Connie

Ted Driscoll on VC Bias in Healthcare Investing

Ted Driscoll of Claremont Creek Ventures has been embroiled in the world of digital healthcare a lot longer than most of his industry peers. Before becoming a VC nine years ago, Driscoll, who has a PhD in digital imaging from Stanford, spent decades as a founder and executive at five diagnostics and imaging companies. Maybe it’s no wonder then that Driscoll has strong opinions about where investors who are newer to the digital health scene should be focusing their attention.

You’ve written about confirmation bias and how “humans are good at ignoring stuff they don’t agree with.” Does that apply to healthcare investing, too, in your view?

I think it’s one of the curses of venture capital. VCs come in with preconceived notions and it causes them to not necessarily look at the world in the future but to look at the past.

Meaning what, more specifically?

We’re in the midst of a revolution in medicine and we don’t see it. It’s becoming all digital — not just electronic records being captured and stored but diagnostic decisions that are being based on much larger data sets than doctors can fit in their heads. They need tools that find information in the data and that’s a new thing for doctors. In my memory, the guys who went to med school weren’t the computer science types, but now they need computer familiarity to cope with the huge datasets that confront them.

And you think VCs aren’t funding enough of those tools?

My personal opinion is that the most value is created by technologies that can change a doctor’s decision-making. I’m not so interested in things that tell me how many paces I took yesterday; I am interested in the wearable that monitors someone with congestive heart failure and alerts him when he needs to go to hospital. I’m interested in the cheek swab that’s going to tell a doctor that a depressed patient is going to respond to Prozac and not Celexa, so the doctor can make an informed decision rather than rely on trial and error.

No doubt I’ll miss a Facebook along the way but I’m not seeing healthcare applications for consumers that work that well. Frankly, the many acquaintances of mine with Fitbits or Fuelbands stopped wearing them after three months.

You note that doctors loath to adopt new technologies. How, or when, do we get past that hurdle?

Doctors are quite aware of malpractice issues, so they tend to not want to change until they know something is going to work and not have unexpected side effects. Another issue is the way reimbursement works. Certain tests might be valuable, but because a doctor knows he or she won’t be reimbursed until the following year [they might hesitate to use that test] or else exaggerate the patient’s condition to ensure they’re reimbursed for the treatment [more quickly]. Our reimbursement system is total anarchy, with different practices across every state. Is there a reimbursement code for this? Does Medicare reimburse that? Worse, it changes from year to year.

The good news: as the medical community begins to understand this whole world of information under the surface that can help them, and lots of tests are getting approved [by the FDA], that information is getting back to reimbursers, and they’re coming around. Five years ago, I wouldn’t have invested in a genetic test. Now, I have.

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

Connie

May 2, 2014

Firm Dynamics

Claremont Creek Ventures, Ted Driscoll
StrictlyVC: May 1, 2014

Hello and happy Thursday morning, everyone. StrictlyVC is trying out a new email service provider, so you may notice some changes. Hopefully, one of them will be that you have, in fact, received your issue of the newsletter today! [Please, she thinks, hands clasped.]

You might also notice that there’s no column today. Apologies — with the switchover, we ran out of time yesterday. We hope you find some useful intel in the tidbits below, and we’ll see you back here tomorrow.

—–

Top News in the A.M.

Alibaba, the Chinese Internet giant that’s about to go public in the U.S, is trying to regain a stake in its Alipay payment affiliate. No deal is imminent, but it would be a big deal to Alibaba’s future shareholders, argues Dealbook.

New Fundings

Ambri, a four-year-old, Cambridge, Ma.-based maker of liquid-metal battery technology, has raised $35 million in Series C funding to build a commercial-scale factory. New investors in Ambri’s round include the Swiss insurance companyBuilding Insurance Bern, and KLP Enterprises (the family office of Karen Pritzker and her husband, Michael Vlock). Earlier investors Bill Gates and Vinod Khosla also participated in the round, which brings the amount of equity Ambri has raised to date to $50 million. GigaOm has much more here.

Ayla Networks, a 3.5-year-old, Sunnyvale, Ca.-based company whose cloud connectivity software helps manufacturers turn appliances and more into intelligent devices, has raised $14.5 million in Series B funding from Cisco Investments andSAIF Partners. Other participants in the round included the International Finance Corporation, a member of the World Bank Group; Linear Venture; SJF Ventures;Crosslink Capital; and Voyager Capital.

CloudGenix, a year-old, Santa Clara, Ca.-based networking company that helps companies manage multiple types of apps over multiple types of devices and connections, has raised $9 million in Series A funding from Charles River Venturesand Mayfield Fund.

Edgewater Networks, a 12-year-old, San Jose, Ca.-based company that makes enterprise session border controllers to connect, optimize, and secure IP-based communications, has raised $5 million in debt financing from Eastward Capital. The company has raised at least $12 million in debt and equity in recent years, shows Crunchbase.

Evrything, a three-year-old, London-based software company whose applications help companies connect their devices to the Web, has raised $7 million in Series A funding from Atomico, Dawn Capital, BHLP, and Cisco Systems. The company had raised an undisclosed amount of seed capital led by Atomico in 2011.

Flipps Media, a three-year-old, Uniondale, N.Y.-based company whose app enables users to stream media to televisions without additional devices, has raised $2.4 million from Earlybird Venture Capital and earlier investors, including investor Tim Draper.

LeadiD, a three-year-old, Ambler, Pa.-based software company that makes tools for buyers and sellers of online customer leads, has raised $7 million in Series A funding from Comcast Ventures and Tribeca Venture Partners. Genacast Ventures, which had led LeadiD’s seed funding, also participated in the round. LeadiD has raised $9.7 million altogether.

Liquid Data Intelligence, a months-old, Lisbon, Portugal-based software analytics service that promises to help mobile app developers and marketers optimize conversion rates by personalizing their apps for individual users in real-time, has closed a $1 million seed round from Faber Ventures and Portugal Ventures.

Moveline, a 2.5-year-old, Las Vegas-based company whose users video their belongings and are then given quotes from moving companies, has raised $3 million in Series A funding led by ff Venture Capital, with participation from Vegas Tech Fund and Quotidien Ventures, along with earlier investors.

OGSystems, a 10-year-old, Chantilly, Va.-based company that specializes in agile software development and systems engineering for the Department of Defense, the intelligence community, and commercial markets, has raised an undisclosed amount of funding from General Catalyst Partners.

Otonomy, a 5.5-year-old, San Diego-based company that’s developing and commercializing treatments for diseases of the inner and middle ear, has raised $49 million from a line list of investors. Its new backers included Jennison Associates,Perceptive Advisors, the Federated Kaufmann Funds, Ally Bridge Group, certain private funds advised by Clough Capital Partners, and other unnamed institutional investors. Earlier investors also participated, including OrbiMed Advisors, Novo Ventures, TPG Biotech, Avalon Ventures, Domain Associates, RiverVest Venture Partners, Aperture Venture Partners, and Osage University Partners. The company has raised $144 million to date.

The RealReal, a three-year-old, San Francisco-based, online high-end consignment shop, is raising a big new round, according to an SEC filing that shows the company has raised $20.3 million as part of a $31 million round. The company had previously raised $21.5 million from investors, including Novel TMT Ventures, Canaan Partners,Greycroft Partners, Panarea Capital, InterWest Partners, Sukhinder Singh Cassidy, Suzy Welch, and e.ventures.

Trippy, a three-year-old, Manhattan Beach, Ca.-based online question-and-answer platform that connects travelers, disclosed yesterday that it has raised $3.5 million in Series A funding in a round that closed last year. The funding was led by eVentures, which was joined by True Ventures and Sequoia Capital. TechCrunch has more here.

Vhoto, a two-year-old, Seattle, Wa.-based company whose app uses algorithms, computer vision and machine learning to allow iPhone users to pull still shots from video, has also announced a $2.4 million dollar seed round from Atlas Venture, Polaris Partners, and the company’s cofounder and chairman, Hugh Crean. (Crean, by the way, worked previously as an EIR at General Catalyst Partners and was earlier the CEO of Farecast.com. Vhoto’s CEO, Noah Heller, was most recently an EIR at Atlas.)

ZeroFox, a year-old, Baltimore-based security startup that helps companies identify, manage and mitigate social media-based cyber threats, has raised $10.3 million in Series A funding led by New Enterprise Associates. Other participants in the round included Genacast Ventures, Core Capital, and numerous angel investors from the security industry, including former Symantec CEO Enrique Salem.

—–

New Funds

Benhamou Global Ventures, a Silicon Valley based early-stage venture capital firm founded by former 3Com CEO Eric Benhamou, is announcing the first close of its newest fund, BGV II LP, a vehicle that will be investing just less than $100 million in seed and early-stage companies that focus on everything from enterprise technology — including security, cloud-based services, Web scale infrastructure, mobility — to Internet-connected devices. The firm has already made one investment from the new fund in Qubell, a two-year-old, Menlo Park, Ca.-based “platform as a service” company. (GigaOm had written about Quebell here.)

Cisco Investments, the corporate venture capital arm of Cisco, announced yesterday that it will pour a fresh $150 million into funding early-stage companies, especially those focused on big data and analytics; the Internet of Things; connected mobility; storage; silicon; the content technology ecosystem; and India innovation. The new capital folllow’s Cisco’s previously announced $100 million commitment to startups focused on the Internet of things. The venture arm currently has stakes in more than 80 companies and 35 funds as part of a $2 billion portfolio.

Not new but a new development: Industry Ventures, the 14-year-old, San Francisco-based secondary shop, is assuming the daily management of Square 1 Venture 1, L.P., a 2008-vintage venture capital fund-of-funds. Square 1 is a Durham, N.C.-based specialty bank that provides loans and other services to venture firms and their portfolio companies. Square 1 suggested it was selling its portfolio to focus exclusively on that banking business.

Lerer Ventures looks to be raising a fourth, $50 million fund, judging by a new SEC filing. Interestingly, the fund is titled Lerer Hippeau Ventures IV, possibly signaling a branding change three years after Eric Hippeau, the former CEO of Huffington Post, joined the firm. (Before Huffington Post, which sold to AOL in 2011, Hippeau was a well-known venture capitalist with Softbank Capital.) Lerer closed its third fund with $36 million in 2012.

Lightstone Ventures, a two-year-old, early-stage life sciences firm launched by health-care investors from Morgenthaler and Advanced Technology Ventures, has closed its debut fund at $172 million, it’s announcing this morning. The team consists of Mike Carusi and Jean George of ATV (which won’t raise another fund), and Hank Plain and Chris Christofferson of Morgenthaler. Lightstone invests in early-stage biotechs and medical device makers, and has already backed three companies, including Catabasis, the Cambridge-based startup developing triglyceride-lowering and anti-inflammatory drugs. Lightstone has offices in Palo Alto, Boston, and Boulder. Xconomy has much more here.

Passport Capital of San Francisco looks to be raising some new capital, judging by an SEC filing that does not list a target. Passport is a multistrategy hedge fund that was founded by John Burbank in 2000 and invests in agriculture, basic materials, energy, financial services, health care, capital markets and the Internet, among other things. In March, for example, Passport and Blackrock led a $100 million round for the big data company Hortonworks at a valuation of more than $1 billion. Last month, Passport’s filed its first Form D of 2014, showing that the company recently raised $27.2 million from investors.
—–

IPOs

Box, the Los Altos, Ca.-based online storage company, may delay its eagerly awaited IPO until late May, according to Quartz’s sources, who cite market volatility as the driver. The offering is expected to raise as much as $250 million in the public markets. (Tweeted Box’s famously funny CEO Aaron Levie last night, in apparent frustration over the report: “‘Quiet periods are so much fun,’ said no one ever.”)
—–

Exits

Check, a 6.5-year-old, Palo Alto, Ca.-based whose app that helps users pay bills and monitor bank accounts and credit cards, is in talks with Intuit about being acquired for more than $350 million, according to WSJ sources. The outlet says the discussions are early and that a final agreement might not be reached for another week or two. Check has raised $47 million from investors, including Menlo Ventures, Morgenthaler Ventures, and Pitango Venture Capital.

PlayFirst, a nearly 10-year-old, San Francisco-based mobile game developer, has been acquired by the 13-year-old, publicly traded game maker Glu Mobile for roughly $12 million in stock. PlayFirst had raised $37.7 million over the years, including from Trinity Ventures, Rustic Canyon Partners, DCM, and Mayfield Fund.
—–

People

Fortune takes a look at 10 founding teams and the valuations of their pre-IPO companies — which have now reached into the multiple billions of dollars.

Lee Fixel, a 34-year-old Florida native who co-heads Tiger Global’s investments in closely held companies, is making more bets on early-stage companies, signaling to many that valuations of later-stage Silicon Valley companies have gotten too frothy even for Tiger. In fact, reports Bloomberg, Fixel may “may turn to investing more internationally,” say its sources, who “asked not to be identified because the information is private.” (Shhhhh.) All told, Tiger Global has made 84 investments in 70 privately held companies since 2006, the year Fixel joined the firm, says Bloomberg.

Yahoo CEO Marissa Mayer appears to be grossly overpaid thanks to Yahoo’s lucrative stake in Alibaba. But here’s something: Since Mayer’s appointment in 2012, outbound applications by Yahoo employees to smaller tech startups have dropped by 44 percent, according to data from recruiting software provider Jobvite.

Boris Wertz, a Vancouver-based VC who runs the early-stage fund Version One Ventures, will be working more closely with Andreessen Horowitz in a official capacity as a “board partner.” Wertz, says the firm in a blog post, will “continue doing what he does best, scouting out great people and companies for his own fund, but when it makes sense he’ll also bring a16z into the equation, as well as representing a16z on the boards of select startups.”
—–

Happenings

Coming up in New York on June 4, the LDV Vision Summit, (which could be a good place to look at some new imaging and video startups). You can see the agenda and speakers here.

Coming up even sooner in New York: TechCrunch Disrupt, which kicks off on Monday. Details are here.

And a quick reminder that the NVCA’s VentureScape conference takes place in San Francisco May 13 and 14. Click here for more details.
—–

Jobs< Cambridge Associates is looking for a research associate in the Bay Area.

Codeacademy, the buzzed-about online educational startup, is looking for a junior business development person to add to its team in New York.
—–

Essential Reads

At Facebook’s F8 conference yesterday, Facebook came off a lot like a middle-aged man, notes Valleywag.

Google Glass currently carries a $1,500 price tag, but the components packed tightly inside the device may cost the Internet giant less than $80, the WSJ reports.

Snapchat is adding emphemeral texting and video chats to its product, reports the Verge.

Wired on one startup’s struggle to survive in the Silicon Valley gold rush. “Nick was making ends meet by Airbnb-ing out his apartment a couple of blocks from their office and commuting an hour each way from his girlfriend’s place in Petaluma. Chris was leaning hard on his indefatigable wife. For this they had upended pleasant lives, and they could no longer quite remember why.”
—–

Detours

“Without urgent action, we are heading for a post-antibiotic era, in which common infections and minor injuries can once again kill,” says a new report from the World Health Organization.

America’s 10 richest universities, and the countries whose GDPs they match.

Gawker columnist A Dog reviews Thomas Piketty’s “Capital in the Twenty-First Century.”

Tiny hamsters eating burritos.

—–

Retail Therapy

We are amazed. A 3D printing pen that will let you draw in the air.

Cool trailer.

Eat your heart out, Roman Abramovich. Your yacht looks like a trailer park dumpster next to this baby.
——-

To sign up for StrictlyVC, click here.

Connie

May 1, 2014

Morning Summary
StrictlyVC: April 30, 2014

Happy last day of April, everyone!

—–

Top News in the A.M.

FCC chairman Tom Wheeler will launch a campaign today to defend his controversial net neutrality proposal, arguing that his critics are wrong and there’s no reason (wink) for Internet providers to cheer the proposal.

—–

In Supreme Court Rulings, Startups Win

Yesterday, the Supreme Court made life a lot better for venture-backed startups, whether they know it yet or not.

In a case called Octane, the justices ruled 9-0 that the U.S. Circuit Court for the Federal Circuit — where every patent appeal in the country eventually winds up — had imposed overly restrictive standards for companies looking to recoup legal fees in cases brought against them by patent holders.

In a second, related case, Highmark, the justices also limited the ability of an appeals court to overturn a lower court judge’s decision in such cases.

To learn more, StrictlyVC talked last night with intellectual property attorney Rudy Telscher, who argued on behalf of the petitioners in the Octane case.

First, congratulations. Was this your first time, arguing a case before the Supreme Court?

It was. I’ve been there a couple of times on unrelated matters, but it was my first time to argue, and it was a pretty amazing experience, from walking into the courtroom to opening [the] case in front of the justices to handling their barrage of very smart questions. I’m lucky to have been able to argue such an important issue before them.

What part of the experience was most surprising?

Well, a protester stood up during my rebuttal and was removed by Secret Service. That was a surprise. [Laughs.] I handle of lot of appellate arguments, but the experience was very different in that you have nine justices coming at you from different angles. You’re facing the brightest legal minds in the country, and you know that as one is asking a question, the others are thinking up eight more. Some [of their questions], I hadn’t thought up [during my preparation], but when you handle a case for eight years, you have a good sense of the law.

Wow, eight years. For those just tuning in to the case, can you explain its importance, particularly to VCs and the founders they back?

An entrepreneur or smaller company builds a successful product and a larger competitor wants to come after them . . . And even though the larger competitor’s position is weak, it’s expensive to fight. [These suits] used to be an occasional thing, but now small and large companies alike are getting hit by patent trolls that buy up broadly worded patents from the ‘90s that have nothing to do with what’s going on today. And they call these companies and say, “It will cost you $2 million to $3 million to defend yourself. You might as well pay us $500,000 to settle.”

Now there will be more companies that stand up to these claims, because their odds of getting [repaid for their] their attorneys’ fees are pretty good.

How much has your client, Octane Fitness, spent on attorneys’ fees? And will those fees now be fully reimbursed by the opposing side?

They’ve spent $2.5 million, which might sound like a large sum but is probably about $3 million less than the national average. Now, the case goes back down to district court.

Is there any chance you’ll be ruled against there?

There are no guarantees, but I’d like to think the odds of that are low. The Supreme Court altered the standard a lot, saying it was rigid and very difficult to meet. It’s a big deal.

New Fundings

Atlas Genetics, a nine-year-old, Bath, England-based company that develops diagnostics tests for infectious diseases, has raised $28.4 million from investors, including Novartis Venture Funds, Consort Medical, Life Sciences Partners, BB Biotech Ventures, Johnson & Johnson Development Corp. and YFM Equity Partners.

Apigee, a 10-year-old, Palo Alto, Ca.-based predictive analytics company, has raised $60 million in fresh funding led by new investors Pine River Capital Management and Wellington Management Company. Earlier investors Norwest Venture Partners, Bay Partners,Third Point, SAP Ventures, BlackRock, Focus Ventures, andAccenture also participated in the round. Apigee has raised $171 million to date. The WSJ has much more on the company here.

Aviso, a two-year-old, Mountain View, Ca.-based company whose cloud-based tools aim to help companies provide more accurate earnings forecasts, has raised $8 million in Series A funding from Shasta Ventures, First Round Capital, Cowboy Ventures, Bloomberg Beta, WebEx founder Subrah Iyar, Informix founder Roger Sippl and other individual investors.

Bouju, a two-year-old, L.A.-based maker of “enterprise brand protection software” designed to help companies protect their intellectual property, has raised an undisclosed amount of funding led by Amidi Group.

BrightWhistle, a four-year-old, Atlanta, Ga.-based company that uses social media to help hospitals reach patients, has raised an undisclosed amount of new funding from its earlier investors, including Eastside Partners, Hamilton Ventures, Atlanta angel investor Paul Iaffaldano and other new angel investors.

CommercialTribe, a year-old, Denver-based company whose cloud-based social learning platform aims to help train sales representatives, has raised $3.2 million in Series A funding from Boulder Ventures, Access Venture Partners, Grotech Ventures, and Martha Tracey of Crawley Ventures.

Ecologic Brands, a 5.5-year-old, Oakland, Ca.-based maker of sustainable packaging, including bottles made of recycled cardboard and old newspapers, has raised a $7 million round from DBL Investors,Catamount Ventures, Black Bear Partners and Kruger, which manufactures other paper products.

Integrated Diagnostics, a five-year-old, Seattle-based molecular diagnostics firm, has raised $30.3 million in Series B funding led by Baird Capital, with participation from earlier investors InterWest Partners and the Wellcome Trust. The company also raised $17 million in debt financing from Life Sciences Alternative Funding. The company has raised $89.1 million altogether, shows Crunchbase.

MovieLaLa, a 1.5-year-old, San Francisco-based social network that helps movie fans discover upcoming movies through their friends, has raised an undisclosed amount of money from Salesforce CEO Marc Benioff, bringing the company’s total funding to date to $750,000. Others of MovieLaLa’s individual investors include Larry Braitman, a founding investor in Flixster, and Wealthfront CEO Adam Nash.

Ozon Holdings, the 16-year-old, Moscow-based parent company of Russia’s leading e-commerce company Ozon Group, has sold a roughly 20 percent stake in its business to two companies — Sistema, a publicly traded diversified holding company in Russia, and CIS and Mobile TeleSystems, a Russian telecommunications company — for $150 million. Meanwhile, the private equity firm Baring Vostok Private Equity Fund remains Ozon’s single-largest shareholder.

Pepperdata, a two-year-old, Sunnyvale, Ca.-based company whose software runs on existing Hadoop clusters to give operators more predictability, capacity, and visibility for their Hadoop jobs, has raised $5 million in Series A funding from Signia Venture Partners and Webb Investment Network.

Scientific Revenue, a 14-month-old, Redwood City, Ca.-based software company that aims to help game developers and publishers increase revenue by improving the yield of paying customers, has raised a first round of $2.5 million led by Walden Venture Capital. A syndicate of strategic investors also participated in the round, says CEO Bill Grosso, the former CTO of Live Gamer, an in-game payment infrastructure company.

Sols, a year-old, New York-based 3D printing company focused on custom-made shoe insoles that help with foot pain, has raised $6.4 million in Series A funding led by earlier investor Lux Capital. New investor Founders Fund also participated, along with earlier investors RRE, Rothenberg Ventures, Felicis Ventures, FundersGuild, and Grape Arbor VC. Sols has raised $8.15 million to date.

Sprinklr, a 4.5-year-old, New York-based maker of social media management software, has raised $40 million in Series D funding led by Iconiq Capital, with participation from Battery Ventures and Intel Capital. The company has raised $77.5 million to date, shows Crunchbase.

Tealium, a six-year-old, San Diego-based company whose tag management system helps its customers collect information from Web surfers, has raised $20 million in funding from Silver Lake. To date, the company has raised $47 million, including from Tenaya Capital, Battery Ventures, and Presidio Ventures.

TeleSign, a nine-year-old, L.A.-based company that provides authentication services for companies needing to verify the identities of their users, has raised $40 million in Series B funding led by Adams Street Partners. Other participants in the round included March Capital Partners and earlier investor Summit Partners.

Tidemark, a five-year-old, Redwood City, Ca.-based business-intelligence service, has raised $32 million in funding from Silicon Valley Bank, along with earlier investors Greylock Partners, Andreessen Horowitz, Redpoint Ventures, and Tenaya Capital. Tidemark has raised $80 million altogether.

Understory, a two-year-old, Boston-based weather data and analytics startup, has raised a seed round of $1.9 million led by True Ventures. Other participants in the round included RRE Ventures, Vegas Tech Fund, SK Ventures and angel investor Andrew Payne. Understory has created devices that collect data directly at the Earth’s surface. Xconomy has more here.

Vorstack, a three-year-old, Los Altos Hills, Ca.-based cyber-security company, has raised $5.2 million from individual investors, EMC Ventures, and earlier Vorstack investor Aligned Partners.

—–

New Funds

Sandeep Murthy, a general partner at Sherpalo Ventures, the 14-year-old investment firm of superstar investor Ram Shriram, is apparently parting ways with him — at least, geographically. Murthy, who has long managed Sherpalo Ventures’s India investments, is launching two funds of his own. The first, Lightbox Ventures I, has already backed six startups. A second fund, Lightbox Ventures II, will look to invest up to $90 million fund in early-stage, India-based startups. Shriram, meanwhile, will focus primarily on U.S. investments for now. TechCrunch has much more on the story here.

—–

IPOs

GlobeImmune, a 19-year-old, Louisville, Co.-based company that develops infectious disease and cancer therapies called Tarmogens, has set the estimated terms for its IPO, saying it expects to sell 2.2 million shares at a price between $15 and $17 each. The company has raised at least $45 million over the years, shows Crunchbase. Its biggest shareholders include Celgene Corporation, HealthCare Ventures, Morgenthaler Partners, Wexford-Kappa Investors, Sequel Limited Partnership, and Lilly Ventures Fund.

For those trying to keep track: 90 IPOs have priced so far in 2014 (as of last night). Of them, says IPOScoop, 51 issuers are trading up, and 39 have seen their shares sink below their offering prices. The total return from the issue price (on average) is 9 percent. The Nadaq’s year-to-date change, meanwhile, is -1.75 percent.

—–

Exits

Audience Media, a three-year-old, Barcelona-based company whose software aims to help publishers monetize their content, has been acquired by Zinio, a San Francisco-based company that makes a digital newsstand and magazine app. Terms of the deal were not disclosed. Zinio has raised at least $27 million to date.

ConnectEdu, a 12-year-old, Boston-based education technology company, has filed for Chapter 11 bankruptcy protection. The filing lists ConnectEdu’s assets at between $1 million and $10 million against liabilities of between $10 million and $50 million. ConnectEdu had raised roughly $28 million over the years, including from the Bill & Melinda Gates Foundation; North Atlantic Capital; and Allen & Company.

InkTank, a two-year-old, San Francisco-based maker of open-source storage systems, has been acquired by the open source software company Red Hat for $175 million in cash. InkTank had raised $14.4 million from New Dream Networks, owners of the cloud hosting company DreamHost, and Mark Shuttleworth, founder of the computer software company Canonical. TechCrunch has more here.

IPierian, a 6.5-year-old, South San Francisco-based drug discovery platform for neurodegenerative diseases like Alzheimer’s, has been acquired for up to $750 in cash by Bristol-Myers Squibb. The company had raised $74.2 million from investors over the years, including Google Ventures, SR One, Biogen Idec, Mitsubishi UFJ Capital, Highland Capital Partners, Atel Ventures, MPM Capital, and Kleiner Perkins Caufield & Byers.

Omnilink Systems, an 11-year-old, Alpharetta, Ga.-based offender monitoring company that tracks people and assets for judicial and commercial customers, has been acquired by Numerex Corp. for $37.5 million in cash. Omnilink had raised $12.2 million from investors, including from Grotech Ventures.

—–

People

Jeff Crowe of Norwest Venture Partners on the best advice he has ever received: “‘Don’t give up. Never give up.’ When I started my company, I can remember early on that we missed our objectives the first year, and it was pretty demoralizing. My board was great at saying, ‘Don’t give up,’ and we eventually started doubling our revenue every year thereafter.”

George Kellerman, a partner at 500 Startups, is leaving the organization to join former colleague Paul Singh, who left 500 Startups last year. Singh has since been raising $50 million for his new, Arlington, Va.-based venture firm, Disruption Corporation. “George is a Valley native, but I think he sees the opportunity that I do,” says Singh, talking about the so-called Series A gap. Indeed, Singh’s fund, called Crystal Tech Fund, targets tech companies in the post-seed space, as do a small but growing group of other firms, including Venture51, Capital Partners (the new fund of Ronny Conway), and Bullpen Capital. Singh says he has already made six investments through Crystal Tech, including in WeWork, a four-year-old, New York-based collaborative community platform that connects small businesses.

Early Twitter investor Chris Sacca took to, yes, Twitter yesterday to skewer Wall Street investors who dumped the company’s shares following first-quarter earning results that showed decelerating growth in active users. (The stock was down more than 10 percent yesterday in after-hours trading, notes Fortune.) Tweeted Sacca, “Dear Wall St: you had the same tired questions about Twitter stock when I was buying it at $4b. Let’s revisit this in a couple years. Cool?”

—–

Job Listings

LinkedIn has posted a new listing for a senior manager of corporate development.

And for our PR readers: Uber is looking for a head of corporate communications.

—–

Data

The end of the Facebook monopoly (c/o Benedict Evans).

—–

Essential Reads

Glam Media has done a big fat pivot into streaming video, renaming itselfMode Media in the process. VentureBeat has more here.

The surprising compensation trends of startup executives.

In case you’d missed this: Wired’s Steven Levy delves into the science behind your Facebook and Twitter feeds.

—–

Detours

This guy walked around Tokyo backwards; here is what the footage looks like played in reverse.

The fastest animal in the world is no longer the cheetah.

—–

Bear Paw Meat Handler Forks for pork pulling. (Look, you never know.)

—–

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

Connie

April 30, 2014

Morning Summary

Supreme Court
In Supreme Court Rulings, Startups Win

Yesterday, the Supreme Court made life a lot better for venture-backed startups, whether they know it yet or not.

In a case called Octane, the justices ruled 9-0 that the U.S. Circuit Court for the Federal Circuit — where every patent appeal in the country eventually winds up — had imposed overly restrictive standards for companies looking to recoup legal fees in cases brought against them by patent holders.

In a second, related case, Highmark, the justices also limited the ability of an appeals court to overturn a lower court judge’s decision in such cases.

To learn more, StrictlyVC talked last night with intellectual property attorney Rudy Telscher, who argued on behalf of the petitioners in the Octane case.

First, congratulations. Was this your first time, arguing a case before the Supreme Court?

It was. I’ve been there a couple of times on unrelated matters, but it was my first time to argue, and it was a pretty amazing experience, from walking into the courtroom to opening [the] case in front of the justices to handling their barrage of very smart questions. I’m lucky to have been able to argue such an important issue before them.

What part of the experience was most surprising?

Well, a protester stood up during my rebuttal and was removed by Secret Service. That was a surprise. [Laughs.] I handle of lot of appellate arguments, but the experience was very different in that you have nine justices coming at you from different angles. You’re facing the brightest legal minds in the country, and you know that as one is asking a question, the others are thinking up eight more. Some [of their questions], I hadn’t thought up [during my preparation], but when you handle a case for eight years, you have a good sense of law.

Wow, eight years. For those just tuning in to the case, can you explain its importance, particularly to VCs and the founders they back?

An entrepreneur or smaller company builds a successful product and a larger competitor wants to come after them . . . And even though the larger competitor’s position is weak, it’s expensive to fight. [These suits] used to be an occasional thing, but now small and large companies alike are getting hit by patent trolls that buy up broadly worded patents from the ‘90s that have nothing to do with what’s going on today. And they call these companies and say, “It will cost you $2 million to $3 million to defend yourself. You might as well pay us $500,000 to settle.”

Now there will be more companies that stand up to these claims, because their odds of getting [repaid for their] their attorneys’ fees are pretty good.

How much has your client, Octane Fitness, spent on attorneys’ fees? And will those fees now be fully reimbursed by the opposing side?

They’ve spent $2.5 million, which might sound like a large sum but is probably about $3 million less than the national average. Now, the case goes back down to district court.

Is there any chance you’ll be ruled against there?

There are no guarantees, but I’d like to think the odds of that are low. The Supreme Court altered the standard a lot, saying it was rigid and very difficult to meet. It’s a big deal.

Connie

April 30, 2014

Entrepreneurs, Politics

Rudy Telscher, Supreme Court
StrictlyVC: April 29, 2014

Happy Tuesday, dear readers. We know many of you didn’t receive yesterday’s email. Why it doesn’t make it through to everyone on certain days will remain one of those great unsolved mysteries (until we hire a much-needed consultant), but if you’d like to check out what you missed, it is here.

—–

Top News in the A.M.

Smartphone giants Apple and Samsung are seeing their market share decline slightly in the face of growing competition from Huwaei and Lenovo, according to new data released last night.

—–

Wealth Manager: “VCs Do Tend to Have Strong Opinions”

Mark Castelin, a director of investment advisory services at the wealth management firm Harris myCFO, handles a lot of the “unique” needs of ultra high-net-worth venture capitalists. We talked last week about how VCs differ from some of the firm’s other clients. Our conversation has been edited for length.

Your firm does a lot of analysis on different sectors and considers itself a kind of sounding board for clients. I would think VCs are hard to advise, though. Are they?

VCs do tend to have strong opinions where they want to invest in the venture space, though they may say they know nothing about bonds or emerging markets. So sometimes they use us as a resource for specific things. Other times they want validation that a path they’re pursuing is being pursued by others. And they want to know [their peers’ strategies].

Your clients typically have $25 million in investable assets and a net worth of roughly $100 million or more. How much of that money do you counsel them is safe to invest in venture-backed startups?

Maybe it will be 40 percent exposure to private markets, and half of that will be venture capital, so the implication is that they have a $20 million bucket to allocate [to startups]. Then we make sure that the client holds to that number and we work with that person to ensure that they diversify their holdings so that they include everything, including biotech and clean tech, as well as some geographic diversification, because so much is going on outside the U.S. right now.

Do you steer ever, or often, steer them to secondary investments?

They come along fairly infrequently, but in our mind, they’re a very good investment opportunity. These are companies that are fairly far along in the J curve . . . so the multiples might not be as high as with primary [investments] but you have much better odds of success.

The saying in tech circles was once “show no chrome.” But people have grown flashier, seemingly. What are you seeing?

I’d argue that [self-made] people are still more conservative than those who inherit money. Given all the stresses and strains that go into birthing a successful business, not many are wont to go run around spending it willy nilly. I don’t really see that many going on global sprees.

There’s that old saying about “suits to shirtsleeves in three generations.” There are those who make the money, then the second generation that’s close enough to kind of respect it. The third generation is so far removed that they just see it as numbers in a bank account and they’re happy to spend it.

Is the Giving Pledge impacting the way people view that self-made wealth?

People of wealth have always been generous, but [Bill] Gates and [Warren] Buffett turning over entire fortunes to charity [has inspired more people to do the same]. I don’t think we’ve ever seen that practiced in the ultra high net worth arena except in the last three years or so, when it’s begun to gain traction. I think in the past, perhaps without the ability to connect so easily, people might not have thought they could have as much of an impact on other people as they do today.

New Fundings

AbCelex Technologies, a 3.5-year-old, Toronto-based biotech company that focuses on detection and prevention of food-borne illnesses, has raised $2 million in Series A funding led by the Chicago-based fund Cultivian Sandbox Ventures.

Algal Scientific, a five-year-old, Plymouth, Mi.-based company that’s developing a wastewater treatment system that removes and recovers nutrients using an algae-based process, has raised $3 million from Evonik Venture Capital GMBH, Formation 8, and Independence Equity.

Alibaba and founder Jack Ma’s Yunfeng Capital have shelled out $1.22 billion for an 18.5 percent stake in China’a biggest online video company,Youku Tudou. Alibaba will hold about 16.5 percent of Youku, while Yunfeng will have about 2 percent, reports Bloomberg. You can find more here on the acquisition and other ways Alibaba is prepping for its IPO.

Aston Club, a year-old, Melbourne, Australia-based company whose hospitality-focused payment app enables patrons of bars and restaurants to pay their bill without dealing with credit cards, has raised $1.5 million in seed funding from a group of angel investors.

B2M Solutions, a 12-year-old, Oxfordshire, England-based company that sells mobile device analytics and process optimization software to enterprise customers, has raised an undisclosed amount of funding from Motorola Solutions Venture Capital.

Bidu, a two-year-old, Brazil-based online insurance comparison and brokerage company, has raised $8.9 million from the British venture capital firm Amadeus Capital Partners. The company was incubated by São Paulo-based Monashees Capital and the insurance brokerage company MBS Seguros. Monashees and other past investors, including Bertelsmann Group and Otto Capital, also participated in the new financing round. Dealbook has more here.

Brightpearl, a seven-year-old, San Francisco-based company that sells a cloud-based multi-channel retail management system to help customers with sales order management, inventory, and so on, has raised $10 million in a funding round led by MMC Ventures, with participation from new investor Quayle Munro. Earlier investors Eden Ventures and Notion Capital also joined the round. Brightpearl has raised $24.5 million to date, shows Crunchbase.

Caviar, a two-year-old, San Francisco-based food delivery startup that promises to help high-end restaurants sell and deliver anything on their menu to take-out customers, has raised $13 million from Tiger Global Management, says the WSJ. The company raised $2 million in seed funding last year from Andreessen Horowitz, Winklevoss Capital,Harvard Common Press, Iron Fire Capital and Paul Bucheit.

CrowdComputing Systems, a 3.5-year-old New York-based maker of SaaS-based products for building an online workforce, has changed its name to WorkFusion, as well as raised a $15 million Series B round led by Mohr Davidow Ventures. The company has raised $22.3 million to date, including from earlier investors Greycroft Partners, iNovia Capitaland RTP Ventures.

Doximity, a three-year-old, San Mateo, Ca.-based professional network for U.S. healthcare professionals, has raised $54 million round in Series C funding co-led by DFJ and T. Rowe Price. New investor Morgan Stanley Investment Management also participated in the round, alongside earlier investors Emergence Capital Partners, Morgenthaler Ventures and InterWest Partners. Doximity has raised roughly $82 million to date.

Farfetch, a 6.5-year-old, London-based online shopping platform that features a variety of independent fashion boutiques’ brands and styles, has raised a $40 million round of funding that’s expected to close this week, sources tells Fortune’s Erin Griffith. The company previously raised $42.5 million over three rounds of funding from Index Ventures,Advent Venture Partners, E.ventures, and Conde Nast.

Kite Pharma, a 4.5-year-old, L.A.-based company that’s developing therapies meant to train the immune system to eradicate cancer, has raised $50 million in new funding from an unnamed syndicate of healthcare investors. Last year, the company raised a $35 million Series A round, including from Alta Partners.

LendUp, a 2.5-year-old, San Francisco-based lending company, has raised a $50 million credit debt facility from Victory Park Capital, reports TechCrunch. The company had previously raised $18 million in venture funding from Google Ventures, Data Collective, ThomVest Ventures,Andreessen Horowitz, QED Investors and others. Victory Park Capital has provided debt financing to numerous next-generation lenders, including Kabbage, Avant, and Zest, notes TechCrunch.

Lover.ly, a three-year-old, New York-based search engine for finding bridal ideas, trends and other wedding-related information, is closing a $2.5 million Series B round at a valuation at or north of $15 million, according to TechCrunch’s sources. No word yet on who is leading the round or otherwise participating in the investment. Lover.ly has raised $1.2 million in seed funding to date, including from Quotidian Venturesand individual investors like Joanne Wilson.

New Relic, a six-year-old, San Francisco-based maker of application monitoring tools for developers, has raised $100 million in funding led by BlackRock and Passport Capital, with T. Rowe Price and Wellington Management participating. The company has now raised roughly $274 million, shows Crunchbase, including from Benchmark, Trinity Ventures, and Tenaya Capital.

PolicyMic, a three-year-old, New York-based site that publishes a mix of original and aggregated articles about “what’s happening in the world and why it matters,” has raised $10 million in new funding from numerous investors, including Netscape cofounder Jim Clark, who said in a statement that the company’s founders “remind me of my younger self and I’m excited to partner with them on this challenge.” PolicyMic had previously raised $5 million from Lightspeed Venture Partners, Lerer Ventures, Red Swan, and Bertelsmann Digital Media Investors, among others.

URX, a year-old, San Francisco-based company focused on mobile deep linking — interconnecting mobile apps in a way similar to how the Web itself operates via clickable links — has closed $12 million in Series A funding led by Accel Partners. Other participants included First Round Capital, Google Ventures and SV Angel. The round values the company, which has raised $15.1 million altogether, at $40 million, says TechCrunch.

—–

New Funds

RRE, the 20-year-old, New York-based venture firm that largely focuses on New York-based startups, has officially closed its sixth fund with $280 million in commitments. The firm raised the money in just six weeks, co-founder Stuart Ellman tells Business Insider. Last fall, StrictyVC hadinterviewed cofounder Jim Robinson, who suggested the firm would be in the market again shortly. At the time, RRE had mostly finished investing its fifth, $230 million fund, closed in 2011 (a fund that has a 59 percent RRE, the firm tells Business Insider).

As Business Insider notes, some of RRE’s higher-profile deals include OnDeck Capital, the still-private small business lending company;Whiptail, which was acquired by Cisco for $415 million; and Makerbot, which was acquired for nearly $604 million by the 3D printing company Stratasys. “We’re both proud and humbled by what New York startups have been able to achieve,” Ellman tells the outlet. “We think the best is yet to come.”

—–

IPOs

Aspen Aerogels, a 13-year-old, Northborough, Ma.-based company that designs, develops and makes aerogel insulation that’s used primarily in large-scale energy infrastructure facilities, has filed an S-1 with the SEC. The company, which has raised at least $136 million from investors over the years, counts among its biggest shareholders: Arcapita Ventures, which owns a 13.5 percent stake in the company; GKFF Ventures (formerly known as Argonaut Ventures), which owns 27.1 percent; Reservoir Capital Partners, which owns 32.7 percent; and RockPort Capital Partners, which owns 7.7 percent.

Metabolon, a 14-year-old, Durham, N.C.-based medical technology company that tests how diseases and drugs affect the body, is working on an IPO that could launch by June, sources tell the WSJ. The company has already confidentially filed with the SEC under the JOBS Act. It has raised at least $47.7 million to date, shows Crunchbase; its backers include Sevin Rosen Funds, the Aurora Funds, Camden Partners, Fletcher Spaght Ventures, and Syngenta Ventures.

—–

Exits

This one really falls into the almost-an-exit bucket: Fortune is reporting that Walt Disney Co. was in talks to acquire the online content juggernaut BuzzFeed earlier this year, but that talks broke down over price. BuzzFeed, which has raised $19.3 million from investors, was reportedly seeking up to $1 billion.

Also not quite an exit but maybe, possibly getting there: The WSJ is reporting that discussions of a $300 million-plus acquisition of the Indian online clothing retailer Myntra Designs by Flipkart, the Indian retail site, have stalled over how Myntra would be managed afterward. “We want to stay an independent entity; that is nonnegotiable,” Myntra CEO Mukesh Bansal tells the outlet.

Jaspersoft, a 13-year-old, San Francisco-based maker of subscription-based business intelligence software, has been acquired by publicly traded Tibco Software for $185 million. Jaspersoft had raised at least $43 million over four rounds, including from Scale Venture Partners,SAP Ventures, Partech Ventures, DCM, and Morgenthaler Ventures.

—–

People

Fortune profiles DFJ‘s Steve Jurvetson, who is thinking way, way ahead, as usual — all the way to the software and services layer that will be created when SpaceX and others create cheaper access to space. “These things take so much time and effort to build, it’s kind of like NASCAR,” he says of his own rockets, which he builds with his son. “If it weren’t for the potential for a wreck, it would be a bit less exciting.”

Silicon Valley Business Journal introduces readers to “the other Khosla,”Neeru Khosla, wife of famed venture capitalist Vinod Khosla and founder of the education foundation CK-12, which focuses on content related to science, technology, engineering and math. Says Vinod Khosla of his wife and her efforts: “As a family, we sort of started with the view that only a science education is an education — a somewhat bigoted view, I would say, of mine and hers . . . It’s almost been religion in our family.”

Ted Schlein, a longtime partner at Kleiner Perkins Caufield & Byers, talks with the Silicon Valley Business Journal about a variety of things, including the state of Kleiner Perkins. Says Schlein: “I think people like to talk about stuff that may have taken place 10 years ago when we were focused on green tech. Did that pan out the way we thought it was going to pan out? No, it didn’t. That’s life. OK. So now we focus on some of these other areas, and I think it’s been good.We had a very large number of IPOs and M&A events last year, and the pipeline is quite good for this year. So I think things are going great. But people will say what they are going to say.”

Nokia late yesterday said it was naming former networking unit head Rajeev Suri as its new chief executive, following the sale of its flagship device business to Microsoft. Suri joined Nokia in 1995. Re/code has more here.

—–

Job Listings

Yelp is looking for a senior manager of business development in San Francisco.

—–

Data

Israeli private high-tech firms raised $673 million in venture capital in the first quarter, up 53 percent from a year earlier, the Israel Venture Capital (IVC) Research Center announced this morning. The sum is 16 percent lower than the record amount raised in the fourth quarter but is still exceptionally high, said IVC. More here.

—–

Essential Reads

How Twitter‘s monetization strategy is coming together.

—–

Detours

A mom packs an encouraging note in her own lunch. (StrictlyVC is days away from doing this.)

An amazing high-rise apartment building in France looks like a tree.

What is a photocopier? (Very funny, though presumably not for the actual people involved. H/T: Balaji Srinivasan)

—–

Retail Therapy

Dear BMW: We are very confused by this. That is all.

—–

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

Connie

April 29, 2014

Morning Summary

Harris myCFO
Wealth Manager: “VCs Do Tend to Have Strong Opinions”

Mark Castelin, a director of investment advisory services at the wealth management firm Harris myCFO, handles a lot of the “unique” needs of ultra high-net-worth venture capitalists. We talked last week about how VCs differ from some of the firm’s other clients. Our conversation has been edited for length.

Your firm does a lot of analysis on different sectors and considers itself a kind of sounding board for clients. I would think VCs are hard to advise, though. Are they?

VCs do tend to have strong opinions where they want to invest in the venture space, though they may say they know nothing about bonds or emerging markets. So sometimes they use us as a resource for specific things. Other times they want validation that a path they’re pursuing is being pursued by others. And they want to know [their peers’ strategies].

Your clients typically have $25 million in investable assets and a net worth of roughly $100 million or more. How much of that money do you counsel them is safe to invest in venture-backed startups?

Maybe it will be 40 percent exposure to private markets, and half of that will be venture capital, so the implication is that they have a $20 million bucket to allocate [to startups]. Then we make sure that the client holds to that number and we work with that person to ensure that they diversify their holdings so that they include everything, including biotech and clean tech, as well as some geographic diversification, because so much is going on outside the U.S. right now.

Do you steer ever, or often, steer them to secondary investments?

They come along fairly infrequently, but in our mind, they’re a very good investment opportunity. These are companies that are fairly far along in the J curve . . . so the multiples might not be as high as with primary [investments] but you have much better odds of success.

The saying in tech circles was once “show no chrome.” But people have grown flashier, seemingly. What are you seeing?

I’d argue that [self-made] people are still more conservative than those who inherit money. Given all the stresses and strains that go into birthing a successful business, not many are wont to go run around spending it willy nilly. I don’t really see that many going on global sprees.

There’s that old saying about “suits to shirtsleeves in three generations.” There are those who make the money, then the second generation that’s close enough to kind of respect it. The third generation is so far removed that they just see it as numbers in a bank account and they’re happy to spend it.

Is the Giving Pledge impacting the way people view that self-made wealth?

People of wealth have always been generous, but [Bill] Gates and [Warren] Buffett turning over entire fortunes to charity [has inspired more people to do the same]. I don’t think we’ve ever seen that practiced in the ultra high net worth arena except in the last three years or so, when it’s begun to gain traction. I think in the past, perhaps without the ability to connect so easily, people might not have thought they could have as much of an impact on other people as they do today.

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

Connie

April 29, 2014

Investment Opportunities

Harris myCFO
StrictlyVC: April 28, 2014

Good Monday morning, everyone!

—–

Top News in the A.M.

What jurors in the Apple-Samsung case will hear today instead of closing arguments.

—-

Bigcommerce Primes Itself for a Big Round

Bigcommerce, a five-year-old, Austin-based start-up whose software-as-a-service helps more than 55,000 companies create and manage their online stores, is in the market for more funding, co-founder and CEO Mitchell Harper suggested in a wide-ranging conversation with StrictlyVC last week.

The company — which charges its customers a flat rate of between $24 per month, all the way up to $1,000 per month for “white glove service” — raised $40 million last July from Revolution, the investment firm cofounded by AOL cofounder Steve Case. At the time, Case told me that neither BigCommerce nor its previous investors, including General Catalyst Partners and Floodgate, were looking for such a big injection of fresh capital. The company, which has raised $75 million altogether, is operating in a space that has since heated up considerably, though.

Most notably, Shopify, an eight-year-old, Ottawa-based startup with which BigCommerce competes most directly, raised $100 million in December led by OMERS Ventures and Insight Venture Partners. The funding is helping Shopify in its ongoing expansion from online commerce into the brick-and-mortar world, where it has launched a point-of-sale version of its software that’s optimized to run on tablets like the iPad. (Shopify has raised $122 million altogether.)

In our conversation, Harper wasn’t specific about whether BigCommerce’s strategy going forward will involve the same path. But he did say the company might soon begin acquiring its way into new markets.

“Most decisions have been build versus buy or partner,” he said, “but that could change. Small business use a lot of tools, from email marketing to social media to inventory; there are probably 30 or 40 adjacent products” that the company could explore. While it doesn’t have specific plans to launch into any of them, he added that in “three months that could change, the market is moving so quickly.”

In the meantime, BigCommerce, whose revenue is currently growing 20 60 percent year over year, appears to be stepping on the gas. For example, the company, which has offices in Austin and Sydney, is opening an office in San Francisco, too, and earlier this month used some guerrilla tactics to staff it, including descending on engineers at tech bus stops that fill with Facebook, Google, and Yahoo employees. (Using both recruiters and its own engineers to hand out invitations to a happy hour, BigCommerce managed to engage with roughly 1,000 people and snag about a dozen, Harper says.)

Harper noted that no new funding announcement is imminent, but that because capital right now is “cheap,” a new round is “definitely not off the table at the moment. It depends on the valuation, the dilution, the potential upside that an investor can bring . . . and whether they share the same vision that we do.”

He added that that while the 320-employee company has been “optimizing for growth” and isn’t profitable as a result, it could be “very profitable” if management were focused instead on getting the company into the black.

New Fundings

Big Health, a five-year-old, London-based digital health start-up, has raised $3.3 million in Series A funding from Index Ventures andForward Partners. The company tracks data to create highly personalized behavioral medicine programs; its first product, Sleepio, targets customers with sleeping issues.

Blue Apron, a two-year-old, New York-based grocery delivery service company, is raising $50 million in Series C funding led by Stripes Group, according to TechCrunch. To date, Blue Apron has raised a total of $8 million, according to CrunchBase, with two earlier rounds led by Bessemer Venture Partners.

Datumate, a two-year-old, Nazareth, Israel-based image-mapping software maker whose technology aims to reduce the time civil engineers and architects spend taking technical measurements for projects, has raised $5 million in funding by Battery Ventures. Earlier investor Al-Bawader, an Israel-based investment firm, also participated in the round.

Fundrise, a two-year-old, Washington, D.C.-based company that helps any resident (and not just accredited investors) invest in properties in their local market, has raised $20.5 million, according to an SEC filingthat shows a target of $32.8 million. The company had previously raised a $2 million seed round, including from WestMill Capital, according to Crunchbase.

InsideSales.com, a 10-year-old, Provo, Ut.-based company whose predictive analytics software aims to help salespeople close deals, has raised $100 million at a valuation of nearly $1 billion, according to Venture Capital Dispatch. Polaris Partners led the round — contributing “sizably more than anyone else,” it says in the story — joined by Kleiner Perkins Caufield & Byers, which chipped in $25 million from its $1 billion digital growth fund. InsideSales has raised $143 million altogether, shows Crunchbase.

OurCrowd, a 1.5-year-old, Jerusalem, Israeli-based equity crowdfunding platform for accredited investors, has raised $25 million in Series B funding from unnamed investors.

Paddle8, a 3.5-year-old, New York-based virtual auction house focused on fine art, has raised $7 million in debt, according to an SEC filing that shows the company is looking to raise $18 million in debt. The company has raised $10 million in equity to date, including from Mousse Partners, Founder Collective, the Mellon Family, Redline Capital Management,Haystack, and artist Damien Hirst.

SI-BONE, a six-year-old, San Jose, Ca.-based medical device company that’s focused on lower back pain and making surgery for the sacroiliac joint minimally invasive, has closed a $33 million round of funding led by OrbiMed and Novo A/S. Earlier investors Skyline Ventures andMontreux Equity Partners also participated.

SocialFlow, a five-year-old, New York-based social media platform that helps brands engage with existing and potential customers, has raised $2.4 million in new funding, according to an SEC filing that lists a target of $2.6 million. SocialFlow had previously raised $24.8 million, shows Crunchbase, including from AOL Ventures, Fairhaven Capital Partners, RRE Ventures, SV Angel and Betaworks.

Streem, a nearly two-year-old, San Francisco-based cloud storage startup, has raised $875,000 in seed funding, including from Y Combinator, 500 Startups, IronFire Capital, Arbor Ventures, Start Fund, and numerous angel investors, according to TechCrunch.

Tiny Speck, a five-year-old, San Francisco-based company behind a real-time messaging, archiving and search tool called Slack, has raised a fresh $42.75 million in Series C funding led by Social+Capital Partnership. Other participants in the round included Accel Partners and Andreessen Horowitz, which had funded an earlier iteration of Tiny Speck that had focused all of its efforts on a multiplayer game called “Glitch.” The company released an early version of the Slack app last summer and launched it officially in February. Tiny Speck had raised $17.2 million previously.

Tradier, a 1.5-year-old, Charlotte, N.C.-based brokerage platform and trading and analytics application hosting environment, has raised $3 million in new funding from its founders and Devonshire Investors, which is the private investment arm of Fidelity Investments’ owners, the Johnson family.

Verdezyne, a nine-year-old, Carlsbad, Ca.-based industrial biotechnology company focused on producing renewable chemicals, has raised $48 million led by the Malaysian multinational conglomerate Sime Darby Berhad. Earlier investors in Verdezyne include BP Alternative Energy Ventures, DSM Venturing B.V., OVP Venture Partners, and Monitor Ventures.

Voluntis, a 13-year-old, Suresnes, France-based healthcare software company that specializes in Patient Relationship Management (PRM), has raised $29 million in Series D financing co-led by Bpifrance Large Venture and Innovation Capital. Earlier investors, including CapDecisif Management, CM-CIC Capital Innovation and Sham, also participated in the round.

—–

New Funds

Hamilton Lane, the Bala Cynwyd, Pa.-based fund-of-funds firm, has closed its newest vehicle with $426.8 million. It says its original target was $400 million.

—–

IPOs

Three newly public companies had a rough first day on the stock market Friday, joining the broader market sell-off. Shares of stent maker Lombard Medical closed down 9.1 percent. Quotient, a blood test developer, also saw its shares sink 6.9 percent. And app maker Viggle dropped the most at 28 percent. Viggle’s biggest venture backers include Adage Capital Management, which owned 6.5 percent of the company heading into its IPO; DAG Ventures, which owned 9.2 percent; Accel Partners, which owned 6.4 percent; and Frazier Technology Ventures, which owned 6.2 percent. Quotient’s majority shareholder is the healthcare venture firm Galen Partners, which has a 51 percent stake in the company. And Lombard’s biggest shareholders include Invesco, which owned 39 percent going into its IPO; Abingworth, which owned 17.8; Fidelity, which owned 9.5; and Life Sciences Partners, which owned 5.7 percent. USA Today has more here.

Radius Health, an 11-year-old, Cambridge, Ma.-based company that tried to go public in 2012 but withdrew its application, is again trying to go public in an effort to raise $92 million from investors. Radius Health, originally called Nuvios, makes a bone-density-boosting drug that’s in the middle of a Phase III study. Xconomy had written about some of the company’s earlier woes, including turnover at the top, in December. Its shareholders include MPM Capital, The Wellcome Trust, HealthCare Ventures, Saints Capital, and BB Biotech Ventures.

—–

People

Over the weekend, the board of RadiumOne, a five-year-old, San Francisco-based venture-backed ad tech company, voted to remove its founder, Gurbaskh Chahal, from his job as CEO after he was convicted of two misdemeanors for domestic violence and battery. Its official statement is here. Chahal has posted his reaction to his firing here. (Disclosure: A family member of StrictlyVC is among RadiumOne’s roughly 300 employees, so you’ll have to go elsewhere for more extensive coverage of this one!)

Jack Ma and Joe Tsai, who cofounded the Chinese e-commerce giantAlibaba, have set up philanthropic trusts funded by share options that represent about 2 percent of the Alibaba’s current equity. In an interview with the WSJ, Ma talked of his growing alarm at lung and liver cancers that have impacted his family, friends, and colleagues, saying he believes environmental pollution is the cause. “Somebody has to do something,” he added. The Journal says the trusts highlight what many see as the dawn of a new era of giving among China’s freshly minted billionaires.

Elon Musk‘s SpaceX plans to sue the U.S. Air Force to challenge a $7.2 billion contract awarded to a company called United Launch Alliance, Musk said at a news conference on Friday. Musk alleges the United Launch Alliance contract is costing taxpayers “billions of dollars, for no reason” as SpaceX could provide launch rockets far more inexpensively.

San Francisco Magazine interviews tech reporter and entrepreneur Kara Swisher, who calls Google, where her wife, Meghan Smith, is a VP, “pretty dangerous and thuggish.” Asked how Smith feels about her assessment, Swisher says, hilariously: “She doesn’t care. She’s, like, a computer genius. She doesn’t pay attention. She’s not a political person, she’s not a corporate person—she’s a techie. And she has a different opinion of Google: She thinks it’s all daffodils and sunshine and that they’re helping the world—like most of these idiot techies. I gotta listen to that sh_t all day. But they believe it. So whatever.”

Time released its annual list of “the 100 most influential people,” and asked big-league influencers to write about the winners. Peter Thielwrites glowingly of Amazon founder Jeff Bezos. Jack Dorsey of Twitter and Square fame, meanwhile gushes about Snapchat founders Evan Spiegel and Bobby Murphy, calling them “fresh, a little raw and just plain cool.” In a twist, Uber CEO Travis Kalanick gets called “super rad” not by another tech celebrity but by actor Neil Patrick Harris. The broader list might be worth checking out(?).

—–
Job Listings

Lending Club is looking for a VP of corporate development. The job is in San Francisco.

—–

Happenings

ThingsCon, a two-day conference about the future of the hardware business, gets underway in Berlin this Friday.

TechCrunch Disprupt kicks off one week from now in New York. Here‘s the agenda.

—–

Data

According to the analytics company RJMetrics, the top 10 startup cities in the U.S., in descending order, are 1.) San Francisco 2.) New York 3.) Seattle 4.) Washington, D.C. 5.) Austin 6.) Boston 7.) Chicago 8.) Mountain View, Calif. 9.) Palo Alto, Calif., and 10.) Denver. You can learn more about RJMetrics’s methodology, along with other highlights from its startup report, here.

China-based venture firms raised $1.07 billion in the first quarter of this year, 35 percent more than in the first quarter of 2013, according to Dow Jones VentureSource. But only six firms managed to close new funds in the first three months of the year, a meager number compared to previous quarters. The WSJ has more here.

—–

Essential Reads

Turning New York into a hotbed of innovation has been harder than people anticipated, reports Jenna Wortham of the New York Times. “The most harmful thing that limits a company in New York is that they are not part of the milieu of Silicon Valley,” Roelof Botha, a partner at Sequoia Capital, tells her. Being in the San Francisco area, he said, helps start-up founders know the right people to pick up on bits of gossip about new product releases or venture financing rounds.

—–

Detours

Why the Internet fetishizes old photos.

New York City in 17 syllables.

A three-bedroom, three-bath penthouse at the Four Seasons in San Francisco just hit the market for $11 million, or a stunning, $3,056 per square foot. Yahoo CEO Marissa Mayer and husband Zachary Bogue reportedly own a penthouse at the same Four Seasons, while other luminaries have come and gone, including PayPal cofounder Peter Thiel, who looks to have sold his penthouse in 2005 for $6.5 million.

—–

Retail Therapy

Hooray — earphones that don’t fall out.

A table for you and your cats, at long last.

—–

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

Connie

April 28, 2014

Morning Summary
Bigcommerce Primes Itself for a Big Round

Bigcommerce, a five-year-old, Austin-based start-up whose software-as-a-service helps more than 55,000 companies create and manage their online stores, is in the market for more funding, co-founder and CEO Mitchell Harper suggested in a wide-ranging conversation with StrictlyVC last week.

The company — which charges its customers a flat rate of between $24 per month, all the way up to $1,000 per month for “white glove service” — raised $40 million last July from Revolution, the investment firm cofounded by AOL cofounder Steve Case. At the time, Case told me that neither BigCommerce nor its previous investors, including General Catalyst Partners and Floodgate, were looking for such a big injection of fresh capital. The company, which has raised $75 million altogether, is operating in a space that has since heated up considerably, though.

Most notably, Shopify, an eight-year-old, Ottawa-based startup with which BigCommerce competes most directly, raised $100 million in December led by OMERS Ventures and Insight Venture Partners. The funding is helping Shopify in its ongoing expansion from online commerce into the brick-and-mortar world, where it has launched a point-of-sale version of its software that’s optimized to run on tablets like the iPad. (Shopify has raised $122 million altogether.)

In our conversation, Harper wasn’t specific about whether BigCommerce’s strategy going forward will involve the same path. But he did say the company might soon begin acquiring its way into new markets.

“Most decisions have been build versus buy or partner,” he said, “but that could change. Small business use a lot of tools, from email marketing to social media to inventory; there are probably 30 or 40 adjacent products” that the company could explore. While it doesn’t have specific plans to launch into any of them, he added that in “three months that could change, the market is moving so quickly.”

In the meantime, BigCommerce, whose revenue is currently growing 20 60 percent year over year, appears to be stepping on the gas. For example, the company, which has offices in Austin and Sydney, is opening an office in San Francisco, too, and earlier this month used some guerrilla tactics to staff it, including descending on engineers at tech bus stops that fill with Facebook, Google, and Yahoo employees. (Using both recruiters and its own engineers to hand out invitations to a happy hour, BigCommerce managed to engage with roughly 1,000 people and snag about a dozen, Harper says.)

Harper noted that no new funding announcement is imminent, but that because capital right now is “cheap,” a new round is “definitely not off the table at the moment. It depends on the valuation, the dilution, the potential upside that an investor can bring . . . and whether they share the same vision that we do.”

He added that that while the 320-employee company has been “optimizing for growth” and isn’t profitable as a result, it could be “very profitable” if management were focused instead on getting the company into the black.

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

Connie

April 28, 2014

Entrepreneurs, Fundraising

Bigcommerce, Floodgate, General Catalyst, Mitchell Harper, Shopify, Steve Case Revolution
StrictlyVC: April 25, 2014

It’s Friday, party people! Hope you have a terrific weekend, and we’ll see you next week with more good stuff.

—–

Top News in the A.M.

A couple days after Netflix and Comcast fought in public, the two companies, which are supposed to be partners, have taken it into the street again.

—–

Inside Mithril, Part Two

On Tuesday, StrictlyVC took readers inside 22-month-old Mithril Capital Management, a well-known but little-understood investment firm cofounded by longtime friends and colleagues Peter Thiel and Ajay Royan.

As we’d sat down with Royan for more than an hour at Mithril’s San Francisco offices, we had some additional notes from our chat we thought you might find interesting. They’ve been edited for length.

You worked with Peter at his hedge fund, Clarium Capital Management, as well as at Mithril. What makes your partnership work?

We’ve worked together so long that he’s a fantastic foil to my thinking. And after all these years, if Peter is excited about something and I think differently, he’s very open to good feedback. So we have good discussions [and] independent views and there’s enough shared experience and shared principles that we can have a quick, high-resolution conversation about things in depth.

Mithril has made seven investments to date, most of them eight-figure investments, including in a San Francisco-based security software company called Lookout. Do you take board seats with these investments?

It’s at the request of the company. My view is [you want to offer] high availability and low interference. You want the check writing to be the most dramatic thing that you do, which is contra to what you hear in the Valley these days. You should be very helpful — and we are, whenever we’re asked, including with sophisticated financial strategy. But companies are staying private longer these days, so they’re encountering operational issues and capital management issues that venture-backed companies didn’t encounter 10 years ago, and that’s where we’re most helpful. But that is not formal governance; that’s really about a good relationship with founders.

You’ve said that with Mithril’s first, current fund, you ended up with a more standard fund structure, though you really wanted to form a corporation. Will you pursue a different structure the next time around?

No, [what we have] is a standard default that works for everyone. Our LPs in the first fund — we were careful in who we ended up working with. About a fifth of the capital is principal capital, so that was meaningful. We ended up working with a lot of family money – so, larger family endowments [as opposed to institutional capital] and sovereigns, as well. But in most of these cases, if we look at our LP base, it’s almost all direct investors, it’s people who are looking at us as a partner in Silicon Valley to understand what’s going on in the technology space, to be invested in it, so it changes the character and complexion of it.

What’s your view on valuations? Is Mithril at all price sensitive?

Entry price is really important. But you want to enter on a basis where you can hold over the long term. Almost every investment we’ve made has been a non-auction process. Even if there was an auction going on, it’s usually gotten sidetracked in favor of having a conversation with Mithril because [we’re typically] investing at an inflection point in a company’s business. Take Lookout for example. It’s known for its anti-virus protection for phones. But because it’s protecting 50 million devices . . . it now has a network of phones using applications like a neighborhood watch. And you can extrapolate information from this network and understand where the threats are coming from across different artificial silos. It’s not just AT&T or T-Mobile’s phones. It’s not phones owned by GE employees or your family members. So its historic business is still valid and growing fast, but there’s a whole other S-curve starting, and that’s what we’re underwriting. It was almost like a new Series A for a company that’s already a $500 million to $600 million company.

You believe there’s still too little tech investing, and that the world needs more firms like yours and Andreessen Horowitz and Khosla Ventures. Why?

From an investor point of view, there’s just very little going on [on] a relative numbers basis. It might not feel that way sitting in San Francisco or counting the number of words associated with technology in the newspapers today relative to 10 years ago. But on a global basis, you look at real estate investment and you look at power plants and real assets . . . and [tech investment] is just minuscule compared with the money that goes into these other asset classes. The fact that so little capital has generated so much value in such a short time has made it have an outsize effect in people’s minds. If you look at the Fortune 500 by revenue, there are a lot of industrial companies; if you rank it by profits, it’s remarkably tech heavy. I think the whole world is just beginning to understand what that means.

New Fundings

Bitmoon Computing, a months-old, Palo Alto, Ca.-based, still-stealth startup, has raised $8 million in funding, according to an SEC filing firstspied by Fortune. Two executives are listed on the filing: Rob Woollen and Jason Frantz, both EIRs at Sutter Hill Ventures. Other members of Sutter Hill are listed as directors.

Crate Data, a year-old, Berlin-based open source data store for developers, has raised $1.5 million in funding from Sunstone and DFJ Espirit.

Crispr Therapeutics, a months-old, London-based company developing an enzyme that can be used as a tool in gene-editing procedures, has raised $25 million in Series A funding led by Versant Ventures. (The New York Times wrote an interesting piece on gene editing last month, fyi.)

Freee, a two-year-old, Tokyo-based maker of automated online accounting software for small and mid-size businesses, has raised $8 million in Series A funding from DCM and Infinity Venture Partners.

GroundMetrics, a 3.5-year-old, San Diego-based developer of electromagnetic surveying technology used by the oil and gas industry, has raised $2.7 million in Series B funding led by Cowboy Technology Angels, an Oklahoma-based angel group. Other participants in the round included Tech Coast Angels, Crescent Ridge Partners, ACE Fund,Harvard Business School Alumni Angels, and former Barclays executive Peter Landin.

Isarna Therapeutics, a 16-year-old, Munich, Germany-based company developing inhibitors that stimulate the human immune system to fight cancer and other diseases, has raised $7.6 million in funding, including from AT NewTec, Global Asset Funds and MIG Fonds. To date, the company has raised at least $25.4 million altogether, shows Crunchbase.

Juno Therapeutics, a young, Seattle-based startup that’s developing immunotherapies for cancer, has closed its Series A round (again). In December, the company announced it had closed on $120 million, much of it from ARCH Venture Partners and the Alaska Permanent Fund, through a partnership managed by Crestline Ventures. In January, it added $25 million to the round from Bezos Expeditions (the investment arm of Amazon founder Jeff Bezos) and Venrock. Yesterday, Juno revealed that it has raised yet another $31 million, closing the round at $176 million. No new investors were named. Juno is a joint venture among the Fred Hutchinson Cancer Research Center, the Memorial Sloan-Kettering Cancer Center, and Seattle Children’s Research Institute.

Peloton, a two-year-old, New York-based that produces in-home bikes (along with on-demand instructional exercise content), has raised $10.5 million in Series B funding led by Tiger Global Management, which was joined by angel investors. Peloton is also about to open an 8,000-square-foot cycling studio in New York’s Chelsea neighborhood. The company has raised just more than $14 million altogether.

SirionLabs, a 1.5-year-old, Gurgaon, India-based enterprise software company aimed at improving the efficiency of outsourcing contracts, has raised “about Rs 28 crore” from Sequoia Capital, reports the Economic Times. The company was cofounded by second-time entrepreneur Ajay Agarwal, who also cofounded a legal processing outsourcing firm called UnitedLex.

Stitch, a year-old, San Francisco-based mobile email application for salespeople, has raised $3.25 million in seed funding from Google Ventures, SoftTech VC, Freestyle Capital, Foundation Capital, ENIAC Ventures and angel investors, reports TechCrunch.

Virtuix, a year-old, Houston-based company whose gaming device features a 360-degree treadmill that allows gamers to run, walk, jump and crouch when playing a game with a virtual reality headset, has raised $3 million in funding led by Maveron and Tekton Ventures, a seed stage venture fund based in San Francisco. Other participants in the round included Scentan Ventures, Radical Investments, Scout Ventures,StartCaps Ventures and angel investors.

XAPPmedia, a year-old, Washington, D.C.-based startup that provides interactive audio advertising for Internet radio stations, has raised $3 in funding from undisclosed investors to develop an advertising platform. VentureBeat has more here.

—–

New Funds

ARCH Venture Partners, a 28-year-old, Chicago Heights, Il.-based venture firm that invests in life sciences, physical sciences, and IT companies, is targeting $250 million for its eighth fund, shows a new SEC filing that states a first sale has yet to occur. Among ARCH’s newest bets isJuno Therapeutics (see New Fundings), and Nextcode Health, a clinical diagnostics company. ARCH raised its last fund, a $400 million vehicle, in 2007, according to peHUB.

Three members of the Waterloo, Ontario startup community are creating a $5 million (still unnamed) fund to help early-stage tech firms in region,reports the Guelph Mercury. Michael Litt and Devon Galloway, co-founders of Vidyard, and Mike McCauley, a founder of BufferBox, have already funded sevens startups and say they’ll be writing many more checks of between $25,000 and $100,000 in “local deals, smart founders, guys we can see ourselves in a few years ago,” Litt tells the outlet.

—–

IPOs

The law firm Fenwick & West announced the results of its 2013 technology and life sciences IPO survey yesterday. Among its many conclusions: the number of tech and life sciences IPOs rose 62 percent between 2012 and last year, with life sciences companies slightly outpacing their tech peers. (Twenty-three life sciences companies went out, compared with 22 tech offerings.) Life sciences companies also had better public debuts, with 83 percent of them trading up their opening day, compared with 64 percent of tech companies. Another point: 11 companies completing IPOs in the second half of 2013 also completed a follow-on offering within six months of their IPO. The full report is here.

—–

Exits

DocTrackr, a three-year-old, Cambridge, Ma.-based document rights management startup, has been acquired by the publicly traded company IntraLinks Holdings for an undisclosed amount. DocTrackr had raised $2 million in seed funding from investors including Polaris Venture Partners,Atlas Ventures, Lead Dog Ventures, and Common Angels.

Zefr, a 4.5-year-old, Venice, Ca.-based software platform for brand and content management on YouTube, has sold its MovieClips unit (which encompasses a catalog of 45,000 film clips) to the ticketing platform Fandango for an undisclosed amount. Reportedly, Fandango is looking to start producing more original programming, as well as tie-in promotions. Zefr has raised roughly $60 million from investors, including US Venture Partners, MK Capital, Shasta Ventures, Richmond Park Partners, First Round Capital, and SoftTech VC.

Payscale, a 15-year-old, Seattle-based compensation software services company, has been acquired by the private equity firm Warburg Pincus in a deal worth up to $100 million, reports TechCrunch. PayScale has reportedly developed a massive database of individual compensation profiles, containing salary information on 40 million jobs, since opening its doors. Over the years, it has raised more than $33 million from investors, including Montlake Capital, Madrona Venture Group, Fluke Venture Partners, Trinity Ventures, Allen & Co., and SAP Ventures.

ProtoGeo Oy, a two-year-old, Helsinki-based maker of a mobile app calledMoves, has been acquired by Facebook, a move that signals the company’s interest in the fitness tracking market. Inc. Facebook says the company will continue running independently, and that Facebook will use it to help people “take small steps toward more healthy habits and lifestyle,” according to the WSJ. The app had raised a small, undisclosed round of financing from Lifeline Ventures, PROfounders, AJP Holding,Juha Lindfors, Jyri Engestrom, and Tekes.

Scroll Kit, a 2.5-year-old, New York-based startup whose platform enables people to build websites without knowing any code, has been acquired by Automattic, the parent company of WordPress. Terms of the deal aren’t being disclosed, but the Scroll Kit editor is being shut down in three months as its co-founders integrate some of the features into WordPress.

—–

People

David Cowan of Bessemer Venture Partners spent Wednesday with a barbershop quartet, serenading the Bay Area office managers of Bessemer’s portfolio companies. Cowan called them the startups’ “unsung heroes.” You can see group’s delightful harmonizing right here.

Liron Gitig has been promoted to partner at FTV Capital, the 16-year-old San Francisco-based growth equity investment firm. Gitig joined FTV Capital in 2006. Before joining the firm, he worked briefly for Lazard Technology Partners and spent three years as a vice president at Giza Venture Capital.

Vic Gundotra, a vice president of engineering at Google who was a leading force in bringing Google+ into the social world, is leaving the company, Re/code reported yesterday. The outlet’s sources say Google CEO Larry Page has already picked a current Google+ exec — VP of engineering David Besbris — to replace Gundotra, who hasn’t said yet what’s next.

Conor Moore has been named the national co-leader of KPMG‘s venture capital practice. Moore, who is based in San Francisco, joined KPMG in 2002 and has held a number of different roles over the years, including partner-in-charge of KPMG’s Northern California technology and venture capital practices.

Kevin Rose may not be long for Google Ventures, where he’s currently a partner — so he reportedly suggested at a conference in Europe yesterday.According to the Silicon Valley Business Journal, Rose said at the show that he regrets resigning as CEO of the aggregation site he cofounded, Digg, and that he has his heart set on launching a new startup, even while he isn’t yet working on anything.

Semil Shah, a popular TechCrunch columnist and seed-stage investor, will no longer be contributing to the outlet after a three-year run. “I don’t know the details, as I’m not too involved with the publication, but the weekend and guest columns are moving in a new direction, and I’m not a part of that direction,” he wrote in a post yesterday.

A (creepy but seemingly pretty accurate) wax replica of Facebook founderMark Zuckerberg has been fashioned for a new Madame Tassauds’ museum in San Francisco. Of the statue, Madame Tussauds’ marketing manager told NBC Bay Area that “35 percent of the figures are from the San Francisco Bay Area or people, like Mark Zuckerberg, who have moved to Bay Area to make their mark on the world.” (Steel yourself, Larry Page, surely you are next.)

—–

Job Listings

OnDeck, the well-financed small business lender, is looking for acorporate development manager in New York.

—–

Data

Datafox looks at the rising tide of companies that stand to gain from the explosion in mobile advertising.

A new Makovsky Health/Kelton survey suggests that consumers are getting more open-minded about sharing their personal health data. A whopping 90 percent of the 1,000 respondents said they would have no problem sharing their healthcare data to help researchers understand a disease or improve care or treatment options. More here.

—–

Essential Reads

Apple, Google, Adobe, and Intel have reportedly agreed to pay a total of $324 million to settle a lawsuit accusing them of conspiring to hold down salaries in Silicon Valley, just weeks before a high profile trial had been scheduled to begin.

Growth-capital financings purportedly give startups time to mature before advancing onto the public markets. But they aren’t necessarily a recipe for better stock performance once the companies go out, reports The Information. (Subscription required.)

—–

Detours

Apple, Google, Adobe, and Intel have reportedly agreed to pay a total of $324 million to settle a lawsuit accusing them of conspiring to hold down salaries in Silicon Valley, just weeks before a high profile trial had been scheduled to begin.

Growth-capital financings purportedly give startups time to mature before advancing onto the public markets. But they aren’t necessarily a recipe for better stock performance once the companies go out, reports The Information. (Subscription required.)

—–

Retail Therapy

The Four Seasons now has a private jet and wants to take you around the world in it.

LittleBits’s Space Kit. A bit pricey but very neat!

—–

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

Connie

April 25, 2014

Morning Summary

Mithril Capital Management
Inside Mithril, Part Two

On Tuesday, StrictlyVC took readers inside 22-month-old Mithril Capital Management, a well-known but little-understood investment firm cofounded by longtime friends and colleagues Peter Thiel and Ajay Royan.

As we’d sat down with Royan for more than an hour at Mithril’s San Francisco offices, we had some additional notes from our chat we thought you might find interesting. They’ve been edited for length.

You worked with Peter at his hedge fund, Clarium Capital Management, as well as at Mithril. What makes your partnership work?

We’ve worked together so long that he’s a fantastic foil to my thinking. And after all these years, if Peter is excited about something and I think differently, he’s very open to good feedback. So we have good discussions [and] independent views and there’s enough shared experience and shared principles that we can have a quick, high-resolution conversation about things in depth.

Mithril has made seven investments to date, most of them eight-figure investments, including in a San Francisco-based security software company called Lookout. Do you take board seats with these investments?

It’s at the request of the company. My view is [you want to offer] high availability and low interference. You want the check writing to be the most dramatic thing that you do, which is contra to what you hear in the Valley these days. You should be very helpful — and we are, whenever we’re asked, including with sophisticated financial strategy. But companies are staying private longer these days, so they’re encountering operational issues and capital management issues that venture-backed companies didn’t encounter 10 years ago, and that’s where we’re most helpful. But that is not formal governance; that’s really about a good relationship with founders.

You’ve said that with Mithril’s first, current fund, you ended up with a more standard fund structure, though you really wanted to form a corporation. Will you pursue a different structure the next time around?

No, [what we have] is a standard default that works for everyone. Our LPs in the first fund — we were careful in who we ended up working with. About a fifth of the capital is principal capital, so that was meaningful. We ended up working with a lot of family money – so, larger family endowments [as opposed to institutional capital] and sovereigns, as well. But in most of these cases, if we look at our LP base, it’s almost all direct investors, it’s people who are looking at us as a partner in Silicon Valley to understand what’s going on in the technology space, to be invested in it, so it changes the character and complexion of it.

What’s your view on valuations? Is Mithril at all price sensitive?

Entry price is really important. But you want to enter on a basis where you can hold over the long term. Almost every investment we’ve made has been a non-auction process. Even if there was an auction going on, it’s usually gotten sidetracked in favor of having a conversation with Mithril because [we’re typically] investing at an inflection point in a company’s business. Take Lookout for example. It’s known for its anti-virus protection for phones. But because it’s protecting 50 million devices . . . it now has a network of phones using applications like a neighborhood watch. And you can extrapolate information from this network and understand where the threats are coming from across different artificial silos. It’s not just AT&T or T-Mobile’s phones. It’s not phones owned by GE employees or your family members. So its historic business is still valid and growing fast, but there’s a whole other S-curve starting, and that’s what we’re underwriting. It was almost like a new Series A for a company that’s already a $500 million to $600 million company.

You believe there’s still too little tech investing, and that the world needs more firms like yours and Andreessen Horowitz and Khosla Ventures. Why?

From an investor point of view, there’s just very little going on [on] a relative numbers basis. It might not feel that way sitting in San Francisco or counting the number of words associated with technology in the newspapers today relative to 10 years ago. But on a global basis, you look at real estate investment and you look at power plants and real assets . . . and [tech investment] is just minuscule compared with the money that goes into these other asset classes. The fact that so little capital has generated so much value in such a short time has made it have an outsize effect in people’s minds. If you look at the Fortune 500 by revenue, there are a lot of industrial companies; if you rank it by profits, it’s remarkably tech heavy. I think the whole world is just beginning to understand what that means.

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

Connie

April 25, 2014

Entrepreneurs, Firm Dynamics

StrictlyVC on Twitter