• StrictlyVC: August 8, 2014

    Happy Friday, everyone. So, my first week filling in for Connie (if that’s actually possible!) is coming to an end. Three interviews spread across four days, now in the books. Today, and then again on Friday next week, I’ll write the column here for the newsletter. If you’d like to chat about it or anything else, you can find me on Twitter at @semil.

    In the meantime, stay tuned for some more great interviews next week, including with Ryan Sarver of Redpoint Ventures and entrepreneur and investor Elad Gil.

    —–

    Top News in the A.M.

    The Apple versus Samsung patent-battle may have ended overseas, but it’s still going strong in the U.S., reports CNET.

    —–

    Four Ways to Break Into Investing

    Last night, I asked the crowd on Twitter what they’d like to hear about in today’s column. Entrepreneur John Petersen wrote back asking questions about what it’s like to get into early-stage investing, as more people want to get into the game on some level (and I believe they will, particularly if there are more liquidity options available in the future).

    Regarding my own investing experience, I’m making it up as I go along, but here’s what I believe someone has to think through before diving into this kind of investing:

    First, is the person able and willing to see an investment nosedive to zero? There are reasons that regulations require that potential investors have a certain level of income before investing like this. It’s hard to get money back from early-stage investments, and even if money does come back, it may take a long, long time. This is obvious to most, but not all — so it bears repeating.

    Second, assuming a person is able to lose the money earmarked for investing, does that person want to invest directly into startups or as a limited partner via someone else’s fund, or start a fund (or a syndicate)?

    Option 1: Direct investing may appear to be the most fun, but it’s hard to gain direct access to these early-stage opportunities, and founders are savvy, seeking to partner with people who can help them. It’s also possible to use AngelList or other crowdfunding platforms to directly invest, but often there’s a charge on carry associated with it, and not everyone is allowed into each syndicate to which they apply.

    Option 2: Many others put their money to work by investing in a fund that will deploy that money across a portfolio, spreading out their risk. Generally, the individual LP pays the fund a fee to invest the money but stays at arm’s length. In some situations, though, LPs will strike agreements with a fund’s GPs to co-invest alongside them and pay a bit in that carry but save on fees. This sounds good in theory but often in the most competitive deals, even the GPs are fighting for their allocations. (AngelList has also started to create industry-specific syndicate funds that investors can back, in addition to applying to back other funds on the platform.)

    Option 3: Creating a new fund is a third option. It’s costly and time-consuming, though, requiring intricate tax and accounting setup, fundraising activities to recruit LPs, and a strategy to deploy and manage the funds invested.

    Option 4: Creating an AngelList syndicate is a bit easier but not easy, either. Typically, the individual needs to be investing his or her own funds, building a syndicate against his/her reputation, and then harnessing the syndicate to move in step with each check, enjoying financial leverage with carry along the way.

    So much of investing depends on the individual, including how much access they have to great founders and how much they want to work to find investments and manage money (and relationships). But for those who are really serious about the topic, it’s worth reading, and bookmarking, and reading again this short but insightful 2012 post by Andy Rachleff, who cofounded both Benchmark and Wealthfront and teaches at the Stanford Graduate School of Business. Today, I tried to lay out some options for folks who are interested in dabbling; in Andy’s post, he soberly tells it like it really is based on years of experience. It is required reading.

    —–

    New Fundings

    Casper Sleep, a 10-month-old, New York-based online mattress retailer, has raised $13.1 million in Series A funding led by New Enterprise Associates, with A­-Grade Investments, Queensbridge Venture Partners, Slow Ventures, Lerer Hippeau Ventures, SV Angel and numerous others participating.

    Movile, a 16-year-old, São Paulo, Brazil-based mobile commerce platform, has raised $35 million in Series D funding led by Innova Capital, with earlier investor Naspers participating. The company has also landed $20 million in long-term financing through FINEP — Brazil’s Funding Authority for Studies and Projects within the Ministry of Technology. TechCrunch has more here about the company, whose best-known app is PlayKids, a subscription-based mobile and tablet only children’s entertainment platform.

    Plated, a two-year-old, New York-based company that home-delivers 30-minute gourmet recipes and ingredients, has raised $15 million in fresh funding, shows an SEC filing. The round brings the company’s total funding roughly $21 million; its backers include Great Oaks Venture Capital, Founder Collective, Lerer Ventures, and ff Venture Capital.

    SmartNews, a two-year-old, Tokyo-based news aggregation app, has raised $36 million in new funding led by Atomico and the mobile-social gaming company Gree. The company has now raised $40.2 million altogether, shows Crunchbase. Recode has more here.

    —–

    Exits

    CardSmith, an 11-year-old, Doylestown, Pa-based company that provides campus cards and card program management services to hundreds of institutions, has been acquired by the education software giant Blackboard for undisclosed terms.

    —–

    People

    Marc Andreessen agrees to an interview via Twitter, revealing, among other things, that if Andreessen Horowitz ever breaks its “‘one office” rule, it’s pretty likely office #2 would be in Israel.”

    Serial entrepreneur Stewart Butterfield is back on top with his newest business, Slack. Its ambition, he says: “Be the next Microsoft.”

    Matt Melymuka has joined Greycroft Partners as a senior associate in its New York office. Melymuka previously worked as an associate at Investor Growth Capital, a growth-stage venture capital firm. He also worked earlier as an investment banking analyst at Piper Jaffray.

    —–

    Job Listings

    Starbucks is looking for a senior financial analyst to work in its corporate development group. The job is in Seattle.

    —–

    Essential Reads

    Silicon Valley arrogance is good, writes BusinessWeek.

    —–

    Detours

    The plot thickens as 900 writers battle Amazon.

    Restoration Hardware’s mail-order extravagance.

    What fish does to the brain.

    —–

    Retail Therapy

    Will it waffle? You might be surprised.

    Connie

  • Four Ways for Founders (and Anyone Else) to Break Into Investing

    yes or noBy Semil Shah

    Last night, I asked the crowd on Twitter what they’d like to hear about in today’s column. Entrepreneur John Petersen wrote back asking questions about what it’s like to get into early-stage investing, as more people want to get into the game on some level (and I believe they will, particularly if there are more liquidity options available in the future).

    Regarding my own investing experience, I’m making it up as I go along, but here’s what I believe someone has to think through before diving into this kind of investing:

    First, is the person able and willing to see an investment nosedive to zero? There are reasons that regulations require that potential investors have a certain level of income before investing like this. It’s hard to get money back from early-stage investments, and even if money does come back, it may take a long, long time. This is obvious to most, but not all — so it bears repeating.

    Second, assuming a person is able to lose the money earmarked for investing, does that person want to invest directly into startups or as a limited partner via someone else’s fund, or start a fund (or a syndicate)?

    Option 1: Direct investing may appear to be the most fun, but it’s hard to gain direct access to these early-stage opportunities, and founders are savvy, seeking to partner with people who can help them. It’s also possible to use AngelList or other crowdfunding platforms to directly invest, but often there’s a charge on carry associated with it, and not everyone is allowed into each syndicate to which they apply.

    Option 2: Many others put their money to work by investing in a fund that will deploy that money across a portfolio, spreading out their risk. Generally, the individual LP pays the fund a fee to invest the money but stays at arm’s length. In some situations, though, LPs will strike agreements with a fund’s GPs to co-invest alongside them and pay a bit in that carry but save on fees. This sounds good in theory but often in the most competitive deals, even the GPs are fighting for their allocations. (AngelList has also started to create industry-specific syndicate funds that investors can back, in addition to applying to back other funds on the platform.)

    Option 3: Creating a new fund is a third option. It’s costly and time-consuming, though, requiring intricate tax and accounting setup, fundraising activities to recruit LPs, and a strategy to deploy and manage the funds invested.

    Option 4: Creating an AngelList syndicate is a bit easier but not easy, either. Typically, the individual needs to be investing his or her own funds, building a syndicate against his/her reputation, and then harnessing the syndicate to move in step with each check, enjoying financial leverage with carry along the way.

    So much of investing depends on the individual, including how much access they have to great founders and how much they want to work to find investments and manage money (and relationships). But for those who are really serious about the topic, it’s worth reading, and bookmarking, and reading again this short but insightful 2012 post by Andy Rachleff, who cofounded both Benchmark and Wealthfront and teaches at the Stanford Graduate School of Business. Today, I tried to lay out some options for folks who are interested in dabbling; in Andy’s post, he soberly tells it like it really is based on years of experience. It is required reading.

    Connie

  • StrictlyVC: August 7, 2014

    Hi, everyone, Semil Shah here, filling in with an abbreviated version of StrictlyVC while Connie takes a little time off. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.

    —–

    Top News in the A.M.

    Watch out Amazon? Starting today, Google and Barnes & Noble are teaming up on the fast, cheap delivery of books.

    —–

    Chris Douvos: LPs Secretly Think “Certain Types” of Operational Experience are Overrated

    Earlier this week, we featured a Q&A with Chris Douvos of Venture Investment Associates, a straight-shooting LP whose career began at Princeton University Investment Company more than a dozen years ago. Because the interview ran a bit long, and because Douvos is a smart guy with interesting insights, we decided to run the rest of our interview with him here today.

    Are LPs starting to look for different kinds of backgrounds in the partnerships they back? If so, how?

    In terms of backgrounds, there’s not a lot of change; I think that classically trained LPs like to see some operational experience among their GPs, but there’s also a belief that certain types of knowledge and experience get stale quickly.

    There are a lot of people coming straight out of “hot companies” right now looking to raise funds, and I think that history teaches us that a lot of these funds will have unfulfilling results. In fact, some of the best investors out there — real titans of the VC world — had little operational experience.

    But there are many different routes to success. I think the flavor of the month right now is “the platform.” A position that a bunch of funds seem to be adding right now is “VP of Platform” or something similar. The archetype in this regard for me was Brett Berson at First Round. For years, I called him the unsung MVP of the venture business. And indeed, [First Round founder] Josh [Kopelman] and the whole First Round team have done an amazing job of conceptualizing, building, and iterating their platform. The True [Ventures] guys have done an admirable job, as well. Of course, Andreessen Horowitz has built something special, too. But having known all those guys since the beginning, I see how significant an investment the building of these platforms has been, and I think it’ll be challenge to replicate.

    What’s the one thing you believe founders should know about LPs in general?

    LPs are putting their GPs under an enormous amount of pressure right now as they evaluate if they even want to invest in venture capital. Aside from the [roughly] dozen firms that don’t need to worry about fundraising, everyone seems to be on the “watch list” right now. Proof points — whether they’re nice exits or strong telltales of progress — can mean the difference between an easy fundraise and a protracted slog for that stressed-out board member of yours.

    ——

    New Fundings

    All Def Digital, a year-old, L.A.-based online comedy and music network co-founded last year by hip hop mogul Russell Simmons, has raised $5 million led by Greycroft Partners. Other participants in the round included Advancit Capital, e.ventures, and Nu Horizons Investments, created by Simmons and his ex-wife, Kimora Lee Simmons-Leissner. Deadline has more here.

    RedPoint Global, an eight-year-old, Wellesley Hills, Ma.-based maker of data management and digital marketing software, has raised $5.2 million in new funding led by Grotech Ventures, with participation from Sagamore Ventures. The company has raised $11.6 million altogether, shows Crunchbase.

    Rocket Internet, the seven-year-old, Berlin-based incubator founded by the renowned Samwer brothers, has collected $446 million from Philippine Long Distance Telephone in exchange for a 10 percent stake in its business. Rocket Internet has helped form — as well as made early investments in — a long list of companies since its founding. Included in its porfolio: online fashion retailers Dafiti, Lamoda, Jumia, and Zalando, which target customers in Latin America, Russia, Africa, and Europe, respectively.

    Splice Machine, a two-year-old, San Francisco-based company whose transactional database sits on top of the Hadoop file system, has added $3 million to its Series B round from Correlation Ventures, Roger Sippl and Roger Bamford. The funding brings the round to $18 million. Earlier investors in the financing included Interwest Partners and Mohr Davidow Ventures. Splice Machine has now raised $22 million altogether, shows Crunchbase.

    Two Tap, a 1.5-year-old, Palo Alto, Ca.-based platform that helps publishers of mobile apps or websites sell products directly in their applications, has raised $2.7 million in seed funding. Its backers include Digital Garage, Green Visor Capital, Initialized Capital, Khosla Ventures, SV Angel, Transmedia Capital and individual investors.

    —–

    IPOs

    Ten charts that shows us something new about the IPO boom.

    iDreamSky Technology, a Chinese publishing platform for games played on mobile devices, has raised $116 million by offering 7.7 million ADSs at $15, above the expected $12 to $14 range. More here.

    Microlin Bio, a diagnostic and therapeutics biotech, postponed its IPO yesterday. Renaissance Capital has more here.

    Tobira Therapeutics, a biotech developing an immunotherapy treatment for liver disease and HIV, has also postponed its IPO. More here.

    —–

    Exits

    Emu, a two-year-old, Palo Alto, Ca.-based company whose messaging app can monitor chats and infer what people are talking about, has been acquired by Google for undisclosed terms. The company had raised $1.5 million in seed funding, including from TriplePoint Capital, Menlo Ventures, DFJ, and Kleiner Perkins Caufield & Byers. Wired analyzes the deal here.

    Directr, a 1.5-year-old, Boston-based mobile app company that makes it easy for users to create movies on their phones, has been acquired by Google for undisclosed terms. The company had raised $1.7 million in seed funding from a long list of investors, including Advancit Capital, NextView Ventures, Boston Seed Capital, and Reddit cofounder Alexis Ohanian. TechCrunch has more here.

    Ringadoc, a four-year-old, L.A.-based cloud-based physician call-back service, has been acquired by the electronic health records company Practice Fusion for undisclosed terms. The company had raised at least $1.9 million, including from Founders Fund, Siemer VC, and Telegraph Hill Group, and Practice Fusion CEO Ryan Howard. RIngadoc was incubated at Practice Fusion’s San Francisco headquarters. MobiHealthNews has more here.

    —–

    People

    Former Yahoo president Sue Decker gives HBR an insider’s account of the Yahoo-Alibaba deal that she helped broker in 2005.

    Mike Kail is Yahoo‘s newly appointed chief information officer and SVP of infrastructure, a role that will see him leading Yahoo’s IT and data center operations. Kail was previously VP of IT operations at Netflix.

    A court has ruled that Hong Kong tycoon Albert Yeung can sue Googleover its autocomplete results suggesting he has links to organized crime. More here.

    —–

    Job Listings

    Universal Music Group is recruiting an analyst and an associate for its corporate development and strategy group. The jobs are in Santa Monica, Ca.

    ——

    Data

    In 2005, 31 firms raised funds of between $100 million and $250 million. The top performers of that bunch are Skyline Venture Partners Fund IV, Storm Ventures Fund III, and Union Square Ventures 2004, according to Pitchbook, which says the funds’ median IRR is -0.04 percent and the top-quartile IRR hurdle rate is 4.96 percent.

    —–

    Essential Reads

    Netflix now has more subscription revenue than HBO.

    Foursquare has begun tracking users everywhere they go, even when the app is closed.

    The San Jose Police Department doesn’t think it needs federal authorization in order to fly a $7,000 Hexacopter drone it procured earlier this year. The FAA thinks otherwise.

    —–

    Detours

    A good way to wreck a local economy? Build casinos.

    Is a more prestigious college worth the money?

    The unauthorized letter that’s been passed to elite MBAs for decades.

    A Meteorologist Works Out Some Personal Issues During His Forecast.

    —–

    Retail Therapy

    Good old leather Jack Purcells.

    Connie

  • Chris Douvos: LPs Secretly Think “Certain Types” of Operational Experience Are Overrated

    Chris DouvosBy Semil Shah

    Earlier this week, we featured a Q&A with Chris Douvos of Venture Investment Associates, a straight-shooting LP whose career began at Princeton University Investment Company more than a dozen years ago. Because the interview ran a bit long, and because Douvos is a smart guy with interesting insights, we decided to run the rest of our interview with him here today.

    Are LPs starting to look for different kinds of backgrounds in the partnerships they back? If so, how?

    In terms of backgrounds, there’s not a lot of change; I think that classically trained LPs like to see some operational experience among their GPs, but there’s also a belief that certain types of knowledge and experience get stale quickly.

    There are a lot of people coming straight out of “hot companies” right now looking to raise funds, and I think that history teaches us that a lot of these funds will have unfulfilling results. In fact, some of the best investors out there — real titans of the VC world — had little operational experience.

    But there are many different routes to success. I think the flavor of the month right now is “the platform.” A position that a bunch of funds seem to be adding right now is “VP of Platform” or something similar. The archetype in this regard for me was Brett Berson at First Round. For years, I called him the unsung MVP of the venture business. And indeed, [First Round founder] Josh [Kopelman] and the whole First Round team have done an amazing job of conceptualizing, building, and iterating their platform. The True [Ventures] guys have done an admirable job, as well. Of course, Andreessen Horowitz has built something special, too. But having known all those guys since the beginning, I see how significant an investment the building of these platforms has been, and I think it’ll be challenge to replicate.

    What’s the one thing you believe founders should know about LPs in general?

    LPs are putting their GPs under an enormous amount of pressure right now as they evaluate if they even want to invest in venture capital. Aside from the [roughly] dozen firms that don’t need to worry about fundraising, everyone seems to be on the “watch list” right now. Proof points — whether they’re nice exits or strong telltales of progress — can mean the difference between an easy fundraise and a protracted slog for that stressed-out board member of yours.

    Connie

    ,

  • StrictlyVC: August 6, 2014

    Good Wednesday morning, everyone. Semil Shah here, filling in with a shortened version of StrictlyVC while Connie is out for a couple of weeks. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.

    —–

    Top News in the A.M.

    China’s government has excluded iPads and MacBook laptops from the list of products that can be bought with public money because of security concerns, says a new Bloomberg report that suggests the implications could be wide-reaching. “When the government stops the procurement of products, it sends a signal to corporates and semi-government bodies,” a Hong Kong-based analyst tells Bloomberg. “The Chinese government wants to make sure that overseas companies shouldn’t have too much influence in China.”

    —–

    Adam Besvinick on Breaking Into Today’s VC Market

    Breaking into VC requires plenty of hustle, and Adam Besvinick has been hustling since graduating from Duke University in 2009 — nabbing summer stints at places like Accrue Ventures and DreamIt Ventures, an MBA from Harvard, and a part-time associate job at Lowercase Capital along the way.

    Last month, Besvinick, who was most recently working as the head of business development at the e-commerce site Wanelo, landed a full-time job as a principal with the early-stage venture firm Deep Fork Capital. We caught up with him last week to find out more about his new gig, how he operates, and where he’ll be shopping.

    Tell us about where you’ll focus your investing, including geographically.

    I’ll be based full-time in New York, making monthly trips to the Bay Area and fairly regular trips to other hubs like L.A. and Boston, where we have portfolio companies. I won’t be constrained to a particular geography, but the first few opportunities I sourced for Deep Fork are in New York, and we think it’s increasingly valuable to have a constant presence there.

    Most of my attention will be spent on seed-stage investment opportunities in content, commerce, and marketplaces, both consumer-facing and enterprise-facing companies in those sectors. However, my “first love” is social, so if I find something interesting in this world, I’m definitely going to take a hard look.

    You were most recently working at a startup. What precipitated this shift back into venture?

    Coming from a finance background, I always had a latent interest in investing, and when I started to break into the startup ecosystem, I felt like it was easier to get in front of VCs than to get in front of founders or other early-stage operators. And my first thorough exposure to the world of startups was through being fortunate enough to work with Chris Sacca and Lowercase Capital, as opposed to being on the operating side of things. I loved the different types of work I got to do with Chris and had a passion for and obsession with startups, so I knew that VC was where I ultimately wanted to end up.

    Since working for Chris in business school, how have you seen the early-stage market change?

    One major change is how we, as consumers, are inundated with apps and products in a way that we weren’t even two-and-a-half years ago. As a seed-stage investor, it makes it that much more difficult to extract signal from noise. Also, consumers have begun to develop engrained “mobile flows”—they have a set group of apps that they go to repeatedly, and it’s difficult to break up that flow unless you’re sufficiently different and valuable.

    What tools and products do you use daily in your VC work?

    I’m on Product Hunt, AngelList, and Crunchbase for checking out companies and products. I like Mattermark’s emails and Twitter feed but haven’t pulled the trigger on a subscription yet. LinkedIn and Rapportive are both critical for contacts. I read email newsletters from StrictlyVC, Term Sheet, and CB Insights daily. I downloaded Homer after adding it to Product Hunt and came across a couple of interesting apps on people’s phone screens that were shared, but I’m not sure this will be a persistent use case. I’ve also been playing around with Weave and SwiftIntro for meeting people who are building cool things, and I’m in a few interesting Facebook groups that have led to the discovery of compelling products. Last, but certainly not least, is Twitter – it’s my go-to for staying on top of everything that’s relevant to me.

    How are you and Deep Fork thinking about using crowd-funding platforms such as AngelList? And how do you feel founders should be thinking about these platforms?

    So far, I’ve used AngelList as a sourcing tool and to generate some inbound deal flow. It’s a great way to get a lay of the land, particularly if you follow a fair amount of individual investors and funds, which I’ve been making a point of doing.

    When it comes to raising, I have seen it be a great way to fill out rounds after there are initial commitments and/or a lead. I’m carefully watching [AngelList’s] Syndicates to see how they evolve.

    —–

    New Fundings

    Doctor On Demand, a two-year-old, San Francisco-based startup that offers doctor consultations via mobile video chat, has raised $21 million in Series A funding led by Venrock, with participation from Shasta Ventures and Virgin Group Chairman Sir Richard Branson.

    InVision, a three-year-old, New York-based company whose software enables users to more easily design their own apps, has raised $21 million in Series B funding led by Tiger Global Management, with FirstMark Capital participating. The company has now raised $35 million altogether.

    Kiwi, a three-year-old, Palo Alto, Ca.-based mobile game developer, has raised $15 million in Series B funding led by Northgate Capital, with participation from DFJ and returning investor Sequoia Capital. The company has now raised $21 million altogether.

    Spoqa, a three-year-old, Seoul-based mobile loyalty platform, has raised $3.9 million in new funding led by Daesung Private Equity group and Bokwang Investments. TechCrunch has more here.

    —–

    New Funds

    Felicis Ventures, the Palo Alto, Ca.-based early-stage investment firm founded by former Googler Aydin Senkut in 2006, has closed its fourth fund with $96 million in commitments. Reuters has much more here.

    —–

    IPOs

    Vivint, the three-year-old, Provo, Ut.-based home security and solar-energy provider owned by Blackstone Group, has confidentially filed for an IPO, reports Reuters. The company is now the second-biggest installer of residential solar panels in U.S. behind SolarCity, backed by Elon Musk. SolarCity went public in late 2012 at roughly $8 per share; its shares are currently trading at $71 a piece.

    Zendesk, the 6.5-year-old, San Francisco-based on-demand customer service platform, handily beat Wall Street estimates in its first, post-IPO earnings report. Investors Business Daily has more here.

    The European IPO market remains superhot, says Christoph Stanger, Goldman Sachs’s co-head of equity capital markets for Europe, the Middle East and Africa. “When I look at our pipeline – and I think that’s representative for others’ – it’s actually jam-packed . . .We can assume that if markets hold, it will be a very, very active second half of the year.”

    —–

    People

    Greg Coleman, who spent the last three years as president of the now-public ad tech company Criteo, has joined BuzzFeed as its new president. Before joining Criteo, Coleman had been the president of Huffington Post. The WSJ has more here.

    Dev Ittycheria, who joined OpenView Partners as a managing director late last year and who was formerly the president of BMC Software, was just appointed CEO of database giant MongoDB, reports Forbes. He replaces Max Schireson, who spent just one year at the helm. More here.

    Speaking of venture capitalist Chris Sacca (see today’s column), did you know his brother Brian starred in Martin Scorsese’s “The Wolf of Wall Street?” More here.

    The 25 most famous Harvard students of all time.

    —–

    Job Listings

    Comcast Ventures is looking for a market development analyst. The job is in New York.

    —–

    Essential Reads

    A Russian crime ring has amassed the largest known collection of stolen Internet credentials, including 1.2 billion user name and password combinations and more than 500 million email addresses, reports the New York Times. Forbes goes on to note that the security firm that reported the breach to the New York times is hoping to directly profit from it.

    Bitcoin supporters are stepping up the pressure on New York’s top financial regulator to extend the comment period for the state’s new virtual currency rules.

    —–

    Detours

    It’s hard giving away money,” says Jason Buzi, who made a fortune in the real estate business and has been trying to share the wealth by announcing cash giveaways via Twitter.

    The Japanese literature trend that conflates one extreme after another.

    “Meet Noah Ritter, Wayne County Fair attendee and Human of the Year. He’s being interviewed about rides on which he has been scared HAFF TUH DEFF.”

    —–

    Retail Therapy

    Timex is teaming up with AT&T and Qualcomm on a connected version of the Ironman GPS series. A “Dick Tracy watch this is not,” notes Recode. (We’ll be looking for it this fall anyway.) More here.

    Oh, wow, every 10-year-old boy’s dream bike, made real.

    Connie

  • Adam Besvinick on Breaking Into Today’s VC Market

    Adam BesvinickBy Semil Shah

    Breaking into VC requires plenty of hustle, and Adam Besvinick has been hustling since graduating from Duke University in 2009 — nabbing summer stints at places like Accrue Ventures and DreamIt Ventures, an MBA from Harvard, and a part-time associate job at Lowercase Capital along the way.

    Last month, Besvinick, who was most recently working as the head of business development at the e-commerce site Wanelo, landed a full-time job as a principal with the early-stage venture firm Deep Fork Capital. We caught up with him last week to find out more about his new gig, how he operates, and where he’ll be shopping.

    Tell us about where you’ll focus your investing, including geographically.

    I’ll be based full-time in New York, making monthly trips to the Bay Area and fairly regular trips to other hubs like L.A. and Boston, where we have portfolio companies. I won’t be constrained to a particular geography, but the first few opportunities I sourced for Deep Fork are in New York, and we think it’s increasingly valuable to have a constant presence there.

    Most of my attention will be spent on seed-stage investment opportunities in content, commerce, and marketplaces, both consumer-facing and enterprise-facing companies in those sectors. However, my “first love” is social, so if I find something interesting in this world, I’m definitely going to take a hard look.

    You were most recently working at a startup. What precipitated this shift back into venture?

    Coming from a finance background, I always had a latent interest in investing, and when I started to break into the startup ecosystem, I felt like it was easier to get in front of VCs than to get in front of founders or other early-stage operators. And my first thorough exposure to the world of startups was through being fortunate enough to work with Chris Sacca and Lowercase Capital, as opposed to being on the operating side of things. I loved the different types of work I got to do with Chris and had a passion for and obsession with startups, so I knew that VC was where I ultimately wanted to end up.

    Since working for Chris in business school, how have you seen the early-stage market change?

    One major change is how we, as consumers, are inundated with apps and products in a way that we weren’t even two-and-a-half years ago. As a seed-stage investor, it makes it that much more difficult to extract signal from noise. Also, consumers have begun to develop engrained “mobile flows”—they have a set group of apps that they go to repeatedly, and it’s difficult to break up that flow unless you’re sufficiently different and valuable.

    What tools and products do you use daily in your VC work?

    I’m on Product Hunt, AngelList, and Crunchbase for checking out companies and products. I like Mattermark’s emails and Twitter feed but haven’t pulled the trigger on a subscription yet. LinkedIn and Rapportive are both critical for contacts. I read email newsletters from StrictlyVC, Term Sheet, and CB Insights daily. I downloaded Homer after adding it to Product Hunt and came across a couple of interesting apps on people’s phone screens that were shared, but I’m not sure this will be a persistent use case. I’ve also been playing around with Weave and SwiftIntro for meeting people who are building cool things, and I’m in a few interesting Facebook groups that have led to the discovery of compelling products. Last, but certainly not least, is Twitter – it’s my go-to for staying on top of everything that’s relevant to me.

    How are you and Deep Fork thinking about using crowd-funding platforms such as AngelList? And how do you feel founders should be thinking about these platforms?

    So far, I’ve used AngelList as a sourcing tool and to generate some inbound deal flow. It’s a great way to get a lay of the land, particularly if you follow a fair amount of individual investors and funds, which I’ve been making a point of doing.

    When it comes to raising, I have seen it be a great way to fill out rounds after there are initial commitments and/or a lead. I’m carefully watching [AngelList’s] Syndicates to see how they evolve.

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

    Connie

    ,

  • StrictlyVC: August 5, 2014

    Hi, everyone. Semil Shah here, filling in with a shortened version of StrictlyVC while Connie is out for a couple of weeks. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.

    —–

    Top News in the A.M.

    Cyber security researcher Ruben Santamarta says he has figured out how to hack the satellite communications equipment on passenger jets through their WiFi and inflight entertainment systems, reports Reuters.

    The U.S. government is meanwhile moving closer to formal rules that ban in-flight cellphone calls.

    —–

    Where NextView Ventures is Shopping Now

    Lee Hower was an early employee of PayPal and LinkedIn’s very first director of corporate development before joining the field of venture capital in 2005. His first stop was as a principal and venture partner at Point Judith Capital. In 2010, he cofounded Boston-based NextView Ventures, whose many bets include Taskrabbit, the popular marketplace that enables users to outsource their chores, and ThredUp, a consignment marketplace that just closed on $23 million in new funding last week. We exchanged emails last week about NextView’s newest fund, and what’s capturing Hower’s attention right now.

    ​​NextView recently raised its second fund. What were your biggest learnings from your debut fund?

    Yes, we recently raised our second fund, [closing on] $40 million. Our team, model, and strategy are all the same, but we’re typically the lead or co-lead investor in seed rounds [now], and the size of these rounds is a little larger today than when we started in 2010. Back then, they were often $1 million or under, but we’ve seen them average between $1.4 million and $1.5 million now, and $2 million-plus isn’t uncommon.

    We’ll fund the same number of companies, but we can continue to lead these slightly larger rounds with initial investments and also have a little extra follow-on capital.

    You and your partners are quite public in blogging and tweeting from the Boston ecosystem. What other investors at the seed stage in Boston would you encourage founders and other investors to follow and keep an eye on?

    Founder Collective, Atlas Venture, Spark Capital, and General Catalyst Partners.

    Is NextView anticipating doing more deals on the East Coast versus doing them in the Boston area?

    We’ve focused on the East Coast since we started, though we’ll invest throughout the U.S. Our first fund was a little less than one-half Boston, about one-third New York, and about 15 to 20 percent “other.” When we invest outside the East Coast, it’s typically founders we’ve had a long relationship with, a sector we know particularly well, or a company that’s been transplanted. For example, ThredUp started in Boston but moved to San Francisco. We expect the geographic mix to stay about the same for our second fund, which we started investing in the first quarter. We’ve made six investments to date; four are in Boston and two are in New York.

    Aside from the web and mobile, what platforms are you and NextView most excited about right now and why?

    We’re looking at blockchain stuff like a number of other investors are. We also like wacky stuff. One of our new investments (unannounced) is literally rethinking mass transit with a blank canvas. Our portfolio is split roughly 50 percent consumer and 50 percent [business-to-business] companies, and at the heart of each one is internet-enabled software. We take a pretty long view, though, and believe web and mobile have a long way to run. If you look at most of the truly transformational (at a civilization level) platform shifts — electricity, automobile, microprocessor, etc. — the innovation plays out over many decades, not just a few years. The internet will be the same.

    ——

    New Fundings

    Bitglass, a 1.5-year-old, Campbell, Ca.-based cloud security software maker, has raised $25 million in Series B funding, including from an unnamed bank and SingTel Innov8, the venture investing arm of SingTel Group. The company has raised $35 million to date. Other investors in the company include Norwest Venture Partners and New Enterprise Associates.

    Gliacure, a three-year-old, Middleton, Wi.-based company whose small molecule drug focuses on glial cells to treat Alzheimer’s disease, has raised $5.8 million in Series B funding from undisclosed backers. The company had previously raised $2.75 million in Series A funding. MedCity News has more here.

    Rebiotix, a three-year-old, Roseville, Mn.-based biotechnology company that aims to help change the way gastrointestinal diseases are treated by using the human micro biome, has raised $25 million in Series B funding from undisclosed investors. The company has raised at least $27.8 million altogether, shows Crunchbase.

    Smaato, a nine-year-old, San Francisco-based exchange for mobile ads, has raised $25 million in funding led by Singapore Press Holdings, with participation from Aeris Capital and EDBI. The company has raised $47 million to date. Dealbook has more here.

    —–

    Exits

    Mdotlabs, a 1.5-year-old, Madison, Wi.-based company that provides information to advertisers about bots, click farms, and other fraudulent clicks that can account for up to 50 percent of a digital ad campaign, has been acquired by ComScore for an undisclosed amount. ZDNet hasmore here. The company had raised at least $1.3 million in seed funding from Chicago Ventures; Great Oaks Venture Capital; and Ray Zemon, the founder of the fashion retailer Shopbop.

    Perfect Market, a seven-year-old, Pasadena, Ca.-based company that sells digital publishing software designed to drive engagement, has been acquired by the content recommendation startup Taboola, reports TechCrunch. According to Crunchbase, Perfect Market had raised $30.6 million from investors, including Idealab, Tribune Company, Trinity Ventures, Rustic Canyon Partners, and Square 1 Bank. Taboola, a seven-year-old, New York-based company, has meanwhile raised $40 million from investors, including Pitango Venture Capital, Marker, WGI Group, and Evergreen Venture Partners.

    —–

    People

    The 17 highest-paid CEOs in tech.

    The new kind of worker needed to make “instant” delivery possible.

    Musa Tariq, the former social media chief for both Nike and Burberry, has been hired by Apple as its digital marketing director. The outlet 9to5mac has the story here.

    —–

    Job Listings

    OpenView Venture Partners is looking for a business development analyst. The job is in Boston.

    —–

    Data

    Corporate venture capital arms invested nearly $5 billion in startups across the first half of this year. That’s up roughly 45 percent from a year ago and highest level since the go-go dot com days, reports VentureWire.

    Today, Pitchbook takes a look those U.S. venture funds that raised between $500 billion and a billion dollars in 2005. (Just seven funds meet the criteria.) The top performers based on IRR are Austin Ventures IX, Clarus Life Sciences I, and Columbia Capital Equity Partners IV. The seven funds’ median IRR is 6 percent.

    —–

    Essential Reads

    BMW has unveiled its answer to Tesla‘s supercharger network.

    Extracting audio from visual information. (More on this here.)

    —–

    Detours

    Hedge funds run by women outperform those run by men, and investors have taken notice.

    For 150 years, the New York Times has been doing its best to define slang terms to readers, often to hilarious effect.

    The gangster’s guide to upward mobility.

    —–

    Retail Therapy

    An alarm clock that wakes you up with a fresh pot of coffee. Yes, it’s ridiculous, but you can have steaming hot coffee right there.

    The SureFire Luminox Wristlight. It’s a watch and wrist-mounted light. (Your inner MacGyver will thank you.)

    Connie

  • Where NextView Ventures is Shopping Now

    Lee HowerBy Semil Shah

    Lee Hower was an early employee of PayPal and LinkedIn’s very first director of corporate development before joining the field of venture capital in 2005. His first stop was as a principal and venture partner at Point Judith Capital. In 2010, he cofounded Boston-based NextView Ventures, whose many bets include Taskrabbit, the popular marketplace that enables users to outsource their chores, and ThredUp, a consignment marketplace that just closed on $23 million in new funding last week. We exchanged emails last week about NextView’s newest fund, and what’s capturing Hower’s attention right now.

    ​​NextView recently raised its second fund. What were your biggest learnings from your debut fund?

    Yes, we recently raised our second fund, [closing on] $40 million. Our team, model, and strategy are all the same, but we’re typically the lead or co-lead investor in seed rounds [now], and the size of these rounds is a little larger today than when we started in 2010. Back then, they were often $1 million or under, but we’ve seen them average between $1.4 million and $1.5 million now, and $2 million-plus isn’t uncommon.

    We’ll fund the same number of companies, but we can continue to lead these slightly larger rounds with initial investments and also have a little extra follow-on capital.

    You and your partners are quite public in blogging and tweeting from the Boston ecosystem. What other investors at the seed stage in Boston would you encourage founders and other investors to follow and keep an eye on?

    Founder Collective, Atlas Venture, Spark Capital, and General Catalyst Partners.

    Is NextView anticipating doing more deals on the East Coast versus doing them in the Boston area?

    We’ve focused on the East Coast since we started, though we’ll invest throughout the U.S. Our first fund was a little less than one-half Boston, about one-third New York, and about 15 to 20 percent “other.” When we invest outside the East Coast, it’s typically founders we’ve had a long relationship with, a sector we know particularly well, or a company that’s been transplanted. For example, ThredUp started in Boston but moved to San Francisco. We expect the geographic mix to stay about the same for our second fund, which we started investing in the first quarter. We’ve made six investments to date; four are in Boston and two are in New York.

    Aside from the web and mobile, what platforms are you and NextView most excited about right now and why?

    We’re looking at blockchain stuff like a number of other investors are. We also like wacky stuff. One of our new investments (unannounced) is literally rethinking mass transit with a blank canvas. Our portfolio is split roughly 50 percent consumer and 50 percent [business-to-business] companies, and at the heart of each one is internet-enabled software. We take a pretty long view, though, and believe web and mobile have a long way to run. If you look at most of the truly transformational (at a civilization level) platform shifts — electricity, automobile, microprocessor, etc. — the innovation plays out over many decades, not just a few years. The internet will be the same.

    Connie

    , , , ,

  • StrictlyVC: August 4, 2014

    Hi, everyone. Semil Shah here, filling in with a shortened version of StrictlyVC while Connie is out for a couple of weeks. If you’d like to talk about today’s column or anything else, you can find me on Twitter at @semil.

    —–

    Top News in the A.M.

    Google has revealed the identity of a user to police after discovering child abuse imagery in his Gmail account.

    —–

    LP Chris Douvos on the (Still) Difficult Case for VC

    Chris Douvos is a rare animal — an LP who doesn’t shy from expressing his opinions publicly.

    Since 2011, Douvos has been a managing director with Venture Investment Associates, a fund of funds group that commits capital to venture capital, growth capital, and private equity groups. Douvos worked previously for TIFF (The Investment Fund for Foundations) and the endowment for Princeton University, “despite having not one, but two degrees from Princeton’s bitter rival, Yale,” as he says at his personal blog. We caught up last week for an email chat, part of which we’ll run separately later this week.

    Are you the only LP who blogs? Do you think other LPs will and/or should in the future?

    I think I was the most prolific blogger. Some others had tried it, but it’s time-consuming to keep it up; I’m not writing as much as I’d like nowadays, either, so I’ve got to sharpen the pencil again. Too many topics, not enough time! It’s also tricky for LPs because part of the voodoo we do is done in the shadows. We’re in an information business and knowledge is a scarce currency There’s a real “close to the vest” mentality and LPs are always glad to share their second-best ideas, but that’s about it. I’d be surprised if many LPs pick up the blogging standard, as a result.

    What’s the bull and bear LP view on the rise of equity crowdfunding and platforms such as AngelList, for example?

    I love crowdfunding and think that AngelList Syndicates has the opportunity to be massively disruptive to the funds world. I’m an investor in AngelList’s Maiden Lane fund and am watching what happens there very closely. My neighbors in Palo Alto are building a crowdfunding platform for real estate that’s really getting traction. There’s going to be evolution in all this stuff, of course, but having a front row seat is pretty exciting; after all, sometimes, we make the road by walking.

    As for the the broader LP world, it’s hard to say if there’s really a bull or bear view, as most LPs are still watching to see how some of this stuff shakes out. It’s more of a curiosity at the moment. Also, beyond [Bay Area] area codes, not that many people are really thinking about this stuff yet. As LPs, we’re trained to be patient, have an extremely long horizon, and gather data. Also, most LPs tend to be very risk averse. Jeremy Grantham famously says that 90 percent of decisions in finance first take into account career risk, and I think that’s true. It’s hard to get LPs to think — much less act — at start-up speed. That’s not a knock, it’s may even be a compliment as too many people have been run over by steamrollers looking to pick up shiny new pennies. That’s particularly true in long-dated, illiquid asset classes like VC.

    Companies are staying private longer, especially the breakouts. How does that affect an LP’s strategy?

    Venture capital is already the longest-dated, furthest-out-of-the-money option that most institutions invest in. In a post-Lehman world, institutions realized that illiquidity wasn’t free; it carried a risk premium for a reason. And once these institutions had touched the hot coal of liquidity risk, many started to actively seek to shorten the duration of their portfolios. Also, there’s a question about the evaluation horizon for funds. You rarely see results before a GP comes back with their next fund, and in a lot of cases, the evaluation horizon stretches longer than people’s attention span or tenure at an institution. This principal-agent problem is a big issue.

    To be sure, some risk appetite is seeping back into the market now, but people are asking hard questions about how long it takes to see distributions. Indeed, we’re seeing more interim liquidity, but seeing companies stay private longer makes it harder for the PE portfolio manager to make the case for VC in the Monday meeting at a multi-asset class pool of assets.

    —–

    New Fundings

    Airbnb, the six-year-old, San Francisco-based home-sharing company, has officially closed a new round of funding, shows an SEC filing first flagged by VentureBeat. The filing, which shows the round closed with $475 million, doesn’t list any new investors, including TPG Growth,Dragoneer Investment Group, and T. Rowe Price, all of which were separately reported to be involved with the financing.

    Scytl, a 13-year-old, Barcelona-based maker of secure electronic voting technology, has tacked on $44 million to a round it began raising in April. The money, from Vy Capital, Adams Street Partners and Industry Ventures, brings the total round to $104 million. Earlier participants included Vulcan Capital, SAP Ventures, Balderton Capital, Nauta Capital and Spinnaker. Altogether, Scytl has raised $113.2 million, shows Crunchbase.

    WearYouWant, a three-year-old, Bangkok-based fashion retail site, has raised $1.5 million in Series A funding, reports TechCrunch. The round was led by Digital Media Partners and Japanese e-marketing firm OPT SEA. Other investors include IMG Investment Partners and WearYouWant co-founder Julien Chalte.

    —–

    New Funds

    German magazine-publishing giant Bauer Media has been investing in more digital media startups, and today, it announced Bauer Venture Partners, a new fund with $134 million set aside to invest in startups over the next decade. Created alongside VC Thomas Preuss, late of Neuhaus Partners, the fund will invest in European tech startups at a range of stages, reports GigaOm.

    —–

    IPOs

    Loxo Oncology, a year-old, Stamford Ct.-based company that develops targeted small molecule therapeutics to treat cancer in genetically defined patient populations, went public on Friday, selling 5.3 million shares at $13 a piece. The stock closed at the same price. The company’s private investors include Aisling Capital, OrbiMed, Array BioPharma, AI Loxo Holdings, and New Enterprise Associates.

    Mobileye, a 15-year-old, Har Hotzvim, Israel-based company whose software algorithms and camera-based technology helps drivers see and manage traffic risks, had a promising public market debut Friday. Its shares, priced at $25 a piece, ended their first day at $37. Bloomberg has more here. The company’s private investors include Goldman Sachs, Fidelity, Enterprise Holdings, and Blackrock.

    —–

    Exits

    Caviar, a two-year-old, San Francisco-based food delivery service whose app lets users track their order on a map, is reportedly being acquired by the payments company Square for $90 million in stock. TechCrunch had reported on the talks last month, writing the Caviar would be sold to Square for up to $100 million. The official announcement is expected this week.

    —–

    People

    Shiva Rajaraman, the executive in charge of YouTube‘s consumer products, is headed to Spotify, reports Recode. According to Recode’s report: “Rajaraman’s departure is notable for multiple reasons, but the most obvious is that one of his jobs was to shepherd YouTube’s long-delayed music subscription service. And now he’s headed to the world’s biggest music subscription service.”

    Pinterest cofounder Evan Sharp talks to the Atlantic about when he knew he had something bigger than a bookmarking site. “You build something and it’s like, what can I build on top of that and what can I build on top of that and what can I build on top of that. Great companies, I think, are the ones that see what they’ve built and can build on top of it and iterate their product.”

    Wealth managers are increasingly enlisting spy tools to map portfolios. The New York Times has more here.

    —–

    Job Listings

    Nike is looking for a director of business development for its “innovation” unit to research, source, evaluate, and model partnership opportunities across the company, including, footwear, apparel, equipment, materials science, exploration, and athlete research. The job is in Portland, Or.

    —–

    Essential Reads

    Yelp has the power to make or break proprietors, both financially and, apparently, psychologically. Now, an upscale hotel in Hudson, Ny., is fighting back by charging couples who book weddings at its venue $500 for every bad Yelp review posted online by their guests.

    Here are some of the terrifying possibilities that have Elon Musk worried about artificial intelligence.

    Drone use is outpacing regulations in New York.

    —–

    Detours

    The power of a round face.

    NFL players’ stunning evolution since the organization’s 1920 founding.

    Quite a whisky advertisement: “The Gentlemen’s Wager,” a short film from Johnnie Walker starring Jude Law.

    —–

    Retail Therapy

    Vertical dopp kit.

    Five great sets of stationary, for those times when email just won’t cut it.

    Connie

  • LP Chris Douvos on the (Still) Difficult Case for VC

    case full o cashBy Semil Shah

    Chris Douvos is a rare animal — an LP who doesn’t shy from expressing his opinions publicly.

    Since 2011, Douvos has been a managing director with Venture Investment Associates, a fund of funds group that commits capital to venture capital, growth capital, and private equity groups. Douvos worked previously for TIFF (The Investment Fund for Foundations) and the endowment for Princeton University, “despite having not one, but two degrees from Princeton’s bitter rival, Yale,” as he says at his personal blog. We caught up last week for an email chat, part of which we’ll run separately later this week.

    Are you the only LP who blogs? Do you think other LPs will and/or should in the future?

    I think I was the most prolific blogger. Some others had tried it, but it’s time-consuming to keep it up; I’m not writing as much as I’d like nowadays, either, so I’ve got to sharpen the pencil again. Too many topics, not enough time! It’s also tricky for LPs because part of the voodoo we do is done in the shadows. We’re in an information business and knowledge is a scarce currency There’s a real “close to the vest” mentality and LPs are always glad to share their second-best ideas, but that’s about it. I’d be surprised if many LPs pick up the blogging standard, as a result.

    What’s the bull and bear LP view on the rise of equity crowdfunding and platforms such as AngelList, for example?

    I love crowdfunding and think that AngelList Syndicates has the opportunity to be massively disruptive to the funds world. I’m an investor in AngelList’s Maiden Lane fund and am watching what happens there very closely. My neighbors in Palo Alto are building a crowdfunding platform for real estate that’s really getting traction. There’s going to be evolution in all this stuff, of course, but having a front row seat is pretty exciting; after all, sometimes, we make the road by walking.

    As for the the broader LP world, it’s hard to say if there’s really a bull or bear view, as most LPs are still watching to see how some of this stuff shakes out. It’s more of a curiosity at the moment. Also, beyond [Bay Area] area codes, not that many people are really thinking about this stuff yet. As LPs, we’re trained to be patient, have an extremely long horizon, and gather data. Also, most LPs tend to be very risk averse. Jeremy Grantham famously says that 90 percent of decisions in finance first take into account career risk, and I think that’s true. It’s hard to get LPs to think — much less act — at start-up speed. That’s not a knock, it’s may even be a compliment as too many people have been run over by steamrollers looking to pick up shiny new pennies. That’s particularly true in long-dated, illiquid asset classes like VC.

    Companies are staying private longer, especially the breakouts. How does that affect an LP’s strategy?

    Venture capital is already the longest-dated, furthest-out-of-the-money option that most institutions invest in. In a post-Lehman world, institutions realized that illiquidity wasn’t free; it carried a risk premium for a reason. And once these institutions had touched the hot coal of liquidity risk, many started to actively seek to shorten the duration of their portfolios. Also, there’s a question about the evaluation horizon for funds. You rarely see results before a GP comes back with their next fund, and in a lot of cases, the evaluation horizon stretches longer than people’s attention span or tenure at an institution. This principal-agent problem is a big issue.

    To be sure, some risk appetite is seeping back into the market now, but people are asking hard questions about how long it takes to see distributions. Indeed, we’re seeing more interim liquidity, but seeing companies stay private longer makes it harder for the PE portfolio manager to make the case for VC in the Monday meeting at a multi-asset class pool of assets.

    Connie

    ,

StrictlyVC on Twitter