San Francisco Mayor Ed Lee defends his relationship with local technology founders, which has been characterized by many as overly cozy.

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Diagnose What’s Wrong, With Your Smartphone

Last week, Slate reported on a brilliant UCLA professor who is “changing the field of medical testing by turning smartphones into portable laboratories.”  But there are a growing number of entrepreneurs finding ways to transform our phones into diagnostic tools. Among the latest is Walter de Brouwer, the founder of Scanadu, a three-year-old, Mountain View, Calif.-based company that just raised $10.5 million in Series A funding led by the firm Relay Ventures. (Tony Hsieh’s VegasTechFund, Jerry Yang’s Ame Cloud Ventures, and numerous angels also participated.) 

Right now, Scanadu makes a puck-shaped scanner that’s packed with sensors designed to read your vital signs — including heart rate, blood pressure, temperature, and blood oxygen levels — and beam the information wirelessly to your iOS or Android smartphone. Next, the company plans to produce a disposable urine analysis testing platform to help determine, say, whether you’re developing heart-related kidney problems. 

Yesterday, I chatted with de Brouwer — a serial entrepreneur and former academic — about his company’s next steps.

What’s the big idea here?

We want to bring [to consumers] the complete diagnostic experience of a hospital. That consists of the emergency room, which basically measures the electromechanical information on the surface of the body; imaging, or what you see through the skin; and labs, where bodily fluids — blood, urine analysis, saliva — are examined.

One day, this will come together in a way that’s FDA approved, so that patients have accurate information that both they and their doctors accept and understand.

You don’t yet have FDA approval. How long do you anticipate it will take?

We’re starting our first clinical trials with [the] Scripps [Translational Science Institute] and will deliver a feasibility study to the FDA in March. Normally, [the turnaround takes] 100 days, though you can never predict, especially if there are more questions, and you have to do more trials. So our hope is to have the product out to consumers for the holidays in 2014, but our expectation is that [it will be available for sale] in 2015.

Will you try to sell to both Western and developing countries?

Because we’re small – we have 19 employees right now – we’re targeting the U.S. market for the moment.

Who will have access to your customers’ data?

Users will basically own their data, which they can send to their doctor to view, even in real time.

In summer, you raised a separate $1.6 million for Scandu in a record-breaking Indiegogo campaign, during which pre-order prices rose from $149 to $199. What are you planning to charge for your first product?

The app will be free. But $199 is what we found consumers are willing to pay [for the device]. Over time, they can expect to pay less. The first digital thermometers cost $950.

New Fundings

Bill.com, a seven-year-old, Palo Alto, Calif.-based company whose online platform provides services for payables, receivables and cash management for small and mid-size business owners, has raised $38 million in financing led by new investor Scale Venture Partners. Other participants in the round included Bank of America, American Express, Fifth Third Bank, CheckFree founder Pete Kight, and Commerce Ventures, as well as all of Bill.com’s previous investors August Capital, Napier Park Global Capital, TTV Capital, Jafco Ventures, Emergence Capital and DCM.  The round brings Bill.com’s total funding to date to $80 million.

Bitcasa, a two-year-old, Mountain View, Calif.-based, cloud storage service company, has raised $11 million led by Horizons Ventures, with participation from Pelion Venture Partners, Samsung Ventures, Andreessen Horowitz, and First Round Capital. The company, which installed a new CEO in September, has now raised $20 million.

CardioInsight Technologies, a seven-year-old, Cleveland, Oh.-based company that makes a non-invasive electrocardiographic mapping technology, has raised $15 million in new funding. In a release about the round, the company did not name its investors. According to Crunchbase, CardioInsight has now raised $26.5 million in equity and $1.65 million in debt altogether.

CustomInk, a 13-year-old, Tysons Corner, Va.-based custom-apparel company, has raised $40 million from Revolution Growth – its first institutional round of investment. TechCrunch has much more on the company here.

FoundationDB, a four-year-old, Vienna, Va.-based maker of a distributed database, has raised $17 million in Series A funding from Sutter Hill Ventures, reports TechCrunch.

Futurelytics, a two-year-old, Wilmington, Del.-based company that helps its clients understand what to do with their customer data, has raised $800,000 in seed financing led by Index Ventures and Credo Ventures. Kima Ventures and Rob Keve, former CEO of FizzBack, also participated in the round.

GAIN Fitness, a four-year-old, San Francisco based mobile fitness application developer, has raised more than $2.1 million in new funding led by previous investor InterWest Partners. The company has now raised about $2.9 million, including a seed round that was announced in December 2011.

itBit, an 18-month-old, Singapore-based bitcoin exchange, has raised $3.25 million from Canaan Partners, RRE Ventures and Liberty City Ventures. The funding brings the company’s total capital raised to date to $5.5 million.

LendUp, a three-year-old, San Francisco-based online platform that offers an on-demand, “socially responsible” alternative to payday lenders, has raised $14 million in Series A funding led by Google Ventures. Data Collective and QED Investors are participated in the round.

Servergy, a four-year-old, McKinney, Tex.-based company that makes energy-efficient data servers, has raised $20 million in Series C funding raised by the accredited investors of The Williams Financial Group, an independent broker-dealer based in Texas.

ShapeUp, a seven-year-old, Providence, R.I.-based company whose online social-wellness platform encourages employees to engage through team workout challenges, has raised $7.5 million in debt and equity. Cue Ball Capital and Excel Venture Management, which have backed ShapeU previously, led the $5 million equity portion of the financing, while Silicon Valley Bank provided another $2.5 million in debt. The company has raised $10 million altogether.

Validic, a three-year-old, Durham, N.C-based company has raised $760,000 in seed money from Internet billionaire Mark Cuban, along with an array of angel investors. Validic helps wellness companies, healthcare providers, pharmaceutical companies, and health plans access and aggregate data from apps and devices that have open APIs, including Fitbit.

Written.com, a months-old, Austin, Tex.-based startup that works with marketers to find existing online content that’s supportive of their products and services, has raised $1 million in seed funding. The money comes from LiveOak Venture Partners, Floodgate, and various angel investors.

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New Funds

KPMG, the global consulting giant, has created a new, London-based corporate venture arm that aims to back big data and data analytics companies. Called KPMG Capital, the unit is launching with about $100 million, an amount that KPMG is reportedly prepared to increase if needed. Forbes has much more here.

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IPOs

Twitter‘s IPO created 1,600 millionaires, along with a $2.2 billion tax bill, says PrivCo.

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People

Fab.com is starting to remind StrictlyVC of Boo.com, a luxury e-tailer that that quickly raised $188 million to fuel its plans for world domination, only to abruptly implode in 2000. Yesterday, Bloomberg reported that Fab is losing its chief operating officer, Beth Ferreira, who joined Fab in 2011 from Etsy. The revelation comes less than two weeks after the departure of Fab cofounder Bradford Shellhammer. Two-year-old Fab has raised at least $325 million from investors. In an email to Fab’s board about Ferreira, CEO Jason Goldberg added that he plans to “downsize” the company even further.

John Pleasants is out the door at Disney, reports AllThingsD. Pleasants landed at Disney when it acquired Playdom, where he was CEO. Before joining Playdom, he was COO of Electronic Arts. Pleasants has also served as the president and CEO of Revolution Health and as CEO of Ticketmaster.

Before Sheryl Sandberg, Silicon Valley spent an unhealthy amount of time scrutinizing another female executive, Kim Polese. Polese talks about that experience, telling the Guardian of the continuing challenges that women in tech face: “That we’ve gone backwards is still stunning to me.”

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Happenings

Business Insider‘s Ignition conference revs up for a second, star-studded day in New York.

Dealbook, meanwhile, kicks off its 2013 conference today in New York. Barry Diller will be there, as will the Winklevoss twins, ThirdPoint founder Daniel Loeb, and Sal Khan of Khan Academy, among others. You can watch a live stream of the event using this link.

O’Reilly also kicks off day two of its Strata conference in London today. You can learn more here.

It’s also day two of the Techonomy 2013 conference in Tucson, Ariz. Among the speakers today: Zappos CEO and VegasTechFund founder Tony Hsieh.

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Job Listings

Samsung is looking for a New York-based associate to search out investment opportunities for its Open Innovation Center (OIC) which is based in Silicon Valley but has an outpost in Chelsea. The OIC’s mission is to incubate and build software that’s better than Apple’s (essentially), but the center is also looking to bring in startups through acquisitions, to seed-fund startups, and to form partnerships with startups that don’t necessarily want to go to work inside of Samsung. To apply, you need an MBA and at least three years of experience at a tech company, plus two or more years of experience in venture capital, private equity, investment banking, or in business development.

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Essential Reads

More tech startups are spying new opportunities thanks the Affordable Care Act. (More on the trend in StrictlyVC later this week.)

Wild: Google is trying to patent an electronic tattoo with a microphone. The company says the tattoo could be used by security personnel in emergency situations (to start).

Tesla was just hit with a 40-page, securities class-action suit, after three of its cars burst into flames in recent months. The  suit seeks to sustain losses during the stock’s precipitous fall afterward.

Bad news: About 600,000 bats were killed by wind turbines last year.

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Detours

“I’m Josh Fletcher, and I’m the last employee at Blackberry…You want keyboards? You don’t want keyboards? You want it bigger? You want it smaller? Just tell us what you want. Just &$%ing tell us what you want.”

AshleyMadison, the site for adulterers, is being sued by a woman who says she was paid to create 1,000 fake female profiles to entice men to the platform. Her complaint? That all that typing hurt her wrists. (You cannot make this stuff up.)

China doesn’t think Jimmy Kimmel is so hilarious. During a regular skit in which Kimmel asks kids to debate contemporary political issues, he asked the children, during an October episode, how the U.S. might solve its debt problem with China. “Kill everyone in China? OK, that’s an interesting idea,” Mr. Kimmel said in response to one child’s suggestion. Growing protests over the skit have now led to demands by China’s Foreign Ministry that ABC fire Kimmel.

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Retail Therapy

Colorful chinos are in, friends. Give in and acquire a pair or two. Your jeans will still be waiting for you.

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With no hands-on technology experience and a tight deadline, entrepreneur Jeffrey Zients, who is leading the effort to fix HealthCare.gov, has his work cut out for him. “To try to come in, in six weeks, and sort something like this out – I just have a lot of sympathy for him,” said Joshua Bolten, a friend of Zients and a chief of staff to President George W. Bush.

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AppNexus on Ad Tech IPOs, and Why It’s Not Yet Public

New York-based AppNexus has been having a very good run. The six-year-old ad platform, which oversees the real-time buying and selling of online display advertising, has grown to 600 employees. The company, which had nine offices at the start of the year, has since opened two others. And so many billions of ads are being processed on AppNexus’s platform each day that it’s now the “largest [ad tech] company outside of Google,” says AppNexus President Michael Rubenstein. 

So when is AppNexus going to follow in the footsteps of other ad tech companies to go public? On Friday, I asked Rubenstein, who was director of Google Ad Exchange before joining AppNexus in 2009 (and who spent a decade at DoubleClick before that). Our conversation has been edited for length. 

When we last talked much earlier this year, you’d just closed on $75 million in funding. What are some of the highlights since?

It’s been an amazing growth year. We’ve just about doubled our revenue [since 2012]. We decided to accelerate our international expansion and just recently opened offices and a data center in Sydney and Singapore. The other major investment we’ve made this year was mobile. Because it’s such an explosive trend in the digital media industry, we dedicated a team of dozens of people inside the company to building the best mobile ad technology in the world based on our existing capabilities.

You recently partnered with the mobile ad network Millennial Media. Why do you think its stock hasn’t performed better?

They went public at a very high valuation and the stock has come down a lot since then, but I’m not an expert on [why]. What’s clear is that Millennial is building a leading business in what’s likely to be the fastest-growing and most exciting area of the ad market for a long time to come.

Any thoughts on why another ad tech company, the automated ad buying startup Rocket Fuel, has received a warmer reception by public investors? 

Rocket Fuel is doing a really great job of serving its customers and building a very strong ad business. Whether that means its stock price is justified or over- or undervalued, it’s hard to say with valuations all over the place.

Why are ad tech valuations so seemingly schizophrenic?

I don’t know if the market really knows how to value these businesses. It could be the market is trying to sort out which are the great companies and which aren’t.

Can you share anything about your revenue and whether or not you’ve ever been profitable? The standard for going public still seems to be revenue of more than $100 million.

We’ll do significantly more than that [in 2013]. We’re not profitable because we continue to invest very heavily in the long term. We’ve invested massively in mobile advertising and had very little revenue from [it], for example, but that will change next year. And by 2017, the [Internet Advertising Bureau] is forecasting that mobile advertising will [represent a slight majority of U.S. online ad spending].

It is safe to say you’re thinking about an IPO?

We had some thoughts about it and decided to do that big round at the beginning of the year instead because we felt like we’d be best off building value rather than going public. An IPO is something that we’d like to do in the future, but it would be more of a financing event than anything else.

Will we see AppNexus make an acquisition any time soon?

We always look. But acquisitions are a big deal, and, having been involved in a number at DoubleClick and Google, I can tell you that an acquisition can be a terrific catalyst for growth if done right. But often, they are not done right. So you have to pick your pitch.

New Fundings

DesignCrowd, a five-year-old, Sydney, Australia-based crowdsourcing marketplace for freelance designers, has raised $3 million in new funding from investors led by Starfish Ventures. The round brings the company’s total funding to date to $6.3 million. (In a related story, Starfish cofounder John Dyson told The Australian this weekend that he welcomes the entry of U.S. venture firms into the Australian market, including Peter Thiel’s Valar Ventures, Sequoia Capital, and Accel Partners. “Bring it,” Dyson did not say.)

The Honest Company, a two-year-old, Santa Monica, Calif.-based company that was co-founded by actress Jessica Alba and sells baby diapers, wipes, bath and body care products and non-toxic cleaning products, just raised $25 million in fresh capital. The round was led by Institutional Venture Partners, which was joined by ICONIQ Capital. Previous investors Lightspeed Venture Partners and General Catalyst Partners also participated. The company has now raised $52 million.

SkyFuel, a six-year-old, Arvada, Colo.-based company that makes thermal concentrating solar power (CSP) equipment, is raising a $2 million debt round and is a quarter of the way there, shows an SEC filing. The company announced that it raised $17 million in Series B funding in 2008, led by publicly traded Leaf Clean Energy Company. Filings show it raised another $3.5 million in equity in 2010, and that it has subsequently raised about $20 million in debt.

Spartz, a four-year-old, Chicago-based startup that produces websites with “viral potential” every six weeks (among them is OMG Facts), has raised $2.4 million of a targeted $10 million round, shows an SEC filing. Inc. profiled the company this past spring.

uBid Holdings, a 16-year-old, Chicago-based online marketplace for closeout and overstocked items, is in the market for a new $6 million round, according to a new SEC filing that shows that uBid has so far raised $500,000. The company has raised at least $14.5 million in equity and debt since 2010, Crunchbase shows.

Uniplaces, a two-year-old, London-based marketplace that invites students to rent their homes (so a focused Airbnb, essentially), has raised $1.06 million in seed led by Octopus Investments and angel investors Alex Chesterman (founder of Zoopla) and William Reeve (chairman of Grace.com). Uniplaces launched in Lisbon last year, but expanded into London, where it moved its headquarters last summer.

Via Motors, a three-year-old, Orem, Utah-based company that specializes in extended-range electric trucks, vans and SUVs, has raised $5.7 million as part of a $10 million round, shows a new SEC filing. Silicon Valley real estate billionaire Carl Berg is listed as a non-executive director on the filing, as is automotive executive Bob Lutz, who has held senior management roles at GM, Ford, Chrysler and BMW over his career.

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New Funds

Atomico, the U.K.-based venture firm that has expanded into numerous countries in recent years, has closed its third fund with $476.6 million, a new SEC filing shows. The firm began raising the capital in October 2012.

Seven-year-old Atomico was founded by Skype co-founder Niklas Zennstrom to (mostly) seek out investments in non U.S.-based startups. Among its portfolio companies is the three-year-old, Berlin-based task management app developer 6Wunderkinder, which just closed on $30 million in new funding led by Sequoia Capital. (The deal marked Sequoia’s first investment in Germany.)

In 2011, Atomico also participated in the $42 million Series A round of the 10-year-old Finnish game maker Rovio, of the Angry Birds franchise. It’s the only funding that Rovio has publicly disclosed to date.

Atomico presumably saw a very nice return last month, when the Climate Corporation was acquired by Monsanto for roughly $1 billion. Climate Corporation helped its agribusiness customers predict crop yields using big data to examine soil quality, historical rainfall and more. Altogether, Climate Corporation had raised $109 million, and Atomico was there from the beginning, leading its $4.3 million angel round in 2007 with Index Ventures.

Atomico has offices in São Paulo, Beijing and Istanbul, and  Tokyo. It closed its second, $165 million, fund in 2010.

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IPOs

Cara Therapeutics, a nine-year-old, Shelton, Conn.-based clinical-stage biopharmaceutical company at work on drugs to treat pain and inflammation, has filed an S-1 to raise around $60 million. Its principal stockholders include Esperante AB, which owns 9.2 percent of the company; Ascent Biomedical Ventures, which owns 9.9 percent; Alta BioPharma Partners, which owns 10.7 percent; MVM International Life Sciences, which owns 9.7 percent; Healthcare Private Equity Limited Partnership, which owns 5.3 percent; Devon Park Bioventures, which owns 9.4 percent; and Rho Ventures, which owns 14.5 percent.

Globoforce, a 16-year-old, Southborough, Mass.-based company that was incorporated in Ireland (where it still maintains one of its principal offices) filed an S-1 on Friday to raise about $75 million. The company’s software powers recognition and rewards programs for its enterprise customers. Its principal shareholders include Atlas Venture, which owns 31.4 percent of the company, and Balderton Capital, which owns 41.5 percent. (Balderton invested in 2002, when it was still affiliated with Benchmark Capital and known as Benchmark Europe.)

Ultragenyx Pharmaceuticals, a 3.5-year-old, Novato, Calif.-based clinical-stage biotech company that’s developing treatments for metabolic genetic diseases, filed an S-1 on Friday to raise up to $86 million. Its biggest shareholders include TPG, which owns 13.2 percent of the company; Beacon Bioventures, which owns 13.2 percent; HealthCap, which owns 11.8 percent; Adage Capital Partners, which owns 7.4 percent; and A.M. Pappas Life Science Ventures, which owns 5.9 percent.

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Exits

Curbed.com, a nine-year-old, New York-based media company with three Web publications –Curbed, Eater, and Racked — has been acquired by the 10-year-old online publisher Vox Media. The price isn’t being disclosed, but outlets have been reporting that Curbed.com went for between $20 million and $30 million. Vox Media has experienced hypergrowth since raising its first round of venture funding in 2008 from Accel Partners, Allen & Co., and former AOL exec Ted Leonsis. Vox, whose properties include SB Nation and The Verge, is run by Jim Bankoff, another former AOL executive. The company has raised nearly $80 million to date, including through a $34 million round (that is expected to reach $40 million) that was reported last month.

On Friday, Intel announced it was acquiring the four-year-old, Santa Clara, Calif.-based, education-software maker Kno, providing what appears like a soft landing for the company. Kno’s original focus was on making tablets, and it raised $55.4 million in equity and debt within its first year toward that end, including from Andreessen Horowitz, along with First Round Capital and SV Angel. The company switched gears in 2011 to focus on interactive textbooks for mobile devices; according to an SEC filing, it then raised an additional $37.2 million. Terms of Kno’s acquisition aren’t being disclosed.

Last week, when Facebook‘s shares reached a record high, Andreessen Horowitz sold a third of Facebook holdings, Bloomberg reports. According to a filing flagged by the outlet, the firm offloaded 2.28 million shares at $49 and $50 apiece for about $111 million. Andreessen Horowitz still owns 4.57 million shares. (A year ago, it reportedly distributed about 4.6 million shares of Facebook, most of which were acquired in Facebook’s purchase of Instagram.) Andreessen Horowitz had invested at least $80 million in Facebook shares in 2010 at what was then a $35 billion valuation.

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People

Kerry Cooper is the new CEO of Choose Energy, a five-year-old, Plano, Tex.-based site that invites users to compare and shop for plans from energy suppliers. Cooper was previously the CMO and COO of clothing retailer ModCloth. Choose Energy has raised $11.5 million to date, including a newly raised $7.5 million round from Kleiner Perkins Caufield & Byers, Stephens Capital Partners, BlueScape Resources, NGEN Partners, and Michael Polsky, the president and CEO of Invenergy, a Chicago-based renewable energy company.

Profiled over the weekend: Shana Fisher, one of New York’s “best angel” investors who you’ve likely never heard of before. (Fisher’s bets include Vine, Refinery29, Makerbot and Pinterest.)

Evan Williams and Medium also get the long-form treatment. Says Williams of the type of journalism he aims to attract to the platform: “I want to give rationality a fighting chance.”

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Happenings

Business Insider‘s three-day Ignition conference gets underway in New York today, featuring Elon Musk, Arianna Huffington, and Russell Simmons among others. Here is the agenda.

O’Reilly kicks off its three-day Strata conference in London today. You can learn more here.

The three-day Techonomy 2013 conference also gets rolling this afternoon, in Tucson, Ariz. Among the panelists today is Samir Arora or Glam Media and Konrad Feldman of Quantcast.

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Job Listings

Dropbox is looking to add someone to its corporate development team in San Francisco. This person will identify and recommend acquisition targets for Dropbox; support related deals through the acquisition process; and represent Dropbox at events. To apply, you need two to four years of experience in venture capital, investment banking, and, preferably, a B.A. from a “top tier” university.

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Data

In honor of Veteran’s Day, Pitchbook is publishing its findings on VC-backed startups that in some capacity serve the military. Over the last decade, says the firm: 280 such companies have raised about $3.27 billion. Most of that flowed to the IT industry (42%), followed by B2B (33%), B2C (9%), Energy (7%), Healthcare (5%) and Materials and Resources (3.5%). Military and defense-related companies have already landed 36 financings this year, including for CyPhy Works (which StrictlyVC wrote about on Friday) and RallyPoint, a social network for active-duty military members and veterans.

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Essential Reads

Big Data is so yesterday. The real insights, say a growing number of startups, can be found through hyperdata.

Why is encrypted email so rare in the first place?

Lawyers for Apple and Samsung are reportedly ready for the second “Trial of the Century.”

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Detours

Think you may work with a psychopath? The odds are higher if work in one of these professions.

Confronted with an unprecedentedly secular crop of young people, Jewish leaders work overtime to convince Millennials to just come on and “marry a nice Jewish boy.”

An ESPN columnist admits how hard it has become for him to watch NFL games. “I used to love football the way German shepherds love sirloin…I see too much sorrow and ugliness now…”

Aging liberals have far more sex than conservatives, according to a decades-long Harvard study. Says the Harvard professor who led the research, “I have consulted urologists about this, they have no idea why it might be so.”

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Retail Therapy

Beautiful maps of national parks.

The $670 Bonneville Red Selvedge Denim Coverall. Who knew you could look so stylish while repainting/rebuilding/fixing stuff? Just don’t wear these anywhere near your auto body shop or, for that matter, around anyone who uses their hands for a living. You will be mocked mercilessly, and you will deserve it.

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Good news: The U.S. economy may be stronger than many thought; it added more than 200,000 jobs last month.

Former NSA contractor Edward Snowden may have tricked up to 25 colleagues into giving him their login credentials before he leaked classified material to the media, sources tell Reuters.

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The FAA Shows Drone Companies a Way Forward

Yesterday, the Federal Aviation Administration released its first “roadmap” for allowing unmanned aerial vehicles (UAVs) access to U.S. national airspace beginning in 2015. The idea is to permit some drone activity while preserving enough flexibility for the FAA to adjust its rules and regulations if it needs to.

The step was a welcome one for entrepreneurs who are working on flying robots for the military (whose airspace isn’t regulated by the FAA) but who will soon be able to sell to a variety of commercial industries, including agriculture, construction, oil, gas, and mining.

“There’s a light at the end of the tunnel now,” says Bilal Zuberi, a Palo Alto-based partner at Lux Capital, who sees a whole new industry about to emerge, with droids as just the starting point. He likens the moment to “when the satellites first went into space and data became available. You could do so much more with it than people imagined.”

Think maps that update in real-time or sophisticated applications that notify farmers when crops have been afflicted with specific diseases.

“Right now, people are thinking about just the hardware,” notes Zuberi, “but the hardware will lead to huge software opportunities downstream.”

CyPhy Works is one example of a startup that is building UAV hardware but betting on a future in software. The Boston-based company —  which announced $7 million in fresh funding this week led by Lux Capital — makes a 3-pound flying robot and a larger, 12-pound model that are both tethered to portable command stations but can float up to 500 feet off the ground and hang there for hours while beaming down high-definition video.

The company’s primary customer right now is the U.S. military, which is using the drones at combat outposts to monitor compounds and facilities. (The drones can accept a variety of payloads, from three-dimensional scanners to sensors for chemical detection.)

CyPhy founder Helen Greiner —  who earlier cofounded iRobot, which remains best known for its Roomba vacuum cleaners – sees a huge software opportunity coming when UAVs are permitted to share the skies with civilian aircraft.

“It’s a good time to be developing commercial applications, which we view as any opportunity to help manage a project using a bird’s eye view, whether it’s monitoring a bridge being built, a pit being dug, or a facility to see what people are doing,” she says.

Part of that process will involve convincing customers that they need satellites of flying cameras to replace their stationary cameras. But Greiner wants to be able to provide them with automatic detection and imagery analysis, too.

I ask Greiner about the privacy concerns that have been holding up the FAA. What about people buying UAVs to spy on their neighbors? “I share that [privacy] concern,” she says. “I don’t want one outside my house. But that’s not what we’re building here.”

What of the competition? After all, according to the FAA, there could be at least 7,500 commercial drones in use within five years.

Greiner suggests she isn’t concerned with what others are doing. She tells me about the top engineers she has hired from iRobot and other UAV companies. Grenier also talks about her passion for her work. “I’ve wanted to build robots since I was 11…it’s exciting stuff to be doing.”

Most crucially, she notes, no one is leading the pack at this early date. “It’s still very early in the game.”

New Fundings

Ecovative Design, a six-year-old, Green Island, N.Y.-based company, has raised over $14 million in equity financing from new and existing investors, including existing investors the DOEN Foundation and 3M Company. Terms were not disclosed. Ecovative’s technology is used to grow compostable composites intended to replace the plastic foams used in packaging, automotive components, and building and construction materials.

Espresso Logic, a new, Santa Clara, Calif.-based “reactive programming database service” that promises to reduce application development from months to days, has raised $1.6 million in seed funding led by Inventus Capital Partners. Individuals Anurag Jain, Lee Nackman, Gokul Rajaram, and Raju Reddy were among the individual investors to join the round.

Granify, two-year-old, Edmonton, Canada-based company whose software is being used to improve e-commerce conversion rates, has raised $1.5 million in seed funding from Valar Ventures, iNovia Capital, Klass Capital, the Business Development Bank of Canada, Extreme Startups, Social Starts and numerous individual investors. The company had raised a separate, $1.5 million round in 2012, according to Crunchbase.

Jut, a new, San Francisco-based startup that’s operating in stealth mode but says it has “built an ambitious vision around the future of big data applications,” has closed $20 million in Series B financing. Accel Partners led the round, with participation from LightSpeed Venture Partners and Wing Ventures.

Nuvyyo, a three-year-old, Kanata, Ontario-based company whose technology helps stream TV programming to mobile devices, raised $4 million from Celtic House Venture Partners earlier this year, it has told Dow Jones.

Project Frog, a seven-year-old, San Francisco-based modular building developer, has closed $20 million in Series D funding from Convergent Capital Management and some members of the Cleantech Syndicate, a consortium of 11 family offices. The capital brings Project Frog’s total funding to date to roughly $50 million.

RadPad, an 18-month-old, L.A.-based iPhone app that renters can use to search for apartments, has raised $800,000 in seed funding from Deep Fork Capital, the first backers of Trulia. The WSJ has more on technologies transforming the real estate business here.

Surefire Medical, a four-year-old, Westminster, Colo.-based medical device company that’s developing an infusion device for treating liver cancer, has raised $18.2 million in Series B funding from MCG Partners, Partisan Management Group and High Country Ventures. The round brings Surefire’s capital raised to date to at least $24.3 million.

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New Funds

Targeted Technology Fund —  a San Antonio-based venture capital fund that seeks out biomedical device investments in Texas, Alabama, Colorado and Georgia —  is raising its second fund, according to an SEC filing that shows the firm has garnered $20 million of a targeted $50 million in capital. You can find more background on the firm right here.

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IPOs

Twitter’s shares closed yesterday at $44.90, 73 percent above the company’s $26-per-share IPO price but slightly below its opening figure of $45.10. Dealbook tries to assess what it all means.

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Exits

Sincerely, a two-year-old, San Francisco-based mobile gifting startup that had been cofounded by Matt Brezina of Xobni fame, was acquired yesterday. The buyer: Provide Commerce, a privately held e-commerce company. Sincerely had raised at least $3 million from Charles River Ventures, First Round Capital, Spark Capital, and SV Angel, among others. Brezina told TechCrunch yesterday that the all-cash deal “could not have been better” for everyone involved.

Sky Motion Research, a five-year-old, Montreal, Canada-based company whose app combines radar data and ground observations to provide hyperlocal forecasts, was acquired yesterday by AccuWeather, reports Mashable. Terms of the acquisition weren’t disclosed.

Ticket Monster, a Korean subsidiary of LivingSocial, has been acquired by Groupon for “at least $100 million in cash and up to $160 million in stock,” reports AllThingsD. LivingSocial acquired the business in 2011 for terms that were never disclosed publicly.

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People

Reggie Davis, who has served as Zynga’s general counsel for the last four years and led the company through its IPO, is stepping down, with plans to take a year off to spend time with his wife and four sons. Law.com has the story. Davis previously worked for Yahoo and Duane Morris.

Todd Papaioannou joins venture-backed Splunk as its chief technology officer. Papaioannou was most recently an EIR at Data Collective, the big data-focused venture capital firm. Papaioannou also co-founded a Battery Ventures’ portfolio company called Continuuity, which arose out of his tenure as an EIR at Battery, beginning in 2011.

As many as 52 people are being laid off at the e-commerce company ShoeDazzle.com. The Journal has the scoop. ShoeDazzle sold to a competing company, JustFab, earlier this year.

Matt Van Horn resigned yesterday from the social network Path, where he was head of business, reports TechCrunch. According to TechCrunch’s sources, Van Horn is teaming up with Path iOS developer Nikhil Bhogal to co-found a new company. For more on the story, click here.

Data

A preliminary study released on Wednesday by the National Association of College and University Business Officers (NACUBO) and the Commonfund Study of Endowments, suggests that educational endowments have been goosed by the stock market’s strong performance in 2013. The study, based on responses from 206 endowments and foundations, shows that education endowments averaged 11.7 percent in fiscal 2013 (which ended in summer), compared to an anemic .03 percent in fiscal 2012. You can learn more about the study here.

Just as you suspected: It takes about seven years to exit a venture-backed company, says CB Insights in a new analysis of venture-backed companies that you can read about here.

Job Listings

The Palo Alto office of law firm Perkins Coie is looking for an associate to join its emerging companies and venture capital group. To be considered, you need two to five years of experience in either handling emerging companies or direct venture capital work. (General corporate experience will “not be sufficient,” says the firm.) Land the job, and you’ll be working alongside Adrian Fenty, who rose to national prominence at the mayor Washington D.C. between 2007 and 2011, and who joined Perkins Coie to expand its emerging companies practice in September.

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Essential Reads

The New York Stock Exchange was not-so-subtly talking trash about Nasdaq all of yesterday, observes Business Insider. (Among other things, the NYSE was noting that it now lands more tech deals than Nasdaq.)

Plenty of people still don’t understand how Twitter could possibly be worth its $24.4 billion market cap (at close yesterday) before ever turning a profit. This Newsweek piece might be one of the more effective explainers we’ve seen.

“If anybody has any real conviction, one way or another, with regard to whether Twitter’s stock is overvalued or undervalued, you can be pretty sure that they don’t really know what they’re talking about.”

AngelList cofounder Naval Ravikant firmly believes that bitcoin is the future of Internet money. Here’s why.

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Detours

Gizmodo takes stock of Hart Island, the largest mass grave site in the U.S. (It’s a grim but fascinating exploration.)

These famous black-and-white photos have been colorized to dramatic effect.

A family of anchorman: A post by Ron Burgundy.

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Retail Therapy

Food goddess Alice Waters has published a new book.

Someone has created Sriracha-flavored candy canes that look exactly like your standard peppermint-flavored variety. We’d advise against handing them out or hanging them on your Christmas tree unless you have something against young children.

This belt buckle carries a beer in your waistband, which sort of begs the question: Exactly how lazy do you have to be to buy this belt buckle?

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Shocker: When it came to Twitter’s IPO, Wall Street reserved its best information for its top clients.

Dealbook has been live-tracking Twitter’s first hours as a public company. You can see its stream here.
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Brian O’Malley of Battery Ventures: “Investors Are Fundamentally Lazy”

Yesterday afternoon, I sat down with Brian O’Malley of Battery Ventures in the gleaming marble lobby of San Francisco’s Four Seasons Hotel. 

Despite having a cold, O’Malley – who has led Battery’s deals in a long line of solid companies, including Bazaarvoice, which helps e-commerce companies manage customer reviews; SkullCandy, which makes headphones and earbuds; and the hotel booking service HotelTonight — spoke animatedly on a wide variety of topics. We chatted at length about the consumer packaged goods space, for example. I’ll share that part of our interview next week. In the meantime, here’s a quick excerpt from our discussion of the ever-evolving dynamics of post-Series A investing.

Money for anything past the Series A round seems to have tightened up this past summer. What are you seeing?

It really depends on the company. The way the market is working today, growth-oriented investors are much more interested in getting into the right company in the right space, versus taking a risk on something that’s unknown. They’ll pay five times the price to get in the Series B of some hot company rather than do something that maybe has some question marks around it.

Do you subscribe to the winner-take-all theory? Do you think there are only a small number of breakout companies worth chasing?

Investors are fundamentally lazy, so a lot of the time, they aren’t going to figure [out a business’s potential] on their own unless they’re super savvy about a particular space.

On the flip side, most VCs now recognize that the winner in any given space does get 90 percent of the economics, while the second-place company gets 8 percent, and everyone else [shares] 2 percent. So by Series B, people are already starting to see how the market is evolving; they’re already starting to see how repeatable your business is, and they’re spending much more time chasing the one or two dozen companies that everyone wants to get into.

And you think that makes sense?

I think it’s a function of larger funds needing bigger exits to make their math work.

As the funds get larger, what you need from a success gets larger as well. For funds for which it’s incredibly easy to raise money, their limiting factor is their time. And companies take longer to exit [these days], and so [the VCs] have less capacity for new investments. And when you have less capacity, you need each of your investments to return more money. That’s one of the big challenges.

What’s another?

What’s interesting, and what has surprised me, is how much people are influenced in terms of which companies they think will break out based on which companies are having success today.

There’s a lot of emphasis right now on these more enterprise-focused businesses, which has a lot to do with enterprise-focused businesses doing incredibly well on the public market. But the reality of my doing a Series B investment is that I’m not going to be selling for three to five years, and the market might be very different by then. Even still, people are willing to back much less mature companies in the space du jour rather than invest in something that has some scale in a space that’s out of favor.

New Fundings

Building Robotics, a two-year-old, Berkeley, Calif.-based company whose software tries to optimize the heating and cooling of buildings, has secured a $1.14 million in seed funding from Claremont Creek Ventures, Google Ventures, Formation 8, Navitas Capital, Red Swan Ventures and numerous angel investors. The company was formed early last year at the Berkeley Skydeck startup accelerator, a collaboration between the university’s College of Engineering, the Haas School of Business, the Vice Chancellor for Research office, Berkeley Lab, the City of Berkeley, the Downtown Berkeley Association, and the Chamber of Commerce.

Channel IQ, a four-year-old, Chicago-based company that provides on-demand promotion and pricing information to its retailing and manufacturing customers, has raised $12 million from Drive Capital, the new firm by former Sequoia Capital partners Mark Kvamme and Chris Olsen. The capital appears to be Channel IQ’s first round. (StrictlyVC reported a standalone piece on Drive Capital on Monday if you missed it.)

Concordia Beverage Systems, a 23-year-old, Bellevue, Wash.-based company that makes a range of super-automatic espresso machines, has raised $1.5 million in new funding, according to an SEC filing. Marker Hill Capital, Fluke Venture Partners, and Heidi Sinclair, the former chair of Weber Shandwick’s global technology practice, are named in the Form D. Concordia raised a $6.5 million round from Marker Hill, Fluke, and Swiftsure Capital last year.

Coresystems, a 13-year-old, Windisch, Switzerland-based maker of a cloud-based field service app, has raised $15.5 million from a syndicate of private Swiss investors, including tech investor Peter Zencke.

ImmunGene, a six-year-old, Thousand Oaks, Calif.-based company, has secured $9 million in a Series A financing from Ally Bridge Group. ImmunGene is a biotechnology company developing targeted protein therapies to treat cancer.

Rubicon Media, a San Francisco-based startup founded by Christopher Griffin, founder of the real-money gaming platform Betable, has raised $22.5 million, according to a new SEC filing. Rubicon was founded in 2013 but has been operating in stealth mode. No investors are listed on its new Form D.

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New Funds

Blumberg Capital, a San Francisco-based, seed- and early-stage venture capital firm, has closed its third fund with $150 million. Firm cofounder David Blumberg notes in a release about the new fund that the firm has already seen a 52x return on its initial, 2009 investment in the five-year-old social media management platform HootSuite, which has raised $187 million altogether.

Icon Venture Partners, a year-old venture firm based in Menlo Park, has closed on a $100 million debut fund that will target seed and Series A rounds of companies. The firm is particularly interested in companies that are “taking advantage of the capital efficiency brought about by lower cost, high performance computing infrastructure and a faster time to market for today’s enterprise technology start-ups,” says a release. Icon was founded by Charles Beeler, most recently of El Dorado Ventures, and Jeff Hinck, a cofounder of Vesbridge Partners. The pair has already backed five companies, including the mobile relationship management company Appboy; the security platform company Bugcrowd; 9Lenses, which helps collect and analyze organizational intelligence; Sport NGIN, which makes software for sports organizations; and Swiftstack, a maker of private cloud storage software.

The Austin-based venture capital firm Silverton Partners has just raised $75 million for its fourth fund, money the firm will use to investing solely in early-stage Austin startups. TechCrunch has more.

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IPOs

Venture-backed security company Barracuda Networks went public on the NYSE yesterday, raising roughly $75 million and establishing a market cap of $1.14 billion. (Its shares debuted at $18 and closed last night at $22.80.) Two of its biggest shareholders — Francisco Partners and Sequoia Capital — sold some of their stakes in the offering but they still have sizable ownership positions. Barracuda’s S-1 shows Francisco owned 26.5 percent pre-IPO and that it would own 24.3 percent afterward; Sequoia’s ownership dropped slightly from 17.4 percent to 15.9 percent.

Karyopharm Therapeutics, a four-year-old Natick, Mass-based company that’s working on a drug that would bolster the body’s natural tumor-suppressing proteins, went public yesterday on the Nasdaq. The shares, which debuted at $16, were up by just five cents by the market’s close. Karyopharm’s biggest shareholders heading into its offering were the Cyprus-based firm Chione, which owned 46.8 percent of the company (and now owns 37.2 percent), Plio Limited, which owned 14.6 percent (and now owns 11.6 percent), Foresight Capital, which owned 9.4 percent (and now owns 7.5 percent), and Delphi Ventures, which owned 8.2 percent (and now owns 6.5 percent).

Twitter is now a public company. (Perhaps you’ve heard.)

Wix.com, the seven-year-old, Tel Aviv-based company that has been likened to a WordPress for the rest of the world, went public yesterday on the Nasdaq in one of the biggest U.S.-listed Israeli deal in years. The offering could potentially set the stage more Israeli tech firms to pursue IPOs, observes the WSJ. Wix had raised roughly $60 million over the years, including from Bessemer Venture Partners, Mangrove Capital Partners, Benchmark Capital, Insight Venture Partners, and DAG Ventures. The company, which sold 7.7 million shares at $16.50 each (they closed at $16.31 per share) has a market value of about $750 million.

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People

Ali Behbahani has been promoted to partner at New Enteprise Associates. Behbahani joined the firm in 2007 and specializes in biopharmaceuticals and medical devices. Before joining NEA, he was a consultant in business development at The Medicines Company, a specialty pharmaceutical company.

Joanne Bradford, who joined the San Francisco Chronicle as president just five months ago, has joined Pinterest as its head of partnerships, reports AllThingsD. Before joining the Chron, Bradford spent nearly four years as the chief revenue and marketing officer of Demand Media, according to her LinkedIn profile.

Tim Connors, the lone GP of PivotNorth Capital, tells the WSJ in an interview about his investing style and his brand new fund: “I’m not a ‘shop at Demo Day’ investor.”

Mark Murphy, who has been leading communications and public affairs for SecondMarket for the last five years, has left to join Bloomberg as head of communications for its financial products, including Bloomberg Terminal.

Greg Sugar is the new VP of business development at the mobile video company Tout. Sugar joins Tout from Zynga, where he was the former senior director of ad revenue. (We’ve heard Sugar is kind of a rock star, so this seems like a big win for Tout.)

Ariel Tseitlin, formerly the director of cloud solutions at Netflix, is joining Scale Venture Partners as a venture partner. You can click here for more on Tseitlin, who will be helping Scale to expand its portfolio of cloud companies.

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Happenings

The Tech Policy Summit kicks off in Napa, Calif., today. You can check out its list of speakers here.

It’s day two of the ad:tech conference at New York’s Javitz center. Click here to learn more about it.

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Job Listings

Earlier this year, Microsoft co-founder Paul Allen‘s investment arm, Vulcan Capital, opened a new office in Palo Alto. Now it’s looking to hire a senior associate to help manage the team’s existing investments and support and identify other investment opportunities. (Note: This is a more senior position than the associate director job we shared with you on October 7.)

This person will focus on making investments in the $10 million to $100 million size range in Internet and other tech companies, including mid- to late-stage venture capital, growth equity, recaps, buyouts and strategic public market block investments. Abhishek Agrawal, a former principal at General Atlantic, heads up the office.

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Essential Reads

Google has now encrypted the traffic that the NSA was accessing. “F*&k these guys,” says Google security engineer Mike Hearn.

Striking while the iron is hot: Square, the payments startup founded by Twitter cofounder Jack Dorsey, is exploring a 2014 IPO.

Business Insider’s Nicholas Carlson does a deep dive into AOL, and CEO Tim Armstrong‘s ongoing struggle to turn it around.

Smart phones are turning into portable laboratories. (You can read more on the trend in StrictlyVC next week.)

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Detours

The New Republic explores the world’s biggest building — a Chinese mall you’ve never heard of.

PBS Frontline publishes startling video of billionaire Steve Cohen answering questions about insider trading rules in connection with a 2011 civil suit.

Here’s what sunset looks like from outer space.

This severed head wedding cake reportedly “killed” at a couple’s wedding reception (though the guests declined to eat it, offering politely that they were “just too full”).

Former reporter Stephen Glass, who famously fictionalized part of his work, received a blow by California’s Supreme Court yesterday, which looks unlikely to allow him to practice law in California. The 2000 graduate of Georgetown University Law Center was refused admittance by the New York State Bar in 2002. The Recorder has more.

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Retail Therapy

You think your iPhone camera takes perfectly good pictures, but you are wrong, silly reader. If you really want to film what you see, you need a Garmin VIRB, an HD 1080p action camera with built-in Chroma display (don’t ask us what that is), up to three hours of battery life, and a rugged, waterproof* design. (*Device can withstand accidental immersion in 1 meter of water for up to 30 minutes. Longer than that and you are screwed.)

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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 the newsletter, visit strictlyvc.com.