Ventures, an investment firm that makes credit and equity investments in high-growth financial services companies. PV Magazine has more here.

WorkJam, a 2.5-year-old, Montreal-based company whose mobile employee engagement platform targets hourly and non-desk workers, has raised $12 million in funding from Lerer Hippeau Ventures, Blumberg Capital, Founder Collective and NovelTMT. TechCrunch has more here.

Xenex Disinfection Services, an eight-year-old, San Antonio, Tex.-based company that makes disinfection systems for healthcare facilities, has raised $38 million in funding led by Essex Woodlands, with participation from Piper Jaffray Merchant Banking, Malin Corporation and Tectonic Ventures. More here.

New Funds

Lux Capital, a nearly 17-year-old venture firm with offices in New York and Menlo Park, has closed its fifth fund with $400 million in commitments, to continue investing in tstartups that are “inventing the future without destroying humanity.” TechCrunch has more here.

Venture Investment Associates, the fund of funds manager, has closed new funds totaling more than $230 million in capital commitments.  These include $150 million toward the firm’s combined Venture Investment Associates (VIA) VIII & VIII-VC funds and $80 million toward a third iteration of VIA’s Seed Technology Partners (STP) funds. Last May, we talked on stage with one of the firm’s (atypically) high-profile managing directors, Chris Douvos, about the challenges of investing in venture firms.

Virginia Tech and Carilion Clinic, a Roanoke, Va.-based health care organization, have formed a new $15 million venture capital fund designed to fund the startups taking root around Blacksburg, Va., and Roanoke’s so-called innovation corridor. The Roanoake Times has more here.

An Australian superannuation fund called Hostplus has invested AU$85 million ($65.2 million) in Artesian, a nine-year-old venture capital firm. The capital brings Artesian’s capital under management to AU$150 million ($115 million). Artesian funds early-stage startups in Australia. The Tech Portal has more here.


Four-year-old OneWeb — which last December raised a whopping $1.2 billion from SoftBank for its yet-to-launch satellite internet service — is merging with large satellite incumbent Intelsat. SoftBank separately said it would invest another $1.7 billion in the combined company, which is expected to be valued at $13 billion, counting both equity and debt. TechCrunch has more here.


Bill Gates on how the internet has damaged democracy.

Today at Mobile World Congress, new FCC chairman Ajit Pai gave a wide-ranging speech in which he made his most pointed comments against net neutrality since taking over as chairman, calling the rules put in place in early 2015 a “mistake.”

Renata Quintini has joined Lux Capital as a partner. Quintini has spent the last five-and-a-half years as a general partner with Felicis Ventures. (She was its third member after founder Aydin Senkut.) The native Brazilian had earlier worked as an investment manager for Stanford’s endowment.

Amit Singhal has left his job at Uber as its SVP of engineering because he didn’t disclose that he left Google last year after top executives there informed him of an allegation of sexual harassment from an employee that an internal investigation found “credible.” Singhal was asked to resign by Uber CEO Travis Kalanick yesterday morning. Singhal joined the company just last month. Recode has more here.


Amazon is looking to add a senior manager to its corporate development team. The job is in Seattle.

Sapphire Ventures, is hiring a senior associate into its fund investing team. (Rather than looking at startups, you’d be helping identify promising venture firms that Sapphire should be funding.) The job is in Palo Alto, Ca.


As public markets reach record highs, venture-backed tech startups have been left on the sidelines, shows Bloomberg’s U.S. startups barometer.

According to a new report out today from eMarketer, much of Snapchat’s growth is now being driven by older Americans.

YouTube viewers world-wide are now watching more than 1 billion hours of videos a day, threatening to eclipse U.S. television viewership. That’s a 10-fold increase since 2012. The WSJ has more here.

Essential Reads

When Snap goes public on Thursday, one of the investors closely watching the result will be Rizvi Traverse, the secretive firm that rose to prominence amassing large stakes in Twitter and Square. The Information has more here.


Backstories you’re better off not knowing.

You can get pregnant while pregnant(!).

Inside the posh Hôtel Costes in Paris.

Retail Therapy

Sammy Davis Jr. once owned this 1977 Rolls Royce Camargue. If you’d like to own it, too, talk to the folks at Bonhams.

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