Good morning!

—–

Top News in the A.M.

Andreessen Horowitz has just made a giant bet on bitcoin, leading a $25 million investment in a San Francisco-based company that makes it easier to buy and sell the digital currency. (See also in Fund News below.)

—–

Focusing on Privacy Issues, Before the Sale

Earlier this week, The Recorder observed that maintaining strong privacy standards is now a serious requirement for startups interested in M&A, not some “item on a deal-making checklist or a vague commitment to users.” Since the biggest asset of many startups is often data like subscriber lists, neglecting privacy standards can be a deal-killer, the outlet observed.

Surprisingly (to me), one attorney told The Recorder of the issue: “Only a tiny minority of companies really have their act together; a good number of companies are completely out to lunch.”

To find out more about how big a sticking issue privacy has become for acquirers, I talked yesterday with Christine Lyon, an attorney at Morrison Foerster who focuses on privacy and employment law.

Lyon told me that a big part of the shift owes to increased regulatory scrutiny, saying the Federal Trade Commission “has been more active in privacy enforcement generally.”

I asked Lyon who tends to be the most “at risk.” She cited mobile app makers, largely because “they might not think of themselves as collecting personal information, when they are.” (Names and email addresses are considered Personally Identifiable Information, or PII.)

Sometimes, she said, it’s simply a case of “delayed compliance. The [mobile app] startup thinks, ‘Once we’re up and running and have more money, we’ll roll out a policy.’” Unfortunately, says Lyon, “at that point, you’ve collected data, and you’re sort of stuck figuring out how to implement [a privacy policy belatedly].”

Perhaps unsurprisingly, Lyon also mentioned that two other types of companies that should pay special attention to new state and federal privacy laws are sites that either cater in some way to children or deal with health-related information. When it comes to both, the risk of a misstep is much higher, said Lyon — not to mention that buyers in both cases are always “very interested in what sorts of consents were obtained.”

To correct what the FTC would consider a material issue in their privacy policies, a startup can do a couple of things. First, it can try getting the consent of its users retroactively, though most users won’t give it. (Who wants to be bothered?) Another option is to offer users the opportunity to “opt-out” from permitting a company to transfer its data to an acquirer.

Unfortunately, neither solution may be enough to appease a potential acquirer in the current environment. “An area that’s high risk for enforcement will get buyers’ attention,” she’d told me. “We’re just seeing a lot more issues like this cropping up and sometimes killing deals.”

The lesson here is obvious: companies that skimp on privacy could ultimately end up leaving a lot of money on the table.

New Fundings

Happy Tuesday, everyone! Yes, we’re still figuring out the ideal format for readers. (Half of you loved what we did yesterday; the other half threw up on it.) Thanks very much for your patience, and if you haven’t signed up yet, you can do that here!

—–

Top News in the A.M.

Seven billionaires have joined Warren Buffett’s Giving Pledge club; among them, Groupon cofounder Eric Lefkofsky and his wife, Liz.

—–

Entrepreneur Tristan Walker to VCs: Not Focusing on African-Americans is “Crazy”

Yesterday, StrictlyVC featured software mogul Mitch Kapor, who noted that VCs aren’t paying enough attention to the changing demographics of the country — even if it’s good business for his own investment firm, which is paying very close attention. Indeed, among other things, Kapor goes to events hosted by the Latino Startup Alliance and aligns himself with NewMe, a San Francisco-based accelerator focused on underrepresented entrepreneurs.

But Kapor isn’t alone in trying to wake up Silicon Valley. Tristan Walker, a Palo Alto-based entrepreneur who cut his teeth running business development at Foursquare and is now running his own still-stealth startup, is also doing what he can to shine a light on underrepresented groups.

It’s personal for Walker, who is African-American, which puts him in the company of just 1 percent of black tech entrepreneurs in Northern California. But like Kapor, Walker also believes proactively reaching out to African-American and Hispanic groups makes good business sense. We talked late last week.

A year or so ago, you set up the internship program Code2040 to bring black and Latino engineering undergrads to the Valley. Why?

Because for the first 24 years of my life, prior to coming here [to attend Stanford Business School], I had no idea that Silicon Valley was a place, let alone a great place. I don’t want people making the same mistake, so I thought [to] create an organization that gets black and Latino engineering graduates into internships in the Valley, and I enlisted one of my classmates [Laura Weidman Powers] to run it. In the summer of 2012, we had five fellows; this past summer, we had 18.

How does it work?

Startups only have so many resources to recruit at universities, so while you find [recruiters] at Stanford and M.I.T. and [the University of] Waterloo, my thinking was: What about engineering students at Harvey Mudd [College in Claremont, Calif.] and Stony Brook University [in New York], where I received my undergraduate degree? There are kids at these places who are incredibly talented and deserve that chance. So we visit these colleges, connect with administrators and students, educate them, and make it easier for [startups] to find great talent in the process.

Is this a pipeline problem or is there more to it?

It’s an access problem; there aren’t enough black folks here to put people in the network. But there’s an awareness problem, too. Growing up, I wanted to be an actor or athlete because I saw the Denzel Washingtons and Michael Jordans of the world. I also wanted to work on Wall Street, because those guys were very visible. As Silicon Valley becomes more visible to elite engineers who happen to be of color, the virtuous cycle will [begin]. I do think we’re at the start of something.

In another 30 years, the majority of people in the U.S. will be people of color. Is there more that VCs could be doing to target different demographics, so they aren’t playing catch-up later?

Definitely. Talk of white founders of black founders aside, focusing on this demographic is good business. [African Americans] are the earliest adopting, most culturally influential demographic in the world. To not be focusing on them is crazy.

Also, think about it: years down the road, if I’m a startup founder building a mobile app, do I build a Spanish-language version first? Do I focus on Android or iPhone first? What do I do about people who can only pay in cash? There’s a seismic shift [coming]; we should be thinking about it from now.

New Fundings

Anturis, a 2.5-year-old, San Francisco-based company that makes IT infrastructure-monitoring software, has raised $2 million in Series A funding led by Runa Capital and VEB Innovations.

BrandProject, a months-old, Toronto-based venture that invests in consumer products, has raised $3 million in funding from BDC Venture Capital. BrandProject rose its first, $12 million, round of funding from undisclosed sources in August.

Catchpoint Systems, a five-year-old, New York-based company that makes Web and infrastructure monitoring software, has raised $6 million in Series B financing led by existing investor Battery Ventures. The company has raised just north of $10 million altogether, according to Crunchbase.

HealthLoop, a four-year-old, Mountain View, Calif.-based whose software is used by medical practices to monitor and communicate with patients during the recovery process, has raised a $10 million Series A round led by Canvas Venture Fund. Subtraction Capitalalso participated in the funding. The funding brings the company’s total capital raised to date to $13 million.

Lazada, a two-year-old, Kuala Lumpur-based Amazon-like e-commerce platform that targets consumers in Indonesia, Malaysia, Philippines, Thailand and Vietnam, has raised $250 million from retail giant Tesco PLC and Access Industries, along with previous investors Investment AB Kinnevik and Verlinvest. The round brings Lazada’s funding to a stunning $486 million. Bloomberg has much more here.

Monexa, a 15-year-old, Vancouver-based company focused on an on-demand subscription billing and payment automation for its customers, has raised an undisclosed amount of funding fromYaletown Venture Partners, also in Vancouver.

—–

People

AllThingsD editors Walt Mossberg and Kara Swisher have signed a deal with NBCUniversal for a news and conference business that will bring their current staff to a newly named website, reports Bloomberg.Details here.

Reggie Brown, the early Snapchat employee who says he invented the idea for disappearing messages, has admitted to leaking information to the press (including those deposition videos that Business Insider ran late last month). As a result, Brown is facing a restraining order, along with possible fines and even a dismissal of the suit itself, reports Techcrunch.

We had a bad feeling about Clinkle‘s launch when it announced the “largest seed round in Silicon Valley history” in June. Now, as Fortune reports, the still-stealthy mobile payments startup has laid off25 percent of its workforce.

Yesterday, The Information assembled a list of top executives who may be looking for new opportunities, and the outlet included Scott Forstall, who co-invented the iPhone operating system but wasforced out of the company in October 2012. Reportedly Forstall has been traveling, as well as talking with Kleiner Perkins and Andreessen Horowitz, though Apple employees think it’s more likely that Forstall will start his own company than become a VC.

Hilarie Koplow McAdams has been newly appointed as the chief revenue officer of New Relic, which makes application management and performance software. As GigaOm observes, the move is likelypre-IPO preparation. Koplow-McAdams was most recently VP of global sales for Salesforce.com.

Balaji Srinivasan, who cofounded the genetic-testing company Counsyl, is the newest general partner at Andreessen Horowitz. Srinivasan, who taught data mining, statistics, and computational biology at Stanford before founding Counsyl, made waves in Octoberwhen, during a Stanford lecture, he suggested building “an opt-in society, ultimately outside the United States, run by technology.” Characterized as a “super-high-octane polymath” by firm cofounderMarc Andreessen, Srinivasan is particularly interested in healthcare, education, finance (including bitcoin), drones, and 3D printing.

—–

IPOs

King, the mobile games maker behind “Candy Crush Saga,” has delayed its IPO until next year amid fears that its flagship game has been “too successful.” The Telegraph has more here.

Quartz looks at the “mind-bendingly” complex ownership structure behind Chinese internet IPOs, asking (very rhetorically): What could go wrong?

—–

Exits

Newsy, a five-year-old, Columbia, Mo.-based video news service that monitors and analyzes news coverage, has been acquired by the media giant E.W. Scripps for $35 million in cash. Newsy, which raised at least $3.5 million from undisclosed investors, will beoperated as a subsidiary.

QuikIO, a 2.5-year-old, Mountain View, Calif.-based cross-platform video streaming app, has been acquired by Yahoo in what sounds like an acqui-hire. PandoDaily has the story.

—–

Happenings

Gartner Group‘s four-day Data Center Conference rolls into its second day in Las Vegas today. More information here.

The 10th annual LeWeb Paris conference is now in full swing. Clickhere to learn more. (LeWeb may be posting video of some of the conference here, too.)

—–

Job Listings

Canaan Partners is looking for an analyst to join its Menlo Park, Calif., office. (The firm has a health care team, but this person will focus on information technology.) To apply, you need an undergraduate degree in a technical field and between one and three years of experience working at a startup or other tech company. Canaan’s analysts typically work for the firm for two to three years before heading off to business school or to a company.

—–

Essential Reads

The hack that brought Foursquare back from the dead.

Venture capitalist Fred Wilson on bitcoin, data Leakage, health care and more.

Yesterday, Facebook announced that one of the most prominent artificial-intelligence researchers in the world, Yann LeCun, will be joining the company. Here’s why, suggests the New Yorker.

—–

Detours

If a story is viral, truth may take a beating.

Ohioans lead the nation in cursing. (StrictlyVC was hoping for a World Series or NBA Championship but will have to make do with this.)

Eyelid art. It’s a real thing.

—–

Retail Therapy

Turn your baby into a delicious-looking burrito using one of these giant, flour tortilla wraps — just in time for the holidays!

As long as you’re freezing your arse in this weather, get in the spirit with an Arctic Force Snowball Blaster. It makes three snowballs at a time that you can shoot at high velocity in the corporate parking lot. Or, heh, you know, wherever.

—–

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.

Good morning, everyone! Hope you had a great weekend. I also hope you’ll bear with us as we experiment with a few things, including our formatting. (Love it? Hate it? Let me know, at connie@strictlyvc.com or @cookie.)

—–

Top News in the A.M.

In an open letter to President Obama and Congress this morning, Google, Apple, Microsoft and five more of the most prominent U.S. tech companies, are demanding the government set new, stricter limits on surveillance.

—–

Mitch Kapor Asks: Where Is Twitter’s Person of Color?

Mitch Kapor, who founded Lotus and is widely considered a pioneer of the personal computing industry, wasn’t impressed when Twitter announced it had finally welcomed a woman – Marjorie Scardino – to its eight-member board last Thursday. As Kapor says of the move, “There’s no reason that Twitter had to wait until now to put a woman on the board.”

Scardino’s appointment also doesn’t address the fact that every member of Twitter’s board is white, says Kapor, noting people of color are even more active on the platform than whites. (According to Pew Research, 26 percent of black Internet users surveyed say they use Twitter, compared to 19 percent of Hispanic users and 14 percent of white users.) “No one is talking about the fact that people of color over-index on Twitter. Why aren’t we talking about the reason no one of color is on its board?” Kapor asks.

Late last week, I chatted with Kapor – today an active investor whose personal foundation works to ensure equity, particularly for low-income communities of color – about Silicon Valley and issues of race. Our conversation has been edited for length.

It often feels like Silicon Valley isn’t paying much attention to different ethnic and racial groups, including as end users. How big a problem is this in your view, and how is it remedied?

Entrepreneurs scratch their own itch, naturally, turning problems into opportunities. So as you have more underrepresented people of color starting companies, they’re naturally going to form them in ways that serve markets that have been overlooked.

But it has to be a multi-pronged approach, because while it’s the case that the Valley thinks of itself as a meritocracy, the gatekeepers take all kinds of shortcuts – paying attention to where you went to school, all the while professing that they don’t care what color or gender you are. It’s a ridiculous claim. People make all kinds of implicit assumptions about what success looks like that makes it harder for African Americans, Latinos, women, and people with accents to succeed.

What’s a practical way to get the ball moving? Is it a matter of getting more underrepresented groups integrated early on into the ecosystem?

A good first step would be to recognize that the smartest VCs and entrepreneurs are subject to systematic distortions from implicit bias. We could do much more to mitigate it if we’d stop pretending it doesn’t exist.

The powers that be on this subject say the most amazingly stupid things. They say things like, “I don’t care if you happen to be black or Latino.” But no one happens to be black or Latino; you can’t grow up and not be treated differently in one way or another. And to fail to take that into account is poor rationalization.

What else could ultimately make a difference? The country’s demographics are changing fast.

It’s sort of like climate change. Even though the science was strong, people took a wait-and-see position at first. After the science kept adding up, you were left with a relatively small number of climate denialists. On the topic of changing demographics, it’s the same thing. It’s inexorable. It will only come out one way. It’s just a question of how long it takes to get to critical mass.

At some point, especially if there’s one big outcome – one black billionaire – it will be a game changer. You can talk until you’re blue in the face without results. It’s when founders from nontraditional backgrounds start breaking out that we’ll start seeing a real impact.

Who have you backed recently who has a different perspective given his or her nontraditional background?

Take Regalii, a recent Y Combinator graduate whose founder is Latino. It’s a mobile solution for the international remittances market, and it comes out of [co-founder Edrizio de la Cruz’s] life experience as an immigrant from the Dominican Republic who went to Wharton. It’s a totally valid opportunity and the sort of thing that investors should fund, but it’s not the sort of thing that other people are necessarily going to think of, even though they should.

I agree 100 percent that there are lots of opportunities to cater to underserved markets that entrepreneurs aren’t going after. Because we’ve become known for being focused on high-growth opportunities that have a positive social impact, we’ve become a magnet, and we feel like we have an unfair competitive edge. These are companies not being fought over by other VCs. But that’s their loss and our gain.

New Fundings

BeHome247, a two-year-old, Austin, Tex.-based company that makes a smartphone-operated remote access, management, and property control system, has closed on $1.6 million in funding, shows an SEC filing. The company isdeclining to name its investors.

Chef, a five-year-old, Seattle-based company formerly known as Opscode, has closed a $32 Million Series D funding round led by Scale Venture Partners. Other new investors Citi Ventures and Amplify Partners also participated in the funding, alongside previous investorsBattery Ventures, DFJ, and Ignition Partners. Chef, an IT infrastructure automation company, has now raised roughly $55 million altogether.

Citrus, a three-year-old, Mumbai, India-based payment company that’s often likened to PayPal of China’s Alipay, has raised $5.5 million, reports Dow Jones, which saysSequoia Capital was part of the round.

Clever, a two-year-old, San Francisco-based company whose software helps schools set up and update their student information easily, from student enrollment status to class rosters to teacher schedules, has raised $10 million in new funding led by Sequoia Capital, reports TechCrunch. The funding brings the total capital raised by the company to $13 million, says the outlet.

Daily Secret, a three-year-old, New York-based company that emails users a daily “best kept secret” about their favorite cities, has raised a new, $1.25 million round of funding, shows an SEC filing that lists E.ventures, as well asPan Africa Investment Co. Daily Secret, which puts out editions for more than 35 cities, including Athens, San Francisco and Tel Aviv, raised a $1.85 million Series A round last year from E. Ventures, BV Capital, Greycroft Partners, and Trigger Media.

Honest Buildings, a 2.5-year-old, New York-based startup, has raised a fresh round of funding, just six months after closing its $5.5 million Series A round, judging by an SEC filing. Thrive Capital appears to have led the $4 million fundraise (its cofounder, Jared Kushner, is listed on the filing). Honest Buildings, whose online platform connects real estate construction and design space professionals, has received past funding from Westly Group, RockPort Capital Partners and Mohr Davidow Ventures; collectively, it has now attracted about $11.5 million.

Flurry, an eight-year-old, San Francisco-based mobile analytics company, has raised $12.5 million in new funding, according to TechCrunch. The company declined to name its new investors but told the outlet it has raised $62.5 million altogether. Its many existing investors include Draper Fisher Jurvetson, Union Square Ventures, First Round Capital, Crosslink Capital and Menlo Ventures.

ObserveIT, a seven-year-old, New York-based maker of activity recording and auditing software, has raised $20 million from Bain Capital Ventures. The company, whose monitoring and insight into user activity helps its customers solve their compliance, security and IT operational problems, hasn’t publicly disclosed previous institutional funding.

Practice Fusion, an eight-year-old, San Francisco-based company focused on electronic health records, has raised a $15 million Series D extension led by Qualcomm Venturesand Longtitude Capital. The funding brings Practice Fusion’s Series D to $85 million and its overall funding to $149 million.

Via Motors, a three-year-old, Orem, Utah-based company that specializes in extended-range electric trucks, vans and SUVs, is apparently in aggressive fundraising mode. Last month, it filed a Form D, showing it had $5.7 million as part of a $10 million round, with Silicon Valley real estate billionaire Carl Berg and automotive executive Bob Lutzlisted as non-executive directors. On Friday, the company filed a fresh Form D showing it’s now raising $50 million. In a press conference on the main stage of the LA Auto Show last month, Lutz announced that Via would start production of its trucks and vans soon.

—–

New Funds

Silicon Valley venture capital firm Benchmark has officially raised $425 million for its eighth fund, judging by an SEC filing. The fund size is exactly the same as the firm’s previous fund, closed in January 2011. Five GPs are listed in the filing: Matt Cohler, Bill Gurley, Mitch Lasky, Steven Spurlock, and Peter Fenton.

—-

People

Paul Bragiel, a 36-year-old, American entrepreneur who three years ago founded the seed fund and accelerator i/o Ventures in San Francisco, has put his career on ice to try skiing in the 2014 Olympic Games — for Colombia. The Journal has much more on this very unusual story.

Blackberry cofounder Mike Lazardis made (and lost) a fortune on his ailing smartphone company. Now, he seems prepared to bet it all on quantum computing. As he tells the National Post of his investments, including a brand-new “Quantum Nano Centre” at the University of Waterloo: “There is a quantum revolution coming, an industrial revolution. It’s audacious.”

—–

IPOs

Art.com, the decades-old online seller of prints, posters, frames and canvas is still hoping for an IPO, according to USA Today, which says the company recently brought in investment banks to discuss the possibility.

Lumenis, a 22-year-old, Yokneam, Israel-based company that develops and sells lasers used in minimally invasive surgeries, has registered to go public on Nasdaq to raise up to $115 million. The company’s biggest outside investors include Viola-LM Partners, which owns 45.9 percent of the company, XT Hi-Tech Investments, which owns 35.5 percent, and Bank Hapoalim, which owns 5.2 percent.

Rubicon Project, the six-year-old, L.A.-based online- ad company, has picked Morgan Stanley and Goldman Sachs Group to lead its IPO, according to people who talked with Advertising Age. The company is reportedly aiming for a market debut next year. Rubicon has raised more than $50 million over the years, according to Crunchbase, including from Clearstone Venture Partners, Mayfield Fund and News Corp.

—–

Exits

EdgeCast, a seven-year-old, Santa Monica, Calif.-based content delivery network company, has been acquired by Verizon for an undisclosed amount that a source tells TechCrunch is in excess of $350 million. Verizon will use EdgeCast’s technology to enhance its video delivery and Web services offerings. EdgeCast had raised roughly $75 million from investors, including Steamboat Ventures and Menlo Ventures.

getTalent, an 18-month-old, San Francisco-based company that made online engagement tools for recruiters, has been acquired by the job site Dice, says TechCrunch. getTalent had raised $2.6 million in funding from HR software maker SuccessFactors and angel investors. Terms of the acquisition weren’t disclosed, but in a note to TechCrunch, Dice’s president made it sound like an acqui-hire, writing: “We are pleased to have the team behind getTalent join our Dice.com development team.”

—–

Happenings

The 10th annual LeWeb Paris conference kicks off tomorrow; speakers include venture capitalists Fred Wilson, Tony Tjan, and Guy Kawasaki, along with a long list of founders and operating execs. You can learn more about what’s happening and when here.

—–

Job Listings

The corporate giant Johnson & Johnson is looking for a manager of venture deal and analysis to help the company make equity investments in early-stage venture and publicly traded companies in the areas of pharmaceuticals, biotechnology, medical and surgical devices, health care information technology, diagnostics, and consumer products. The job is in Menlo Park, Calif.

—–

Data

Venture capital firms poured nearly $350 million into food-related startups last year, compared with less than $50 million in 2008, according to the research firm CB Insights. The AP has a nice report on the evolving landscape here.

—–

Essential Reads

Late last week, a federal judge gave the green light to an employee class-action suit against Uber that claims the ride-sharing company has stiffed drivers on tips and expenses. The case could now move forward, possibly even as a national class action. As the Recorder sees it, the move injects uncertainty into the freelancer model central to Uber and other tech ride-share startups like Lyft and Sidecar.

How to bet against the bitcoin bubble.

There really isn’t a VC industry in Spain, reports Tech.EU. And that’s a pretty big problem for the 38 startup programs now operating inside the country.

—–

Detours

Go ahead. Mail your boring holiday cards.

Artist Jee Young Lee creates surreal dreamscapes in her small studio. (These are dazzling.)

—–

Retail Therapy

These “dynamic balance” golf shoes look a little odd, but hey, when it comes to your swing, sometimes you gotta do what you gotta do.

Yes! Finally, a combination bottle opener and wire stripper.

—–

Etc.
A couple of weeks ago, I had to run off in the early a.m. to speak at Wharton‘s San Francisco campus. Here’s a clip if you’re interested.  Thanks to Wharton’s vice dean, Doug Collom, for inviting me!

—-

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

• StrictlyVC: December 6, 2013
• Clever Gets $10 Million From Sequoia To Provide A Standardized API For School Data
• StrictlyVC: December 3, 2013

Happy Friday, everyone! Enjoy your weekend and we’ll see you back here next week with some interesting features, including interviews with entrepreneur Tristan Walker and software mogul and philanthropist Mitch Kapor.

——