• A Startup That Pays Cash to Buy Homes Now Offers Money-Back Guarantee

    Eric WuOpendoor, a two-year-old, San Francisco-based startup is a swing-for-the fences type of bet during a time when the most ambitious startups are suddenly less fashionable than they once were.

    That’s not crimping the company’s style. In fact, Opendoor, which is on a mission to make it simple to buy and sell houses online, just added another layer of uncertainty onto its big-risk, big-reward model.

    The roughly 100-employee company currently buys homes sight unseen when a home seller visits its site, asks for a quote, and accepts Opendoor’s bid, which the company comes up with based on public market information about historical home sales and its own proprietary data about market conditions. (The company says its offers are typically one to three points below what the seller might fetch on the open market roughly three months into the future. That’s the average time required to sell a home in the U.S., it says.)

    Starting today, it’s making two more bold promises. First, it will buy back a home if the new owner is unhappy with it. Specifically, if someone changes his or her mind for any reason, that person has 30 days to receive a full refund. More, Opendoor will provide each new buyer with a 180-point inspection report on the condition of their new home; if anything breaks in the first two years, it will fix it.

    “We stand behind our homes,” says Eric Wu, CEO and co-founder of Opendoor. “Unlike a typical seller who is trying to hide information from [the seller], we’re fully transparent because we want our customers to be happy.”

    Wu, who previously sold a startup to the real estate portal Trulia, cofounded Opendoor in March 2014 with three others: operator-investor Keith Rabois; Ian Wong, who formerly led data science at Square; and JD Ross, who oversaw product at the investment management platform Addepar.

    Their plan from the outset was to use technology to flip homes, an idea that has garnered roughly $110 million from investors, including its biggest shareholder, Khosla Ventures.

    Wu says Opendoor has also raised “hundreds of millions of dollars” in debt in order to carry the homes on its balance sheet while it works toward re-selling them.

    In an interview yesterday, Wu declined to say how many homes have so far been bought or sold using the platform. But he did say that OpenDoor typically buys 10 houses a day across the two markets in which it’s currently operating: Phoenix and Dallas.

    More here.

    Connie

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  • L.A. Gets a Later-Stage Player with March Capital Partners

    IMG_1326_Group HorizontalL.A. has a new later-stage funding source in March Capital Partners, a firm with a newly closed $240 million fund — and a few tricks up its sleeve. For starters, though it invests in both Southern and Northern California, it considers itself a global investor and has already made bets in India (in online payments company BillDesk) and Germany (Dojo Madness, which makes a digital coaching app for gamers).

    It also writes Series B and Series C checks, which can’t be said of many other L.A.-based venture firms. And March Capital, which is primarily focused on business-to-business enterprises, has ties to three other enterprises that help with its deal flow. It’s a cofounder and an investor in two Bay Area accelerators that keep it abreast of new trends: The Fabric and Hive. More, one of its founding partners is Jamie Montgomery, a renowned investment banker who in recent years has launched an annual summit that introduces privately held companies to hundreds of investors and this year featured former Cisco CEO John Chambers, Atom Factory’s CEO Troy Carter, and designer Yves Béhar among others.

    Montgomery isn’t the only familiar face at March, either. Others of March’s founding partners include longtime VCs Jim Armstrong, Sumant Mandal — both formerly of Clearstone Venture Partners — and Gregory Milken, a serial entrepreneur and board member of the Milken Institute.

    We talked yesterday with Montgomery and Mandal about their new firm, which they quietly formed 20 months ago. (They spent the last 18 months fundraising.)

    Sumant, you and Jim spent much of your careers at Clearstone. Is it shutting down?

    More here.

    Connie

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  • Checking the Market’s Temperature with Bain’s Ajay Agarwal

    Screen Shot 2016-05-28 at 8.38.43 AMAjay Agarwal leads the West Coast team for Bain Capital Ventures, which he joined 13 years ago. Because he he has seen some market zigs and zags, we met him for coffee last week to talk about what he’s seeing in the market right now. Our chat has been edited for length.

    Bain Capital Ventures opened its first office in the Bay Area five years ago. Now you have an office in Palo Alto, and you’re moving into a bigger office soon in San Francisco. How many of your partners are here now, and how many of your startups are in SF versus south of the city? 

    It used to be that 90 percent of our team was on the East Coast, in Boston and New York, and 10 percent was here, but it’s about 50/50 at this point. And I’d say 40 percent of our [Bay Area] startups are south. There are a lot of machine learning companies in Sunnyvale and Mountain View and Los Altos, and that’s a big area of interest for us right now.

    What’s one new, related investment that might interest readers?

    Trooly, whose team comes from LinkedIn. If you think about it, we have all these peer-to-peer marketplaces bringing together strangers, whether they are drivers or babysitters. But the state of the art — background checks — is a flawed process. A lot of information has been digitized, but there are still plenty of counties where, if you’ve committed a crime, they’ll have a physical record alone. So you’d have to send a courier to all of the places where someone has lived to get the information you need, which is expensive.

    Meanwhile, Trooly can figure out much more about someone and do it quickly using data science and machine learning. It can figure out any content that has been written by you or about you and whether it’s in any way objectionable. It can verify if the information you send someone is accurate and distinguish between a typo and whether you’re trying to fool someone [on an application]. For every person who fails a background check, we find a person who passed a background check and should not have.

    More here.

    Connie

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  • This Silicon Valley VC Says Chinese Investors are Joining Series A Deals, and They’re Playing “Hardball”

    Screen Shot 2016-04-27 at 1.30.49 PMAs a venture investor for the last 20 years, George Zachary has witnessed plenty of trends develop and fizzle. Yesterday, we talked with him about what he’s seeing right now. One of the newest wrinkles he noted is a growing number of Chinese investors who’ve grown aggressive about getting into Series A deals, and who seem to be playing by their own rules.

    Our chat with Zachary — a general partner at CRV who has led the venture firm into bets on Twitter, Yammer and Udacity, among others — has been edited for length.

    You’re investing in seed and Series A deals. Are you not concerning yourself with what’s happening in the later-stage and public markets? That seems to be a common refrain for early-stage investors.

    You definitely have to worry about whether your company can be financed later on, no matter what everyone says. In fact, a lot of Series A companies that have to do an extension of the Series A are raising at lower valuations. One of our founders has done two startups before, but valuations in the space where he’s operating all went down 50 percent, so he’s just accepting that he’ll have to raise his (extension) round with a lot more dilution than he wanted. It is what it is.

    How much have valuations come down, and where are you seeing them hit the hardest?

    Well, for celebrity founders, they are staying high.We’re doing a celebrity-founder deal now that has a high price tag, and everyone wants into it. For repeat founders with a good exit the last time, the price is always going to be high, plus or minus 10 percent. This particular team is at concept stage. We’re basically handing them a near-blank check.

    But valuations are down elsewhere. The average thing coming out of Y Combinator is probably a half to three-quarters of what it was [in terms of valuation in recent years]. The average seed-stage deal is half.

    I should mention that for celebrity founders, research supports that if they’re operating in the same space [as their last company], they have a higher rate of success [than other people]. If they move from databases to clean tech or from cell towers to social networks, they usually don’t do super well.

    According to CrunchBase, CRV was involved in at least 27 financings last year. Its data shows just four deals in 2016. Is the firm waiting for the market to sort itself out?

    Not explicitly. We’ve committed to three things in the last month that are in the docs stage.

    Docs are taking longer because there are new investors coming in, and they want more stuff in their terms. These are newer investors, often foreign investors, who are basically saying: “I want senior preference to [a company’s earlier] investors,” and that’s adding two or three weeks as they usually ask right as the docs are closing.

    Wait, what’s happening? Who are these new investors, and how prevalent is this? When you say foreign, do you mean mostly from China? Obviously, a lot of Chinese investors are looking to invest more money in the U.S.

    They’re almost all from China, and they want all of their preferences to be senior to everyone else’s. What’s happening is, since they know the startup’s financials, they just wait it out. By that point, we’ve already signed a term sheet and turned off a lot of other people who wanted to invest. These things never come up in the term sheet phase but later in the docs. They’ll say, “We did our diligence, and we need XYZ to invest.”

    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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  • SkySafe Lands $3 Million to Disable Badly Behaving Drones

    Screen Shot 2016-04-19 at 12.56.31 PMSkySafe, a six-month-old, San Diego, Ca.-based company whose technology can disable drones that are flying where they shouldn’t, has raised $3 million in seed funding. Andreessen Horowitz led the round, with participation from Founder Collective, SV Angel, and BoxGroup.

    No doubt the company is serving a fast-growing need, particularly given the number of drones poised to wreak havoc on public spaces from sports arenas to airports. Consider the British Airways flight that was hit by a commercial drone as it approached Heathrow Airport on Sunday, or the World Cup skier nearly done in by a falling drone in December. The FAA estimates there will be 2.5 million drones sold in the  U.S. alone just this year.

    “We’re very excited about a future where drones are used by consumers and businesses for all sorts of purposes, but to get there, drones need to be made extremely reliable and safe,” says venture capitalist Chris Dixon, who led the deal for Andreessen Horowitz.

    Dixon suggests SkySafe can ensure that drones don’t go rogue, largely via radio waves, which it uses to override a drone’s remote and take control of the aircraft. Perhaps so. What SkySafe is building certainly sounds less menacing than some of the other options to emerge recently, including an anti-drone laser and an anti-drone rifle. Unfortunately, for competitive reasons, the six-person company isn’t willing to dive much more deeply into how its tech works, as we learned when we talked yesterday with cofounder and CEO Grant Jordan. Our chat has been edited for length.

    SkySafe has four founders. What’s your background, and how did you come together?

    I graduated from MIT, then spent four years as an officer in the Air Force Research Lab testing anti-drone tech, where I got a lot of exposure to various ways that different groups have come up with for taking down small drones. After I finished my time there, I went to grad school at USCD for computer security, and I [connected with my cofounders] for a security company consulting firm that we founded called Somerset Recon. Between that security work and [my] drone work, we saw a growing threat in the drone space.

    What types of customers will you be trying to persuade to use SkySafe?

    Pretty much the entire space of public safety. Airports, prisons, stadiums, other event venues, border protection, critical infrastructure. The number of places that have seen incidents in the past year has grown tremendously.

    Would you characterize most of those incidents as accidents or otherwise?

    In the aviation industry, at airports, those look like accidents. But in prisons, there are no accidents. Those are drones that are trying to smuggle in weapons, drugs and other contraband. I wouldn’t classify what we’ve seen in stadiums as accidents, either. [Drone operators] might not mean any harm, but they’re going out of their way to fly into an area they aren’t supposed to be, and right now, there’s nothing an event venue can do about it.

    More here.

    Connie

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  • Meet Jeremy Fiance, UC Berkeley’s 24-Year-Old Superconnector

    Screen Shot 2016-04-16 at 6.56.53 PMMost 24-year-olds are still figuring out how their careers will take shape. Jeremy Fiance, a recent UC Berkeley graduate, knows he wants to be a venture capitalist. He isn’t waiting to rise through the ranks of someone else’s firm, either.

    Instead, Fiance is today taking the wraps off his new firm, The House Fund, which just closed its debut vehicle with $6 million in capital commitments from an array of individual investors, many of them venture capitalists.

    It’s easy to understand their interest in Fiance. He’s sharp. (He graduated with an interdisciplinary studies degree, having studied business, engineering, and design). He’s media savvy. (Within hours of our phone conversation last week, Fiance sent over a comprehensive package of media assets.)

    Fiance also has a highly compelling pitch. The big idea: UC Berkeley has been overlooked for too long by angel investors and VCs alike, and Fiance is positioned as well as anyone to unearth its hidden gems.

    It’s hard to believe when you think about the numbers. UC Berkeley has a half a million alums and a current student body of 37,000, including undergraduate and graduate students. But students and alums alike say that despite high-profile alums like Eric Schmidt, Steve Wozniak, and Chris Anderson — not to mention the many interesting startups created at the school (Caviar, acquired by Square is but one) — UC Berkeley still receives a small fraction of the attention that angel investors and venture capitalists pay Stanford students and alums.

    As venture capitalist Pejman Nozad told us last summer, a big gating factor is simply location. Because UC Berkeley is 45 minutes from Palo Alto, where plenty of VCs still live and work, it “doesn’t get nearly as much attention despite that its computer science department ranks right up there with Stanford and Carnegie Mellon and M.I.T.”

    Last year, Nozad’s firm, Pejman Mar, which is itself a stone’s throw away from Stanford, created a $250,000 startup competition at UC Berkeley to help it identify promising teams until it has more bandwidth to throw at the school.

    Other firms have also crept up here and there.

    More here.

    Connie

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  • Secondary Buyers Appear from Overseas to Snap Up Startup Stakes

    Screen Shot 2016-04-08 at 9.49.37 PMWe told you early last month that secondary businesses have been inundated with sellers in recent months, and that’s not expected to change anytime soon. Nary a tech company went public in the first quarter. There’s also the related issue of falling valuations, which has both institutional and individual shareholders nervously wondering whether to hang on to their holdings or get rid of them.

    Helping to keep the whole flywheel going: secondary buyers who are coming from overseas to snap up startup stakes. So says Timothy Harris, a partner in the emerging companies and venture capital group of law firm Morrison Foerster who got us up to speed on the market yesterday afternoon.

    Harris has his own agenda when it comes to secondaries — including helping startups decide whether to engage in transactions, how to structure them and to ensure companies have some degree of control over the process. But he spoke candidly about the good, the bad and the unexpected of what he’s seeing. Our chat has been edited for length.

    The Financial Times wrote a piece recently proposing that some still-private companies have no plans to go public, ever, saying this was okay and even healthy.

    That’s right. [The secondary market] is now one of the only ways that liquidity is provided to shareholders who don’t want to sit on their often highly appreciated shares. There were no IPOs in the first quarter. And some companies are still so highly valued, who can buy them? Meanwhile, you have people who joined these private companies thinking they’d go public and that [an IPO exit] was how they were going to pay their college tuition or for elder care or for the mortgage on their house.

    The impulse to sell is understandable. But who’s buying? Isn’t it like catching a falling knife right now?

    I don’t think that’s true. I’ve advised some VCs [about] what I perceive to be incredible deals based on what I’ve read about these companies and what they are worth. It’s like an art auction when the artists aren’t yet dead or they’re recently dead and it’s not clear how much their pieces will be worth in the future. People took a gamble on Facebook before it went public; they gambled on Square. Others who are buying into unicorns are similarly hoping the companies will go public someday or else that they can turn around and sell the shares for more later.

    But again, who exactly is buying?

    Many of them are tourist investors from overseas — both high net-worth individuals, funds, and public companies — who are thrilled to return home and say, “We just bought fill-in-the-blank-hot company.” They show up quite a bit and they appear relatively price insensitive, which makes them attractive to sellers. You also see investment bankers who represent someone who wants to buy or sell shares of certain companies. The angels and VC are also buying and selling to each other.

    More here.

    Connie

  • Luma, a Sleek WiFi Router, Raises $12.5 Million from Accel and Amazon

    Screen Shot 2016-04-08 at 9.37.35 PMFinally, companies have begun to recognize a long overlooked opportunity to develop a next-generation router that looks sleek and is far more user-friendly than the networking hardware of yesteryear.

    Some contenders are the established companies themselves, including Asus, D-Link and Netgear, all of which have now have bells and whistles like parental controls, the ability to prioritize traffic based on network and device, and apps that help users repair their home network via smartphone or tablet.

    Newer entrants, including Google’s new OnHub router and two-year-old Eero, feature both more elegant designs and far greater ease of use, though OnHub gets mixed performance reviews. Meanwhile, Eero strongly suggests that users buy more than one, which can quickly become expensive. (The company says that each router covers roughly 1,000 square feet. A three-pack of Eero units costs $499.)

    Luma, a two-year-old, Atlanta-based entrant, may give them all a run for their money.

    For one thing, like the Eero, Luma’s glossy WiFi routers look like something Apple might have come up with. Luma, which like Eero, works best when sprinkled around the home, also offers more coverage and is more affordable by design. Each unit covers roughly 1,500 square feet, and a three-pack costs $299, compared with an individual unit, which costs $149. (Originally, Luma planned to feature pricing similar to Eero: $199 per unit and $499 for a three-pack.)

    Perhaps most important, especially to parents: Luma features the kind of network controls you might find at a large company.

    More here.

    Connie

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  • Longtime Tesla Motors CIO Jay Vijayan Has Formed Stealth Startup

    Tesla MotorsJay Vijayan, who spent four years as the Chief Information Officer of Tesla Motors, and who served as its VP of IT and business applications for a year before that, left the company in January to form his own Bay Area startup.

    Vijayan isn’t talking yet about that company. (StrictlyVC reached out to him last Monday and he hasn’t responded.)

    But his departure comes at an interesting time, given the almost unprecedented excitement surrounding the Model 3 car that Tesla unveiled to the public last Thursday night.

    As you may have already read, the company had booked more than 253,000 orders in the first 36 hours after CEO Elon Musk revealed several prototypes in a showy display reminiscent of Apple product releases.

    That kind of demand is surely putting to the test a proprietary software system called Warp that Vijayan and his team of engineers at Tesla designed to support the company’s direct sales efforts in the U.S. (In 2014, the WSJ had taken a long look at the platform here.)

    Vijayan also appears to be doing some angel investing, which may or may not be related to his new startup. Last Monday, numerous India-based outlets reported that FixNix, a Bangalore-based governance, risk management, and compliance platform, had raised $500,000 in seed funding led by Vijayan, along with other, unnamed, Silicon Valley-based angel investors.

    More here.

    Connie

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