September 17, 2019

Tuesday! Holy smokes, it’s late!

Top News

Donald Trump was in the Bay Area today for the first time since his election, and despite the covert fundraiser that his host, former Sun Microsystems CEO Scott McNealy, tried organizing because of past protests around Trumps visits, things didn’t go quite as planned. To wit, a neighbor who spied tents erected outside of McNealy’s Portola Valley home, tipped off the WSJ. According to CNBC, protesters then appeared “in droves” outside McNealy’s home, and crucially, they brought the “giant baby Trump” balloon with them.​
No doubt there was plenty to discuss. For starters, the Trump administration is expected tomorrow to “formally revoke California’s authority to set auto emissions rules that are stricter than federal standards, taking a major step forward in its wide-ranging attack on government efforts to fight climate change,” reports the New York Times. More here

Photo courtesy of Marissa Louie.

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This Young Litigation Finance Startup Just Raised $100 Million to Chase Cases It Thinks Will Win

If you haven’t heard much about litigation finance, that may change soon. The practice dates back decades, though it’s been picking up momentum since 2006, when Credit Suisse Securities founded a litigation risk strategies unit that it later spun off.

What is litigation finance? In a nutshell, the idea is to fund plaintiffs and law firms in cases where it looks like there will be a winning ruling. When everything goes the right way, the capital that helps fund the lawsuits is returned — and then some — in return for the risk taken. Litigation finance firms — and there’s a growing number of them — basically want to estimate as accurately as possible the risk involved so they can bet on the right horses.

Interestingly, one of the newest entrants onto the scene wasn’t founded by career attorneys or spun out of a hedge fund or private equity group. Instead it’s a young, 11-person company called Legalist that’s run by a 23-year-old Harvard dropout named Eva Shang, who cofounded the company with her college classmate Christian Haigh (who graduated).

The pair, who say they honed the idea as part of a Y Combinator batch in 2016, just secured $100 million to put to work. That’s roughly ten times the $10.2 million they raised for a first fund that tested out their ability to find and finance civil lawsuits that pay.

We talked with Shang late last week to learn more about new fund, which was raised from non-profit endowments, family offices, and institutional investors (including an insurance company) and that’s styled like a private-equity fund with a traditional management fee and carry structure.

First, how do you find these plaintiffs that you’re backing? Do you reach out to them? 

We don’t reach out to them. Attorneys bring us cases. They’re the repeat players in litigation funding industry; they’re seeing a lot of cases. 

And who are they telling you about? Who fits your criteria? 

The plaintiffs who we work with are involved in smaller cases, meaning they require less than a million dollars in funding. It’s a lot of money to pay a lawyer, but in the world of litigation, it’s akin to seed-stage investing. Once [we’ve found candidates], then the algorithms [do the] diligence. 

What kind of information or patterns are they seeking out? 

We scrape state and federal court records and look for indicators, like whether a court is favorable to plaintiffs, if particular case types tend to win, who the judge is. We also check for points at which the case could be dismissed. We’re focused exclusively on commercial cases, so often breach-of-contract [disputes] where it’s a David and Goliath situation and the smaller company is typically underfunded. When there’s litigation, we help pay for attorneys’ fees and if it’s successful, we recover and if not, we don’t. 

How many cases have you backed so far, and how many have you won? 

We’ve funded 38 cases, half of them have been resolved, and of those, we’ve had above an 80 percent success rate. 

And that has translated into what kind of return for your investors? 

More here.

Massive Fundings

CMR Surgical Limited, a five-year-old, U.K.-based maker of medical devices for minimally invasive surgeries, just raised $240 million in funding, including from LGTEscala Capital InvestmentsCambridge Innovation CapitalWatrium, and Zhejiang Silk Road FundMore here

DataRobot, a seven-year-old, Boston-based developer of machine learning automation software for enterprises, has raised $206 million in Series E funding. Sapphire Ventures led the round; other participants include Tiger Global ManagementWorld Innovation Lab, Alliance Bernstein PCIEDBIDFJ GrowthGeodesic CapitalIntel CapitalSands CapitalNEA and Meritech. TechCrunch has more here

Greenlight Financial, a five-year-old, Atlanta, Ga.-based company behind a debit card for kids that parents manage via its app, has raised $54 million in Series B funding. Drive Capital led the round, joined by JPMorgan ChaseWells FargoTTV CapitalLive Oak Bank and Relay Ventures. VentureBeat has more here

MadeiraMadeira, a 10-year-old, Brazil-based online home goods platform, has raised $110 million in fresh funding led by SoftBank Group, which made the investment through the $5 billion Latin America fund that it announced by in March. Other participants include Light Street Capital and earlier investor Flybridge Capital. Reuters has more here

Trulioo, an eight-year-old, Vancouver, Canada-based company that helps websites and mobile applications verify and validate that people are who they say, has raised $52.8 million in funding led by Goldman Sachs, with participation from Citi VenturesAmerican Express and Santander InnoVentures. GeekWire has more here

TuSimple, a four-year-old, San Diego, Ca.-based self-driving truck company, just raised $120 million in Series D funding. Investors include UPSCDH Investments and Mando Corporation. The company has now raised $215 million altogether. More here.

Big-But-Not-Crazy-Big Fundings

Cake, a three-year-old, Stockholm, Sweden-based electric motorcycle startup, has raised $14 million in funding led by Creandum, with participation from and numerous individual investors. More here

FarmWise, a three-year-old, San Francisco-based company building weed-pulling robots for the farming industry, has raised $14.5 million led by Calibrate Ventures. TechCrunch has more here

Holidu, a five-year-old, Munich, Germany-based search engine for vacation rentals, just raised €40 million ($44 million) in Series C funding led by Prime Ventures, with participation from coparionMairDuMont VenturesEQT VenturesVenture Stars, and Senovo. TechCrunch has more here

Navigating Cancer, an 11-year-old, Seattle, Wa.-based maker of oncology-focused patient relationship management software, has raised $26 million in Series D funding led by the Merck Global Health Innovation Fund and TT Capital Partners. Other investors in the round include BrightEdge, the American Cancer Society’s newly formed philanthropic venture fund; LabCorpORIX Growth Capital; and Rustic Canyon PartnersMore here

Takeoff Technologies, a three-year-old, Boston-based company that aims to replace big supermarkets with mini-warehouses where customers can pick up orders they’ve placed online, has raised $25 million in Series C funding led by Forrestal Capital at a $500 million valuation. American Inno has more here

Vouch Insurance, a year-old, San Francisco-based startup providing business insurance to startups, has raised $24.5 million in Series A funding led by Ribbit Capital and SVB Financial GroupMore here.

Smaller Fundings

Biproxi, a 1.5-year-old, San Diego, Ca.-based commercial real estate transaction platform that says it verifies listings, buyers, sellers and tenants, has raised $10 million in seed funding led by Greycroft. Other participants include Newmark Knight FrankRPM Ventures, and the National Association of Realtors. The Chicago Tribune has more here

Broker Buddha, a two-year-old, New York-based platform that’s trying to make it easier for  commercial brokers to sell insurance, has raised $4.5 million in funding led by Vertex VenturesMore here

Cerebelly, a 10-month-old, Santa Cruz, Ca.-based children’s food brand founded by serial entrepreneur Jennifer Zeszut, has raised $6.7 million in funding. Investors include Imaginary VenturesMore here

Embr Labs, a five-year-old, Cambridge, Ma.-based thermal technology company behind a bracelet that ostensibly helps users feel colder or warmer, has raised $6 million in Series B funding led by DigiTx Partners. Other backers in the round include Safar PartnersJoyance PartnersBose Ventures, and PBJ CapitalMore here

Front Range Biosciences, a four-year-old, Lafayette, Co.-based biotech startup focused on the breeding and production of new plant varieties and seeds in hemp, coffee and the cannabis industry, has raised $8.5 million in funding. Investors include Militello CapitalWelcan CapitalAFI CapitalPhyto PartnersHarvard Business School Alumni Angels of New YorkNew York AngelsSand Hill AngelsArcadian Capital ManagementHalley Venture Partners and Salveo CapitalMore here

Luca + Danni, a five-year-old, Cranston, R.I.-based jewelry brand, has raised $6.2 million in funding from Ross-SimonsMore here

Unearth Technologies, a three-year-old, Seattle-based maker of map-based operations management software for the construction sector, just raised $7 million in Series A funding. Vulcan Capital led the round, joined by Madrona Venture Group. GeekWire has more here.

New Funds

Colorcon, a 58-year-old company that develops, supplies and supports specialty products for the pharmaceutical industry — think food colorants, nutritional coatings, the film on time-release medications — is getting into the business of funding startups. It isn’t bringing aboard any traditional venture investors or taping off a corner of its Harleysville, Pa., offices so a team of staffers can meet with startups. Colorcon knows what it doesn’t know, suggests its CEO, Martti Hedman. “We’re a team of 750 people, so we didn’t want to invest in our own VC team. We’re sort of too small for that, too inexperienced.” Instead, Colorcon, which wants to plug $50 million into startups, has elected to outsource its venture operations to a low-flying but growing outfit in San Francisco called Touchdown Ventures. We reported on the arrangement here.


Cameron Borumand has been promoted to principal at the Seattle-based, early-stage venture firm Ignition Partners. He joined as an associate in 2017 after spending several years in technology investment banking. 

In addition to promoting Niki Pezeshki to investment partner at the venture firm Felicis (a move we wrote about here), the early-stage outfit has promoted to Grace Chou to vice president and Kristin Beach to chief operating officer. 

Pax Labs CEO Bharat Vasan has apparently been pushed out of the company, roughly 1.5 years after taking the job. The popular maker of cannabis vaporizers isn’t saying what happened and neither is Vasan, though the development should make our upcoming interview with the company pretty interesting(!).

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Essential Reads

Per MIT’s Technology ReviewUber has a new feature called “RideCheck” that uses the GPS, accelerometer, gyroscope, and other sensors on a driver’s smartphone to monitor for irregular activity, like an overly long stop. If it senses something out of the ordinary, a notification pops up on both the driver’s and rider’s app to see if everything is okay.  

Chinese retailers have abruptly stopped selling Juul e-cigarettes, just days after their debut. Juul wasn’t given an explanation, says Bloomberg, but given that its prospects in the U.S. are worsening, international growth is more important than ever for the company. More here.


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