StrictlyVC: November 3, 2017

November 3, 2017


Hi, all, apologies for the very late send. We thought we’d have WiFi on our flight toLisbon and we were mistaken. We now have only have a short layover in Newark to assemble the most recent news, but more next week. Hope you have a wonderful weekend in the meantime.:)


Brodie, we love you but please do not eat our last intact pair of slippers while we’re gone. (A little time-out from Brodie is largely why we’re heading out of town. Don’t tell anyone.)




Top News


Broadcom is considering a bid of more than $100 billion for Qualcomm in what would be the biggest-ever takeover of a chipmaker. Bloomberg has the story here.



Sponsored By …


StrictlyVC has been sponsored this week by “Intangibles” – a podcast about the traits, behaviors, and qualities that entrepreneurs can cultivate to help be successful.  Authors, consultants, behavioral psychologists, and academicians dive deep into topics such as humility, organizational agility, empathy, and leadership. The podcast is created and hosted by Antecedent VenturesSubscribe on iTunes.



VCs’ Carried Interest is Safe for Now (and Probably Forever)


The House tax bill released yesterday has something for VCs (and private equity folks, and hedge fund managers) to celebrate: it doesn’t touch the carried interest tax break that both Donald Trump and Hillary Clinton vowed to do away with on the campaign trail last year.


Carried interest is the percentage of a fund’s profit — usually a 20 percent share but sometimes up to 30 percent for top firms — that’s paid to firms’ institutional investors. It’s currently treated as long-term capital gains, making it eligible for a tax rate as low as 23.8 percent. Ordinary income, in contrast, can be taxed as much as 39.6 percent for single individuals earning more than $415,050 or more than $466,950 for those who are married and filing jointly.


During every U.S. presidential election season, at least one candidate vows to repeal carried interest deductions, while VCs and other private market investors rail against these proclamations, in part because they believe they deserve the tax break for taking risks and holding on to assets for what often becomes many years on end.


Indeed, in summer of last year, the National Venture Capital Association, which represents venture firms’ interests, called Clinton’s plans to do away with carried interest “misguided” and of Trump’s similar promises to do away with carried interest, the organization said it would  “threaten [the] entrepreneurial ecosystem,” said the NVCA.


In fairness, the NVCA might have been right about Trump’s proposal. It suggested ending carried interest at long-term capital gains rates and instead taxing it at 33 percent, which was the highest marginal tax bracket in his plan at the time. That wasn’t the confusing part, though. What didn’t make sense to academics was a related plan to create a 15 percent business tax for members of partnerships and other pass-through business entities — which would probably destroy a lot more than the entrepreneurial ecosystem. (The very real concern: that pretty much every business would restructure as a pass-through, and the country would essentially run out of tax dollars.)


Former Goldman Sachs president turned White House advisor Gary Cohn said last month on CNBC that Trump remains intent on eliminating the carried interest tax break even though it wasn’t specified in his tax framework.


More here.



Sponsored By . . .


If you’re an accredited investor looking for new investment opportunities, don’t miss Angel Capital Expo, coming up Thursday, November 16, in San Francisco. You’ll be joining more than 300 angel investors and founders who’ve already registered to hear 16 highly vetted startups deliver their pitches. It’s our second — and last — event of 2017; StrictlyVC readers who apply the promo code StrictlyVC by weekend’s end receive 15 percent off of the standard ticket price of $150. Register here.



New Fundings, a three-year-old, China-based auto insurance search engine, has raised $30 million in Series B funding from Shunwei Capital and CBC Capital. DealStreetAsia has more here.


CrossEngage, a two-year-old, Berlin-based cross-channel marketing technology company, has raised $5.8 million in funding co-led by Vorwerk Ventures andEarlybird Venture CapitalMore here.


Lunar Wireless, a two-year-old, Detroit-based mobile data plan company with no monthly fees, has raised $4.1 million in funding led by 8VCMore here.


News Guard, a months-old, New York-based startup that will rate news content so search and social-media platforms can help their users know what to trust (its founder is media entrepreneur Steve Brill), has almost finished raising $6 million from unnamed investors, says Axios. More here.


Hevo Data, a 1.5.-year-old, San Francisco-based cloud-based data integration platform, has raised $1 million in seed funding led by IDG Ventures India. TechCrunch has more here.


Passionflix, a 1.5-year-old, L.A.-based studio that’s turning romance novels into movies and TV series (it was founded by Tosca Musk, sister of Elon and Kimbal Musk), has raised $4.75 million in seed funding. Investors include a long list of individuals, including Patrick Cheung and Jason Calacanis. TechCrunch has more here.


Reaction Commerce, a four-year-old, Santa Monica, Ca.-based open source e-commerce platform aimed at online retailers, has raised $8.5 million in Series A funding led by GV, with participation from CrossCut VenturesDouble M Partners, and Female Founders FundMore here.


Snatch, a two-year-old, San Francisco and U.K.-based developer of an augmented reality game, has raised £4.4 million ($5.8 million) in seed funding led by Initial Capital. Other participants in the round include First Minute CapitalCrunchFundSimon Equity PartnersCassius Family FundHanson Asset ManagementVelocity Technology Fund and Silicon Valley Bank. TechCrunch has more here.


SouChe, a five-year-old, China-based used car finance platform, has raised a whopping $333 million in Series E funding led by Alibaba, with participation from Warburg PincusPrimavera Capital and CMB International. China Money Network has more here.



New Funds


Tusk Ventures, a young, early-stage venture firm with offices in San Francisco and New York, has closed its debut fund with $36 million. TechCrunch has more here.





Black Duck Software, a 15-year-old company whose products automate the process of securing and managing open-source software — including detecting license compliance issues — is being acquired by Synopsys, the publicly traded maker of semiconductor-design software. Under the terms of the definitive agreement, 31-year-old Synopsys will pay approximately $565 million, or $548 million net of cash acquired. Black Duck, based in Burlington, Mass., had raised at least $75.5 million over the years, shows Crunchbase. Its backers include Fidelity VenturesFocus VenturesGold Hill CapitalSplit Rock PartnersGeneral Catalyst Partnersnext47 (a venture unit of Siemens) and Flagship Pioneering. TechCrunch has more here.


Niantic, the company behind the hit mobile game Pokémon Go, has acquired the team from the startup Evertoon for undisclosed terms. Launched last year, Evertoon’s app was designed to help users make short, personalized films that could be shared out to social networks like YouTube and Twitter. The company had raised $1.7 million, according to Crunchbase, including from Greylock Partnersand Arena Ventures. TechCrunch has more here.


Snap, the parent company of Snapchat, has quietly acquired Metamarkets, a seven-year-old, San Francisco-based ad tech startup that provides programmatic ad data-related services to marketers, like a data dashboard to measure how campaigns are performing. TechCrunch sources says the deal was closed for less than $100 million. Metamarkets had raised just less than $58 million from investors, including Khosla VenturesTrue Ventures, and Data CollectiveMore here.





Tech IPOs have been picking up lately, and one lesser-known semiconductor company, Aquantia, made its debut on the NYSE today, raising $61 million in its offering, after pricing shares at $9.00. It closed the day of trading at $9.51. TechCrunch has more here.





Venture capitalist David Lee has sued former partner Ron Conway for millions of dollars that Lee says is being improperly withheld by Conway. Conway, unsurprisingly, disagrees that this money that Lee is “entitled to receive.” Axios has the story here.


Switcheroo at DoubleDutch, the richly funded live-engagement marketing platform: just two months after Bryan Parker was promoted from COO to CEO, the company’s earlier top banana, Lawrence Coburn, has been reinstated as CEO. TechCrunch has the scoop here.





Cowboy Ventures is looking to hire an investment associate. The job is in Palo Alto, Ca.



Essential Reads


Apple continues its run toward a $1 trillion market cap. (It attracted an especiallybig crowd today, after its iPhone X became available in its retail stores.)


Alphabet has lost another trade secret claim in its lawsuit against Uber.


Bitcoin: What’s coming in the year ahead.


India’s smartphone users love Paytm for sending money and WhatsApp for sending messages. Now each company is getting into the other’s business, with Paytm unveiling an updated version of its service today that integrates chat features.





A peek inside Lake Como’s grandest old hotel.


How to sell a 20-year-old Honda.


American hero. (Twitter has since said it’s putting “safeguards” in place to prevent future accidental deactivations.)



Retail Therapy


deodorizing clothes hangar. We could use one of these right about now.


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