Connie

StrictlyVC: January 9, 2014

Good morning! Hope your Thursday is off to a promising start. We have some good stuff coming up in the next few days, so stay tuned!

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Top News in the A.M.

Apple and Samsung have agreed to attend a mediation session to be held on or before February 19, as they prepare to clash in court in March over smartphone patents.

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Pricing in Deception

Yesterday, TechCrunch reported that a 2.5-year-old Boston-based social shopping startup, Kickscout, is being acquired by another shopping app, Mobee, for an undisclosed “combination of cash and stock.” TechCrunch wrote that as part of the arrangement, Kickscout’s founder (and sole employee), Michael Sheeley, is joining Mobee as its chief product officer.

Most likely, the story would have gone unnoticed, but Boston Globe columnist Scott Kirsner tweeted soon after the piece was published, “Sorry, TechCrunch, this story is actually: Boston-based Mobee hired a smart guy whose startup didn’t take off.” Kirsner continued on Twitter, “If your app is being shut down and you are going to work for someone else’s company, that means you got HIRED, not ACQUIRED.” Kirsner – who seems to have a healthy sense of humor — then added, “Deal was a ‘combination of cash & stock’ – yeah, like [taxi] fare to Mobee’s office and some stock options.”

Assuming that Kirsner is right – that Sheeley was just plucked from a bad situation – it’s easy to understand his aggravation. Silicon Valley’s compulsively sunny, rah-rah spirit can be nauseating. Talk to an entrepreneur or VC, and everything is proceeding as planned.

Still, it’s hard to see the downside in allowing someone to save face in this situation or the many others we’ve seen in recent years, where struggling founders have been swooped up by another company that’s looking to lock in their talent for a while. I like that a person who has tried and failed can receive a fresh set of cards instead of shutting down their business with nothing but debt (which, by the way, still happens with the vast majority of startups).

As for the argument that it’s unhealthy to portray face-saving maneuvers as successes, I’d argue that by now, we’re all acclimated to the culture of spin in which we live. We’ve basically been in an arms race of good news since TechCrunch was founded in 2005.

Anyone following the industry is already pricing in some deception, so why bother getting upset about it?

New Fundings

Aereo, a two-year-old, New York-based company whose customers access live broadcast TV on Internet-connected devices via its remote integrated antenna/DVR technology, has raised $34 million in Series C financing. Previous investors IAC, Highland Capital Partners, andFirstMark Capital were joined by new investors Himalaya Capital Management and Gordon Crawford, long the chief media stockpicker for the L.A-based money-management firm Capital Research & Management Co. Aereo has now raised nearly $100 million altogether.

Chromatin, a 13-year-old, Chicago-based agricultural technology company, has held a first close on its Series E financing round, which is expected to total $36 million. Wood Creek Capital Management led the round, joined by GE Capital. Previous investors BP Alternative Energy, IllinoisVentures, the State of Wisconsin Investment Boardand Adventures IV also participated. With the Series E round, Chromatin has raised more than $70 million, says the company.

Compliance Science, a 10-year-old, New York-based company that sells online regulatory compliance technology and services, has raised $8.25 million in Series A funding from Edison Ventures. It’s the first outside capital that Compliance Science has received.

FlatFrog Laboratories AB, a seven-year-old, Lund, Sweden-based maker of a patented in-glass touch technology, has raised $10 million in Series C funding from Invus, Sunstone Capital and Intel Capital, all of whom participated in the company’s Series B round. FlatFrog has raised $53.4 million altogether, according to Crunchbase.

Forus Health, a three-year-old, Bangalore-based medical device company that focuses on the ophthalmology space, has raised $8 million from Asian Healthcare Fund and its existing investors Accel Partnersand IDG Ventures. Forus is looking to develop affordable technology that can be used by minimally trained technicians. It has raised $13 million to date.

Immedia Semiconductor, a five-year-old, Andover, Mass.-based company that develops semiconductor-based ISP and video compression technology for consumer electronics applications, has raised $11.9 million, shows an SEC filing. Listed on the form are David Aronoff of Flybridge Capital Partners and Louis Toth of Comcast Ventures.

Intellinote, a year-old, Reston, Va.-based note taking app that incorporates social collaboration, project management, and e-mail integration, has raised $4.3 million in Series A led by Grotech Venturesand Boulder Ventures.

Lumiata, a year-old, San Mateo, Calif.-based healthcare IT startup that applies big data to patient data to optimize health care interactions, has raised $4 million from Khosla Ventures.

Maverix Biomics, a two-year-old, San Mateo, Calif.-based software company focused on analysis of next-generation genomic sequencing data, has raised $6 million in Series A funding from Asset Management Ventures, Andreas Bechtolsheim and Andrew Yang, among others.

MobStac, a Bangalore-based startup that helps publishers build and manage their mobile websites and apps, has raised $2 million in Series B funding from Accel Partners and Cisco. The round brings MobStac’s total venture financing to $3.1 million.

Mswipe, a three-year-old, Mumbai-based maker of mobile, point-of-sale technologies, has raised an undisclosed amount of Series B funding from Matrix Partners and Axis Bank, both of which have provided Mswipe with (an also undisclosed amount of) funding previously.

QingCloud, a two-year-old, Beijing-based company that operates an on-demand real-time cloud computing platform, has raised $20 million in Series B funding led by Lightspeed China Partners with participation from Matrix Partners China. BlueRun Ventures, QingCloud’s Series A investor, also participated in the round.

Renrendai, a 3.5-year-old, Beijing-based Internet banking service platform where borrowers can get credit ratings on all loans, has raised $130 million in Series A funding from Trustbridge Partners andHonghe Venture Capital.

Yotpo, a three-year-old, Israel-based company that enables e-commerce sites to add a social layer for product reviews, has raised $10.7 million led by Blumberg Capital. Participating in the round were prior investors Rhodium, Gandyr Group, Oliver Jung, 2B Angels,Magna Capital Partners, Plus Ventures, Zohar Gilon and other investors. The company has raised $13 million to date.

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New Funds

Silicon Valley venture capitalist Asha Jadeja, who founded the small venture firm Dot Edu Ventures in 2000, has reportedly “set aside” a fund of “around $8 million” that she intends to invest specifically in India across a period of six years, says the Business Standard.

Jadeja, who was born in Ahmedabad, has already invested about $100,000 in regional companies, including GridAnts in Ahmedabad, which makes a location-based application, and Gaatha in Gujurat, an e-commerce site that sells handcrafted goods. Indeed, she tells Business Standard that she’s seeing a “lot of start-ups emerging out of Gujarat and India” that can become a “powerful force in social impact.”

Jadeja had earlier founded and run iScale, a networking company. She was also married to Raveej Motwani, the famed computer science professor at Stanford who was among Google’s earliest advisors. Motwani passed away in 2009.

Prashant Shah, who spent nearly a decade at the San Francisco-based venture firm Hummer Winblad Venture Partners, is now managing TiE LaunchPad, a Santa Clara, Calif.-based accelerator for enterprise-focused startups. Shah has raised $4.8 million to invest seed funding in those companies, too, shows an SEC filing. For more details, click here.

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People

Square’s CFO, Sarah Friar, has joined the board of New Relic, an application performance management company that’s eyeing an IPO. Before joining Square in 2012, Friar worked as a managing director at Goldman Sachs and as a senior VP of finance and strategy at Salesforce.com.

David Nosal, a former Korn/Ferry executive who infiltrated his former employer’s computer system after leaving to form his own firm, has been sentenced to one year and one day in prison.

Elliott Sigal has joined NEA as a venture partner and senior advisor. Sigal is a former EVP and director for Bristol-Myers Squibb. He served as the company’s chief scientific officer and president of R&D from 2004 to 2013.

Paul Sloan, most recently editor in chief at CNET, has joinedCoupons.com as head of communications, reports the Silicon Valley Business Journal. Coupons.com — which has raised approximately $230 million over its 16-year history — is valued at more than $1 billion and is widely expected to go public this year.

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IPOs

Flexion Therapeutics, a seven-year-old, Burlington, Ma.-based company that’s developing injectable pain therapies for osteoarthritis, plans to raise up to $86 million in an IPO, shows an SEC filing. Pricing terms weren’t disclosed. The company has raised at least $62 million over the years. Versant Venture Capital owns 29.7 percent of the company; Sofinnova Capital owns 19.3 percent; Pfizer owns 17.3 percent; 5AM Ventures owns 15.5 percent; and Novo A/S owns 11.2 percent.

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Job Listings

Facebook is looking to hire a manager of corporate development in Menlo Park, Calif. The job requires four to six years of experience, with two to three years of experience in venture capital, banking, consulting, or corporate development at a top consumer Internet company.

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Data

Pitchbook has some new data on the funnel effect we’re seeing in startup financings. According to its findings, the Bay Area saw a 10.6 percent drop in deal flow last year, with 1,225 rounds completed compared with 1,370 financings closed in 2012. Meanwhile, investors pumped more money into that smaller pool of Bay Area companies, committing $13.4 billion last year up from $12.5 billion in 2012. More on the trend here.

Israel is apparently booming. According to a report about the high tech sector released this week by IVC Research, the combined value of Israeli high-tech start-ups that were sold in 2013 reached $6.64 billion last year, a 10-year high. Here’s more on the report.

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Essential Reads

The Chinese e-commerce giant Alibaba Group said yesterday it won’t allow the sale of Bitcoins on its platform, “in the interest of consumer protection,” a spokeswoman told the New York Times.

Reddit’s Ask Me Anything format: How a weird Internet thing became a mainstream delight.

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Detours

Of the saying that children grow up too fast, Jerry Seinfeld tells fellow dad Louis C.K, “I feel like I can only take one year of each year. [It’s like] ‘No more of you as a nine-year-old. I’ve had it.’”

Improv Everywhere’s “No-Pants Subway Ride” is planning its 12th installment in New York this Sunday. Plan accordingly.

Floor plan porn: The Swigs of 740 Park Avenue.

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Retail Therapy

This Chronos safe is constructed of “true military-grade ballistic armor plate.” Because you want to know that while you’re tweeting from CES, some lousy crumb isn’t getting into your cherished collection of Swiss timepieces.

You love your new(ish) iPad Air. Treat it right by carrying it inside thissupple leather case constructed from two solid pieces of vegetable-tanned English bridle. (Disclaimer: This simple piece that’s truly “ready for years of wear,” has no padding. Dropping it to the ground from a standing position may cause horrified gasps, followed by sickness and nausea.)

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Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for this newsletter, please click here.

Connie

January 9, 2014

Morning Summary
Pricing in Deception

Yesterday, TechCrunch reported that a 2.5-year-old Boston-based social shopping startup, Kickscout, is being acquired by another shopping app, Mobee, for an undisclosed “combination of cash and stock.” TechCrunch wrote that as part of the arrangement, Kickscout’s founder (and sole employee), Michael Sheeley, is joining Mobee as its chief product officer.

Most likely, the story would have gone unnoticed, but Boston Globe columnist Scott Kirsner tweeted soon after the piece was published, “Sorry, TechCrunch, this story is actually: Boston-based Mobee hired a smart guy whose startup didn’t take off.” Kirsner continued on Twitter, “If your app is being shut down and you are going to work for someone else’s company, that means you got HIRED, not ACQUIRED.” Kirsner – who seems to have a healthy sense of humor — then added, “Deal was a ‘combination of cash & stock’ – yeah, like [taxi] fare to Mobee’s office and some stock options.”

Assuming that Kirsner is right – that Sheeley was just plucked from a bad situation – it’s easy to understand his aggravation. Silicon Valley’s compulsively sunny, rah-rah spirit can be nauseating. Talk to an entrepreneur or VC, and everything is proceeding as planned.

Still, it’s hard to see the downside in allowing someone to save face in this situation or the many others we’ve seen in recent years, where struggling founders have been swooped up by another company that’s looking to lock in their talent for a while. I like that a person who has tried and failed can receive a fresh set of cards instead of shutting down their business with nothing but debt (which, by the way, still happens with the vast majority of startups).

As for the argument that it’s unhealthy to portray face-saving maneuvers as successes, I’d argue that by now, we’re all acclimated to the culture of spin in which we live. We’ve basically been in an arms race of good news since TechCrunch was founded in 2005.

Anyone following the industry is already pricing in some deception, so why bother getting upset about it?

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

Connie

January 9, 2014

Entrepreneurs

Kickscout, Michael Sheeley, Mobee
StrictlyVC: January 8, 2014

Hi, happy Wednesday, everyone!

—–

Top News in the A.M.

Uber CEO Travis Kalanick says, sorry folks, surge pricing is here to stay.

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In Newest Digital Health Deal, Zephyr Lands $15 Million

As more doctors and health-related companies digitize their patient records, research, and data from clinical trials, venture-backed entrepreneurs have been rushing in to help them.

Now Zephyr Health, a 2.5-year-old, San Francisco-based startup is promising to bring that digitally formatted — but disconnected — data together in ways that help healthcare providers more easily and cost-effectively identify and target treatments.

Zephyr has already convinced investors of its merits. This morning, the company is announcing a $15 million Series B round from Kleiner Perkins Caufield & Byers and Jafco Ventures — funding that has drawn Kleiner’s Brook Byers and Jafco’s Joe Horowitz to its board. Now Zephyr, which has raised $16 million altogether, just has to get companies to sign up.

It already counts five of the world’s largest pharmaceuticals and device companies as customers, says founder and CEO William King, who spent much of his earlier career in sales development at Johnson & Johnson. We chatted yesterday afternoon. Our conversation has been edited for length.

Why start the company?

I’d spent a spent considerable amount of my career at Johnson & Johnson, focused entirely on life sciences, and what we saw there and still see is a huge amount of data that should be talking but isn’t. Consider an MRI image that could be talking with a blood pressure result, but instead those pieces of data are disconnected. We thought we could unify the data that isn’t talking and build a compelling visual front end for the analytics that’s specifically tailored for the life sciences environment.

Is the data you’re parsing public or private or both?

It’s data from the public domain — clinical trials, patient demographics, sales, interactions, medical publications — as well as proprietary data from our clients.

You have 40 employees. What are their roles?

We’re overwhelmingly an engineering [team, one that is focused on] data solutions and machine-based learning algorithms and ensuring that we can bring data together rapidly, accurately, and as inexpensively as possible. So we also have algorithm experts, data scientists, data researchers, and a few folks who are dedicated to client services and account management.

You mentioned a compelling visual front end for your software-as-a-service business. What are end users seeing when they use Zephyr?

We offer a platform as well as different data offerings and different applications on the front end. Just like on your smart phone, different users will purchase different apps for different reasons. Our Illuminate app, for example, is used by people who are looking at clinical trial information. Cocktail, an app that helps you mix the different data types together and strain them, might be used by a marketing director.

Our platform is designed for a broad spectrum of people, including people who aren’t accustomed to using analytical software.

What’s a recent example of how you’ve helped a customer?

Over the holiday, we heard from one customer who’d been trying to select a clinical trial site. Recruiting enough patients for a clinical trial is a big challenge for a whole variety of reasons. But we were able to take patient demographic information, [geographic] information, funding information and much more and combine it to create a refined view [that had helped the client make a decision]. As a result, this client’s recruiting was considerably ahead of schedule, which is meaningful because recruiting is a big cost and requires a lot of time and that has an impact on many other things.

What’s your biggest challenge?

Our biggest challenge centers on “big data” as a term. There’s a lot of big data competition, meaning lots use the phrase. One of the big challenges that we try and overcome is clearly defining what we mean by it and how it lends value to a person’s business.

New Fundings

Aquion Energy, a six-year-old, Pittsburgh, Pa.-based maker of batteries and energy storage systems, has added $20 million to the $35 million Series D financing it had announced last April, citing strong investor interest. The funding comes from new investors Bill Gates, Yung’s Enterprise, Nick and Joby Pritzker through their family’s firm Tao Invest, Bright Capital, and Gentry Venture Partners. Previous investors Kleiner Perkins Caufield & Byers, Foundation Capital, andAdvanced Technology Ventures also participated in the round, which brings the company’s total funding to $85 million.

Bellicum Pharmaceuticals, a 10-year-old, Houston-based company that’s developing cell therapies to treat cancers and other life-threatening diseases, has added $14.7 million to its Series B round. The additional financing, from investors that include AVG Ventures andRemeditex Ventures, brings the company’s Series B to $34.4 million.

Blueprint Medicines, a three-year-old, Cambridge, Ma.-based company that’s developing therapeutic compounds and combination therapies that target the molecular aberrations that cause cancer, has raised $25 million in Series B funding. Nextech Invest led the round, along with new investors Biotech Value Fund and Casdin Capital. Founding investors Third Rock Ventures and Fidelity Biosciences also participated, alongside other, undisclosed investors. The company has now raised $65 million altogether.

Digital Arbitrage, a two-year-old digital marketing platform that enables small and mid-size hotels to quickly build and manage an online presence, has raised $2 million, according to an SEC filing . The company, which lists offices in San Diego, Sao Paulo, and Kiev, had previously raised $600,000 in seed funding.

Ethical Electric, a two-year-old, Chevy Chase, Md.-based company whose mission is to make buying renewable energy easy, has raised $11 million in Series A funding. A syndicate of investors led by Matthew Palevsky led the round.

Ifbyphone, an eight-year-old, Chicago-based company whose software connects, measures and optimizes sales and service calls for businesses and organizations, has raised $9 million in new funding, shows an SEC filing. The company, whose investors include Origin Ventures and Apex Venture Partners, has raised roughly $32 million in equity funding to date, according to Crunchbase.

ImmuneXcite, a Lexington, Mass-based biopharmaceutical company, has secured $3.58 million in fresh funding from (unnamed) new and existing investors. The funding brings the total raised to date to $7 million, including a loan for $1 million from the Massachusetts Life Science Center. ImmuneXcite has created a platform technology to enhance the efficacy of therapeutic monoclonal antibodies for oncological and infectious disease targets.

Isarna Therapeutics, a 15-year-old, Munich-based company that’s developing inhibitors that stimulate the human immune system to fight cancer, has raised $17.8 million in funding from AT NewTec and existing investor MIG, a Munich-based venture firm.

MedHOK (Medical House of Knowledge), a three-year-old, Tampa-based platform for health plans, has raised $77.5 million from Bain Capital Ventures and the growth equity firm Spectrum Equity. MedHOK provides payers, pharmacy benefit managers, accountable care organizations, and integrated health networks with tools to view and act on patient information in real time.

Mediant Communications, an 11-year-old, New York-based provider of shareholder communications services to banks, brokerage firms, corporate issuers and investment companies, has raised $7 million in growth funding from Argentum Capital Partners, a recently formed private growth equity fund.

Oscar, a two-year-old, New York-based health insurer that came out of stealth mode last summer, has raised $30 million in new capital led by existing investor Founders Fund, reports the New York Times. Other previous investors, including Thrive Capital, Khosla Ventures andGeneral Catalyst Partners, also participated in the round. Oscar was cofounded by Joshua Kushner, who founded Thrive Capital in 2009; Kusher, who had previously raised a $35 million for Oscar, becomes the company’s chairman with its newest financing. His cofounders, Kevin Nazemi , who was Microsoft’s former director of health care, and Mario Schlosser, a former McKinsey & Company computer scientist, will run the firm day to day.

ThisCLICKS, a three-year-old, St. Paul, Mn.-based mobile technology startup that specializes in cloud labor management software, has raised $4 million in Series A funding from E.ventures, Greycroft Partners andArthur Ventures.

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New Funds

Stanford Alumni Angels East, an investor group that funds startups in mobile, big data, health 2.0, and e-commerce, is looking to raise a venture fund, according to an SEC filing that doesn’t list a target. Headquartered in New York, the group invests in East Coast and West Coast companies and is comprised of Stanford alumni angel investors, many of whom are current or former entrepreneurs. According to AngelList, its Investments are not limited to those run by Stanford-educated entrepreneurs.

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People

Adrian Cockcroft, a former Netflix cloud architect who helped lead the company’s shift to an all-cloud computing infrastructure, has joinedBattery Ventures as a technology fellow. In his new role, Cockcroft will advise Battery and its portfolio companies on various technology trends and issues; assist with deal sourcing and due diligence; and speak at tech events. Cockcroft is Battery’s first technology fellow; Battery says the position is designed to be a “long-term engagement.”

Yesterday, Fab CEO Jason Goldberg published a 3,500-word blog post about what went so wrong last year. “I freely admit, when you grow revenue 500% year over year and become a media darling overnight, it’s hard to keep perspective.”

Twitter co-founder Biz Stone finally took the wraps off his stealth-mode startup yesterday. Called Jelly, the company’s app allows users to snap photos and ask related questions of their Facebook and Twitter networks, such as, “What kind of plant is this?” (One Jelly user has already snapped a photo of Facebook CEO Mark Zuckerberg texting while driving, a photo he posted to Jelly’s platform, asking his network how he should respond to such a thing.)

Kamran Zaki has left Netflix, where he was head of global payments, to become the president of Adyen, an eight-year-old, San Francisco-based software company focused on online, mobile, and face-to-face payments. Before Netflix, Zaki was the head of global core payments at PayPal.

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IPOs

T. Rowe Price Group‘s New Horizons Fund bought 4.6 million Twitter shares for $2.66 apiece before its November IPO. Assuming that position hasn’t changed, those shares were worth $305 million on Monday, reflecting a 25-fold gain. Reuters has more here. I had profiled Henry Ellenbogen, the influential manager of New Horizons, in 2012. The fund first bought into Twitter in 2009.

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Exits

Aviate, a three-year-old, Palo Alto, Calif.-based company whose software organizes the information on your smartphone and “surfaces it at the perfect moment,” has been acquired by Yahoo. Aviate had raised $1.8 million from Highland Capital Partners, Andreessen Horowitz,Freestyle Capital and Draper Associates, as well as individual investors. Yahoo isn’t disclosing the purchase price.

Little Eye Labs, an 18-month-old, Bangalore-based company whose software analyzes the performance of Android apps, has been acquired by Facebook for an amount “in the range of $10 million to $15 million,”reports TechCrunch. Little Eye Labs had raised $300,000 in funding from Ventureast and GSF Accelerator, which is a 10-week program that runs in four major Indian cities simultaneously twice a year. (Little Eye’s founders, who’d worked together previously at IBM, were part of a GSF program in 2012.)

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Job Listings

SanDisk Ventures, the corporate venture arm of the flash memory storage giant, is looking for a director who will be responsible for all aspects of venture capital deal-making. “Critical requirements” include previous experience in new business development or product line management, and experience across the storage and enterprise infrastructure industry. The “ideal” background includes an MBA and knowledge of additional languages.

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Data

500 Startups sewed up the greatest number of global deals in 2013, according to PitchBook, but in Silicon Valley, Andreessen Horowitz led its peers, with nearly three quarters of its 97 deals centered locally. Silicon Valley Business Journal has more here.

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Essential Reads

Gartner is predicting that 45 percent of all new devices this year will run Google’s Android software, up from 38 percent last year.

Just as Bay Area high-tech firms such as Google have been using private shuttle buses to transport their workers to their jobs, Google is taking it to another level with its own ferry service on San Francisco Bay.

Groupon is trying out a new business, sources tell Re/code. The idea is to help small mom-and-pop retail shops sell off items they can’t unload at full-price; Groupon customers would be notified when a nearby business is having a sale.

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Detours

A growing body of evidence suggests that the open office undermines the very things that it was designed to achieve.

Joel Cohen, the former federal prosecutor who led the criminal investigation of Jordan Belfort, critiques the “Wolf of Wall Street,” saying that “there are consequences for blurring the lines too much.”

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Retail Therapy

StrictlyVC is getting drunk on all of the cool things streaming out of CES this week(!). Among other favorites so far are these acrylic glass stereo speakers, and this photovoltaic bracelet that knows when you’ve had too much sun. (We don’t really need a bracelet to alert us to our sun exposure, but it was designed with Louis Vuitton and it’s definitely a fun reminder of how far wearables have come.)

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Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for this newsletter, please click here.

Connie

January 8, 2014

Morning Summary

William King, Zephyr Health
In Newest Digital Health Deal, Zephyr Health Lands $15 Million

As more doctors and health-related companies digitize their patient records, research, and data from clinical trials, venture-backed entrepreneurs have been rushing in to help them.

Now Zephyr Health, a 2.5-year-old, San Francisco-based startup is promising to bring that digitally formatted — but disconnected — data together in ways that help healthcare providers more easily and cost-effectively identify and target treatments.

Zephyr has already convinced investors of its merits. This morning, the company is announcing a $15 million Series B round from Kleiner Perkins Caufield & Byers and Jafco Ventures — funding that has drawn Kleiner’s Brook Byers and Jafco’s Joe Horowitz to its board. Now Zephyr, which has raised $16 million altogether, just has to get companies to sign up.

It already counts five of the world’s largest pharmaceuticals and device companies as customers, says founder and CEO William King, who spent much of his earlier career in sales development at Johnson & Johnson. We chatted yesterday afternoon. Our conversation has been edited for length.

Why start the company?

I’d spent a spent considerable amount of my career at Johnson & Johnson, focused entirely on life sciences, and what we saw there and still see is a huge amount of data that should be talking but isn’t. Consider an MRI image that could be talking with a blood pressure result, but instead those pieces of data are disconnected. We thought we could unify the data that isn’t talking and build a compelling visual front end for the analytics that’s specifically tailored for the life sciences environment.

Is the data you’re parsing public or private or both?

It’s data from the public domain — clinical trials, patient demographics, sales, interactions, medical publications — as well as proprietary data from our clients.

You have 40 employees. What are their roles?

We’re overwhelmingly an engineering [team, one that is focused on] data solutions and machine-based learning algorithms and ensuring that we can bring data together rapidly, accurately, and as inexpensively as possible. So we also have algorithm experts, data scientists, data researchers, and a few folks who are dedicated to client services and account management.

You mentioned a compelling visual front end for your software-as-a-service business. What are end users seeing when they use Zephyr?

We offer a platform as well as different data offerings and different applications on the front end. Just like on your smart phone, different users will purchase different apps for different reasons. Our Illuminate app, for example, is used by people who are looking at clinical trial information. Cocktail, an app that helps you mix the different data types together and strain them, might be used by a marketing director.

Our platform is designed for a broad spectrum of people, including people who aren’t accustomed to using analytical software.

What’s a recent example of how you’ve helped a customer?

Over the holiday, we heard from one customer who’d been trying to select a clinical trial site. Recruiting enough patients for a clinical trial is a big challenge for a whole variety of reasons. But we were able to take patient demographic information, [geographic] information, funding information and much more and combine it to create a refined view [that had helped the client make a decision]. As a result, this client’s recruiting was considerably ahead of schedule, which is meaningful because recruiting is a big cost and requires a lot of time and that has an impact on many other things.

What’s your biggest challenge?

Our biggest challenge centers on “big data” as a term. There’s a lot of big data competition, meaning lots use the phrase. One of the big challenges that we try and overcome is clearly defining what we mean by it and how it lends value to a person’s business.

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

Connie

January 8, 2014

Entrepreneurs

Jafco, Kleiner Perkins Caufield & Byers, William King, Zephyr Health
StrictlyVC: January 7, 2014

Happy Tuesday! A quick reminder that you can always reach out to me about anything at connie@strictlyvc.com or on Twitter. If you’re looking to sign up for the newsletter, you can click right here.

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Top News in the A.M.

Apple has just announced that app store sales topped a whopping $10 billion in 2013. More here.

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Nick Hanauer on Why VCs Should Fight for a Higher Minimum Wage

For at least the last six months, Seattle-based venture capitalist Nick Hanauer has been arguing for a higher minimum wage and citing stats that underscore the myriad ways that growing income inequality will bring everyone down.

Hanauer was one of Amazon’s first investors and cofounded the ad tech company aQuantive, which sold to Microsoft for $6.4 billion in 2007. He’s also the chairman of Pacific Coast Feather Company, a privately held family business that produces down pillows and bedding for clients such as Sealy and Eddie Bauer.

Although Hanauer clearly isn’t living paycheck to paycheck, he has turned his sights on raising the minimum wage to $15 and is pointedly criticizing Bay Area venture capitalists for their inaction, noting that if they don’t start doing more to stem the “rising inequality in our society,” they are “idiots.”

“VCs have a huge stake in a thriving middle class,” Hanauer told me over the phone yesterday afternoon. “If workers don’t have enough money, they can’t buy from our companies.” Leading the charge for higher wages is an “easy lift” for technology companies and VCs “because we get none of the pain and all of the benefit. If you’re running or funding a venture-backed company, you aren’t paying anyone a minimum wage. On the other hand, you’re hoping to sell your products to everybody.”

I raise the oft-cited argument that many Bay Area companies are making it easier and cheaper to do things, and I can practically see Hanauer rolling his eyes. “There’s this Valley-based libertarian idea that as long as we’re businesspeople, we’re doing enough for our community — which is self-aggrandizing and just utter horseshit,” he says.

Asked for concrete advice on how VCs can take part in the minimum wage debate, Hanauer suggests that the Bay Area look north. In November, voters in the city of SeaTac, Washington, narrowly approved a labor-backed measure that would require a $15 minimum wage for approximately 6,300 workers in the airport, hotel, and rental car industries. Hanauer is himself now part of a working group organized by incoming Seattle mayor Ed Murray to implement a $15 minimum wage in Seattle, and “I think it will happen,” Hanauer says.

In California, Hanauer says more investors should throw their support behind Ron Unz, publisher of the libertarian-leaning magazine The American Conservative, who has poured his own money into a ballot measure to increase the minimum wage in California to $10 an hour in 2015 and $12 in 2016. The initiative, which will be voted on in November, would make California’s minimum wage the highest in the nation. (California’s current minimum wage is $8.)

“There are a lot of fine people in Silicon Valley,” says Hanauer, “but there’s this really creepy thing happening down there where people are making stratospheric amounts of money and leaving everyone else behind. We need to ensure the economy enfranchises as many people as possible, and we need more civic leadership coming out of the venture community.”

If it takes seeing low-wage workers as potential customers, so be it. “A rising tide lifts all boats,” he says.

New Fundings

LegalZoom, the 14-year-old, Glendale, Calif.-based provider of online legal documents and services, has a new, partial owner. European private equity firm Permira has acquired $200 million of LegalZoom’s existing equity in a secondary transaction that will provide liquidity to existing investors, and to a lesser degree management and employees,reports PandoDaily.

Mashable, the nine-year-old, New York-based independent news outlet, has raised $13.3 million in its first outside funding round. The financing was led by Updata Partners, reports CNN, which has much more here.

Plated, a two-year-old, New York-based company that sends recipes and the fresh ingredients needed to prepare them to its subscribers, has raised $5 million in Series A funding led by ff Venture Capital. Other participants in the round included Lerer Ventures, Founder Collective,Great Oaks Venture Capital and various angel investors. The company had previously raised $1.4 million in seed funding.

Remitly, a 2.5-year-old, Seattle-based mobile payments service that enables consumers to make person-to-person international money transfers from the U.S., has raised $5.5 million led by QED. Other investors in the round included Trilogy Partnership, Founders Co-Op,TomorrowVentures, Bezos Expeditions, and individual investors. The company has raised $10.5 million altogether, according to Crunchbase.

Soft Tissue Regeneration, a six-year-old, New Haven, Conn.-based maker of regenerative orthopedic devices for tendon and ligament repair, has raised $5 million in financing. Existing backers Connecticut Innovations and Launch Capital led the round with participation fromThe Vertical Group. The company had previously raised around $11 million in equity and debt, according to Crunchbase.

View, an eight-year-old, Milpitas, Calif.-based company that makes dynamic glass that’s capable of intelligently adjusting to external conditions and users preferences, has raised $100 million in funding from Madrone Capital Partners. Madrone, in Silicon Valley, specializes in growth capital investments.

—–

New Funds

Launch Angels, a new Boston-based investment platform that plans to invest in startup deals sourced from equity crowdfunding sites, says it has raised “nearly $1 million” for its first venture fund, named Where Angels Fund. The pool’s LPs are associates from the mobile technology company Where, bought by PayPal for $135 million in 2011. The outfit will focus on early-stage companies with an emphasis on mobile and consumer Internet startups; it intends to back between eight and 12 companies over the course of one year. Launch Angels is also right now gathering commitments for a second and third fund, called the Early Traction Fund and Women-Led Fund, respectively.

—–

People

Greylock Partners’ Aneel Bhusri became a billionaire yesterday, according to Forbes. Bhusri cofounded and serves as the co-CEO of the enterprise software company Workday; his wealth has been soaring along with Workday’s shares, which are trading at an all-time high today at $86 dollars a piece.

Henry Blodget and company reportedly rebuffed a $100 million offer from AOL to acquire Business Insider in the second half of last year. The nearly seven-year-old, New York-based company has raised more than $18 million in venture funding to date, including from Allen & Company, RRE Ventures, Institutional Venture Partners and Marc Andreessen. Asked about possible talks with AOL, Blodget told Fox Business yesterday: “We love the folks at AOL, and we have enjoyed the many conversations we have had with them over the years. But what we talk about is private.”

Snapchat cofounders Evan Spiegel and Bobby Murphy sat down with Forbes for an “inside story” on the company and the details that emerged are worth reading, including what happened moments after Lightspeed transferred $485,000 to the cash-starved company (at a valuation of $4.25 million) in April 2012. “That was the greatest feeling of all time,” Spiegel tells Forbes. Indeed, as Forbes reports it: “On the day the money went through, [Spiegel] sat in a machine-shop class busily refreshing the Wells Fargo app on his iPhone. In a final homage to Zuckerberg, when the money appeared he walked up to the professor and dropped out of the class and Stanford, a few weeks from graduation.”

—–

IPOs

Aldexa Therapeutics, a 10-year-old, Burlington, Ma.-based biotechnology company focused on immune-mediated, inflammatory, orphan and other diseases that are thought to be caused in part by naturally occurring toxic chemical species known as free aldehydes, hasfiled to go public. Domain Associates owns 50 percent of the company;Johnson & Johnson owns 45 percent. Aldexa has seen net income of -$37.3 million over the last 12 months.

Square 1 Financial, the 10-year-old, Raleigh, N.C.-based financial services company, has also filed to go public. Square 1’s biggest outside investors include Patriot Financial Partners, which owns 22 percent of the company; Castle Creek Capital Partners, which owns 9.7 percent; Endicott Opportunity Partners, which owns 9.7 percent;Northaven Management, which owns 8.1 percent; and Basswood Capital Management, which owns 6.8 percent. The outfit has enjoyed net income of $18.7 million over the last 12 months.

—–

Exits

Cvent, a 14-year-old, McLean, Va.-based event management platform, has revealed plans to sell 4.8 million shares of its common stock in a secondary public offering. Cvent — which had raised $137 million in private backing from Insight Venture Partners, Greenspring Associates and New Enterprise Associates — went public last July.

Morta Security, a two-year-old, Palo Alto, Calif.-based security startup that was founded by former employees of the NSA and United States Air Force, has been acquired by Palo Alto Networks for terms that aren’t being made public, reports the New York Times. Morta Security had raised an undisclosed amount of seed funding a year ago fromAndreessen Horowitz, Greylock Partners, Norwest Venture Partners, Data Collective, Larry Link, and Peter Wagner. The acquisition is Palo Alto Network’s first.

Parature, a 13-year-old, Reston, Va.-based company that makes customer service software, has sold to Microsoft for $100 million, according to TechCrunch. Over the years, Parature had raised $30.2 million in funding from Valhalla Partners, Sierra Ventures, and Accel Partners.

Sense Networks, a 10.5-year-old, New York-based company mobile advertising platform and exchange, has been acquired by the search and advertising company YP, which was itself formed in 2012 through the combination of two AT&T divisions that were then backed byCerberus Capital Management. Sense Networks had raised a reported $9 million from Passport Capital, Intel Capital, and Javelin Venture Partners, among others.

VisualGraph, a year-old, San Francisco-based startup behind some sophisticated machine vision, image recognition, and visual search technologies, has been acquired by Pinterest for an undisclosed amount. Its founder Kevin Jing and software engineer David Liu, who joined VisualGraph in September, are joining the Pinterest engineering team, reports TechCrunch.

—–

Happenings

CES continues.

—–

Job Listings

JUMP Investors, a 14-year-old, L.A.-based venture capital and private equity firm, is looking to hire a full-time associate. Applicants should have an MBA and, preferably, one to three years of investment banking experience.

—–

Data

Seed funding by venture capital firms hit a four-year high in 2013, according to a new report by CB Insights that claims $893 million was invested in 843 seed deals last year, the most since 2009. Silicon Valley Business Journal has more on the report here.

European venture startups also saw a healthy amount of funding last year. According to the data firm Preqin, European firms raised $8.3 billion over the last 12 months, a 37 percent jump over 2012 funding levels. The number of deals also rose by 8% to 1,352 from 1,250 — the highest number of transactions since Peqin began recording data in 2007.

—–

Essential Reads

Corning, a 163-year-old company that once made cookware and railroad lanterns, has emerged as an improbable star of the $280 billion smartphone industry as it develops curved screens and glass that repels germs.

Steven Sinofsky, the former Microsoft exec turned Andresseen Horowitz board partner, on the four stages of disruption.

Never mind the résumé. How hot is the C.E.O.?

—–

Detours

Pulling all-nighters can damage the brain, possibly permanently, suggests a new study.

“Downton Abbey” with cats.

—–

Retail Therapy

Go ahead, complete the circle. Dress like an overgrown baby.

Crock-Pot has a new slow cooker that allows you to turn it on or off or adjust its temperature using its app for iOS or Android. You can also receive “push reminders” so you won’t overcook that Bavarian pot roast while making late-afternoon calls to Tokyo. (StrictlyVC was sold at “Crock-Pot.”)

—–

Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for this newsletter, please click here.

Connie

January 7, 2014

Morning Summary
Nick Hanauer on Why VCs Should Fight for a Higher Minimum Wage

For at least the last six months, Seattle-based venture capitalist Nick Hanauer has been arguing for a higher minimum wage and citing stats that underscore the myriad ways that growing income inequality will bring everyone down.

Hanauer was one of Amazon’s first investors and cofounded the ad tech company aQuantive, which sold to Microsoft for $6.4 billion in 2007. He’s also the chairman of Pacific Coast Feather Company, a privately held family business that produces down pillows and bedding for clients such as Sealy and Eddie Bauer.

Although Hanauer clearly isn’t living paycheck to paycheck, he has turned his sights on raising the minimum wage to $15 and is pointedly criticizing Bay Area venture capitalists for their inaction, noting that if they don’t start doing more to stem the “rising inequality in our society,” they are “idiots.”

“VCs have a huge stake in a thriving middle class,” Hanauer told me over the phone yesterday afternoon. “If workers don’t have enough money, they can’t buy from our companies.” Leading the charge for higher wages is an “easy lift” for technology companies and VCs “because we get none of the pain and all of the benefit. If you’re running or funding a venture-backed company, you aren’t paying anyone a minimum wage. On the other hand, you’re hoping to sell your products to everybody.”

I raise the oft-cited argument that many Bay Area companies are making it easier and cheaper to do things, and I can practically see Hanauer rolling his eyes. “There’s this Valley-based libertarian idea that as long as we’re businesspeople, we’re doing enough for our community — which is self-aggrandizing and just utter horseshit,” he says.

Asked for concrete advice on how VCs can take part in the minimum wage debate, Hanauer suggests that the Bay Area look north. In November, voters in the city of SeaTac, Washington, narrowly approved a labor-backed measure that would require a $15 minimum wage for approximately 6,300 workers in the airport, hotel, and rental car industries. Hanauer is himself now part of a working group organized by incoming Seattle mayor Ed Murray to implement a $15 minimum wage in Seattle, and “I think it will happen,” Hanauer says.

In California, Hanauer says investors should also throw their support behind Ron Unz, publisher of the libertarian-leaning magazine The American Conservative, who has poured his own money into a ballot measure to increase the minimum wage in California to $10 an hour in 2015 and $12 in 2016. The initiative, which will be voted on in November, would make California’s minimum wage the highest in the nation. (California’s current minimum wage is $8.)

“There are a lot of fine people in Silicon Valley,” says Hanauer, “but there’s this really creepy thing happening down there where people are making stratospheric amounts of money and leaving everyone else behind. We need to ensure the economy enfranchises as many people as possible, and we need more civic leadership coming out of the venture community.”

If it takes seeing low-wage workers as potential customers, so be it. “A rising tide lifts all boats,” he says.

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

Connie

January 7, 2014

Entrepreneurs, Firm Dynamics

Nick Hanauer, Second Avenue Partners
StrictlyVC: January 6, 2014
Hi, and Happy New Year, dear reader! Hope you had a wonderful holiday. StrictlyVC’s personal reel featured an outing to “Elf the Musical,” a punishing game of Nerf-N-Strike, and the flu, briefly. It was a terrific break; it’s also really nice to be back.

—–

Top News in the A.M.

The WSJ talks with Mark Zuckerberg and his top lieutenants about how reshaping Facebook’s business around mobile phones has “forced” Zuckerberg to “grow up.” It’s the “story of a vertical learning curve,” Facebook director Marc Andreessen tells the Journal.

—–

Tony Hsieh and Ev Williams Use Holacracy: Should You?

Last week, we learned that Zappos’ management structure is being replaced with a “self-governing” management system called Holacracy that dispenses with job titles and throws an elbow at traditional hierarchies, replacing them with a flatter structure that distributes power more evenly.

At first blush, the news could be interpreted as a predictably quirky Zappos maneuver by its employee-friendly CEO, Tony Hsieh. But Holacracy isn’t as zany as it sounds. In fact, rather than throw out much of a company’s structure, Holacracy actually applies far more structure to every decision to make it easier and faster to get things done. For example, a traditional management structure where only a few people are authorized to make decisions can lead to delays and missed opportunities. By contrast, Holacracy assigns different aspects of the decision-making process to a wider range of people, theoretically yielding a shorter turnaround on new proposals.

Brian Robertson — a Philadelphia-based management consultant who dreamed up Holacracy in 2007 after struggling to manage his first company — shared a bit more about how it works last week.

Holacracy involves different “circles” and uses “tensions” to steer an organization. Is there another way to describe Holacracy to those who might be confused by that kind of language?

At its core, Holacracy is a power structure for how to run an organization. Alignment, accountability – those are usually done through a management hierarchy. Holacracy doesn’t throw out those things but uses a different structure to get there, so instead of a single CEO, power formally rests in a constitutional process, and everyone is kind of on a level playing field because they know how to influence the organization through those rules.

So Holacracy is less about democracy and more about transparency.

It’s not democratic; decisions are autocratic, with every employee holding a different authority to make certain decisions. So it’s not a big consensus system; it’s just more distributed.

How would a CEO go about learning more? Should they start by scanning the constitution you’ve created? Do they need to hire you?

Any company is free to do what they want with the constitution itself, though we don’t recommend it. It’s a complex game; it’s hard to learn by reading a rulebook.

We find people who are already looking for alternative approaches – CEOs who are aware of the limits of the conventional ways of managing but who don’t know there’s an alternative. Then we offer to come out for a day, and we put them through the Holacracy system and the meeting processes that we use. We also try it with some of the company’s real, live stuff. There’s a big learning curve, but it’s easy to see the potential of it straightaway. We often hear [at these trials] that a company just got 10 times more stuff done than it normally would.

Along with Zappos, the publishing platform Medium is probably the highest-profile company using Holacracy. How did Medium cofounder Ev Williams discover it?

David Allen, the author of Getting Things Done, is highly respected by a lot of interesting people, and when he started talking about us [publicly], Ev noticed.

We wound up having a great breakfast. Ev said when he left Twitter [to start Medium], he was feeling this sense of dread, because he loved creative work, but he hated being a bottleneck manager. He was getting further and further from the work he loved. In fact, most of our clients aren’t people who are excited to have the [CEO] title for the first time; they’re pretty seasoned leaders who experience the same problems [as Williams].

Do you have any proof that Holacracy works?

We definitely lack hard data, but we do have a lot of stories from our clients, including David Allen Company and Precision Nutrition, in Canada. What we hear again and again is that it’s pretty transformative, and it’s usually the CEOs who are our biggest advocates.

New Fundings

Amprius, a six-year-old, Sunnyvale, Calif.-based maker of lithium-ion batteries, has raised $30 million in Series C funding led by the Asian private equity firm SAIF Partners. All of Amprius’ previous investors, including Trident Capital, VantagePoint Capital Partners, IPV Capital, Kleiner Perkins Caufield & Byers, Chinergy Capital, Google Chairman Eric Schmidt, and Stanford University, participated. Amprius was founded by Stanford professor Yi Cui.

DNAnexus, a four-year-old, Mountain View, Calif.-based company that uses cloud computing to manage and analyze DNA data for use in clinical research, has raised $15 million in Series C financing led byGoogle Ventures. Claremont Creek Ventures, TPG Biotech andFirst Round Capital also participated in the round, which brings the company’s total funding to $31.6 million.

Good Technology, the 18-year-old, Sunnyvale, Calif.-based mobile device management company, is raising a new $10 million round, according to an SEC filing that shows it has raised $4.2 million toward that end. Good had raised $50 million in April of last year and has raised hundreds of millions of dollars over the years, including fromOak Investment Partners, Rustic Canyon Ventures, and Draper Fisher Jurvetson among many others. The Wall Street Journal reported last March that Good had hired four investment banks to explore a possible IPO.

Integral Ad Science, a four-year-old, New York-based company whose algorithms help advertisers best place (and protect) their brands on ad-supported sites, has raised roughly $30 million in fresh funding, according to an SEC filing. August Capital appears to be leading the round; the company has raised about $50 million to date, including from Atlas Venture, Pelion Venture Partners, andFounder Collective.

Spredfast, a nearly six-year-old, Austin-based company whose software helps companies manage, monitor, and measure their social media campaigns, has raised $32.5 million in Series D funding led byLead Edge Capital. Other participants in the round included Austin Ventures, InterWest Partners, and OpenView Partners. The company has now raised $64 million, according to Crunchbase.

Vidible, a months-old, San Francisco-based company behind an online marketplace for video content, has raised $3.35 million in Series A funding led by Greycroft Partners. Vidible’s co-founder and president, Tim Mahlman, was most recently the chief revenue officer of Klout; he stayed just 10 months, leaving in June 2012 to become an entrepreneur-in-residence at Greycroft.

—–

New Funds

Forerunner Ventures, an early-stage venture capital firm based in San Francisco, has raised its second fund, according to an SEC filingthat shows the outfit has raised $55 million. The money comes about 18 months after Forerunner announced the close of its first, $40 million, fund. Forerunner, founded by managing partner Kirsten Green, focuses on digital commerce startups and has backed dozens of startups in the category, including Warby Parker, Bonobos, Dollar Shave Club, and Hotel Tonight.

StageOne Ventures, an early-stage venture firm based in Tel Aviv, is looking to raise up to $100 million for its second fund, says VentureWire. The firm invests in Israeli startups focusing on software, communications, Internet and media. You can find a list of its investments here.

—–

People

Phil Barnes, a partner at First Round Capital in New York, talks with Fast Company about his New York office, which he designed with an eye toward putting entrepreneurs at ease. “The idea is to create a living room sense,” Barnes tells the outlet, which notes the space could “pass for a showroom at cheap chic retailer CB2, which supplied much of the furniture.”

Amazon founder Jeff Bezos was reportedly flown by an Ecuadorian navy helicopter to his private jet on Baltra Island near the center of the Galápagos on New Year’s Day, so he could be whisked to the U.S. for emergency kidney stone surgery. Bezos was apparently aboard a cruise ship when he became ill. Asked by CNBC to confirm the news, an Amazon spokesperson passed along Bezos’s response: “Galapagos: five stars. Kidney stones: zero stars.”

NPR interviews Paul Bragiel, the San Francisco-based VC who has been struggling to transform himself from “chunky computer nerd” to cross-country skier in the Sochi 2014 Winter Olympics.

If you thought former FCC chairman Julius Genachowski might re-join the world of venture capital after returning to the private sector, you’d be wrong — but not terribly far off! The Carlyle Group has hired him as a managing director and partner on its U.S. buyout team. Before joining the FCC, Genachowski was an operations chief at IAC/InterActiveCorp. He also launched his own venture fund that specialized in digital media companies, Rock Creek Ventures, and helped start the tech incubator LaunchBox Digital.

Greylock Partners’ Reid Hoffman talks with Re/code. Among other highlights, Hoffman says that “interest around the quantified self is interesting. But, for us, we still don’t think it makes it at a venture level.”

The Telegraph profiles super-entrepreneur Elon Musk, and though much of his story is well-known by now, the piece features somefascinating details, including that as a boy, Musk “often withdrew into his own world so completely that he was feared deaf and had his adenoids removed.”

—–

IPOs

UniQure B.V., a Netherlands-based biopharmaceuticals company whose gene therapy product received regulatory approval in the European Union last year, has filed to go public. UniQure emerged from the ashes of an earlier gene therapy company called Amsterdam Molecular Therapeutics Holding N.V. (“AMT”). Its principal shareholders include some of AMT’s biggest stakeholders, including the life science investment firm Forbion Capital Partners, which owns 35.6 percent of the company. Other principal shareholders include Cooperatieve Gilde Healthcare (it owns 13.5 percent of the company), Advent (it owns 6.2 percent), Coller International Partners (it owns 44.5 percent), and Chiesi Farmaceutici S.p.A. (it owns 9.1 percent).

Greentech Media looks at five cleantech companies that could go public this year.

—–

Exits

Bitspin, a Swiss company that makes an Android alarm clock app, has been acquired by Google; it plans to keep the app available for free indefinitely, reports The Verge. Terms of the deal were not disclosed.

Mandiant, a 10-year-old, Alexandria, Va.-based information security firm, has been acquired by its publicly traded competitor FireEye in a $989 million mix of stock and cash. Mandiant’s CEO told the Washington Post last week that Mandiant sees annual revenue of $100 million and employs 500 people. The company had raised one, $70 million, growth round of funding in 2011 from One Equity Partners, JPMorgan Chase, and Kleiner Perkins Caufield & Byers.

Sequoia Capital has sold its 1.75 percent stake in SKS Microfinance, an Indian for-profit microfinance institution, to the investment group WestBridge Capital for INR 155 ($2.47) each; Sequoia purchased the stake in SKS five years ago at INR 138 ($2.22) a share.

SnappyLabs, a two-year-old, San Francisco-based photo technology startup, has been acquired by Apple, reports TechCrunch. SnappyLabs was founded and employed by one person: John Papandriopoulos, an electrical engineering PhD from the University Of Melbourne. TechCrunch notes Papandriopoulos dreamed up a way to enable iPhone’s camera take full-resolution photos at 20 to 30 frames per second — far faster than Apple’s native technology.

Twisted Pair Solutions, a 14-year-old, Seattle-based company, hasbeen acquired by Motorola Solutions for an undisclosed amount. Twisted Pair’s technology creates an integrated communications system for smartphones, tablets and PCs, allowing them talk to each other securely in mission-critical business, public safety, and military applications. According to Geekwire, Twisted Pair raised one round of financing, a $9 million Series A round from Ignition Partners, Core Capital Partners and Chart Capital Partners.

—–

Happenings

It’s early January, which means it’s time for the annual “Super Bowl for geeks,” the Consumer Electronics Show in Las Vega$, baby. Will the Hollywood stars, popular musicians, sports legends and TV personalities in attendance be enough to draw you into the mix?

—–

Job Listings

Thomvest Ventures — a venture firm that invests on behalf of Peter Thomson, whose family owns the majority of Thomson Reuters — is looking for a venture analyst. The job is in Redwood Shores, Calif. Applicants should have between one and three years of investment banking experience; a past role at a tech company (big or small) is a plus.

—–

Data

According to Pitchbook, 868 venture-backed deals, funded by 1,814 investors, generated $56.5 billion in exits last year. More here.

Looking ahead, says CB Insights, long-beleaguered Kleiner Perkins Caufield & Byers now has a bigger pipeline of potential 2014 tech IPO candidates than that of any other venture capital or corporate venture capital investor. Says the outfit: “Of the 590 private U.S. tech companies with a real or rumored valuation over $100 million and who are demonstrating significant momentum based on our private company Mosaic ratings, Kleiner Perkins has 50 of them.”

—–

Essential Reads

“60 Minutes” reported last night on the “cleantech crash.” The video and script, which you can find here, has cleantech investors like Rob Day asking the show to “pay more attention.” As Day tweeted last night, “If the @60Minutes piece had come out 3 years ago, it wouldn’t be such horribly stupid uninformed drivel.”

“Some years, you are up. Other years, you are down. One month, you are running the Valley’s most celebrated company. And the next, you are everyone’s favorite punching bag. Sometimes you raise a motherlode of a Series B, and a year later the entire landscape has changed around you and you’re screwed.”

—–

Detours

The world’s ultra-rich are snapping up units at a new high-rise in Miami. Maybe it’s the car elevators?

Isaac Asimov’s predictions for 2014 were eerily prescient, except for the Internet.

Snowstorms, then and now.

—–

Retail Therapy

Bugatti, in partnership with Roland Iten, now makes a mechanical belt buckle that effortlessly cinches one’s pants. At a cost of $84,000, you may think it absurd. But to a one-handed billionaire? Maybe not so crazy.

This IPhone lanyard is so wrong that we might have to buy one.

—–

Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for this newsletter, please click here.

Related articles
Connie

January 6, 2014

Morning Summary

Holacracy
Tony Hsieh and Ev Williams Use Holacracy: Should You?

Last week, we learned that Zappos’ management structure is being replaced with a “self-governing” management system called Holacracy that dispenses with job titles and throws an elbow at traditional hierarchies, replacing them with a flatter structure that distributes power more evenly.

At first blush, the news could be interpreted as a predictably quirky Zappos maneuver by its employee-friendly CEO, Tony Hsieh. But Holacracy isn’t as zany as it sounds. In fact, rather than throw out much of a company’s structure, Holacracy actually applies far more structure to every decision to make it easier and faster to get things done. For example, a traditional management structure where only a few people are authorized to make decisions can lead to delays and missed opportunities. By contrast, Holacracy assigns different aspects of the decision-making process to a wider range of people, theoretically yielding a shorter turnaround on new proposals.

Brian Robertson — a Philadelphia-based management consultant who dreamed up Holacracy in 2007 after struggling to manage his first company — shared a bit more about how it works last week.

Holacracy involves different “circles” and uses “tensions” to steer an organization. Is there another way to describe Holacracy to those who might be confused by that kind of language?

At its core, Holacracy is a power structure for how to run an organization. Alignment, accountability – those are usually done through a management hierarchy. Holacracy doesn’t throw out those things but uses a different structure to get there, so instead of a single CEO, power formally rests in a constitutional process, and everyone is kind of on a level playing field because they know how to influence the organization through those rules.

So Holacracy is less about democracy and more about transparency.

It’s not democratic; decisions are autocratic, with every employee holding a different authority to make certain decisions. So it’s not a big consensus system; it’s just more distributed.

How would a CEO go about learning more? Should they start by scanning the constitution you’ve created? Do they need to hire you?

Any company is free to do what they want with the constitution itself, though we don’t recommend it. It’s a complex game; it’s hard to learn by reading a rulebook.

We find people who are already looking for alternative approaches – CEOs who are aware of the limits of the conventional ways of managing but who don’t know there’s an alternative. Then we offer to come out for a day, and we put them through the Holacracy system and the meeting processes that we use. We also try it with some of the company’s real, live stuff. There’s a big learning curve, but it’s easy to see the potential of it straightaway. We often hear [at these trials] that a company just got 10 times more stuff done than it normally would.

Along with Zappos, the publishing platform Medium is probably the highest-profile company using Holacracy. How did Medium cofounder Ev Williams discover it?

David Allen, the author of Getting Things Done, is highly respected by a lot of interesting people, and when he started talking about us [publicly], Ev noticed.

We wound up having a great breakfast. Ev said when he left Twitter [to start Medium], he was feeling this sense of dread, because he loved creative work, but he hated being a bottleneck manager. He was getting further and further from the work he loved. In fact, most of our clients aren’t people who are excited to have the [CEO] title for the first time; they’re pretty seasoned leaders who experience the same problems [as Williams].

Do you have any proof that Holacracy works?

We definitely lack hard data, but we do have a lot of stories from our clients, including David Allen Company and Precision Nutrition, in Canada. What we hear again and again is that it’s pretty transformative, and it’s usually the CEOs who are our biggest advocates.

Image courtesy of Visual Facilitators.

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

Connie

January 6, 2014

Entrepreneurs

Brian Robertson, Holacracy
StrictlyVC: December 20, 2013

Happy Friday! This is StrictlyVC’s last email until early January. Before signing off, a note of thanks for all the kind words you’ve offered since this product’s launch. All of it, and each of you, is very much appreciated. (Corny sounding, yes, but true!)

If you should see any friends in the industry over the break and want to recommend they sign up for StrictlyVC, that would also be a nice gift (wink). Happy holidays!

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Top News in the A.M.

The University of California is under no obligation to obtain and disclose information about the investment performance of venture capital funds in its portfolio, a California court ruled yesterday.

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Zuora: The Hottest Company You Don’t Know

Zuora isn’t a household name, but the six-year-old is becoming kind of a big deal as private companies go. Its high-touch subscription-billing platform already counts as customers dozens of established corporate giants (HP, Dell, News Corp), newer corporate giants (Box, Docusign, ZenDesk), and up-and-comers (Dollar Shave Club) for whom its technology handles everything from pricing to order management.

Unsurprisingly, investors love the 300-person company. Zuora has raised $128 million to date, including from Benchmark, Index Ventures, Vulcan Ventures, and Marc Benioff of Salesforce.com, where Zuora’s cofounder and CEO, Tien Tzuo, was employee number 10.

Still, Zuora isn’t planning to go public any time soon, say Tzuo. We talked about why earlier this week.

You’ve said that you’d like at least another year or two before tapping the public markets, but it seems like you’d get a warm reception right now.

The private markets are assigning valuations that are as strong if not stronger than pubic markets; there isn’t a lot of inherent value right now to going public. Staying private also allows us to work more on ourselves and to make big bets.

Do you mean acquisitions?

We haven’t made any acquisitions but our private valuation is getting to the size now where it’s starting [to make sense]. I suspect [we’d look at] more adjacent areas, as technology tuck-ins. It’s not a strategy of ours, but staying private gives us more flexibility.

So what kind of big bets are you making?

We’re kind of in a land grab [having recently opened offices in London and Australia, with plans to move into Asia-Pacific]. If we can raise money and focus on [expanding], then it just makes more sense to do that. Our big challenge is evangelizing the shift from a product to a subscription-based economy.

Meaning the renting versus buying economy?

Right. Eighty or 90 percent of companies getting funded now have a subscription model because of [cloud-based servers and other things]. Medical device companies that [used to spend a fortune on equipment] now use services hosted at Amazon and pay as they go for processing power.

Everyone will wake up across the world and realize their business is a subscription-based model. Product-driven society, where you ship as many cars, pens, and computers, is no longer sustainable.

Assuming that’s true, you’re probably as aware as anyone of the types of subscription-based companies that VCs are funding. What are you seeing?

I’m seeing massive niches. Take GoodMouth, which sells toothbrushes. It’s kind of a no-brainer. You’re supposed to change your toothbrush every month or two; GoodMouth sends them to you. With the Internet, you can pick something that has traditionally been too small and scale it to the whole country.

Another example is point-of-sale systems. It might seem like Square has the point-of-sale market locked up, but that’s not so. There are half a dozen companies focused on point-of-sale systems: there’s one that’s focused on grocery stores, another focused on dry cleaners. Very specific vendors can scale to a very large size today, unlike five to ten years ago, and smart VCs know it. Peter Fenton [of Benchmark, who sits on Zuora’s board], has a company in his portfolio called Revinate. It does hotel management systems. That can’t be further afield from the masses, but it’s a multibillion-dollar vertical.

New Fundings

Cyanogen, a four-year-old, Seattle-based custom Android software developer, has raised $23 million in Series B funding led byAndreessen Horowitz. Benchmark and Redpoint Ventures, which provided the company with $7 million in Series A funding just three months ago, also participated in the round, along with the Chinese company Tencent. Cyanogen has built an open-source operating system that reportedly gives Android owners a more customizable and faster experience than they’d get out of the box with an Android phone.

Floored, an 18-month-old, New York-baed technology company whose 3D capture & visualization software sells to the real estate, architecture, interior design and furniture industries, has raised $5.26 million in Series A funding. RRE Ventures led the round. New investorGreycroft Partners and existing investors Two Sigma Ventures,Lerer Ventures and Felicis Ventures, also participated in the financing, which brings the company’s total capital raised to date to $6.3 million.

Foursquare, the four-year-old, New York-based social location service, has raised $35 million in Series D funding led by DFJ Growth and the Capital Group’s Smallcap World Fund. AllThingsD reports that the round was completed at a valuation slightly north of Foursquare’s last valuation of $600 million. Read more about it here. The company has now raised $106 million in equity, and another $41 million in debt, according to Crunchbase.

Freshdesk, a three-year-old, Walnut, Calif.-based maker of customer support software, has raised $7 million in Series C funding. Existing investors Accel Partners and Tiger Global Management participated in the round. The company has raised roughly $14 million to date.

Folloze, a months-old, Palo Alto, Calif.-based company, has raised $1.97 million, according to an SEC filing that doesn’t list any investors but shows the round’s target is $3.5 million. The company is still operating in stealth mode but says its mission is to “democratize content contribution and distribution in the enterprise” through a “new approach for enterprise content that empowers individuals to outperform in their day-to-day job.” (We know, not so helpful, but there you have it.)

Hightower, a months-old, New York-based company whose mobile technology allows landlords and brokers to collaborate on deals in real time, as well as track important documents and information, has raised $2.12 million in seed funding. Bessemer Venture Partners and Thrive Capital led the round, which also included participation from RRE Ventures, Red Swan, and a gaggle of individual investors. David Tisch, Aaron Levie, Joe Lonsdale, Jason Tan, Chris Howard, Brad Silverberg, Brandon Shorenstein, Lee Linden, and Gary Vaynerchuck, were among them.

Kurtosys, a nine-year-old, London-based company whose financial technology software targets asset managers, has raised $8 million in Series C financing from Triangle Peak Partners and existing investorTrue Ventures. The company has raised $21.7 million altogether, according to Crunchbase.

MyOwnMed, a year-old, Chevy Chase, Md.-based company whose mobile health app captures between-visit health data, has raised $1.3 million in funding, shows an SEC filing. No investors are listed on the form.

ResolutionTube, a months-old, Seattle-based augmented reality collaboration platform for the customer service industry, has raised $1.5 million in seed funding led by Madrona Venture Group with participation from numerous individual investors, including David Cohen, Rudy Gadre, Owen Van Natta, and Vijay Vashee.Acceleprise Ventures also participated in the round.

Robinhood, a two-year-old, Redwood City, Calif.-based company whose free mobile application allows users to read stock news, rate companies, and trade stocks, has raised $3 million in seed funding led by Index Ventures. Tim Draper, Rothenberg Ventures, andAndreessen Horowitz also participated in the financing, among others.

TaxiBeat, a nearly three-year-old, Athens, Greece-based company whose mobile app allows passengers to call a specific, nearby taxi based on distance, user ratings, and car model, has raised $4 million. The money comes from Hummingbird Ventures in London; the company, which is expanding into several European cities and Latin America, has raised $7 million altogether, reports TechCrunch.

Vensun Pharmaceuticals, a 2.5-year-old, Yardley, Pa.-based generic pharmaceutical company, has raised $15.8 million in Series B funding. The round was led by JW Asset Management, which also led Vensun’s 2012 Series A financing. Additional investors in the financing included entities affiliated with Allen Chao, the co-founder of Watson Pharmaceuticals, now Actavis.

Warby Parker, the three-year-old, New York-based online eyeyglasses company, has raised $60 million in new funding led by existing investorTiger Global Management, reports Fortune. Other previous investors to join in the round include General Catalyst Partners, Spark Capital,Thrive Capital, and First Round Capital. The giant round brings the company’s total financing to date to $116 million.

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New Funds

Boulder Ventures, an 18-year-old, Boulder, Colo.-based venture firm that backs early-stage tech and life sciences companies in Colorado and the Mid-Atlantic region, is in the process of raising its sixth fund, shows a new SEC filing. The target listed is $100 million. The filing, which says the first sale has yet to occur, lists three partners: Kyle Lefkoff, Jonathan Perl, and Peter Roshko. One of the firm’s biggest hits in recent years was Rally Software, a Boulder-based company that makes project management software and which held a successful public offering in 2010 after raising around $70 million. (The company’s market cap today is $425 million; SEC filings show that Boulder Ventures owned 10 percent of the company.)

Flywheel Ventures, an 11-year-old, Santa Fe, N.M.-based seed and early-stage venture firm focused on tech and physical sciences ventures in the Southwest/Rockies region, has raised $8.74 million for its second fund, an SEC filing shows. The total offering amount for the vehicle is listed as indefinite. Flywheel’s sole GP is Trevor Loy; among the firm’s most recent investments is ByteLight, a Boston- based retail indoor location company, which raised $3 million in Series A funding earlier this fall, including from Motorola Solutions, the eCoast Angel Network, Sand Hill Angels and Google evangelist Don Dodge.

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People

Yesterday, we noted that venture capitalist John Doerr was having a good week, having offloaded Google shares for more than $4 million. But that haul pales in comparison to the $91 million that Facebook board member Marc Andreessen will reportedly see from the sale of 1.65 million class A shares of Facebook in the company’s secondary offering, announced yesterday.

Venture capitalist and Illinois Republican gubernatorial hopeful Bruce Rauner has reportedly “been working overtime to cast himself to voters as a man who picked himself up by his bootstraps, worked for everything he earned and remained humble even as he acquired the wealth and success that earned him a spot as an adviser and confidant to Mayor Rahm Emanuel.” StrictlyVC doesn’t have a horse in this race, but Rauner’s ads are certainly interesting.

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IPOs

Congratulations, America: 2013 was the best year for the U.S. IPO market since 2000. Renaissance Capital breaks down the year here.

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Exits

Inspirato, a three-year-old, Denver-based, private club that provides its members exclusive access to luxury homes and hotels, along with adventure travel experiences, has combined with competitor Portico Club. The new company is being called, unfortunately, Inspirato with American Express. Inspirato has raised nearly $50 million in funding, including from DAG Ventures, Millennium Technology Value Partners, Kleiner Perkins Caufield & Byers, Access Venture Partners and Crunchfund. TechCrunch has an interesting look at the deal, and its backstory, here.

Storyful, a 3.5-year-old, Dublin, Ireland-based company that finds news on social media, has been acquired for $25 million by News Corp, which says it will operate Storyful as a standalone business. Storyful had raised one round of funding, in December 2011, from theAIB Start-Up Accelerator Fund, which is managed by ACT Venture Capital. The amount wasn’t disclosed publicly.

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Job Listings

Microsoft is looking for a corporate development manager in Seattle. This person will help lead small and medium-size deals, as well as help evaluate larger transactions, meaning there’s plenty of deal structuring, negotiating of terms sheets, etc. Microsoft’s corporate development managers also interface with the investment banking, venture capital, and startup communities and conduct special projects that make it easier to identify new business opportunities.

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Data

CB Insights has published a list of the top early-stage VCs in Midwest tech startups, based on follow-on investment rates. In descending order, the top five are: Detroit Venture Partners, Pritzker Group Venture Capital, Apex Venture Partners, Chicago Ventures, and Illinois Ventures. You can read more here.

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Essential Reads

“On the day [Steve] Jobs announced the iPhone, the director of the Android team, Andy Rubin, was six hundred miles away in Las Vegas, on his way to a meeting with one of the myriad handset makers and carriers that descend on the city for the Consumer Electronics Show. He reacted exactly as DeSalvo predicted. Rubin was so astonished by what Jobs was unveiling that, on his way to a meeting, he had his driver pull over so that he could finish watching the webcast. ‘Holy crap,’ he said to one of his colleagues in the car. ‘I guess we’re not going to ship that phone.’”

A professor of robotics discusses the “robot smog” that could pollute cities of the future.

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Detours

Minutes from the Dunley Family Emergency Christmas Celebration Planning Committee Meeting.

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Retail Therapy

On Indiegogo, you can now buy a $65 mind-reading dog translator thatjust might work. We’re just kidding. You might as hold the money out a moving car window and let it go.

You work hard. Sometimes. You deserve a comb that’s made from high-grade titanium, has a black titanium finish, and comes in a custom Italian leather sleeve. You deserve a comb that has the muscular name of Octovo Ti. Did we mention that this comb costs $150? Wait, why are you taking out your plastic comb? It is not “just fine.” Did we mention that quantities are limited. Hello?

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Connie

December 20, 2013

Morning Summary
Zuora: The Hottest Company You Don’t Know

Zuora isn’t a household name, but the six-year-old is becoming kind of a big deal as private companies go. Its high-touch subscription-billing platform already counts as customers dozens of established corporate giants (HP, Dell, News Corp), newer corporate giants (Box, Docusign, ZenDesk), and up-and-comers (Dollar Shave Club) for whom its technology handles everything from pricing to order management.

Unsurprisingly, investors love the 300-person company. Zuora has raised $128 million to date, including from Benchmark, Index Ventures, Vulcan Ventures, and Marc Benioff of Salesforce.com, where Zuora’s cofounder and CEO, Tien Tzuo, was employee number 10.

Still, Zuora isn’t planning to go public any time soon, say Tzuo. We talked about why earlier this week.

You’ve said that you’d like at least another year or two before tapping the public markets, but it seems like you’d get a warm reception right now.

The private markets are assigning valuations that are as strong if not stronger than pubic markets; there isn’t a lot of inherent value right now to going public. Staying private also allows us to work more on ourselves and to make big bets.

Do you mean acquisitions?

We haven’t made any acquisitions but our private valuation is getting to the size now where it’s starting [to make sense]. I suspect [we’d look at] more adjacent areas, as technology tuck-ins. It’s not a strategy of ours, but staying private gives us more flexibility.

So what kind of big bets are you making?

We’re kind of in a land grab [having recently opened offices in London and Australia, with plans to move into Asia-Pacific]. If we can raise money and focus on [expanding], then it just makes more sense to do that. Our big challenge is evangelizing the shift from a product to a subscription-based economy.

Meaning the renting versus buying economy?

Right. Eighty or 90 percent of companies getting funded now have a subscription model because of [cloud-based servers and other things]. Medical device companies that [used to spend a fortune on equipment] now use services hosted at Amazon and pay as they go for processing power.

Everyone will wake up across the world and realize their business is a subscription-based model. Product-driven society, where you ship as many cars, pens, and computers, is no longer sustainable.

Assuming that’s true, you’re probably as aware as anyone of the types of subscription-based companies that VCs are funding. What are you seeing?

I’m seeing massive niches. Take GoodMouth, which sells toothbrushes. It’s kind of a no-brainer. You’re supposed to change your toothbrush every month or two; GoodMouth sends them to you. With the Internet, you can pick something that has traditionally been too small and scale it to the whole country.

Another example is point-of-sale systems. It might seem like Square has the point-of-sale market locked up, but that’s not so. There are half a dozen companies focused on point-of-sale systems: there’s one that’s focused on grocery stores, another focused on dry cleaners. Very specific vendors can scale to a very large size today, unlike five to ten years ago, and smart VCs know it. Peter Fenton [of Benchmark, who sits on Zuora’s board], has a company in his portfolio called Revinate. It does hotel management systems. That can’t be further afield from the masses, but it’s a multibillion-dollar vertical.

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

Connie

December 20, 2013

Entrepreneurs

Benchmark, Marc Benioff, Next World Capital, Peter Fenton, Salesforce, Tien Tzuo, Vulcan Capital, Zuora

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