Hi, everyone, happy Monday! Hope you enjoyed last week’s various interviews with institutional investors. Thanks very much again to Semil Shah for holding down the fort while we stepped away from the computer for a week.:)

StrictlyVC is being brought to you this week by Rosebud Communications, Silicon Valley’s premier PR firm specializing in venture-backed startups. Their areas of expertise include enterprise SaaS solutions, martech, edtech, and fintech. Email them at info@rosebudpr.io.

Top News in the A.M.

Apple kicked off its Worldwide Developers Conference today in San Jose; you can check out TechCrunch’s live blog here for constant updates. Among other announcements coming out of the event: Amazon and Apple have finally come to an agreement to bring Amazon’s video app to the Apple TV streaming box. Apple also just introduced its newest mobile operating system.

Apple and Amazon are joining forces with Foxconn in its takeover bid for Toshiba’s semiconductor business. Reuters has more here.

WeWork’s Adam Neumann is Graduating from College Today — 15 Years After Enrolling

In recent years, there’s been plenty of debate about the merits of college and whether, given the escalating price of a higher education — and the time required — it’s worth it. Certainly, dropping out of college proved an auspicious decision for Bill Gates, Steve Jobs and Michael Dell. The same could be said of Mark Zuckerberg, Ev Williams and Travis Kalanick.

WeWork co-founder and CEO Adam Neumann feels rather differently about the value of a college diploma. In fact, today, 15 years after enrolling in Baruch College in New York, Neumann — whose company is currently valued by its investors at roughly $17 billion — is both delivering the commencement address at the school and graduating, having recently completed the independent study he needed to finally receive his bachelor’s degree.

We were in touch with him late yesterday to ask why he made the effort.

Did you know from the outset that you wanted to study business?

When I moved to New York City from Israel, I came here with the idea to get a great job, have tons of fun and make a lot of money. Growing up in Israel, I watched a lot of American TV and I thought it’s what the “cool” people did, and I wanted the same thing. I thought this was the American dream — a fast-paced pursuit, a joyride — and it drove my desire to pursue a career in business. After I met [my wife] Rebekah, I realized that this was wrong. She told me that if I brought passion and intention together, it would lead me in the right direction and I would become genuinely happy. And then, the money would follow.

Were you a good student? How would you describe your teenage self? 

When I started at Baruch in January 2002, I was almost 23 years old. I’d previously spent five years as an officer the Israeli Navy. I did what I thought you were supposed to do at that age — a little studying and a lot of trying to have fun.

I think I’ve heard you say that you had the idea for WeWork while a college student, but a professor dissuaded you. If so, have you been in touch with that professor in subsequent years?

In college, I entered an entrepreneurship competition and I submitted a concept like our current product WeLive that was called “concept living.” There were five rounds. The first round was a written proposal and in the second round you got to present, and I didn’t even get to present. The professor didn’t think I’d be able to raise enough money to change the way people live.

I think there’s an important lesson in that, when you’re a teacher, when you’re in a position of power, when you’re a leader, be very careful what you tell people they can’t do. Because they might just listen to you. And you may just be crushing a dream that might be very, very meaningful — not just to that person but to the world.

However, what he said to me influenced me to start WeWork first, and I would not have been able to launch WeLive without the success of WeWork.

More here.

New Fundings

AI-Drive, a two-year-old, Beijing, China-based company that develops central decision-making systems for autonomous vehicles and drones, has raised $14 million in Series A funding led by Shunwei Capital. China Money Network has more here.

Arcadia Power, a three-year-old, Washington, D.C.-based renewable energy company, has $6 million in Series A funding led by Energy Impact Partners, with participation from earlier investors BoxGroup and Wonder Ventures. More here.

BrainCheck, a three-year-old, Houston, Tex.-based mobile brain health tracking platform, has raised $1.5 million in funding, including from True Wealth Ventures. Austin Business Journal has more here (sub required).

Carmera, a 2.5-year-old, New York-based 3D mapping startup, has raised $6.4 million in new funding led by Matrix Partners, with participation from Resolute Ventures, Notation Capital, Joe Montana, Bre Pettis, Semil Shah and others. More here.

DealCloud, a seven-year-old, Charlotte, N.C.-based maker of deal management and workflow software, has raised $4.5 million in funding co-led by Cultivation Capital FinTech and Hamilton Lane. The Charlotte Observer has more here.

Evolve Vacation Rental Network, a six-year-old, Denver-based vacation rental property management platform, has raised $11 million in fresh funding led by T. Rowe Price, with participation from Annox Capital, Allen & Co. and PAR Capital Ventures. Denver Business Journal has more here.

Knightscope, a four-year-old, Mountain View, Ca.-based company that’s building autonomous robots that are designed to monitor their surrounding environment and provide a physical and commanding presence in public places where security is needed, has raised $3 million in funding from Konica Minolta. More here.

Kyrpt.co, a 1.5-year-old, Boston-based mobile authentication startup, has raised $1.2 million in seed funding led by Rough Draft Ventures, with participation from Slow Ventures, SV Angel, and Akamai Labs. TechCrunch has more here.

Lob, a four-year-old, San Francisco-based automated mail-delivery infrastructure platform, has raised $20 million in Series B funding led by YC Continuity Fund, with participation from Polaris Partners, Floodgate, First Round Capital and Initialized Capital. VentureBeat has more here.

Lorem Technologies, a year-old, New York-based website development services startup, has raised $1.1 million in seed funding led by Flybridge Capital, with participation from Founder Collective, Randy Parker and Frederick Townes. More here.

Neigou.com, a four-year-old, Beijing-based platform that provides benefits from e-commerce sites to a company’s employees, has raised roughly $14 million in Series B funding led by China’s National Small and Medium-sized Enterprises Development Fund. Other investors in the round include Cheung Kong Graduate School of Business’ Chuang Fund and Focus Media Information Technology. China Money Network has more here.

Owl’s Brew, a four-year-old, New York-based tea cocktail mixer maker, has raised an undisclosed amount of Series A funding, including from Cambridge Companies SPG and ZX Ventures, which is new incubator and venture team backed by Anheuser-Busch InBev. More here.

Shansong Express, a three-year-old, Beijing-based inner-city logistics startup, has raised $50 million in additional Series C funding. Shunwei Capital and Beijing Hualian Group co-led the round, with participation from Hearst Communications and earlier backer Prometheus Capital. The new round brings Shansong’s total fundraising this year to $100 million. In February, the company closed on $50 million in Series C funding led by SIG Asia Investment and YI Capital. China Money Network has more here.

UNTUCKit, a six-year-old, Hoboken, N.J.-based men’s apparel brand, has raised $30 million in new funding from Kleiner Perkins Caufield & Byers. We find this company’s product — its shirts are specifically tailored to be worn outside of your pants, sort of an hilarious concept, though apparently, it’s clicking with shoppers. According to Reuters, the company is now valued at $200 million. More here.

YEAY, a two-year-old, Berlin-based video e-commerce experience for millennials that allows them to buy and sell their stuff using Snapchat-style video stories, has raised $4.9 million in seed funding co-led by the German venture firm Grazia Equity and the Swiss firm Mountain Partners, with participation from a raft of individual investors. TechCrunch has more here.

Yogome, a five-year-old, San Francisco-based e-learning company that makes a tablet and mobile games, has raised $6.6 million in Series A funding led by Seaya Ventures, with participation from Variv Capital and Endeavor Catalyst. More here.

Yuanfudao, a five-year-old, Beijing, China-based online tutoring firm, has raised $120 million in fresh funding led by a Warburg Pincus affiliate, with participation from earlier backer Tencent. The round is reportedly the largest in China’s online tutoring industry, though VIPKID came awfully close last summer. More here.

Zopa, a 12-year-old, London-based lending company that’s launching a bank, has raised £32 million ($41.3 million) in new funding, including from Wadhawan Global Capital and Northzone Ventures. CNBC has more here.

New Funds

Draper Esprit, an 11-year-old, London-based private equity and venture capital firm, says it has raised roughly $206 million in fresh funding to invest across Europe, and particularly Western Europe. Business Insider has more here.

Thursday!

Judging by your mystified emails, some of you missed our earlier mentions that SVC founder Connie Loizos is out the rest of this week. We promise we’ll have funding announcements and all the other sections that she cares about when she’s back on Monday. (We’re pretty certain she’ll be back, though after snorkeling for the first time yesterday off the coast of Maui, she’s now threatening to never return.)

In the meantime, StrictlyVC advisor and frequent guest editor Semil Shah is generously helping us with a rare series of short interviews with sophisticated institutional investors, meaning the people who write the checks to venture firms (so they can invest in your startups). Today’s interview is with an investor at the giant asset management firm Invesco, which remains very bullish on VC as an asset class, particularly smaller, earlier-stage funds. Read on to learn more.

Sponsored By . . .

Today’s StrictlyVC is brought to you by CSFI, (aka the Center for Financial Services Innovation), hosts of the 2017 EMERGE Financial Health Forum in Austin, Texas,  June 14 through June 16. This year, they’ll be announcing the next class of the Financial Solutions Lab on stage, looking at business strategies that work, and talking about the future of financial health. Plus innovation, innovation, innovation. StrictlyVC readers save $150 off registration rates, so get thee to Austin!

LP Conversation No. 4: Amit Tiwari of Invesco

By Semil Shah

Amit Tiwari is a San Francisco-based partner at Invesco Private Capital (IPC), one of the industry’s oldest and most active private equity fund of funds. Tiwari helped establish IPC’s West Coast presence, and he currently co-leads the management of IPC’s Emerging Manager mandate with CalSTRS. He also manages all of IPC’s sourcing and evaluation of emerging private equity opportunities in Latin America. He recently answered some of our questions concerning the current state of the venture investing ecosystem.

Some investors think the Bay Area is now home to too many venture firms. Agree or disagree? 

I was at a private equity conference recently where an LP said: “I need another $10 million – $25 million seed fund like I need another hole in my head.” While she was referring to the global seed space, from what we’ve seen this issue is more acute in the Valley than in other geographies.

It’s been great to see vibrant activity across fundraising and new company formation. The economics of starting a company have undergone a sea change and startups are popping up at unprecedented levels. This is good. But there’s definitely been a glut of small, sub-$25 million seed funds that have really muddied the water. Not only is there an increasing number of funds; there’s also very little differentiation between these groups. Fatigue is growing within the LP community from seeing one fund after another that looks the same. VCs need to have an edge; something rare — a different approach, perhaps, that sets them apart.

As an aside, there also appears to be a concentration of capital as the vast majority of LP commitments today are being parked at big funds around the Valley. Many of these funds will need to deploy that capital in big chunks at a time — and to do so, many will likely gravitate toward big rounds; possibly at the mid- to late stages, which we are less excited about from a returns standpoint. We don’t have conviction that you can underwrite consistently to 10x+ returns at those stages like you can in earlier stages. And when half to two-thirds of capital is concentrated around a segment of the market where returns are comparatively modest, we think it will dampen returns for venture as a whole. We’d prefer to see a broader distribution of capital.

More institutional investors are directly co-investing beside the venture funds in which they invest. Meanwhile, more venture funds are investing in other venture funds. What’s going on and do you approve?<

LP direct investments have been around for a while within private equity — think buyouts — so this strategy isn’t new for institutional investors. They’ve increasingly come into favor within venture over the last decade, gaining steam after the recent financial crisis as a way for LPs to shorten the long tail and juice returns.

Demand for these direct investments ebbs and flows based on market sentiment, but I think they are here to stay. When done prudently, direct investments can be a good thing. On one hand, commitments into good VCs can be difficult to scale, so direct deals allow LPs to add to their “exposure” when they’re co-investing together. It also garners a deeper partnership between the LP and VC. It may help LPs diligence funds as well because they get to see how a given GP or VC navigates a deal up close.

As for VCs formally investing in other funds, this is a relatively new phenomenon and I don’t know if we have enough data points to say whether this will become a long-lasting trend. It certainly changes the dynamics of how institutional LPs underwrite. Most LPs go into venture funds assuming a 10-year commitment, with the potential for one- or two-year extensions. When their VC funds are investing in other VC funds, LPs have to start thinking in 13, 14, 15+ year investment horizons, as each underlying fund investment will take on it’s own life. Those are portfolio construction issues that LPs would prefer to manage on their own.

Investing in funds is also a different skill than investing in companies, and from that standpoint, VCs need to make sure that they have the right people with the know-how and the networks within the fund manager community. The Foundry Group Next has taken a good approach in this regard by bringing in a seasoned LP dedicated to the effort. [Editor’s note: Foundry brought aboard Lindel Eakman, who’d previously spent 13 years with the University of Texas Investment Management Company, which was Foundry Group’s largest investor.] Otherwise it can become cumbersome for the VC to have to manage both company boards and LP advisory boards. They’re different beasts.

Are there new tools and methods for LPs to diligence their fund investments? If so, how does your team use them?

The methodology is largely the same but there are more tools now. The private equity industry is notoriously opaque and publicly available information — especially when it comes to performance and valuations — had been difficult to get in the past. There’s more data available to LPs now than ever before. The likes of Crunchbase, Mattermark, Pitchbook, and CB Insights coming onto the scene over the last few years has changed the game. For example, it used to be that we could compare and contrast where an investment is marked within a VC’s portfolio against other syndicate members where we have access as LPs.

Today, we can go deeper to evaluate a given investment at a different level; because of newer data tools, we can better understand the competitive landscape, market sizing, and do our own intelligence gathering rather than having to rely on the VCs’ assessments of a company’s valuation and prospects.

Will crowdfunding replace early-stage investing?

Crowdfunding has a place, but I do not see it displacing early stage venture investing. If you’re market-testing your idea and need validation or working capital for small initial run of manufacturing/development, then crowdfunding is a worthwhile alternative. It can be a one-turn game, so if you’re comfortable with a single injection of capital it may be viable. But if you’re thinking about scaling your business, downstream financing, team building, and a multi-path product roadmap, crowdfunding alone won’t cut it.

How closely do you track VCs on social media, if at all?

We see social media activity as just another data point, but it’s not something that would make or break a decision today. If a VC is active on social media, we’re most curious about the content itself and how much engagement she/he is getting. Thought leaders like Fred Wilson and Brad Feld have built a massive following over the years because of how they’ve been able to engage people in the industry through their writing, and this has had ancillary brand benefits to their respective venture firms, often translating into deal flow and reputation.

That said, venture is increasingly becoming a services business, which is why you see more and more VCs increasing their effort in content marketing as a way to differentiate themselves within the ecosystem. Going forward, I do think that social media will play a more important role for VCs; it may become a much more relevant data point for LPs in their evaluation.

(Editor’s note: Invesco is not an investor in Shah’s seed-stage fund, Haystack.)

Wednesday! Connie is out this week; we’re seeing a lot of you are still out on vacation this week, too. Hope you’re enjoying the down time.:)

In the meantime, StrictlyVC advisor and frequent guest editor Semil Shah is generously helping us with a series of short interviews with a variety of institutional investors, including, today, from Accolade Partners, a 17-year-old, Washington, D.C.-based fund of funds that invests in both venture firms and private equity outfits.

We won’t be running the other sections of the newsletter through Friday, but we’ll be back in full form this coming Monday.

Covfefe!

Sponsored By . . .

Today’s StrictlyVC is brought to you by our friends at the non-profit Center for Financial Services Innovation, which invites all you smart innovators to join them in Austin, Texas, June 14-16 for their annual EMERGE Financial Health Forum. StrictlyVC readers save $150 off registration, and there’s no better place to see the future of fintech innovation! Register today.

LP Conversation No. 3: Atul Rustgi of Accolade Partners

By Semil Shah

Atul Rustgi has spent the last decade as a partner with Accolade Partners, a venture capital and growth equity fund of funds that’s based in Washington, D.C. Rustgi, who previously worked at McKinsey & Co. and the venture philanthropy Robin Hood Foundation, recently shared some quick thoughts with us about what’s he’s seeing in the world of VC.

Do you feel that there are too many venture firms right in Silicon Valley? Not enough?

In terms of number of firms, it definitely feels more saturated than a few years ago. A few years ago, we’d see a new micro VC every couple weeks. Now we’re seeing two to three new micro VCs every week. They’re coming from many different directions — spinouts from established firms, operators, angel investors. We’re seeing more and more specialized funds, too.

While we believe the opportunity set for innovation is potentially greater than the past decade and that some great companies will be started disrupting large industries, the amount of activity and noise is at an all-time high. It’s exhausting to keep up with all the new fund formation. We don’t see the rate of new fund formation abating, either, as more institutional investors allocate to venture [as an asset class] both domestically and internationally because of where interest rates are today and return expectations in other asset classes. It’ll be interesting to see what happens when interest rates rise, if they rise materially.

San Francisco feels particularly saturated, with more balance in other cities such as New York, Los Angeles, and Chicago, but in those cities too, we’re seeing increased fund formation. Given the amount of dollars — and therefore efficiency — in San Francisco, you wonder if the incremental dollar has a better return potential in non San Francisco cities. You definitely see it with lower valuations in those cities. But you also need to consider the quality of companies and opportunities in those cities. Ther’s a lot of beta in the market. It’s harder and harder to find the alpha.

We’re seeing more fund of funds like yours wanting to invest directly in companies. At the same time, more VCs are investing in other venture funds. Think the fund of the future be a kind of hybrid fund? 

We see more and more entities — funds of funds, endowments, foundations — wanting to invest directly in companies for various reasons, such as minimizing fees and the J-curve, and shortening the timeline to liquidity, to name a few. We also see larger VC firms investing in smaller funds for the purpose of scout programs, where they can get a first look at promising companies that move from Seed to Series A.

While these trends aren’t new to the industry, they do seem to be accelerating. As an investor in larger VC funds, we would ideally like to see these firms access this deal flow through their relationships or the use of data, without financially investing in these underlying funds. By investing in smaller funds, it augments the number of portfolio companies in the main fund, potentially dilutes the main fund’s return, and extends the main fund’s liquidity profile. It also becomes an alternative source of capital for these new funds, therefore contributing to the number of new fund formations.

We understand why firms do it, but wish they invested in companies solely and not funds.

Are you using any new tools of tricks to aid in helping you research and track your fund investments? 

We do believe we have some tools and methodologies that are unique to us but we’ll chalk them up as trade secrets. We’re always trying to find new ways to evaluate managers. Beyond specific tools and methods, let’s not forget investing in funds is a partnership. This is a long cycled asset class where it takes 7 to 10 years for a portfolio company to mature, and funds last longer than that. At the end of the day, the relationship with the general partners matters a lot. It takes time to establish that level of trust prior to investing. Data and analysis helps in making an investment, but we’re ultimately betting on people.

Think crowdfunding will ever replace early-stage investing?

This debate started a few years ago when AngelList and sites like Kickstarter started. Despite the increasing prominence of these platforms, new fund formation is at an all-time high, so maybe they can and will co-exist. We believe there is a role for both. As an institutional allocator of capital, we still need somebody to “man the ship” and think about portfolio construction. If you’re a direct investor, the crowdfunding sites are great platforms. But if direct investing is not your primary expertise, then you need a steward of your capital, like a general partner.

Do you track VCs on social media?

We monitor the social media activity of all of our managers through Twitter, Medium, blogs, etc. Most post about topics like family, politics and sports, but also market news and industry dynamics. It helps us get to know them holistically, understand what they’re thinking, and engage with them.

To date we haven’t seen anything that would preclude us from investing in a fund, but we’re definitely on the lookout. Furthermore, a number of our managers maintain highly followed blogs, and they’ve proven to have positive benefits — increased deal flow and a strengthened brand among them.

(Editor’s note: Accolade Partners is not an investor in Shah’s seed-stage fund, Haystack.)

Happy Tuesday! Hope you had a terrific Memorial Day weekend.

For new readers or those who might have missed our mention last week, Connie is taking this week off to play some volleyball at the beach. StrictlyVC advisor and frequent guest editor Semil Shah is filling in and running a series of short interviews with a variety of institutional investors, including, today, from the University of Texas Management Company, which oversees a roughly $40 billion endowment, making it third largest U.S. university endowment behind Harvard and Yale.

We will *not* be running the other sections of the newsletter, but we’ll be back in full form this coming Monday.

Sponsored By . . .

StrictlyVC is being brought to you today by Parachute: Parachute’s cozy bathrobe is so soft that working from home will become mandatory.

LP Conversation No. 2: Susan Chen of UTIMCO

By Semil Shah

Susan Chen is a Managing Director at University of Texas Investment Management Company, otherwise known as UTIMCO. We recently asked her some of her thoughts about the current state of venture capital investing.

A question about the Bay Area ecosystem: Does it feel saturated to you? If so, why? If not, why?

I wouldn’t say it feels saturated; I would say it feels full. It feels full in the sense that there is a lot of capital pursuing investments at every stage. Saturation to me suggests a complete breakdown of capital discipline, or a situation where there is so much capital chasing deals that it is hard to see *any* way that a dollar in the system can earn an appropriate return. I don’t think we’re quite there yet.

I should note that UTIMCO pays attention to metrics such as number of active funds, total capital raised, average valuation and size of a given stage round, etc. to monitor the supply/demand dynamic in venture — just as we do in other asset classes; we ultimately seek to partner with the folks whom we think are the best VCs in the world. The average data in venture around capital raised, round size, and so forth, is useful, but doesn’t tell the whole story, just as headline valuation metrics in public markets are useful but don’t tell the whole story.

We are seeing more fund of funds wanting to invest directly in companies, and we see some VC firms now investing in funds. Will the fund of the future be a “hybrid” fund? 

VCs seek to invest just before revolution — in other words, where companies are disrupting an industry or providing a 10x or better solution to an important problem. So it seems very natural that VCs would also look inward and seek to change and evolve their models over time in a way that reflects market developments and where they believe the best opportunities to be.

I don’t think the fund of the future is necessarily a hybrid fund. There are some firms where that model makes a lot of sense. For example, we invested recently in a fund that invests both directly in companies and in other funds, and that model makes sense because the partners at that firm had long historical personal track records of investing in and advising funds, as well as investing in companies. If a fund-of-funds invests exclusively in small, early stage funds, it may make sense for that FoF to add a direct component because those smaller funds may have follow-on rights that they can’t fully deploy capital into.

But there are other firms — and I think it’s actually the majority of firms — where that model makes much less sense. Perhaps a VC firm’s partners have always invested only in their own funds and don’t have experience or interest in investing in and advising other VC funds. Or perhaps a FoF invests primarily in later-stage funds or larger multi-stage funds. In those cases, a hybrid structure isn’t really synergistic with the firm’s core activities.

Are there new tools and methods for LPs to diligence their fund investments? If so, how does your team use them?

In the last few years, various databases — such as Pitchbook, CB Insights, and Mattermark — have emerged that provide quite a bit of information about which VCs have invested in a company, at which round, who the lead partner was, board memberships, etc.

We use these resources to gather some information, but our ultimate firm and fund evaluation is still very customized. We focus on understanding a VC’s sourcing network, deal evaluation process, portfolio construction approach, perception and reputation with entrepreneurs, and the partnership dynamic within the GP. Good old phone calls and face-to-face meetings remain the best way to accomplish this.<

Will crowdfunding replace early-stage investing? If yes, when will things tip over? If not, why not?

For the types of companies and management teams that VCs look to invest in, crowdfunding can be an interesting, complementary source of funds,  but it’s unlikely to completely replace early-stage institutional funding. Companies and founders with big visions will continue to prefer a more concentrated and active set of investors that can help them build their businesses and that can add real value on product and strategy.

ESPN recently reported that NFL teams monitor and analyze the social media activity of players who enter the draft as part of the evaluation process. Do LPs do something similar when tracking VCs?

As an LP, we follow VCs and their portfolio companies on social media, and I know many fellow LPs do the same. I view social media primarily as a method to stay informed and as another channel we can use to engage in regular dialogue with our partners.

We don’t base investment decisions on a VC’s social media popularity. Social media presence can be indicative of a VC’s surface brand awareness among entrepreneurs, but it doesn’t capture investment judgment, portfolio construction approach, how that VC will behave when a company is struggling, or many other important things. Some of our partners are extremely active on social media, and others are much less active.

(Editor’s note: UTIMCO is not an investor in Shah’s seed-stage fund, Haystack.)

Friday! For new readers or those who might have missed our mention earlier this week, a quick note: we’re taking a little time off next week and handing the keys over to our friend, seed-stage investor Semil Shah, who’s running a series of short interviews with a variety of institutional investors, including from the University of Texas and Invesco. (These are the women and men who provide VCs with the money they sprinkle across startups. They don’t like being outed publicly, because it means being asked by VCs and aspiring VCs for even more money, so we appreciate their willingness to participate in these Q&As.)

You can check out his first interview below.

We will *not* be running the other sections of the newsletter, but we’ll be back in full form a week from Monday.

Speaking of this coming Monday, U.S readers will know it’s Memorial Day stateside, so we’ll resume publishing on Tuesday. Hope you have a *wonderful* long weekend, and remember next week to direct your positive feedback/ire/corny jokes to @semil.:)

GO CAVS.

Top News in the A.M.

On-demand meal delivery service Sprig is preparing to shut down, reports The Information. Sprig had raised $56 million from investors, including Accel Partners, Social Capital and Greylock Partners. TechCrunch has the note that customers will be receiving here.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: TGIF, amirite? As we head into the Memorial Day weekend, the team at Dash want to wish you safe travels. And if you’re going to hit the road, why don’t you check out Dash’s suite of connected car products for iPhone and Android. Our platform is designed to make driving smarter, safer, greener and more affordable for everyday users. Take us for a spin and put a little KITT in your car!

LP Conversation No. 1: Sarah Anderson of Cintrifuse

By Semil Shah

Sarah Anderson is a director at Cincinatti, Ohio-based nonprofit Cintrifuse, an organization created by Cincinnati’s business community that also manages a fund that invests in early-stage venture capital funds outside of Cincinnati. (The idea is to generate investment and interest in the region, while increasing the amount of capital available to Cincinnati startups.) We recently interviewed Anderson about what she’s seeing on the front lines; that exchange follows.

Is there any part of the tech startup ecosystem that feels saturated to you?

Seed stage feels very saturated. We’re seeing larger seed rounds with much higher valuations, which, I believe, is led by too much money on the supply side.

LPs are flooding the market with VC dollars, and emerging managers are finding themselves able to raise on a dream and a vision without much track record. Right now, emerging managers with great credentials are typically able to raise $50 million to $100 million funds right now [and those funds] are becoming quickly oversubscribed in many cases.

Series A and beyond feels more right-sized. [I should note that] we don’t deal alot with growth-stage VCs.

More fund of funds want to invest directly in companies; meanwhile, more VC firms are also investing in [others’] funds. What do you make of this trend?

We’re seeing the same thing. We are not yet [a part of it], but we do sense the pressure from our LPs to start doing more directs in order to boost cash flow and returns without the added fees.

The funds I know of that are investing in other funds are doing so more for deal flow, but they’re merging their fee structures so their LPs don’t suffer from the excess fees. This seems to be an optimal way to do business for some larger funds, but likely won’t work for all funds.

Are there new tools and methods for LPs to diligence their fund investments? If so, how does your team use them?

We continue to refine our existing templates and optimize for qualities that seem to matter most. I would love to know more about existing tools for diligence. In the end, it is an art, not a science, but there are likely better ways to inform the art that I’m not aware of.

Do you think we’ll reach a point where crowdfunding could replace early-stage investing? 

Only if you believe a check is a check —  a commodity. VCs should bring alot more to the table than just a check if they are doing their job correctly, and that includes mentoring and guidance at the early stages for the entrepreneur, opening doors to customers, sharing expertise in product development and scaling, and a host of other necessary pieces of wisdom and intelligence that are needed to build a successful company. VC investors should be partners in building a company from the ground up. The color of money from crowdfunding is completely different in this regard.

ESPN recently reported on how NFL teams monitor and analyze the social media activity of players who enter the draft as part of their evaluation process. Do LPs do something similar when tracking VCs?

Oh yes, but probably for different reasons. First, VCs should have some strong insight into the industries in which they’re investing. Looking at who they follow and what they post can provide a good perspective on how deeply they’re engrained in a particular sector. Second, having a brand as a VC firm is critical to deal flow and competing on terms for investments. Many times, entrepreneurs are driven to particular partners based on insights shared through a blog post or a twitter feed. It’s an important way to reach those founders you want to reach.

(Editor’s note: Cintrifuse is not an investor in Shah’s seed-stage fund, Haystack.)

New Fundings

Change.org, a 10-year-old, for-profit petition and fundraising website focused on social and political change, has raised $30 million in new funding led by LinkedIn cofounder Reid Hoffman. Other investors include Y Combinator’s Sam Altman and Microsoft cofounder Bill Gates. Fortune has more here.

Demandbase, a 10-year-old, San Francisco-based software platform for marketers, has raised $65 million in new funding led by earlier backer Sageview Capital, with participation from Silver Lake Waterman. Earlier backers also joined the round, including Adobe Systems, Altos Ventures, Greenspring Associates, Scale Venture Partners, Sigma Partners and Split Rock Partners. The company has now raised $158 million altogether. VentureBeat has more here.

Ele.me, a nine-year-old, Shanghai-based giant in the crowded Chinese food-delivery service arena, is reportedly raising at least $1 billion in new funding led by Alibaba Group Holding and Ant Financial, in a round that will value the company at between $5.5 billion and $6 billion. Bloomberg has more here.

Harpoon Therapeutics, a 1.5-year-old, Brisbane, Ca.-based biotech company that’s developing T-cell-recruiting therapies for the treatment of cancer, has raised $45 million in Series B funding led by Arix Bioscience and New Leaf Venture Partners, with participation from Taiho Ventures and earlier investor MPM Capital. FierceBiotech has more here.

Readly, a five-year-old, Stockholm, Sweden-based company whose app provides users unlimited access to thousands of national and international magazines for a fixed monthly subscription, has raised €13 million ($14.5 million) in Series B funding. Investors include Zouk Capital, Hermes GPE, and Aggregate Media Fund. More here.

Rentalutions, a five-year-old, Chicago-based online platform that streamlines the rental process for do-it-yourself landlords and their tenants, has raised $2 million in funding led by Cultivation Capital, with participation from M25 Group and Sandalphon Capital. More here.

Riley, a year-old, San Francisco-based company that provides lead qualification as a service (real estate brokers buy leads and Riley quickly qualifies them and passes them back to the realtor), has raised $3.1 million in seed funding. Investors include Y Combinator, FundersClub, Social Capital, Fuel Capital, Kleiner Perkins Caufield & Byers, Liquid 2 Ventures, Rough Draft Ventures and numerous angel investors, including Michael Seibel and Paul Buchheit. TechCrunch has more here.

Sana Health, a two-year-old, U.K.-based company whose smart sleep mask aims to helps insomniacs and chronic nerve pain patients fall asleep with a press of a button, has raised $1.3 million in seed funding from Founders Fund, Maveron and SOSV, among others. TechCrunch has more here.

Soft Space, a five-year-old, Malaysia-based payment startup that works typically with banks to create customized offerings for their mobile payments process, has raised $5 million in Series A funding. The round comes solely from the Japanese firm Transcosmos. TechCrunch has more here.

Spin, a seven-month-old, San Francisco, Ca.-based stationless bikeshare system, has raised $8 million in Series A funding led by Grishin Robotics, with participation from Exponent, CRCM, Quora co-founder Charlie Cheever and early Y Combinator alum Matt Brezina. TechCrunch has more here.

Spruce, a New York City-based digital title insurance and closing company, has raised $4.5 million in Series A funding. Bessemer Venture Partners led the round, with participation from Omidyar Network, Third Prime Capital, and earlier backers Collaborative Fund and Notation Capital.

UltraSoC, an 11-year-old Cambridge, U.K.-based semiconductor company, has raised $6.4million in funding led by Atlante Tech, with participation from new investors Enso Ventures, Oxford Capital, and CEO Guillaume d’Eyssautier. Earlier backers Octopus Ventures and South East Seed Fund also joined the round. More here.

New Funds

Engage Ventures, a new, Atlanta-based accelerator fund for early-stage deals, has closed on $15 million in capital commitments for its debut effort. Its investors include a wide range of Fortune 1000 companies, including AT&T, Chick-fil-A, Cox Enterprises, Delta Air Lines, Georgia-Pacific, Georgia Power Foundation, Intercontinental Exchange, Invesco, The Home Depot, and UPS. More here.

People

Another one of the co-founders of online lending startup SoFi is leaving the company, TechCrunch has learned. Dan Macklin, who served as VP of Community and Member Success at SoFi, has announced internally that he’ll be stepping down from his position on June 6. More here.

Tesla is bringing in a new leader for its human resources unit amidst a flurry of complaints about workplace culture at its California factory. More here.

Ahead of Facebook CEO Mark Zuckerberg’s commencement speech at Harvard yesterday, the school’s much-lauded student newspaper had some… interesting headlines to share.  Here’s Zuckerberg’s full 30-minute address, and here’s a richly detailed (and not overly long) piece about his travels around the country this year.

Jobs

The venture-backed delivery startup DoorDash is looking for a biz dev manager; the job in San Francisco.

ff Venture Capital is hiring a senior financial venture capital analyst. The job is in New York.

Data

Wearables suck at tracking the calories that users burn, shows a new study.

Essential Reads

Even the world’s largest bitcoin exchange couldn’t handle this week’s cryptocurrency boom.

A battery-powered 3D printed rocket was successfully blasted into space yesterday.

Detours

The highest-paid CEOs in 2016.

The art and science of comedic timing.

Beverly Hills’s most expensive home is on the market, replete with Rolls-Royce and champagne vault.

Retail Therapy

Volvo’s sleek new wagon is being called a throwback, but it looks an awful lot like a Mercedes to us. (Hey, we’d take either one.)

Thursday!

Top News in the A.M.

Facebook has signed deals with Vox Media, BuzzFeed, ATTN, Group Nine Media and others to make shows for its upcoming video service, which will reportedly feature long and short-form content with ad breaks. Reuters has the story here.

Flipkart, the Bangalore, India-based e-commerce company, has moved closer to sealing its merger with rival firm Snapdeal. According to media reports, it has signed a term sheet and will conduct financial due diligence in the coming days. More here.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: Women are better drivers. So are Android users. Ditto for drivers in California. These are some of the insights from Dash‘s award-winning connected car platform. So, whether working with insurers who want to develop better risk algorithms, or OEMs who are improving their models for predictive maintenance, Dash’s fleet, data and enterprise solutions are a trusted provider for automotive data driven insights. To learn more, check our Dash’s recent coverage or contact us directly.

Despite recent controversy, Tanium Announces $100M Secondary Sale

Tanium hasn’t had the best year, but a new stock sale is telegraphing that while the company may be down, it’s far from out. This morning, the 10-year-old, Emeryville, Calif.-based company, whose technology enables organizations to continuously scan all endpoints in a network to detect vulnerabilities and unmanaged devices, is announcing it has raised $100 million led by the private equity firm TPG.

The deal assigns the company a post-money valuation of  $3.75 billion, meaning Tanium is essentially priced the same as when it last raised roughly $150 million from investors in 2015 at a post-money valuation of $3.65 billion.

Tanium’s CEO, Orion Hindawi, says the company has $300 million in cash and investor capital in the bank and that it didn’t need to raise money.

The company nevertheless “realized there was an opportunity to do a secondary [sale]” that could provide early employees and shareholders with some liquidity, while also getting heavy-hitting TPG involved in its future success, he says. “I want institutional investors on our cap table who can help [do an eventual public offering] right,” Hindawi explains.

Hindawi says that none of the outfit’s previous institutional investors — including its biggest outside shareholder, Andreessen Horowitz — are selling any of their shares and that the secondary sale instead involves “friends and family” shareholders.

He also claims that Tanium has already conducted secondary sales “multiple times” in the past to “lessen the pressure” on both employees as well as Tanium, which aims to go public on its own timeline.

Certainly, Tanium isn’t the first Silicon Valley outfit to allow early investors and employees to wring real money out of their paper holdings while making its way toward an initial public offering. Facebook, Twitter, Groupon, Pinterest, Zynga and Automattic are among many companies that have enabled employees and early investors to cash out of some of their privately held shares.

Companies typically negotiate secondaries from a position of strength, because their shares are desirable to outside investors. Indeed, Hindawi claims that Tanium’s revenue has been growing 100 percent year over year, and that it’s seeing 150 percent “net renewals. When [customers] pay us $1 one year, they pay us $1.50 the next, not because we charge more for the same thing, but because we keep adding value” by introducing new features on a monthly basis.

Still, with Tanium’s previous secondary sales conducted so quietly, it’s easy to wonder why the company is today choosing to broadcast its newest stock sale.

More here.

New Fundings

99, a four-year-old, São Paulo, Brazil- based rival to Uber, has raised $100 million from SoftBank. The New York Times has more here.

Billtrust, a 16-year-old, Trenton, N.J.-based maker of cloud-based payment cycle management software, has raised $50 million in new funding led by Riverwood Capital Management. Payment Week has more here.

Casper, the three-year-old, New York-based mattress startup, has officially raised $75 million from Target, which reportedly explored buying Casper for $1 billion previously. Earlier investors Lerer Hippeau Ventures, IVP and NEA are also participating in the round, which could hold a final close with $100 million, says Recode. More here.

FS Card, a three-year-old, Washington, D.C.-based fintech startup whose credit card aims to become a welcome alternative to local payday lenders and to improve users’ FICO scores, has raised $8 million from Tricadia Capital.  More here.

Inflowz, a months-old, Tel Aviv, Israel-based AI process optimization company, has raised $3.5 million in seed funding from Glilot Capital Partners. More here.

Mydream+, a two-year-old Beijing-based co-working space start-up, has raised $20 million in Series B funding led by the venture firm JOY Capital, with participation from credit assessment start-up Wecash and the venture capital firm K2VC. China Money Network has more here.

OrphoMed, a 2.5-year-old, San Francisco-based clinical stage biopharma company whose lead candidate aims to treat irritable bowel syndrome, has raised $39 million in Series A funding led by co-led by New Enterprise Associates and seed investor Takeda Ventures. Other earlier investors also joined the round, including Pappas Capital, Relativity Healthcare Partners, and the Mario Family Fund. More here.

Paragon One, a 1.5-year-old, New York-based online career coaching service and mentor marketplace that caters in part to Chinese college students who want to work abroad, has raised $1.9 million in seed funding from a long list of investors, including Y Combinator. (The company took part in the accelerator’s last batch of startups). More here.

Peloton, a five-year-old, New York-based maker of indoor cycling bikes and live-streamed fitness content, has raised $325 million in Series E funding at a $1.25 billion post-money valuation. Backers include Wellington Management, Fidelity Investments, Kleiner Perkins, True Ventures, Comcast NBCUniversal, GGV Capital, Balyasny and QuestMark Partners. Business Insider has more here.

Prumentum Group, a 1.5-year-old, Los Gatos, Ca.-based wealth management startup that’s partly automated (and partly not), has raised $25 million in Series A funding from family offices, including The Cynosure Group and Fremont Group. TechCrunch has more here.

Reali, a nearly two-year-old, San Mateo, Ca.-based real estate technology company, has raised $5 million in Series A funding led by Signia Venture Partners. TechCrunch has more here.

The Yard, a six-year-old, New York-based coworking space company, has landed a $15 million credit line from IDB Bank to expand its number of coworking offerings. TechCrunch has more here.

New Funds

Apax Partners is raising its first fund focused exclusively on tech investments, with plans to pursue both growth equity and buyout opportunities. Private Equity International has more here.

B Capital, an early-stage firm founded last year by Facebook cofounder Eduardo Saverin and Raj Ganguly, a prominent investor who worked previously with Saverin, has closed its debut fund with $180 million, shows an SEC filing. It was widely reported last year that the firm had closed on an initial $143.6 million in commitments.

Horsley Bridge Partners, a San Francisco firm that invests in venture capital and small buyout firms, is raising a $1.3 billion venture capital fund of funds, according to new SEC filing. This 12th fund somewhat quickly follows the firm’s 11th venture-focused fund of funds, which closed with $1.1 billion in 2015.

Saudi Telecom Company, or STC, a 19-year-old, Riyadh, Saudi Arabia-based publicly traded telecommunications company that offers landline, mobile, internet services, has announced the establishment of STV, its own venture capital fund, to which it plans to commit $500 million. The vehicle, which aims to invest in the region’s digital innovation ecosystem, is now reportedly the largest institutional technology venture capital fund in the Middle East. The Daily Mail has more here.

IPOs

Appian, a Reston, Va.-based software development platform that caters to enterprise customers, hit the public market this morning with a $75 million IPO, and its shares have climbed more than 34 percent since. CNBC has more here.

Smart Global Holdings, a Newark, Ca.-based maker of specialty memory solutions to the electronics industry, has raised $58 million in its IPO, pricing 5.3 million shares at $11 per share, below its originally proposed $13 to $15 per share range. Smart Global is owned by Silver Lake.

Exits

Red Hat has been making clear in recent years that it sees the cloud and containerization as a significant part of its future. Toward that end, it just acquired 4.5-year-old, San Francisco-based startup Codenvy. Codenvy had raised $9 million from investors. Terms of the deal aren’t being disclosed. TechCrunch has more here.

Publicly traded ServiceNow has acquired Qlue, a 12-year-old, Palo Alto, Ca.-based virtual messaging agent developer. Financial terms aren’t being disclosed. Silicon Valley Business Journal has more here.

People

Hamish Douglass, cofounder of the Magellan Financial Group, which manages more than $37 billion, thinks Uber has a less than 1 percent chance of surviving the next decade.

Former tech CEO Greg Gianforte is running as a Republican candidate in a hotly contested special House election; an audio tape of him roughing up a reporter may instead land him six months in jail.

After leaving his role at Uber as VP of Global Vehicle Programs in April, Sherif Marakby is back at Ford to lead its autonomous vehicles and electrifications program. More here.

Jobs

The global venture firm e.ventures is looking to hire a venture capital analyst. The job is in San Francisco.

Data

Index Ventures just published a 70-page step-by-step guide for companies looking to expand into Europe. You can check it out here.

Essential Reads

A new lawsuit is accusing Uber of fare fraud.

The tech industry is about to see its first big-name structure an ICO, or initial coin offering, when chat giant Kik introduces its own cryptocurrency via a token sale.

Now Google wants to monitor your real-world life, too.

Detours

The first thing to do when entering a hotel room.

Why your avocado toast costs so damn much. (H/T: Hunter Walk)

Good.

Retail Therapy

Go Gogoro.

Wednesday! Looks like we’re going to make it, everyone; hang in there.:)

(Quick reminder that investor Semil Shah takes the helm next week; he’ll be bringing you a rare series of LP interviews, so stay tuned.)

Top News in the A.M.

Unity Technologies, a 13-year-old, San Francisco-based company that says its software powers half of all new mobile games, has raised $400 million in fresh funding from the private equity firm Silver Lake. A “big chunk” of the round went toward purchasing the shares of longtime employees and earlier investors, CEO John Riccitiello told Bloomberg yesterday, explaining that he thinks it “makes sense to let employees buy cars.” More here.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: Dash is the fastest growing connected car platform, taking a lead in the $750 billion market for automotive data. And we are hiring! We have a variety of roles, in areas from machine learning and data science, to mobile development (Android and iPhone) and server-side, as well as business development and marketing. For more background on Dash, read the latest article in Techonomy. And if you believe you can help Dash make driving smarter and safer for everyone on the road, then connect with us today.

How to Stage and ICO (and Answers to Other Lingering Questions You Might Have)

Over the last month, it’s been hard to miss talk in the media and on social channels about initial coin offerings, or ICOs. What are they? Where did they suddenly come from? Who’s investing in them?

When the popular investing platform AngelList announced on Monday that it’s jumping into the business of making ICOs easier to coordinate, attention reached a fever pitch, prompting my colleague Alex Wilhelm to yesterday tackle the question, “WTF is an ICO?”

Because this editor was still confused (I’m not proud), I talked yesterday with Stan Miroshnik, a UC Berkeley grad with an MBA from MIT who today runs L.A.-based Argon Group, one of the first digital finance-focused investment banks. Miroshnik nicely answered an array of questions about ICOs, including how these things get staged, how companies establish a value for their offerings, and more. If you’re still trying to get a handle of this latest investing trend, too, read on.

ICOs are everywhere suddenly.  When was the first ICO staged?

You have to go back to around 2013, when Mastercoin, a protocol on top the bitcoin blockchain, raised $500,000. Then you had a number of other milestone token sales, such as Ethereum in 2014, then the DAO, or Decentralized Autonomous Organization, which was built on the Ethereum blockchain and that stored and transmitted Ether and Ethereum-based assets and that raised the equivalent of $150 million last year.

Momentum began to build after that, as a smaller group of [these offerings] grew in size, and by last fall, some companies were raising millions of dollars in minutes. That really kind of made people stand up and wonder if this is a new funding mechanism.

How many ICOs have there been to date?

There were 64 last year that collectively raised $103 million, excluding the DAO. So far this year, we’ve seen 25 offerings raise a bit more than $163 million, and we’re on track to see more than $210 million raised by the end of June.

The idea is that instead of raise traditional funding from a bank or investors, a company that sells tokens to its customers ensures those customers are better aligned with the company’s success. Is that accurate?

Yes. If I’m buying your token, I am incentivized to help the company’s product and ecosystem expand, bring in other users, maximize the tokens’ utility, and I’m hoping that demand for the token will increase and it may become more valuable. You’re creating the network and viral effect with these monetary incentives.

The term ICO is really a misnomer for what are token sales or token crowd sales.

So how do these ICOs work, practically speaking? 

There’s a cadence to these things. You do the prep-work and get your project to a natural technical milestone. Then you pre-announce when you’re planning to have a token sale, describing some of the terms, and telling a story of the project and its goals. You publish a white paper and disclosure and give people a chance to read it and comment. There are also usually threads that develop on Reddit, Bitcointalk, Slack, Telegram and elsewhere, where people actively debate the merits of the product. Then, on the landing page on the aforementioned date, there’s typically a tool that enables purchasers to acquire the tokens in exchange for bitcoin or ether.

These require digital wallets?

[The issuing company] requests [the investor’s] source wallet and the wallet where the token buyer wants to receive the token. Once the company collects the money, the sale is concluded, the smart contract is deployed, the tokens are issues via the smart contract, and delivered to the token purchasers.

How do companies establish a value for the tokens they’re offering?

More here.

New Fundings

BounceX, a five-year-old, New York-based marketing tech firm, has raised $31 million in funding led by Silicon Valley Bank. Business Insider has more here.

Bowery, a two-year-old, New York City-based commercial real estate appraisal firm, raised $1.75 million in seed funding led by Camber Creek, with participation from Fika Ventures, Corigin Ventures, LeFrak and Expansion Venture Capital. More here.

Bulletin, a two-year-old, New York-based shared retail space startup, has raised $2.2 million in seed funding, including from Flybridge Ventures, Kleiner Perkins, Afore Ventures, and Y Combinator. Mashable has more here.

Bulletproof 360, a three-year-old, Bellevue, Wa.-based company that makes a coffee drink with butter, has raised $19 million in fresh funding led by CAVU Venture Partners, with participation from earlier backer Trinity Ventures. The company has now raised $28 million to date. TechCrunch has more here.

Carpe Data, a year-old, Santa Barbara, Ca.-based startup that sells predictive scoring and data products to property and life insurance companies, has raised $6.6 million in Series A funding led by Aquiline Technology Growth. More here.

Chef’d, a four-year-old, El Segundo, Ca.-based home-delivery meal kit startup, has raised $10 million in Series B funding from Campbell Soup, with participation from online grocer Fresh Direct. Fortune has more here.

Circle Media, a three-year-old, Portland, Ore.-based company behind a device that helps parents enforce their home’s internet rules and restrictions, has raised $10 million in Series A funding led by Relay Ventures, with participation from an unnamed second investor. The company had previously raised $1.5 million in seed funding. TechCrunch has more here.

Coins, a three-year-old, Philippines-based blockchain-enabled mobile payments platform, has raised $5 million in Series A funding from Naspers Ventures. TechCrunch has more here.

Discuss.io, a five-year-old, Seattle-based video conferencing platform that enables brands and researchers to conduct in-depth interviews, including with focus groups, has raised roughly $5 million in Series A funding co-led by Unilever Ventures and Pereg Ventures. More here.

DocPlanner, a six-year-old, Warsaw, Poland-based health appointment booking platform, has raised €15 million ($17 million) in Series D funding led by ENERN Investments, with participation from Target Global and One Peak Partners. More here.

G2 Crowd, a five-year-old, Chicago-based business-to-business review platform, has raised $30 million in Series B funding led by Accel Partners, with participation from LinkedIn, Pritzker Group Venture Capital, G2 Crowd’s founders, and “key industry executives.” TechCrunch has more here.

Merlon Intelligence, an 11-month-old, San Francisco-based money laundering prevention platform, raised $7.65 million in seed funding led by Data Collective. (Merlon’s CEO, Bradford Cross, was formerly a partner with the venture firm.) TechCrunch has more here.

Meta SaaS, a year-old, Austin, Tex.-based maker of automated license auditing software, has raised $1.5 million in seed funding, led by serial entrepreneur Mark Cuban. VentureBeat has more here.

Hi, everyone. Hoping you have a happy Tuesday. We’re thinking of our friends in England today and actively trying to remind ourselves that the world has never been safer, despite the misguided dum-dums determined to tear it apart.

Top News in the A.M.

Uber said this morning that it mistakenly underpaid New York City drivers for the past 2.5 years, an error that will likely cost it tens of millions of dollars. It’s the second time in three months the ride-hailing company has acknowledged it deprived workers of their proper earnings. The WSJ has more here.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: As the leading open connected car platform, Dash‘s software and data is leveraged globally by enterprise partners – from OEMs and fleets, to insurers and smart cities, as well as highly novel use cases. For example, Dash was tasked by CBS Outdoor, a leader in out of home advertising, to gain insights into drivers who saw a set of billboards in Los Angeles. Dash’s data was able to track driver demographics and behavior, vehicle type, day part, trip origin and intent, as well as a host of actionable insights which would allow for highly targeted ad inventory on digital road signage. Read more: “Data is the new nitro.”

Benchmark Just Backed an ER Doctor Who Wants to Keep Stoned People Off the Road

Many people enjoy several careers over their lifetimes. Then there’s Mike Lynn, an emergency room doctor in Oakland, Calif.; a reserve deputy sheriff; a faculty member at UCSF; a former venture capitalist; and the founder of Hound Labs, a three-year-old, Oakland, Calif.-based company at work on a breathalyzer for marijuana. (Did we mention he also spent time at the White House, focused on counterterrorism?)

Lynn is still juggling several of those roles, but his top priority these days is perfecting his breathalyzer technology, which measures THC — the psychoactive ingredient in cannabis — to determine whether a marijuana user is impaired. The plan is to first sell the product to law enforcement agencies, then employers, then directly to people who get high but don’t want to drive (or be caught driving) while in a marijuana-induced haze.

Clearly, investors like what he’s dealing. Today, Hound Labs is announcing that Benchmark has invested $8.1 million in the company as its sole Series B investor, capital that brings the company’s total funding to $14 million. As part of the round, Hound Labs has also added Mitch Lasky to its board (he’s the same Benchmark partner on the board of Snap), as well as “Law & Order” creator Dick Wolf.

We talked yesterday with Lynn about his trajectory and what he’s building. Our chat has been edited for length.

Your background reads like that of a fictional character. How did this happen?

I can’t say I had a grand plan for everything. [Laughs.] [As an undergrad], I went on a Fulbright scholarship to Sri Lanka in the late ’80s to work on leprosy. I then went to med school; I did my emergency training in Oakland, and because I was still interested in infectious diseases, I volunteered as part of my emergency medical training to work at a missionary hospital near where Sudan and Uganda come together that’s very violent and poor. We were working with patients with hemorrhagic diseases and we didn’t know what they were; I remember flying through Frankfurt and on to San Francisco and thinking [about the potential consequences] if I were infected.

More here.

(Other) New Fundings

American Robotics, a year-old, Boston-based commercial farming drone system developer, has raised $1.1 million in seed funding, including from Brain Robotics Capital. Xconomy has more here.

Blispay, a three-year-old, Forest Hills, Md.-based startup that provides a financing program for small and midsized retailers to offer to their customers, has raised $12 million in funding from FirstMark Capital, Accomplice, NEA, Camden Partners, and F-Prime Capital. The Baltimore Sun has more here.

Embrace.io, a year-old, Culver City, Ca.-based company that’s aiming to help developers understand the performance of their apps, has raised $2.5 million in seed funding led by Eniac Ventures, with participation from The Chernin Group, Techstars Ventures, BoxGroup and others. TechCrunch has more here.

Fastly, a six-year-old, San Francisco-based content network delivery company, has raised $50 million in funding led by Sorenson Capital, with participation from Sapphire Ventures and earlier backers Iconiq Capital, Amplify Partners, August Capital, O’Reilly AlphaTech Ventures, and IDG Ventures. VentureBeat has more here.

Frichti, a 1.5-year-old, Paris-based food delivery platform, has raised €30 million ($33.7 million) in funding from Verlinvest and Felix Capital, with participation from earlier backers Alven Capital and Idinvest Partners. TechCrunch has more here.

GraniteShares, a year-old, New York City-based ETF company, has raised $3.5 million in seed funding from Bain Capital Ventures. More here.

KidPass, a 1.5-year-old, New York-based children’s activities discovery platform, has raised $5.1 million in Series A funding led by Javelin Venture Partners, with participation from CoVenture, Y Combinator, TIA Ventures, Bionic Fund, Cocoon Ignite Ventures, and FJ Labs. More here.

Long Game, a 1.5-year-old, San Francisco-based personal finance platform that provides users with FDIC-insured bank accounts, as well as an app that invites them to play games and win cash prizes, has raised $4 million in seed funding from Collaborative Fund and Thrive Capital. TechCrunch has more here.

Mavin, a four-year-old, Palo Alto, Ca.-based mobile app engagement tool developer, has raised $3 million in Series A funding, including from Mousse Partners and Montane Ventures. TechCrunch has more here.

Organogenesis, a 32-year-old, Canton, Ma.-based regenerative medicine developer (one of its FDA-approved products is used to treat venous leg ulcers), has secured a $20 million financing facility from Eastward Capital Partners, which provides venture debt and equity to tech companies. More here.

Outreach, a three-year-old, Seattle-based sales-focused enterprise communication platform, has raised $30 million in funding led by DFJ Growth, with participation from Four Rivers Group and earlier backers Mayfield, MHS Capital, Microsoft Ventures and Trinity Ventures. The company has now raised $60 million altogether. TechCrunch has more here.

PandaDoc, a six-year-old, San Francisco-based document automation software platform, has raised $15 million in Series B funding led by Rembrandt Venture Partners, with participation from Microsoft Ventures, HubSpot, EBRD, and Altos Ventures. TechCrunch has more here.

R3, a three-year-old, New York-based consortium of financial firms that are looking to develop blockchain-based software, has raised $100 million in funding, including from Intel, Bank of America, and Wells Fargo. Fortune has more here.

Stanley Robotics, a two-year-old, Paris-based company at work on an automated valet parking service (for reals), has raised €3.6 million ($4 million) in funding, including from Elaia Partners, Idinvest Partners and Ville de Demain. More here.

Trove, a year-old, San Francisco-based self-storage startup, has raised $8 million in funding led by Greylock Partners, where Trove CEO Michael Pao worked last year as an entrepreneur in residence. (Before that, Pao had spent several years at Uber, working his way up from a general manager role to the company’s head of product.) TechCrunch has more here.

URWork, a two-year-old, Beijing, China-based co-working space operator, has raised $58 million at a $1.3 billion valuation, including from investors Sequoia Capital China, Sinovation Ventures and Tianhong Asset Management Co. Bloomberg has more here.

ViaCyte, an 18-year-old,  San Diego, Ca.-based regenerative medicine company at work on diabetes cell therapies, has raised $10 million in funding from W.L. Gore & Associates. Xconomy has more here.

VitalConnect, a six-year-old, Campbell, Ca.-based maker of wearable, medical-grade biosensor systems, has raised $33 million in Series C fund co-led by MVM Life Science Partners and Baxter Ventures. MassDevice has more here.

New Funds

The Japan-based venture firm Gree Ventures has closed its newest fund with the equivalent of $67 million in capital commitments. The team says the money will be used to fund seed- to Series A-stage startups in Japan, Southeast Asia, and India. Tech in Asia has more here.

Osage Venture Partners, a Bala Cynwyd, Pa.-based early-stage venture firm that focuses on business-to-business software companies on the East Coast, has closed its ninth fund with $90 million in capital commitments. More here.

New York-based Trail Mix Ventures is raising up to $15 million for its debut fund, which will focus on seed-stage, “future of living well” e-commerce opportunities, says Axios. More here.

Former Sequoia Capital China Managing Director Samantha Du is raising $150 million for a venture fund, Zai Venture Fund I, shows an SEC filing. More here.

Exits

Space Ape Games, a nearly five-year-old, London-based social and mobile games studio founded by alums from Playfish, Mind Candy and EA, says Supercell has acquired 62 percent of the company for $55.8 million as part of a long-term strategic partnership. TechCrunch has more here.

People

LeEco, a Chinese company that made a big splash in the U.S. last fall, is preparing for a round of layoffs that may happen as soon as Tuesday, says CNBC, whose sources claim the company may be letting go of as many as 440 of its 500 U.S. employees. More here.

Mark Zuckerberg: Yes, I’m on a listening tour. No, I’m really not running for public office.

Jobs

CSAA, formerly known as the California State Automobile Association, is looking to hire a managing partner to help oversee its corporate venture capital and labs unit. The job is in Walnut Creek, Ca.

Data

Law firm Fenwick & West just released its first quarter Silicon Valley Venture Capital Survey. The biggest takeaway: valuations are now level with their 13-year averages, after falling from crazy territory in 2015. Somewhat unsurprisingly, the use of investor-favorable deal terms, including multiple liquidation preferences, participation rights, and cumulative dividends, increased in the first quarter, too. More here.

Essential Reads

VCs aren’t so excited about what Softbank’s Vision Fund could do to valuations. There’s concern that SoftBank will ladle out more money than startups need or can absorb, too. More here.

At Google, an employee-run (and Google-sanctioned) email list is being used to track harassment and bias complaints. More here.

JD.com, one of China’s biggest online retailers is building a delivery drone that can carry 2,000 pounds of cargo. More here.

Detours

RIP, 007.

A look inside Facebook’s New York office.

What to do if there’s a terrorist attack while you’re traveling.

Retail Therapy

For $650,000, you can escape civilization with one thousand acres of Welsh countryside. It comes with a derelict shooting lodge to sweeten the deal.

Hello and happy Monday! Just a quick mention to readers: we’re taking a little time off next week after Memorial Day. In our absence, investor and frequent guest editor Semil Shah will be publishing a series of interviews with limited partners (the “money behind the money,” in other words — the investors who provide venture firms with the capital that they then plug into startups).

We’re super excited about these as LPs aren’t the world’s most talkative bunch yet they have prized insights into what’s what in the world of venture capital. Note, however, that we will *not* be publishing the newsletter in its entirety (no new funding announcements, essential reads, etc.). Please send complaints to @semil. (JK.)

More tomorrow.:)

Top News in the A.M.

Softbank’s Vision Fund — the largest tech fund in history — announced a first close on a whopping $93 billion in capital commitments on Saturday. Backers include Apple, Qualcomm, UAE-based Mubadala Investment Company, Foxconn, and Foxconn-owned Sharp. Saudi Arabia’s Public Investment Fund is also a major investor, in a tie-up that demanded special privileges. Specifically, says the WSJ, Softbank had to agree to let the Saudis sit in on deal meetings. Softbank also had to grant veto rights for deals over a certain size. More here.

In a shake-up reflecting the pressures on the American auto industry, Ford Motor is replacing CEO Mark Fields with Jim Hackett, who oversees the Ford subsidiary that works on autonomous vehicles. The New York Times has more here.

Texas is close to overturning regulations so onerous that both Uber and Lyft pulled out of Austin last year.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: Data is the new nitro (Techonomy): when the world’s leading automotive battery manufacturer wanted to develop a model to predict battery failure, they challenged Dash to use data from their connected car platform, and machine learning capabilities, to build the algorithm. Despite a decade of R&D, industry shop tools typically yield 60% accuracy, but within eight weeks, Dash’s algorithm delivered over 90% predictive power. To learn more about Dash’s enterprise offerings, contact us.

This Young Used-Car Marketplace is Now Valued at $2.8 Billion

Auto1 Group, a nearly five-year-old, Berlin-based used-car marketplace, just announced a huge round — €360 million ($404 million) in debt and equity financing that includes €75 million ($84.2 million) from Princeville Global, itself a Hong Kong-based investment firm with a second office in San Francisco.

Why the excitement over Auto1? Momentum, seemingly.

The company, which values and buys used cars from individuals, dealerships, and manufacturers, then sells them for a profit to other dealerships, says it facilitated 330,000 vehicle transactions on its platform last year. It also says it reached revenue of €1.5 billion. Indeed, in a press statement released late last week, cofounder and co-CEO Christian Bertermann said the company will use its new funding to capture what it hopes will soon be 10 percent of Europe’s used sales car market.

It has plenty of competition, of course. Among its rivals are the giant dealer groups Emil Frey and AVAG Holding, which are headquartered in Switzerland and Germany, respectively.

Plenty of used car marketplaces have also lost their thrust at some point, including Beepi, a direct-to-consumer platform founded in 2013 that was sold for parts earlier this year after raising $150 million from investors.

In fairness, Beepi was mismanaged, according to TechCrunch sources, including by paying “grossly high salaries.” Beepi, along with a spate of other used-car startups that includes Vroom, Shift, and Carvana, also featured a rather different business model than Auto1. Instead of selling cars directly to consumers via the Internet, Auto1 isn’t looking to skip the dealership; it’s betting consumers want to literally kick the tires.

More here.

(Other) New Fundings

Casper Sleep, the 3.5-year-old, New York-based mattress startup, is reportedly raising a new round of funding led by Target, which had offered $1 billion to buy the company but couldn’t or wouldn’t close the deal, according to Recode. When Casper closed its Series B round in 2015, it was valued at $550 million by its investors, which include Lerer Hippeau Ventures, New Enterprise Associates, and Institutional Venture Partners.  More here.

Cloudwise, a seven-year-old, Beijing-based company that makes cloud application performance management software, has raised $26 million in Series C funding led by CBC Capital, with participation from SIG and earlier investor Sequoia Partners China. More here.

CornerJob, a 2.5-year-old, Barcelona-based recruitment app that’s focused on low-skill, high-turnover jobs, has raised $19 million in Series C funding. Investors in the round include Northzone, Randstad Innovation Fund, e.ventures, Samaipata Ventures, Caixa Capital Risc, Sabadell Venture Capital, Mediaset Italia, Mediaset España, Groupe TF1, 5M Ventures, Media Digital Ventures, Augesco Ventures and TV Azteca. More here.

Echodyne, a three-year-old, Bellevue, Wa.-based maker of lightweight radar systems designed to bring autonomy to vehicles of every kind, has raised $29 million in Series B funding led by New Enterprise Associates. Other participants in the round include Bill Gates, Madrona Venture Group, Vulcan Capital, Lux Capital, The Kresge Foundation and others. The company has now raised $44 million altogether. TechCrunch has more here.

EcoIntense, a 10-year-old, Berlin-based company that makes software for safety and sustainability compliance, raised €22 million ($24.7 million) in funding from One Peak Partners and funds managed by Morgan Stanley Expansion Capital. Tech.eu has more here.

HubHaus, a 1.5-year-old, Redwood City, Ca.-based co-living startup that competes with Common and other shared-housing companies, has raised $1.4 million in funding led by General Catalyst Partners. More here.

Ledger Holdings, the three-year-old, New York-based parent company of bitcoin operations exchange operator LedgerX, has raised $11.4 million in Series B funding led by Miami International Holdings and Huiyin Blockchain Venture Investments. The round comes as LedgerX awaits final approval from the Commodity Futures Trading Commission for its bitcoin options trading service. The company had previously raised $1.5 million in seed funding from investors, including GV and Lightspeed Venture Partners. CoinDesk has more here.

Lemonaid Health, a four-year-old, San Francisco-based online healthcare platform, has raised $11 million in Series A funding co-led by Novartis Venture Fund and Hikma Ventures, with participation from Quest Diagnostics, Correlation Ventures, Adaptive Healthcare Fund, Vega Ventures and 415 Ventures. More here.

Hi, happy Friday! We’re back home in San Francisco but running off to oversee some potato sack races this morning (for reals) so no column today. Hope you have a terrific weekend and that our East Coast readers find a way to stay cool today. See you Monday.:)

Top News in the A.M.

Uber has threatened to fire Anthony Levandowski, one of its top self-driving engineers, if he does not cooperate with an investigation into allegations that he stole trade secrets from Alphabet’s Waymo, his former employer, before joining Uber.

Facebook just made it easier for you to order food from your favorite restaurants directly within its app.

Sponsored By . . .

StrictlyVC is being brought to you this week by Dash: In the race for autonomy, auto OEMs and technology companies need increasing amounts of data to ‘feed the machine’ of their self-driving algorithms. Since 2009, Google’s cars have driven two million miles – Dash’s fleet produces a similar yield of data in under a month. With the world’s leading open connected car platform, Dash is working with smart cities, OEMs, tier 1 suppliers, insurers and more, leveraging our global telematics marketplace. To learn more about Dash’s enterprise offerings and our vision for autonomy, read “Data is the new nitro” on Techonomy.

New Fundings

Away, a 1.5-year-old, New York-based travel brand that sells carry-on luggage with internal chargers, has raised $20 million in Series B funding led by Global Founders Capital, with participation from earlier investors Comcast Ventures, Accel Partners and Forerunner Ventures. The latter three had also invested in Away’s seed and A rounds. TechCrunch has more here.

CreativeLive, a seven-year-old, Seattle, Wa.-based education platform, has raised $25 million in funding round of funding led by GSV Acceleration, with participation from REV Venture Partners, actor Jared Leto, and earlier backers Greylock Partners, Social Capital, Richard Branson and Creative Artists Agency. The company has now raised $58.8 million altogether. More here.

CSquared, a four-year-old, Nairobi, Kenya-based tech company that was spun out Google and is focused on deploying wholesale, carrier-neutral, open-access fiber optic networks across Sub-Saharan Africa, has raised $100 million in funding, including from International Finance Corp (IFC), Google, Convergence Partners, and Mitsui & Co. VentureBeat has more here.

Dor, a two-year-old, San Francisco-based provider of foot-traffic counting and analytics software, has raised $3.8 million in funding led by Zetta Venture Partners and Vertex Ventures. More here.

Iterum Therapeutics, a two-year-old, Dublin, Ireland-based clinical-stage pharmaceutical company, has raised $65 million in Series B funding led by Arix Bioscience, with participation from new investors Advent Life Sciences, Domain Associates, Bay City Capital and Pivotal bioVenture Partners. Earlier investors also joined the round, including Frazier Healthcare Partners, Canaan Partners, Sofinnova Ventures and New Leaf Venture Partners. More here.

N2W Software, a five-year-old, West Palm Beach, Fla.-based provider of cloud-native data protection and disaster recovery for  AWS, has raised an undisclosed amount of funding from Insight Venture Partners. More here.

Numerated Growth Technologies, a new, Boston-based real-time commerce platform for banks that was incubated at Eastern Labs, the fintech innovation space at Eastern Bank, has raised $9 million in initial funding. The round was led by Cultivation Capital FinTech and Venrock, with participation from Eastern Bank, FIS, First Federal Lakewood, Hyperplane, and Bright FinTech. Built in Boston has more here.

OppSource, a nine-year-old, St. Paul, Mn.-based SaaS sales development platform, has raised $1.2 million in funding led by Bozeman, Montana-based Next Frontier Capital. The Minneapolis Star Tribune has more here.

Paytm, a seven-year-old, Noida, India-based digital payments startup, has officially raised $1.4 billion from SoftBank Group to maintain its market lead in Asia’s third-largest economy. Reuters has more here.

Upfront Healthcare, a two-year-old, Chicago-based company whose software helps doctors improve patient scheduling, has raised $5.6 million in Series A funding led by Nashville Capital Network, along with Hyde Park Venture Partners, Echo Health Ventures and Martin Ventures. The Chicago Tribune has more here.

Wandera, a five-year-old, San Francisco-based mobile gateway for enterprise mobile security and data policy, has raised $27.5 million in equity and debt from Sapphire Ventures, with participation from existing investors Bessemer Venture Partners and 83North. The company has now raised $50 million altogether. More here.

New Funds

Menlo Ventures, an early-stage venture fund founded in 1976, has closed its newest early-stage fund with $450 million in commitments. Forbes has more here.

RM Global, a New York-based  life sciences investment banking firm, is expanding its presence in Israel with the launch of an Israel-focused biopharma venture fund that just held a first close with $30 million in commitments. More here.

The Japanese electronics company Sharp said yesterday that it would invest up to $1 billion in SoftBank Group’s planned $100 billion Vision fund. Taiwan’s Foxconn, the parent of Sharp, has also said it intends to invest in the fund. Business Insider has more here.

Exits

Spotify has acquired a four-year-old, Paris-based AI startup Niland for undisclosed terms. Niland offered an API-based product focused on providing more accurate search and recommendation options for music and raised undisclosed funding from French investor IT Translation. TechCrunch has more here.

People

Chelsea Clinton’s husband, Marc Mezvinsky, was named vice chairman at Social Capital, where he’ll be tackling government relations, among other things. Last year, Mezvinsky shut down Eaglevale Partners, the hedge fund he founded in 2011. Bloomberg has more here.

Spotify has hired longtime M&A specialist Sheila Spence to help it buy other companies. Recode has more here.

America’s richest self-made women, in Forbes.

Despite its scandals, people still really want to work at Uber, apparently.

Jobs

Zetta Venture Partners is looking to hire an associate. The job is in San Francisco. Write to work@zettavp.com.

Data

It’s been a year since U.S. rules went into effect enabling anyone to buy a slice of a startup. Turns out, few are interested.

Essential Reads

Uber’s future may rely on predicting how much you’re willing to pay.

Musical.ly, an app for creating and sharing personal music videos, is in talks with media companies including Viacom and NBCUniversal to make original show programming, set to launch this summer, reports Bloomberg.

Detours

There’s a right way and a wrong way to do empathy.

Behind the myth that you only use 10 percent of your brain.

“In his last act, he gets to leave, and we are stuck with Donald Trump, who he created.”

Retail Therapy

Bar box, for when you want to play Don Draper.