• Eric Hippeau on His Firm’s New Fund and Where It’s Shopping Now

    Eric HippeauLerer Hippeau Ventures announced yesterday that it has closed its fourth seed-stage fund with $62 million, up from the $50 million it raised for its third fund. According to Eric Hippeau, one of the firm’s four managing directors, the firm plans to hire more support staff, and the initial checks it writes to startups will likely increase from between $300,000 and $600,000 to between $400,000 and $800,000. Little is changing structurally, though.

    What is shifting a bit is what interests the four-year-old, New York-based firm, whose bets include Warby Parker, Buzzfeed, and LiveIntent, among many others. Hippeau, a longtime venture capitalist and the former CEO of Huffington Post, told me more yesterday. Our chat has been edited for length.

    You’ve been out fundraising numerous times in your career. What’s it like out there right now?

    By design, we fundraise every 16 to 18 months, so it can’t be a long fundraising cycle. So it’s about a three-month-plus period [that we need to gather commitments]. We’re very fortunate in that we have very supportive existing [investors] who tend to reinvest with us. We do attract new LPs every time we raise a fund, so there’s a due diligence process with new LPs.

    What was important to the new LPs?

    Every fund has to have a point of view and a differentiated position to succeed; that’s what new LPs are looking for. In our case, a number of things differentiate us. We’re seed-first investors . . and 70 percent our investments are in New York, with the rest tending to be in Silicon Valley.

    I do think venture is increasingly intriguing to LPs; I think there’s recognition that something important is going on that’s more than just building technology for technology’s sake – that technology is, in fact, disrupting a huge number of sectors and touching people’s lives in a much broader way today than ever before and . . .creating new wealth. So if you have a unique proposition, it’s a good time to be talking with LPs.

    You’ve said that just two partners have to agree to move forward on a deal, partly because it would be more time-consuming otherwise. Are you having to make quick decisions right now? How would you characterize the pace of deal-making?

    Deal flow is the strongest I’ve seen since we started in 2010, both in terms of quantity and quality. In New York, things tend to slow down in the summer, which is fine; it gives us a chance to catch up on other things. But we’ve been seeing super-high-quality companies coming through.

    As seed investors, how much “there” should be there when you’re looking at a startup?

    It doesn’t have to have a finished product but we do need to see a product. There are always exceptions. If it’s a repeat entrepreneur, and someone we know well, [or] if it’s [a] [business-to-business] enterprise startup, the product doesn’t have to be as far along.

    Looking out six to 12 months, what might you be investing in that you’re less focused on today?

    I think we’ll look more at fin tech, because New York has a lot of relevant experience and because, for the most part, to this day, [fin tech] is built on proprietary technology, and our sense is that it will use the same consumer tech we use every day in our pockets.

    You have a lot of media investments as a firm. Can you share some general thoughts about the future of the news business? Do you think, like Marc Andreessen, that it will grow 10x or more from where it is today?

    We invested in content way before people on the West Coast did and [remain] very bullish on it. We believe, for example, that there’s a ton of new platforms that need native content. So if you look at Instagram or Snapchat or WhatApp or social mobile, all of these platforms are opportunities for people to consume more content, and those opportunities allow for new brands.

    We also start content companies ourselves, [among them the animal-themed site] TheDoDo and NowThis News, which are short-form videos on Instagram.

    Is content the dominant theme of your portfolio?

    People think it is because of the Huffington Post and investments like Buzzfeed. It actually represents less than 20 percent of our portfolio.

    Connie

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  • StrictlyVC: June 24, 2014

    Hi, happy Tuesday morning, everyone!

    —–

    Top News in the A.M.

    Google‘s Nest Labs is opening its platform to outside developers for the first time. It’s also sharing user information with Google for the first time, allowing Google to know when Nest users are at home or not.

    —–

    Relationship Science Trains Its Sights on the Venture Industry

    In February of last year, a New York-based company called Relationship Science pulled back the curtains from an online platform it has been developing since 2010, one that now features 3.5 million profiles of the world’s “decision-makers,” all of them mapped out to illustrate how they’re connected to one another and everyone else.

    Characterized as a “Rolodex for the 1 percent” by Dealbook, it’s not a directory that one is asked to join. Power players can’t remove themselves, either. Everything that Relationship Science uses is public data – some scraped from the Web, some from third-party data providers, and some turned up by some of its 500 employees in Indian and New York, who pore over SEC documents, campaign finance databases, annual reports and the like to create a graphical view of each individual and his or her “strong” to “weak” links to others.

    The big idea is to help businesses and nonprofits recruit, strike deals, raise money and sell stuff by arming them with more information about how to get to particular people. And nearly 450 clients – many on Wall Street – have bought into the vision, paying Relationship Science between $9,000 and “upward of six figures” a year for its competitive intelligence. Now, the company is looking to pull others into the fold, from political campaigns to sports franchises to more VCs, the company’s chief marketing officer, Josh Mait, told me yesterday.

    Relationship Science has already raised $90 million from investors, including billionaires Henry Kravis, Ken Langone, and Ron Perelman. Are you in the market again or will you be in the foreseeable future?

    I don’t have a crystal ball. I think we’ve raised a decent amount of money and that it’s given us the ability to build a sophisticated asset that can now be extended in a number of ways.

    The company doesn’t provide users with phone numbers or email addresses or a way to message anyone else on the platform, putting the onus on users to find creative ways to contact the people they research. Will that ever change?

    We don’t have contact information because we’d have a big fat spam machine otherwise. We made a purposeful decision to provide instead deep dossiers on people and companies and to let our clients – who are pretty sophisticated businesspeople – figure out how to act on it.

    What are some of the platform’s most-used features?

    One, called Pathfinder, allows you to run paths between any entity to any entity. Say I’m a partner at a VC firm, looking at a company and trying to reach potential investors. I might make a list of all my board members, which would provide me with more axis points to find relationships. Our search capabilities also help clients to do smart prospecting. If you want to hire someone with a particular criteria, it might turn up 15,000 individuals, but we can help you find people in that grouping who are just one degree [of separation] away from you. And we have news and alerts on the people most important to you, which isn’t always a news item in a publication but can be when someone sells a stock or makes a donation to a cause.

    Are you capturing people’s outside interests? I’d think that would be useful.

    We’re able to capture some interests and affiliations. I wouldn’t want to exaggerate it , though. It’s hard data to capture other than sporadically. We do allow clients to put in their own information, and when they come across someone’s profile, we’ll surface any commonalities they have with that person.

    VCs already have other options. Many might also argue that it’s not rocket science, figuring out who is connected to whom in the startup industry. It’s not nearly so big or opaque as Wall Street.

    I think you’re right about that perception. But I’d argue that any firm that’s looking for a competitive advantage should have a good handle on what their strongest relationships are — especially during critical moments when you want any edge you can get.

    —–

    New Fundings

    Bigtree Entertainment, a 15-year-old, India-based company that owns the online entertainment ticketing property BookMyShow, has raised $25 million from new investor SAIF Partners. Earlier investors Accel Partners and Network18 also participated in the round, which brings the company’s total funding to $43 million, according to Crunchbase.

    Cargomatic, a 1.5-year-old, Venice, Ca.-based company that connects available truck drivers with companies needing to move freight (it calls itself the “Uber of trucking”), has raised $2.6 million led by Morado Ventures, SV Angel, and Sherpa Ventures, reports Venture Capital Dispatch. Winklevoss Capital, Acequia Capital, Structure Capital and several angel investors also participated in the round.

    CloudPhysics, a three-year-old, Mountain View, Ca.-based SaaS-based data management platform that helps corporate data centers run smoothly, has raised $15 million in Series C funding led by Jafco Ventures. Earlier investors Kleiner Perkins Caufield & Byers and Mayfield Fund also joined the round, which brings the company’s total funding to $27.5 million.

    Definiens, a 20-year-old, Munich, Germany-based pathology image-analysis company, has raised $20 million in new funding led by Wellington Partners. Earlier investors Gilde Healthcare Partners, Cipio Partners, and TVM Capital also joined the round. The company has raised at least $33.3 million to date, shows Crunchbase.

    Grand Rounds, a three-year-old, San Francisco-based startup that provides medical second opinions online, has raised $40 million in Series B funding led by Greylock Partners. Earlier investors Venrock and Harrison Metal also participated in the round, which brings the company’s total funding to $51 million. Re/code has more on the company here.

    Housing.com, a two-year-old, Mumbai, India-based online real estate portal that helps people rent and buy homes, has raised $19 million in its fourth round of funding, from Helion Venture Partners, Nexus Venture Partners, and Qualcomm Ventures. It isn’t immediately clear how much the company has raised to date. (Sorry.)

    LIFX, a two-year-old, San Francisco-based company making a Wi-Fi enabled, multi-color LED light bulb, has raised $12 million in Series A funding led by Sequoia Capital. The company had also raised $1.3 million via a Kickstarter campaign in 2012.

    OwnerIQ, an eight-year-old, Boston, Ma.-based company that provides real-time media buying services to advertisers, has raised $11 million in funding led by existing investors in a round that was closed over two tranches, beginning in April. The company, which looks to have raised roughly $40 million to date, counts Kepha Partners, Longworth Venture Partners, Egan-Managed Capital, CommonAngels, Massachusetts Technology Development Corporation, and Atlas Venture among its backers.

    Passare, a 1.5-year-old, San Francisco-based startup that’s “simplifying end-of-life management” through an online portal where family and friends of the deceased can make funeral and travel arrangements, create online memorials and invite guests, has raised $6 million from a group of funeral homes, angel investors and the Abilene, Tx.-based insurance company Funeral Directors Life Insurance Company. The WSJ has the story.

    Patreon, a year-old, San Francisco-based subscription platform that enables fans and sponsors to support artists and creators, has raised $15 million in Series A funding led by Index Ventures, with participation from Alexis Ohanian, Sam Altman, David Marcus, Joshua Reeves and numerous other individual investors. TechCrunch has much more here.

    Phunware, a five-year-old, Austin-based company focused on creating mobile experiences for brands, including through mobile software development, has raised $30.7 million in Series E funding led by Firsthand Technology Value Fund. Other investors in the round included Fraser McCombs Ventures, Maxima Ventures, Wild Basin Investment, the Central Texas Angel Network, Cisco Systems, World Wrestling Entertainment, and Samsung Ventures. The company has now raised $48.3 million to date.

    RelayRides, a 5.5-year-old, San Francisco-based peer-to-peer car sharing marketplace that now focuses only on providing long-term (day-long, at least) rentals, has raised $25 million in Series B funding led by Canaan Partners. Earlier investors August Capital, Google Ventures and Shasta Ventures also participated in the round, which brings the company’s total funding to $44 million.

    Soundhawk, a 2.5-year-old, Cupertino, Ca.-based company that makes a “smart listening” system that looks like a Bluetooth headset to help people hear what they’re listening for in noisy environments, has raised $5.5 million in funding from tech manufacturing giant Foxconn Group. The WSJ has much more on the company here. Soundhawk had previously raised $5.7 million from True Ventures.

    Transifex, a 4.5-year-old, Menlo Park, Ca., and Athens, Greece-based startup that helps developers translate sites and apps into multiple languages quickly and inexpensively (comparatively), has raised $2.5 million in seed funding led by New Enterprise Associates. Other participants in the round included Toba Capital, Arafura Ventures, and several individual angel investors. More here.

    White Ops, a 1.5-year-old, New York-based company focused on online fraud detection (it says it isolates and eliminates bot-infected traffic), has raised $7 million in funding from new investors Paladin Capital Group and Grotech Ventures.

    —–

    IPOs

    Intersect ENT, an 11-year-old, Menlo Park, Ca., company that makes drug-eluting, self-expanding implants for use in surgery on patients with chronic sinusitis, has filed for an IPO. The company has raised at least $80 million over the years, shows Crunchbase. Its largest shareholders include U.S. Venture Partners, which owns 22.7 percent of the company; Kleiner Perkins Caufield & Byers, which owns 20.3 percent; PTV Sciences, which owns 14.7 percent; Norwest Venture Partners, which owns 12.8 percent; and Medtronic, which owns 6.8 percent.

    —–

    Exits

    99dresses, a four-year-old, New York-based platform whose app helped connect people wanting to buy and sell used clothing, is closing, according to its cofounder and CEO, Nikki Durki. The company, a Y Combinator alum, had raised an undisclosed amount of funding from Draper Associates, Persefon Ventures, and Fenox Venture Capital. Durki has written about her experience in shutting down the business on Medium, in a post titled, “My Startup Failed, and This is What It Feels Like.”

    A Little Market, a 5.5-year-old, Paris-based online marketplace for handmade items, has been acquired by its bigger U.S. peer Etsy for an undisclosed amount of money, reports TechCrunch. Etsy says the company is its “sixth and largest acquisition to date.” A Little Market will continue to operate independently. Etsy has raised $97.3 million in funding from Accel Partners, Union Square Ventures, Index Ventures and other investors.

    —–

    People

    The Breakthrough Prize Foundation, funded by a group of high-profile Silicon Valley luminaries, including Mark Zuckerberg and Yuri Milner, has named five winners of its first mathematics prize. Re/code has the list here.

    Shawn Atkinson, an attorney in the venture capital practice of the international law firm Edwards Wildman Palmer, is leaving to join Orrick, Herrington & Sutcliffe. Edwards Palmer has reportedly struggled to grow its business in recent years. Cooley is also reportedly among those firms looking to pick up the pieces; according to the Global Legal Post, the firm is interested in recruiting senior lawyers from Edwards Wildman in order to launch a London office.

    Yahoo CEO Marissa Mayer is somewhat famous for keeping people waiting. Still, as the WSJ reports, appearing two hours late last week for a private dinner in Cannes that was organized expressly for Mayer and ad execs from major companies, including Chobani, MillerCoors, and Mondelez International, was an especially bad move. At least one CEO left before Mayer arrived. Another executive at the dinner tells the WSJ: “It is another instance where she demonstrated that she doesn’t understand the value of clients, ad revenue or agencies.” (VC Hunter Walk, who worked with Mayer for numerous years at Google, tweeted in response to the story, “Hey ad exec who leaked the Marissa story. At least have guts to go on record w WSJ if you’re gonna throw mud.”)

    —–

    Job Listings

    Tamr, a Cambridge, Ma.-based company that announced $16 million in funding last month from Google Ventures and NEA, has just opened a San Francisco office and is looking for business development pros, among other things. (Sorry we don’t have a better link for you; we’re told you should just email the company.)

    —–

    Essential Reads

    Is time spent a better metric than pageviews? Upworthy says it is, and it’s opening up its code for “attention minutes” to anyone who wants to use it.

    Why Twitter and Facebook ads aren’t effective.

    A recent study out of HBS finds that venture capitalists have a strong tendency to team up with other VCs whose ethnic and educational backgrounds are similar to their own – a tendency that’s lousy for business.

    —–

    Detours

    From Wired: A summer binge-watching guide to “Arrested Development.”

    The most-connected New Yorkers.

    “Star Wars,” recut into a modern trailer.

    No, no, no, no.

    —–

    Retail Therapy

    James Nestor’s “Deep,” for the beach.

    The Alen 68 yacht, for the water.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • Relationship Science Trains Its Sights on the Venture Industry

    relsciIn February of last year, a New York-based company called Relationship Science (RelSci) pulled back the curtains from an online platform it has been developing since 2010, one that now features 3.5 million profiles of the world’s “decision-makers,” all of them mapped out to illustrate how they’re connected to one another and everyone else.

    Characterized as a “Rolodex for the 1 percent” by Dealbook, it’s not a directory that one is asked to join. Power players can’t remove themselves, either. Everything that Relationship Science uses is public data – some scraped from the Web, some from third-party data providers, and some turned up by some of its 500 employees in Indian and New York, who pore over SEC documents, campaign finance databases, annual reports and the like to create a graphical view of each individual and his or her “strong” to “weak” links to others.

    The big idea is to help businesses and nonprofits recruit, strike deals, raise money and sell stuff by arming them with more information about how to get to particular people. And nearly 450 clients – many on Wall Street – have bought into the vision, paying Relationship Science between $9,000 and “upward of six figures” a year for its competitive intelligence. Now, the company is looking to pull others into the fold, from political campaigns to sports franchises to more VCs, the company’s chief marketing officer, Josh Mait, told me yesterday.

    Relationship Science has already raised $90 million from investors, including billionaires Henry Kravis, Ken Langone, and Ron Perelman. Are you in the market again or will you be in the foreseeable future?

    I don’t have a crystal ball. I think we’ve raised a decent amount of money and that it’s given us the ability to build a sophisticated asset that can now be extended in a number of ways.

    The company doesn’t provide users with phone numbers or email addresses or a way to message anyone else on the platform, putting the onus on users to find creative ways to contact the people they research. Will that ever change?

    We don’t have contact information because we’d have a big fat spam machine otherwise. We made a purposeful decision to provide instead deep dossiers on people and companies and to let our clients – who are pretty sophisticated businesspeople – figure out how to act on it.

    What are some of the platform’s most-used features?

    One, called Pathfinder, allows you to run paths between any entity to any entity. Say I’m a partner at a VC firm, looking at a company and trying to reach potential investors. I might make a list of all my board members, which would provide me with more axis points to find relationships. Our search capabilities also help clients to do smart prospecting. If you want to hire someone with a particular criteria, it might turn up 15,000 individuals, but we can help you find people in that grouping who are just one degree [of separation] away from you. And we have news and alerts on the people most important to you, which isn’t always a news item in a publication but can be when someone sells a stock or makes a donation to a cause.

    Are you capturing people’s outside interests? I’d think that would be useful.

    We’re able to capture some interests and affiliations. I wouldn’t want to exaggerate it , though. It’s hard data to capture other than sporadically. We do allow clients to put in their own information, and when they come across someone’s profile, we’ll surface any commonalities they have with that person.

    VCs already have other options. Many might also argue that it’s not rocket science, figuring out who is connected to whom in the startup industry. It’s not nearly so big or opaque as Wall Street.

    I think you’re right about that perception. But I’d argue that any firm that’s looking for a competitive advantage should have a good handle on what their strongest relationships are — especially during critical moments when you want any edge you can get.

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

    Connie

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  • StrictlyVC: June 23, 2014

    Hi, everyone! We realize we’re a little late today — we’re still catching up after a busy weekend.

    If you missed StrictlyVC on Friday (a couple of readers let us know it landed in their spam folders), it’s here.

    —–

    Top News in the A.M.

    Oracle is buying Micros Systems, which makes software for restaurants and hospitality providers, in its biggest deal since acquiring Sun Microsystems five years ago.

    —–

    Julie Wainwright on Lessons in E-Commerce

    Julie Wainwright is an e-commerce pioneer. In the late ‘90s, she was the chief executive of Berkeley Systems, a maker of popular games and computer screen savers; Reel.com, which was one of the first companies to sell videos online; and the short-lived retailer company Pets.com (best remembered for its legendary sock puppet marketing campaign).

    She’s still at it, leading the RealReal, a fast-growing online consignment business she began building in 2011 and that StrictlyVC visited last week for a profile. As part of that sit-down, we asked Wainwright to share some of what she has learned through her online selling adventures. Our chat has been edited for length.

    The RealReal has raised $43 million from investors. Do you think your personal brand made a difference early on?

    I don’t know about that. To the people who already knew me, absolutely. But coming into new VCs, I’m not like them in any way. I’m a woman, and I’m an older woman. One even said [whispering], “A lot has changed.” And I was like, “Really? Basic business has changed? I don’t think so. Tactics change, but not business fundamentals.”

    Very broadly, what are the advantages and disadvantages of being a veteran of this industry?

    Youth has so many advantages, because you don’t know what you don’t know, and you take risks and put yourself in situations that, if you had a broader perspective or more learning, you wouldn’t. And great breakthroughs can come through when you don’t have fear. But every business goes through a trial period, and that’s where you need a playbook and that’s where I’d say you really enjoy the beauty of experience. I have a playbook, and I’ve hired people with deep playbooks, so early on, we were already a business with great potential.

    Pets.com raised your profile for better or worse. What are some things you learned from that experience?

    The key lesson I learned there is that strategic investors’ interests and your company’s interests are not always aligned.

    I already knew that anything relating to commodities, Amazon was going to do better and cheaper, even back in 1997. I’d been watching them. I’d been to their warehouse. I’d seen their infrastructure. They were so far ahead. So when I was brought in to lead Pets.com, I said the only way I’ll do it is if Amazon is a strategic investor in the business. And Amazon put in $60 million. And I thought that because they put in so much money that we had a safe harbor and that they’d just end up buying this company; I thought we’d create this category, which was huge, and then just merge with them. Drugstore.com thought the same thing.

    And they copied both of you instead.

    Maybe they just ran the numbers and decided it was cheaper than buying. They did the same thing with [the daily deals business] LivingSocial. Now Amazon is doing their own daily deals.

    The market turned on you at Pets.com. What happens if that happens again now?

    We have a very capital-efficient business here. I don’t have the same issues that any other e-commerce-built business that I know of does. Because our goods come from our seller and buyer base, and we have a huge repeat rate, we’d be okay even if we couldn’t get more financing. We’d just have slower growth.

    What do you think other e-commerce companies, including Fab and One Kings Lane, are doing wrong?

    First, I think both are doing a lot right. As a consumer, I love One Kings Lane. I’d say, looking at things from a very superficial level, that Fab overextended its growth by moving too quickly. It also has a lower average price point, and to make money at a lower price point, you have to be phenomenally efficient. For example, the average selling price point of Zulilly [the daily deals site for mothers and children] is $50, and Zulilly is making money. I bet Fab’s [average selling price point] is close and it’s not. The difference is Fab was really interested in expanding internationally and bought all these companies and had to merge them all and it didn’t have its own manufacturing facilities, then switched to its own pick, pack, and ship [model] . . . It’s just done so much in three years, whereas Zulilly has always focused on its products and how to get cost-efficient.

    You think it’s too late for Fab?

    My guess is that Fab can do it. It has to get really focused, though.

    —–

    New Fundings

    AnyPerk, a two-year-old, San Francisco-based company that helps its customers create and distribute employee perks and incentives, has raised $3 million in seed funding, reports Venture Capital Dispatch. Vegas Tech Fund, FundersClub and Vayner/RSE led the round, joined by more than ten other investors. The company is a Y Combinator alum.

    Benvenue Medical, a 10-year-old, Santa Clara, Ca.-based spine tech startup, has raised $40 million in Series E funding, plus $24 million in debt financing, InterWest Partners led the equity round, with DeNovo Ventures, Domain Associates, Technology Partners and Versant Ventures participating. Silicon Valley Bank was the sole debt provider. MedCity News has more here.

    Box, the nine-year-old, Los Altos, Ca.-based online-storage company, is in talks to raise a round of funding from private-equity firm TPG, three months after filing for IPO. Box is unprofitable because it spends heavily on salespeople, marketing and expansion into more countries, notes the WSJ, which raised the specter on Friday that “though still very unlikely,” without a cash infusion, “Box could run out of money” some time next year. Box has raised a total of more than $400 million from roughly a dozen venture firms, including Draper Fisher Jurvetson, General Atlantic, Bessemer Venture Partners and Emergence Capital Partners.

    Dimension Therapeutics, a 1.5-year-old, Cambridge, Ma.-based gene therapy company focused on developing novel treatments for rare diseases, has raised $30 million in funding from new investor OrbiMed, along with earlier investor Fidelity Biosciences. The company has now raised $35 million altogether.

    Dual Therapeutics, a year-old biotechnology startup that spun out of University Hospitals of Cleveland last year, is raising $7.5 million, according to an SEC filing. According to MedCity News, the company is currently operating out of Harlem Biospace, a life science incubator that opened in New York last year. It’s developing therapeutics for prostate cancer, lung cancer and acute lymphoblastic leukemia.

    Dynamic Yield, a three-year-old, Tel Aviv, Israel-based developer of a real-time website optimization and personalization platform, has raised $12 million in Series B funding led by Marker, with participation from existing investors Bessemer Venture Partners, ProSiebenSat.1 Media AG, Innovation Endeavors, and the New York Times Co. The company has raised $14.2 million to date, shows Crunchbase.

    Inpria, a seven-year-old, Corvallis, Or.-based developer of high-resolution photoresists, has raised $1.45 million led by the Oregon Angel Fund. The capital comes on the heels of a separate, $7.3 million round of funding the company announced in February, led by Samsung Ventures, with participation from Intel Capital and Applied Ventures.

    ProjectManager, a six-year-old, Auckland, New Zealand-based maker of online project management software has raised $3.5 million in Series A funding led by New Zealand’s Zeus Management.

    Proterra, a 10-year-old, Greenville, S.C.-based maker of zero-emission-battery electric buses, has raised $30 million in Series D round led by earlier investors Kleiner Perkins Caufield & Byers and GM Ventures. The company had closed the second round of its $34 million Series C funding in January, led by new backer Tao Invest (the family firm of Nick and Joby Pritzker). The company has now raised $150 million to date, including from Edison Energy, Constellation Ventures, Mitsui & Co.,Vision Ridge Partners, Hennessey Capital and 88 Green Ventures.

    Scivantage, a 14-year-old, Jersey City, N.J.-based company that sells Web-based front and middle-office technologies to the financial services industry, has raised $20 million from earlier investors Brown Brothers Harriman Capital Partners and Edison Ventures. The round also included debt financing provided by Comerica Bank and ORIX Ventures.

    Skyhigh Networks, a two-year-old, Cupertino, Ca.-based company whose cloud-based security software helps companies monitor employees’ use of cloud computing services, has raised $40 million in Series C funding from earlier investors Greylock Partners and Sequoia Capital, which were joined by Salesforce. The company has now raised $66.5 million altogether. Dealbook has more here.

    Tanium, a 6.5-year-old, Berkeley, Ca.-based enterprise management startup that helps companies manage and secure the devices on their network via a Web brower, has raised $90 million from Andreessen Horowitz. It’s the company’s first venture investment, Re/code reports, citing a tweet by Marc Andreessen about the deal. In a separate tweet, Andreessen called Tanium’s technology a “breakthrough like we’ve never seen.” Orion Hindawi, who founded Tanium with his father, tells the WSJ that Tanium offers a near-instant snapshot of potentially malicious software in corporate-computing networks, then lets employees wipe out the unwanted software remotely.

    VocalIQ, a three-year-old, Cambridge, England-based company whose software aims to improve dialogue interactions in voice-activated systems, has raised $1.27 million in seed funding. The round was led by Amadeus Capital Partners, with participation from Cambridge Enterprise. The company is a spin-out of the University of Cambridge’s Dialogue Systems Group.

    Webydo, a four-year-old, Tel Aviv-based software as a service startup whose technology helps professional graphic designers to create sites on fly, without manual coding, has raised $7 million in Series B funding led by the crowdfunding platform OurCrowd, along with Magna Capital Partners and unnamed strategic investors. Webydo has raised $9.7 million to date. TechCrunch has more here.

    Yooli, a 1.5-year-old, Beijing-based person-to-person lending platform, has raised “tens of millions of dollars” in Series B financing led by Morningside Ventures, reports TechNode. The company reportedly raised $10 million in Series A funding from Softbank China Venture Capital last year.

    —–

    New Funds

    On Friday, Cisco Canada announced the Cisco Canada Innovation Program, a strategy to invest $150 million in Canadian dollars to accelerate innovation in Canada. The company said it plans to invest across a mix of technologies, businesses, and investment stages over the next 10 years, and that it will “actively engage with investment partners and start-ups to mentor and develop new leaders and innovators.”

    Khosla Ventures, the 10-year-old, Sand Hill Road firm, is raising a fifth fund, according to an SEC filing that lists the fund’s target as $1 billion and states that, as of Friday, the first sale has yet to occur.

    —–

    IPOs

    Atara Biotherapeutics, a two-year-old, Brisbane, Ca.-based company that’s developing therapies for muscle wasting conditions, kidney disease and cancer, has filed to go public. Among the company’s biggest shareholders, Kleiner Perkins Caufield & Byers owns 18.6 percent of the company; Domain Associates owns 13.2 percent; DAG Ventures owns 13.2 percent; Baupost Group owns 11.8 percent; Inmobiliaria Carso S.A. de C.V. (the family trust of billionaire Carlos Slim) owns 9.3 percent; Celgene Corporation owns 8.7 percent; and Amgen owns 8.6 percent.

    GoPro, the 11-year-old, San Mateo, Ca.-based maker of those wearable cameras that are so popular with athletes, is set to price almost 18 million shares of stock in a range of $21 to $24 on Wednesday, with the company’s stock hitting the market Thursday. GoPro is looking at raising about $400 million, which could value the company at $2.8 billion.

    Ocular Therapeutix, an eight-year-old, Bedford, Ma.-based biopharmaceutical company that’s developing therapies for diseases and conditions of the eye, including a gel to treat glaucoma, has filed to go public. Its biggest shareholders include Versant Ventures, which owns 19 percent of the company; Polaris Partners, which owns 16.2 percent; SV Life Sciences, which owns 15.1 percent; CHV II, which owns 12.5; and Baxter Healthcare, which owns 5.3 percent.

    —–

    Exits

    Baarzo, a year-old, Palo Alto-based video discovery technology that claims to help users find specific moments in a video, is in talks to be acquired by Google, reports TechCrunch. Baarzo was part of StartX, the non-profit acclerator for Stanford alums.

    Dropcam, the popular, San Francisco-based home monitoring camera startup, is being snapped up by Google-owned Nest Labs, maker of smart thermostats and smoke detectors in a $555 cash deal. Dropcam will be folded into Nest’s brand and its employees will head to Nest’s headquarters in Palo Alto, Re/code had reported on Friday. Venture capitalist Trae Vassallo — who led Kleiner Perkins Caufield & Byers into Dropcam’s $30 million Series C last summer and joined its board — tells StrictlyVC of the deal: “It’s always bittersweet to sell a company that’s growing so fast, but the combined vision is extraordinary.” Dropcam had raised roughly $48 million altogether, including from Mitch Kapor, Ben Narasin, David Cowan, Bradley Horowitz, Felicis Ventures, Bay Partners, Accel Partners, Menlo Ventures, and Institutional Venture Partners.

    LiveLook, a seven-year-old, Matawan, N.J.-based company that creates co-browsing and screen sharing technologies primarily for customer service interactions, is being acquired by Oracle for an undisclosed amount. According to VentureWire, Rose Tech Ventures, New Vantage Group, New York Angels, and the state of New Jersey’s Edison Innovation Fund were among LiveLook’s investors.

    TalkTo, a 3.5-year-old, Cambridge, Ma.-based smartphone app that helps its users correspond with local businesses via text messages, has been acquired by the still-private, San Francisco-based social media company Path for undisclosed terms. TalkTo had raised $3 million in 2012 led by Matrix Partners.

    —–

    People

    Businessweek politely asks: Is Marc Andreessen overdoing it with his torrents of tweets, streams that are “mostly rabid celebrations of technology”? Does he risk “turning his firm into a primary target” of those who already think Silicon Valley is tone deaf? Eh, says Andreessen to the outlet; he’s not worried about it. “This is running 1,000 to 1 in favor of what we are doing,” he says.

    Oliver Samwer of Rocket Internet, the German venture capital company behind dozens of online start-ups, told those gathered at a retail industry conference last week that e-commerce means certain doom for those who don’t get with the program.  “You only have stores because there was no Internet, but that does not mean there is a right to have a store,” he said, reportedly adding: “It will all move online, you will have 10 percent left that will not move online.”

    —–

    Job Listings

    Fidelity Growth Partners Asia is looking for an associate to work out of both Beijing and Shanghai.

    Also, Fenox Venture Capital and True Ventures are looking for summer interns in San Jose, and Palo Alto, respectively. Meanwhile,Zelkova Ventures is looking for an intern in New York.

    —–

    Happenings

    Google‘s annual two-day I/O technology conference takes kicks Wednesday at the Moscone Center in San Francisco. You can find more details here.

    —–

    Essential Reads

    Surprise: Snapchat‘s most popular feature isn’t snaps anymore.

    —–

    Detours

    I was a digital bestseller!

    A World Cup viewing guide for stay-at-home dads.

    The 10 “snobbiest” mid-size cities in America, per a ranking based on home prices, the number of private schools per capital, and so on.

    The best, and worst, paid jobs in America.

    —–

    Retail Therapy

    Grovemade desk collection, when you like things matchy-matchy. (It’s okay. We won’t judge you.)

    Connie

  • Julie Wainwright on Lessons in E-Commerce

    juliewainwrightJulie Wainwright is an e-commerce pioneer. In the late ‘90s, she was the chief executive of Berkeley Systems, a maker of popular games and computer screen savers; Reel.com, which was one of the first companies to sell videos online; and the short-lived retailer Pets.com (best remembered for its legendary sock puppet marketing campaign).

    She’s still at it, leading the RealReal, a fast-growing online consignment business she began building in 2011 and that StrictlyVC visited last week for a profile. As part of that sit-down, we asked Wainwright to share some of what she has learned through her online selling adventures. Our chat has been edited for length.

    The RealReal has raised $43 million from investors. Do you think your personal brand made a difference early on?

    I don’t know about that. To the people who already knew me, absolutely. But coming into new VCs, I’m not like them in any way. I’m a woman, and I’m an older woman. One even said [whispering], “A lot has changed.” And I was like, “Really? Basic business has changed? I don’t think so. Tactics change, but not business fundamentals.”

    Very broadly, what are the advantages and disadvantages of being a veteran of this industry?

    Youth has so many advantages, because you don’t know what you don’t know, and you take risks and put yourself in situations that, if you had a broader perspective or more learning, you wouldn’t. And great breakthroughs can come through when you don’t have fear. But every business goes through a trial period, and that’s where you need a playbook and that’s where I’d say you really enjoy the beauty of experience. I have a playbook, and I’ve hired people with deep playbooks, so early on, we were already a business with great potential.

    Pets.com raised your profile for better or worse. What are some things you learned from that experience?

    The key lesson I learned there is that strategic investors’ interests and your company’s interests are not always aligned.

    I already knew that anything relating to commodities, Amazon was going to do better and cheaper, even back in 1997. I’d been watching them. I’d been to their warehouse. I’d seen their infrastructure. They were so far ahead. So when I was brought in to lead Pets.com, I said the only way I’ll do it is if Amazon is a strategic investor in the business. And Amazon put in $60 million. And I thought that because they put in so much money that we had a safe harbor and that they’d just end up buying this company; I thought we’d create this category, which was huge, and then just merge with them. Drugstore.com thought the same thing.

    And they copied both of you instead.

    Maybe they just ran the numbers and decided it was cheaper than buying. They did the same thing with [the daily deals business] LivingSocial. Now Amazon is doing their own daily deals.

    The market turned on you at Pets.com. What happens if that happens again now?

    We have a very capital-efficient business here. I don’t have the same issues that any other e-commerce-built business that I know of does. Because our goods come from our seller and buyer base, and we have a huge repeat rate, we’d be okay even if we couldn’t get more financing. We’d just have slower growth.

    What do you think other e-commerce companies, including Fab and One Kings Lane, are doing wrong?

    First, I think both are doing a lot right. As a consumer, I love One Kings Lane. I’d say, looking at things from a very superficial level, that Fab overextended its growth by moving too quickly. It also has a lower average price point, and to make money at a lower price point, you have to be phenomenally efficient. For example, the average selling price point of Zulilly [the daily deals site for mothers and children] is $50, and Zulilly is making money. I bet Fab’s [average selling price point] is close and it’s not. The difference is Fab was really interested in expanding internationally and bought all these companies and had to merge them all and it didn’t have its own manufacturing facilities, then switched to its own pick, pack, and ship [model] . . . It’s just done so much in three years, whereas Zulilly has always focused on its products and how to get cost-efficient.

    You think it’s too late for Fab?

    My guess is that Fab can do it. It has to get really focused, though.

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

    Connie

    ,

  • StrictlyVC: June 20, 2014

    StrictlyVC is so very happy it’s Friday! Have a terrific weekend, everyone, and we’ll see you Monday.:)

    —–

    Top News in the A.M.

    Apple‘s smartwatch, which could reportedly hit the market as early as October, will likely come in multiple screen sizes and feature more than 10 sensors, including ones to track health and fitness, reports the WSJ.

    —–

    Currency Expert: Bitcoin “Not a Clear Winner”

    Jesse Powell was once a hard-core gamer who spent his teen years playing the trading card game “Magic: The Gathering” in tournaments around the country. The 33-year-old has become somewhat of a currency specialist since. Back in March 2011, while the rest of the tech world was obsessing over Facebook’s valuation, Powell was shutting down his gaming forum and e-commerce business to focus on Bitcoin, eventually founding the venture-backed cryptocurrency exchange Kraken.

    Kraken trades a variety of “coins,” including Litecoin, Dogecoin, Namecoin, Ven and Ripple. But the company, which makes its money off exchange fees, receives the bulk of its revenue by trading 1,000 to 2,000 Bitcoin per day (valued at between $600,000 and $1.2 million, based on its current price of $601).

    That ratio could change, Powell told me yesterday in an interview that’s been edited for length.

    When you were building Kraken, did you anticipate that Bitcoin would become so much more dominant than other virtual currencies?

    I didn’t know if Bitcoin would be the currency to end all currencies. I thought it might be version 1.0 and that somebody might come out with something much better. It was hard to know if it’d be the Facebook of currencies or the MySpace, so we wanted to be currency agnostic and be able to capture the market, whichever way it developed.

    Do you have your answer now?

    I’m not nearly as bullish on Bitcoin as I was a year ago. There are a lot of good-looking new currencies coming out. Bitcoin has a huge network effect right now and a brand name, but technically it has some problems. The mining lately has been a big problem; consolidation is a big risk for the whole system.

    You’re talking that mining pool that has, numerous times, provided more than half the computational power needed to mine new coins. Can you explain what a mining pool is to readers and why that’s such bad news?

    With mining, you’re basically crunching numbers, solving puzzles with your computing power and coding; it’s the way you prove that you’re securing the network, that you’re auditing the transaction. It’s kind of like, because so much auditing [goes into each transaction] it would be impossible for someone to scam the system. But if someone controls more than 50 percent of all Bitcoin mining taking place, that person or group could have a majority vote and basically dictate what happens. So someone could spend Bitcoin, and you could say, “No, my 51 percent vote says you didn’t” in order to sell the same Bitcoin twice.

    Why do people use mining pools in the first place?

    It’s like a lottery pool. People compete to mine the coins, with a winner rewarded with 25 of them every 10 minutes. So people tend to pool their mining efforts to increase their likelihood of getting some portion [of those Bitcoin], and they often want to be part of the biggest pool to increase their odds, even though [what they’d win] would be less valuable [divided up among more people]. But a pool that can tip past 50 percent is a big problem.

    Wouldn’t miners be hurting themselves if they tried scamming the network?

    Financially, it’s not in their best interest, because people would stop using it. But, say, China directed all the fabs in the country to stop producing chips for Apple and start producing Bitcoin mining chips. A country does have the ability to destroy bitcoin.

    And no one could do anything about it?

    There are things that could be done, changes to the way that mining is done that could make China’s miners obsolete overnight. But other coins that are emerging don’t have this vulnerability, like Ripple [which is] why I could see another currency like Ripple or [the next-generation cryptocurrency] Ethereum emerging as the winning currency – or maybe we’ll just have 100 different currencies.

    Do you have a financial stake in Ripple?

    Yes, I am an investor in Ripple Labs, and I have some [of its] currency.

    It may be that Bitcoin lives on as a store of value, like gold, but isn’t used in day-to-day transactions. But I think there’s enough new interesting stuff that’s built off the Bitcoin idea that it’s not a clear winner.

    —–

    New Fundings

    Algolia, a 1.5-year-old, San Francisco-based company that makes a developer-friendly SaaS API for database search, has raised an additional $1.2 million in seed funding led by Storm Ventures. The company has now raised $2.8 million altogether, including from Y Combinator, 500 Startups, Alven Capital, Index Ventures and Point Nine Capital.

    Aspire Health, a three-year-old, Nashville-based palliative care start-up, has raised an undisclosed amount of Series B funding from BlueCross BlueShield Venture Partners, the insurance company’s investment arm, which is managed by the Chicago-based firm Sandbox Industries. Aspire was co-founded by former Republican Senator Bill Frist; it sets up house-call physician practices to treat the sick, in person and over the phone. The Tennessean has more here.

    Compliant Innovations, a 1.5-year-old, Sunnyvale, Ca.-based company behind a case collaboration app that let’s surgeons and care teams communicate about patient care, has raised an undisclosed amount of Series A funding from Lifeforce Ventures and Attractor Ventures.

    ieCrowd, a 3.5-year-old, Riverside, Ca.-based company that buys and tries to commercialize intellectual property from university research labs, has raised $2.2 million in new seed funding from undisclosed investors.

    JHL Biotech, a two-year-old, Taiwan-based company that sells contract manufacturing services to companies developing and commercializing biologic medicines in Asia, has raised $35 million in Series B funding led by new investors Milestone Capital and unnamed Taiwanese venture capitalists and individuals. Earlier investors, including China Development Industrial Bank, Biomark Capital and Kleiner Perkins Caufield & Byers, also participated in the round.

    Light Chaser Animation Studios, a 1.5-year-old, Beijing-based company that makes animated films, has raised $20 million in Series B funding led by GGV Capital and Chengwei Capital, with participation from Hillhouse Capital and earlier investor IDG Capital Partners.

    MiTu, a two-year-old, Culver City-based developer of streaming digital content for the Latino market, has raised $10 million in Series B funding led by Upfront Ventures. The company’s other investors included The Chernin Group, Advancit Capital, and Machinima co-founder Allen DeBevoise. MiTu says it has 400 million monthly video views, 40 million subscribers and 1,200 video creators creating content for its channels. Variety wrote about it last year.

    Navitor Pharmaceuticals, a new, Cambridge, Ma.-based biotech company that’s exploring uses of the so-called mTORC1 pathway, has raised $23.5 million from Polaris Partners, Atlas Venture, and Johnson & Johnson Development Corp. The Boston Business Journal has muchmore here.

    Review Trackers, a two-year-old, Chicago-based service that helps businesses aggregate and manage online reviews about them, has raised $2 million in funding led by Milwaukee’s CSA Partners, with participation from American Family Ventures, Symphony Alpha Ventures and angel investor Jeff Rusinow.

    Saltside Technologies, a three-year-old, Gothenburg, Sweden-based online marketplaces platform aimed at emerging markets, has raised $25 million in funding, led by AB Kinnevik. The company now has operations in Sri Lanka, Bangladesh and Ghana, Africa. TechCrunch has more here.

    Siva Power, an eight-year-old, San Jose, Ca.-based maker of solar panels has closed on $15 million in new funding from the Chinese city of Wuxi and earlier investors Trident Capital, DBL Investors, and Acero Capital Management.

    Sidecar Interactive, a four-year-old, Philadelphia-based company that has developed an automated online marketing platform, has raised $3.1 million in new venture funding led by Osage Venture Partners. The company has reportedly now raised $8.1 million to date, including from NextStage Capital, Innovation Ventures, Gabriel Investments, Ben Franklin Technology Partners, Mid-Atlantic Angel Group, Robinhood Ventures, and ARC Angel Group.

    TouchofModern, a two-year-old, San Francisco-based e-commerce website geared toward male customers, has raised $14 million in Series B financing led by Partech Ventures. Other participants in the round included Great Oaks Venture Capital, Lucas Venture Group, Silicon Valley Bank and earlier investors Hillsven Capital and Floodgate. The company has raised $17 million to date, shows Crunchbase. PandoDaily has more here.

    Tyrogenex, an eight-year-old, West Palm Beach, Ca.-based biotechnology company researching and developing treatments for solid tumors, has raised $15 million in Series D financing from Brace Pharma, the U.S. investment company of EMS S/A, the largest pharmaceutical company in Brazil.

    —–

    New Funds

    Clarus Ventures, a nine-year-old, Cambridge, Ma.-based life sciences venture firm, has raised $234.2 million for its new fund, according to a new SEC filing. Clarus Ventures first registered a filing for the fund, which lists a target of $375 million, in February. At either the current or target size, the fund will be meaningfully smaller than Clarus’s last two funds. The firm closed its second, $660 million fund, in 2008 and its inaugural, $500 million, fund in 2005.

    Costanoa Venture Capital, a 2.5-year-old, Palo Alto, Ca.-based early-stage firm, is hoping to raise $135 million for its second fund, shows an SEC filing that states the first sale has yet to occur. The fund, Costanoa Venture Capital II, would be larger than the firm’s debut $100 million fund. Costanoa was founded by Greg Sands, formerly of Sutter Hill Ventures; in February, he added a second partner, Neill Occhiogrosso, who joined from an evergreen fund called Investor Growth Capital. It focuses primarily on cloud-based services — especially companies that focus on data and analytics.

    Palo Alto Venture Science, a new, Palo Alto, Ca.-based fund founded by former business-intelligence consultant Matt Oguz, is looking to raise $200 million for a new fund, reports Forbes. Oguz, like Google Ventures and a growing number of firms, has a more data driven-approach, telling Forbes that he has built a a scoring system for companies that looks at 13 variables, including “intellectual property” and “sales approach.” More here.

    Polaris Partners, the 18-year-old, Boston-based firm with offices in San Francisco and Dublin, Ireland, is raising a seventh fund and targeting $400 million for the effort, reports Fortune’s Dan Primack. The firm closed its sixth fund, a $375 million pool, in 2011. In what looks like a succession-related step, co-founders Jon Flint and Terry McGuire are now listed on Polaris’s site as founding partners, notes Primack, while four younger professionals — Dave Barrett, Brian Chee, Amir Nashant and Bryce Youngren — are listed as managing partners.

    —–

    IPOs

    Mobileye, a 15-year-old, Har Hotzvim, Israel-based company whose software algorithms and camera-based technology helps drivers see and manage traffic risks, has registered to go public, though it has yet to disclose how many shares it plans to offer and at what price range. The company has raised at least $515 million over the years, shows Crunchbase. Some of the company’s biggest shareholders include Goldman Sachs, which owns a 17.5 percent stake; Fidelity, which owns 7.8 percent; Enterprise Holdings, which owns 7.1 percent; and Blackrock, which owns 5.7 percent.

    —–

    Exits

    Alpental Technologies, a year-old, Seattle-based wireless communication startup started by former Clearwire engineers including Michael Hart and Pete Gelbman, has been acquired by Google for undisclosed terms. The company never publicly disclosed funding, but Geekwire had discovered an SEC filing last summer that showed it had raised $850,000 from investors. More here.

    mDialog, a nine-year-old, Toronto-based video advertising technology startup, has been acquired by Google for an undisclosed amount. MDialog had raised at least $8 million from investors, including Relay Ventures, shows Crunchbase.

    MasteryConnect, a 4.5-year-old, Salt Lake City-based maker of evaluation software that helps teachers assess their students’ performances, has acquired 3.5-year-old, Cambridge, Ma.-based education-technology peer Socrative for $5 million in a cash-and-stock deal. MasteryConnect previously raised $1.1 million in a seed round and $7.9 million in a Series A round led by NewSchools Venture Fund and Catamount Ventures. Socrative had raised $760,000 in seed funding led by True Ventures. The WSJ has more here.

    —–

    People

    Life sciences investor Steven Burrill was quietly removed from control of a $283 million venture capital fund back in March, reports Forbes. Burrill famously founded Burrill & Co., the 20-year-old, diversified merchant bank that does venture investing, investment banking, private equity, media, and events. Reportedly, in an inspection of the books and records of the venture fund by a financial advisory services firm, it was discovered that $19.2 million had been paid out to various affiliates of Burrill (the man, not the firm) in excess of what had been earned. Forbes reports that Burrill also failed to make nearly half a million dollars in capital contributions that were required under the firm’s partnership agreement with its investors. It was known that Burrill & Co. had hit on hard times in recent years. Now, it’s looking like a December piece in Xconomy about its woes merely scratched the surface.

    Kevin Rose of Google Ventures may have been looking to escape to Portland to get away from anti-tech protesters who began gathering outside his San Francisco home in early April. But Rose finds himself at the center of another controversy, after buying a Willamette Heights home that he now plans to demolish and replace with a new, modern home. According to the Oregonian, hundreds of neighbors have signed a petition asking him to leave alone the somewhat historic house, built in 1892 and “in very good condition,” according to a local real estate broker quoted in the article. “We did expect him to do a substantial remodel,” added the broker. “[B]ut you pay $1.3 million and tear a house down? In Portland? That doesn’t happen in Portland.” Rose has said he would donate the house’s materials to charity to be re-used; he has also apparently offered to sell the house back to its previous owners, who didn’t return a call from the paper.

    —–

    Job Listings

    Handybook, a two-year-old, New York-based company whose app connects users with on-demand housecleaners and home repair services (and that announced $30 million in funding last week), is looking for business development managers in Chicago and Toronto.

    —–

    Essential Reads

    In a unanimous decision, the Supreme Court has ruled that a series of banking patents didn’t cover a concrete software process but an abstract idea, potentially setting a stricter precedent for future patents.

    What Silicon Valley investors are using to track the Next Big Thing.

    —–

    Detours

    Life in the ’80s, as seen through old Sharper Image catalogs.

    Jeremy Meeks’s mugshot is going viral, “not because he was arrested on five weapons charges” in Stockton, Ca. but “because he’s very, very, handsome.”

    We’re a little tired right now, but we’re pretty sure this would be hilarious under any circumstance.

    —–

    Retail Therapy

    Ever wanted to measure your heartbeat through your derriere? Now you can (no pun intended).

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

  • Currency Expert: Bitcoin “Not a Clear Winner”

    BitcoinJesse Powell was once a hard-core gamer who spent his teen years playing the trading card game “Magic: The Gathering” in tournaments around the country. The 33-year-old has become something of a currency specialist since. Back in March 2011, while the rest of the tech world was obsessing over Facebook’s valuation, Powell was shutting down his gaming forum and e-commerce business to focus on Bitcoin, eventually founding the venture-backed cryptocurrency exchange Kraken.

    Kraken trades a variety of “coins,” including Litecoin, Dogecoin, Namecoin, Ven and Ripple. But the company, which makes its money off exchange fees, receives the bulk of its revenue by trading 1,000 to 2,000 Bitcoin per day (valued at between $600,000 and $1.2 million, based on its current price of $601).

    That ratio could change, Powell told me yesterday in an interview that’s been edited for length.

    When you were building Kraken, did you anticipate that Bitcoin would become so much more dominant than other virtual currencies?

    I didn’t know if Bitcoin would be the currency to end all currencies. I thought it might be version 1.0 and that somebody might come out with something much better. It was hard to know if it’d be the Facebook of currencies or the MySpace, so we wanted to be currency agnostic and be able to capture the market, whichever way it developed.

    Do you have your answer now?

    I’m not nearly as bullish on Bitcoin as I was a year ago. There are a lot of good-looking new currencies coming out. Bitcoin has a huge network effect right now and a brand name, but technically it has some problems. The mining lately has been a big problem; consolidation is a big risk for the whole system.

    You’re talking that mining pool that has, numerous times, provided more than half the computational power needed to mine new coins. Can you explain what a mining pool is to readers and why that’s such bad news?

    With mining, you’re basically crunching numbers, solving puzzles with your computing power and coding; it’s the way you prove that you’re securing the network, that you’re auditing the transaction. It’s kind of like, because so much auditing [goes into each transaction] it would be impossible for someone to scam the system. But if someone controls more than 50 percent of all Bitcoin mining taking place, that person or group could have a majority vote and basically dictate what happens. So someone could spend Bitcoin, and you could say, “No, my 51 percent vote says you didn’t” in order to sell the same Bitcoin twice.

    Why do people use mining pools in the first place?

    It’s like a lottery pool. People compete to mine the coins, with a winner rewarded with 25 of them every 10 minutes. So people tend to pool their mining efforts to increase their likelihood of getting some portion [of those Bitcoin], and they often want to be part of the biggest pool to increase their odds, even though [what they’d win] would be less valuable [divided up among more people]. But a pool that can tip past 50 percent is a big problem.

    Wouldn’t miners be hurting themselves if they tried scamming the network?

    Financially, it’s not in their best interest, because people would stop using it. But, say, China directed all the fabs in the country to stop producing chips for Apple and start producing Bitcoin mining chips. A country does have the ability to destroy bitcoin.

    And no one could do anything about it?

    There are things that could be done, changes to the way that mining is done that could make China’s miners obsolete overnight. But other coins that are emerging don’t have this vulnerability, like Ripple [which is] why I could see another currency like Ripple or [the next-generation cryptocurrency] Ethereum emerging as the winning currency – or maybe we’ll just have 100 different currencies.

    Do you have a financial stake in Ripple?

    Yes, I am an investor in Ripple Labs, and I have some [of its] currency.

    It may be that Bitcoin lives on as a store of value, like gold, but isn’t used in day-to-day transactions. But I think there’s enough new interesting stuff that’s built off the Bitcoin idea that it’s not a clear winner.

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

    Connie

    ,

  • StrictlyVC: June 19, 2014

    Good morning, everyone! Sorry for the late send-off this a.m.; StrictlyVC got a late start on today’s column.

    Hope you have a great Thursday.

    —–

    Top News in the A.M.

    The FCC’s annual broadband report is out. “The good news,” reports GigaOm, “is that, overall, the country’s average broadband speed is 36 percent faster than what it was in 2012. The bad news is that DSL subscribers are getting left out of the party, and that severe congestion points are making life worse for everyone on the internet.”

    —–

    Is the RealReal the Real Deal?

    At a low-slung, 45,000-square-foot warehouse in an industrial corner of San Francisco, I’m hovering over a purse. It’s in the hands of Graham Wetzbarger, the director of authentication at The RealReal, a 2.5-year-old luxury consignment company that also operates a 10,000-square-foot warehouse in L.A. and a 20,000-square-foot warehouse in Manhattan.

    Holding up the bag for closer inspection, Wetzbarger shakes his head. “The Louis Vuitton Neverfull is like the unofficial bag of Asia; it’s so popular that everyone has one or more than one.” This, adds Wetzbarger, is no Neverfull, pointing to the quality of purse’s lining, its exposed zipper tape, and a spot of loose stitching. “It’s also more slouchy than it should be [given its age]. Then, when we look at the date code, the formatting is all wrong, too.” He shows me a leather tag featuring a number series. “This combination would mean it was made in the 84th week of 1962.” [Eye roll.] Louis Vuitton “wasn’t even doing date codes until the ‘80s.”

    The devil is truly in the details for The RealReal, a fast-growing online marketplace that’s taking business from both eBay and Sotheby’s by making it simple for dowagers and other well-heeled consumers to sell their lightly used designer goods. The company is now processing roughly 40,000 pieces of clothing, shoes, handbags, fine jewelry and fine art a month, and this year, it projects that it will do more than $100 million in revenue. In fact, the business is growing so quickly that the biggest challenge for Julie Wainwright, RealReal’s founder and CEO, is managing all the moving parts of her business.

    It’s easy to see why 2.5 million people have registered to use the site. The RealReal takes authenticity so seriously that it employs authenticators like Wetzbarger, along with a staff gemologist, and a horologist. In addition, the company trains its customer-facing teams on how to spot and handle “fakes.”

    The RealReal also makes it easy for its growing base of consigners to turn underused items in their home into cash. To sell an item, a consumer simply sends an item to the company based on the list of 750 brands like Chanel and Prada that RealReal accepts. RealReal also has 30 salespeople around the country who visit clients’ homes, which “allows us to get product we’d never get, from people who’d never even think of consigning,” says Wainwright. In return for doing practically nothing, consigners receive up to 70 percent of each sale.

    Once they do, they’re hooked, Wainwright says. “When people get their first check, they’re delighted. They had no idea they had that much money sitting around their house.”

    In fact, says Wainwright, she’s begun to notice a change in consumer behavior that bodes well for RealReal. “Once people start consigning, they change the way they buy retail. Once they understand the value of the resell items, they [rationalize more new purchases], knowing they can pay a high price . . . and make a lot of that money back by reselling [those goods].”

    Still, the company has its challenges, the biggest of which, right now, is managing its growth. “It’s hard,” says Wainwright candidly. She points to the company’s two-story warehouse in Manhattan, which has been a headache for the company since almost the start. Because it’s union-controlled, no one can operate the elevator on Saturdays or Sundays. Time Warner Cable, which goes down regularly in the city, only recently approved a two-year-old order for fiber.

    Fortunately, the company will soon vacate the city and move into a 125,000-square-foot warehouse in New Jersey, but the move has taken much longer than Wainwright anticipated. “Our warehouses are crazy full, because it never occurred to me that it would take seven months to negotiate a lease in New Jersey and another three months to get it refurbished.”

    Dealing with used inventory can be trying, too. The company’s buyers – 60 percent of whom buy 7 items a year — often become sellers. Its consigners are repeat customers, typically offloading items on RealReal three times a year. But adding inventory – which the company must do each month to keep growing – can be tricky, especially in summer months when many of its consigners are away on vacation.

    That’s saying nothing of RealReal’s stiff competition. In addition to other new consignment marketplaces, eBay – which sells between $2 billion and $4 billion in luxury goods each year – looks unprepared to cede much territory. For example, eBay Valet, a service introduced last December, invites users to take a picture of an item. The company then evaluates the item, estimates its value, then sends the user a prepaid box to ship it to eBay.

    There isn’t a lot of room for error. As other e-commerce companies like OneKingsLane and Fab have shown, growth can slow suddenly. And while RealReal is growing quickly, it isn’t yet profitable. Despite having raised $43 million from investors, it’s hard to see how RealReal won’t require more money to turn the corner.

    Wainwright has navigated tough waters before. Back in 2000, she was brought in to manage Pets.com, a fast-growing pet supply startup that became a poster child for dot com failures when the market went south. Despite being dealt a difficult hand, she still managed to return investors’ capital.

    With her eyes set on profitability in 2015, Wainwright is determined to manage growth before it overwhelms her company. It’s a quality problem. With consigners flooding her warehouses with high-priced goods, she has a closet anyone would envy.

    —–

    New Fundings

    Calm, a two-year-old, San Francisco-based company whose apps are designed to calm the minds of users (think crashing waves and light rain sounds), has raised $578,000 in seed funding from investors, including Launch fund and Automattic CEO Matt Mullenweg. The company has raised more than $1 million to date.

    ClearCare, a 4.5-year-old, San Francisco-based company that sells software for scheduling, messaging and more to the home-care industry, has raised $11 million in Series B funding led by Bessemer Venture Partners. Cambia Health Solutions, along with earlier investors Voyager Capital, Qualcomm Ventures and Harbor Pacific Capital, also participated in the round, which brings the company’s total funding to date to $15.5 million.

    Galvanize, a 1.5-year-old, Denver-based startup that runs coding classes, provides workspaces, and invests in startups in San Francisco and Denver, has raised $18 million in Series A funding led by University Ventures Fund. The company will use the money in part to expand into New York City, it says.

    HelloFresh, a two-year-old, New York-based dinner kit delivery business (yes, another one), has raised $50 million in a new funding led by Insight Venture Partners and earlier investor Phenomen Ventures. The company has now raised $67.5 million altogether, including from Rocket Internet, Investment AB Kinnevik, HV Holtzbrinck Ventures, and Vorwerk Direct Selling Ventures.

    Ibotta, a two-year-old, Denver-based coupon app the mobile couponing app that rewards users who engage with brands with small payments or cost savings, has raised $20 million in Series B funding led by Jim Clark, cofounder founder of Silicon Graphics, Netscape, and myCFO, among other things. Clark’s longtime friend Tom Jermoluk, also previously of Silicon Graphics, also invested in the round. Ibotta had raised an undisclosed amount of Series A funding last year from Great Oaks Venture Capital. TechCrunch has much more on the company here.

    Imprint Energy, a 3.5-year-old, Alameda, Ca.-based startup that’s developing miniature rechargeable batteries, has raised $6 million in Series A funding led by Phoenix Venture Partners. Flextronics’ Lab IX and AME Cloud Ventures also participated.

    LogFire, a 6.5-year-old, Atlanta-based maker of cloud-based inventory and warehouse management software, has raised $8.25 million in Series A funding led by Edison Ventures. Fulcrum Equity Partners also participated in the round.

    Mantis Vision, a nine-year-old, Israel-based company whose mobile 3D technology is being used by Google for its 3D-sensing Project Tango smartphone, has raised $12.5 million in funding from Qualcomm Ventures; Samsung Ventures; Flextronics’ hardware venture arm, Lab IX; and the optical manufacturing firm Sunny Optical Technology. TechCrunch has more here.

    Modern Meadow, a three-year-old, Brooklyn-based company that’s growing leather from skin cells for the purpose of helping fashion designers and leather goods makers more ethically meet demand for their products, has raised $10 million in Series A funding led by Horizons Ventures. The company had earlier raised $250,000 in federal grants and $3 million in seed funding from Peter Thiel’s Breakout Labs, Sequoia Capital, Artis Ventures and Iconiq. Venture Capital Dispatch has more here.

    Namely, a 2.5-year-old, New York cloud-based human resources management platform, has raised $4.7 million from earlier investors Bullpen Capital, Lerer Ventures, True Ventures and Vayner RSE. The company has raised $8.3 million to date.

    Ostrovok, a four-year-old, Moscow-based accommodations booking startup, has raised $12 million in funding from Vaizra Capital Russia, a fund backed by two co-founders of Vkontakte, the Russian social network. The company has now raised roughly $50 million altogether. Earlier investors include Yuri Milner, Accel Partners, Esther Dyson, General Catalyst Partners, Founders Fund, and Atomico Ventures.

    Pixability, a six-year-old, Boston-based software company that aims to help major brands dramatically increase their YouTube impact on target audiences, has added $4 million to its Series B round, to close it at $8.1 million. The new funding was led by Point Judith Capital and included Quad/Graphics, Progress Ventures, and unnamed individuals. Beta Boston has more here. The company has raised $9.4 million to date.

    Progreso Financiero, a nine-year-old, Menlo Park, Ca.-based financial services company that targets the credit needs of the Hispanic market, has raised $47 million in funding led by Institutional Venture Partners. The round, being disclosed today, closed last August. Others of its investors include The Catalyst Fund of CFSI, Charles River Ventures, Core Innovation Capital, Greylock Partners, and Madrone Capital Partners. Its new funding brings the total capital raised by the company to $170 million.

    Puppet Labs, a nine-year-old, Portland-based IT automation company, has raised $40 million in fresh funding, following a $30 million round last year. Earlier investors Cisco, Google Ventures, Kleiner Perkins Caufield & Byers, Triangle Venture Capital Group, True Ventures and VMware participate in the round, which brings the company’s total funding to $86 million.

    Spotlight Ticket Management, a five-year-old, L.A.- based company whose technology helps companies understand the effectiveness of their spending on tickets — including to amusement parks, country clubs, and conferences — has raised $6 million in Series A funding from Point Judith Capital, Coyote Ridge Ventures and City National. The company has raised $8.5 million to date.

    TaoDangPu, a two-year-old, Beijing-based online pawn shop focused on high-end jewelry and watches, has raised $30 million in Series B financing led by TBP Capital, with earlier investor BlueRun Ventures participating,says China Money Network. Reportedly, the company had previously raised “several million” dollars in Series A funding from BlueRun, Northern Light Venture Capital and a third, unnamed investor.

    ThoughtSpot, a two-year-old, Redwood City, Ca.-based business intelligence software company that’s reportedly making big strides in how easily its corporate customers can search their data, has raised $30 million in new funding led by Khosla Ventures. Box CEO Aaron Levie and earlier investor Lightspeed Venture Partners also participated in the round, which brings the company’s total funding to $40.7 million.

    Wayin, a three-year-old, Denver-based company whose software gathers social media postings and displays it in real time on its clients’ sites, mobile apps, or, in the case of sports teams, scoreboards, has raised at least $12.1 million in Series C round, per an SEC filing flagged by Xconomy.The company, cofounded by Sun Microsystems cofounder and CEO Scott McNealy, has raised $32.5 million to date; its investors include U.S. Venture Partners.

    Western Oncolytics, a 2.5-year-old, Cleveland, Oh.-based company whose virus-based therapy promises to target many types of cancers and even cancerous cells that may be undetected in a patient’s body, has raised $275,000 in seed funding from undisclosed individual investors.

    Zerto, a five-year-old, Boston-based maker of disaster-recovery technology for virtualized data centers, has raised $26 million in Series D funding led by new investor Harmony Partners. Earlier investors Battery Ventures, Greylock IL, RTP Ventures and U.S. Venture Partners all participated in the round, which brings Zerto’s total funding to $60.2 million.

    —–

    New Funds

    Greycroft Partners, the eight-year-old, early-stage venture firm with offices in New York and L.A., has just closed on its first growth fund, a $200 million vehicle, reports the WSJ. The company, whose bets have included Maker Studios and Buddy Media, needed more dry powder for its expansion-stage companies, particularly as “many of our companies are not in San Francisco and have a harder time tapping into these expansion-stage funds in the Valley,” partner Ian Sigalow tells the outlet.

    Shasta Ventures, the 10-year-old, early-stage, Sand Hill Road firm that counts Nest Labs among its stand-out investments, has raised $300 million for its fourth fund — its largest to date. Altogether, Shasta has raised a little more than $1 billion, with its previous funds each totaling between $210 and $265 million. The WSJ has more here.

    —–

    Exits

    Finnish e-retailer One Nordic Furniture, which sells ready-to-assemble design furniture and accessories, has been acquired by online retailer Fab for an undisclosed amount of cash and stock. One Nordic’s team will own 5 percent of the combined company once the deal has closed.

    SnappyTV, a four-year-old, San Francisco-based video publishing and distribution platform that lets content owners edit and share media content across the Web, has been acquired by Twitter for an undisclosed amount. The company appears to have raised just $760,000 in seed funding from Great Oaks Venture Capital, Transmedia Capital, and Freestyle Capital.

    —–

    People

    Another week, another $4 million in John Doerr‘s pocket.

    —–

    Job Listings

    Sands Capital Management is looking to hire a senior research associate to join its life sciences team. The job is in Arlington, Va.

    —–

    Data

    A new study by Pepperdine University and Dun & Bradstreet suggests that access to capital increased in the second quarter of the year, while demand for funding fell.

    —–

    Essential Reads

    Walt Mossberg on Amazon’s smartphone ambitions.

    Yo.

    —–

    Detours

    A Twitter tracking tool that will let you know, nearly in real time, when someone changes their bio.

    Fifteen classic movie scenes reimagined by a couple, using their chubby-cheeked baby and a whole lot of cardboard.

    Why trophy wives may not really be a thing after all.

    —–

    Retail Therapy

    Behold, the $7,000 briefcase (in case you were wondering).

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    ,

  • Is the RealReal the Real Deal?

    realreal-730x442At a low-slung, 45,000-square-foot warehouse in an industrial corner of San Francisco, I’m hovering over a purse. It’s in the hands of Graham Wetzbarger, the director of authentication at The RealReal, a 2.5-year-old luxury consignment company that also operates a 10,000-square-foot warehouse in L.A. and a 20,000-square-foot warehouse in Manhattan.

    Holding up the bag for closer inspection, Wetzbarger shakes his head. “The Louis Vuitton Neverfull is like the unofficial bag of Asia; it’s so popular that everyone has one or more than one.” This, adds Wetzbarger, is no Neverfull, pointing to the quality of purse’s lining, its exposed zipper tape, and a spot of loose stitching. “It’s also more slouchy than it should be [given its age]. Then, when we look at the date code, the formatting is all wrong, too.” He shows me a leather tag featuring a number series. “This combination would mean it was made in the 84th week of 1962.” [Eye roll.] Louis Vuitton “wasn’t even doing date codes until the ‘80s.”

    The devil is truly in the details for The RealReal, a fast-growing online marketplace that’s taking business from both eBay and Sotheby’s by making it simple for dowagers and other well-heeled consumers to sell their lightly used designer goods. The company is now processing roughly 40,000 pieces of clothing, shoes, handbags, fine jewelry and fine art a month, and this year, it projects that it will do more than $100 million in revenue. In fact, the business is growing so quickly that the biggest challenge for Julie Wainwright, RealReal’s founder and CEO, is managing all the moving parts of her business.

    It’s easy to see why 2.5 million people have registered to use the site. The RealReal takes authenticity so seriously that it employs authenticators like Wetzbarger, along with a staff gemologist, and a horologist. In addition, the company trains its customer-facing teams on how to spot and handle “fakes.”

    The RealReal also makes it easy for its growing base of consigners to turn underused items in their home into cash. To sell an item, a consumer simply sends an item to the company based on the list of 750 brands like Chanel and Prada that RealReal accepts. RealReal also has 30 salespeople around the country who visit clients’ homes, which “allows us to get product we’d never get, from people who’d never even think of consigning,” says Wainwright. In return for doing practically nothing, consigners receive up to 70 percent of each sale.

    Once they do, they’re hooked, Wainwright says. “When people get their first check, they’re delighted. They had no idea they had that much money sitting around their house.”

    In fact, says Wainwright, she’s begun to notice a change in consumer behavior that bodes well for RealReal. “Once people start consigning, they change the way they buy retail. Once they understand the value of the resell items, they [rationalize more new purchases], knowing they can pay a high price . . . and make a lot of that money back by reselling [those goods].”

    Still, the company has its challenges, the biggest of which, right now, is managing its growth. “It’s hard,” says Wainwright candidly. She points to the company’s two-story warehouse in Manhattan, which has been a headache for the company since almost the start. Because it’s union-controlled, no one can operate the elevator on Saturdays or Sundays. Time Warner Cable, which goes down regularly in the city, only recently approved a two-year-old order for fiber.

    Fortunately, the company will soon vacate the city and move into a 125,000-square-foot warehouse in New Jersey, but the move has taken much longer than Wainwright anticipated. “Our warehouses are crazy full, because it never occurred to me that it would take seven months to negotiate a lease in New Jersey and another three months to get it refurbished.”

    Dealing with used inventory can be trying, too. The company’s buyers – 60 percent of whom buy 7 items a year — often become sellers. Its consigners are repeat customers, typically offloading items on RealReal three times a year. But adding inventory – which the company must do each month to keep growing – can be tricky, especially in summer months when many of its consigners are away on vacation.

    That’s saying nothing of RealReal’s stiff competition. In addition to other new consignment marketplaces, eBay – which sells between $2 billion and $4 billion in luxury goods each year – looks unprepared to cede much territory. For example, eBay Valet, a service introduced last December, invites users to take a picture of an item. The company then evaluates the item, estimates its value, then sends the user a prepaid box to ship it to eBay.

    There isn’t a lot of room for error. As other e-commerce companies like OneKingsLane and Fab have shown, growth can slow suddenly. And while RealReal is growing quickly, it isn’t yet profitable. Despite having raised $43 million from investors, it’s hard to see how RealReal won’t require more money to turn the corner.

    Wainwright has navigated tough waters before. Back in 2000, she was brought in to manage Pets.com, a fast-growing pet supply startup that became a poster child for dot com failures when the market went south. Though dealt a difficult hand, she still managed to return investors’ capital.

    With her eyes set on profitability in 2015, Wainwright is determined to manage growth before it overwhelms her company. It’s a quality problem. With consigners flooding her warehouses with high-priced goods, she has a closet anyone would envy.

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

    Connie

    ,

  • StrictlyVC: June 18, 2014

    Hi, good Wednesday morning, everyone. StrictlyVC was out much of yesterday so we have a slightly rushed column for you today. Hope you enjoy it, though, and we’ll see you back here tomorrow!

    —–

    Top News in the A.M.

    Apple has just released a new model of iMac, and it’s considerably cheaper than its predecessors.

    BlackBerry will bring thousands of apps from Amazon‘s store to its Blackberry 10 phones, coming this fall.

    —–

    Arvind Sodhani on the Giant that is Intel Capital

    Last week, at a conference in San Francisco, I was asked to interview Intel Capital’s president Arvind Sodhani, who also holds the title of executive VP of Intel Corporation. The idea was to give the audience insight into how the nine-year-old corporate venture unit – which employs 85 investors around the world and invests between $300 million and $500 million each year – does what it does.

    Suffice it to say that it’s complicated. Here’s a cheat sheet, though, for investors and entrepreneurs looking for more, ahem, intel.

    Intel, like most corporate VCs, won’t invest in something that looks like it could be a financial home run but has no bearing on the company’s business. Every investment has to have the potential of delivering both a strategic and financial return. The good news: In one form or another, Intel’s business touches almost every sector out there, so it’s investing in everything from wearables to semiconductors to Hadoop, the bedrock software of so-called big data businesses — which Intel sees as a growth sector. Indeed, readers might recall that in late March, Intel forked over$740 million for an 18 percent stake in Cloudera, which produces the most popular version of the Hadoop software framework.

    Which raises another point: Intel Capital is stage agnostic. While it sometimes makes a swing-for-the-fences deal like Cloudera, it’s also willing to fund very nascent ideas, Sodhani told me last week, calling the organization’s “sweet spot between $5 million and $20 million – that’s where we’re doing the bulk of our investments.”

    As for where it’s making its bets geographically, Sodhani said that half of Intel Capital’s investments are here in the U.S., with the rest distributed globally, including in China, where the organization recently committed to invest up to $100 million in companies working on smart devices, as well as Israel, Russia, India, Brazil, Japan and elsewhere.

    Unsurprisingly, some places work out better than others. Intel Capital has backed companies in places like Vietnam and Chile, for example, but hasn’t been able to consistently find deal flow in either country. It also recently placed an investor in Nigeria to scout out opportunities in Africa, though Sodhani said it “takes a year-and-a-half to two years before someone new in a country can get going and see investments . . . When you arrive in a new country, it takes time to figure out the legal framework, what instruments are available . . . there are lots of different issues.”

    One of them is helping to develop a tech-friendly ecosystem, which Sodhani credits Intel Capital with doing in a variety of places like Vietnam, where startups are still a relatively new phenomenon. While there are plenty of founders, said Sodhani, wresting potential employees out of their solid jobs to work for those founders is still in an upward battle. “Entrepreneurs are willing to take the risk; the hard part is how do you get the rest of the people to come and join the company.”

    Before we’d parted ways, I’d asked Sodhani to share how investment decisions are made within Intel Capital. He suggested that, despite the sprawling design of the organization, it isn’t unlike most venture firms. Every Tuesday, it holds a weekly partner meeting where all deals receive some air time and potential new investments are presented. Company experts are then brought in to discuss and evaluate new funding prospects, questions are asked and researched, and after at least a second look at a company, a committee of five people within Intel Capital decides whether or not to back it. (Sodhani says that Intel Capital can “move lightening fast when there’s a great deal if we’re made aware that it’s a competitive situation. We can put together a term sheet in less than 24 hours if we want.”)

    Like a lot of firms with deep pockets, Intel Capital is also willing to overlook price if the technology is deemed as a must-have. “Valuations are very [high], and I’d say that we’re probably getting to a point where we need to be careful of them,” Sodhani said. Still, he’d added, “some things we have to hold our noses and say, [Let’s move forward], because the technology is important to us.”

    Open source software is one of those things, he continued. “It’s becoming very expensive, but open source is producing lot of software that’s critical. The whole trend of IT migration to the cloud — that’s a $30 trillion idea.”

    —–

    New Fundings

    Appier, a two-year-old, Tapei-based company whose advertising technology is used for cross-screen targeted marketing across a range of devices, has raised $6 million in Series A funding from Sequoia Capital. TechCrunch has more here.

    AuraSense Therapeutics, a 4.5-year-old, Evanston, Il.-based company focused on commercializing spherical nucleic acid conjugates, has raised $13.6 million in Series C funding from a long list of investors, including Microsoft cofounder Bill Gates; Microsoft executive Craig Mundie; Patrick Ryan, founder of Aon; David Walt, co-founder of Illumina; Boon Hwee Koh, director of Agilent Technologies; and the Rathmann Family Foundation. The company has raised at least $21.5 million to date, including from Abbott Biotech Ventures.

    BioCatch, a four-year-old, Boston-based company that makes cyber-security software focuses on online and mobile fraud mitigation, has raised $10 million in funding led by Blumberg Capital and the equity crowdfunding firm OurCrowd. Other, unnamed investors also participated in the round, which brings BioCatch’s total funding to $11.6 million

    BucketFeet, a three-year-old, Chicago Heights, Il.-based company that specializes in artist-designed footwear, has raised $3.7 million in funding led by Bridge Investments and Jumpstart Ventures. Other participants in the round included Levy Family Partners, Listen Ventures, and individual investors, including Crate & Barrel founder Gordon Segal. The company has raised $5.8 million to date.

    BitPagos, a year-old, electronic-payment company that supports bitcoin and credit card payments and has offices in both Palo Alto, Ca., and Buenos Aires, has raised $600,000 in seed funding from Pantera Capital, Tim Draper, Barry Silbert, Boost Bitcoin Fund, Amasia and others. The company is a graduate of the San Mateo, Ca.-based Boost VC accelerator program, which focuses on virtual-currency startups.

    Kony, a seven-year-old, Orlando, Fla.-based company behind a mobile application development platform, has raised $50 million in new funding co-led by Softbank Capital and earlier investor Insight Venture Partners. The company has now raised at least $98.4 million, according to Crunchbase, including from Telstra Ventures, Georgian Partners, Delta-v Capital, and Hamilton Lane.

    Onapsis, a 4.5-year-old, Cambridge, Ma.-based cyber-security software firm focused protecting highly sensitive applications within large companies and government agencies, has raised $9.58 million in funding led by .406 Ventures, which was joined by Endeavor Catalyst. The company had previously raised $3 million from investors, including TPG founder David Bonderman.

    Other Machine Co., a 1.5-year-old San Francisco-based startup that makes what it called 3D cutters, has raised $8.5 million in Series A funding from investors that include Broadway Angels, Allegro Venture Partners, Core Ventures Group, Crunchfund, VegasTechFund, Slow Ventures and several angel backers including Autodesk CEO Carl Bassand 3D Robotics CEO Chris Anderson. The WSJ has much more on the company here.

    Quantum Technology Sciences, a 15-year-old, Cocoa Beach, Ca.-based maker of intrusion detection and movement monitoring software designed for securing energy assets, has raised $4.4 million in Series A funding round from investors knowledgeable about oil and gas production, including Jim Farnsworth, chief exploration officer with Cobalt International Energy, Infinity Oil & Gas; Texas-based investment firm McNair Group; and Bud Brigham of Anthem Ventures.

    Rhiza, a six-year-old, Pittsburgh, Pa.-based maker of marketing analytics tools, has raised $3 million in Series A funding led by Draper Triangle Ventures. Other investors in the round included Arthur Ventures andCamp One Ventures.

    SIM Partners, an eight-year-old, Evanston, Il.-based digital marketing company, has raised $8 million in Series A funding, including from River Cities Capital Funds in Cincinnati and Chicago-based Jump Capital Partners. The company’s software is used by large companies to provide standardized online-marketing content across their locations and affiliates.

    Sunverge Energy, a five-year-old, San Francisco-based maker of distributed energy management systems, has raised $15 million in Series B funding led by the Southern Cross Renewable Energy Fund.Siemens Venture Capital and Total Energy Ventures International also participated in the round.

    —–

    New Funds

    Arrowroot Capital, a six-month-old, Santa Monica, Ca.-based growth equity firm, is targeting $50 million for its debut fund, shows an SEC filing. Founder and managing partner Matthew Safaii is the only person listed on the filing. Safaii was previously a managing director and head of the acquisitions team at ICG Group, the publicly traded venture capital firm.

    Bain Capital Ventures has raised a new, $935 fund, reports Dealbook, a pool that comes in two parts, it says. The core fund totals $715 million, of which $65 million was committed by Bain employees and the balance was from outside investors. Bain also raised a separate fund totaling $220 million, which includes $20 million from Bain insiders. More here.

    Danhua Capital, a year-old, Palo Alto, Ca.-based early-stage fund founded by Stanford physics professor Shoucheng Zhang and Stanford alumnae Anjia Gu have raised $91.3 million for its debut fund, shows a new SEC filing. Among the firm’s bets so far is Apportable, a San Francisco-based mobile development technology company that raised $5 million earlier this year.

    James Joaquin, a former partner with Catamount Ventures and an entrepreneur whose experience includes roles as CEO of Xmarks, Xoom and Ofoto, as well as co-founder of When.com, is raising his own venture fund under the name Obvious Ventures. A new SEC filing for the fund doesn’t list a target. The site is here.

    Lightspeed China Partners is back in the market and raising $260 million for its second fund, shows an SEC filing. The affiliate of Lightspeed Venture Partners closed its first fund with $168 million in January of last year after targeting $150 million. It invests exclusively in China-based businesses, with a focus on startups in the the Internet, mobile, services and enterprise software.

    Microsoft Ventures is launching a new, Redmond, Wa.-based accelerator for startups that are developing technologies to automate the home, the company tells Venture Capital Dispatch.

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    IPOs

    CyberArk Software, a 15-year-old, Lower Newton Falls, Ma.-based cybersecurity software company, recently submitted a preliminary, confidential filing to list on Nasdaq, according to VentureWire sources who say the company plans to sell a 15 percent to 20 percent stake in an IPO at a valuation of between $500 million and $1 billion. CyberArk has raised at least $43 million over the years, show Crunchbase. Its investors include Jerusalem Venture Partners and Goldman Sachs.

    Sage Therapeutics, a four-year-old, Cambridge, Ma.-based biopharmaceutical company that’s developing a drug for a life-threatening seizure condition, has filed to go public. The company has raised at least $93 million from investors. Its biggest shareholders include Third Rock Ventures, which owns 58.5 percent of the company; ARCH Venture Partners, which owns 21.3 percent; and Fidelity Investments, which owns 5.6 percent.

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    Exits

    GlassHouse Technologies, a 13-year-old, Boston-based data center services provider, has filed for bankruptcy, reports Boston Business Journal. The firm twice pulled plans to go public. GlassHouse had raised $91.3 million, shows Crunchbase, including from Citrix Systems, Cisco,GrandBanks Capital, Kodiak Venture Partners, Paladin Capital Group, Globespan Capital Partners, Montagu Newhall Associates, and Sigma Partners.

    Oracle is nearing a deal to buy the publicly traded hospitality-industry software provider Micros Systems for more than $5 billion, according to Bloomberg sources. The deal would be Oracle’s largest since its $5.7 billion takeover of Sun Microsystems, announced in 2009, says Bloomberg.

    Silevo, a seven-year-old, Fremont, Ca.-based company that makes solar modules, is being acquired by SolarCity, the full-service solar energy services company that went public in late 2012. Silevo has raised more than $33 million from investors, including DT Capital Partners, GSR Ventures and NewMargin Ventures.

    Tail-f Systems, a nine-year-old, Stockholm-based maker of configuration management and network automation software, has been acquired by Cisco for $175 million to broaden its cloud-services offerings. Tail-f Systems had raised $6.3 million from SEB Venture Capital, according to Crunchbase.

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    People

    When boxing champion Floyd Mayweather decided to throw a million dollars into his first tech venture, he literally threw a million dollars, stuffed into a gym bag, at the company’s founder, a former employee of his named John Shahidi. “Champ, we can’t do it that way,” Shahidi told him. “There has to be paperwork.”

    Richard Mordini has left Javelin Venture Partners — where he spent the last five years as a senior associate, then venture partner — to join Fooda, a three-year-old company that delivers food from local restaurants to employees at work. Mordini joins the company as its VP of finance after taking a “long look at it while an investor,” he tells StrictlyVC. “Fooda’s been at the food game for a bit longer than the newer entrants and is sort of executing in the ‘Chicago style’ of Groupon . . . blocking and tackling unnoticed until all of a sudden it’s not.” Fooda has raised $7.8 million to date, including from Lightbank and Valor Equity Partners.

    One Kings Lane, the online home decor retailer that raised a $112 million Series E round at a $900 million valuation in January, is laying off between 15 and 20 percent of its staff, reports Re/code. More here.

    Gary Swart, the longtime CEO of oDesk, the online workplace platform, is joining Polaris Partners as a venture partner in San Francisco. Swart left oDesk the first week of April, when its merger with former rival ELance was completed. Swart tells StrictlyVC that at Polaris, he’ll be “focused on marketplaces . . . and SaaS companies, which is very similar to the Polaris approach already.”

    Investor Hunter Walk of Homebrew, who spent roughly a decade at Google before becoming a venture capitalist, published some thoughts on Twitter last night about why “startups,” like Facebook‘s new ephemeral messaging app Slingshot, are difficult to nurture inside established large companies. Among the factors Walk listed was legal risk. “Parent co won’t let ‘startup’ into gray areas out of lawsuit fear. Big pocketbook.” A second concern: brand risk, meaning “big [company] brand tied to ‘startup’ influences what startup can do. What happens on Slingshot impacts P&G ad buys on Facebook.” Partner risk is another factor, wrote Walk, tweeting, “Potential partners treat ‘startup’ as part of large [company] and react accordingly to tech, distribution, etc. [opportunities].” Walk added: “Google had all sorts of these ‘startups’ inside. All failed. Now they let those folks start companies [and Google Venture] funds. Much better model.”

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    Job Listings

    The global, early-stage venture firm e.ventures is looking for an associate, per a new listing on LinkedIn. The job is in San Francisco.

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    Happenings

    Next Friday, in San Francisco, 500 Startups hosts PreMoney, a one-day conference for accredited investors about the future of venture capital. You can check out the speaker line-up here; registration is over here.

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    Essential Reads

    Inside the secretive R&D lab where Amazon has been developing a 3D phone since 2009.

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    Detours

    The genius of “Silicon Valley.”

    How to anonymize everything you do online.

    Comic John Oliver and celebrated physicist Stephen Hawking talk robots and more. Asks Oliver at the segment’s end: “If time travel were possible, would you want to go back in time and refuse to do this interview?” “Yes,” answers Hawking. Oliver: “You truly are an incredibly smart man.”

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    WashApp, a new app that’s trying to crowdsource the business of washing your clothes, is offering StrictlyVC readers a discounted spin (heh, heh) as long as you live in San Francisco. You can download the app here. (To get $10 off, use the code WASH10. If you order from the site directly, just mention the newsletter when you hit the “special instructions” field.)

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    Connie

StrictlyVC on Twitter