Hi, good morning, everyone! (Web visitors, here’s an easier-to-read version of today’s email here.)

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Top News in the A.M.

Instagram now has 300 million users. As Recode’s Kurt Wagner astutely notes, that makes it Facebook’s fourth product with more users than Twitter, including Facebook, with 1.35 billion users; WhatsApp, with 600 million users; and Facebook Messenger, with 500 million users. (Adding insult to injury, Twitter — ranked second on Glassdoor’s list of best places to work last year — didn’t crack the top 50 this year.)

Sony tries of a hack of its own to disrupt downloads of its stolen files.

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VC Michael Eisenberg: More VCs Are Staying in Israel

If you’ve ever done an Internet or software venture deal in Israel, you probably know Michael Eisenberg. He started off in the industry 20 years ago, working first as a general partner at Israel Seed Partners, then spending nearly a decade with Benchmark, which he left last year to launch Aleph, an early-stage firm he cofounded with operator-turned-investor, Eden Shochat.

Eisenberg also spends plenty of time in the U.S., to visit Israeli founders who’ve relocated here, as well as to help recruit for those of his portfolio companies that are staying put back home. In fact, the busy father of eight happened to be in New York yesterday; in between meetings, we chatted by phone about Israel’s current startup scene and what he’s seeing there.

You invest exclusively in Israeli startups, though you’re in the U.S. fairly often. What percentage of your management teams have moved here?

Probably half, with the other half still in Israel.

Has that number changed much in recent years?

If anything, we’re seeing more Israeli entrepreneurs decide to stay in Israel. With the development of the web and the ability it affords founders to market their products from anywhere, entrepreneurs no longer need the same degree of in-market presence.

You closed a debut fund of $140 million last year, with a side fund of $14 million. How much have you invested so far, and what size checks are you writing?

We’ve invested about 25 percent of the fund. We’re writing Series A checks of $2 million to $5 million. Half the deals are syndicated; the other half, we’ve done ourselves.

According to IVC-Online, the pace of investment in Israeli startups was up in the third quarter — this despite the Gaza conflict.

I’m not sure there’s any rhyme or reason for it, but the pace of innovation in Israel exists outside of the regional economy and regional politics. At the end of the day, innovation is very scarce. You can find it in pockets of New York and Shanghai and London, but it’s mostly in Silicon Valley and Tel Aviv, and as more industries are subject to innovation, investment is Israel is inevitably going up.

We hear that local firms are getting sidelined, that multinational firms like Bessemer and Benchmark have a major and growing competitive advantage right now.

There’s definitely brand value to international firms like Benchmark, as I experienced. And most of the Israel firms haven’t built their brand over time. But reputation is earned. It’s not bought. What entrepreneurs learn is that an individual is more important than the firm.

Eden and I have spent a collective 40 years building relationships. We both travel every third or fourth week. I’ve logged more miles than any VC in Israel. Just because you’re the Israeli partner of a U.S firm doesn’t mean you have the relationships needed to help a company.

Are you seeing more Chinese investors in Israel? Baidu just made its first investment in an Israeli startup called Pixellot, which seems notable.

Over the last 12 months, we’ve seen many more Chinese investors come to Israel, which is a good thing. Chinese investors have [backed] Israeli venture firms, including Pitango [Venture Capital] and Carmel [Ventures], but they’re starting to invest directly in technology as well because the East is such a big market.

Of course, you hope it doesn’t presage the top of the market. I remember a huge infusion of Italian money at the top of the market [in the late ‘90s], and that didn’t end well.

Credit Suisse is reportedly interested in investing in Israeli startups for clients of its wealth management business. Is that a worrisome indicator?

There’s generally been a big move by financial institutions in the U.S. and Europe into Israel. Citigroup and Barclays and others have set up tech centers and innovation labs. Especially around financial technology and security, Israel is a great place to go. I’m just not sure there’s enough engineering talent for everyone who wants to move into the market.

What’s happening with valuations?

Valuations in Israel aren’t as out of whack as they are in the U.S. It’s a much more disciplined market that seems to remember what downturns look like. At Aleph, we have a policy of straight-up flat term sheets, too. That’s something I learned at Benchmark.

Aleph also has an equal partnership model like Benchmark’s, with the carry split evenly. I often wonder why more firms don’t do the same.

It makes a lot of sense. It kills all the politics. Partners at Benchmark help each other tirelessly. But it’s inherently difficult to scale — to be able to find someone who provides as much value [as everyone else], and I think firms are daunted by that. You just have to rise to that challenge.

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New Fundings

Area 1 Security, a year-old, Menlo Park, Calif.-based cyber-security startup founded by three former NSA analysts, has raised $8 million in a Series A financing led by earlier investor Kleiner Perkins Caufield & Byers. The company has now raised $10.5 million, including from Cowboy Ventures, Data Collective, First Round Capital, Allegis Capital, and others.

Connect, a 2.5-year-old, San Francisco-based company whose app merges contact information from Facebook, LinkedIn, Gmail, Instagram, and iPhone address books so users can message any of their contacts from inside the app, has raised $10 million, including from Fosun International and Salesforce CEO Marc Benioff. The company has now raised $13 million altogether. Venture Capital Dispatch has more here.

Grow, a year-old, Provo, Ut.-based company behind a business-intelligence dashboard service, has raised $1.5 million in seed funding from Kickstart Seed Fund, Pelion Ventures and individual investors. The company has now raised $2 million altogether.

Helium Systems, a year-old, San Francisco-based Internet-of-things startup, has raised $16 million in funding led by Khosla Ventures, with participation from FirstMark Capital, Digital Garage, Marc Benioff, SV Angel, and Slow Ventures among others. TechCrunch has more here.

Hinge, a 3.5-year-old, New York-based mobile app that helps people meet dates through their online social graphs, has raised $12 million in fresh funding led by Shasta Ventures, with participation from previous investorsLowercase Capital, Great Oaks Venture Capital, Eniac Ventures and CAA Ventures. Hinge had raised $4.5 million in summer. It has now raised $20.6 million altogether.

Huddle, a seven-year-old, London-based company whose enterprise collaboration software enables people to store and share video, messages and other items, has raised $51 million in Series D funding led by Zouk Capital, with participation from the Hermes GPE Environmental Innovation Fund and all of its earlier backers. The company has now raised $85 million altogether. Venture Capital Dispatch has more here.

Infer, a four-year-old, Palo Alto, Ca.-based company whose predictive SaaS platform aims to help companies identify prospective customers, has raised $25 million led by earlier backer Redpoint Ventures. The company has so far raised $35 million, shows Crunchbase. Others of its backers include The Social+Capital Partnership, Sutter Hill Ventures,Andreessen Horowitz, and Nexus Venture Partners.

IPerceptions, a 10-year-old, New York-based digital customer research company, has raised an undisclosed amount of growth capital from Wellington Financial.

Kamcord, a two-year-old, San Francisco-based company whose technology enables gamers to record parts of their game play and share key moments, has raised $15 million in new funding led by the Japanese gaming giant GungHo Online Entertainment, with participation from Tencent Holdings and TransLink Capital. Venture Capital Dispatch has more here.

Optomeditech, a 2.5-year-old, Espoo, Finland-based company that’s developing intravenous catheters and blood collection needles, has raised $2.5 million in funding led by Lifeline Ventures and The Finnish Innovation Fund Sitra.

OutboundEngine, a two-year-old, Austin, Tx.-based marketing technology company, has raised $11 million in Series B funding led by Silverton Partners, with participation from Harmony Partners, Altos Ventures and existing investors. The company has now raised $17.8 million altogether, shows Crunchbase.

Piccing, a 3.5-year-old, Palo Alto, Ca.-based social shopping platform, has raised $3.62 million in Series A funding from undisclosed investors.

Threat Stack, a two-year-old, Cambridge, Ma.-based cloud-security monitoring service, has raised $5 million in Series A1 financing from Atlas Venture and .406 Ventures. The company has raised $9 million altogether, shows Crunchbase.

UNIFi Software, a year-old, San Francisco-based company that sells data integration software, has raised $4.45 million in seed financing led by Canaan Partners, with participation from other investors, including Omaha Capital.

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New Funds

Milestone Venture Partners, a 15-year-old, New York-based early-stage venture capital fund, is hoping to raise a new, $150 million fund to back software and data services businesses. VentureWire has the details here.

Sequoia Capital, the 42-year-old, global venture firm, is raising its 15th U.S. venture fund, shows an SEC filing that doesn’t list a target.

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IPOs

Box has updated its S-1 paperwork. ZDNet breaks it down here, but among the highlights: Box reported a little more than $57 million in revenue, up from $33.6 million the previous year. Losses are down, too, to $45.4 million at the end of the third quarter, down from $51.4 million in Q3 2013.

LendingClub is now a public company.

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Exits

AppArchitect, a two-year-old, Finnish company behind a drag-and-drop platform for creating mobile apps, has been acquired for undisclosed terms by AppGyver, a mobile app development company. AppArchitect had raised an undisclosed amount of funding rom DreamIt Ventures, shows Crunchbase. AppGyver has raised $3.5 million from investors, including Initial Capital and Open Ocean Capital.

Backupify, a six-year-old, Cambridge, Ma.-based cloud backup service, has been acquired by Datto, a backup and disaster recovery service in Norwalk, Ct. Terms weren’t disclosed, but Backupify cofounder and CEO Rob May tells TechCrunch the purchase price was “a lot more than we raised.” Backupify had collected $19.5 million from investors, including General Catalyst Partners, Lowercase Capital, Symantec, Avalon Ventures, First Round Capital and numerous angels, including Chris Sacca.

HockeyApp, a three-year-old, Stuttgart, Germany-based company whose platform collects live crash reports, gets feedback from users, distributes betas, recruits new testers, and analyzes its customers’ test coverage, has been acquired by Microsoft for undisclosed terms. More here.

Neohapsis, a 17-year-old, Chicago-based security advisory company that provides governance, risk, and compliance products and security services to enterprises and government agencies, has been acquired by Cisco. Terms of the deal weren’t disclosed. Neohapsis had raised at least $35 million over the years, shows Crunchbase, including from Paladin Capital Group, New Venture Partners, and Trident Capital.

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People

HBO chief technology officer Otto Berkes is leaving the premium cable network following its decision to enlist Major League Baseball Advanced Media to build its streaming service instead of develop it in-house. Berkes, a co-creator of Microsoft’s Xbox, had joined HBO in 2011 as senior VP of digital products and was promoted to CTO in 2012.

Paul Camp, formerly a managing director and global head of J.P. Morgan’s transaction services business, is now the CFO of the bitcoin startup Circle Internet Financial, which provides a digital-currency wallet and account management services to consumers.

Associate Professor Ben Edelman of Harvard Business School has issued an apology for threatening a Chinese restaurant manager over a $4 overcharge. “Having reflected on my interaction with Ran,” and been chastised by nearly everyone on the Internet, “it’s clear that I was very much out of line.”

Early next year, Tony Perkins, founder of the media brand AlwaysOn, plans to open a members-only social club called the Cuckoo’s Nest that will accept just 1,200 members and cost $2,500 a year to join. (Members under age 30 will be asked to pay $1,000.) “The Valley does not have a place where entrepreneurs can find each other and hang out at,” says venture capitalist (and charter Cuckoo Nest member) Tim Draper in an email soliciting new members.

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Job Listings

Vocap Investment Partners, a growth-stage investment firm, is looking for an analyst or associate. The job is in Atlanta.

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Data

Shivon Zilis, an investor at Bloomberg Beta, tries making sense of the exploding number “machine intelligence” companies. Here’s her analysis.

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Essential Reads

Facebook no longer likes the word “users.” You’re just a person who happens to use Facebook.

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Detours

Why football will probably never die.

Oof.

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Retail Therapy

A portable garage toolbox refrigerator. [Grunt.] Hulk like.

Fifteen great gifts for the Apple addicts in your life.

Happy Monday, everyone! Hope you had a terrific weekend. (Web visitors, you can check out an easier-to-read version of this email right here.)

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Top News in the A.M.

The Delhi government has banned Uber India following a violent assault involving a 25-year-old woman on Friday. Any taxi using Uber’s services in Delhi can now attract fines and even be impounded. Police in Delhi began looking to take action against Uber immediately after the attack, with local officials blaming the company for not checking the driver’s background or ensuring that he had a satellite location device in his car.

North Korea has denied hacking Sony Pictures’ computer systems in retaliation for its movie “The Interview,” which revolves around a plot to assassinate North Korea’s leader, Kim Jong Un. It called the cyberattack a “righteous deed,” though. (The film’s actors, James Franco and Seth Rogen, are meanwile having fun with the whole thing.)

India-based e-tailing giant Snapdeal could see some of its shares trade hands soon, reports the Times of India. It says the Bengaluru-based venture fund Kalaari Capital may be in the process of executing a secondary sale of shares worth $100 million.

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Weathergage Capital: Our Peers Thought We Were “Half Crazy” to Back Micro VC

Judith Elsea, a cofounder of the Palo Alto, Ca.-based venture fund-of-funds Weathergage Capital, has been a proponent of micro-VC funds since long before the term came into fashion.

We caught up last week to talk shop, during which time Elsea was fairly candid — except about whether eight-year-old Weathergage has sealed up a third, $200 million fund that the firm set out to raise 10 months ago. (Weathergage closed its first, $250 million vehicle, in 2007. It closed a second fund with $182 million in 2011.)

Weathergage invests in growth equity funds and venture capital, including micro VCs. On a percentage basis, much do you allocate to the last?

Micro VC is part of a larger practice. I couldn’t share how big a part, but we’re one of the pioneering investors in micro VC and we’ve increased our exposure over time. We saw that it was much easier and cheaper to start a company and that you could do a heck of a lot more at the product-market fit level with a lot less money. We saw the opportunity, but we didn’t know if we’d see investors set up much smaller size funds to capture entrepreneurs at that point in their companies’ development. But it happened that we did and we were fortunate to invest in some really talented investors.

I remember when Mike Maples — who you’ve backed — was starting out in 2006 with $15 million from 10 individual investors.

Many institutional investors and our peers in our general ecosystem thought we were half crazy for allocating some our capital to this area. But as time has gone on and returns have rolled in and been quite good and competitive, it’s attracted more investor interest and become a lot less of an oddity.

Still, no one knows yet quite how they’ll do.

The primarily characteristic of the performance so far is a large number of M&A and early exits. So you might say that’s an artifact of the current market. But that doesn’t meant they haven’t achieved exits fairly quickly and at fairly attractive multiples in aggregate.

I don’t know how much time it takes to prove a model – probably longer than we’ve seen in micro VC. But for the best-in-class managers, they seem to have found a nice niche in the VC ecosystem. We certainly see their companies getting sponsored by the best venture funds with great regularity. We see them getting attractive exits. To the extent that the funds aren’t fully liquidated yet, you could say they’re unproven. But you could say the same of any VC firm in last five years.

Some LPs prefer new managers who have operating experience. Others prefer investing experience. Does Weathergage favor one or the other?

Some [of our top managers] have recent operating experience that resonates with entrepreneurs who matter. Some, because of the body of their investment work, resonate with the entrepreneurs who matter. So we don’t have a bias in that regard.

Do you care how much of the fund GPs contribute from their own pockets?

We’re looking for GPs to be committed in every way to the success of their endeavor. Sometimes that takes the form of capital commitment; in all cases, it’s the time and attention that they spend on their companies’ behalf. Especially in micro VC, where people have probably had some success in their previous lives but are raising very small funds, we don’t have a tendency to be dogmatic [about how much they kick in themselves].

As more funds compete for the attention of LPs, they’ve become increasingly specialized. Is that an effective strategy? Do you invest thematically?

We do, but we don’t express it by sectors. We have views on life sciences, for instance, so because we’ve been quite bullish on that area, we have sought out exposure to best-in-class life sciences managers. But we haven’t really gotten down to the level of saying, We need more Internet-focused managers. The investment opportunity is too dynamic.

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New Fundings

Change.org, the seven-year-old, San Francisco-based online petition site, has raised $25 million in its third round of outside funding, reports Fortune. The round included earlier investor Omidyar Network, with participation from an array of high-profile individuals, including Bill Gates, Richard Branson, Reid Hoffman, Ev Williams, Jerry Yang, Gideon Yu, Arianna Huffington, Ashton Kutcher and Guy Oseary. The company, which boasts 80 million users, has now raised $42 million altogether, shows Crunchbase.

Congenica, a year-old, Cambridge, England-based genome discovery and diagnostics company, has raised £1 million ($1.6 million) from Cambridge Innovation Capital.

Extole, a four-year-old, San Francisco-based referral marketing startup, has raised $14 million in Series C funding led by Scale Venture Partners, with participation from Norwest Venture Partners, Redpoint Ventures, Shasta Ventures, and Trident Capital. The company has now raised at least $19 million to date, shows Crunchbase.

Independa, a five-year-old, San Diego-based company whose cloud-based software is intended to help the elderly maintain their independence by providing regular reminders for medication, appointments, and other needs, has raised $4.3 million in Series B funding led by return investor City Hill Ventures, which was joined by other, undisclosed investors. The company, whose remote monitoring technology is built into LG Elecronics TV sets, among other things, has now raised $14.5 million altogether, shows Crunchbase.

Instacart, the two-year-old, San Francisco-based home grocery delivery service, is raising roughly $100 million in Series C funding that will value the startup at $2 billion, reports TechCrunch, which says it’s hearing that Kleiner Perkins Caufield & Byers is the lead investor. With this round, Instacart will have raised $154.8 million, including from Andreessen Horowitz, Sequoia Capital, Khosla Ventures, Canaan Partners, and individual investors, including Y Combinator president Sam Altman and Box founder Aaron Levie. As TechCrunch notes, at $2 billion, the company’s valuation will have more than quadrupled since June, when it raised its Series B round.

LanzaTech, a nine-year-old, Roselle, Il.-based biotechnology company involved in the bio-ethanol production, has raised $112.6 million in Series D funding, including from the sovereign wealth fund New Zealand Superannuation Fund. The company held a first close on the round (then $60 million) back in March led by Mitsui & Co., which had plugged $20 million into the company. Other investors in the round include Siemens Ventures, CICC Growth Capital and earlier backers Khosla Ventures, Qiming Venture Partners, K1W1, and the Malaysian Life Sciences Capital Fund. The company has now raised $186.3 million altogether, shows Crunchbase. Biofuels Digest has more here.

LockerDome, a six-year-old, St. Louis, Mo.-based interest-based social media platform, has raised $10 million in Series B funding led by Cultivation Capital, with numerous undisclosed angel investors participating.

Maxwell Health, a two-year- old, Cambridge, Ma.-based SaaS company that simplifies employee benefits for businesses, has raised $26.4 million in Series B funding led by Adams Street Partners. Other participants included Cambia Health Solutions, Schooner Capital, Brothers Brook, and Annox Capital, along with earlier backers Vaizra Investments,Tribeca Venture Partners, Catalyst Health Ventures, Serious Change, and Lerer Hippeau Ventures. To date, the company has raised roughly $35 million.

Mesosphere, a two-year-old, San Francisco-based company whose software aims to spur the adoption of big data applications like Hadoop and Spark by making them easier to manage and run, has raised $36 million in Series B funding led by new investor Khosla Ventures, with additional funding from Andreessen Horowitz, Fuel Capital, SV Angeland other unnamed investors. The company has now raised roughly $50 million altogether. Venture Capital Dispatch has more here.

Metamind, four-month-old, Palo Alto, Ca.-based deep learning startup that says it can process images and text faster than other widely used technologies, has raised $8 million in funding from Khosla Ventures and Salesforce founder Marc Benioff, VentureBeat has more here.

Spare5, a new, Seattle-based mobile-optimized, on-demand insights platform, has raised $3.25 million in seed financing from New Enterprise Associates, Foundry Group, Madrona Venture Group, and numerous angel investors. Spare5 is the first company to spin out of Madrona Venture Labs, a startup studio housed at Madrona that prototypes, builds and launches new software applications and services.

Virtu, a six-year-old, New York-based electronic trading firm, has a new minority owner, says Reuters. Reportedly, Singapore state investor Temasek Holdings acquired roughly a 10 percent stake in its business, valued at around $200 million, from the private equity firm Silver Lake Partners. Virtu is one of a number of privately held automated trading firms. Back in April, Virtu postponed an IPO after the late March publication of Michael Lewis’s “Flash Boys,” which offered a troubling look at the world of high-frequency trading.

Wedpics, a 3.5-year-old, Raleigh, N.C.-based online and mobile platform that encourages wedding participants to share photos, has raised $4.25 million in Series B funding led by Bullpen Capital, with OCA Ventures,Venture51, IDEA Fund Partners, Great Oaks Venture Capital, and numerous angel investors participating in the round. In March, Wedpics had raised $1.5 million in Series A funding. TechCrunch has more here.

WiWide, a seven-year-old, China-based startup that provides public WiFi networks to stores and restaurants, has raised $49 million in Series C funding led by the Internet provider Tencent and the Yelp-like company Dianping, reports Tech in Asia. Smart phone giant Xiaomi led WiWide’s undisclosed Series B round last year, while its Series A came from Greenwoods Investment in 2012.

XOEye Technologies, a four-year-old, Ann Arbor, Mi.-based company that’s developing industrial-grade wearable technology, has raised $1.5 million in Series A funding led by Crestlight Ventures and the angel investment group Selous Venture Society.

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New Funds

Mercury Fund, a nine-year-old, Houston-based seed and early stage fund that largely targets startups in the Midwest and Texas, has closed on $105 million for its third venture fund, it announced late last week. A recent SEC filing had shown a $125 million target. The firm closed its previous fund with $70 million in 2010.

Obvious Ventures, a new, San Francisco-based venture outfit backed byEv Williams, the star entrepreneur behind publishing platforms Blogger, Twitter, and Medium, is in the process of raising its first fund, reports Recode. In fact, it has already brought on several partners and together they’ve made 11 investments, “most of them in software with a smattering in packaged goods,” says Recode. (You can find nine of those companies here.) Focus areas include sustainability, the sharing economy and healthy living.

Richmond Global Ventures, a 15-year-old firm that was long operated as a family office and features small offices in New York, Silicon Valley, and Miami, is trying to raise between $80 million and $125 million to back early-stage companies around the world, reports the Miami Herald.

SherpaVentures, a nearly two-year-old, San Francisco-based venture firm, is already in the market for its second sizable venture firm, shows anSEC filing that indicates the firm is raising up to $250 million for a vehicle called SherpaEverest Fund. SherpaVentures was founded by Shervin Pishevar, a serial entrepreneur who later joined Menlo Ventures as a managing director, and Scott Stanford, a former managing director of Goldman Sachs. They met while making early investments in Uber and went on to close on $154 million for their first fund just six months ago. The firm specializes in “on-demand economy” services and commerce solutions that are quicker and adapted to the mobile consumer.

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People

Ralph Baer, who invented and patented the first home video game system, died on Saturday at age 92. He had more than 150 U.S. and foreign patents around everything from talking doormats and greeting cards to submarine tracking systems, reports the New York Times.

Paul Devine, a former Apple global supply manager, was sentenced to a year in prison and to repay $4.5 million after being convicted of wire fraud, conspiracy and money laundering in relation to selling Apple iPhone and component secrets to Apple’s suppliers four years ago. More here.

Venture capitalist Tim Draper won nearly all of the 30,000 bitcoin during a U.S. Marshals Service auction last summer. Not so last Thursday, during a second bitcoin auction. In fact, on Friday, Draper told Dealbook that he’d won just one block of 2,000 bitcoin, a fraction of the 50,000 that were put up for sale this time around. (Interestingly, the Marshals Service told Dealbook that only 11 registered bidders took part in its second auction, compared with 45 bidders who participated in the first auction. It also received just 27 bids, compared with 63 bids last summer.)

Twitter’s former head of product Daniel Graf left the company on Friday, one month after he was demoted, reports Recode. Graf had joined the company in April after managing Google Maps; he was recruited by former Twitter COO Ali Rowghani, who was elbowed out of the company last summer.

Late last week, investor Vinod Khosla was ordered to immediately unlock a gate across from Martins Beach in Northern California that he’d reportedly locked when he bought a sizable chunk of beachfront property. “The gate across Martins Beach Road must be unlocked and open to the same extent that it was unlocked and open” when Khosla bought his 53-acre property, according to the order by California state judge Barbara Mallach. The beach is roughly 33 miles south of San Francisco.

Ryan Sarver, venture capitalist, former Twitter platform director, and now restaurant owner? It’s true, and his place, Alta, has become “something of a social center for San Francisco’s mid-Market Street tech community,” reports Recode. More here.

Kate Mitchell of Scale Venture Partners and Ashton Newhall of Greenspring Associates have signed on to lead a new Diversity Task Force on behalf of the National Venture Capital Association, says the trade organization. The idea: to “develop a clear and measurable path to increase opportunities for women and men of diverse backgrounds to thrive in venture capital and entrepreneurship.”

Anne Wojcicki, the billionaire cofounder of the genomics company 23andMe and estranged wife of Google cofounder Sergey Brin, is unapologetically stingy, she tells The Sunday Times, which reports: “She hates it when people order drinks in restaurants because they ‘make all the margins in drink and desserts.’” Wojciki also “once made herself ill by bingeing on free carrot juice at the office canteen: ‘Because it was expensive I felt I had to maximize the amount that I consumed, so I drank 32 ounces every day for a year and turned orange.’”

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Job Listings

SK Telecom Ventures is looking for an analyst. The job is in Sunnyvale, Ca.

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Essential Reads

Wireless in Gaza: the young entrepreneurs beating the blockades.

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Detours

Some of the coolest libraries in the world.

An art project tells the stories of strangers, from behind.

Detroit by air.

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Retail Therapy

Clever USB flash drives.

Air conditioning in a can. When you’re too hot to think about what’s in the can.

To sign up for StrictlyVC, click here. To advertise, click here.

Hi, everyone, good morning! We’re doing something a little unusual today; we’re running a guest post by Greg Gretsch of Sigma West, who was among numerous people to write to StrictlyVC on Monday in response to our piece about how many tech companies break out each year (and how hard it is to verify oft-cited research that suggests that number is 15ish).

Turns out a number of you question the numbers but are reluctant to say so publicly. Not so Gretsch, who wrote us such an impassioned email about the industry’s widespread acceptance of the meme that we asked him to author a post about it. Hope you enjoy it. Either way, we hope you’ll tell him what you think and why.

Have a terrific weekend! (Also, web visitors, this version of what you see below is easier to read.)

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Top News in the A.M.

In the “global struggle for Internet freedom,” the Internet is losing, finds anew report.

It’s not just young people watching more digital video. The L.A. Times has more here.

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The “15” Meme Fallacy

StrictlyVC recently observed that 10-year-old data of investor-entrepreneur Andy Rachleff has done much to inform how venture capitalists now behave. That data found that between the mid ‘80s and mid 2000s, about 15 tech companies are founded each year that account for 97 percent of all public returns. It was popularized around 2009, when Marc Andreessen and Ben Horowitz – who were launching their venture firm at the time — began discussing it widely with reporters.

Yet the idea that only 15 tech companies each year go on to produce $100 million in revenue and therefore “matter,” has never sounded right to me. It doesn’t square with my own experience, having led Sigma’s investment in three companies that reached more than $100 million in revenue per year: EqualLogic, which sold to Dell for $1.4 billion; Responsys, which went public, then sold to Oracle for $1.6 billion; and oDesk, which recently merged with Elance and remains private. I’m working with several more companies now that I’m confident will reach that very important milestone.

So what? Well, the problem isn’t the belief that a small number of companies generate the lion’s share of venture returns in any given year. That’s been the conventional wisdom for years. The problem arises when this belief is taken the next few steps. In other words: If there are only 15 companies founded each year that matter, then in order to be a good firm you have to be an investor in those 15 companies (or many of them), then therefore (and this is where many firms go off the rails), it doesn’t matter what you pay for them.

Overlooked in this march toward the “winner’s circle” is the time required to build a company to $100 million in revenue. It took EqualLogic roughly 6 years, Responsys roughly 12 years, and oDesk a decade. Rachleff’s research (which he no longer has) covered a span of time through the mid 2000s. All of my $100 million companies were founded in those cohort years but reached the magical $100 mark in more recent years, meaning they wouldn’t have been in his 15-per-companies-per-year estimate.

To believe that such a narrow number of companies is all that matters doesn’t make intuitive sense, either. According to Morgan Stanley, there were more than 20 venture-backed tech IPOs each year between 2001 and 2014. It’s safe to assume the vast majority of those companies mattered to their investors. The same is surely true of the countless great M&A transactions we’ve seen over the same period, like WhatsApp, Nicira, Instagram, and YouTube.

Worth noting: None of the aforementioned M&A deals got to $100 million in revenue on their own.

This brings me to another point. While it’s true that venture investing follows a power-law — meaning that a small percentage of companies each year represent the overwhelming percentage of gains from that year — you can still generate fantastic returns without being in those monster hits.

Even if you take out the “15”, there will still be many 10x exits that are just making up for the companies that lost everything for that vintage year. And any venture investor would be happy to invest in a 10x company whether or not it was among those that generated the bulk of the returns in venture for its vintage.

The biggest problem in investors’ religious adherence to the 15/$100 million meme is that it causes bad behavior. When every investor is chasing that mythical yearly batch of 15 companies, valuations for those anointed companies skyrocket. That’s bad for investors who often end up investing at valuations greater than the public market is willing to give these companies (see Groupon, Zynga, et al.). It’s also bad for companies. Those for which capital is cheap and easily accessed are at greater risk of making non-economical business decisions that create business models that rely on increasing amounts of cheap capital (see Fab, Box.net, et al).

Bill Gurley put it best when he told the WSJ: “Excessive amounts of capital lead to a lower average fitness because fitness, from a business standpoint, has to be cash-flow profitability or the ability to generate cash flow. That’s the essence of equity value . . . [and] we get further and further away from that in the headiest of times.”

At some point someone will do the definitive piece of academic research on the topic. Unfortunately, given the long time required to scale most companies to $100 million in revenue, the mature cohorts will be so far out of date that they won’t be relevant to the then-current investing climate.

—–

New Fundings

Allena Pharmaceuticals, a four-year-old, Newton, Ma.-based company that’s developing therapeutics to treat metabolic and orphan diseases (one drug aims to prevent kidney stones), has raised $25 million in Series B funding led by HBM Partners, with participation from Pharmstandard International and return backers Bessemer Venture Partners, Frazier Healthcare, and Third Rock Ventures. The company has now raised $43 million altogether.

Edison DC Systems, a 1.5-year-old, Grafton, Wi.-based company that develops power supplies for data centers, has raised $1.3 million in Series A funding led by Chicago’s Energy Foundry, with participation from individual investors.

TheGrid, a three-year-old, San Francisco-based company that uses artificial intelligence to help people create and design their sites, has raised $4.6 million in Series A financing led by AME Cloud Ventures.

Lulutrip, a seven-year-old, Santa Clara, Ca.-based online travel service for Chinese-speaking customers, has raised an undisclosed amount of Series A1 funding from Lightspeed China Partners.

Novelda, a 10-year-old, Oslo, Norway startup that develops sensors for home automation and other uses, has raised $12 million in Series A funding led by Norwegian government fund Investinor AS. Other participants included Alliance Venture, Sparebank 1, SMN Invest, some company employees, and angel investors.

Prong, a 3.5-year-old, New York-based company whose accessories keep smartphones charged, including a case that incorporates a detachable back-up battery, has raised $1.6 million in Series A funding led by the Atlanta-based private equity firm Georgia Oak Partners. The company has now raised $3.1 million altogether, shows Crunchbase.

Ring, a two-year-old, Santa Monica, Ca.-based “smart doorbell” that uses video, motion detectors and mobile connectivity to let users know when someone is at their front door, has raised $4.5 million in Series A funding led by True Ventures, with participation from earlier backers First Round Capital, Queensbridge Venture Partners, Upfront Ventures, and angel investors. Ring has also secured $2.5 million in debt financing. Venture Capital Dispatch has more here.

Sirakoss, a five-year-old, Edinburgh, Scotland-based company that makes synthetic bone grafts for spine, dental, and other applications, has raised $4.8 million in Series A funding led by Epidarex Capital, with participation from Scottish Investment Bank, Armourers & Brasiers’ Co., and other undisclosed investors.

ThreatStream, a three-year-old, Redwood City, Ca.-based threat intelligence platform that identifies cyber threats, has raised $22 million in Series B funding led by General Catalyst Partners, with “significant” participation from Institutional Venture Partners and earlier investors Google Ventures and Paladin Capital Group.

Tute Genomics, a two-year-old, Provo, Ut.-based cloud-based software for genome analysis, has raised $2.3 million in Series A1 financing led by Eurovestech, with participation from Peak Ventures and numerous angel investors. The company has now raised $3.8 million altogether, shows Crunchbase.

Uber, the 5.5-year-old, San Francisco-based car service company, has raised $1.2 billion in new funding from investors that include the Qatar Investment Authority; two hedge funds, Valiant Capital Partners andLone Pine Capital; and the venture firm New Enterprise Associates, according to the WSJ. The bidding process lasted “several weeks” and drove the valuation of Uber to more than $41 million, says the report. Uber has now raised $2.7 billion altogether.

—–

IPOs

Histogenics, a 14-year-old, Waltham, Ma.-based regenerative medicine company, raised $65 million in its IPO, selling 5.9 million shares of its common stock at $11 per share in the IPO.

OnDeck Capital, the seven-year-old, New York-based online lender, has increased the amount it intends to raise in its IPO to $207 million. The company expects to offer 10 million shares at $16 to $18 a share and will give underwriters the right to purchase up to an additional 1.5 million shares.

—–

Exits

Comparison-shopping website Become Inc. has been acquired by Connexity Inc. TechCrunch has much more here.

—–

People

The ride-share service Lyft has a new chief marketing officer and chief financial officer, reports Bloomberg. Kira Wampler, who most recently worked at real-estate website Trulia, will lead Lyft’s marketing efforts in a newly created position; Brian Roberts was promoted to CFO after briefly working on business development at Lyft. (He joined the company three months ago from Walmart, where he was an SVP.)

Rovio Entertainment, the Finnish mobile game developer behind the “Angry Birds” franchise, is slashing roughly 14 percent of its workforce, completing a round of layoffs announced in October. Ars Technica hasmore here.

The Economist spends time with J.B. Straubel, who, as Tesla‘s CTO, is trying to take “batteries to a dimension.”

—–

Essential Reads

This helps explain that Sony hack: A leaked company roster that lists nearly 7,000 employees at Sony Pictures Entertainment shows just 11 people assigned to a top-heavy information security team, reports Fusion. More here.

Yahoo is poised to surpass Twitter next year to become the third-biggest company in U.S. mobile advertising, reports Bloomberg.

—–

Detours

For the first time, we’re about to see Pluto up close.

Another reason to go to bed earlier.

I’m Renovating My Kitchen So I Can Start Life Anew with No Regrets.

—–

Retail Therapy

Pop-quiz clock.

The Aston Martin DB10, for Bond, James Bond. (And nine other exceedingly lucky people.)

Hi, happy Thursday, everyone! (Web visitors, this version of what you see below is easier to read.)

—–

Top News in the A.M.

Apple deleted music that some iPod owners had downloaded from competing music services from 2007 to 2009 without telling users, attorneys for consumers told jurors in a class-action antitrust suit against Apple Wednesday.

Microsoft to Barnes & Noble: Thanks, but you can have your Nook business back now.

—–

Michael Kim of Cendana Capital Raises a New, $50 Million Fund

This morning, five-year-old Cendana Capital, which has made a name for itself by backing so-called micro funds, is taking the wraps off a new, $50 million fund of funds — roughly twice the size as its first $28.5 million pool.

No doubt that’s good news to Cendana’s existing managers – including Freestyle Capital, IA Ventures, K9 Ventures, Lerer Hippeau Ventures, and SoftTech VC. It’s also likely to be seen as a boon to the many entrepreneurs and operators who are entering the market with hopes for their own seed-stage funds.

Yesterday, StrictlyVC caught up with Cendana founder Michael Kim to talk about the new fund and his one big concern about today’s market. Our chat has been edited for length.

Congratulations on the new fund.

Thank you. We were targeting $30 million so this was way oversubscribed. We hit our hard cap.

Your first fund must be performing well.

Our net IRR was 24 percent as of June, and we expect performance to improve from there.

Who have you backed with your newest fund?

We’ve invested in five funds so far, four of which were [investments in managers we’ve previously backed], including PivotNorth Capital, SoftTech VC, Forerunner Ventures, and Lerer Hippeau Ventures. Our new investment is MHS Capital, founded by Mark Sugarman. He spent seven years investing his first, $34 million fund, and he wound up with sizable stakes in some great companies, including OPower, Indiegogo, and Thumbtack. We think we’ll eventually invest in roughly the same number of core positions as we took in our first fund, which is 10 or 11.

Will other new managers have a shot at getting a check from you?

Yes, though I do think it’s becoming harder for new entrants to compete. At this point, the incumbents really have the credibility to lead the best deals. And the ownership levels a fund can get are important, both because seed stakes get diluted and because the average venture exit is between $50 million and $100 million. If you own just a few percent of a company that exits at that range, it doesn’t really move the needle.

When you set out to raise it a year or so ago, you’d also set out to raise a $25 million fund to make direct investments. Did that come together?

We raised $17 million.

Have you been getting asked, or have you been trying, to make more direct investments in the portfolio companies of your fund managers?

We get involved in a subset of A deals, as well as subset of those companies that go on to Series B deals, where the tech risk is largely mitigated and the companies are generating tens of millions, if not hundreds of millions, of dollars.

But are your portfolio managers calling you and saying, Hey, it’d be great for you to kick in a little capital so this other guy doesn’t get the position, or are you proactively seeking out these stakes?

We proactively work with fund managers and entrepreneurs so we can react quickly if there’s an opportunity to invest. We’ve made three investments [from that $17 million fund] already, and in each case, the round was way oversubscribed but we got in because of our fund managers’ relationships with the founders and because the companies thought we could add value. We invested in Casper [an online retailer of mattresses], for example, and we helped them get on CNN a few days ago because my friend is a producer there, and they sold more than they ever have that day.

Of course, there are cases where Sequoia will come in and do a Series A and not let anyone else in. It’s very competitive, but [we can keep up].

A lot of people point to Sequoia as having the sharpest elbows. Who else tends not to want to share the Series A pie?

All the top tier firms are very focused on ownership, and rightly so if they feel like a company has high potential. From what I can tell, Accel is similar, but it’s behavior that makes sense and that seed managers need to negotiate by having a close relationship with founders and [hanging on to their] pro rata rights [if they can].

There’s concern that the market has been good for so long that a downturn, maybe soon, is inevitable.

Even if the public markets correct by 20 percent, the most vulnerable sectors are the late-stage companies and investors. Hortonworks [which is going public and expected to command a public market value below what it was assigned during its last financing round] is a perfect example.

Seed-stage funds are best-positioned for a downturn because if valuations come down, public tech companies will need to focus on growth, and they’re likely to use some of their tens of billions in cash to acquire it. And seed funds can exit companies at much more modest valuations and still get capital recovery.

Everything could also freeze, including the bank accounts of would-be acquirers.

If the seed funds can’t exit, that’s a big issue. Even though most of our funds have substantial reserves, they can’t carry a company forever. So a perfect storm would be a 20 percent market crash that causes Series A and B investors to pull back. You could end up with a lot of zombie companies. Still, even with a higher loss ratio, I think we’ll ultimately see seed funds do well. It just takes one or two winners.

—–

New Fundings

Abeona Therapeutics, a two-year-old, Cleveland, Oh.-based biotech startup focused treating Sanfilippo Syndrome, a rare, terminal, genetic disorder that kills afflicted children before they reach their mid-teens, has raised $3.6 million in funding, including from the Cure Sanfilippo Foundation, the Sanfilippo Research Foundation, Team Sanfilippo, the Abby Grace Foundation, and the National MPS Society, among others. A year ago, the company had raised $750,000 in seed financing, including from the Children’s Medical Research Foundation.

Avant Credit, a two-year-old, Chicago-based online consumer lender, has raised $225 million from investors, just months after closing on a $75 million round of funding. Two-thirds of the newest round came from Tiger Global Management and August Capital, which co-led the round. (They led the company’s $75 million round this past summer, too.) Other participants in the Series D include DFJ Growth, RRE Ventures, KKR, and investor Peter Thiel. Venture Capital Dispatch has more here.

BeON Home, a two-year-old, Cambridge, Ma.-based start-up whose smart lightbulbs are designed to turn on at the sound of a doorbell or via a smartphone app for home security purposes, has raised $1.5 million in seed funding from the Dangold Investment Corporation.

BlueDot, a young, Toronto-based startup that tracks and predicts the global spread of infectious diseases, has raised an undisclosed amount of Series A funding from Horizons Ventures. The company had earlier raised $400,000 in seed funding from MaRS Innovation, and $140,000 in commercialization grants from The Ontario Centres of Excellence.

Borrowell, a year-old, Toronto-based, soon-to-launch lending platform that will offer unsecured consumer loans, has raised $5.4 million in seed funding and commitments to its loan platform. Investors include Equitable Bank and Oakwest Corporation Limited, along with individual investors.

CANbridge Life Sciences, a two-year-old, Beijing, China-based biopharmaceutical company focused on developing Western drug candidates in China and North Asia, has raised $10 million in Series A funding from Qiming Venture Partners and TF Capital.

Connora Technologies, a three-year-old, Hayward, Ca.-based company with recyclable epoxy thermoset technology, has raised an undisclosed amount of funding from Samsung Ventures.

Fresco News, a 10-month-old, New York-based startup that crowdsources breaking news and photos from Twitter, Instagram and other social media, is “in the final negotiations” of signing an angel investor who Business Insider characterizes as an renowned entertainer with millions of social media followers (but who has never before made a tech investment). More here.

GrabTaxi, a three-year-old, Malaysia-based Uber rival, has raised $250 million from SoftBank in its fourth financing round this year. The company has now raised $330 million altogether, including from Vertex Venture Holdings, Tiger Global Management, GGV Capital, and Qunar.com, among others. TechCrunch has more here.

Inksedge, a months-old, Mountain View, Ca.-based company that makes personalized invitations and stationary and employs teams in both the U.S. and Bangalore, has raised $1.5 million from investors, led by New Enterprise Associates. Pinnacle Ventures and Milliways Ventures also joined the round, as did angel investors. The Economic Times has thestory here.

Landbay, a year-old, London-based peer-to-peer lending platform specifically designed around “buy-to-let” mortgages (for properties whose owners intend to rent them), has raised £1.5 million ($2.35 million) fromOmni Partners. Earlier this year Landbay raised £250,000 ($392,000) of seed capital via the Seedrs crowd-equity platform.

Lesson.ly, a two-year-old, Indianapolis, In.-based company that makes employee-training software, has raised $1.1 million led by Allos Ventures, with individual investors participating.

Nestio, a three-year-old, New York-based platform for residential real estate professionals to manage and communicate their information in real-time from one place, has raised $1.6 million in Series A funding led byFreestyle Capital, with participation from RiverPark Ventures and earlier backers Joanne Wilson, David Cohen, Mike Lazerow, Jerry Colonna, and Scout Ventures. The company has now raised $3.9 million to date.

NexDefense, a three-year-old, Atlanta-based company that makes cybersecurity software for industrial networks, has raised $2.4 million in seed funding led by Buckhead Investment Partners and Mosley Ventures.

Qufenqi, a Beijing-based electronics retailer that lets buyers pay in monthly installments, has reportedly raised $100 million in Series C funding led by BlueRun Ventures. Tech in Asia has more here.

Prenetics, a five-year-old, Hong Kong-based biotech firm built around next-generation prenatal DNA testing, has raised $2.65 in funding from500 Startups, SXE Ventures, Groupon’s APAC lead Joel Neoh, and Singapore’s Coent Venture Partners. TechCrunch has more here.

ShareWhere, a months-old, Miami-based startup behind an anonymous social sharping app called Kandid (users share secrets anonymously with other users who are nearby), has raised $1.4 million in seed funding from undisclosed sources. Tech Cocktail Miami has more here.

Shoes of Prey, a five-year-old, Sydney, Australia-based retail startup that lets consumers design their own shoes, has raised $5.5 million led by Khosla Ventures, with participation from Bonobos CEO and co-founder Andy Dunn, and ThirdLove co-founders David Spector (formerly a partner at Sequoia Capital) and Heidi Zak. The company has now raised $8.6 million altogether. The Australian outlet BRW has more here.

WhipClip, a new, L.A.-based startup whose mobile app allows consumers to clip popular moments from television, has raised $20 million in funding from Raine Ventures, Institutional Venture Partners, William Morris Endeavor, Ziffren Brittenham, Greycroft Partners, and individual investors, including Peter Guber, Steve Bornstein, Gordon Crawford, Thom Weisel, Scooter Braun and Ron Zuckerman. WhipClip was founded by Demand Media cofounder Richard Rosenblatt. Recode has the story.

Zonoff, a three-year-old, Malvern, Pa.-based company whose software platform helps retailers (like Staples), OEMs and integrators deliver “connected home” products to the mass market, has raised $31.8 million in Series B funding from Valhalla Partners and Grotech Ventures. The company has now raised $35.6 million altogether, shows Crunchbase.

—–

New Funds

Formation 8, the three-year-old, San Francisco-based venture capital firm, has raised $500 million for its second fund, it announced yesterday. Formation 8 connects companies in the U.S. with potentially important counterparts in Asia, aided in part by Brian Koo, a co-founder and a member of the family that runs an offshoot of the Korean electronics giant LG. Others of the firm’s cofounders include Joe Lonsdale, a founder of the data analysis firm Palantir, and Gideon Yu, a co-owner of the San Francisco 49ers. Dealbook has more here.

Xfund, a three-year-old, Boston-based outfit that was initially called the Experiment Fund and launched with less than $10 million to invest in student entrepreneurs, has just closed on a new, $100 million fund. “The experiment worked,” cofounder Patrick Chung tells the WSJ. Chung was a partner at New Enterprise Associates when he launched the firm. He is now a full-time Xfund general partner, alongside Hugo Van Vuuren. NEA, Breyer Capital and Accel Partners anchored the new fund, with a dozen other institutions and a handful of individual investors participating.

—–

Exits

IAC, the digital-media conglomerate headed by Barry Diller, is pulling the plug on nRelate, its native-advertising division that sold content-recommendation ad inventory distributed via thousands of web publishers. IAC’s Ask.com search unit acquired nRelate for undisclosed terms in July 2012. Founded in 2009, nRelate provided a marketplace for marketers to buy sponsored content on third-party websites.

—–

People

Several startups have severed ties with Yahoo CIO Mike Kail after his former employer, Netflix, accused him last week of accepting kickbacks from startups, reports the WSJ. Kail has served as an advisor to about 14 startups this year, which is a lot of startups for a full-time CIO, suggests the WSJ. Three of the them, ElasticBox, Context Relevant and Netskope, tell the Journal they ended their relationships with Kail this past week.

Apple cofounder Steve Wozniak reveals that not a lot happened in that garage where Apple legendarily got its start. “The garage is a bit of a myth,” he tells Bloomberg Businessweek. “We did no designs there, no breadboarding, no prototyping, no planning of products. We did no manufacturing there.”

Y Combinator has added three new people to its ever-ballooning roster, notes TechCrunch. Michael Seibel, the former CEO of Justin.tv and Socialcam, is shifting from part-time partner to full time. Jon Levy, previously a part-time lawyer and consultant for YC, has been promoted to partner. And Ilya Sukhar, who cofounded the mobile backend-as-a-service startup Parse — acquired by Facebook last year — is joining as a part-time partner. Altogether, YC now has 27 part-time and full-time partners.

—–

Job Listings

Rock Health, a four-year-old seed fund focused exclusively on healthcare technology, is looking for a business development person. The job is in San Francisco.

—–

Essential Reads

How the NSA hacks cell phone networks worldwide.

Time takes readers inside Mark Zuckerberg‘s plan to wire the world and put every single human being online.

—–

Detours

The 52 scariest movies ever made.

A 500,000-year-old doodle.

Details about the next James Bond movie revealed!

—–

Retail Therapy

The biggest Angelpoise lamp you ever did see (we hope).

Because sometimes you need mustache-shaped ice cubes.

Hi, everyone, hope your Wednesday is off to a stellar start. Great seeing some of you yesterday. (Psst, web visitors, read this version of today’s email if you don’t want to strain your eyes.)

—–

Top News in the A.M.

Twitter is rolling out the first of several changes to its service to combat online harassment, the company announced yesterday.

Senator Al Franken, who raised a series of privacy questions in a letter to Uber last month, decided to write Lyft a letter, too. More here.

—–

Pretty Funny: Peter Thiel

Silicon Valley’s denizens are famously brainy. But many are also perceived as taking themselves too seriously. Peter Thiel, the investor and entrepreneur, has long been relegated to the latter camp, partly because of his controversial views on the merits of dropping out of college, and partly owing to what are often characterized as his extreme libertarian views. But in many appearances that Thiel has made this fall while promoting his new book, “Zero to One,” he has shown another side of himself: talented raconteur.

Yesterday, in conversation with longtime reporter Bambi Francisco at an event co-sponsored by her media company, Thiel – who is among Francisco’s investors – seemed especially at ease, effortlessly making one funny observation after another.

Of party rounds, for example, where startups may raise $1 million from 10 investors, Thiel said he’d guess that they’ve typically underperformed relative to startups that raise capital from fewer investors. “The reality is when you have two [backers], they’ve really thought about it, versus 20 [investors, where] it turns out nobody has.” Pushed back by Francisco on the topic (Thiel has himself written $250,000 checks, she noted), Thiel added, to laughter from the crowd, “I don’t think there’s anything morally wrong with it. People have the right to invest their money. They have the right to invest their money badly.”

Thiel also offered an amusing analogy to explain why people are uncomfortable with the idea of pursuing a monopoly, though he thinks it’s stupid to do otherwise. “If you have a company that’s aiming for monopoly, there’s no one else doing it and you don’t get validation from other people. If you’re doing something that’s really competitive, there are lots of other people doing it and it ends up being validating though it may be a dumb idea.

“The autobiographical version I always tell is that I was hyper-tracked as a kid. In my eighth-grade junior high school yearbook, one of my friends wrote, ‘I know you’re going to get into Stanford in four years.’ I got into Stanford four years later. I went to Stanford Law School. I got good grades; I ended up at a top New York law firm. From the outside, it was a place that everybody wanted to get in; from the inside, it was a place that everybody wanted to get out. [Audience laughter.] Seven months and three days later [when I was leaving], somebody down the hall from me said, ‘I didn’t realize it was possible to escape from Alcatraz.’ [I said], ‘All you have to do is go out the front door and not come back.’”

Thiel has certainly had plenty of opportunities in recent months to perfect his act, which he acknowledged. Asked about the car service Uber, for example, Thiel noted that as an investor in Uber competitor Lyft, he’s “extremely biased.” He then gleefully added, “I’m on record as saying I think Uber is the most ethically challenged company in Silicon Valley, and I’m willing to repeat that every single time at one of these events.”

Thiel was even charming in recounting missteps along his current book tour, including a September appearance on CNBC, where Thiel said of Twitter: “Twitter is hard to evaluate. They have a lot of potential. It’s a horribly mismanaged company—probably a lot of pot-smoking going on there. But it’s such a solid franchise it may even work with all that.”

Thiel reiterated yesterday that he thinks Twitter could be better run, calling LinkedIn, which enjoys the same valuation, “much better managed.” But Thiel said his televised comment was largely a “pro Twitter comment. The larger context was that if you have a monopoly, you can screw up everything else.”

Media outlets are “always trying to get you to say controversial things,” said Thiel, who says he realized pretty quickly that he’d gone further than intended on CNBC when he saw a beaming executive waiting in the wings.

“As I left the studio, the CEO of CNBC was smiling, and he was like, ‘You did a great job, Peter. We’d love to have you back any time you want to be back here.’ I thought, Wow, have I said too much?”

—–

New Funds

Ad2games, a seven-year-old, Berlin-based online games marketing platform, has raised $9 million in Series A funding from the accelerator HitFox Group and venture investor 3TS Capital Partners, along with members of the Ad2games management team.

Apellis Pharmaceuticals, a nearly seven-year-old, Louisville, Ky.-based developer of immunotherapies, has raised $33 million in Series C funding led by Morningside Ventures and AJU IB Investment, with participation from earlier investor Epidarex Ventures. The company has now raised $55.5 million altogether, shows Crunchbase.

Ather, a 1.5-year-old, Chennai, India-based startup that makes electric scooters, has raised $1 million in funding led by Flipkart founders Sachin Bansal and Binny Bansal (who are unrelated). Other participants in the round include Raju Venkatraman, the CEO of healthcare company Medall. Ather had raised a previous, undisclosed amount of funding in February of this year, including from the Indian government.

AYOXXA Biosystems, a five-year-old, Cologne, Germany-based biotech company at work on a tech platform for multiplex protein analysis, has raised $14.1 million in Series B funding, including from BioMedPartners and Grazia Equity.

Blab, a 2.5-year-old, Seattle-based social intelligence startup, has raised $8.8 million of an $11.6 million Series B round from Blue Focus Communications Group and Shoreline Venture Management, with participation from Operative Capital. The company has now raised more than $15 million altogether. Geekwire has more here.

ChangeTip, a year-old, San Francisco-based bitcoin-enabled social media tipping platform, has raised $3.5 million in seed funding led by Pantera Capital, with participation from Bold Start Ventures, DCG,CryptoCurrency Partners, 500 Startups and others. The company has now raised $4.3 million altogether.

ClientSuccess, a 10-month-old, Lehi, Ut.-based maker of customer management software, has raised $1 million in new funding led by Peak Ventures, with participation from Josh James and Scott Dorsey. Earlier backers also participated, including Plus550, Techstars Bullet Time Ventures and Robb Kunz.

Cognitive Networks, a seven-year-old, San Francisco-based company whose software aims to provide viewers of smart TVs with things to do while they watch their shows, has raised $14.5 million in Series B funding from Hearst Ventures and two other, undisclosed lead investors. Earlier backers DCM and Rogers Venture Partners also joined the round.

Conventus Orthopaedics, a six-year-old, Minneapolis, Mn.-based company that provides a range of orthopaedic and sports medicine services, has raised $24 million in Series AA funding from Deerfield Management Company, Ally Bridge Group, Sightline Partners, Spray Fund, Blue Stem Capital, BioStar Ventures and Blue Sky Fund. The company has now raised $50.9 million altogether, shows Crunchbase.

Ecrebo, a 4.5-year-old, Berkshire, England-based customer engagement platform used by retailers, has raised $6.3 million in Series A funding from Octopus Investments.

Eloquii Design, a year-old, New York-based fashion brand focused on plus-sized, trend-conscious women, has raised $6 million in Series A funding led by Greycroft Partners, with participation from Daher Capital, Bassett Investment Group, Western Technology Investment, Female Founders Fund and individuals including Fabrice Grinda, Jose Marin and Ben Sun. The company, relaunched last year following a liquidation sale, has now raised $9 million in new funding. Venture Capital Dispatch has more here.

GI View, a 10-year-old, Ramat Gan, Israel-based company whose joystick-controlled colonoscopy device recently received U.S. regulatory clearance, has raised $13 million round of funding from Israel HealthCare Ventures, Ziegler Meditech Equity Partners, Kemper Insurance and individual investors. According to Crunchbase, GI View had previously raised roughly $20 million.

IndiaHomes.com, a nearly seven-year-old, New Delhi, India-based real estate property advisor, is raising $50 million from earlier investors New Enterprise Associates and Foundation Capital, reports the Economic Times. More here.

Kaminario, a six-year-old, Newton, Ma.-based enterprise flash storage company, has raised $53 million in funding from previous backers Sequoia Capital, Pitango Venture Partners, Globespan Capital Partners, Tenaya Capital, and Mitsui, along with new investors Silicon Valley Bank, Lazarus Hedge Fund, and an unnamed public company. The company has now raised roughly $128 million altogether. TechCrunch has more here.

Misfit Wearables, a three-year-old, Redwood City, Calif.-company that makes a wearable activity tracker called Shine, has raised $40 million in Series C funding from investors, including the Beijing-based smartphone giant Xiaomi, Shunwei Capital Partners and JD.com. Earlier investor GGV Capital led the round, which brings Misfit’s total funding to $63 million. Venture Capital Dispatch has more here.

Naurex, a six-year-old, Evanston, Il.-based biopharmaceutical company at work on a drug to treat major depressive disorder, has raised $80 million from Cowen Group, EcoR1 Capital, Goudy Park Capital, Portola Capital Partners and Sabby Capital, along with earlier investors. Naurex had previously raised $82 million over several rounds from a long list of investors, including Druid BioVentures, Genesys Capital, PathoCapital, Latterell Venture Partners, Adams Street Partners, and Savitr Capital. The Chicago Tribune has more here.

Optimatics, an 18-year-old, Overland Park, Ks.-based software company that makes infrastructure planning software used by water and wastewater utilities, has raised an undisclosed amount of funding from Emerald Technology Ventures.

PMV Pharmaceuticals, a Doylestown, Penn.-based company that’s developing small molecule drugs for the treatment of cancer, has raised $30 million in Series A funding led by OrbiMed, with participation from Osage University Partners and earlier backer InterWest Partners.

Return Path, a 15-year-old, New York-based email data analytics company, has raised $35 million in growth equity funding led by Vista Equity Partners. The company has now raised $97.3 million altogether, shows Crunchbase. Its earlier investors include Union Square Ventures, Bessemer Venture Partners, Foundry Group, Costanoa Venture Capital, Sapphire Ventures, and Industry Ventures.

Seres Health, a year-old, Cambridge, Ma.-based microbiome therapeutics platform, has raised $48 million in Series C funding from earlier backer Flagship Ventures, which conceived of and incubated the company within its VentureLabs program. The company has now raised $68 million altogether. Xconomy has more here.

Sonos, a 12-year-old, Santa Barbara, Ca.-based company that makes wireless multi-room music systems, has raised $130 million in new funding, according to an SEC filing flagged yesterday by TechCrunch. Sonos had previously raised roughly $325 million from investors, including e.ventures, Redpoint Ventures, KKR, Elevation Partners, and Index Ventures.

Space Ape Games, the two-year-old, London-based mobile games developer behind the popular title “Samurai Siege,” has raised $7 million in Series C funding led by Northzone, with participation from earlier investors Accel Partners, Initial Capital and Connect Ventures. The company has now raised $11 million altogether.

Stripe, the nearly five-year-old, San Francisco-based payments startup, has raised $70 million in a new funding led by Thrive Capital, with participation from earlier backers Sequoia Capital, Founders Fund, Khosla Ventures and General Catalyst Partners. The startup has now raised roughly $200 million from investors, including Andreessen Horowitz, Allen & Co., Peter Thiel, Elon Musk and Max Levchin. According to Venture Capital Dispatch, Stripe is now valued at a stunning $3.57 billion.

ThinkingPhones, an eight-year-old, Cambridge, Ma.-based company that unifies voice, video, text messaging and collaboration services for businesses, has raised $56.7 million in Series D funding, including from Technology Crossover Ventures and Bessemer Venture Partners. The money brings the company’s total funding to date to $89 million. Boston Business Journal has more here.

Veniam, a nearly three-year-old, Porto, Portugal-based developer of citywide WiFi networks of connected vehicles that act like moving hotspots, has raised $4.9 million in Series A funding led by True Ventures, with participation from Union Square Ventures, Cane Investments and individual investors.

Weaveworks, a months-old, London-based company that says it enables customers to build and migrate applications to run on any container technology, has raised $5 million in Series A funding led by Accel Partners.

Xeltis, an eight-year-old, Zurich, Switzerland-based company whose implanted medical devices enable the spontaneous growth of heart valves and vessels in the body, has raised 27 million euros ($34 million) in Series B funding led by Kurma Life Science Partners and Life Sciences Partners, with participation from earlier investors VI Partners and others.

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Exits

Clothes Horse, a 3.5-year-old, New York-based online shopping recommendation tool, has been acquired by London-based competitor Fits.me for undisclosed terms. Fashionista has more here. Clothes Horse had raised an undisclosed amount of seed funding from DreamIt Ventures.

Readyforce, a five-year-old, San Francisco-based professional network for college students and new graduates, has been acquired for undisclosed terms by LookSharp, a startup that offers job listings and operates InternMatch. Readyforce had raised more than $14.2 million in funding from investors, including Menlo Ventures, First Round Capital,U.S. Venture Partners, and PivotNorth Capital. TechCrunch has more here.

Zenverge, a 10-year-old, Cupertino, Ca.-based fabless semiconductor company that makes high definition, content-processing integrated circuits, has been acquired by Freescale Semiconductor Corp. for undisclosed terms. According to Crunchbase, Zenverge had raised roughly $100 million from investors, including Woodside Fund, Verizon Ventures, Norwest Venture Partners, CID Group, DCM, Battery Ventures, and Motorola Solutions Venture Capital.

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People

According to Amazon founder and CEO Jeff Bezos — who has never had or seemingly wanted a right-hand man — there is a succession plan in place at the company, though he’s not spilling who might eventually take over the business from him.

Jonathan Christensen, who spent six years at Skype as a general manager, then as a VP, has taken the wraps off his two-year-old company,Wire, and it looks a lot like Skype. Check it out.

Sumo Logic has a new CEO in former VMware exec Ramin Sayer, reports Venture Capital Dispatch. The company, whose software helps corporate customers analyze the growing volumes of data generated by machines, has replaced Vance Loiselle, who joined Sumo Logic from BMC Software in 2012 and is now reportedly leaving for family reasons. Sumo Logic has raised $80.5 million from investors, including Accel Partners, Greylock Partners, Sequoia Capital and Sutter Hill Ventures.

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Job Listings

LinkedIn is in the market for an associate or senior associate to join its corporate development team. The job is in Mountain View, Ca.

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Essential Reads

Amazon Web Services has an interesting new payment option for companies looking to reserve cloud-computing capacity.

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Detours

The divorce surge is over.

Your brain is built for kindness.

Fusion gets an unfiltered look at who is making what at Sony (because, hackers).

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Retail Therapy

When the alarm clock “sounds off in the morning, grab the gun, point it at the wall and pull the trigger.” Yes! Wait, what?

Selections from Burt Reynolds’s sad-as-hell auction.

Hello and happy Tuesday, good people. Looks we had a delivery issue yesterday; here’s a copy of our Monday newsletter in case yours went missing. (Web visitors, this version of today’s email is easier to read.)

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Top News in the A.M.

The FBI is warning U.S. businesses that hackers have used malicious software to launch a destructive cyberattack in the United States. Reuters has the story here.

Intel has just unveiled a new open-source communication system created for Professor Stephen Hawking — and it can be adapted for use by millions of disabled people.

The good news: Internet holiday shopping reportedly rose 8.1 percent yesterday. The bad news: Internet holiday shopping rose 17.5 percent on Cyber Monday last year, when consumers spread their online purchases over fewer days.

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SendGrid Raises $21 Million to Perfect the Business Email

SendGrid, an email delivery platform that counts Pinterest, Uber and Glassdoor among many others that use its technology to engage with their customers, has just raised $20.7 million in Series C funding led by Bain Capital Ventures. (The company has now raised $48 million altogether.)

Last week, we chatted with SendGrid’s new CEO, Sameer Dholakia, a former key Citrix cloud executive, about what the round says about the five-year-old, Boulder, Co.-based company and the email industry more broadly.

You joined SendGrid roughly six weeks ago. Why the management change?

The company had a terrific CEO, Jim Franklin, who helped grow the company from a couple of million in sales to a company that now has 180,000 customers. But he and the board thought it was the right time to make a transition.

What are you looking to do with this new funding?

One thing we’re looking to do with this Series C is to accelerate our product innovation and new product lines to kind of diversify the business. One of two themes that we’ll push along is big data. You can imagine that [given the scale of our business], there are insights we can glean and actions we can take on behalf of our customers to make them more effective communicators with their users. We want to take a more holistic approach to email marketing.

Can you elaborate?

Not a lot without giving too much away. But as a brand, any customer knows about its users. Their digital fingerprints are significant, from their use of a site, how frequently they open emails, their purchase activity. We want to use that data to create insights that were previously unavailable. At the end of the day, email is an interaction with your user, and you want to customize that interaction based on everything you know.

How many employees does SendGrid have now, and is it profitable?

We don’t share information about our finances, but we’ve grown from 150,000 to 180,000 customers over just the last six months, and we’ve sent 300 billion emails, up from 200 billion eight months ago.

We have 250 employees. We’ve probably added 100 in just the past year, and we’ll be looking to add [roughly another 100] in the next 12 months. It’s a low-touch, go-to-market model, so the size of our direct sales team is minuscule, which is great. It allows us to invest an incredible amount in engineering and technical account mangers and support. A lot of art and science goes into ensuring that our customers’ trusted email makes it to the inbox. We have a double-digit size team that focuses on nothing but catching bad guys on our system and shutting them down.

How much does your service cost?

We have a broad base of customers who might be spending a few hundred dollars a month, all the way to some of our largest customers, and they’re in the range of [spending] many tens of thousands of dollars per month.

New management, new funding. Is it fair to think that you’re eyeing an IPO in the next couple of years?

Certainly, if our growth rates continue at their current clip, we hope to look toward that in the not-too-distant future.

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New Fundings

Beep, a nearly three-year-old, San Francisco-based company that makes a connected audio device (a small copper dial that connects a users’ speakers to their music over Wi-Fi), has raised $4 million in new funding from investors, including David Dolby, Tony Hsieh, Justin Kan, Alexis Ohanian, Garry Tan, Technicolor Ventures, Y Combinator and WTI. The company has now raised $5.6 million altogether. Gigaom has morehere.

Bonusly, a two-year-old, Brooklyn, N.Y.-based online platform that helps companies reward and motivate employees by using peer-to-peer bonuses, has raised $1 million in seed financing from Bloomberg Beta and FirstMark Capital.

CompleteSet, a two-year-old, Cincinnati, Oh.-based company that aims to build an online catalog and marketplace for every collectible item ever made, has raised $650,000 in seed-round capital, including from Chrysalis Ventures cofounder Doug Cobb and the Lexington, K.Y.-based investment firm Cherub Fund. The Cincinnati Business Courier has more here.

Helpling, a months-old, Berlin, Germany-based Rocket Internet-backed cleaners-on-demand service, has raised $17 million in Series A funding from Mangrove Capital, Phenomen Ventures, Point Nine Capital and Delivery Hero chairman Lukasz Gadowski. TechCrunch has more here.

Moko, a seven-year-old, Beijing, China-based online marketplace for fashion models looking to connect with fashion agencies, has raised RMB 50 million ($8.1 million) in funding from the regional investment firm Holch Capital, according to press reports.

NowSecure, a five-year-old, Oak Park, Il.-based mobile security company, has raised $12.5 million in Series A funding led by Baird Capital, with participation from earlier investor Jump Capital and new investor Math Venture Partners.

Fatmap, a two-year-old, London-based company that makes ultra-high-resolution 3D ski maps, along with a “mapping engine” that it plans to license to other app makers and industries, has raised £300,000 ($470,000) in seed funding from numerous angel investors, including Kenton Cool, an English mountaineer. TechCrunch has more here.

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New Funds

Fenox Venture Capital, a three-year-old, San Jose, Ca.-based outfit that invests across stages, says it’s launching a $200 million fund to invest in Bangladesh’s technology, Internet and media industries. Toward that end, it has brought aboard serial entrepreneur Shameem Ahsan, an angel investor and the president of the Bangladesh Association of Software & Information Services, as a general partner. More here.

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IPOs

Hortonworks, a three-year-old, Sunnyvale, Ca.-based Hadoop startup that spun out of Yahoo and disclosed its plans to go public early last month, has now set the terms for its IPO, saying it plans to raise $78 million by offering 6 million shares at a price range of $12 to $14. Hortonworks would command a fully diluted market value of $659 million at the midpoint of that range, which is notable as the company had said it raised its $150 million Series D round at a valuation of more than $1 billion.

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Exits

Days after a merger announcement was inadvertently published (then deleted), Acompli, a 1.5-year-old, San Francisco-based company that raised at least $7.3 million from investors, has officially been acquired byMicrosoft for $200 million in cash. Acompli, whose mobile email application helps customers quickly find emails in their inboxes, was backed by Felicis Ventures, Harrison Metal, and Redpoint Ventures.

AdVine, a four-year-old, Cape Town, South Africa-based mobile ad agency, has been acquired for undisclosed terms by Opera, a Norway-based company that develops data-compressed web browsers, app storefronts, and other cloud-based services. TechCrunch has more here.

Cypress Semiconductor, based in San Jose, Ca., is acquiring the Sunnyvale, Ca.-based flash system company Spansion for about $1.6 billion in stock. The deal is set to create a semiconductor company that will be the biggest provider of certain types of chips for embedded systems, notes Bloomberg. Cypress is one of the largest makers of a flash chip called SRAM, which is used in consumer electronics; Spansion makes NOR flash systems, typically used in automobiles and industrial systems.

Freightquote, a 16-year-old, Lenexa, Ks.-based freight shipping logistics company, is being acquired by the publicly traded company C.H. Robinson for $365 million in cash. Freightquote was backed by Menlo Ventures, which first invested in the company in 1999.

Vidible, a two-year-old, San Francisco-based startup behind a multi-platform, programmatic video exchange platform for discovering and distributing video content, has been acquired by AOL for around $50 million, reports Recode. Vidible had raised $3.5 million, most of which came via a $3.4 million round earlier this year led by Greycroft Partners, with participation from IDG Ventures.

Wallaby Financial, a nearly three-year-old, Pasadena, Ca.-based company whose apps help consumers optimize their credit card usage based on their preferences, has been acquired by publicly traded Bankrate. Financial terms were not disclosed. The company had raised $1.1 million in seed funding from a long list of investors, including Mucker Capital, Quotidian Ventures, Karlin Ventures, Lion Wells Capital, and Founders Fund.

Wyth, a 1.5-year-old, Cambridge, Ma.-based startup that had built a scheduling app, has been acquired by Airbnb for undisclosed terms. Cofounder Carla Pellicano had previously served as an entrepreneur-in-residence at both CRV and Matrix Partners, which collectively provided Wyth with $1 million in seed funding. BetaBoston has the story here.

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People

Fontinalis Partners, a Detroit-based venture capital firm that’s focused on mobile technologies, has formed a Special Venture Partner program and named five advisors to it, including Mark Schulz, Luis Blaquier, Mei-Wei Cheng, Gabe Klein, and Paul Mascarenas. Shulz, a former Ford Motor Company exec, was a founding partner of Fontinalis and sits on the board of two of its portfolio companies. Blaquier is a partner at Grupo Pegasus and is the ex-head of Goldman Sachs’s investment banking activities in the Southern Cone. Cheng was the president and CEO of Siemens, China, until April of this year. Klein is COO of Bridj, a data-driven transportation company. And Mascarenas most recently served as the CTO and VP of Research and Advanced Engineering at Ford Motor Company.

Clients of Goldman Sachs‘s wealth managers received some surprise news yesterday: according to Fortune, they learned that they’ll have the chance to invest in Uber. More here.

Apple cofounder Steve Jobs still casts a long shadow, including in the courtroom, reports the New York Times. Specifically, Apple is set to go to trial in the third major antitrust lawsuit it has faced since Jobs died — a class action involving older iPods — and Jobs’s no-holds-barred emails may make Apple’s attorneys’ jobs harder if recent history is any indicator.

Divesh Makan has turned his investment advisory firm, Iconiq Capital, “into an exclusive members-only Silicon Valley billionaires club,” reports Forbes, in a short, new profile of Makan, whose famous clients include Mark Zuckerberg and Sheryl Sandberg of Facebook.

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Job Listings

General Motors is looking for a strategy and innovation manager to work with venture capital firms to seed products, among other things. The job is in Detroit.

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Data

This year could be the second year in a row that corporate financings are up. In fact, the percentage of U.S. venture financings in 2014 that have included corporate investors is 17 percent, says VentureSource. But while that may seem like a lot, it’s a far cry from 2000, the peak of corporate venturing, when companies participated in 30.2 percent of all financings. Venture Capital Dispatch has more here.

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Essential Reads

Paranoid though it may sound, security experts tells the Washington Post that no taxi company, no car service, no private entity of any kind has ever presented the kind of cyber-espionage target that Uber now does, given the troves of private travel information at its fingertips.

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Detours

Entertainer Chris Rock in a must-read conversation with Frank Rich.

Why the scientist who unravelled DNA is selling his Nobel Prize.

See the Milky Way from Earth.

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Retail Therapy

Girl Scout cookies. For sale. Online. [Does cartwheels.]

Le Grand Hat.

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