• Hired CEO: “We’re on a Clear Path to $1 Billion-Plus in Revenue”

    MattSome people think great hires come through networking. Hired, a two-year-old, San Francisco-based company focused primarily on technical talent, thinks much more of the process can and should be automated, and it’s seemingly on to something. More than 1,100 employers – from American Express to Secret — are now using its platform and it has facilitated more than $3.3 billion in job offers, it says. As tellingly, most of a $15 million round that Hired raised earlier this year remains untouched in the bank, according to the company.

    Should boutique agency recruiters be nervous? Maybe. Many still use tech minimally, throwing people on phones and email, while Hired tries wringing every inefficiency out of the process through data analysis, providing high-touch experiences on top.

    Certainly, it’s a big market to disrupt. U.S. companies alone pay out $124 billion each year to third-party recruiting services. We talked yesterday with Hired’s CEO, serial entrepreneur Matt Mickiewicz, to learn how he’s trying to nab a piece of that pie.

    There are lots of recruiting startups. What are some big differentiators that companies and prospects should know about Hired?

    We’re basically flipping the funnel. Traditional recruiters sell into companies and get client contracts. We’re focused on candidates and building a consumer brand, so when you’re ready for a new challenge, you come to us because you know you’ll get offers from a spectrum of companies with minimum fuss.

    How are you reaching these elusive engineering job candidates?

    Thirty percent is through paid advertising – like sponsoring online developer communities and hackathons and meetups. Thirty percent is through organic sources and 30 percent comes through direct referrals.

    How many candidates have you placed?

    We don’t disclose that number but it’s multiple people per day.

    How are companies paying you to find them?

    There’s no initial cost for employers. It’s a pay-for-success model and employers can either pay 15 percent of [a new employee’s] base salary, which is typically around $20,000, or they can pay 1 percent per month [of that person’s salary] for up to 24 months, amortizing the cost across the life span of the employee.

    That’s [roughly a third] more money for you.

    In recruiting, traditionally, all the cost is front loaded, but the value is delivered over time. So if you’re growing fast and hiring 10 people a quarter, that’s a lot of money in up-front expense. With the 1 percent plan, companies can better manage their cash flows. It also aligns our interests. In the traditional model, if a person leaves after eight months, the company is still on the hook [for the recruiting fee]. If that happens with our model, the company [stops paying us].

    What makes you so sure you’re finding the right matches?

    We filter for quality – whether [candidates have] attended top schools, worked for top venture-backed startups, contributed to hackathons – and typically accept just 5 percent of applicants. We also screen for intent, meaning how likely it is that this person will go on interviews with companies based on how long they’ve been with their current employer, how realistic the candidate is . . .

    Where is Hired today? Give us some metrics.

    Six months after raising our Series A, we’re on an eight-figure annual run rate, which is crazy. Our employee count is 57 [up from 25 a year ago], and we’re now opening a new office every six weeks and becoming profitable [at that office] within 30 to 60 days. It’s a great product-market fit.

    You have offices in in San Francisco, Seattle, L.A., and New York. Where do you go next?

    We’re scaling out in the U.S. and internationally, so Boston is opening this month and we’ll be in London by the end of this year.

    You talk a big game about customer service. What’s an example of going above and beyond for a job candidate?

    If someone flies an engineer to New York but doesn’t reimburse that person right away, we’ll pay that bill ourselves.

    You previously cofounded the fast-growing freelance marketplace 99Designs, among other companies. Think Hired will be the biggest company for you?

    Yes. We’re solving a problem at scale and it works. We’re on a clear path to a billion dollars plus in revenue.

    Connie

    ,

  • StrictlyVC: September 10, 2014

    Hi, good Wednesday morning, everyone! StrictlyVC spent part of yesterday driving back and forth to Palo Alto and ran out of time to write a column, but we’ll see you back here tomorrow. Also, for an easier-to-read version of the following, click here.

    —–

    Top News in the A.M.

    Apple didn’t disappoint yesterday, say those who jammed into its Cupertino, Ca., launch event. In addition to two new phones, the consumer products giant unveiled its long-awaited Apple Watch and a new payments system. Here’s Bloomberg on the new payments system, The Verge on the Apple Watch, and the New York Times on the company’s two iPhone 6 models.

    —–

    New Fundings

    4Moms, a nine-year-old, Pittsburgh, Pa.-based maker of high-tech baby gear (including a stroller that folds itself up with the push of a button), has raised $41 million in growth capital led by Castanea Partners. Bain Capital Ventures, which invested $20 million in the company in 2012, also participated. The company has now raised just more than $80 million altogether.

    Avogy, a four-year-old, San Jose, Ca.-based semiconductor and systems technology company, has raised $40 million in Series B funding led by Intel Capital, with participation from earlier investor Khosla Ventures.

    aWhere, a 15-year-old, Denver-based software-as-a-service data analytics company that combines public and proprietary data about weather, soil quality, and crop prices to help farmers make better business decisions, has raised $7 million in Series A funding led by Elixir Capital, with Aravaipa Ventures participating. The company has raised $11.6 million to date. Venture Capital Dispatch has more here.

    CartoDB, a new company out of six-year-old, New York-based Vizzuality, has raised $7 million in Series A funding led by Earlybird Venture Capital, with Kibo Ventures and Vitamina K participating. CartoDB makes easy-to-read maps and apps that make sense of location data.

    Dagne Dover, a two-year-old, New York-based maker of handbags and accessories, has raised $1.25 million in seed funding from investors, including 2020 Ventures, First Round Capital, and individuals David Bell, Fabrice Grinda, and Dominic Cioffoletti.

    Edufii, a two-year-old, San Luis Obispo, Ca.-based social network for athletic skills development (coaches use it in part to communicate their advice to athletes), has raised $1.4 million in Series A funding led by DFJ Frontier and Pasadena Angels. Other participants in the round include the Gideon Hixon Fund, Tech Coast Angels, SLO Seed Ventures and individual investors.

    Euclises Pharmaceuticals, a three-year-old, St. Louis, Mo.-based biotech startup that’s aiming to develop treatments for cancer, has raised $1.3 million in Series A funding led by Cultivation Capital, with BioGenerator, Missouri Technology Corporation, the St. Louis Arch Angels, ABC Laboratories and the St. Louis County’s Helix Fund participating.

    FieldAware, a three-year-old, Plano, Tx.-based company whose software makes it easier for mobile field workers to handle technical support calls over their phones, has raised $24 million in new funding led by Summit Bridge Capital, with Silicon Valley Bank and earlier investors OpenView Venture Partners, Atlantic Bridge Partners and Oyster Capital Partners participating. The round follows a $12 million investment made in FieldAware by OpenView Venture Partners in late 2012.

    FlightCar, a 2.5-year-old, Cambridge, Ma.-based online marketplace that allows car owners who are parking at the airport to rent out their cars to other travelers, has raised $13.5 million in fresh funding from GGV Capital. Comcast Ventures and Facebook cofounder Eduardo Saverin also invested in the round, alongside earlier investors General Catalyst Partners, SoftBank Capital, and First Round Capital. The company has raised $19.7 million to date, shows Crunchbase.

    HomeUnion, a five-year-old, Irvine, Ca.-based online real estate investment management firm that specializes in single-family rental properties, has raised $5.5 million in Series A funding from Artiman Ventures.

    Interior Define, a two-year-old, Chicago-based e-commerce site that promises high-quality furniture with personalization options, has raised $1 million in seed funding from individual investors, including Bonobos and Red Swan Ventures founder Andy Dunn.

    LightCyber, a three-year-old, Israel-based cyber-security startup that says it enables companies to detect cyber penetrations early on, has raised $10 million in new funding led by Battery Ventures. Earlier investors Glilot Capital Partners and Check Point Software co-founder Marius Nacht also participated. Venture Capital Dispatch has more here.

    SGB, a seven-year-old, San Diego-based bioenergy crop company that develops and produces hybrids seeds of the Jatropha tree as a low-cost feedstock for biofuels, has $11 million from existing investors, which includes Life Technologies, Finistere Ventures, Thomas, McNerney & Partners, and Flint Hills Resources, a wholly owned subsidiary of Koch Industries. The company has raised at least $28 million to date, shows Crunchbase. The San Diego Union-Tribune has much more here.

    Taboola, a seven-year-old, New York-based content-marketing company that was founded in Tel Aviv, is looking to raise $75 million to $100 million at a valuation of between $900 million and $1.2 billion, say WSJ sources. The company has hired Credit Suisse Group to lead the fundraising.

    —–

    New Funds

    Avrio Capital, an eight-year-old, late-stage venture firm that looks to back innovative food and agriculture companies, has held a first close of roughly $60 million dollars for its fourth fund. The Canadian firm, which has offices in Calgary, Montreal and Toronto, counts Farm Credit Canada and Export Development Canada among its limited partners.

    Exitround, a 1.5-year-old, San Francisco-based company that allows founders to discreetly explore strategic acquisition opportunities, is today announcing Exitround Capital, a marketplace that will put founders in touch with private equity capital options, as well. (Candidates need between $3 million and $100 million in yearly revenue, with positive EBITDA margins.) You can learn more here.

    Jasper Infotech, the seven-year-old, New Delhi, India-based owner of e-commerce juggernaut Snapdeal, is launching its own mobile-focused technology incubator and seed fund, reports the Economic Times. The company’s head of corporate development, Abhishek Kumar, says Snapdeal will incubate about eight ventures for two months per batch and will set up a separate team to run the initiative. “An increasing amount of content and transactions are happening on hand-held devices . . .That’s the eco-system we are targeting,” he told the outlet.

    SoftBank Capital, the investment arm of Japanese telecom company SoftBank, has raised $100 million for a new venture fund, according to a recent SEC filing that was flagged yesterday by Boston Business Journal. SoftBank’s portfolio includes the wearables company Fitbit and media startup BuzzFeed.

    TrueBridge Capital Partners, a seven-year-old, Chapel Hill, N.C., fund of funds manager focused exclusively on venture capital, has raised its third vehicle with $408 million, reports VentureWire. The firm’s LPs include Lehigh University and the agricultural company Syngenta.

    —–

    IPOs

    Alibaba‘s stock filing, which could potentially be the largest ever, is already fully booked after its road show kicked off earlier this week, reports Fortune.

    Rocket Internet, the seven-year-old, Germany outfit, plans to float a stake of just below 15 percent in the company in an IPO worth about $970 million, sources tell Reuters.

    A quick look at the 10 “hottest” tech companies that are expected to go public by year end.

    —–

    Exits

    Dropbox has “acqu-hired” the two computer vision and machine learning professors who founded Kriegman-Belhumeur Vision Technologies, a software concern provides select customers with “cutting-edge” facial recognition technology. TechCrunch explains the deal here.

    To the consternation of 7-year-olds everywhere, Microsoft is in advanced talks to acquire the maker of the game Minecraft for more than $2 billion, reports Dealbook.

    Path, the beleaguered social network, is on the cusp of being acquired byApple, reports PandoDaily, whose source tells the outlet: “It’s almost done, if not signed already, but it’s essentially a done deal.” A pact isn’t so far-fetched, notes Business Insider. Path founder Dave Morin had a marketing and product role at Apple between 2004 and 2006; he was also seated in the front row of Apple’s big event yesterday.

    —–

    People

    Y Combinator president Sam Altman has taken to Genius — the online platform that breaks down text with line-by-line annotations — to point out some of the “major disagreements” he had with a recent piece in The Information about Y Combinator (as well as to supplement other parts of the piece with his additional thoughts). It makes for interesting reading. For example, the original story reported that: “One of the main reasons that investors have grown more fearful about YC’s dominance is the increasingly stratospheric valuations of YC companies.” Altman says those valuations are entirely out of his hands, though. “I’d be delighted if venture investors stopped paying such high prices for the companies coming out of YC,” he writes. “The number one rule of fundraising strategy is to never put yourself in a position where you might face a down round, which are usually fatal.”

    If Salesforce CEO Marc Benioff has any political ambitions, he wouldn’t admit it yesterday during the TechCrunch Disrupt conference. One of San Francisco’s highest-profile civic leaders, Benioff also declined to identify with a political party, saying, “I’m not a Democrat or Republican, I’m an American. I give everyone a lot of money.”

    Reggie Brown came up with the idea of creating an application to send disappearing picture messages while a Stanford student and fraternity brother of Snapchat CEO Evan Spiegel, the company announced in a release yesterday (one that, big surprise, went over the wire during Apple’s widely watched launch event). The two sides have also agreed to an undisclosed settlement that ends a suit that Brown had filed against the firm. According to yesterday’s statement: “We are pleased that we have been able to resolve this matter in a manner that is satisfactory to Mr. Brown and the Company. We acknowledge Reggie’s contribution to the creation of Snapchat and appreciate his work in getting the application off the ground.”

    Tracy Isacke has joined Silicon Valley Bank as the head of its corporate venture relationship group, which was established in 2009. Isacke was previously an executive vice president of new business ventures at Telefonica Digital.

    Vanity Fair’s New Establishment issue is out. At the very top of its “disruptors” list: entrepreneur Elon Musk, just ahead of Larry Page andSergey Brin, and Tim Cook and Jonathan Ive.

    —–

    Job Listings

    AMD Ventures is looking for hire someone — an associate, senior associate, or principal, based on the person’s experience — to add to its venture team. The job is in Sunnyvale, Ca.

    Also, we listed this job yesterday without a link: Hewlett-Packard is hiring a corporate development associate in Palo Alto, Ca.

    —–

    Essential Reads

    Bloomberg imagines what Alibaba‘s post-IPO wish list might look like, highlighting Snapchat and Internet TV provider Roku among other possible acquisition targets.

    Wow. SpaceX is vying with Boeing to build NASA taxis to Mars.

    —–

    Detours

    The most economically diverse top colleges.

    Oh, that name misspelling was no mistake. Your Starbucks barista is hoping you have a mental breakdown.

    —–

    Retail Therapy

    You already have the lumberjack shirts and beard. May as well get the mug.

    Connie

  • StrictlyVC: September 9, 2014

    Good Tuesday morning, everyone, it is Apple time! The company’s big launch event kicks off at 10 a.m., and it will be streaming live video right here.

    Also, if you missed our interview yesterday with globetrotting investor Nazar Yasin of Rise Capital (and formerly of Tiger Global), here’s the link.

    —–

    Top News in the A.M.

    Apple, Apple and more Apple. There’s even a newly published piece on the structure of the Apple keynote.

    —–

    A Billionaire Brawl in Silicon Valley

    It’s no secret that Uber and Lyft don’t like each other much. In just one recent kerfuffle, Lyft told CNN that over a recent 10-month period, Uber employees had requested, then canceled, more than 5,000 rides from Lyft drivers. Uber quickly punched back, claiming that Lyft’s employees had canceled more than twice as many trips on Uber.

    Investors in the rival ride-sharing services have mostly stayed above the fray through such public scuffles. But now, they’re starting to sling mud, too.

    The trouble started yesterday morning, when at a TechCrunch conferencein San Francisco, TechCrunch founder Michael Arrington interviewed Uber CEO Travis Kalanick in what appeared to be an effort to publicly rehabilitate Kalanick, who the press has begun to portray as something of a bully.

    Arrington asked, for example, if it wasn’t true that Lyft is a copycat, partly because Uber and Lyft announced carpool options within a day of each other in early August. Kalanick, who typically seizes opportunities to trash competitors, humbly offered: “Here’s maybe a little bit of a hat tip: I don’t think Lyft copied this particular feature; companies are often working on similar things.” (According to New York magazine, Lyft began work on its program in April, but “before the Lyft news had landed,” Uber published a blog post announcing a “virtually identical service.”)

    Arrington also uniformly dismissed Uber’s competitors as “ankle biters” and called Lyft “annoying because you have to sit in the front and talk, and they have those mustaches.” Said Arrington to Kalanick: “They seem to be constantly whining that [Uber is] beating them. Would you consider buying Lyft to shut them up?” (The audience laughed as Kalanick told him that Uber isn’t acquiring companies right now.)

    Initially, the interview seemed a coup for Uber. Noting Kalanick’s gentler demeanor — Kalanick repeatedly called himself “scrappy” and misunderstood — TechCrunch reported that if “Uber can buck its perception as a ruthless, greedy company trying to put cabbies out of work and instead show the softer side of on-demand services, it could succeed far beyond taxis.” Meanwhile, the San Francisco Chronicle reported onKalanick’s “pains to exhibit his kinder, gentler side” during the on-stage interview.

    But the cozy interview almost immediately drew criticism on Twitter, with comments from people like Wall Street Journal reporter Doug MacMillan and Founders Fund partner Geoff Lewis, both of whom noted that Arrington is an investor in Uber through his investment firm CrunchFund, an affiliation that was never raised during his interview with Kalanick. Lewis, whose firm has invested in Lyft, was particularly pointed in his tweets, calling Arrington’s interview “shameful,” given its absence of any relevant disclosures.

    Things only grew more heated several hours later, when during an on-stage interview with TechCrunch’s Alexia Tsotsis, Peter Thiel of Founders Fund described Uber as “without question, the most ethically challenged company in Silicon Valley.”

    (As Twitter lit up over Thiel’s remark, venture capitalist Marc Andreessen, whose firm also owns a stake in Lyft, joyfully jumped into the fray,tweeting: “A big thank you to @arrington for all the unsolicited free publicity for Lyft this morning at Disrupt!” He also published a discount code for Lyft — DISRUPT — and in Andreessen fashion, punctuated his tweet with a disarming smiley face.)

    Arrington seemingly tried to stifle the conversation by tweeting to Lewis, “Let’s just cut to the ‘and the horse your rode in on’ and go our separate ways, you worthless d__k.” Perhaps realizing the tweet would only garner more attention, Arrington then tweeted that Thiel is an investor in Uber through Arrington’s fund, CrunchFund, and that Arrington is himself an investor in Lyft through Andreessen Horowitz, where he is a limited partner.

    By then, though, Valleywag had caught the flavor of the story, calling out Arrington and Thiel for fighting over Uber “like boys with toys.” And Arrington’s efforts to help alter Kalanick’s public reputation as a brawler were largely forgotten.

    —–

    New Fundings

    Be-Bound, a three-year-old, San Francisco-based company whose technology makes it possible to access and to stay connected to the Internet on any existing network, has raised $4.5 million in Series A funding. Backers include the Global Corporate Investment Holding and Gonzague de Blignières, a former chairman of Barclays Private Equity France.

    Blinq Networks, a four-year-old, Ottawa, Ontario-based company that’s developing wireless backhaul products that help wireless carriers address the growth in demand for capacity, has raised $15.1 million in Series B funding led by WIN Fund. Kensington Global Private Equity Fund also participated in the round, alongside earlier investors BDC Capital, New Venture Partners and Summerhill Venture Partners. The company has raised $32.5 million altogether.

    Conservis, a five-year-old, Minneapolis, Mn.-based maker of compliance, tracking, traceability and performance management software for farmers, has raised $10 million in new funding from Chicago-based Cultivian Sandbox Ventures and prior investors Middleland Capital and Heartland Farms.

    Delhivery, a three-year-old, Gurgaon, India-based e-commerce logistics firm, has raised $35 million in Series C funding led by the private equity firm Multiples Alternate Asset Management, reports VCCircle. Earlier investors Nexus Venture Partners and Times Internet also participated in the round. The company had previously raised $5 million in Series B funding and an undisclosed amount of Series A funding.

    Edge Therapeutics, a five-year-old, Berkeley Heights, N.J.-based clinical-stage biotechnology company that develops therapies to treat acute, life-threatening neurological conditions, has raised $10 million in venture debt financing from Hercules Technology Growth Capital. The company has previously at least $18 million in equity, shows Crunchbase, including from Maxim Group.

    GlassPoint Solar, a six-year-old, Fremont, Ca.-based maker of solar steam generators for the oil and gas industry, has raised $53 million in new funding led by Oman’s largest sovereign wealth fund and Royal Dutch Shell, with earlier investors RockPort Capital, Nth Power and Chrysalix Energy Venture Capital also participating. Bloomberg has more here. The company has raised at least $86.7 million to date, shows Crunchbase.

    GlobalTranz, a 11-year-old, Phoenix-based logistics management firm that specializes in carrier, supply chain and warehouse management, has raised $40 million in Series C funding from Providence Equity Partners and Susquehanna Capital. The company has raised at least $50 million altogether, including from Volition Capital.

    Good Eggs, a three-year-old, San Francisco-based organic food delivery service, has raised $21 million in Series B funding led by Index Ventures. Other company backers include earlier backers Sequoia Capital, Correlation Ventures, Baseline Ventures, Kapor Capital, Harrison Metal Capital and The Westly Group. The company has raised at least $31.5 million to date, shows Crunchbase.

    Jawbone, the 15-year-old, San Francisco-based consumer electronics company, is in the midst of completing a $100 million piece of funding, part of a $250 million round that it had said it was raising this year, reports Recode. New investors include Rizvi Traverse Management; earlier investors expected to participate in the round include Andreessen Horowitz, J.P. Morgan, Kleiner Perkins Caufield & Byers, Khosla Ventures and Sequoia Capital.

    Parkmobile, a six-year-old, Atlanta-based mobile payment technology company that lets motorists pay for parking through a mobile app, as well as creates digital parking permits, has raised a “substantial” amount of funding from the BMW Group, says the company. Parkmobile had earlier raised at least $6.3 million in funding from Bluefield Investments, BCD Holdings, and Fontinalis Partners, shows Crunchbase.

    Property Partner, a months-old, London-based company that combines residential real estate crowdfunding with a secondary exchange to enable investors to trade their holdings, has raised a £1.25m seed round ($2 million) led by Octopus Investments, with participation from the European accelerator Seedcamp; Betfair co-founder Ed Wray; Better Capital founder Jon Moulton; BskyB CFO Andrew Griffith, among others.

    Skyword, a four-year-old, Boston content product platform that helps brands produce online content, has raised $11 million in new funding from earlier investor Cox Media Group. Skyword has raised about $25.5 million altogether, shows Crunchbase.

    Talklocal, a two-year-old, Washington, D.C.-based startup that helps consumers connect quickly with up to three local service providers over the phone, has raised $2.6 million in Series A funding led by Crystal Tech Fund, Privateer Capital, Fortify VC, and Launch Angels’ Where Fund. Other participants in the round include K Street Capital and Bazaarvoice founder Brett Hurt. Talklocal was previously called Seva Call. Tech Cocktail DC has more here.

    Tryton Medical, an 11-year-old, Durham, N.C.-based developer of stents designed to treat coronary bifurcation lesions, has raised $20 million in new funding from Canepa Advanced Healthcare Fund and earlier investors RiverVest Venture Partners and 3×5 Special Opportunity Fund. The company has raised at least $86.3 million to date, shows Crunchbase.

    —–

    New Funds

    CDH Venture, an arm of one of China’s biggest asset managers, CDH Investments, has recently closed a third venture capital fund with just more than $100 million in commitments, reports Venture Capital Dispatch, which notes that the fund had originally targeted $150 million. Its predecessor was far larger, at $500 million. Venture Wire attributes “muted fundraising” to the departure of general partner Hui Wang, who left to launch his own firm, HighLight Capital. Highlight recently closed its debut fund with roughly $300 million.

    Fenox Venture Capital, a three-year-old, San Jose, Ca.-based outfit that invests across stages and facilitates partnerships between the startups it backs and multinational corporations, has launched a $20 million fund in partnership with Infocom Group, one of Japan’s largest information technology providers, reports FinSMEs. Fenox Infocom Venture Fund V, which will be managed by Fenox, will make investments in North American and Southeast Asian startups, with an emphasis on wearable technologies, healthcare, and other consumer Internet opportunities.

    Innova Memphis, a seven-year-old, Memphis, Tn.-based early-stage firm that primarily backs early-stage, Tennessee-based companies that focus on health care or biotechnology to develop or improve new farming or food technologies, has raised $20 million for its third fund, says the firm. The Memphis Business Journal has more here.

    LeapFrog Investments, a 7.5-year-old, London-based investment firm that focuses on socially responsible investments in Asia and Africa, has raised $400 million for its second fund. Among the firm’s investments is Bima, a 3.5-year-old, Stockholm, Sweden-based company providing mobile-delivered insurance to emerging markets. Reuters has much morehere.

    OrbiMed Advisors, the 25-year-old, New York-based investment firm, has raised a new, $325 million fund to back health care companies in Asian nations, where “rising affluence is fueling increased demand for medical products and services,” reports VentureWire. OribMed’s debut Asia fund closed in 2008 with $182 million, says the report.

    Peak Ventures, a Provo, Ut.-based seed-stage fund that focuses on startup in Utah and the Mountain West, has closed on a $23 million venture capital fund, the firm announced yesterday. The firm, which writes initial checks of between $100,000 to $1 million, has already already backed seven startups, including Owlet, a maker of a “smart sock” that tracks babies’ movements and measures their vitals. Peak Ventures is a subsidiary of Peak Capital Partners, which owns and manages 70 student apartment communities in 15 states.

    —–

    Exits

    It’s official. Ebates Shopping.com has been acquired by Rakuten, the owner of Japan’s largest online mall, for $1 billion, roughly the same amount that Rakuten paid for the mobile messaging company Viber earlier this year. TechCrunch has more here.

    —–

    People

    Hong Kong billionaire Gerald Chan has given Harvard $350 million, its biggest single donation ever, reports the Harvard Gazette. The money is being donated by the Morningside Foundation, run by Chan and his brother, Ronnie. Their family operates several businesses, including Chinese real estate giant Hang Lung Group and the Morningside Group, a private equity and venture capital firm.

    Nest Labs cofounder Tony Fadell is on the mend with an injured hamstring after it became detached from his hip bone during a water skiing accident. “I could hear it and feel it go pop,” he told Fortune in a call last week.

    Lou Forster has joined the new, San Francisco-based financial services venture firm Green Visor Capital as a general partner. Forster was most recently a senior managing director of Cerberus Capital Management, where he built and led Cerberus’s Japan office and was the senior ranking executive in Asia.

    Mark MacGann, the former head of government affairs and public advocacy for NYSE Euronext in Brussels, has joined Uber as a senior financial and public policy lobbyist in Europe, reports the WSJ. MacGann, a 20-year lobbying veteran, has been appointed head of public policy for Europe, the Middle East and Africa.

    Graham Pingree has joined the San Francisco-based Cendana Capital, which invests in seed-stage venture firms, as a principal. Pingree was most recently a manager at Project Frog, which develops component buildings that assemble easily onsite. He has also worked as an associate at both Cambridge Associates and Horsley Bridge Partners.

    Tinder and parent company IAC have settled a major sexual harassment lawsuit with cofounder Whitney Wolfe, reports Buzzfeed. The suit was “resolved (without admission of wrongdoing),” John Mullan, an attorney representing Wolfe, said in an email to BuzzFeed News. Wolfe’s complaint, filed in late June, alleged that Tinder co-founder and CEO Sean Rad and co-founder Justin Mateen subjected her to “horrendously sexist, racist, and otherwise inappropriate comments, emails, and text messages,” before ultimately firing her. Mateen is no longer with the company.

    —–

    Job Listings

    Hewlett-Packard is hiring a corporate development associate in Palo Alto, Ca.

    —–

    Data

    India’s most active tech venture firms, according to CB Insights.

    —–

    Happenings

    TechCrunch Disrupt rolls into day two. Here‘s the agenda.

    —–

    Essential Reads

    Things aren’t looking so great for Amazon’s Fire phone, reports the New York Times. Among other things, it cut its price from $200 to 99 cents yesterday.

    —–

    Detours

    Bike lanes have actually sped up car traffic in New York City.

    —–

    Retail Therapy

    It’s bad for business. Your children will grow up looking like mountain people who’ve never seen the sun. But 4,000 hours of HD recordings is compelling.

    Connie

  • A Billionaire Brawl in Silicon Valley

    boxing-kidsIt’s no secret that Uber and Lyft don’t like each other much. In just one kerfuffle of late, Lyft told CNN that over a recent 10-month period, Uber employees had requested, then canceled, more than 5,000 rides from Lyft drivers. Uber quickly punched back, claiming that Lyft’s employees had canceled more than twice as many trips on Uber.

    Investors in the rival ride-sharing services have mostly stayed above the fray through such public scuffles. But now, they’re starting to sling mud, too.

    The trouble started yesterday morning, when at a TechCrunch conference in San Francisco, TechCrunch founder Michael Arrington interviewed Uber CEO Travis Kalanick in what appeared to be an effort to publicly rehabilitate Kalanick, who the press has begun to portray as something of a bully.

    Arrington asked, for example, if it wasn’t true that Lyft is a copycat, partly because Uber and Lyft announced carpool options within a day of each other in early August. Kalanick, who typically seizes opportunities to trash competitors, humbly offered: “Here’s maybe a little bit of a hat tip: I don’t think Lyft copied this particular feature; companies are often working on similar things.” (According to New York magazine, Lyft began work on its program in April, but “before the Lyft news had landed,” Uber published a blog post announcing a “virtually identical service.”)

    Arrington also uniformly dismissed Uber’s competitors as “ankle biters” and called Lyft “annoying because you have to sit in the front and talk, and they have those mustaches.” Said Arrington to Kalanick: “They seem to be constantly whining that [Uber is] beating them. Would you consider buying Lyft to shut them up?” (The audience laughed as Kalanick told him that Uber isn’t acquiring companies right now.)

    Initially, the interview seemed a coup for Uber. Noting Kalanick’s gentler demeanor — Kalanick repeatedly called himself “scrappy” and misunderstood — TechCrunch reported that if “Uber can buck its perception as a ruthless, greedy company trying to put cabbies out of work and instead show the softer side of on-demand services, it could succeed far beyond taxis.” Meanwhile, the San Francisco Chronicle noted Kalanick’s “pains to exhibit his kinder, gentler side” during the on-stage interview.

    But the cozy interview almost immediately drew criticism on Twitter, with comments from people like Wall Street Journal reporter Doug MacMillan and Founders Fund partner Geoff Lewis, both of whom noted that Arrington is an investor in Uber through his investment firm CrunchFund, an affiliation that was never raised during his interview with Kalanick. Lewis, whose firm has invested in Lyft, was particularly pointed in his tweets, calling Arrington’s interview “shameful,” given its absence of any relevant disclosures.

    Things only grew more heated several hours later, when during an on-stage interview with TechCrunch’s Alexia Tsotsis, Peter Thiel of Founders Fund described Uber as “without question, the most ethically challenged company in Silicon Valley.”

    (As Twitter lit up over Thiel’s remark, venture capitalist Marc Andreessen, whose firm also owns a stake in Lyft, joyfully jumped into the fray, tweeting: “A big thank you to @arrington for all the unsolicited free publicity for Lyft this morning at Disrupt!” He also published a discount code for Lyft — DISRUPT — and in Andreessen fashion, punctuated his tweet with a disarming smiley face.)

    Arrington seemingly tried to stifle the conversation by tweeting to Lewis, “Let’s just cut to the ‘and the horse your rode in on’ and go our separate ways, you worthless d__k.” Perhaps realizing the tweet would only garner more attention, Arrington then tweeted that Thiel is an investor in Uber through Arrington’s fund, CrunchFund, and that Arrington is himself an investor in Lyft through Andreessen Horowitz, where he is a limited partner.

    By then, though, Valleywag had caught the flavor of the story, calling out Arrington and Thiel for fighting over Uber “like boys with toys.” And Arrington’s efforts to help alter Kalanick’s public reputation as a brawler were largely forgotten.

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

    Connie

    , , ,

  • StrictlyVC: September 8, 2014

    Good Monday morning, everyone, hope you had a wonderful weekend! We’re almost comically exhausted from ours. (You probably know the feeling.)

    —–

    Top News in the A.M.

    Twitter is testing a way for users to discover and buy products on the platform.

    Reddit, the nine-year-old social news site, is reportedly in the midst of raising a big funding round. Recode has the story here.

    —–

    Investing Internationally? You Might ‘Friend’ Nazar Yasim

    Investor Nazar Yasin has been traveling the world since he was a child. Born in Greece to a real estate and tech investor who moved his family to Cyprus, then London, then Los Gatos, Ca., it isn’t surprising that Yasin’s interest in global tech investing was kindled early on.

    After nabbing an engineering degree, then dual JD/MBA, his first jobs were short-lived analyst and consulting gigs. In 2006, it was on to Goldman Sachs, where he eventually co-headed the firm’s European Internet coverage. Yasin then left in 2009 to become CEO of Forticom, a Latvia-based social networking business. “Everyone thought I was crazy,” he laughs. But Forticom was soon acquired by Russia’s Mail.ru, and Yasin was recruited by Tiger Global Management, where he led numerous deals, including in YY, a Chinese video-based social network that now has a $5.3 billion market cap.

    Today, Yasin is still at it, except these days, he’s running his own investment firm, Rise Capital, which scouts out Series B-stage Internet deals in emerging markets and held a first close of $100 million on its debut fund in March. Last week, I met Yasin at his offices in San Francisco’s Ferry Building to learn more. Our conversation has been edited for length.

    You had a plum job at Tiger. Why leave?

    Over time, we’d raised a lot of money on the private side and started making later-stage investments. I wanted to stay in the same [earlier-stage spot where we’d started], so I left to start Rise.

    Rise is writing checks of between $3 million and $7 million to startups in eight distinct emerging markets. Why base your operations in San Francisco? Are you interested in bringing your portfolio companies to the U.S.?

    No, we have zero interest in that. Being a good tech investor often just boils down to being on the right side of change. And if there’s one place where change is happening faster than other places, it’s here. Just having friends, LPs, and colleagues out here who are working with some of the great tech firms helps us understand what the future is going to look like.

    Alibaba represents the opportunity you’re chasing. Can you elaborate?

    Once Alibaba goes public in a couple off weeks, there will have been half a trillion dollars of publicly traded market cap created by Internet companies in emerging markets. I’m not talking about private market valuations. I’m talking about stock that you and I can buy on exchanges like the NYSE. That’s half a trillion dollars of value that’s come out of thin air in the last five years, created by Internet companies located in emerging markets whose businesses cater to consumers in those markets. Most of Alibaba’s business is focused on Chinese consumers buying stuff in China. There’s so much opportunity for startups in India or Indonesia or Mexico or Brazil or Russia [to do the same].

    Rise has invested in five startups, though it has disclosed just two: the Chilean insurance comparison site ComparaOnline and iROKO Partners, a Nigeria-based entertainment media distribution company. How do they fit into your thesis?

    Alibaba accounts for 7.5 percent of retail — offline or online — in China. That’s the same market share as Walmart, though it’s taken Walmart 50 years and took Alibaba a decade. The reason is that in China and these other emerging markets, there isn’t as much offline retail. There aren’t as many things that look like Walmart or Target or Best Buy. There aren’t things like HBO. There aren’t as many banks. But whereas people’s ways to shop offline are limited, [online is a different story].

    Of the markets you’re targeting, which are the most attractive and which are the least attractive right now?

    India is happening in a very big way right now. Lot of young companies are seeing a lot of traction right now. The same is true of startups in Brazil, Mexico, Indonesia, Nigeria and the broader Middle East. I’d say Russia and China are low priority.

    China is lower priority primarily for valuation reasons. Valuations have grown very punchy over the last two years. In other markets we invest in, it isn’t uncommon to see companies doing $20 million in revenue that you can invest in at a sub $50 million valuation. In China, that company would be worth hundreds of millions of dollars.

    Russia is a challenging market because its economy is dependent on oil and so more volatile than other emerging market economies. Its demographics aren’t as appealing as other emerging markets, either; you don’t have that tremendous combination of population growth and GDP per capita growth. In fact, it’s shrinking. And that’s important because there’s a lack of foreign strategics with an interest in Russia as a result, and if you’re an investor in a privately held company, you’re going to realize your investment through an IPO or M&A.

    What would you consider to be significant scale for an emerging market company?

    At $5 million in revenue, an emerging market startup is processing a lot of widgets. It has a lot of consumers. It’s typically in a market-leading position.

    That’s when you try and step in.

    Between the Series A — where you might see some local angel investors and VCs — and Series D rounds, where everybody and their mother knows about a company and the competition becomes quite fierce, there just isn’t a lot of capital. The companies aren’t quite as visible; it’s harder to identify the winners from the losers, and that’s where we feel like we have an edge. We’ve got a lot of relationships and a lot of data on these markets that we can leverage.

    —–

    New Fundings

    Adjust, a two-year-old, Berlin-based app analytics startup, has raised $7.6 million in Series C funding from Active Venture Partners, with earlier investors Target Partners, Iris Capital and Capnamic Ventures participating, reports TechCrunch. The company, formerly known as Adeven, has raised $11.9 million altogether, shows Crunchbase.

    Authy, a 1.5-year-old, San Francisco-based Y Combinator alum that specializes in two-factor authentication, has raised $2.3 million in seed funding from numerous investors, including Box CEO Aaron Levie, Match.com CEO Sam Yagan, CrunchFund, Winklevoss Capital, Digital Garage, Data Collective, Salesforce.com and AngelList through its MaidenLane fund.

    BitGo, a 1.5-year-old, San Francisco-based bitcoin security startup that operates a “multi-sig” digital wallet designed to protect users’ digital coins, has raised an undisclosed amount of funding from BitFury Capital, a bitcoin mining infrastructure company. Coindesk has more here. BitGo had raised $12 million in funding in June from Redpoint Ventures, Radar Partners, Founders Fund, Barry Silbert’s Bitcoin Opportunity Corp., and Ashton Kutcher’s A-Grade Investments, among others.

    BoomTown, an eight-year-old, Charleston, S.C.-based company that makes online marketing software for real estate professionals, has raised $20.1 million in funding from Adams Street Partners and Susquehanna Growth Equity.

    Electrozyme, a two-year-old, San Diego-based company whose temporary-tattoo-like sensors can gauge the chemicals secreted in sweat — measuring electrolyte balance, hydration level, and more – is raising a Series A round, reports MedCity News. The company previously raised $1.25 million in seed funding, including $250,000 in backing from investor Mark Cuban.

    Flywheel, a two-year-old, Omaha, Ne.-based company that provides managed WordPress hosting, has raised $1.2 million in seed funding, reports VentureWire. Linseed Capital led the round, which included Hyde Park Venture Partners, Lightbank, Ludlow Ventures, Nebraska Angels and Rose Paul Ventures.

    Focal Therapeutics, a seven-year-old, Aliso Viejo, Ca.-based company that makes a 3D tissue marker designed to help surgeons spot the precise site for tumor removal and delivery of radiation treatment, has raised $7.8 million in funding, shows an SEC filing.

    Lob, a year-old, San Francisco-based on-demand printing company, has raised $7 million in Series A funding led by Polaris Partners, with First Round Capital, Floodgate, and other individual investors participating. The company had raised now raised $9.4 million altogether, shows Crunchbase.

    PlusN, a two-year-old, Elmsford, N.Y.-based company that develops carrier aggregation software solutions to increase the capacity of mobile data networks, has raised $600,000 in seed funding, including from Franklin “Pitch” Johnson, founder of Asset Management Ventures, Vantage Venture Partners chairman Chris Brody, and PlusN executive chairman John Levy. Crunchbase shows the company has raised $1.2 million in seed funding altogether.

    Sonendo, an eight-year-old, Laguna Hills, Ca.-based maker of sonic tooth cleaners, has raised more than $35 million in new funding, according to an SEC filing that states the capital has come from eight investors. According to Crunchbase, the company has now raised roughly $80 million to date, including from OrbiMed Advisors, Neomed Management, and Fjord Ventures.

    Wearality, a two-year-old, Cary, N.C.-based maker of virtual reality head-mounted displays, has raised $925,000 in convertible notes as part of a $3 million round, shows an SEC filing that lists six investors. Among the firm’s board members is Joichi Ito, the director of the MIT Media Lab.

    Wellframe, a three-year-old, Boston-based company that combines mobile technology and artificial intelligence to engage patients in personalized care plans, has raised $8.5 million in Series A funding led by DFJ, with participation from Formation 8, Waterline Ventures and Queensbridge Venture Partners. Wellframe closed a $1.5 seed round earlier this year, including from Athenahealth CEO Jonathan Bush and DFJ cofounder Tim Draper.

    ZIRX, a months-old, San Francisco-based on-demand valet parking service, has raised $6.4 million in Series A funding led by Norwest Venture Partners and Trinity Ventures.

    —–

    New Funds

    Atlas Peak Capital, a three-year-old, San Francisco-based secondary investment firm, is raising a $40 million second fund, shows an SEC filing that shows a first sale as yet to occur. The filing lists the firm’s two cofounders, Josh Blachman and Brian DiLaura, who were formerly a VP and a director, respectively, at the secondary firm Saints Capital. The duo had raised $28.9 million for their debut fund, show SEC filings.

    Salesforce has established a $100 million fund called Salesforce1 Fund to invest in mobile enterprise startups, the San Francisco-based company is announcing this morning. John Somorjai, EVP of corporate development and strategy, is heading up the effort via the company’s Salesforce Ventures unit. Salesforce is already an active startup investor, with stakes in more than 100 companies, including Box, Dropbox,Evernote, Layer, and MuleSoft. In fact, according to TechCrunch, as of July’s end, Salesforce.com had invested $215 million in private companies over the last five years. Salesforce1 Fund represents the company’s first dedicated fund.

    —–

    IPOs

    Perhaps you’ve heard. On Friday, Alibaba finally filed its paperwork to go public. The China-based e-commerce giant expects to raise $24 billion, at a valuation of roughly $163 billion. The WSJ breaks down who is poised to make the most from the offering.

    EndoStim, a five-year-old, St. Louis, Mo.-based medical device company whose neurostimulation system was created to treat severe gastroesophageal reflux disease, has filed to go public. The company has raised at least $42.5 million from private investors, shows Crunchbase. The company, now looking to raise another $40 million on the public market, is principally owned by Santé Health Ventures, which holds a 35.4 percent stake; Prolog Capital III, which owns a 5.7 stake; and 1998 Co-Investing, which owns a 5.8 percent stake.

    —–

    Exits

    Ebates Shopping.com is in talks to be acquired by Rakuten, the owner of Japan’s largest online mall, reports Bloomberg, which says Tokyo-based Rakuten may pay about 100 billion yen ($950 million) for Ebates and is nearing a final agreement that could be announced as soon as this week.

    Luminate, a six-year-old, Mountain View, Ca.-based company that makes digital images interactive, has been acquired for undisclosed terms by Yahoo, which is shutting down the service. Luminate, formerly called Pixazza, had raised $28.5 million from investors, including August Capital, CMEA Capital, Google Ventures, Shasta Ventures, Nokia Growth Partners, and Webb Investment Network.

    Rackspace, the 16-year-old, San Antonio, Tx.-based web hosting company that went public in 2011, is in talks to be acquired byCenturyLink, a Louisiana-based landline phone service provider, according to Bloomberg sources. Rackspace is currently valued at $5.33 billion.

    Ultravisual, a two-year-old, Brooklyn, N.Y.-based app maker that offers photo and video creation and collaboration software for Apple’s iPhone iOs, has been acquired by privately held Flipboard for undisclosed terms, reports Recode.

    —–

    People

    Laura Arrillaga-Andreessen is profiled in the WSJ for her efforts to teach effective philanthropy to academia, to startups, and, starting next month, to everyone else through a six-week online program. (It’s free, of course.) In a light aside, the piece notes that Arrillaga-Andreessen mandates that everyone in her foundation’s office dance once a day. It’s “one of the great parts of running an organization,” she says.

    Alex Bard, a Salesforce EVP, has left the company to become CEO of Campaign Monitor, a 10-year-old, Sydney, Australia-based email marketer that raised $250 million in funding from Insight Venture Partners in April. Forbes has much more here.

    Michel de Lempdes has been appointed as head of venture capital at Paris-based Omnes Capital, where he has been co-head since 2012. He began his career at Credit Agricole CIB in New York, working in its funds-of-funds and LBO funding operations. In 2001, he co-launched Credit Lyonnais Venture Capital, which later became part of Omnes. More here.

    Alan Rosling, co-founder of Kiran Energy and former executive director of Tata Sons Limited, has joined the Kolkata, India-based venture firm Navam Capital as a senior advisor and operating partner. Navam Capital focuses on seed and early-stage investments in the energy, technology and health care sectors.

    Marc Stoll has joined the eight-year-old, San Francisco-based business planning platform Anaplan as CFO. Stoll was previously VP of worldwide sales finance for Apple and, before that, SVP and corporate controller for CA Technologies. Anaplan has raised roughly $144 million from investors, including Granite Ventures, DFJ, Shasta Ventures, and Meritech Capital Partners.

    Peter Thiel‘s new book comes out next week. Here’s an excerpt.

    —–

    Job Listings

    Funding Circle, the well-funded, small business lending marketplace online, is looking for a corporate development manager. The job is in San Francisco.

    —–

    Data

    In advance of Apple‘s big event tomorrow, when the company is expected to unveil numerous long-awaited products, CB Insights has assembled a report on the wearables market. Among its findings: more than $1.4 billion has been funneled into wearables over the last five years, much of it in 2014; and True Ventures, Andreessen Horowitz and Khosla Ventures are the most active wearables investors. Here is the full report.

    The complete Y Combinator database, care of Silk.

    —–

    Essential Reads

    Why Amazon has no profits (and why it works).

    —–

    Detours

    The 30 most expensive homes in tech.

    The iPhone 6 is “unlike any experience you’ve ever experienced.”

    New York’s once and future mansions.

    A dog dressed as a giant spider, then sent out to scare the sh_t out of people.

    —–

    Retail Therapy

    If you want to show a startup you mean business, bring one of these.

    Connie

    ,

  • Investing Internationally? You Might ‘Friend’ Nazar Yasin

    Nazar YasinInvestor Nazar Yasin has been traveling the world since he was a child. Born in Greece to a real estate and tech investor who moved his family to Cyprus, then London, then Los Gatos, Ca., it isn’t surprising that Yasin’s interest in global tech investing was kindled early on.

    After nabbing an engineering degree, then dual JD/MBA, his first jobs were short-lived analyst and consulting gigs. In 2006, it was on to Goldman Sachs, where he eventually co-headed the firm’s European Internet coverage. Yasin then left in 2009 to become CEO of Forticom, a Latvia-based social networking business. “Everyone thought I was crazy,” he laughs. But Forticom was soon acquired by Russia’s Mail.ru, and Yasin was recruited by Tiger Global Management, where he led numerous deals, including in YY, a Chinese video-based social network that now has a $5.3 billion market cap.

    Today, Yasin is still at it, except these days, he’s running his own investment firm, Rise Capital, which scouts out Series B-stage Internet deals in emerging markets and held a first close of $100 million on its debut fund in March. Last week, I met Yasin at his offices in San Francisco’s Ferry Building to learn more. Our conversation has been edited for length.

    You had a plum job at Tiger. Why leave?

    Over time, we’d raised a lot of money on the private side and started making later-stage investments. I wanted to stay in the same [earlier-stage spot where we’d started], so I left to start Rise.

    Rise is writing checks of between $3 million and $7 million to startups in eight distinct emerging markets. Why base your operations in San Francisco? Are you interested in bringing your portfolio companies to the U.S.?

    No, we have zero interest in that. Being a good tech investor often just boils down to being on the right side of change. And if there’s one place where change is happening faster than other places, it’s here. Just having friends, LPs, and colleagues out here who are working with some of the great tech firms helps us understand what the future is going to look like.

    Alibaba represents the opportunity you’re chasing. Can you elaborate?

    Once Alibaba goes public in a couple off weeks, there will have been half a trillion dollars of publicly traded market cap created by Internet companies in emerging markets. I’m not talking about private market valuations. I’m talking about stock that you and I can buy on exchanges like the NYSE. That’s half a trillion dollars of value that’s come out of thin air in the last five years, created by Internet companies located in emerging markets whose businesses cater to consumers in those markets. Most of Alibaba’s business is focused on Chinese consumers buying stuff in China. There’s so much opportunity for startups in India or Indonesia or Mexico or Brazil or Russia [to do the same].

    Rise has invested in five startups, though it has disclosed just two: the Chilean insurance comparison site ComparaOnline and iROKO Partners, a Nigeria-based entertainment media distribution company. How do they fit into your thesis?

    Alibaba accounts for 7.5 percent of retail — offline or online — in China. That’s the same market share as Walmart, though it’s taken Walmart 50 years and took Alibaba a decade. The reason is that in China and these other emerging markets, there isn’t as much offline retail. There aren’t as many things that look like Walmart or Target or Best Buy. There aren’t things like HBO. There aren’t as many banks. But whereas people’s ways to shop offline are limited, [online is a different story].

    Of the markets you’re targeting, which are the most attractive and which are the least attractive right now?

    India is happening in a very big way right now. Lot of young companies are seeing a lot of traction right now. The same is true of startups in Brazil, Mexico, Indonesia, Nigeria and the broader Middle East. I’d say Russia and China are low priority.

    China is lower priority primarily for valuation reasons. Valuations have grown very punchy over the last two years. In other markets we invest in, it isn’t uncommon to see companies doing $20 million in revenue that you can invest in at a sub $50 million valuation. In China, that company would be worth hundreds of millions of dollars.

    Russia is a challenging market because its economy is dependent on oil and so more volatile than other emerging market economies. Its demographics aren’t as appealing as other emerging markets, either; you don’t have that tremendous combination of population growth and GDP per capita growth. In fact, it’s shrinking. And that’s important because there’s a lack of foreign strategics with an interest in Russia as a result, and if you’re an investor in a privately held company, you’re going to realize your investment through an IPO or M&A.

    What would you consider to be significant scale for an emerging market company?

    At $5 million in revenue, an emerging market startup is processing a lot of widgets. It has a lot of consumers. It’s typically in a market-leading position.

    That’s when you try and step in.

    Between the Series A — where you might see some local angel investors and VCs — and Series D rounds, where everybody and their mother knows about a company and the competition becomes quite fierce, there just isn’t a lot of capital. The companies aren’t quite as visible; it’s harder to identify the winners from the losers, and that’s where we feel like we have an edge. We’ve got a lot of relationships and a lot of data on these markets that we can leverage.

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

    Connie

    , ,

  • StrictlyVC: September 5, 2014

    Well, hello handsome! (We’re talking to you, Friday.) Have a great weekend, everyone. Also, web visitors, here is an easier-to-read version of this, today’s email.

    —–

    Top News in the A.M.

    Apple CEO Tim Cook says Apple will be adding security alerts for iCloud users.

    New York police officers will begin wearing body cameras in a pilot program. (Some of the components are coming from Seattle-based Vievu.)

    —–

    Ariel Poler: I Don’t Want to Become a Professional Investor

    For 15 years, Ariel Poler did the entrepreneur slog, founding I/PRO, an early web analytics company; Topica, an email community; and the mobile marketing startup TextMarks. Then, in 2010, Poler decided to turn his attention entirely to angel investing, a pastime in which he’d long dabbled and that has also proved lucrative for him thanks to numerous hits, including AdMob (acquired by Google) and StumbleUpon (acquiredby eBay and taken private again).

    Poler’s investing career took shape in the late ’90s when he began helping out the boards of several startups, including Kana Software andLinkExchange, in exchange for equity. He still doesn’t think of himself as an “investor,” though, or plan to raise a fund. “It’s just not what I want to do for a living.” He explained during a recent chat.

    How many startups do you invest in per year and what size checks do you write?

    I don’t have a target but it’s worked out to be between three and five per year. In terms of the size of check, the average is probably $50,000.

    You’re involved with a lot of “hot” companies, including the cycling and running app company Strava. Why not raise a fund like everyone else in your position?

    I don’t think of myself as an investor. I won’t invest in an entrepreneur who I won’t have over for dinner. I don’t want to have to optimize for financial return. To become a professional investor, it just not what I want to do for a living. It’s not why I do it.

    You want to like the people you’re backing. How do you decide if it’s a good fit?

    It’s becoming harder. Because the speed at which startups get built and funded has accelerated significantly in recent years, there’s generally less time for people to understand if there’s a good fit. On rare occasions, I think [something] will be a good fit, then discover it isn’t. But that’s another benefit of [not being obligated to outside investors]. When that happens, I hold on to my shares, but I won’t proactively spend my time with the startup.

    What I try to do is interact a little bit in a way that’s proactive for entrepreneurs [like via] working meetings. I recently met with some founders who needed to pick a vertical for their product and needed help prioritizing, and I said, “Let’s pretend I’m a member of the team,” and we spent an hour and a half [on the issue], and I enjoyed it and they enjoyed it. That’s how it starts. Because everything is moving so quickly right now, you might not have the luxury of [spending a few weeks or more with a team], but I still try.

    You were on the board of Odeo, a platform for podcasters out of which Twitter was eventually spun, and you let founder Evan Williams buy back your shares. Was there a lesson in that experience?

    Everybody got their money back. It wasn’t an option. It wasn’t like some said, “Give me my money,” and others didn’t. Evan wanted to own 100 percent of Odeo and he bought everyone out. Then months later, he did a financing for Twitter and a small group of those who’d been investors in Odeo participated in the Twitter round. For me, when I was deciding, I thought Twitter had potential; I did feel pretty good about it. But there were other reasons I decided not to invest and they’re reasons that were pretty valid and go with my investment philosophy.

    That was the worst professional decision of my career, no question about that. [Laughs.] But if you look at most of the very successful companies, it’s very hard to predict [their rise]. When Evan came to the board and said, “I don’t want to do this anymore,” Twitter was already part of Odeo. We [the board] said, “The founder doesn’t want to do it. We don’t have any traction. We should try to sell it.” It was my job as a board member to find an investment bank, and I did. I was thinking Twitter could help MySpace compete against Facebook. But no one would take it for free — not for a dollar. That’s when Evan said, “I’ll do an incubator [and restart].”

    Many investors seem to think it makes sense to just back an entrepreneur like Williams an infinite number of times.

    That’s a common takeaway. But sometimes they try again and it works, and sometimes they try and it doesn’t. We all thought Twitter could be great but it wasn’t a slam dunk.

    —–

    New Fundings

    Beddit, an eight-year-old, Espoo, Finland-based company that makes an ultra-thin sleep monitoring sensor, has raised an undisclosed amount of funding led by Inventure, a Nordic early-stage venture capital firm. The company has now raised $8 million to date, it says.

    Bridj, a nearly three-year-old, Cambridge-based pop-up bus service, has raised $4 million led by Atlas Ventures, NextView Ventures, Suffolk Equity and Freshtracks Capital. Angel investors Jill Preotle, Andy Ross and Peter Aldrich also participated in the round. BostInno has much morehere.

    Cignifi, a four-year-old, Cambridge, Ma.-based company whose analytics platform produces credit and marketing scores using mobile phone behavioral data, has raised an undisclosed amount of Series B venture funding led by earlier investor Omidyar Network. American Express Ventures and other, unnamed earlier investors, also participated in the round.

    Cord, a months-old, Brooklyn, Ny.-based voice communication app that makes it easy to send a quick voice message, has raised $1.8 million in seed funding led by Metamorphic Ventures, along with Google Ventures, Slow Ventures, Gary Vaynerchuk, Lerer Hippeau Ventures,Greycroft, Melo7 Tech Partners, Ricky Van Veen, and Xavier Niel.

    DataStax, a four-year-old, Santa Clara, Ca.-based database management company, has raised $106 million in Series E funding led by Kleiner Perkins Caufield & Byers. Other participants in the round included ClearBridge Investments, Cross Creek Advisors, Wasatch Funds,Comcast Ventures and PremjiInvest, the family office of Wipro founder Azim Premji. The company has now raised $190 million altogether. Venture Wire Dispatch has much more here.

    Delta ID, a three-year-old, Newark, Ca.-based maker of biometric authentication software for mass-market computing devices, has raised $5 million in Series A funding from Intel Capital and other, unnamed investors. The company has now raised $6.1 million to date.

    GetSet, a two-year-old, Chicago-based social productivity tool meant to help college students build peer mentoring networks, has raised $2.5 million in seed funding from Chicago Ventures, KGC Capital, The Social+Capital Partnership, G2T3V, and individual investors. EdSurge has more here.

    KnCMiner, a year-old, Stockholm, Sweden-based maker of bitcoin mining hardware, has raised $14 million in Series A funding led by Creandum. TechCrunch has more here.

    LiveAction, a seven-year-old, Palo Alto, Ca.-based network and application performance management company, has raised $5.35 million in Series A funding led by AITV, with participation from Cisco and Enerdigm Ventures.

    MetricStream, a 15-year-old, Palo Alto, Ca.-based maker of risk and compliance software, has raised $60 million in Series D funding led by Sageview Capital. Earlier investors Goldman Sachs and Kaiser Permanente Ventures also participated in the round, which brings the company’s total funding to $160 million.

    Narrative, a 2.5-year-old, Linköping, Sweden-based company whose small, clip-on camera allows people to capture images and “lifelog,” has raised $8 million in Series A funding led by Khosla Ventures. Earlier investors Passion Capital and True Ventures also participated in the round, which brings the company’s total funding to $12.2 million.

    Propeller Health, a four-year-old, Madison, Wi.-based digital health company focused on chronic respiratory disease, has raised $14.5 million in Series B funding led by Safeguard Scientifics, with earlier investor The Social+Capital Partnership participating. The company has raised $28.4 million to date.

    Tapdaq, a two-year-old, London-based community-driven mobile ad exchange, has raised a $1.4 millon seed round led by Balderton Capital. TechCrunch has more details here.

    Symphony Commerce, a four-year-old, San Francisco-based company that delivers commerce as a service, handling wholesale and retail business functions like logistics, has raised a $21.5 million in Series B funding led by CRV, with participation from earlier investors Bain Capital and FirstMark Capital. The company has now raised $39 million to date, shows Crunchbase.

    Whale Path, a 1.5-year-old, San Francisco-based on-demand business-research platform, has raised $1.1 million in seed funding from TMT Investments, Kima Ventures, 500 Startups, Altair Capital, FundersClub, Wefunder, and individual investors.

    —–

    IPOs

    Upland Software, a four-year-old, Austin, Tx.-based maker of cloud-based enterprise work management software, has filed to go public, revealing plans to raise up to $50 million. The company has raised at least $31.4 million from investors over the years, shows Crunchbase. Its biggest backers include Austin Ventures, which owns 19.9 percent of the company; Activant Capital, which owns 7 percent; and ESW Capital, which owns 24.5 percent.

    —–

    Exits

    Allegro Diagnostics, an eight-year-old, Maynard, Ma.-based genomic test maker, has been acquired by the publicly traded diagnostics company Veracyte for $21 million. Allegro had raised $5.4 million from Catalyst Health & Technology Partners and Kodiak Venture Partners, shows Crunchbase.

    Twitpic, the photo-sharing site, will be shutting down September 25th because of a trademark dispute with Twitter, the company announced on its blog yesterday. Users will be able to export all their photos and videos in the next few days.

    —–

    People

    Carmelo Anthony, the NBA star who recently cofounded the investment firm Melo7 Tech Partners, says he runs potential investments past VCs Marc Andreessen and Ben Horowitz, whom he calls mentors. “We’ve built a great rapport,” says Anthony.

    Ali Partovi, a well-known Silicon Valley investor and entrepreneur, is joining the food startup Hampton Creek as its chief strategy officer. The New York Times has more here.

    Bre Pettis is stepping down as CEO of the consumer 3D printing company MakerBot in order to head up a new “innovation workshop” at Stratasys, which acquired MakerBot in a $400 million deal last year.

    Nathan Sanders is the newest GP at Technology Crossover Ventures. Before joining the firm, Sanders spent eight years at Bain Capital, as part of both its private equity investment team and its investor relations team.

    Emmett Shear, founder and CEO of Twitch, talks with Bloomberg about why the company chose to sell to Amazon rather than Google. (One words that comes up a lot: “independence.”)

    The White House made it official yesterday: Megan Smith, the longtime Google executive, is the country’s new CTO. Alexander Macgillivray, a former Twitter lawyer, was also officially named as deputy U.S. CTO.

    Ariel Tseitlin has been promoted from venture partner to partner at Scale Venture Partners. Tseitlin was previously a director of cloud solutions at Neflix. The firm has also promoted Cack Wilhem, a summer associate, to principal. Wilhem previously worked in sales at Cloudera and Oracle and spent a year as an analyst at the investment bank Montgomery & Company.

    —–

    Job Listings

    Route 66 Ventures, an early-stage venture firm in Alexandria, Va., is looking for a financial analyst.

    —–

    Happenings

    The TechCrunch Disrupt conference kicks off on Monday in San Francisco. You can check out the full agenda here.

    The Launch Scale conference is coming up, too, October 23rd and 24th in San Francisco. Learn more here.

    —–

    Data

    Tech companies are grabbing up as much cash as they can pre-IPO. Meanwhile, venture-backed healthcare companies are moving in the opposite direction, says CB Insights.

    —–

    Essential Reads

    The New York Times on Apple’s forthcoming smartwatch: “The company put an enormous amount of time and money in the wearable device’s sensors so that they would track movements and vital signs, like heart rate and footsteps, much more accurately than existing fitness devices, two employees said. It has a flexible display panel that is protected by a cover composed of sapphire, a type of tougher glass, they said. The device’s circuit board, which includes its sensors and chips, was described as tiny, about the size of a postage stamp.”

    —–

    Detours

    Not to be a bummer, but a new analysis of air traffic patterns shows that there’s up to an 18 percent chance the Ebola virus will reach us in the next few weeks.

    Shorts are considered ridiculous and unwearable outside the U.S. Is it time for American men to ditch them, too?

    Oh, to be a dog.

    —–

    Retail Therapy

    And you said there was no such thing as a beautiful vacuum.

    Connie

  • Ariel Poler: I Don’t Want to Become a Professional Investor

    arielpolerheadshotFor 15 years, Ariel Poler did the entrepreneur slog, founding I/PRO, an early web analytics company; Topica, an email community; and the mobile marketing startup TextMarks. Then, in 2010, Poler decided to turn his attention entirely to angel investing, a pastime in which he’d long dabbled and that has also proved lucrative for him thanks to numerous hits, including AdMob (acquired by Google) and StumbleUpon (acquired by eBay and taken private again).

    Poler’s investing career took shape in the late ’90s when he began helping out the boards of several startups, including Kana Software and LinkExchange, in exchange for equity. He still doesn’t think of himself as an “investor,” though, or plan to raise a fund. “It’s just not what I want to do for a living.” He explained during a recent chat.

    How many startups do you invest in per year and what size checks do you write?

    I don’t have a target but it’s worked out to be between three and five per year. In terms of the size of check, the average is probably $50,000.

    You’re involved with a lot of “hot” companies, including the cycling and running app company Strava. Why not raise a fund like everyone else in your position?

    I don’t think of myself as an investor. I won’t invest in an entrepreneur who I won’t have over for dinner. I don’t want to have to optimize for financial return. To become a professional investor, it’s just not what I want to do for a living. It’s not why I do it.

    You want to like the people you’re backing. How do you decide if it’s a good fit?

    It’s becoming harder. Because the speed at which startups get built and funded has accelerated significantly in recent years, there’s generally less time for people to understand if there’s a good fit. On rare occasions, I think [something] will be a good fit, then discover it isn’t. But that’s another benefit of [not being obligated to outside investors]. When that happens, I hold on to my shares, but I won’t proactively spend my time with the startup.

    What I try to do is interact a little bit in a way that’s proactive for entrepreneurs [like via] working meetings. I recently met with some founders who needed to pick a vertical for their product and needed help prioritizing, and I said, “Let’s pretend I’m a member of the team,” and we spent an hour and a half [on the issue], and I enjoyed it and they enjoyed it. That’s how it starts. Because everything is moving so quickly right now, you might not have the luxury of [spending a few weeks or more with a team], but I still try.

    You were on the board of Odeo, a platform for podcasters out of which Twitter was eventually spun, and you let founder Evan Williams buy back your shares. Was there a lesson in that experience?

    Everybody got their money back. It wasn’t an option. It wasn’t like some said, “Give me my money,” and others didn’t. Evan wanted to own 100 percent of Odeo and he bought everyone out. Then months later, he did a financing for Twitter and a small group of those who’d been investors in Odeo participated in the Twitter round. For me, when I was deciding, I thought Twitter had potential; I did feel pretty good about it. But there were other reasons I decided not to invest and they’re reasons that were pretty valid and go with my investment philosophy.

    That was the worst professional decision of my career, no question about that. [Laughs.] But if you look at most of the very successful companies, it’s very hard to predict [their rise]. When Evan came to the board and said, “I don’t want to do this anymore,” Twitter was already part of Odeo. We [the board] said, “The founder doesn’t want to do it. We don’t have any traction. We should try to sell it.” It was my job as a board member to find an investment bank, and I did. I was thinking Twitter could help MySpace compete against Facebook. But no one would take it for free — not for a dollar. That’s when Evan said, “I’ll do an incubator [and restart].”

    Many investors seem to think it makes sense to just back an entrepreneur like Williams an infinite number of times.

    That’s a common takeaway. But sometimes they try again and it works, and sometimes they try and it doesn’t. We all thought Twitter could be great but it wasn’t a slam dunk.

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

    Connie

    , , ,

  • StrictlyVC: September 4, 2014

    Good morning, dear readers, and happy Thursday! (Web visitors, here’s an easier-to-read version of today’s e-mail newsletter. To sign up for StrictlyVC, click here.)

    —–

    Top News in the A.M.

    New data gathered “from the cybercrime underground” suggests that the apparent credit and debit card breach at Home Depot involves nearly all of the company’s stores in the U.S., reports security expert Brian Krebs.

    —–

    Mithril Leads $40 Million Diabetes Deal

    Mithril Capital Management prides itself on funding unique “growth companies regardless of sector or geography,” says Ajay Royan, who founded the San Francisco-based venture firm with investor Peter Thiel in 2012. Last month, for example, it backed a Berlin-based, publicly traded company with an approved treatment for brain cancer.

    Fractyl, a company aiming to better control type 2 diabetes, also fits the bill. In fact, Mithril — which has just led a $40 million financing for the three-year-old, Waltham, Ma., company – thinks Fractyl might become the “single most impactful company in our portfolio,” says Royan.

    Certainly, the market opportunity Fractyl is chasing is enormous. More than 350 million people around the world suffer from type 2 diabetes, and as many as one in three U.S. adults could have diabetes by 2050 if current trends continue, according to the Centers for Disease Control and Prevention.

    While the disease is usually managed through exercise regimens, oral medications, and insulin shots, in more extreme cases, bariatric (weight loss) surgery is recommended, and it’s here where things get interesting.

    Bariatric surgery has been shown to return a person’s blood sugar levels to normal roughly six months after the procedure. Traditionally, it was believed the surgery is effective because the size of the stomach is reduced, but researchers and doctors have begun to believe it owes to a change in gut metabolism.

    “The [first section of the small intestine] contains cells that function as chemical sensors,” explains Royan. “As you eat food, a portion of your small intestine anticipates the food’s composition and signals a hormonal response to start preparing insulin or whatever is appropriate for that food.” In diabetics, that portion of the gut is scarred, so the body’s response is off.

    The big idea of Fractyl cofounder and CEO Harith Rajagopalan — a cardiologist and medical device entrepreneur — was to address the issue by altering the physiology of the gut. Specifically, Fractyl has created a device that’s inserted into the small intestine using an endoscope; after expanding and smoothing out the targeted part of the tract, it applies heat via a catheter balloon filled with hot water that kills the surrounding layer of skin. If all goes correctly, the old cells slough off and new cells with hormone receptors are generated in their place.

    So far, the idea is looking spot on. Thirty-five patients have participated in trials, with the results validating the company’s approach. Still, it’s early days. The trials began just eight months ago, meaning no one yet knows how effective the treatment will be over a longer period of time.

    There’s also competition to consider. Though Fractyl has some deep-pocketed venture firms, including earlier investors General Catalyst Partners, Bessemer Venture Partners and Domain Associates, the kind of skin ablation done by Fractyl’s device isn’t unique, even if no one is doing it precisely the same way.

    Royan says he isn’t concerned about potential copycats, pointing to Fractyl’s “significant IP filings.” More, he insists, Fractyl’s design will be very hard to beat. Asks Royan,“Were there cell phones before and after the iPhone? Yes.” But the iPhone’s design has kept it at the fore. For his money, so will Fractyl’s specific approach to fighting diabetes.

    —–

    New Fundings

    Breather, a two-year-old, Montreal-based platform that provides on-demand work spaces in large urban areas, has raised $6 million in Series A funding led by RRE Ventures, with Vayner/RSE, SOS Ventures and earlier backer Real Ventures participating. The company has raised $7.5 million to date.

    Delivery Hero, a four-year-old, Berlin-based food delivery service, has raised roughly $350 million in new funding from the Swedish investment firm Vostok Nafta along with earlier investors, including Insight Venture Partners and Kite Ventures. The company has now raised $635 million altogether. TechCrunch has more here.

    Frank & Oak, a 2.5-year-old, Montreal-based online menswear retailer, has raised $15 million in Series B funding led by Goodwater Capital, the new firm of Chi-Hua Chen, long of Kleiner Perkins Caufield & Byers. Others in the round included new investors Greenoaks Capital, Investissement Quebec, and Lululemon Athletica CFO John Currie, as well as earlier investors Rho Canada Ventures, Real Ventures, Version One Ventures, Lightbank and Bertelsmann Digital Media Investments. Venture Capital Dispatch delves into the funding here.

    Grid Ant Technologies, a two-year-old, Mumbai, India-based distributed computing company whose operating system, Cubeit, allows users to collaborate across multiple devices, has received just less than $3 million in seed funding from Accel Partners and Helion Venture Partners, reports Techcircle.in.

    Immunophotonics, a six-year-old, St. Louis, Mo.-based company that’s developing a metastatic cancer treatment, has raised $1.8 million in Series A funding from Billiken Angels, BioGenerator, Cultivation Capital, theMissouri Technology Corp ., St. Louis Arch Angels and individual investors. The St. Louis Business Journal has more here.

    iSpecimen, a five-year-old, Lexington, Ma.-based company that supplies human clinical specimens to the research, therapeutic, and diagnostic industries, has raised $8 million in Series B funding. The company, which raised $2 million in funding in 2012, didn’t disclose its backers.

    ItsOn, a six-year-old, Redwood City, Calif.-based company behind a cloud-based smart services platform for mobile device OEMs, device OS developers, service providers and others, has raised an undisclosed amount of Series C funding from Cisco Systems. The company has previously raised at least $40 million from investors, shows Crunchbase. Its investors include Silver Lake Partners, SV Angel, and Andreessen Horowitz.

    Legend3D, a 13-year-old, Carlsbad, California-based 3D visual effects and conversion company, has raised $10 million in Series C funding led by earlier investors Northwater Capital Management and Augustus Ventures Limited. The company has raised $47.8 million altogether, shows Crunchbase.

    One, Inc., a nine-year-old, Sacramento, Ca.-based cloud software company that caters to the property and casualty insurance markets, has raised $16.7 million in Series A funding led by H&Q Asia Pacific. Camp One Ventures and AGI Partners also participated in the round.

    Sgrouples, a three-year-old, Mountain View, Ca.-based privacy-centric social networking service, has raised $1.2 million in seed funding from individual investors. The company has now raised $1.8 million altogether.

    Vice Media, the nearly eight-year-old, Brooklyn, N.Y.-based news and entertainment company, has raised $250 million from Technology Crossover Ventures, on the heels of raising $250 million in funding from A&E Networks. The company has now raised $580 million altogether. Dealbook has much more here.

    xAd, a five-year-old, New York-based mobile real-time bidding ad platform, has raised $50 million in equity and debt funding, including from investors Institutional Venture Partners, Emergence Capital, Softbank Capital, and Silicon Valley Bank. The company has now raised $74 million altogether, shows Crunchbase.

    —–

    New Funds

    Frontline Ventures, a year-old, Dublin- and London-based venture capital firm that invests in software only, has closed its debut fund with €40m ($52.5 million). Frontline is run by partners Shay Garvey, formerly of Delta Partners; Will Prendergast, formerly of NCB Venture Capital; and Will McQuillan, who previously founded a short-lived e-commerce company called Osmoda. The firm, whose investments range in size from €250K to €2M, has already invested in eight startups from its new fund, includingCurrencyFair, an online peer-to-peer currency exchange, and Boxever, a big data platform for airlines and travel companies. The Irish Times has much more here.

    —–

    IPOs

    According to a newly published report from Renaissance Capital, the number of IPOs anticipated this fall look to make 2014 the biggest year for IPOs since 2000.

    Before the IPO, an interactive guide to Alibaba.

    Tokai Pharmaceuticals, a 10-year-old, Cambridge, Ma.-based biotech company that makes a daily oral treatment for prostate cancer, announced terms for its IPO on Tuesday, revealing plans to raise $76 million by offering 5.4 million shares at a price range of $13 to $15. At $14 per share, the company would be valued at $310 million.

    Viking Therapeutics, a two-year-old, San Diego-based biotech that’s developing treatments for diabetes and other metabolic and endocrine disorders, revealed plans yesterday to raise $55 million in its IPO by offering 5 million shares at a price range of $10 to $12.

    —–

    Exits

    Baseline, a 33-year-old, L.A.-based online database of film and television information, has been acquired by competitor Gracenote in a deal worth $50 million.

    Moovel, a unit of Daimler AG, said yesterday that it will acquire two companies: three-year-old, Washington, D.C.-based RideScout, whose smartphone apps help people search and compare ground transportation options on demand and in real time; and Germany’s Intelligent Apps, which operates mytaxi, an app that connects users to taxi drivers. Terms for both deals were not disclosed.

    ShopIgniter, a five-year-old, Portland, Or.-based marketing startup, has been acquired by the Seattle-based video advertising firm Mixpo. Terms of the deal were not disclosed. Both businesses are backed by Madrona Venture Group. Oregon Live has more here.

    —–

    People

    Billionaire entrepreneur Patrick Soon-Shiong is urging Culver City, Ca. officials to install fiber Internet at five business districts, including one where his company is located, reports L.A. Weekly. Culver City is emerging as a tech hot spot, notes the outlet, thanks in part to residents like Maker Studios, recently acquired by Disney, and Beats, sold to Apple. Soon-Shiong is arguing that a publicly sponsored fiber network could also make Culver City more competitive for tech startups with Santa Monica, which already has its own fiber network. Soon-Shiong’s newest company is Nantworks.

    —–

    Job Listings

    Lynda.com, a San Francisco-based company that produces online video tutorials (and, ahem, raised a $103 million round last year), is looking for a VP of business development.

    —–

    Essential Reads

    Microsoft’s new Lumia 830 raises eyebrows in Berlin.

    Etsy CEO to businesses: If net neutrality perishes, we will, too.

    —–

    Detours

    According to a new study out of NYU, tall men get the short end of the stick when it comes to marriage.

    The simple technology that accidentally destroyed baseball.

    A very short interview with Bob Odenkirk about his collection of writings, A Load of Hooey.

    —–

    Retail Therapy

    “What are you wearing, darling?” “Why Intel, bien sûr.”

    Connie

  • Mithril Capital Bets Big on Diabetes

    Diabetes wordcloudMithril Capital Management prides itself on funding unique “growth companies regardless of sector or geography,” says Ajay Royan, who founded the San Francisco-based venture firm with investor Peter Thiel in 2012. Last month, for example, it backed a Berlin-based, publicly traded company with an approved treatment for brain cancer.

    Fractyl, a company aiming to better control type 2 diabetes, also fits the bill. In fact, Mithril — which has just led a $40 million financing for the three-year-old, Waltham, Ma., company – thinks Fractyl might become the “single most impactful company in our portfolio,” says Royan.

    Certainly, the market opportunity Fractyl is chasing is enormous. More than 350 million people around the world suffer from type 2 diabetes, and as many as one in three U.S. adults could have diabetes by 2050 if current trends continue, according to the Centers for Disease Control and Prevention.

    While the disease is usually managed through exercise regimens, oral medications, and insulin shots, in more extreme cases, bariatric (weight loss) surgery is recommended, and it’s here where things get interesting.

    Bariatric surgery has been shown to return a person’s blood sugar levels to normal roughly six months after the procedure. Traditionally, it was believed the surgery is effective because the size of the stomach is reduced, but researchers and doctors have begun to believe it owes to a change in gut metabolism.

    “The [first section of the small intestine] contains cells that function as chemical sensors,” explains Royan. “As you eat food, a portion of your small intestine anticipates the food’s composition and signals a hormonal response to start preparing insulin or whatever is appropriate for that food.” In diabetics, that portion of the gut is scarred, so the body’s response is off.

    The big idea of Fractyl cofounder and CEO Harith Rajagopalan — a cardiologist and medical device entrepreneur — was to address the issue by altering the physiology of the gut. Specifically, Fractyl has created a device that’s inserted into the small intestine using an endoscope; after expanding and smoothing out the targeted part of the tract, it applies heat via a catheter balloon filled with hot water that kills the surrounding layer of skin. If all goes correctly, the old cells slough off and new cells with hormone receptors are generated in their place.

    So far, the idea is looking spot on. Thirty-five patients have participated in trials, with the results validating the company’s approach. Still, it’s early days. The trials began just eight months ago, meaning no one yet knows how effective the treatment will be over a longer period of time.

    There’s also competition to consider. Though Fractyl has some deep-pocketed venture firms, including earlier investors General Catalyst Partners, Bessemer Venture Partners and Domain Associates, the kind of skin ablation done by Fractyl’s device isn’t unique, even if no one is doing it precisely the same way.

    Royan says he isn’t concerned about potential copycats, pointing to Fractyl’s “significant IP filings.” More, he insists, Fractyl’s design will be very hard to beat. Asks Royan,“Were there cell phones before and after the iPhone? Yes.” But the iPhone’s design has kept it at the fore. For his money, so will Fractyl’s specific approach to fighting diabetes.

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

    Connie

    , , , ,

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