• L.A.’s Crosscut Ventures Rounds Up $75 Million

    Crosscut VenturesL.A.’s startup ecosystem has more money today, thanks to Crosscut Ventures, a local, seven-year-old outfit that just closed its third fund with $75 million – considerably more than the $50 million was looking to raise when it hit the fundraising trail at the beginning of 2014.

    Crosscut’s newest pool — whose investors include The James Irvine Foundation, Top Tier Capital, and numerous family offices — is also roughly five times the size of the firm’s second fund, which closed with $16 million in 2012. (The outfit collected just $5.1 million for its first, proof-of-concept, fund in 2008.)

    Is it Crosscut, or L.A., or a combination of the two? We recently asked cofounder Brian Garrett, who cofounded Crosscut with fellow managing directors Rick Smith and Brett Brewer — all of whom are joined in the newest fund by managing director Clinton Foy, previously a venture partner. Our conversation has been been edited here for length.

    You’ve just raised a lot of money, considering where you started seven years ago. How do you explain it?

    A lot of it has to do with the general momentum of L.A. ecosystem. When [local VC] Mark Suster announced [his firm, Upfront Ventures’s] $280 million fund last year and hosted its [invite-only] Upfront Summit [in February], I think everyone became more aware of what’s happening here. I don’t think they’d thought it was a long-term or a sustainable [shift] until then.

    There’s also a lack of competition relative to the opportunity here, and, more specific to us, there aren’t a lot of micro venture firms that have four managing directors – two of whom have 15 years of venture experience. [Editor’s note: Garrett and Smith were previously partners at Palomar Ventures.]

    What are your biggest hits to date?

    We’ve had seven exits out of 18 investments in our first fund, four of which produced 9x returns, including [the e-commerce site] ShoeDazzle. We sold our stake when late-stage investors were buying. We had local market knowledge about how competitive that market was getting. We also sold [the digital ad company] Pulpo Media to the public company Entravision for a 9x return; we sold [the e-document repository] Docstoc to Intuit for a 9x – we were the first money in. We also made another secondary sale that hasn’t yet been announced.

    We’ve had two liquidity events in our second fund, too, with the sale of Lettuce to Intuit for a 4x, and the sale of Gradient X to Amobee [a mobile ad company acquired by SingTel in 2012] for 2x our investment.

    You mention ShoeDazzle, which you’d funded when it was valued at less than $10 million. Sounds like you were smart to get out when you did, though did you the miss out on the chance to invest in founder Brian Lee’s next startup, The Honest Company?

    We did. We were at the tail end of fund one and didn’t have a lot of money left, and some sharp-elbowed Silicon Valley VCs took the whole round. We definitely should have gotten money into Honest Company.

    How do you view secondary sales generally? 

    We look at them on a deal-by-by deal basis to evaluate whether to hold or sell. We have a stake now in a company whose valuation is similar to where ShoeDazzle’s was when we decided to sell, but we’re holding because we think it will be a multibillion-dollar company.

    We look at the market landscape and who the buying audience will be and whether the next plateau of value creation is worth the risk it will take to achieve.

    Where do you think it’s not worth the risk?

    In ad tech, for example, we think you’re either first in a new category and you get a big exit via an acquisition from Google or Yahoo, or you’re in the walking dead zone, along with tons of other good, profitable ad tech businesses that no one wants to buy because it’s become so hard to defend any particular intellectual property or sustain a differentiation.

    You were long juggling Crosscut with a startup you’d cofounded, a fashion and media platform called StyleSaint. Meanwhile, Brett was a senior VP of corporate development at the company Adknowledge. Are you both still doing double-time?

    Brett and I are now full-time with the fund. Brett [quit Adknowledge] six months ago; I’ve been full time since August of last year, when I set out to raise the fund. I quickly realized I couldn’t wear both hats.

    Connie

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  • StrictlyVC: June 22, 2015

    Good morning, everyone, and welcome back! Hope you wonderful dads out there had a great Father’s Day yesterday.

    —–

    Top News in the A.M.

    Hours after singer Taylor Swift criticized Apple in an open letter yesterday, the company said it will pay royalties to artists and record labels for music played during a free, three-month trial of its new streaming music service. The WSJ has more here.

    —–

    Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

    Last week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

    The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

    The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

    You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

    It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

    What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

    It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

    Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

    Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

    A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

    The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

    What’s the craziest business you’ve been pitched?

    Well, I did see bodyguards on demand. [Laughs.]

    Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

    I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

    [Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

    Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

    We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

    I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.

    —–

    New Fundings

    Advanced Cell Diagnostics, an eight-year-old, Hayward, Ca.-based molecular pathology company developing cell- and tissue-based diagnostic tests for personalized medicine, has raised $22 million in Series C funding led by Summit Partners, with participation from Kenson Ventures and return backers Morningside Ventures and New Leaf Venture Partners. The company has now raised $40.8 million altogether.

    Airbnb, the seven-year-old, San Francisco-based community marketplace for people to list and book personal spaces, is reportedly raising $1 billion in funding at a $24 billion valuation. According to Crunchbase, the company has already raised almost $800 million from investors, including SherpaCapital, TPG Growth, T. Rowe Price, Dragoneer Investment Group, Founders Fund, CrunchFund, and Sequoia Capital. The WSJ has the story here.

    Ant Financial, Alibaba’s Hangzhou, China-based online payments affiliate, has completed an undisclosed amount of fundraising that values the company at between $45 billion and $50 milion, according to the Financial Times. Ant Financial operates Alipay, the PayPal-like online payments company that handled $778 billion in the year ended June 2014, according to Alibaba. As the Financial Times notes, that’s three times the amount handled by PayPal over the same period. Ant Financial’s main shareholder is Jack Ma, Alibaba’s chairman. Dealbook delved into its business late last year. Much more here.

    Are You A Human, a four-year-old, Detroit, Mi.-based startup that enables anyone offering commerce, services, or ads online to know they are addressing a human (versus a bot), has raised $4.2 million in Series A funding led by Detroit Venture Partners, with participation from MDC Dream Ventures, Foundry Group Angels and NCT Ventures.

    Artesian Solutions, the nine-year-old, U.K.-based platform that provides companies with better intelligence on their B2B customers and future prospects, has raised $8 million in Series B funding led by Kreos Capital and previous investor Octopus Investments. The company has now raised at least $11.2 million altogether, shows Crunchbase.

    Bond Street, a 1.5-year-old, New York-based company that makes loans to small businesses, has raised $110 million in equity and debt capital led by Spark Capital and the Jefferies investment bank, with individual investors including Nathan Blecharczyk, co-Founder of Airbnb; David Chang, chef and owner, of Momofuku; and others. David Haber, co-founder of Bond Street, left Spark Capital to start the company. New York Business Journal has more here.

    Case Wallet, a 15-month-old, New York-based company behind a credit-card-size device used to securely store and send bitcoin, has raised $1.5 million in seed funding led by FuturePerfect Ventures, with participation from RRE Ventures, High Line Venture Partners and the Rochester Institute of Technology Fund.

    CropX, a nearly two-year-old, Tel Aviv, Israel and San Francisco-based startup whose sensors and app measure soil moisture and temperature levels to help farms adjust their irrigation systems, has raised $9 million in Series A funding. Finistere Ventures led the round, joined by Innovation Endeavors, GreenSoil Investments and the company’s earlier backers, including OurCrowd. Venture Capital Dispatch has more here.

    Cryptzone, a 13-year-old, Waltham, Ma.-based maker of context aware encryption software, has raised $15 million in Series B funding led by Kayne Partners, with participation from earlier backer Medina Capital. More here.

    Cure Forward, a year-old, Cambridge, Ma.-based company seeking to connect cancer patients with clinical trials, has raised $15 million in Series A funding from Apple Tree Partners. BetaBoston has more here.

    DIDiT, a two-year-old, New York-based mobile-first social platform that enables users to discover, connect and plan lifestyle experiences, has raised $2 million in seed funding led by BRaVe Ventures, with participation from numerous angel investors. More here.

    FreedomPop, a four-year-old, L.A.-based upstart freemium mobile carrier, has raised $30 million in funding led by European venture capital Partech Ventures, with participation from an unnamed strategic investors and previous backers DCM and Mangrove Capital. The company has now raised $49.3 million altogether, shows Crunchbase. Recode has more here.

    Knyttan, a two-year-old, London-based on-demand fashion startup, has raised £2 million ($1.6 million) in seed funding led by Connect Ventures, with participation from Felix Capital, Playfair Capital, and Ballpark Ventures. TechCrunch has more here.

    Komprise, a year-old, Campbell, Ca.-based company selling data management-as-a-service, has raised $6 million in Series A funding led by Canaan Partners. TechCrunch has more here.

    LiveIntent, a six-year-old, New York-based company that makes technology for in-email display advertising, raised $32.5 million in a funding round led by FTV Capital, with participation from Battery Ventures, First Round Capital and Shasta Ventures. The company has now raised $65.1 million altogether, shows Crunchbase. TechCrunch has more here.

    Mapbox, a five-year-old, Washington, D.C.-based mapping platform for developers that makes it easier for location to be core to any mobile or online application, has raised $52.4 million in Series B funding led by DFJ Growth, with participation from Thrive Capital, Pritzker Group, Promus Ventures and former Goldman Sachs Group co-president Jon Winkelried.

    Mayvenn, a 2.5-year-old, Oakland, Ca.-based e-commerce company that enables beauticians to sell hair extensions and other products without having to purchase, store or ship any inventory themselves, has raised $10 million in Series A funding led by Andreessen Horowitz, with participation from Trinity Ventures, Core Innovation Capital, Troy Carter’s Cross Culture Ventures, Impact America, and numerous individual investors, including Jimmy Iovine and Serena Williams.

    Moovo, a seven-month-old, Delhi, India-based on-demand logistics booking platform, has raised seed funding from YouWeCan Ventures and angel investors. YourStory has more here.

    Namely, a three-year-old, New York-based HR software platform that offers cloud-based applications has raised $45 million in Series C funding led bySequoia Capital, with participation from earlier backers Matrix Partners,True Ventures, Lerer Hippeau Ventures and Greenspring Global Partners. The company has now raised $77.8 million altogether, shows Crunchbase. Recode has more here.

    Oxford Sciences Innovation, a months-old, Oxford, England-based company that funds spinoffs from Oxford University’s tech and science departments, has raised an undisclosed amount of capital from Google Ventures’ European branch. The company is looking to raise upwards of $500 million altogether. More here.

    Sano, a three-year-old, San Francisco-based company making a wearable device that monitors metabolic activity, has raised $10.3 million in seed funding led by True Ventures and Intel Capital, with participation from Felicis Ventures, Elevation Capital, Floodgate, and Rock Health. TechCrunch hasmore here.

    Sense.ly, a two-year-old, San Francisco-based patient engagement and chronic disease monitoring platform centered around a virtual medical assistant, has raised $2.2 million in Series A funding. Backers include Launchpad Digital Health, Fenox Venture Capital and TA Ventures. The company has now raised $3.5 million altogether, shows Crunchbase.

    Smart Vision Labs, a two-year-old, New York-based company whose first device aims to make eye exams cheap and accessible worldwide, has raised $6.1 million in funding led by Techstars Ventures, with participation from Heritage Group, Connectivity Capital, and Red Sea Ventures. Forbes has much more here.

    Tamr, a 2.5-year-old, Cambridge, Ma.-based startup that helps companies understand and unify all of their disparate databases, has raised $25.2 million in Series B funding from Hewlett Packard Ventures, Thomson Reuters, MassMutual Ventures and other unnamed participants, with participation from earlier backers New Enterprise Associates and Google Ventures. The company has now raised $42.4 million altogether. More here.

    Tech In Asia, a four-year-old, Singapore-based news site that reports on Asia’s tech ecosystem, has raised $4 million in funding to turn the site into a community hub that includes a Crunchbase-like database and paid-for analytics service. Backers include SB ISAT Fund, Walden International, Marvelstone, and M&S Partners, along with individual investors. The company had previously raised $2.89 million over several small rounds, including from East Ventures, Fenox Venture Capital and Simile Venture Partners. TechCrunch has more here.

    Tidemark, a six-year-old, Redwood City, Ca.-based enterprise financial planning software company, has raised $25 million in funding from the management software vendor Workday, along with earlier backers Andreessen Horowitz, Greylock Partners and others. Tidemark has now raised $118.4 million altogether, shows Crunchbase. Recode has more here.

    Vox Mobile, a nine-year-old, Independence, Oh.-based company that helps businesses adapt their products to mobile platforms, has raised $6.7 million in a round led by TELUS Ventures, Mutual Capital Partners Funds, Edison Partners and Permal Capital. Forbes has more here.

    —–

    New Funds

    Arboretum Ventures, a 13-year-old, Ann Arbor, Mich.-based venture firm, is looking to raise $215 million for its fourth fund, shows an SEC filing that was filed last week and states the first sale has yet to occur.

    RezVen Partners, a new, Newport Beach, Ca.-based early-stage venture firm focused on software and digital and social media companies, has closed a new fund with $50 million in capital commitments. More here.

    —–

    Exits

    Campus, a two-year-old, San Francisco-based startup that rented out rooms in some 34 houses in the San Francisco Bay Area and New York, is no more — meaning its more than 150 residents need to find somewhere else to live before the official closure on August 31st. The company was founded by Thiel fellow Tom Currier and presumably raised money beyond the $100,000 that Peter Thiel gives budding entrepreneurs to drop out of school. Still, it managed never to disclose as much in various reports about the company (that StrictlyVC has read, anyway).  Business Insider has more here.

    —–

    People

    Politico published a meaty piece on businessman and former New York City mayor Mike Bloomberg, and among the many nuggets it holds is a breakdown of just how reliant Bloomberg Media is on those lucrative Bloomberg terminals: Per Politico: the company’s “many layers of ‘added value’ . . . the magazines, the TV channels, the specialized verticals . . . generally lose money. Lots of it. Businessweek, easily the most appealing product to consumers, reportedly burns almost $30 million a year. The TV operation has lost about $100 million a year for the past decade.”

    John Doerr says he “felt sick” when he first saw the gender discrimination charges brought against his firm, Kleiner Perkins, by former partner Ellen Pao. Last week, in an interview with Bloomberg TV, Doerr said, “I think it was an error to promote Ellen into an investing partner role. That didn’t work out for her. She was a really good chief of staff but not a good investor.” Video from that interview here.

    Alex Stamos, the world-renowned cybersecurity expert and vocal NSA critic who now commands Yahoo‘s team of “Paranoids” to protect the company from all manner of threats, says the “vast majority of people are not safe using the internet everyday.” Vice Media profiles him here.

    Facebook CEO Mark Zuckerberg with wife Priscilla Chan have donated $5 million to a scholarship program that helps young undocumented students attend college. Called TheDream.US, the program is geared toward students who come to the U.S. as children with no authorization and wish to pursue higher education. The program was cofounded in 2013 by Donald Graham, CEO of the Graham Holdings Company and a former Facebook director. USA Today has more here.

    —–

    Jobs

    Capital One Ventures is looking to hire a junior-level manager. The job is in San Francisco.

    —–

    Essential Reads

    Alipay is a phenomenon that’s difficult to fathom outside of China. Its president, Jingling Li, explains it to Fortune here.

    —–

    Detours

    Twenty-one amazing photos of Saturn.

    Why reading can make you happier.

    Here’s everyone you probably Googled last night during “True Detective.”

    —–

    Retail Therapy

    A vegetable-tanned English Bridle leather six-pack carrier, for your craft beers. (Warning: Bringing this to a party will get you punched in the face, or it should.)

    Connie

  • Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

    Ryan SarverLast week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

    The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

    The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

    You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

    It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

    What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

    It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

    Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

    Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

    A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

    The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

    What’s the craziest business you’ve been pitched?

    Well, I did see bodyguards on demand. [Laughs.]

    Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

    I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

    [Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

    Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

    We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

    I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.

    Connie

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  • StrictlyVC: June 17, 2015

    Hi, everyone, hope your Wednesday is off to a great start!

    Quick favor: if you’ve been discovering StrictlyVC in spam in recent weeks, could you shoot us a quick email? We’re working with our ESP this morning to get things resolved once and for all and could use your help.

    We also wanted to remind you that StrictlyVC will not be publishing tomorrow or Friday. (We have some major housekeeping to do before joining forces with TechCrunch.) We’ll see you back here Monday.:)

    —–

    Top News in the A.M.

    Amazon may soon pay normal people to deliver packages en route to their destinations as part of a crowdsourced delivery program. The WSJ has more here.

    A security flaw has left 600 million Samsung smartphones at risk of being hacked.

    Tesla Motors is getting a cash injection in the form of a loan worth up to $750 million from banks like Bank of America, JP Morgan Chase, and Deutsche Bank ,reports Business Insider. The capital might concern Tesla fans, but CEO Elon Musk has said the company needs “staggering” amounts of money to grow its operations, and Tesla has five years to pay back the money, says BI.

    Uh oh, Uber.

    —–

    The Case Against Anthony Noto (and Most Other CFOs) Becoming CEO

    Dick Costolo — who is stepping down as CEO of Twitter in July — has, at a couple of recent conferences, described Twitter CFO Anthony Noto as more than an “accountant” and said that Noto was not brought into the company “just be a CFO.”Yesterday, the Wall Street Journal even suggested that Noto has emerged as a front-runner to replace Costolo, describing Noto – a former tech banker at Goldman Sachs and a former CFO of the National Football League – as a “take-charge” executive, based on interviews with his supporters at the company.

    But promoting Noto to the top spot may not be such a great idea — not based on the experience of longtime executive recruiter Jon Holman, who says CFOs tend to make lousy CEOs. In fact, of the hundreds of C-level executives that Holman has placed over the last 30-plus years, he says he has “never” placed a CFO as a CEO – “nor would I recommend it to someone.”

    Holman “doesn’t know Noto at all,” he is quick to say. He adds that Noto could become the “second or third guy in history who has gone from CFO to CEO and been successful.” But he’s highly skeptical of the model for a variety of reasons.

    First, it’s likely that until April — when Noto was also put in charge of Twitter’s floundering marketing department — Noto has never managed anything near the roughly 4,000 employees that Twitter has around the world.

    “At Goldman, Noto was an analyst, meaning he was a domain expert who knows a huge amount about various industries,” observes Holman. “But he was never managing large numbers of people,  and the people he was managing [in the several years that Noto spent as co-head of the investment bank’s technology, media and telecommunications group] were analysts – not people in marketing, sales, finance, engineering . . .” notes Holman.

    More, says Holman, while CFOs generally sound like they know everything, they do not. “Because CFOs sit in on board meetings along with the CEO, they speak as if they understand the business.They understand the financials of the business. They know that, ‘We’re spending 33 percent of revenue on sales and marketing.’ But they’ve never run a sales organization, and their job has never been on the line if there’s a revenue shortfall,” he notes.

    Not last, CFOs tend to reign in spending and to generally take the most conservative path possible, notes Holman. That’s probably not ideal at Twitter, which has shied away from making dramatic changes to its platform — and been soundly criticized for it. “Most CEOs are outer directed, while CFOs are inner directed,” says Holman. Using a baseball analogy, he observes that “Most CEO types want to swing for the fences; CFOs want players to hit singles.”

    That’s not to say Twitter should rule out Noto completely, suggests Holman. In fact, he could make sense as CEO in the very short term.

    Among other reasons why a company like Twitter might bring in a CFO is if “you have investors who think the sky is falling, or, in this case, that it’s a big problem that Twitter isn’t converting tweets to revenue. CFOs generally speak in appropriate adult-like tones and can [massage] investors and assure them that a company will get it all figured out.”

    Another argument for promoting the CFO is when a company is just going to sell itself anyway, says Holman. In that case, “What you need is someone who understands how to sell a company, someone who will run a [sales] process, which Noto clearly knows how to do.”

    A third reason a CFO like Noto could make sense right now is “if there’s a perception that what a company needs to do is big-time pruning: laying people off, getting expenses under control, those kinds of things that CFOs tend to be really good at.”

    Of course, all of these scenarios would be a prelude to bringing in someone else, and Twitter already has an interim CEO lined up in co-founder Jack Dorsey.  Could we see the equivalent of two interim CEOs at the company?

    Twitter “can do whatever it wants,” says Holman. “Is it a clever strategy? Probably not.”

    —–

    New Fundings

    123ContactForm, a seven-year-old, Timisoara, Romania-based provider of web forms and surveys for companies and NGOs, has raised more than $1 million in funding from Catalyst Romania.

    Bluebridge, a four-year-old, Fishers, Ind.-based, cloud-based mobile app development and management platform, has raised $2 million in funding led by CultivationCapital and Allos Ventures, with participation from angel investors, including ExactTarget cofounder Scott Dorsey. The company had previously raised $2. 8 million in seed and debt financing.

    Boxful, a six-month-old, Hong Kong-based valet storage startup (it comes to take and store users’ surplus items), has raised $6.6 million in Series A funding from Great Eagle, Arocrest Capital, Tinghsin Group, Lonsdale Capital, Soundwill Holdings, Vega Properties and Carlton Holdings.

    Brightwheel, a year-old, San Francisco-based mobile platform for preschools and daycares that allows teachers to track attendance, record observations, and gain insights into daily activities while administrators can send paperless, automated tuition invoices, has raised $2.2 million in seed funding.  The round was led by RRE Ventures and Eniac Ventures, with participation from CrossLink Capital, Golden Venture Partners, Red Swan Ventures, and SherpaVentures.

    Cohesity, a two-year-old, Santa Clara, Ca.-based company that consolidates what are called “secondary” storage systems (meaning anything that doesn’t run a company’s production applications), has quietly raised $70 million across two funds, it says. The company, founded by Mohit Aron — who previously cofounded the “unicorn” storage company Nutanix — most recently raised $55 million in Series B funding led by Artis Ventures and Qualcomm, with participation from Accel Partners, Battery Ventures, Google Ventures andTrinity Ventures. Cohesity’s earlier, $15 million, Series A round was led by led by Sequoia Capital and Wing Venture Capital. Venture Capital Dispatch has the story here.

    Convene, a 5.5-year-old, New York-based conference and meeting company that promises to “orchestrate the perfect meeting” for its customers (it has access to more than 70 meeting rooms in New York and Washington, D.C.), has  raised $15.5 million in Series B funding led by Conversion Venture Capital, with participation from earlier backer Boathouse Capital. The company has now raised roughly $21 million altogether. More here.

    Crocus Technology, an 11-year-old, Santa Clara, Ca.-based maker of magnetic sensors and embedded memory products, has raised $21 million in new funding from NanoDimension, Innovation Capital, IdInvest Partners,Ventech, Sofinnova, CEA Investissement, Rusnano, Industrial Investor Group, and Kreos Capital. The company has now raised $194 million altogether.

    Doctor on Demand, a nearly three-year-old, San Francisco-based telemedicine company that connects patients via video with certified doctors, has raised $50 million in Series B funding led by Tenaya Capital, with participation from Qualcomm Ventures, Dignity Health, 23andMe’s Anne Wojcicki, and earlier backers Venrock, Shasta Ventures, and Sir Richard Branson. The company has now raised $74 million altogether. TechCrunch has more here.

    FACEIT, a three-year-old, London-based online gaming platform, disclosed yesterday that it raised $2 million in funding earlier this year led by United Ventures. More here.

    Iris.tv, a three-year-old,  L.A.-based company that makes personalized video recommendations to viewers who watch short clips online, has raised $5.3 million in Series A fundng from Sierra Wasatch, BDMI, Progress Venturesand individual backers, including Machinima founder Allen DeBevoise. Venture Capital Dispatch has much more here.

    Kezar Life Sciences, a months-old, South San Francisco, Ca.-based company focused on the development of drugs targeting protein homeostasis for autoimmune disorders, has raised $23 million in Series A funding fromMorningside Venture, Cormorant Asset Management, EcoR1 Capital, 9W Capital Management, Omega Funds, Aju IB Investment, and private investors.

    LeadPages, a 2.5-year-old, Minneapolis, Mn.-based company whose software enables businesses to create responsive mobile landing pages, launch pages, sales pages and other conversion pages, has raised $27 million in Series B funding led by Drive Capital, with participation from Foundry Group and Arthur Ventures. The company has now raised $38 million altogether. More here.

    Minio, an eight-month-old, Woodside, Ca.-based open source cloud storage product, has raised $3.3 million in seed funding led by Nexus Venture Partners and General Catalyst Partners, with participation from AME Cloud Ventures, Index Ventures, and numerous individual investors. TechCrunch has more here.

    Pixelligent Technologies, a 13-year-old, Baltimore, Md.-based advanced materials company that makes next-generation materials for applications in solid-state lighting, flat panel displays, optical components and film, has raised $3.4 million in new funding from undisclosed sources. The company has raised roughly $26 million altogether at this point. (It has also been awarded more then $12 million in U.S. grant programs.)

    ServiceTitan, a two-year-old, Glendale, Ca.-based mobile, cloud-based management platform for home service businesses, has raised $18 million in Series A funding led by Bessemer Venture Partners at a post-money valuation of $100 million. The company had previously raised an undisclosed amount of seed capital. Its other backers include Mucker Capital, I2BF Digital, and AMENALAV Group.

    Studitemps, a seven-year-old, Cologne, Germany-based company that places qualified students as temp workers,  has raised $12.4 million in Series C funding from Iris Capital, XAnge, Seventure and b-to-v.

    SQL Sentry, an 11-year-old, Charlotte, N.C.-based maker of software for SQL server database professionals, has raised $25 million in funding from Mainsail Partners. More here.

    Tumblbug, a four-year-old, Seoul-based Kickstarter-like crowdfunding platform for independent creators, has raised more than $1.5 million in Series A funding led by DCM Ventures, Naver and Strong Ventures.

    Tute Genomics, a three-year-old, Provo, Ut.-based company that sells cloud-based analytics, interpretation, and reporting for clinical sequencing, has raised $3.9 million in Series A1 funding from Intermountain Healthcare, Healthbox, and China-based Tencent Holdings. The company has raised now raised $7.7 million altogether.

    Vroom, a two-year-old, New York-based used car sales startup, has raised $19 million in venture funding and $35 million in debt funding from roughly 15 wealthy individuals, including former pro football player John Elway and former Autonation and Blockbuster CEO Steve Berrard. Fortune has the story here.

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    New Funds

    Garage Technology Ventures in Palo Alto, Ca., and Startup Lab in Oslo, Norway, are launching a joint venture called Silicon Valley Catalyst to fund and grow emerging European tech companies. More here.

    Y Combinator is raising money to create a new venture fund, according to an SEC form flagged by Business Insider yesterday. The outfit isn’t talking yet about the vehicle, Y Combinator Continuity Fund I. But our former colleague, Jon Marino, reported back in March that Y Combinator was looking to raise several billion dollars for a fund to deploy in the later-stage rounds of its most promising portfolio companies, like Dropbox and Airbnb.

    —–

    People

    Brian McClendon, a Google engineering VP and 10-year company veteran of the company who was charge of Google Maps, is leaving to oversee Uber’s new Advanced Technologies Center out of Pittsburgh, reports Recode. McClendon is only the latest Googler to be poached by the popular car-service company. At a StrictlyVC event last month, Tom Fallows, another Uber exec recently poached by Google, remarked half-jokingly on stage that he was surprised in discovering on his first day that “one out of three people is a former Google colleague.”

    At the Bloomberg Technology conference yesterday, Mike Schur, an executive producer of TV shows, including “Parks & Recreation,” weighed in on whether or not there’s a tech bubble. “This feels like a very tense moment right now . . .” with “absurd” deals and valuations.” Schur added: “I think Hollywood really likes to satirize any subculture that’s more absurd and self-obsessed than we are.”  More here.

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    Jobs

    Salesforce is looking to hire a senior corporate development manager. The job is in San Francisco.

    —–

    Essential Reads

    Microsoft announced an executive shake-up this morning. More here.

    Etsy, the newly public, Brooklyn-based online marketplace, anounced its own take on the crowdfunding model made popular by Kickstarter: Fund on Etsy. Now sellers can integrate fundraising directly into their virtual storefronts, as well as raise money for products they haven’t yet made. More here.

    —–

    Detours

    A new theory of distraction.

    An airport adventure for a lost toy.

    Nothing like having Arnold tell you to “turn left.”

    —–

    Retail Therapy

    BMW’s new, tech-laden 7-Series sedan, coming this fall. It isn’t cheap, but you’ll get what you pay for.

    Connie