• Designer Fund Closes Debut Effort with $20 Million

    Screen Shot 2016-05-21 at 4.58.05 PMDesigner Fund, a San Francisco outfit that looks to invest in seed-stage startups that feature designers on their founding teams, has raised $20 million in funding from unnamed individual investors, most of them successful designers looking to support the next generation.

    The four-year-old firm was founded by Enrique Allen and Ben Blumenfeld, who remain its only general partners. Previously, Allen was a designer with 500 Startups and Facebook’s fbFund; Blumenfeld was meanwhile an early design lead at Facebook who spent more than five years with the company. The two met at the Stanford Persuasive Tech Lab, which studies how computer design can change human behavior; when Blumenfeld left Facebook to take a sabbatical, they decided to form Designer Fund.

    “We saw a lack of capital that really understood and valued design at the early stages,” explains Allen, who notes that Airbnb’s founders weren’t taken seriously at first because few understood how two design students could rethink and expand the travel market.

    More here.

    Connie

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  • The Next New Thing: Women VCs

    women-vcsThe venture landscape changes fast. Ten years ago, few would have predicted the ubiquity of micro funds or the rise of Andreessen Horowitz or the very existence of a platform like AngelList that enables people with enough connections to become pop-up VCs.

    Few — though not most — see what’s coming next, too, and that’s women VCs, taking their place alongside men, in equal, or nearly equal, numbers. In fact, we’d argue that the shift will represent the biggest opportunity over the next decade.

    It may be hard to believe, given the wealth of attention paid to the low numbers of women in the industry and the obstacles they’re having to overcome. But the signs of change are everywhere if you’re paying close enough attention.

    Women now make up 60 percent of college graduates, and many more of them are graduating with tech-friendly degrees. (Women are exceeding at elite institutions particularly, and now account for one-third of Stanford’s undergraduate engineering students, as well as one-third of Stanford’s graduate engineering students.)

    Though women are making slow inroads at venture firms — according to CrunchBase data published last week,  just 7 percent of the partners are women at the top 100 venture firms —  women are increasingly finding paths around today’s guard.

    They represent 12 percent of investing partners at corporate venture firms — a percentage likely to grow because of heightened interest in how tech companies fare when it comes to diversity. “We believe it’s a missed opportunity if we aren’t an active participant” in funding women- and minority-led companies and funds,” says Janey Hoe, VP of Cisco’s 40-person investments unit.

    More, over the last three years, 16 percent of newly launched venture and micro-venture firms had at least one female founder, shows CrunchBase data.

    Ch-ch-ch-ch-changes

    So what’s happening? As VC Jon Callaghan of True Ventures noted during a panel discussion in San Francisco last week, Moore’s law has played a starring role. As costs have fallen and made entrepreneurship accessible globally, more people are coming into venture capital.

    Monique Woodard, a longtime entrepreneur and more newly a venture partner at 500 Startups, credits her own path to the democratization of information brought about by social media platforms, as well as the many public insights into the industry that VCs like Fred Wilson and Brad Feld have contributed over time. “You suddenly have this library around venture capital and thought leadership that didn’t exist before,” said Woodard, speaking on the same panel.

    It’s also the case that women — an expanding number of whom are founding startups, as well as rising through the ranks of other companies — have more role models in VC than they did a decade ago.

    Of course, none of these trends is brand-spanking new. So why, you may be wondering, is now suddenly the tipping point? Because the ethical, business and financial reasons for change are finally poised to overtake the industry’s inertia.

    More here.

    (Image: Bryce Durbin)

    Connie

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  • Felicis Ventures Closes on $200 Million, Roughly Doubling Its Last Fund

    Felicis Ventures partnershipWhen we first met Aydin Senkut in 2006, it was just months after he’d resigned from Google, where he was a senior manager responsible for strategic partner development in Asia Pacific. He was among a small number of “Googlaires” who had lots of money, great connections, and the ability to see many web startups before traditional VCs.

    In fact, many in the industry viewed Senkut and his ilk as arrivistes, and Senkut has been on his unwavering mission since, first to first impress them, then to surpass them. His execution has been pretty spot on, too. Felicis Ventures, the San Francisco-based firm that he founded 10 years ago and he now manages with three other investors, just closed its fifth fund with $200 million. That’s nearly double the amount Felicis gathered up for its fourth fund less than two years ago.

    Institutions are writing out big checks left and right these days. But it’s easy to understand why Felicis’s limited partners were particularly open to providing the firm with more capital. Felicis has invested in 180 startups to date. Three of those companies have gone public, including Fitbit and Shopify. At least three others — Credit Karma, Planet Labs, and Adyen — appear positioned to go public.

    Meanwhile, another 60 companies in Felicis’s portfolio have enjoyed what Senkut calls “meaningful exits.” Most meaningful, seemingly, Felicis was an early investor in Cruise Automation, which is being acquired by General Motors for more than $1 billion; it backed the cloud infrastructure startup Meraki, acquired by Cisco for $1.2 billion in cash; it invested in Twitch, acquired by Amazon for $970 million in cash; and it backed Climate Corp., which Monsanto bought for roughly $930 million.

    If you’re wondering about the number of companies that have flamed out after receiving a check from Felicis, Senkut says it’s is in the “very low digits; it’s in the teens percentage on a dollar-adjusted basis.”

    When we talked earlier this week, Senkut suggested Felicis’s success so far owes to what he characterizes as a unique strategy.

    More here.

    Connie

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  • GGV Just Raised $1.2 Billion; Here’s How It’s Going to Spend It

    0121_IMG_1847Back in February, we told you GGV Capital was raising a more than a billion dollars from its investors.

    This morning, the 16-year-old, cross-border venture firm is making it official. The final tally, says GGV, is $1.2 billion, including a $675 million main fund; a $225 million “Plus” fund to back its most promising companies as they mature; a $250 million “Discovery” fund that will focus largely on seed-stage opportunities in China; and a side, $50 million “Entrepreneurs” fund that consists largely of company founders as LPs and that will invest pro rata across the funds.

    The firm has a lot of moolah to invest, in other words. To find out out where GGV plans to shop, we talked yesterday with managing directors Glenn Solomon and Jeff Richards, who are based in Menlo Park, but who travel to the firm’s Beijing and Shanghai offices frequently.

    Aside from the amount you’ve raised, it looks like what’s newest here is your first dedicated seed-stage fund, 80 percent of which you intend to invest in China. You’ve always made bets of all sizes in China; why break this part of your business into a separate fund?

    GS: Over the last five years, more than 70 percent of our investments have been Series B or earlier and many of them have been in China. But we thought the opportunity in China to do [seed] deals is really strong for us given our work on the ground and the entrepreneurial community that we’ve built up in China.

    Is it fair to say this is largely a marketing tactic so entrepreneurs will be clearer about your intentions in China? 

    GS: I was having dinner in Beijing with a CEO who we’ve backed in the past and in whose newest company we invested at the Series B, and when I told him about our plans to raise Discovery, he said, “Had I known you guys were doing seed investing, I would have called you first.”

    Don’t underestimate how important [messaging] is. Also, for our limited partners, having a separate vehicle helps them look at our seed investing activity and judge how we’re doing [versus when it’s lumped in with later-stage bets].

    How is competition at the seed level in China?

    More here.

    Connie

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  • Peter Thiel’s Other Fund, Mithril Capital Management, Raises $600 Million

    Ajay RoyanPeter Thiel is having a good month.

    According to a new SEC filing, low-flying Mithril Capital Management, which Thiel co-founded with longtime colleague Ajay Royan in 2012, is out raising its second fund with a $600 million target. Sources say the fund is already oversubscribed, however, and that it may hit $1 billion before it holds a final close.

    Emails and a call to the firm were not returned Friday afternoon.

    The vehicle marks the second giant fund that involves Thiel in one week’s time. The Friday before last, Founders Fund, the early-stage venture firm he co-founded in 2005, closed its sixth fund with $1.3 billion.

    There’s seemingly no end to LPs’ appetite for anything involving Thiel, though it’s also worth noting that aside from his involvement, the firms don’t feature much overlap.

    StrictlyVC sat down with Royan in 2014 to discuss Mithril, which is named after a fictional metal from J. R. R. Tolkien’s fantasy writings. The way he explained its focus then was as a growth-stage fund, one focuses on established companies that are leveraging tech in some way but are not necessarily tech companies. (He compared it, in fact, to a young General Atlantic.)

    Though Mithril has backed some tech companies, including the cloud service marketplace AppDirect; Classy, which provides online fund-raising services for nonprofits; and the data analysis giant Palantir (which is one of Founders Funds’ biggest bets to date), it has numerous bets that better underscore its mandate, including to fund companies too mature for many VCs yet that don’t fit the mold of a private equity investment, either.

    More here.

    Connie

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  • Led by Thrive Capital, a Startup Raises Seed Funding to Tackle the Tedious Stuff for Freelancers

    Teaser ImageIf you’ve ever  worked as a freelancer, you know the last thing you want to do — after lining up gigs, submitting your work, and reworking your project (when that last person on the client side decides he or she wants something entirely different) —  is to handle all the administrative stuff. Think invoicing. Expenses. Other paperwork.

    That’s why a year-old, New York-startup called AND CO is creating a system that does it for you, using both software and live chat support. (Every freelancer gets a personal “chief operator” during working hours.)

    AND CO was born at Prehype, a four-year-old design and incubation boutique that produces new ideas for corporate customers. Among other companies to come from its team are the subscription business BarkBox and the office cleaning and management startup Managed by Q.

    Prehype founder Henrik Werdelin is a BarkBox founder. Managed by Q cofounder Saman Rahmanian is also a partner at PreHype. Meanwhile, Leif Abraham, a former creative director who joined Prehype in 2014 and was an early employee at BarkBox, is the cofounder and CEO of AND CO. (Abraham says his cofounder, Martin Strutz, also a longtime digital creative, was “like an entrepreneur-in-residence” at Prehype.)

    AND CO, which charges a flat $60 a month, focuses largely on freelancers with project workflow, like designers, writers, and developers.

    It’s also fairly limited in what it can do — for now.

    More here.

    Connie

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  • Former Apple Exec Launches In-Home Blood Test Startup

    Cor Product (Lifestyle)Bob Messerschmidt knows a little about health and wellness tech, having spent three years helping architect the Apple Watch platform after Apple quietly acquired his spectroscopy company, Rare Light, in 2010. (The terms were undisclosed.)

    Messerschmidt also knew when he left Apple to found a new company that it would again involve smartphones. After all, he reasoned, they’re starting to help us track not just our general wellness but also our responses to medicine and other treatments. The bigger question was which chronic condition he would tackle and before long, he settled on Cor, a now two-year-old, San Francisco-based, consumer-facing startup that helps measure heart health, all with just a tiny drop of blood.

    Before you start worrying that Cor is a young Theranos, the embattled blood testing company, it’s worth noting that there are many meaningful differences between the two companies. For one thing, Cor wants people to test themselves in their own homes, using an appliance the size of an electric toothbrush and disposable cartridges. Their blood chemistry information is then sent “into the cloud,” analyzed, and results are beamed backed to users within five minutes, along with helpful tips about how to improve them.

    Which raises another important point: Cor isn’t trying to tell its users anything definitive. “Theranos is trying to provide diagnostic numbers,” notes Messerschmidt. “We’re not. We’re not a medical device company. We’re providing life style guidance.”

    It’s trying to be as transparent as possible about how, too.

    More here.

    Connie

  • Human Ventures Turns ‘Normals’ Into Founders

    2015 Megan & Heather Headshots

    A number of startup studios are in the midst of a years-long experiment, providing back-end assistance, office space and mentoring to talented, ambitious people in order to create a startup with them, often based around their expertise.

    Betaworks was the first to try it, opening its doors in New York roughly nine years ago. Others, including Expa, a San Francisco-based firm with an office in New York; Science, based in L.A.; and Chicago-based Roniin are among many newer models, each with their own twist.

    Human Ventures, which opened its doors in New York roughly a year ago, thinks it has struck on a model that can work, too.

    The outfit was founded by entrepreneur Joe Marchese, who’d sold his adtech company to 21st Century Fox for $200 million in late 2014. But Marchese is just the largest among a group of mostly New York-based angel investors who are investors in Human Ventures. Indeed, the now six-person firm, which has raised an undisclosed amount of money, is largely run by CEO Heather Hartnett and Megan O’Connor, who joined the firm last May as its chief growth officer.

    They aren’t longtime startup veterans. Hartnett ran business development at the venture firm City Light Capital and, before that, worked in philanthropy, including at the David Lynch Foundation. O’Connor also worked previously in nonprofits, including as a development director at both Pencils of Promise and Goods for Good.

    That they’re comparative outsiders is kind of the point of Human Ventures, though.

    More here.

    Connie

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  • Super Hot Korea Gets a New Venture Fund

    Screen Shot 2016-03-20 at 10.46.55 AMKorea is sizzling, and the fact isn’t lost on Altos Ventures or its backers. The early-stage venture firm, with an office on Sand Hill Road and in Seoul, has just raised an oversubscribed $110 million fund to invest exclusively in the country, the second fund of its type for Altos, which raised its last Korea-focused fund with $60 million in 2013. (The firm has also raised four U.S.-focused funds over the last decade.)

    It’s easy to understand LPs’ enthusiasm. Korea boasts the world’s 12th economy, with more than 50 million inhabitants and GDP per capita of roughly $25,000, according to the World Bank. Its inhabitants are entrepreneurial, with 28 percent of the population self-employed versus 10 percent in the U.S. Korea also has among the world’s fastest and mostly broadly deployed broadband.

    Also very notably, Korea has produced more than a dozen Internet companies worth more than a billion dollars over the last decade or so, including the web search giant Naver, a now publicly traded company valued at $17 billion; the web search company Daum Kakao, formed when Korean internet firm Daum merged with domestic messaging app company Kakao in a $2.9 billion deal in 2014 (it’s now valued at $5.5 billion); and Yello Mobile, whose mobile apps business was valued at $4 billion during its most recent funding round in December.

    Yesterday, we talked with Altos Ventures managing director Anthony Lee to get a better picture of what’s going on, and how his firm is going to invest its new fund.

    When and why did you start investing in Korea?

    About 10 years ago. We started seeing this opportunity that was very much overlooked in many ways. Everyone knows the country for LG and Samsung, but there are now a lot of very real, billion dollars companies, and there’s almost zero Western capital in those companies. Many bootstrapped themselves. They were almost entirely missed by VCs in Silicon Valley.

    That must be changing. What other investors are you starting to see who you didn’t see five years ago?

    There’s now a domestic VC market, investing $1.5 billion annually in all sorts of things, from Internet stuff to hardware, movies, medical, and manufacturing. We’re seeing a lot more foreign attention now, too. At the later stages, you’re seeing Chinese hedge funds, Japanese corporates — Softbank invested $1 billion in [our portfolio company, the e-commerce startup] Coupang last year. Goldman Sachs is coming in. Blackrock also led an investment in Coupang in late 2014. At the earlier stage, you’re also starting to see, Japanese, Chinese, and more U.S. investors start to venture over there.

    There’s a much stronger focus on profitability in Korea than in the U.S., is that right?

    Yes. Korean venture has been more merchant banking and corporate in its nature, meaning it invests for very quick returns. The government is a large LP in many funds and they’ve [accordingly been] optimized for lower risk. We sometimes find ourselves pushing companies in the direction of growth and not profitability. At the same time, of the 30 companies we’ve invested in there, we’ve only had one loss. It’s a bit emblematic of the way Korean entrepreneurs work. They hate to fail.

    Much more here.

    Connie

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  • Andreessen Horowitz Talking with LPs About a New $1.5 Billion Fund

    Andreessen HorowitzThe venture firm Andreessen Horowitz is talking with investors about a fresh $1.5 billion fund, according to several sources who note the fund could always close at a higher number.

    It was almost exactly two years ago that the firm closed its forth, multi-stage venture capital fund, Andreessen Horowitz Fund IV, with $1.5 billion.

    The money also comes on the heels of a $200 million fund that the firm announced in November called the AH Bio Fund, a vehicle that’s being used to invest in mostly early-stage startups at the intersection of computer science and life sciences.

    Altogether, Andreessen Horowitz, which launched in June 2009, has so far raised $4.35 billion, including three previous funds.

    The firm declined to comment for this story, but it’s easy to imagine that even Andreessen Horowitz – considered one of the top venture firms in the world — isn’t finding fundraising quite as easy as it has in the past given uncertainty in the broader market.

    Though it will undoubtedly reach its target, the young firm is looking for capital at a time when its own investors may not be feeling terribly flush.

    As Chris Douvos, a limited partner with Venture Investment Associates, recently told us, “LPs are definitely yelling at VCs to put some ‘moolah in the coolah.’” Institutional funds “give out money [to VCs] expecting it will come back with profits in a reasonable amount of time,” said Douvos. “When it doesn’t, we can’t put more money into the asset class because a.) we’re at the top of our allocation [to venture capital and b.) we’re out of money.”

    Indeed, the firm looks to have spent recent months preparing to woo investors, including by liquidating part of its stake in the car-sharing company Lyft in December.

    As the WSJ reported earlier this month, both Andreessen Horowitz and early Lyft backer Founders Fund sold some of their shares to Saudi Arabia’s Prince al-Waleed bin Talal and his Kingdom Holding Co. (Taking money off the table and making distributions to LPs is a decision their fellow investor Fred Wilson recently argued more venture firms should be doing more frequently.)

    Andreessen Horowitz has also been shifting its staff around quite a bit.

    More here.

    Connie

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