• On Startups’ Need for Speed

    images (3)Some of today’s fastest-growing startups act as if they’re immune to bad publicity.

    While Uber was in the news today for deciding to retain it senior vice president of business, Emil Michael, despite his veiled threats against a journalist, it’s hardly alone. This past May, when troubling, years-old emails by Snapchat CEO Evan Spiegel were leaked to the media, Spiegel issued a short public apology and then went back to business as usual.

    Partly, today’s companies recognize that consumers and journalists have short attention spans. But today’s startups also realize that their window to succeed has never been smaller. As far as they’re concerned, nothing must get in their way.

    A new report tries to quantify this situation. According to the Bay Area consultancy Play Bigger, those select companies that hit the big time are meeting major milestones (including $500 million, $1 billion, and $5 billion valuations) two to three times faster than they did roughly 15 years ago.

    Indeed, poring over 500,000 venture-backed tech companies dating back to 2000, Play Bigger found that the winners founded between 2000 and 2003 took 8.5 years to reach a valuation of $1 billion, while a corresponding set of companies founded around 2009 and afterward have been hitting the same milestone in just 2.9 years. Similarly, startups founded in 2000 to 2003 took 4.5 years on average to reach a $500 million valuation, and companies founded in 2009 and afterward have been hitting the same target in just 1.6 years. The firm’s report is here.

    The reasons for this hyper-growth aren’t surprising. Thanks to social media, word-of-mouth about products and services spreads faster than ever before. The costs of scaling have fallen dramatically with cloud services. Ubiquitous mobile devices mean global distribution is easier than at any time in history. And startups have a wider variety of funding sources.

    Still, Uber and its brethren are making a mistake if they think their need-for-speed trumps good crisis management.

    Yes, the startup world forgets many of these stumbles quickly, but the public markets are much less forgiving. And when the same company keeps experiencing one public relations disaster after another, one has to wonder whether there’s some sort of systemic problem.

    Today, in pardoning Michael, Uber CEO Travis Kalanick tweeted, “I believe that folks who make mistakes can learn from them – myself included.” We hope so. Time will tell.

    Photo courtesy of David Paul Morris, Bloomberg

    Related articles

    Connie

  • StrictlyVC: November 18, 2014

    Hi, good Tuesday morning, everyone! Hope it’s off to a good start. (Web visitors, here’s an easier-to-read version of this morning’s email.)

    —–

    Top News in the A.M.

    Uber’s senior vice president of business, Emil Michael, has dragged the company into what could be its biggest public relations disaster yet. According to Buzzfeed, Michael suggested at a recent gathering in New York that Uber splash out on opposition research in an effort to muzzle journalists who’ve been critical of the company. Michael, whose comments were overheard and reported on by Buzzfeed’s editor, Ben Smith, went on to suggest that Uber should — and could — expose the personal business of one female tech reporter in particular. Much more here.

    —–

    A Custom Apparel Company with Big Ambitions Raises $35 Million

    Into ironic T-shirts? You aren’t alone. In fact, the market is so robust that Teespring, a two-year-old company that helps anyone turn their idea for a T-shirt (or hoodie) into a real product, has just raised $35 million in Series B financing from Khosla Ventures. Andreessen Horowitz, which had plugged $20 million into the company earlier this year, also participated in the round.

    It seems like an awful lot of money for a simple apparel business, but Providence, R.I.-based Teespring says it has big ambitions to move into numerous verticals. “T-shirts are to Teespring as books were to Amazon,” says the company’s co-founder and CEO, Walker Williams, a Brown University grad who originally started the company to help save a college bar.

    Indeed, the general idea is to help anyone with the inclination become an entrepreneur with as little effort as possible.

    Here’s how it works today: Users simply download a picture of their design; Teespring handles the rest, from manufacturing to fulfillment to customer service. Teespring outsources some pieces of the process right now but going forward, it plans to manage more of it internally. For example, it already has its own customer service department; to further support its ambitions, the company is building out a 105,000-square-foot manufacturing facility in Kentucky that it says should significantly increase its manufacturing and logistics capabilities.

    Teespring is still keeping its revenue close to the vest, but it claims that it has already shipped six million products to more than 80 countries and that 1 in 75 people in the U.S. have purchased a Teespring tee in the past year.

    Williams also says that of the “thousands” of vendors and individuals using the service to make their products, “hundreds” of them are “making six figures” and that more than 10 are making in the millions of dollars a year.

    On average, he adds, users pay Teespring between $8 and $10 per T-shirt, and between $14 and $18 per hoodie depending on the print design, the fabric, and the number of ink colors the unit requires. (That includes Teespring’s margin.) From there, users can sell the goods for whatever they want.

    Today, Teespring employs 170 employees. Once it gets its new facility in Kentucky up and running, says Williams, it will be adding 300 more jobs to the payroll.

    —–

    (Other) New Fundings

    Alfred, a year-old, New York-based company that charges users $100 per month for an assistant (or “Alfred”) to visit their homes twice weekly to handle everything from groceries to shoe repair, has raised $2 million in seed funding led by Spark Capital, with participation from SV Angel andCrunchFund.

    Bipsync, a 2.5-year-old, Palo Alto, Ca.-based company whose platform aims to simplify the process of gathering, retrieving, and analyzing information about investment opportunities, has raised $1.5 million in seed funding from a mix of investors, including Russell Siegelman, a partner emeritus at Kleiner Perkins Caufield & Byers, and Steadfast Venture Capital.

    Blockstream, a two-month-old, San Francisco-based startup that aims to enhance bitcoin’s blockchain and turn it into a universal platform for bitcoin 2.0 applications, has raised $21 million in seed funding led by LinkedIn cofounder Reid Hoffman, Khosla Ventures, and Real Ventures. Other participants in the crowded round include Innovation Endeavors and AME Ventures. The WSJ has much more here.

    Breezeworks, a two-year-old, San Francisco-based company whose mobile app makes it easier for small business owners to do scheduling, invoicing, and more, has raised $5 million in Series A funding led byObvious Ventures. Other investors in the round included Salesforce CEO Marc Benioff, James Murdoch of 21st Century Fox, former eBay president Jeff Skoll, and investor-entrepreneurs David Sacks, Max Levchin, and Peter Thiel. TechCrunch has more here.

    CompStak, a 2.5-year-old, New York-based real estate data firm that crowdsources commercial real estate information for investors, brokers, asset managers and appraisers, has raised $4.4 million in new funding led by Canaan Partners. Other investors in the funding round include investment firm dmgi, Expansion VC, and real estate investment firm Rubenstein Partners. The Real Deal has more here.

    Eyeview, a seven-year-old, New York-based company that provides marketers with a personalized video advertising platform, has raised $15 million in financing from earlier backer Marker. The company has now raised $35.4 million altogether, including from Nauta Capital, Lightspeed Venture Partners, Gemini Israel Ventures, and Innovation Endeavors, shows Crunchbase.

    Indico, a year-old, Needham, Ma.-based machine learning data science startup, has raised $3 million in initial funding from General Catalyst Partners, .406 Ventures, Two Sigma, Boston Seed and angel investors.

    Intellia Therapeutics, a months-old, Cambridge, Ma.-based company that aims to treat disease through the new science of genome editing, has raised $15 million from Atlas Venture and Novartis. The company was created by Atlas Venture and Caribou Biosciences, a Berkeley, Ca.-based biotech company.

    Obillex, a three-year-old, U.K.-based payments platform that matches small businesses in need of good rates with investors looking for modest, low-risk returns, has raised has secured £3 million ($4.7 million) in funding led by Dawn Capital, with participation from MMC Ventures. TechCrunch has more here.

    Oppex, a two-year-old, Helsinki, Finland-based company that operates a search engine for public sector bidding contests, has raised $1.5 million in seed funding from the media company Alma Media, startup acceleratorVeturi, the Finnish fund Tekes, and numerous angel investors.

    OrderWithMe, a 3.5-year-old, Las Vegas-based company that lands discounts for small businesses by aggregating their orders with other small business, has raised $28 million in new funding led by earlier investors, including Vegas Tech Fund, SOSVentures, BaseVC and Tony Hsieh, with additional participation from Silicon Valley Bank, Pentland Group, Advantage Capital and several others. The company has now raised roughly $37 million to date. Tech Cocktail has more here.

    Pingboard, a 1.5-year-old, Austin, Tx.-based office management software maker, has raised $2.2 million of a planned $2.5 million financing per a filing with the SEC. Silverton Partners is among the companies investors. Austin Business Journal has more here.

    RealScout, a two-year-old, Mountain View, Ca.-based online search engine for local home listings, has raised $6 million in Series A funding led by DCM, participation from Formation 8 and numerous individual investors. TechCrunch has more here.

    Shift Technologies, an 11-month-old, San Francisco-based used car marketplace that enables people to buy or sell used cars from their phones with the help of car concierges who schedule test drives and who personally bring the cars to shoppers, has raised $20 million in Series A funding. DFJ and Highland Capital Partners co-led the round. SV Angel and Great Oaks VC also participated, along with individual investors, including Google Maps co-creator Lars Rasmussen, Meraki Networks founder Hans Robertson, Square co-founder Jim McKelvey, and Shazam founder Chris Barton. Venture Capital Dispatch has more here.

    Soci, a 2.5-year-old, San Diego-based company behind a social content discovery engine and social media marketing technology, has raised $1.5 million in Series A funding led by angel investor Peter Fisher, with participation from Silicon Valley Growth Syndicate.

    Veradocs, a 10-month-old, San Francisco-based company whose technology enables IT departments to track documents, as well as change in real time who can access them, has raised $14 million in Series A funding led by Battery Ventures. Other participants in the round include Amplify Partners and individual investors, such as Yahoo CIO Mike Kailand Gainsight CEO Nick Mehta. Venture Capital Dispatch has more here.

    V-Key, a 3.5-year-old, Redwood City, Ca.-based mobile security and cryptographic technology company, has raised $12 million in Series B funding from Ant Financial Services Group (the operating company of Alipay) and earlier backer IPV Capital. The company has now raised $16 million to date, shows Crunchbase.

    —–

    New Funds

    Nigeria has a new, government-backed $50 million fund, its president, Goodluck Jonathan, announced yesterday.

    Chicago has a new fund, too. According to Crain’s Chicago Business, Baird Capital has closed its fourth venture fund with $185 million, substantially more than the $150 million the firm says it had initially targeted. Baird’s investors include the State of Wisconsin Investment Board, Venture Michigan and Shelter Insurance. It closed its last fund with $171 million in 2008, a pool it used to back the 13-year-old babysitting platform Sittercity, among other companies. Baird invests in both IT and health care, diagnostics, and medical device startups.

    —–

    IPOs

    Juno Therapeutics, a year-old, Seattle-based startup that’s developing immunotherapies for cancer, has filed for an IPO after raising $310 million. The company said it could raise up to $150 million in the offering. Juno was formed by Arch Venture Partners and the Alaska Permanent Fund (the state of Alaska’s oil revenue fund) from technologies spun out of the Fred Hutchinson Cancer Center and Seattle Children’s Hospital in Washington, and the Memorial Sloan-Kettering Cancer Center in New York. Its biggest shareholders include Arch, which owns 15.17 percent of the company; CL Alaska and JT Line Partners, which collectively own 34.75 percent of the company; and the Fred Hutchinson Cancer Research Center, which owns 5.17 percent of the company. Xconomy has more here.

    —–

    Exits

    GetFeedback, a 1.5-year-old, San Francisco-based online survey startup, has been acquired by the 10-year-old, Sydney, Australia-based email marketing firm Campaign Monitor for undisclosed terms. Campaign Monitor will reportedly use GetFeedback offices as its new North American headquarters. GetFeedback had raised just $2.3 million in Series A funding from Salesforce Ventures. Campaign Monitor raised $250 million earlier this year from Insight Venture Partners. TechCrunch has more here.

    Rubicon Project, the L.A-based publicly traded advertising automation platform, is acquiring ad tech startups iSocket and Shiny Ads for less than $30 million collectively (and mostly in stock). iSocket, a 5-year-old, San Francisco-based company, had raised roughly $15 million from investors, including Foundry Group, Accelerator Ventures, Quest Venture Partners, Blumberg Capital, and DFJ. Shiny Ads, a five-year-old, Toronto-based startup, had disclosed only $500,000 in seed funding, from Maple Leaf Angels and York Angel Investors.

    Swarm Mobile, a two-year-old, San Francisco-based service that sells in-store retail analytics and customer engagement services to small businesses, has been acquired by the deals company Groupon for undisclosed terms. Swarm had raised $4.5 million over two rounds, including from Abundance Partners and Icon Venture Partners.

    —–

    People

    New York will soon have a floating park above the Hudson River, thanks to billionaire IAC/InterActive chair Barry Diller and his wife, the fashion designer Diane von Furstenberg. They’ve donated $130 million — the largest donation to a public park in New York City’s history — to fund the project, called Pier55, which will feature a mix of green spaces and performance venues. Construction begins in 2016. More here.

    Venture capitalist Ben Horowitz has publicly distanced himself from entrepreneur Mahbod Moghadam, after Moghadam authored a lengthy post about how to steal from Whole Foods. Moghadam’s company,Genius, has received much of its venture funding from Andreessen Horowitz, but in the two years since the firm first invested in the company, Moghadam has repeatedly embarrassed his cofounders and investors. He resigned from the company back in May over one bizarre outburst. On Sunday, asked on Twitter to explain “why he backs this awful guy,” Horowitz tweeted, “I don’t back him,” adding in subsequent tweets that, “He is not a nice person for sure,” and, to Moghadam himself: “It’s not that I don’t like you. It’s just a tragedy that you care only about yourself. I wish you only the best.”

    Will Rosenzweig, a cofounder of Physic Ventures in San Francisco, is becoming the dean of the Food Business School, a Culinary Institute offshoot that Rosenzweig calls “an alternative to an MBA” for emerging entrepreneurs. Rosenzweig was formerly the CEO of Republic of Tea; he tells StrictlyVC that his work at the school will help inform his investments, which he’s continuing to make via syndications but “not in the conventional fund structure [as] in the past.”

    —–

    Job Listings

    Valor Capital Group is looking to hire a venture analyst for its venture capital division. The job is in New York. The catch: You need to be fluent in Portuguese.

    —–

    Essential Reads

    Yesterday, Snapchat unveiled Snapcash, a new payments feature it’s launching in partnership with Square. Recode has the story here.

    Google and Stanford researchers have created image recognition software that teaches itself to identify entire scenes, reports the New York Times.

    The U.S. government is planning to auction another 50,000 bitcoin — worth around $19 million. Dealbook has more here.

    —–

    Detours

    A glowing bike path inspired by Van Gogh.

    The coming chocolate crisis. (Eek.)

    Ken Block’s latest and greatest, replete with O.J. Simpson chase scene.

    —–

    Retail Therapy

    Amazing animated flip-books.

    Black soap, for tough guys.

    Connie

  • A Custom Apparel Company with Big Ambitions Raises $35 Million

    teespringInto ironic T-shirts? You aren’t alone. In fact, the market is so robust that Teespring, a two-year-old company that helps anyone turn their idea for a T-shirt (or hoodie) into a real product, has just raised $35 million in Series B financing from Khosla Ventures. Andreessen Horowitz, which had plugged $20 million into the company earlier this year, also participated in the round.

    It seems like an awful lot of money for a simple apparel business, but Providence, R.I.-based Teespring says it has big ambitions to move into numerous verticals. “T-shirts are to Teespring as books were to Amazon,” says the company’s co-founder and CEO, Walker Williams, a Brown University grad who originally started the company to help save a college bar.

    Indeed, the general idea is to help anyone with the inclination become an entrepreneur with as little effort as possible.

    Here’s how it works today: Users simply download a picture of their design; Teespring handles the rest, from manufacturing to fulfillment to customer service. Teespring outsources some pieces of the process but going forward, it plans to manage more of it internally. For example, it already has its own customer service department; to further support its ambitions, the company is building out a 105,000-square-foot manufacturing facility in Hebron, Kentucky that it says should significantly increase its manufacturing and logistics capabilities.

    Teespring is still keeping its revenue close to the vest, but it claims that it has already shipped six million products to more than 80 countries and that 1 in 75 people in the U.S. have purchased a Teespring tee in the past year.

    Williams also says that of the “thousands” of vendors and individuals using the service to make their products, “hundreds” of them are “making six figures” and that more than 10 are making in the millions of dollars a year.

    On average, he adds, users pay Teespring between $8 and $10 per T-shirt, and between $14 and $18 per hoodie depending on the print design, the fabric, and the number of ink colors the unit requires. (That includes Teespring’s margin.) From there, users can sell the goods for whatever they want.

    Today, Teespring employs 170 employees. Once it gets its new facility in Kentucky up and running, says Williams, it will be adding 300 more jobs to the payroll.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    , , ,

  • StrictlyVC: November 17, 2014

    Good morning, everyone! Hope you had a wonderful weekend. (Web visitors, here’s an easier-to-read version of today’s email.)

    —–

    Top News in the A.M.

    Facebook to enterprises: You want workplace collaboration tools? We’ve got your workplace collaboration tools.

    Sometimes, a record-breaking IPO isn’t enough. According to Reuters, Chinese e-commerce giant Alibaba will be sounding out investors this week as it mulls its first bond offering. (The WSJ talks with cofounder Joe Tsai about some of the company’s other plans here.)

    —–

    Tim Draper on Life Outside DFJ

    Almost exactly a year ago, Fortune reported that billionaire investor Tim Draper would no longer be actively investing on behalf of DFJ, the firm he cofounded in 1985. As the news rippled throughout VC circles, Draper wrote StrictlyVC to clarify that was “not leaving DFJ. Ever. I am just skipping a fund to do some work building Draper University and experimenting with new models for venture capital. He added: “I will of course be an investor in any new fund we create.”

    Draper, already known for his boundless energy, has seemingly been in overdrive since. In addition to his involvement with his 1.5-year-old Draper University — once characterized as an “unconventional boarding school for aspiring tech moguls” — Draper has become a highly active seed-stage investor. He’s betting heavily on bitcoin, too. In fact, in July, he purchased the 30,000 bitcoin seized when the feds took down the online drug bazaar Silk Road in October 2013. That’s saying nothing of his efforts this year to get an initiative on the California ballot to carve the state into six “startup” states. (It failed to qualify.)

    How does he find the time? StrictlyVC asked Draper if he could answer a few questions about the past year; we emailed this past weekend in an exchange that has been edited lightly for length.

    Last year, you said you decided to “skip a fund” at DFJ. How are you feeling one year later?

    Everything I do helps all my funds, whether they be DFJ or Draper Associates [Draper’s seed fund].

    Draper University; Boost.vc [son Adam’s investment fund], Hero City [Draper University’s coworking space]; and my long history in the VC world have all become an amazing source of deal flow.

    What’s been the best part about this past year? What’s been the most challenging?

    The best part is that I am able to innovate in the finance world. There are some things that can be done better for the entrepreneurs, and some that can be done better for the LPs. There are also some real technological innovations that are happening that I have been able to identify and apply to venture capital [including around bitcoin].

    Also, [Draper University] has provided me a new vehicle for investment, new contacts I never would have made without it, and innovations I never would have seen without it.

    The most challenging [thing for me] has been the sheer volume of opportunities I now have for investment.

    You seem to be investing more actively than ever.

    I think I am at my normal pace.

    Would you ever raise institutional funding again?

    Yes.

    What percentage of your bets this past year have been bitcoin-related?

    Maybe 20 percent and rising.

    When you successfully bid on those 30,000 bitcoin, you told Dealbook that you wanted to provide liquidity to markets that have been hamstrung by weak currencies. First, have you ever disclosed how much you paid? More importantly, how are you executing on that plan?

    We have done it. [Editor’s note: Here, Draper points me to his portfolio company Mirror, formerly Vaurum, an exchange platform for bitcoin investors.] And the price I paid for the bitcoin was higher than the current price, but my belief is that the price of bitcoin will exceed $10,000 within three years because the infrastructure is being built that will lay the groundwork for universal adoption. We will be using bitcoin for transactions and all we will know is that the transaction was made faster, smoother and cheaper than it would have been with just fiat currency.

    Will you invest as actively in bitcoin in 2015 or have you covered a lot of your bases at this point?

    This is just the tip of the iceberg. I expect bitcoin and the blockchain to be as prevalent in banking, commerce and finance as the Internet is in information, communications and software.

    A lot of very smart people are divided about bitcoin. Like you, Marc Andreessen is a famous bull. In contrast, Peter Thiel recently said that he’s skeptical, that it’s “not obvious how easy it is to get a seamless payment system attached to [bitcoin].”

    It is happening. I look forward to giving Peter a tour of Draper University and Hero City. Marc has already been there.

    Andreessen and Thiel have also become very public figures. Meanwhile, you did a lot of press around your Six Californias initiative, but as an investor, you seem to have pulled back.

    We just finished up another amazing session at Draper University. We are challenging the count at Six Californias. Draper Associates has been making some brilliant investments that I expect to have even greater outcomes than those I have made in the past. We have news cycles, too.:)

    Your three children are now making their own startup bets. What’s the best piece of advice you’ve given them about being investors in Silicon Valley?

    Yes, Jesse, the Valley Girl, is one of the top supporters of women in entrepreneurship, and she has made some exciting investments. My son Adam is running Boost.vc, and my son Billy works with me making investments for Draper Associates. They all look at the world as something that can be improved through entrepreneurship. [The] best piece of advice [I’ve given them]: “Fail and fail again until you succeed.”

    —–

    New Fundings

    Axcient, an eight-year-old, Mountain View, Ca.-based company whose data protection service aims to make online backup simple for smaller businesses, has raised $10 million in Series E funding, according to anSEC filing that lists a $13.2 million target. The company had previously raised at least $64.2 million, including from Allegis Capital, Scale Venture Partners, and Thomvest Ventures.

    BeiGene, a four-year-old, Beijing-based biotech company that develops targeted and immune-oncology therapeutics, has raised 450 million yuan ($75 million) in Series A funding from new investors CITIC Capital Partners, Hillhouse Capital, and an undisclosed U.S. public-investment fund, along with earlier, unnamed angel investors.

    Bion Pharma, a new, Princeton, N.J.-based company that aims to help Indian and European drug makers receive regulatory clearance and expand their distribution rights in the U.S., has raised $21 million from two investors, according to an SEC filing that shows a $30 million target. Bio was founded by five U.S.-based execs who left Indian generic drugmaker Ranbaxy last month. MedCity News has the story.

    Curatio Healthcare, a nine-year-old, Chennai, India-based mobile healthcare engagement platform, has raised Rs 100 crore ($16.2 million) from Sequoia Capital in exchange for a reported 20 to 25 percent stake. Times of India has more here.

    InsightSquared, a four-year-old, Cambridge, Ma.-based business intelligence company, has raised $13.5 million in Series C funding from earlier backers Atlas Ventures, DFJ, and NextView Ventures along with new investor Two Sigma Ventures. The company has now raised $27 million to date.

    Into the Gloss, a four-year-old, New York-based beauty site and maker of its own skin and beauty products that ship directly to consumers, has raised $8.4 million from Thrive Capital and other investors, says VentureWire. The company had earlier raised $2 million in seed funding from Lerer Hippeau Ventures and Forerunner Ventures.

    Onename, a 1.5-year-old, New York-based company that makes it easy for anyone to be listed in the directory for Bitcoin, has raised $1.5 million in seed funding Union Square Ventures, with participation from Barry Silbert, Naval Ravikant, Cyan and Scott Banister, SV Angel, High Line Venture Partners, and others. Onename graduated from Y Combinator’s Summer 2014 batch. VentureBeat has more here.

    Scaled Inference, a six-month-old, Palo Alto, Ca.-based startup that’s building a cloud-based platform for third parties that want to use artificial intelligence and machine learning tools to run their apps and services, has raised $8 million in Series A funding from Khosla Ventures. The company has now raised $13.6 million, following a seed round earlier this year that included Tencent and Felicis Ventures, among others. TechCrunch hasmore here.

    Sliced Investing, a months-old, San Francisco-based graduate of this summer’s Y Combinator class, has raised $2 million in seed funding to pursue its plans to bring crowd funding to hedge funds. Participants in the round include Khosla Ventures, Data Collective, and TriplePoint Venture Growth.

    SomaLogic, a 15-year-old, Boulder, Co.-based clinical diagnostics company that provides protein detection equipment and more to its customers, has raised $16.5 million, including from Novartis AG, which recently extended a research agreement with SomaLogic. CEO Byron Hewett tells VentureWire that the company, which has raised more than $200 million over the years, is targeting $40 million for this current round.

    SysCloud, a four-year-old, Cranford, N.J.-based company that sells a suite of tools that provides protection for data in Google Apps through real-time backups, has raised $2.5 million in Series A funding led by Inventus Capital Partners, with participation from earlier investor KAE Capital.

    —–

    IPOs

    FibroGen, a 21-year-old, San Francisco-based company that’s developing drugs in anemia, fibrosis and cancer, debuted on Nasdaq Friday, after pricing 8.1 million shares at $18 apiece, near the top of its projected range of $16 to $19 per share; its shares closed the day at $22 per share.

    —–

    People

    Karen Mills, Obama’s former SBA chief, is now working part-time at Harvard Business School. She’s also writing checks as an angel investor, often alongside General Catalyst Partners, reports BostInno.

    Mahbod Moghadam, the ousted co-founder of Genius.com (formerly Rap Genius) posted a how-to story on Friday that’s generating a lot of attention, and not the good kind. Moghadam wrote about shrinking his tab at Whole Foods by switching price tags, pocketing fruit, putting pricey food in soup containers and (unfortunately) much, much more.

    Michael Solomon and Rishon Blumberg, longtime talent agents, have begun serving as agents for desirable developers, and their firm, 10x, is crushing it, reports the New Yorker in an entertaining new profile.

    —–

    Job Listings

    Bridge Ventures, a U.K.-based investment firm that funds businesses that are located in or serve underserved communities, is looking for a partner in New York.

    Golden Seeds, an early-stage firm focused on women-led businesses, is looking for a venture fund analyst. The job is in New York.

    —–

    Essential Reads

    The future of Google Glass grows cloudier.

    —–

    Detours

    Baltic Sea photography.

    Fastest roast turkey.

    Three years ago, he was flipping burgers at McDonald’s. Today Matt Haag, 22, skinny and blindingly pale, makes more than $1 million a year by playing the popular war game Call of Duty.

    —–

    Retail Therapy

    Oh, hey, for the right price, the first official Batmobile can now be yours.

    Connie

    ,

  • Tim Draper on Life Outside DFJ

    tim-draperA year ago, Fortune reported that billionaire investor Tim Draper would no longer be actively investing on behalf of DFJ, the firm he cofounded in 1985. As the news rippled throughout VC circles, Draper wrote StrictlyVC to clarify that he was “not leaving DFJ. Ever. I am just skipping a fund to do some work building Draper University and experimenting with new models for venture capital. He added: “I will of course be an investor in any new fund we create.”

    Draper, already known for his boundless energy, has seemingly been in overdrive since. In addition to his involvement with his 1.5-year-old Draper University — once characterized as an “unconventional boarding school for aspiring tech moguls” — Draper has become a highly active seed-stage investor. He’s betting heavily on bitcoin, too. In fact, in July, he purchased the 30,000 bitcoin seized when the feds took down the online drug bazaar Silk Road in October 2013. That’s saying nothing of his efforts this year to get an initiative on the California ballot to carve the state into six “startup” states. (It failed to qualify.)

    How does he find the time? StrictlyVC asked Draper if he could answer a few questions about the past year; we emailed this past weekend in an exchange that has been edited lightly for length.

    Last year, you said you decided to “skip a fund” at DFJ. How are you feeling one year later?

    Everything I do helps all my funds, whether they be DFJ or Draper Associates [Draper’s seed fund].

    Draper University; Boost.vc [son Adam’s investment fund], Hero City [Draper University’s coworking space]; and my long history in the VC world have all become an amazing source of deal flow.

    What’s been the best part about this past year? What’s been the most challenging?

    The best part is that I am able to innovate in the finance world. There are some things that can be done better for the entrepreneurs, and some that can be done better for the LPs. There are also some real technological innovations that are happening that I have been able to identify and apply to venture capital [including around bitcoin].

    Also, [Draper University] has provided me a new vehicle for investment, new contacts I never would have made without it, and innovations I never would have seen without it.

    The most challenging [thing for me] has been the sheer volume of opportunities I now have for investment.

    You seem to be investing more actively than ever.

    I think I am at my normal pace.

    Would you ever raise institutional funding again?

    Yes.

    What percentage of your bets this past year have been bitcoin-related?

    Maybe 20 percent and rising.

    When you successfully bid on those 30,000 bitcoin, you told Dealbook that you wanted to provide liquidity to markets that have been hamstrung by weak currencies. First, have you ever disclosed how much you paid? More importantly, how are you executing on that plan?

    We have done it. [Editor’s note: Here, Draper points me to his portfolio company Mirror, formerly Vaurum, an exchange platform for bitcoin investors.] And the price I paid for the bitcoin was higher than the current price, but my belief is that the price of bitcoin will exceed $10,000 within three years because the infrastructure is being built that will lay the groundwork for universal adoption. We will be using bitcoin for transactions and all we will know is that the transaction was made faster, smoother and cheaper than it would have been with just fiat currency.

    Will you invest as actively in bitcoin in 2015 or have you covered a lot of your bases at this point?

    This is just the tip of the iceberg. I expect bitcoin and the blockchain to be as prevalent in banking, commerce and finance as the Internet is in information, communications and software.

    A lot of very smart people are divided about bitcoin. Like you, Marc Andreessen is a famous bull. In contrast, Peter Thiel recently said that he’s skeptical, that it’s “not obvious how easy it is to get a seamless payment system attached to [bitcoin].”

    It is happening. I look forward to giving Peter a tour of Draper University and Hero City. Marc has already been there.

    Andreessen and Thiel have also become very public figures. Meanwhile, you did a lot of press around your Six Californias initiative, but as an investor, you seem to have pulled back.

    We just finished up another amazing session at Draper University. We are challenging the count at Six Californias. Draper Associates has been making some brilliant investments that I expect to have even greater outcomes than those I have made in the past. We have news cycles, too.:)

    Your three children are now making their own startup bets. What’s the best piece of advice you’ve given them about being investors in Silicon Valley?

    Yes, Jesse, the Valley Girl, is one of the top supporters of women in entrepreneurship, and she has made some exciting investments. My son Adam is running Boost.vc, and my son Billy works with me making investments for Draper Associates. They all look at the world as something that can be improved through entrepreneurship. [The] best piece of advice [I’ve given them]: “Fail and fail again until you succeed.”

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    ,
    , ,

  • StrictlyVC: November 14, 2014

    Hello, fair readers. No column today, but we’ll see you next week. Hope you have a terrific weekend, and in the case that you’re a Web visitor, here’s an easier-to-read version of this morning’s missive.

    ——-

    Top News in the A.M.

    “The Justice Department is scooping up data from thousands of cellphones through fake communications towers deployed on airplanes, a high-tech hunt for criminal suspects that is snagging a large number of innocent Americans, according to people familiar with the operations,” reports the WSJ.

    —–

    New Fundings

    Apio Systems, a 2.2-year-old, Crystal City, Va.-based company whose mobile platform uses existing sensors in smartphones and tablets to detect a broad range of driving conditions, has raised $5 million in Series A round funding led by Verizon Ventures, with participation from Lerer Hippeau Ventures, the international public transport company Transdev, and East Rock Capital. To date, Apio Systems has raised more than $6 million.

    Craftsy, a four-year-old, Denver-based online craft site whose members learn how to create craft ideas via online tutorials, has raised more than $50 million in growth funding led by Stripes Group, with participation from earlier backer Foundry Group, Tiger Global, Adams Street Partners, Access Venture Partners and Silicon Valley Bank. The company has now raised almost $100 million altogether. The New York Times has much more here.

    Eventbase, a five-year-old, Vancouver-based event app platform, has raised $2 million in Series A funding from the newly formed vehicle SXSW Tech, founded by the organizers of the South By Southwest conferences and festivals. The capital represents Eventbase’s first institutional funding.

    HealthCare.com, an eight-year-old, Miami, Fl.-based healthcare pricing and meta-search engine, has raised $7.5 million in Series A funding led by Priceline Chairman Jeffrey Boyd, with participation from People Fund.

    Hihey, a three-year-old, Beijing-based online auction site, has raised roughly $100 million in Series B funding from Citic Securities andShenzhen Capital Group.

    Indice Semiconductor, a six-year-old, Tualatin, Ore.-based fabless semiconductor company that makes mixed-signal power control and conversion ICs, has raised $6 million in Series A funding, including from the Australian venture firm Rampersand.

    LaForge Optical, a 1.5-year-old, San Mateo, Ca.-based maker of prescription “smart” glasses, has raised $1.1 million in funding from the smart lens technology company Somo Optical.

    Metal Networks, a 2.5-year-old, Houston, Tx.-based company that makes software for buying and selling semi-finished industrial metal, has raised $5 million in Series A funding led by S3 Ventures.

    Rival IQ, a 1.5-year-old, Seattle-based digital marketing analytics company, has raised roughly $1 million in funding from new and earlier investors, including Confluence Capital, Galvanize Ventures, Gravity Ventures, and Vulcan Capital.

    Symbiota, a two-year-old, Cambridge, Mass.-based company whose microbial solutions promote plant health, has raised $7.5 million in Series A funding from Flagship Ventures.

    Trecker.com, a two-year-old, Berlin-based SaaS platform for farm and agriculture business processes, has raised 2.1 million euros ($2.6 million) in Series A funding led by Target Partners.

    UpLift, a three-year-old, Sunnyvale, Ca.-based payment marketing platform that allows merchants to promote preferred payment types, has raised $8.2 million in Series A funding led by IDG Ventures, with participation from PAR Capital Ventures, Thayer Ventures and individual investors.

    Wildcard, a 22-month-old, New York-based company behind a new mobile brower, has raised $10 million in funding led by General Catalyst Partners. Other investors in the round include Lerer Hippeau Ventures, Softbank Capital, SV Angel, GroupMe founders Jared Hecht and Steve Martocci, Dave Tisch, and Gary Vaynerchuk. GigaOm has a nice overview of why the company is interesting here.

    —–

    New Funds

    Qihoo 360 Technology, the nine-year-old Chinese Internet-security company, plans to form an early-stage fund with $60 million to invest in Internet-of-Things companies, says the WSJ. The intended fund, called360 Capital—IoT Fund, will reportedly focus on investments in China, the U.S. and Israel. More here.

    Unshackled, a new San Francisco-based angel fund, has raised a $3.5 million fund that it will use to help foreign entrepreneurs who are already in the U.S. work full-time on their startups. The idea is to provide the foreign-born entrepreneurs with a paycheck, work visas and health benefits while they try to get their companies to the point where they can raise another round. Unshackled is itself backed by roughly 50 investors, including First Round Capital and 500 Startups. Venture Capital Dispatch has the story here.

    —–

    IPOs

    DermTech, an 18-year-old, La Jolla, Ca.-based biotech company that develops and commercializes assays for skin samples using adhesive tape biopsy methods, has withdrawn its plans to go public. The company has raised $16.8 million from investors over the years, including Jacobs Investment Company.

    —–

    Exits

    Aorato, a two-year-old, Herzliya, Israel-based cyber security company, has officially been acquired by Microsoft for what TechCrunch sources say is “in the region of $200 million.” Aorato had raised $11 million from investors, including Glilot Capital Partners, Accel Partners, Innovation Endeavors, and individuals Rakesh Loonkar and Mickey Boodaei.

    Xtime, a 15-year-old, Redwood City, Ca.-based company that sells customer-service software for auto dealers, has been acquired for $325 million in cash by Cox Automotive, a unit of Atlanta-based Cox Enterprises. Xtime had raised at least $28 million over the years, including a $23 million round in 2012 that included DFJ, Saints Capital, Lumia Capital, RPM Ventures, and Bessemer Venture Partners.

    —–

    People

    Adam Boyden has joined RPM Ventures, a 14-year-old, Ann Arbor, Mi.-based seed- and early-stage venture capital firm, as managing director. Boyden had co-founded and led Openlane, an RPM-backed online wholesale automotive marketplace that was acquired by KAR Auction Services for $210 million in 2011. (It had raised $10 million.) In recent years, Boyden has also been the COO of the peer-to-peer lending platform SoFi and served as president of Conduit, a cloud-based user-engagement platform.

    The Fancy, the five-year-old, New York-based social shopping platform that was rumored to be in acquisition talks with eBay in September for roughly a billion dollars, has laid off an estimated one-third of its staff,reports Business Insider. A number of Glassdoor reviewers allege that the company has a tendency to fire employees just before their stock options vest, notes BI. It also reminds readers that executives from Fancy took about $20 million off the table during the company’s last fundraise, money that was reportedly distributed to a dozen executives. The company has raised $104 million to date, shows Crunchbase.

    Serial entrepreneur Halsey Minor, who has famously burned many of his bridges with Silicon Valley investors, is turning to crowdfunding platforms to fund his newest company, Bitreserve, which seeks to use bitcoin to transfer funds across borders and minimize exchange fees. The company disclosed yesterday that it’s using Venovate Marketplace, a U.S.-based brokerage platform for alternative investing, and London-based crowdfunding platform Crowdcube to drum up its Series B funding.

    Kara Nortman has just become the third partner with an operating background to join L.A.-based Upfront Ventures in the past two years. Nortman previously founded P.S. XO, a startup that delivered content for birthday and other kid celebrations to the doorsteps of harried parents; last month, it merged with a similar company, Seedling. Nortman has also run the IAC operating companies Urbanspoon and Citysearch and was a board member at Hatch Labs, where she advised Tinder, maker of a hugely popular online dating app.

    Pierre Omidyar, the billionaire founder of eBay, apparently spent years living as a recluse, interacting with his business contacts using the virtual online world Second Life. More here.

    Reddit, the popular online community message board, is undergoing a management reshuffle. Yishan Wong, Reddit’s CEO for the last two-and-a-half years, reportedly resigned from his position yesterday over a disagreement about the location and lease of a new office for the company. (He wanted to move the company down to Daly City, just south of San Francisco; Reddit’s board said no.) Ellen Pao, Reddit’s business and partnerships strategist, will serve as interim chief executive, the company said in a statement. A New York Times piece about the moves also reported that Reddit cofounder Alexis Ohanian will return to the company full time as its executive chairman.

    Evan Spiegel, cofounder of the popular messaging service Snapchat, has moved on — out of his dad’s house, that is. Variety has more here.

    —–

    Data

    Fenwick & West has released the results of its third-quarter Silicon Valley Venture Capital Survey, which analyzed 180 tech and life science companies. The upshot: Though the quarter one of the strongest in the past decade, it wasn’t as strong as the second quarter, with venture investment, IPOs and fundraising all declining a bit. In the third quarter, for example, up rounds exceeded down rounds 76 percent to 12 percent (with another 12 percent closing up so-called flat rounds). In the second quarter, 80 percent of the deals done had been up rounds, 6 percent were down rounds, and 14 percent remained flat. You can find much more here.

    —–

    Essential Reads

    Amazon and Hachette have finally resolved their dispute. (Phew.)

    —–

    Detours

    Tour the lab where scientists supercharge elite athletes.

    Why everyone loves “Serial,” the true-crime podcast.

    What it’s like to remember almost everything that has ever happened to you.

    —–

    Retail Therapy

    To each his own, but this shower does not seem like a particularly good idea.

    Connie

  • StrictlyVC: November 13, 2014

    Good day, dear readers! We have a longer-than-usual column today, so we scrapped some other sections, but much like the Terminator, they will be back. (Psst, web visitors, here’s an easier-to-read version of today’s email.)

    —–

    Top News in the A.M.

    Senate Majority Leader Harry Reid yesterday moved to advance a bill that would usher in sweeping reforms to the NSA’s mass-surveillance practices, “a surprising move” intended to address the program before Republicans take over the Senate next year, writes the National Journal.

    —–

    Unrest at Nest

    Sitting on stage last week at a San Francisco conference, Greg Duffy, the 28-year-old co-founder and CEO of Dropcam, which makes Internet-connected video cameras, fielded questions from an audience of startup founders. It should have been a time to celebrate. After all, last June, Duffy sold Dropcam to Nest Labs for $555 million. As the panel discussion came to a close, however, Duffy sounded an ominous note. Referring to a longtime colleague who was sharing the stage with him, he told the crowd that Liz Hamren is “the best VP of marketing in the business.” He then added, laughing, “She’s also my former VP of marketing. You can read from that what you want into my current situation.”

    Duffy insists that everything is “great” at Nest, but a cursory look at employee reviews at the jobs site Glassdoor tells a different story. Despite the fact that longtime Apple executive and Nest co-founder and CEO Tony Fadell has received rock star treatment from many journalists (Fast Company dubbed him the “$3.2 Billion Man” for the amount Google paid for Nest this past January; others have wondered if he is the next Steve Jobs), he has received only a 46 percent approval rating across 26 reviews. By contrast, Duffy, who was Dropcam’s CEO until the merger, shows a 100 percent approval rating across six reviews.

    Some of these Glassdoor reviews claim that Nest is “killing everything that was special about working at Dropcam” and that “everything we built is being carelessly dismantled after [the] acquisition.” One review states, “Everything revolves around the CEO. It’s a dangerous mix of cult of personality and Stockholm syndrome. Comments like ‘He’s the next Steve Jobs’ are not uncommon, while people proudly say things like ‘I’m used to Tony screaming at me.’ Everyone dreads meetings with Tony because he will flip if he doesn’t like what he sees. Somehow that’s perceived as good leadership.”

    Sources who spoke to StrictlyVC and asked to remain anonymous say Fadell has fashioned a hierarchical structure reminiscent of TV’s “Game of Thrones.”

    According to one employee, “Almost every decision, no matter how small,” goes through either Fadell or Matt Rogers, who cofounded Nest with Fadell and was previously a senior manager at Apple. (Through a spokesperson, Fadell and Rogers declined to answer questions for this story.)

    “It’s always, ‘Tony and Matt want us to do this. We have to hit this deadline because Tony and Matt want us to.’ You definitely see people taking the path of least resistance because they don’t want to upset Tony.”

    Another employee calls it a “huge meeting culture, to the point where anyone at the director level or up spends their entire day in meetings, many of them duplicative meetings about the same subject, over and over to the point where a lot of people have complained.”

    Coming from Dropcam, which boasted a much more egalitarian culture, a clash seems all but inevitable.

    Yet these employees also suggest that the differences between Dropcam and Nest are not just stylistic. One Nest employee says that Nest, which employs between 700 and 800 people, will see roughly double the revenue of Dropcam this year but that Dropcam, which employs 100 people, is growing its revenue eight times as fast, thanks largely to its subscription business.

    Many employees were reportedly disappointed to sell to Google because “we were firing on all cylinders, with a sensor product about to be released and an outdoor camera about to come out in 2015 and great sales. It just felt like we’d been chopped off at the knees.”

    Says one insider, now at Nest, “There had been rumors earlier in the summer that Google was going to acquire Dropcam, so we had an inkling that something was happening. But when the founders finally called the staff together to announce that we’d been acquired by Nest, there was dead silence in the room. You could have heard a pin drop.”

    No wonder Dropcam investor and former board member Mark Siegel sounds less than elated when asked about the company’s sale to Nest. “I think there was a great independent company to be built, and I wasn’t shy about telling that to these guys,” he says of Duffy and his cofounder, Aamir Virani.

    Siegel, a longtime managing director at Menlo Ventures, says Dropcam was on a “terrific ramp” when it was acquired. Its Wi-Fi cameras were finally being sold via both Amazon and Apple, and the company was in early negotiations with Best Buy. Morever, “We were about to launch in a bunch more retail locations,” he says.

    “There was plenty that had to be built,” he notes. “But it’s very rare that you get the kind of consumer love for a product that you see with Dropcam. Even when we had some bumps in the road – like problems with the contract manufacturer early on—it didn’t affect consumer ratings, because the product was so good.”

    “There were some concerns about what it meant to be an independent, small company going up against a Google/Nest,” observes Siegel. “That’s true of any [situation like this]. The real question is, ‘Was [competing directly with Dropcam] Nest’s priority?’ Now, maybe from the inside looking out, you can ask Greg if that was an overblown fear.”

    To some of the employees we talked to, Nest’s priority seems to be separating itself from Google, not rolling out new products. At a Dublin conference, Fadell was asked about the cultural differences between Apple and Google. Painting a picture that sounds like Nest today, he said that from its earliest days, Apple had a “much more hierarchical structure, and the communications structure was very understood,” while at Google, “everyone could just talk to everyone and learn about everything, and there was much more transparency.”

    “I’m not saying one is better than the other,” Fadell continued, “but it’s very different. The very first day, when the [Nest] deal was announced, I got all these various individuals from inside Google saying, ‘Oh, congratulations,’ and ‘I want to work with you,’ and ‘Is there something we can help you with?’ And at Apple, it was very structured. It wasn’t like you were going to send a message to Steve [Jobs] for any reason and say congratulations and flood his email box.”

    Asked about Dropcam’s merger with Nest after his stage presentation last week, Duffy was quick to describe Dropcam’s integration with Nest as “very positive. Aamir and I spend a lot of time with Tony and Matt” and “there’s a lot of mutual respect.”

    Unfortunately, Duffy politely declined to answer any further questions. “Google policy,” he explained.

    Then he made his way toward a clutch of founders who hoped they might catch a few more minutes of his time.

    —–

    New Fundings

    Body Labs, a 2.5-year-old, New York-based company that deploys body-modeling software for applications in the apparel, CAD and video gaming industries, has raised $2.2 million in seed funding from unnamed investors. Venture Capital Dispatch has more here.

    Blueprint Medicines, three-year-old, Cambridge, Ma.-based company that’s developing highly selective kinase inhibitors for genomically defined cancers, has raised $50 million in Series C financing led by Partner Fund Management, with other new investors — Wellington Management Company, RA Capital, Tavistock Life Sciences, Perceptive Advisors, Sabby Capital, Cowen Investments and Redmile Group — participating along with a long list of previous investors.

    CareLuLu, a 1.5-year-old, San Francisco-based online marketplace that connects parents with child care and preschool programs, has raised $1.7 million in seed funding led by Khosla Ventures, with participation from CrunchFund, the Startup Factory, and 500 Startups.

    Denim LA, the two-year-old, L.A.-based parent company of direct-to-consumer denim seller DSTLD, has raised $4.4 million in seed funding from Amplify.LA, Baroda Ventures, CAA Ventures, CrunchFund, Plus Capital, TenOneTen, WaveMaker Partners, Zillion, and individual investors.

    Full Spectrum Laser, a six-year-old, Las Vegas, Nv.-based company that makes laser and 3-D printer equipment, has raised $10 million in growth financing from Summer Street Capital.

    Gogobot, a four-year-old, Menlo Park, Ca.-based site and mobile app focused on helping users discover things to do based on their friends, interests and travel style, has raised $20 million in Series C funding fromHomeAway, with participation from earlier backers Battery Ventures and Redpoint Ventures. The company has raised $39 million to date.

    Gr8code, a six-month-old, Tampa, Fl.-based outfit that will soon start running a nine-week developer camp, says the venture firm OmniElite Financial Group will invest $5.4 million in the camp over four years. The Tampa Bay Times has more here.

    Lawn Love, a months-old, San Diego-based online lawn service that helps users find, book, and pay for landscaping or lawn care, has raised $1.9 million in seed funding from Allegro Venture Partners, Binary Capital, Launch Capital, Next Level Capital and individual investors.

    League, a six-month-old, Toronto-based digital health and wellness platform that will let users create “leagues” of health professionals that work together to deliver personalized programs, has raised $4 million in seed funding led by OMERS Ventures with Foundation Capital, Real Ventures and Infinite Potential Group participating.

    Lover.ly, a two-year-old, New York-based startup behind a wedding planning site, is closing on a $3.5 million Series A, the company tells VentureWire. It had previously raised $4 million, largely from individual backers, including angel investor Joanne Wilson.

    Quandl, a three-year-old, Toronto-based data management platform and marketplace where people can buy, sell, and download financial and economic data, has raised $5.4 million from August Capital. Venture Capital Dispatch has much more here.

    Razberi, a three-year-old, Carrollton, Tx.-based company that makes network video services for professional video surveillance and security applications, has raised $3.5 million in Series A funding led by LiveOak Venture Partners.

    Scopely, a nearly four-year-old, mobile entertainment network that’s amassing a suite of games built by internal and external developers, has raised $35.8 million led by Evolution Media Partners and Highland Capital Partners, with Knoll Ventures, Greycroft Partners, The Chernin Group, and Sands Capital Ventures also participating. The company had earlier raised $8.5 million. TechCrunch has more here.

    Speakaboos, a six-year-old, New York-based multilingual interactive storybook service for reading books online and offline, has raised $6.5 million in Series B financing led by Rick Segal, managing partner of ReThink Education, and Al Sayegh Group. A group of unnamed individual investors also participated.

    The Fashion, a 1.5-year-old, London-based fashion site that aggregates the products of numerous fashion sites into a single online destination, has raised $1.7 million in seed funding from the Copenhagen-based firm North East Venture Capital and The Danish Growth Fund.

    VersionOne, a 12-year-old, Alpharetta, Ga.-based company that helps manage life cycles of software development projects, has raised $20 million in new funding from LLR Partners. The company has raised roughly $27 million to date, including from OpenView Venture Partners.

    Xiaomi, the 4.5-year-old, Beijing-based smartphone maker (reportedly in talks to raise up to $1.5 billion in new capital), is acquiring a stake in China’s largest video streaming company, Youku Tudou. It marks the first step for the company to provide its own content, as the WSJ reports here.

    —–

    Exits

    Big Fish Games, a 12-year-old, Seattle-based game development studio, has been acquired by the racetrack operator Churchill Downs for $885 million, including $485 million in up-front payments and another $350 million based on performance milestones. Big Fish had raised at least $92.5 million from investors over the years, including an $83.8 million venture round in 2008 from Balderton Capital, General Catalyst Partners, and Salmon River Capital.

    —–

    Essential Reads

    Twitter is planning to fix its growth problem. Here’s the game plan.

    Facebook is updating its privacy policies to clear the way for its payments push and location-based ads.

    —–

    Detours

    A 40-year hunt for a bully.

    Why you shouldn’t lie to your kids, even for good reasons.

    The inside track on how to swing a hotel room upgrade, spa treatment or an impossible-to-get table at the new, cool resto.

    —–

    Retail Therapy

    Now that we’ve discovered them, we’re going to be needing these foosball erasers.

    Connie

    ,

  • Unrest at Nest

    tony fadellSitting on stage last week at a San Francisco conference, Greg Duffy, the 28-year-old co-founder and CEO of Dropcam, which makes Internet-connected video cameras, fielded questions from an audience of startup founders. It should have been a time to celebrate. After all, last June, Duffy sold Dropcam to Nest Labs for $555 million. As the panel discussion came to a close, however, Duffy sounded an ominous note. Referring to a longtime colleague who was sharing the stage with him, he told the invite-only crowd that Liz Hamren is “the best VP of marketing in the business.” He then added, laughing, “She’s also my former VP of marketing. You can read from that what you want into my current situation.”

    Duffy insists that everything is “great” at Nest, but a cursory look at employee reviews at the jobs site Glassdoor tells a different story. Despite the fact that longtime Apple executive and Nest co-founder and CEO Tony Fadell has received rock star treatment from many journalists (Fast Company dubbed him the “$3.2 Billion Man” for the amount Google paid for Nest this past January; others have wondered if he is the next Steve Jobs), he has received only a 46 percent approval rating across 26 reviews. By contrast, Duffy, who was Dropcam’s CEO until the merger, shows a 100 percent approval rating across six reviews.

    Some of these Glassdoor reviews claim that Nest is “killing everything that was special about working at Dropcam” and that “everything we built is being carelessly dismantled after [the] acquisition.” One review states, “Everything revolves around the CEO. It’s a dangerous mix of cult of personality and Stockholm syndrome. Comments like ‘He’s the next Steve Jobs’ are not uncommon, while people proudly say things like ‘I’m used to Tony screaming at me.’ Everyone dreads meetings with Tony because he will flip if he doesn’t like what he sees. Somehow that’s perceived as good leadership.”

    Sources who spoke to StrictlyVC and asked to remain anonymous say Fadell has fashioned a hierarchical structure reminiscent of TV’s “Game of Thrones.”

    According to one employee, “Almost every decision, no matter how small,” goes through either Fadell or Matt Rogers, who cofounded Nest with Fadell and was previously a senior manager at Apple. (Through a spokesperson, Fadell and Rogers declined to answer questions for this story.)

    “It’s always, ‘Tony and Matt want us to do this. We have to hit this deadline because Tony and Matt want us to.’ You definitely see people taking the path of least resistance because they don’t want to upset Tony.”

    Another employee calls it a “huge meeting culture, to the point where anyone at the director level or up spends their entire day in meetings, many of them duplicative meetings about the same subject, over and over to the point where a lot of people have complained.”

    Coming from Dropcam, which boasted a much more egalitarian culture, a clash seems all but inevitable.

    Yet these employees also suggest that the differences between Dropcam and Nest are not just stylistic. One Nest employee says that Nest, which employs between 700 and 800 people, will see roughly double the revenue of Dropcam this year but that Dropcam, which employs 100 people, is growing its revenue eight times as fast, thanks largely to its subscription business.

    Many employees were reportedly disappointed to sell to Google because “we were firing on all cylinders, with a sensor product about to be released and an outdoor camera about to come out in 2015 and great sales. It just felt like we’d been chopped off at the knees.”

    Says one insider, now at Nest, “There had been rumors earlier in the summer that Google was going to acquire Dropcam, so we had an inkling that something was happening. But when the founders finally called the staff together to announce that we’d been acquired by Nest, there was dead silence in the room. You could have heard a pin drop.”

    No wonder Dropcam investor and former board member Mark Siegel sounds less than elated when asked about the company’s sale to Nest. “I think there was a great independent company to be built, and I wasn’t shy about telling that to these guys,” he says of Duffy and his cofounder, Aamir Virani.

    Siegel, a longtime managing director at Menlo Ventures, says Dropcam was on a “terrific ramp” when it was acquired. Its Wi-Fi cameras were finally being sold via both Amazon and Apple, and the company was in early negotiations with Best Buy. Morever, “We were about to launch in a bunch more retail locations,” he says.

    “There was plenty that had to be built,” he notes. “But it’s very rare that you get the kind of consumer love for a product that you see with Dropcam. Even when we had some bumps in the road – like problems with the contract manufacturer early on—it didn’t affect consumer ratings, because the product was so good.”

    “There were some concerns about what it meant to be an independent, small company going up against a Google/Nest,” observes Siegel. “That’s true of any [situation like this]. The real question is, ‘Was [competing directly with Dropcam] Nest’s priority?’ Now, maybe from the inside looking out, you can ask Greg if that was an overblown fear.”

    To some of the employees we talked to, Nest’s priority seems to be separating itself from Google, not rolling out new products. At a conference in Dublin, Fadell was asked about the cultural differences between Apple and Google. Painting a picture that sounds like Nest today, he said that from its earliest days, Apple had a “much more hierarchical structure, and the communications structure was very understood,” while at Google, “everyone could just talk to everyone and learn about everything, and there was much more transparency.”

    “I’m not saying one is better than the other,” Fadell continued, “but it’s very different. The very first day, when the [Nest] deal was announced, I got all these various individuals from inside Google saying, ‘Oh, congratulations,’ and ‘I want to work with you,’ and ‘Is there something we can help you with?’ And at Apple, it was very structured. It wasn’t like you were going to send a message to Steve [Jobs] for any reason and say congratulations and flood his email box.”

    Asked about Dropcam’s merger with Nest after his stage presentation last week, Duffy was quick to describe Dropcam’s integration with Nest as “very positive. Aamir and I spend a lot of time with Tony and Matt” and “there’s a lot of mutual respect.”

    Unfortunately, Duffy politely declined to answer any further questions. “Google policy,” he explained.

    Then he made his way toward a clutch of founders who hoped they might catch a few more minutes of his time.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    ,

  • StrictlyVC: November 12, 2014

    Hi, good morning, everyone! (Web visitors, here’s an easier-to-read version to this morning’s email.)

    —–

    Top News in the A.M.

    FCC Chairman (and formerly lobbyist for wireless companies) Tom Wheeler to the Obama Administration: “I am an independent agency.”

    Reuters reports that at least two of Yahoo’s biggest shareholders are “so unhappy with Chief Executive Marissa Mayer’s turnaround efforts that they are making a direct plea to AOL CEO Tim Armstrong to explore a merger and run the combined company.” The report adds that Armstrong “has been receptive to these Yahoo shareholders and acknowledged the potential benefits of a deal,” according to the shareholders.

    —–

    Taking on Same-Day B2B Delivery (and Dozens of Competitors)

    Sean Spector is a brave soul. Spector is the CEO and cofounder of year-old, Austin-based Dropoff, a same-day delivery service that’s targeting small and mid-size businesses that don’t necessarily want their sensitive documents being delivered by a harried bike messenger who has other places to be. Customers pay a bit more than they might to a traditional courier company but they get a high-touch service in return, from screened “agents” to a slick mobile app that providers customers real-time tracking and the ability to rate their messenger, among other things.

    The company, which is launching today with $1.85 million from Austin Ventures, Silverton Partners, Mucker Labs and others, says it’s targeting an underserved niche in the $8.7 billion same-day delivery market. While it’s making food deliveries, for example, it isn’t dropping off sandwiches to office workers but rather hauling over the catering to the 200-person office party. While it’s delivering flowers, its messengers aren’t bringing them to consumers’ doorsteps but to wedding venues.

    Still, Dropoff — which has made “thousands” of same-day business-to-business deliveries since it began testing its service in spring — has a good many competitors, including 39 that are listed on AngelList alone. I talked yesterday with Spector — who previously cofounded the online game rental service Gamefly — about how Dropoff breaks through the noise. Our chat has been edited for length.

    How many employees do you have? Are your messengers full-time employees? How are they paid? And who owns their modes of transport?

    We have 16 full-time employees, across marketing, finance, technology and sales. Our couriers are independent contractors who get a percentage of each delivery. Most of them work a full day, eight hours, seven days a week and they can earn $20 or more per hour. They own their own bikes, cars, and vans, which we use depending on the speed required of the delivery and its size; they also [pay for their] own insurance, though we [provide them with additional] insurance. All are thoroughly screened and vetted and arrive in uniform.

    You’ve chosen a tough business to enter. Everyone is jumping into same-day delivery.

    It may seem that way, but once you look behind the curtain, it’s very different, what we’re doing. If you think about sensitive documents, expensive medications, floral arrangements for a big wedding, different types of mission-critical things that need to be delivered and tracked, it’s a whole different process.

    How do you come up with your rates?

    We did a ton of research to understand how the current industry works, then modified it based on what makes the most sense for our model. But loosely, it depends on how quickly you need something, the distance we’re traveling, and the weight of what we’re delivering.

    I want catering trays, I’m five miles away and I want them in two hours.

    It will cost you under $20.

    You raised $1.85 million in April, though you’re just announcing it today, and you have plans to expand nationally from Austin. Are you actively seeking an A round yet?

    It’s fair to say we’ll be in the market in 2015.

    —–

    New Fundings

    Course Hero, an eight-year-old, Redwood City, Ca.-based online-learning platform that provides a variety of online resources, including crowdsourced study documents, has raised $15 million in Series A funding led by IDG Capital and GSV Capital. Earlier investors Maveron, Great Oaks Venture Capital and SV Angel, among others, also participated in the round. The company has now raised $17 million altogether.

    Curiosity.com, a new, Chicago-based site that’s been spun out of Discovery Communications, has raised $6 million in Series A funding from Discovery Communications, Chicago Ventures, Corazon Capital, Origin Ventures and Pritzker Group Venture Capital.

    Echo360, a seven-year-old, Reston, Va.-based learning platform that films lectures for students to watch outside the classroom, has raised $18 million in new funding led by Duchossois Capital Management and New Island Capital. Other participants in the round include SWaN & Legend, Clarke Enterprises-CNF, Kiddar/Metz and existing investor Revolution Growth. The company has now raised $58.6 million altogether. The Washington Post has more here.

    Flowonix Medical, a nine-year-old, Mount Olive, New Jersey-based medical device company whose implanted pumps administer pain medications, has raised $40 million in equity and debt. The equity portion, $20 million, was led by Elevage Capital Management, with participation from Clarus Ventures, Hercules Technology Growth Capital and other, earlier Flowonix investors. Hercules will also provide the company with up to $20 million in debt.

    Forter, a 1.5-year-old, Tel-Aviv based anti-fraud start-up, has raised $15 million in Series B funding from New Enterprise Associates and Sequoia Capital. The company has now raised $18 million altogether. Venture Capital Dispatch has more here.

    Full Circle CRM, a four-year-old, San Mateo, Ca.-based online platform that offers marketing performance management services to Salesforce users, has raised $3.8 million in Series A funding led by Aligned Partners, with participation from Salesforce Ventures. The company has raised $4.3 million altogether.

    Gimlet Media, a months-old, New York-based podcasting startup cofounded by longtime public-radio producer Alex Blumberg, has raised $1.5 million in seed funding from Betaworks, Knight Enterprise Fund and Lowercase Capital, along with numerous individual investors. As part of the round, the company had also raised $200,000 through an equity crowdfunding campaign. Venture Capital Dispatch has the story here.

    HealthCare, an eight-year-old, Miami-based company focused on personal health insurance plans, has raised $7.5 million in Series A funding from Annox Capital and Brothers Brook. The company has now raised $9.5 million altogether.

    Ineda Systems, a three-year-old, Santa Clara-based maker of low-power systems on a chip, has raised an undisclosed amount of Series B funding from Cisco, with participation from existing investors, including Qualcomm Ventures and Imagination Technologies, among others.

    La Lumiere, a three-year-old, Jupiter, Fl.-based skin care company whose products use light therapy, or phototherapy to improve skin, has raised $20 million in Series B financing from investors including Johnson & Johnson, and SWaN & Legend Venture Partners.

    Modernizing Medicine, a 10-year-old, Boca Raton, Fla.-based company whose electronic medical record system comes with a library of built-in medical content, has raised $15 million in a Series D round that’s expected to close with $20 million. Earlier backers Pentland Group and Summit Partners are providing the capital. The company had previously raised roughly $40 million, shows Crunchbase.

    Ocho, a two-year-old, New York-based video-based social network for the iPhone, has raised $1.65 million in seed funding from billionaire investor Mark Cuban among others. Ocho users can upload eight seconds worth of video and audio (or edit down longer videos to the same length).

    UTC Laboratories, a nearly two-year-old, New Orleans, La.-based DNA-analysis lab that goes by the name Renaissance RX, has received its first outside funding — an undisclosed sum from TPG Growth.

    Vida, a months-old, San Francisco-based e-commerce platform that connects artists with craftspeople and manufacturers to source and design products, has launched with $1.3 million in seed funding from Google Ventures, Universal Music Group, Slow Ventures, Jesse Draper, Beehive Holdings and the Valley Fund.

    VisaNow, a 16-year-old, Chicago-based tech company that says it cuts the Visa application process for immigrants from months down to hours, has raised $22.1 million according to an SEC filing flagged by VentureWire. The capital comes from General Catalyst Partners.

    Wannabiz, a three-year-old, Tel Aviv, Israel-based company whose marketing app is designed to help small businesses do their own online marketing “like a pro,” has raised $2.2 million in seed funding from Firstime Ventures and TheTime, along with individual investors.

    —–

    New Funds

    Chobani, the nine-year-old, New York-based “Greek” yogurt company, is launching a New York-based startup incubator to invest in food-related companies. Called the Chobani Food Incubator, the outfit will provide startups with commercial kitchens, office space, and collaboration with Chobani leadership over a six-month period that culminates with a demo day in front of “top chefs and food leaders.” The company will begin taking pitches from interested entrepreneurs next month, after which it will choose 10 companies for its inaugural batch. Fast Company has more here.

    —–

    IPOs

    Virtustream, a six-year-old, Bethesda, Ma.-based company that makes cloud computing management software, is on track to generate $100 million in annual revenue and plans to file for an IPO within a year, its CEOtells Bloomberg. Virtustream has raised roughly $130 million over the years, including from SAP, TDF Ventures, QuestMark Partners, Columbia Capital, Noro-Moseley Partners, and Intel Capital.

    —–

    Exits

    It’s official. BrightRoll, the profitable, programmatic video-advertising platform, is selling to Yahoo for $640 million in cash. The deal will combine Yahoo’s desktop and mobile video advertising inventory with BrightRoll’s platform and publisher relationships. BrightRoll is also expected to enhance Yahoo’s profitability, given the more than $100 million in net revenue it’s expected to see this year. Variety has more here.

    Funny or Die, the comedy website co-founded by actor Will Ferrell, has retained the boutique investment bank Moelis & Co. to explore a possible sale of the company, reports Bloomberg, which says the asking price is $100 million to $300 million. Crunchbase shows the 7.5-year-old company has raised at least $18 million over the years, including from Sequoia Capital, SV Angel, HBO, and LinkedIn founder Reid Hoffman.

    SolarBridge Technologies, a 10-year-old, Austin, Tx.-based microinverter startup, has been acquired by SunPower Corp. for undisclosed terms. SolarBridge had raised around $105 million from the U.S. Department of Energy and investors, including Constellation Ventures, Shea Ventures, Rho Ventures, Osage University Partners and Battery Ventures.

    —–

    People

    Twitter CEO Dick Costolo is heading into his company’s first analyst day today and how he presents Twitter is “crucial,” notes a new Bloomberg report, particularly given turnover at the company and its drooping shares, down 38 percent this year.

    Shirish Sathaye is the newest general partner with Silicon Valley venture capital firm Formation 8, reports Fortune. A year ago, Sathaye left Khosla Ventures, which he had joined in late 2010. Fortune notes that he’s the fourth member of the Formation 8 team to come from Khosla Ventures, including partner Jim Kim and senior advisors Gideon Yu and Pierre Lamond.

    —–

    Job Listings

    Yahoo‘s corporate development team is looking for two candidates. It’s in the market for a senior manager to work on its integration team — a role that helps plan, manage and lead the integration the companies that Yahoo acquires. Yahoo is also looking for an associate on the deal lead side. It hasn’t posted that job yet, but we’ll get you a link as soon as possible. (In the meantime, you might want to work your network.)

    —–

    Essential Reads

    Apple will have to face a U.S. lawsuit over vanishing iPhone text messages, reports Reuters.

    Hampton Creek, the three-year-old, San Francisco-based startup that makes plant-based food, is planning to countersue consumer giant Unilever over the meaning of “mayo,” says a TechCrunch report. Unilever filed a lawsuit against Hampton Creek last week, saying its “Just Mayo” product acts like mayonnaise but because it does not contain eggs doesn’t meet the FDA’s definition of the product as something containing both egg yolks and oil.

    —–

    Detours

    How your brain decides without you.

    Actor Christoph Waltz, performing a dramatic reading of the “Sesame Street” theme song.

    —–

    Retail Therapy

    Twelve cool mid-top sneakers.

    Someone just paid $24 million for this watch. Was it you? It wasn’t us.

    Related articles

    Connie

  • A Startup Tackles Express B2B Delivery (and Tens of Rivals)

    DropoffSean Spector is a brave soul. Spector is the CEO and cofounder of year-old, Austin-based Dropoff, a same-day delivery service that’s targeting small and mid-size businesses that don’t necessarily want their sensitive documents being delivered by a harried bike messenger who has other places to be. Customers pay a bit more than they might to a traditional courier company but they get a high-touch service in return, from screened “agents” to a slick mobile app that providers customers real-time tracking and the ability to rate their messenger, among other things.

    The company, which is launching today with $1.85 million from Austin Ventures, Silverton Partners, Mucker Capital and others, says it’s targeting an underserved niche in the $8.7 billion same-day delivery market. While it’s making food deliveries, for example, it isn’t dropping off sandwiches to office workers but rather hauling over the catering to the 200-person office party. While it’s delivering flowers, its messengers aren’t bringing them to consumers’ doorsteps but to wedding venues.

    Still, Dropoff — which has made “thousands” of same-day business-to-business deliveries since it began testing its service in spring — has a good many competitors, including 39 that are listed on AngelList alone. I talked yesterday with Spector — who previously cofounded the online game rental service Gamefly — about how Dropoff breaks through the noise. Our chat has been edited for length.

    How many employees do you have? Are your messengers full-time employees? How are they paid? And who owns their modes of transport?

    We have 16 full-time employees, across marketing, finance, technology and sales. Our couriers are independent contractors who get a percentage of each delivery. Most of them work a full day, eight hours, seven days a week and they can earn $20 or more per hour. They own their own bikes, cars, and vans, which we use depending on the speed required of the delivery and its size; they also [pay for their] own insurance, though we [provide them with additional] insurance. All are thoroughly screened and vetted and arrive in uniform.

    You’ve chosen a tough business to enter. Everyone is jumping into same-day delivery.

    It may seem that way, but once you look behind the curtain, it’s very different, what we’re doing. If you think about sensitive documents, expensive medications, floral arrangements for a big wedding, different types of mission-critical things that need to be delivered and tracked, it’s a whole different process.

    How do you come up with your rates?

    We did a ton of research to understand how the current industry works, then modified it based on what makes the most sense for our model. But loosely, it depends on how quickly you need something, the distance we’re traveling, and the weight of what we’re delivering.

    I want catering trays, I’m five miles away and I want them in two hours.

    It will cost you under $20.

    You raised $1.85 million in April, though you’re just announcing it today, and you have plans to expand nationally from Austin. Are you actively seeking an A round yet?

    It’s fair to say we’ll be in the market in 2015.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

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