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

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Top News in the A.M.

The Washington Post, on today’s net neutrality vote: “It’s easy to point to the coming FCC’s vote as another indication Silicon Valley’s time has come in Washington. But here’s the reality: The industry has already arrived.”

Susan Biglieri, who has served as the CFO of Kleiner Perkins Caufield & Byers since 2001, is set to testify to this morning in the Ellen Pao case. Topics she’s sure to touch on: partner compensation.

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Opendoor Raises $20 Million for Its Audacious Home-Buying Business

Opendoor, a year-old, San Francisco-based company, is on a mission to make residential real estate liquid by making it simple to buy and sell it online.

Investors are buying what it’s selling. This morning, the company is announcing $20 million in fresh funding led by GGV Capital, a round that brings the company’s total outside funding to $30 million.

Consumers are buying Opendoor’s pitch, too. The 20-person company is now buying one house per day – sight unseen — in its test market of Phoenix. Home owners need merely give it their address and some basic details, and using public market information about historical home sales and OpenDoor’s own proprietary data about market conditions, the company arrives at an offer price that’s just one to three points below what the seller might fetch on the open market roughly three months into the future. (That’s the average time, it says, required to sell a home in the U.S.)

The big question now is whether the whole operation is sustainable. Certainly, the risk and reward associated with what it’s trying to pull off is enormous.

Consider: After Opendoor acquires each home, it must ensure the home is up to code in order to resell it. The repairs alone can likely get complicated, as any homeowner can attest. But each home is also given numerous cosmetic upgrades that will give it so-called curb appeal. Think everything from new kitchen cabinets to light landscaping.

Opendoor can (and surely intends) to sell its homes at a premium, based on those upgrades. But it’s a lot of work, the kind that involves contractors and lawn maintenance workers, in addition to Opendoor’s growing team of developers. More, hanging on to that inventory in the meantime is a huge risk. Though the company’s equity certainly helps, as does a partnership with a bank that gives it debt to use, the housing market is highly sensitive to interest rates and other macroeconomic factors. In Phoenix, for example, where Opendoor has been testing out its service for the last several months, up to a quarter of the homes that are listed for sale are eventually taken back off the market.

CEO Eric Wu — a serial entrepreneur who cofounded Opendoor last year with investor-operator Keith Rabois — acknowledges the challenges, but he seems convinced that none are insurmountable. Partly, that owes to the progress Opendoor has made as a software company, whose platform can now (Wu says) seamlessly address everything from property assessments to quickly presenting offers to potential customers to handling the payment of the house to overseeing the infrastructure involved with holding and reselling it.

Wu also knows that there’s tremendous pain associated with home buying today, and where there is pain, there is opportunity.

In fact, Wu is already envisioning the day that Opendoor both buys homes, then resells others it owns to those same customers, creating one of those virtuous cycles that the digerati like to talk about.

“Longer term,” says Wu, “we’d love to have a path where we transact 5 to 35 percent of all homes. Once that occurs, this business really starts to evolve into us solving pain points for homeowners, from [allowing them to easily sell their homes] to helping them [purchase] another with high-quality renovations. We definitely think we can touch both buyers and sellers.”

The company could even get into the financing business eventually, Wu suggests. There’s “lot of headache and stress in securing mortgages today,” he notes. OpenDoor has enough work ahead of it right now, but it’s “something we’ll look at down the road,” he says.

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New Fundings

3D Robotics, the six-year-old, San Diego-based personal drone manufacturer co-founded by former Wired magazine editor Chris Anderson, has raised $50 million led by Qualcomm, reports VentureWire. The company has now raised $85 million in funding to date, including from Ooga Labs, True Ventures, Foundry Group, SK Ventures, O’Reilly AlphaTech Ventures, and Mayfield Fund.

Airtable, a two-year-old, San Francisco-based company that makes complex databases usable on users’ mobile phones, has raised $3 million in funding, including from Box Group, Caffeinated Capital, CrunchFund, Data Collective, Freestyle Capital, and numerous individual investors, including Bebo cofounder Michael Birch. TechCrunch has more here.

Ardusat, a young, Salt Lake City, Ut.-based education company focused on enhancing student engagement through hands-on experimentation, has raised $1 million in seed funding from Space Florida, Fresco Capital, Spire and other investors. The outlet edSurge has more here.

Branch Metrics, a nearly year-old, Palo Alto, Ca.-based software company focused on mobile deep linking (where pages inside of mobile apps are accessible immediately with the click of a link), has raised $15 million in Series A funding co-led by earlier investors New Enterprise Associates and Ben Narasin of TriplePoint Capital, with participation from Pejman Mar Ventures, Zach Coelius, and Cowboy Ventures. The company had previously raised $2.75 million from many of those same investors.

Chefs Feed, a three-year-old, San Francisco-based content platform that offers food suggestions from top chefs, has raised $4 million in Series A funding led by Artis Ventures, with participation from Haas Portman, Structure Capital, Subtraction Capital and individual investors. The company has now raised $8.2 million to date.

Comet Biorefining, a nearly six-year-old, Ontario-based maker of cellulosic glucose technology, has raised an undisclosed amount of funding led by Sofinnova Partners.

Coolan, a nearly two-year-old, San Mateo, Ca.-based company that employs analytics and artificial intelligence to predict server failure and avert data center outages, has raised an undisclosed amount of seed funding from investors, including Keshif Ventures, North Bridge Venture Partners, and The Social+Capital Partnership. More here.

Dtex Systems, a 15-year-old, San Jose, Ca.-based company whose software prevents cyber security breaches originating within an organization, has raised $15 million Series A funding co-led by Norwest Venture Partners and Wing Ventures.

Exablox, a 4.5-year-old, Mountain View, Ca.-based cloud storage provider, has raised $16 million in Series C funding from Dell Ventures. The company has now raised $38.5 million altogether, including from DCM, Norwest Venture Partners, and U.S. Venture Partners.

Getable, a five-year-old, San Francisco-based company whose mobile tools are used for ordering and tracking construction equipment, has raised $5 million in Series A funding led by The Social+Capital Partnership. The company has now raised $8.2 million altogether, shows Crunchbase.

IronSource, a 5.5-year-old Tel Aviv-based ad tech company, has raised $20 million roughly six months after raising an $85 million round from a syndicate of U.S. and China-based investors that the company describes as among the largest strategic partners in mainland China. The company is expected to go public later this year or early next year, says Forbes.

LocoMotive Labs, a 2.5-year-old company that makes play-based apps for children with special needs, has raised $4 million in Series A funding led by Softbank Ventures Korea and TAL Education Group, with participation from earlier backers K9 Ventures, Kapor Capital, NewSchools Venture Fund, D3Jubilee, and individual investors. The company has now raised $5.15 million altogether.

Luxe Valet, a nearly two-year-old, San Francisco-based on-demand valet startup, has raised $20 million in Series A funding co-led by Redpoint Ventures and Venrock Partners. The company has now raised $25.5 million to date, shows Crunchbase.

Lytro, a four-year-old, Mountain View, Ca.-based company whose cameras capture the entire light field around a picture, has reportedly raised $50 million in new funding led by GSV Capital, with participation from all of its earlier investors, which include Allen & Co., Greylock Partners, Andreessen Horowitz, New Enterprise Associates, and K9 Ventures. Unfortunately for between 25 and 50 of its 130 employees, Lytro is also about to “make some cuts in some areas so we can staff up in some new ones,” CEO Jason Rosenthal tells Recode. “Fifty million dollars is a nice big number,” he adds, “but it is not unlimited. We had to make some pretty tough decisions.”

Klipfolio, a 14-year-old, Ottawa, Ontario-based business intelligence company, has raised $6.2 million in Series A round led by Omers Ventures, with participation from the company’s seed investors, including BDC Capital, Mistral Venture Partners, Acadia Woods, BOLDstart Ventures, CommonAngels Ventures, and Fundfire. The company has now raised $7.7 million to date.

Orca Pharmaceuticals, a 2.5-year-old, Abingdon, England-based startup at work on developing oral drugs for chronic inflammatory diseases, has struck an agreement with the much larger British drug developer AstraZeneca to receive up to $122.5 million if it hits various milestones. The deal also gives AstraZeneca the option to buy Orca’s compounds at the end of the collaboration.

Pivot3, a 12-year-old, Austin-based vendor of hyper-converged infrastructure, has raised $45 million in funding from Argonaut Private Equity, S3 Ventures, InterWest Partners, and Wilson Sonsini Goodrich & Rosati. The company has now raised $184.8 million altogether, shows Crunchbase. Forbes has more here.

TopOPPS, a year-old, St. Louis, Missouri-based company that makes predictive analytics software for sales teams, has raised $2 million in funding led by Cultivation Capital. The company has now raised roughly $4 million, it says. More here.

SecureKey Technologies, a seven-year-old, Toronto-based maker of identity and authentication software, has raised $19 million in Series C funding led by Blue Sky Capital and earlier backer Rogers Venture Partners. The company has now raised $75.7 million altogether, shows Crunchbase.

Shark Punch, a four-year-old, game development studio with offices in San Francisco and Helsinki, has raised $1.2 million in seed funding led by London Venture Partners, with participation DN Capital, Reaktor Polte, and other investors.

Unify Square, a seven-year-old Bellevue, Wa.-based company that sells software, services and support for Microsoft Lync/Skype for Business (it was started by Microsoft veterans), has raised $8.2 million in Series B funding from individual investors with backgrounds at Yahoo, IBM and Ariba. The company has now raised $22.2 million altogether. GeekWire has more here.

Zimperium, a 4.5-year-old, San Francisco-based mobile security company that protects smartphones against advanced cyber attacks, has raised $12 million in new funding led by Australia’s Telstra, with participation from Japan’s TOYO Corp. and earlier backers Sierra Ventures, Lazarus Israel Opportunities Fund, and Samsung. The company has now raised $20 million altogether, shows Crunchbase.

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New Funds

MicroVentures, a 5.5-year-old, Austin, Tx.-based equity crowdfunding platform, is now enabling its investors to fund startups in the portfolio of the accelerator and seed-stage venture firm 500 Startups. Crowdfund Insider has more here.

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People

Chi-Hua Chien, who until last October served as an investing partner at Kleiner Perkins Caufield & Byers, took the stand yesterday in the gender discrimination and retaliation case of former Kleiner partner Ellen Pao, who has said she was systematically excluded from opportunities that were provided to men at the firm, including a ski trip to Vail and an all-male dinner party at the apartment of former Vice President Al Gore. Pao has stated in court papers that Chien didn’t invite women to the dinner because they “kill the buzz.” Said Chien yesterday, “I never said that or anything like that . . . The quotes in the lawsuit, the things she claimed I had said, the events she claimed I organized—it was very, very hurtful.” Some of the emails brought into testimony seemed to bolster Pao’s argument, however, including a note from Chien to Path CEO Dave Morin, in response to Morin’s request to add a woman to the Vail trip. “Why don’t we punt on her and find 2 guys who are awesome. We can add 4-8 women next year.” (There were no more ski trips after that.) More here and here.

Twitter CEO Dick Costolo talks with the New York Times about how he decides what’s abuse on the platform, and what he thinks constitutes free speech. Says Costolo: “One way of thinking about it is: I may have a right to say something, but I don’t have a right to stand in your living room and scream it into your ear five times in a row.”

Bob Grady has been appointed a partner at the San Francisco-based private equity firm Gryphon Investors. Grady previously spent five years at the Wyoming-based investment firm Cheyenne Capital, where he served as a general partner and managing director; he was also formerly a managing director and global head of venture and growth capital at The Carlyle Group. Grady is also a longtime Republican operative.

Venture capitalist Bill Gurley of Benchmark isn’t done warning the industry about its reckless behavior. Yesterday, he published half a dozen reasons that today’s late-stage private rounds are very different from an IPO — and why investors would be wise to curb their enthusiasm for them.

Yahoo CEO Marissa Mayer is upholding a long tradition at Yahoo of overpaying people to keep them from leaving, reports Business Insider. One of the outlet’s sources says a prized employee in the company’s ad sales group makes a stunning $2.5 million a year — up from the $450,000 he was making before Mayer arrived. Meanwhile, Jeff Bonforte, the senior vice president in charge of Yahoo’s communication products, is “rumored” to be making roughly $5 million a year, says BI.

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Jobs

Illumina Ventures, a corporate venture unit of the bioinformatics giant Illumina that’s focused on life sciences, is looking for a global head. The job is in San Diego.

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Essential Reads

One billion viewers and no profit; the WSJ takes a hard look at YouTube.

Google has created a computer that can teach itself dozens of games —and wins.

Gartner, the research firm, has predicted a third of all jobs will be lost to automation within a decade. Academics who used to dismiss such findings are starting to worry they’re true, too.

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Detours

Downhill biking through the Himalayas.

Examining pricey museum sleepovers.

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Retail Therapy

Mugs for mustachioed men.

Outlet snouts.

Hi, everyone, hope your Wednesday is off to a great start! (Psst, web visitors, this version of today’s email is easier to read than what you see below.)

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Top News in the A.M.

Tomorrow, the FCC is expected to approve regulating Internet service like a public utility.

China has been dropping some of the world’s leading tech brands from its approved state purchase lists in an apparent response to revelations about widespread Western cybersurveillance.

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The Real Reveal in the Kleiner Case

“Pao didn’t have the necessary skills for the job. She didn’t even come close.”

So said employment attorney Lynne Hermle yesterday in her opening comments about Ellen Pao, the CEO of Reddit and a former partner of Kleiner Perkins Caufield & Byers, the storied venture firm that Pao is suing for gender discrimination and retaliation.

We don’t want to underestimate Hermle, who is notoriously tough and is presumably just getting warmed up. (The trial is expected to last four weeks.)

Still, her strategy seems risky, given how unclear it is what skills are “necessary” to becoming a great venture capitalist.

Certainly, Pao’s educational background is textbook, with degrees from Harvard’s business and law schools, not to mention an undergraduate degree in electrical engineering from Princeton. Pao also logged time at Microsoft, TellMe, and BEA Systems, giving her the kind of operating experience that is often (but not always) a prerequisite for the job.

We’ll spare you the laundry list, but we could probably come up with hundreds of general partners with similar backgrounds. Among them: famed VC Jim Breyer of Accel Partners, who had part-time jobs at Hewlett-Packard and Apple, as well as a stint as a McKinsey consultant, before nabbing his MBA at Harvard and heading straight into Accel.

Still, Hermle might argue, there’s much more to venture capital than education. In fact, she is already beginning to paint Pao as highly political, citing performance reviews that state Pao “seems to have a sense of entitlement rather than earning her position” and is “not viewed as a good team member” and “not 100 percent reliable” in supporting her colleagues. (Indeed, one detail that surfaced yesterday was that Pao suggested Kleiner fire Trae Vassallo, a former Kleiner colleague who helped to lead deals in Nest Labs and Dropcam, among others.)

The implication seems to be that trust and respect within a venture firm are key. And in theory, it’s easy to see why. No one wants to work with a backbiter.

Unfortunately, backbiters are sometimes also rainmakers, and in venture capital, returns are the name of the game.

Yes, it’s nice if you can find team members who are both supportive and know how to produce fat returns, but that’s not always the case. Because of the typical pay structure within a firm — with certain partners receiving far better economics than others — it’s often not so easy to be diplomatic, either.

The truth is that what goes on inside most venture firms isn’t nearly so collegial as GPs would have their LPs believe. They may talk about chemistry; they may applaud each other publicly. But when it comes down to it, venture capital is as cutthroat a business as you’ll find. You make money for investors or you get kicked out — and anyone who has been around long enough can tell you that everything else is a façade.

Much has already been written about Ellen Pao and whether and what her case against Kleiner tells us about gender discrimination inside venture firms.

What’s more likely to be revealed in this very public case is that partnerships are far more fragile than the industry would have us believe.

New Fundings

CENX, a six-year-old, Hoboken, N.J.-based company whose software helps wireless carriers manage their data networks, has raised an undisclosed amount of growth financing from its previous backers, including Cross Creek Advisors, DCM, Ericsson, Highland Capital Partners, Mesirow Financial Private Equity, and Verizon Ventures.

FundThrough, a year-old, Toronto-based online business lending startup, has raised $2.2 million led by Real Ventures, with participation from Origin Merchant Partners, Five Elements Ventures, Barlow Lane Holdings and individual investors.

Iotera, a four-year-old, Bay Area-based-company that produces GPS devices with what it says are months of battery life, has raised $1 million in seed funding led by earlier backer ZenShin Capital Partners, with participation from Crunchfund, Startup Capital Ventures, String Ventures, EarlyMarket and Rubicon Venture Capital. TechCrunch has the story here.

Mavenlink, a 6.5-year-old, Irvine, Ca.-based company whose cloud-based software helps distributed teams manage and scale the projects, has raised $15 million in equity and a $4 million credit facility from Carrick Capital Partners and Silicon Valley Bank.

NCino, a three-year-old, Wilmington, N.C.-based company behind a web-based operating technology for banks and financial-services companies, has raised $29 million in Series B funding led by Insight Venture Partners. Earlier backers, including Wellington Management, former Morgan Stanley Chairman and Chief Executive John Mack, and Promontory Financial Group founder and CEO Gene Ludwig, also joined the round. The company has now raised $49 million to date. Forbes has more here.

Q4 Web Systems, an 8.5-year-old, Toronto-based company whose services cater to investors relations professionals (including making investor websites), has raised $5 million led by Plaza Ventures, with participation from Atlas Venture and Silicon Valley Bank.

RtTech Software, a four-year-old, New Brunswick, Canada-based company whose data software aims to help manufacturing companies improve their asset availability, asset utilization and utilities consumption, has raised $3 million in Series A funding led by McRock Capital, with participation from earlier backer New Brunswick Innovation Foundation.

Telltale Games, a 10-year-old, San Rafael, Ca.-based digital publisher that releases interactive episodic content on a monthly schedule, has raised an undisclosed but “significant” amount of strategic funding from Lions Gate Entertainment Corp. that VentureBeat hears is $40 million. The company had raised roughly $14.5 million previously, including from Granite Ventures and IDG Ventures.

Wigo, a 13-month-old, Boston-based startup whose mobile application enables college students to find out where people they know are going out, has raised $1.5 million in seed funding led by Great Oaks Venture Capital, with participation from the startup foundry Blade, GGV Capital, Greylock Partners, KEC Ventures, and individual investors. The company has raised $2.2 million altogether. Business Insider takes a look at it here.

Xero, an 8.5-year-old, Wellington, New Zealand-based publicly traded maker of online accounting software, has raised $100 million from Accel Partners, with its largest institutional investor, Matrix Capital Management, chipping in another $10.8 million. Financial Review has more here.

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New Funds

Notation Capital, a new, Brooklyn-based seed-stage firm founded by former Betaworks colleagues Nicholas Chirls and Alex Lines, has closed its debut fund with $8 million. Venture Capital Dispatch has much more here.

Institutional Venture Partners, the 35-year-old, Sand Hill Road firm is looking to raise a new fund, reports VentureWire. Its sources say the firm is targeting more than the $1 billion it raised in 2012 when it closed its fourteenth fund, too.

Pereg Ventures, an early-stage venture capital firm that operates in the U.S. and Israel and is backed by Nielsen NV, has completed initial fundraising for its debut fund with $25.1 million, it tells VentureWire. It was initially targeting $50 million and it’s still aiming to raise more capital, it says.

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IPOs

GoDaddy, the 18-year-old, Scottsdale, Az.-based online service that helps people and businesses set up web sites, took another step to becoming a publicly traded company yesterday, filing its sixth updated S-1 since filing to go public last June. The company is fast-growing but also a “big money loser,” notes USA Today, which continues to make its offering anything but certain. If the company does go public, it will be a long time in coming. GoDaddy tried going public in 2006, too, but it later pulled its offering. Former CEO Bob Parsons, who was replaced in 2012, said at the time that he yanked the offering because he found the quiet period that came along with it “suffocating” as it prevented him for doing radio, TV, or his-then weekly Internet radio show. (The company was also losing money, according to that earlier S-1.)

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Exits

Meritage Pharma, a seven-year-old, San Diego-based company that’s been developing prescription products to treat gastrointestinal and atopic diseases, has been acquired for $70 million and up to another $175 million in potential future payouts. The buyer: Shire, a Dublin, Ireland-based company that targets markets such as rare diseases, neuroscience and internal medicine. Meritage had raised $35 million from Domain Associates, Latterell Venture Partners and Vertical Group.

Toro, a 2.5-year-old, San Francisco-based startup that helps developers promote their apps on Facebook and was formerly known as Red Hot Labs, has been acquired by Google for undisclosed terms. Toro had raised $1.5 million in funding from investors, including Andreessen Horowitz, Greylock Partners, SV Angel, General Catalyst Partners, Keith Rabois, Chris Dixon, Bill Tai and Guitar Hero co-creators Charles Huang and Kai Huang. TechCrunch has the story here.

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People

Yesterday, in a San Francisco courtroom, venture capitalist Trae Vassallo testified that like Ellen Pao — the former Kleiner Perkins Caufield & Byers partner who is suing the firm for gender discrimination and retaliation — she endured several upsetting episodes with a then (married) senior partner at the firm, Ajit Nazre. To wit, she said he invited her for drinks one night to discuss strategy but that during the meeting, he started to make advances. Vassallo, who is herself married and has three children, also recounted being invited by Nazre to a business meeting in New York where the two were to meet DoubleClick CEO David Rosenblatt. Rosenblatt never arrived, and Nazre later showed up in the door of Vassallo’s hotel room wearing a bathrobe and slippers, asking to be let in. More here.

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Jobs

Citi Ventures is looking for an investing group head. The job is in New York.

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Essential Reads

Apple was told to pay $532.9 million after a federal jury said yesterday that its iTunes software used a Texas company’s patented inventions without permission. Apple is pledging to appeal. Said Apple spokeswoman Kristin Huguet to Bloomberg: “Smartflash makes no products, has no employees, creates no jobs, has no U.S. presence, and is exploiting our patent system to seek royalties for technology Apple invented. We refused to pay off this company for the ideas our employees spent years innovating and unfortunately we have been left with no choice but to take this fight up through the court system.”

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Detours

How an undocumented immigrant from Mexico became a star at Goldman Sachs.

You know it’s cold when . . .

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Retail Therapy

For all the DJs in the house. (Josh Felser, we’re looking at you.)

“Pao didn’t have the necessary skills for the job. She didn’t even come close.”

So said employment attorney Lynne Hermle yesterday in her opening comments about Ellen Pao, the CEO of Reddit and a former partner of Kleiner Perkins Caufield & Byers, the storied venture firm that Pao is suing for gender discrimination and retaliation.

We don’t want to underestimate Hermle, who is notoriously tough and is presumably just getting warmed up. (The trial is expected to last four weeks.)

Still, her strategy seems risky, given how unclear it is what skills are “necessary” to becoming a great venture capitalist.

Certainly, Pao’s educational background is textbook, with degrees from Harvard’s business and law schools, not to mention an undergraduate degree in electrical engineering from Princeton. Pao also logged time at Microsoft, TellMe, and BEA Systems, giving her the kind of operating experience that is often (but not always) a prerequisite for the job.

We’ll spare you the laundry list, but we could probably come up with hundreds of general partners with similar backgrounds. Among them: famed VC Jim Breyer of Accel Partners, who had part-time jobs at Hewlett-Packard and Apple, as well as a stint as a McKinsey consultant, before nabbing his MBA at Harvard and heading straight into Accel.

Still, Hermle might argue, there’s much more to venture capital than education. In fact, she is already beginning to paint Pao as highly political, citing performance reviews that state Pao “seems to have a sense of entitlement rather than earning her position” and is “not viewed as a good team member” and “not 100 percent reliable” in supporting her colleagues. (Indeed, one detail that surfaced yesterday was that Pao suggested that Kleiner fire Trae Vassallo, a former Kleiner colleague who helped to lead deals in Nest Labs and Dropcam, among others.)

The implication seems to be that trust and respect within a venture firm are key. And in theory, it’s easy to see why. No one wants to work with a backbiter.

Unfortunately, backbiters are sometimes also rainmakers, and in venture capital, returns are the name of the game.

Yes, it’s nice if you can find team members who are both supportive and know how to produce fat returns, but that’s not always the case. Because of the typical pay structure within a firm — with certain partners receiving far better economics than others — it’s often not so easy to be diplomatic, either.

The truth is that what goes on inside most venture firms isn’t nearly so collegial as GPs would have their LPs believe. They may talk about chemistry; they may applaud each other publicly. But when it comes down to it, venture capital is as cutthroat a business as you’ll find. You make money for investors or you get kicked out — and anyone who has been around long enough can tell you that everything else is a façade.

Much has already been written about Ellen Pao and whether and what her case against Kleiner tells us about gender discrimination inside venture firms.

What’s more likely to be revealed in this very public case is that partnerships are far more fragile than the industry would have us believe.

Hi, happy Tuesday, everyone!

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Top News in the A.M.

Apple is now more than double the size of Exxon — and everyone else.

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A Team Player Strikes Out on His Own

Like many venture capitalists, Ashmeet Sidana watched his firm, Foundation Capital, grow smaller during his nearly nine-year tenure, narrowing from a $750 million fund closed in 2008 to a $282 million fund closed in 2013.

In some ways, its downsizing was inevitable. As the costs of starting both consumer-facing and enterprise startups has shrunk, the industry has largely become split among very small funds that can nurture these efficiently run startups, and very large funds that can help get the survivors either sold or taken public.

It left Sidana, who parted ways with Foundation in 2013, thinking about a big opportunity that he could chase with fewer dollars. Specifically, he began obsessing about the huge gulf between the best data centers — built by the likes of Amazon and Google, where one system administrator can manage 10,000 servers — and traditional enterprise data centers, where one administrator still sometimes manages just 25 to 50 servers.

Because those traditional enterprise data centers will never go away entirely, owing to privacy and security and latency concerns, and “because you have this radical efficiency on the other side,” entirely new companies will be created between the two, says Sidana.

It’s that belief that has driven a number of Sidana’s angel investments over the last half year, including in startups Signal Fuse and Menlo Security (both of which remain in stealth mode).

That thesis, along with Sidana’s track record – his past board seats include FreeWheel, acquired by Comcast for $350 million and Altor Networks, acquired by Juniper for $95 million – has also attracted the attention of institutional investors.

Indeed, this morning, Sidana is officially taking the wraps off his new firm, Engineering Capital, as well as its debut, $32 million fund, whose LPs include Foundation Capital founder Kathyrn Gould, investor-academic Steve Blank, and the fund of funds firm Cendana Capital. (We made brief mention of the fund in yesterday’s newsletter.)

Sidana hasn’t made any investments out of the fund yet, but he says that Engineering Capital plans to build a concentrated portfolio of between 12 to 15 companies across such sectors as storage, networking, management, and security. “Any company leveraging this trend in IT” is fair game, he says.

Sidana will also be the first, anchor investor in them all if he has his way. “I’ll lead the round, price it, and take a board seat, which is different from a lot of other enterprise funds that are making small investments,” he says, calling his a“ rifle shot versus a shotgun approach.”

Asked how he settled on his new brand, Sidana — who once ran product management for one of VMWare’s flagship products, and who plans to run his firm single-handedly for now — says Engineering Capital aims to represent “venture capital for engineers.”

He adds with a laugh, “My joke is to ‘engineer’ the capital for them.”

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New Fundings

Chewse, a four-year-old, L.A.-based platform that makes it easier for offices to order meals from certain restaurants at pre-determined times, has raised $1.7 million in seed funding, including from Telegraph Hill, InnoSpring, 500 Startups, Chris Sacca, Ben Ling, Richard Chen and other angel investors. TechCrunch has more here.

GuideSpark, a seven-year-old, Menlo Park, Ca.-based company that provides employers with customizable video templates for conveying human resources information in a more digestible way, has raised $22.2 million in Series C funding led by Meritech Capital Partners, with participation from earlier backers IDG Ventures, New Enterprise Associates and Storm Ventures. The company has now raised $42.4 million to date, shows Crunchbase.

HomeLane, a seven-month-old, Bangalore, India-based company that boasts of integrated interior design and manufacturing capabilities that allow its customers to customize their homes, has raised $4.5 million in Series A funding led by Sequoia Capital, with participation from Aarin Capital. YourStory has more here.

Knowmail, a year-old, Tel Aviv, Israel-based developer of email-management software for businesses, has raised $1.2 million in seed financing from Plus Ventures, 2B Angels, AfterDox and INE Ventures.

LocoMotive Labs, a 2.5-year-old, Berkeley, Ca.-based developer of play-based educational apps for children with special needs, has raised $4 million in Series A funding co-led by SoftBank Ventures Korea and TAL Education Group. Earlier backers, including D3Jubilee, K9 Ventures, Kapor Capital, and NewSchools Venture Fund, also participated in the round. The company has now raised $4.6 million altogether, shows Crunchbase.

Mack Weldon, a four-year-old, New York-based company that makes “high-tech” socks, underwear, and undershirts, has raised $4 million in Series A funding from RiverPark Ventures, Bridge Investments and Lyrical Partners. The company has now raised $5.9 million altogether.

Metamarkets Group, a nearly five-year-old, San Francisco-based analytics platform for buyers and sellers of programmatic advertising, has raised $15 million in Series C funding from City National Bank, Data Collective, IA Ventures, Khosla Ventures, True Ventures, Village Ventures and individual investors. The company has now raised $43.5 million altogether, shows Crunchbase.

Prexton Therapeutics, a three-year-old, Geneva, Switzerland-based company that’s developing therapeutic compounds to treat central nervous system conditions including Parkinson’s disease, has raised 8.7 million euros ($9.8 million) in Series A funding from Sunstone Capital and Ysios Capital, with participation from earlier investor MS Ventures.

Roadster Online, a year-old, San Francisco-based company that promises to find great prices on new cars for customers, then deliver the car to their doors, has raised $1.8 million in seed funding from undisclosed sources, reports VentureWire.

Sikka Software, an 11-year-old, Milpitas, Ca.-based software-as-a-service company with a practice-management platform for dentists, optometrists, veterinarians and the like, has raised $5.5 million in Series B funding led by new investor Sierra Ventures, with participation from earlier backer ATA Ventures.

Space Time Insight, an eight-year-old, San Mateo, Ca.-based company whose analytics software aims to help companies in asset-intensive industries (like utility companies) make faster, better decisions, has raised $8 million in funding from the energy supplier E.ON SE and NEC Corp. The company has now raised $50 million altogether, including from EnerTech Capital, Novus Energy Partners, and Zouk Capital, shows Crunchbase.

Vigilant Biosciences, a four-year-old, Miami, Fl.-based company whose point-of-care and lab-based products help healthcare practitioners to more easily assess the risk of oral cancer, has raised $5.5 million in Series B funding from White Owl Capital Partners, venVelo, the Florida Institute for the Commercialization of Public Research, and earlier, unnamed investors. The company has now raised $7.8 million to date.

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IPOs

MaxPoint Interactive, a nine-year-old, Morrisville, N.C.-based SaaS platform that runs targeted digital marketing campaigns to drive in-store sales, yesterday announced plans to raise $75 million in an IPO by offering 6.5 million shares at between $10.50 and $12.50 per share. The company, backed by $11 million from Trinity Ventures and Madrona Venture Group, will be entering a public market that’s hasn’t been kind to ad tech since early last year.

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Exits

Authy, a three-year-old, San Francisco-based startup with a two-factor authentication app, has been acquired by the cloud software service Twilio for undisclosed terms. The app will continue as a standalone service, but its capabilities will be added to Twilio’s API, reports Recode. Authy had raised $3.8 million from investors, including Y Combinator, Corazon Capital, Salesforce Ventures, StartCaps Ventures, and Data Collective.

Camel Audio, a 15-year-old, London-based company known for its range of plug-ins, synthesizers, effects, and sound libraries, appears to have been quietly acquired by Apple. MacRumors has the story here.

Heptares Therapeutics, an eight-year-old, Welwyn Garden, England-based clinical-stage biotechnology company that’s been developing treatments for Alzheimer’s and other diseases, has been acquired by Sosei Group, a Japanese biopharmaceutical company, for up to $400 million, if certain milestones are met. Heptares had raised at least $21 million from investors, including Takeda Ventures and Clarus Ventures, shows Crunchbase.

Kindermint, a two-year-old, Tampa, Fl.-based online resale store that specializes in gently used kids’ clothing, has been acquired by the six-year-old, San Francisco-based used-clothing retailer ThredUp for undisclosed terms. Kindermint appears to have raised a tiny seed round from an undisclosed source; ThredUp has meanwhile raised roughly $50 million from investors, including Upfront Ventures, Highland Capital Partners, Trinity Ventures, and Redpoint Ventures.

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People

The rapper (and, more recently, startup investor) Chamillionaire is the newest entrepreneur-in-residence at L.A.-based Upfront Ventures. Partner Mark Suster explains why here.

The high-profile showdown between Kleiner Perkins Caufield & Byers and former Ellen Pao — who is suing the firm for $16 million for gender discrimination and retaliation — kicks off at 9.am. PST this morning in San Francisco Superior Court. The San Jose Mercury News is promising readers a play-by-play here. Meanwhile, Fortune has posted both sides’ pre-trial briefs here.

James Proud, a 23-year-old entrepreneur with a new sleep tracking device called Sense, receives high praise in Wired, even if it’s “too soon to say whether Proud’s sleep monitor will develop into a credible success story.”

Troubled payday lender Wonga has just laid off 325 employees, sold off a unit of its business, and lost its chairman. More here.

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Job Listings

IDG Ventures is looking to hire an associate. The job is in San Francisco’s Presidio park.

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Data

A typical billionaire has $3.1 billion. Here’s where most of them live.

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Essential Reads

Digital natives still love books. “I can’t imagine reading Tocqueville or understanding him electronically,” says a junior at American University. “That would just be awful.”

Pebble thinks it can hold off the tech giants by going back to its Kickstarter roots with its new watch, called Time.

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Detours

Ranked: The salary bump you can expect from a graduate degree, by major.

Mad Magazine’s best spoof ads.

The Googlifier.

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Retail Therapy

AdVenture Capitalist.

Backpacks for photojournalists. (H/T: InsideHook)

Good morning, everyone! Hope you had a wonderful weekend. (Web visitors, this version of today’s morning email is easier to read than what you see below.)

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Top News in the A.M.

Google has just launched YouTube Kids.

Twitter gets behind the FCC’s “net neutrality” proposal.

To eliminate bugs within iOS, Apple is reportedly planning to launch the first-ever public beta program for it, beginning with the iOS 8.3 next month. What that means: any iPhone user will be able to give Apple’s unreleased iPhone software a test run before its final release (though the program will be restricted to 100,000 people).

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Kathryn Gould: The Kingmaker in the Background

Most venture capitalists don’t curse like sailors. Most can’t boast a 90 percent internal rate of return over the course of their investing careers, either. Kathyrn Gould — the inimitable founder of Foundation Capital, who today spends much of her time today on her vineyard in the foothills of California’s Sierra mountain range — is known for both.

In select circles, Gould, who got her start in VC in the late ’80s at the now-defunct firm Merrill, Pickard, Anderson & Eyre, is also known for mentoring up-and-coming investors. We talked recently about her views on the industry – and which VCs she’s betting on right now.

You used to make angel investments, including a $50,000 investment in the software business Demandforce that returned $2 million when the company was acquired by Intuit in 2012. Why stop?

I made three angel investments, and I wouldn’t say I won’t do more, but I’m a perfectionist and for me, making angel investments [requires as much time and effort] as running a firm. My lifetime IRR is 90 percent and I’m not going to mess with my numbers just to screw around.

[Early-stage Investor] Mike Maples and I put our personal money into Demandforce before we started Floodgate, but chance favors a prepared mind, and while I could still [make angel bets], I don’t want to.

When you say that “we” started Floodgate, what do you mean?

Mike [who logged time at Silicon Graphics and Trilogy Software, then cofounded a company, Motive, that went public in 2004] briefly floated through Foundation Capital [in the early 2000s] so I knew him, and we used to strategize about what was happening in venture business.

He’d started to dabble with his own money, including investing in Twitter, which wasn’t an obvious winner. I’d retired [from Foundation in 2006], but I said, “If I were to do [another fund], I’d raise a small amount of money” [because of the changing economics of startups]. And we said, “Sh_t, let’s put together a business plan and do this thing.” So we mapped out how we’d do it, I helped him with his slides, and I introduced him to my three best investors at Weathergage, Horsley Bridge Partners, and the University of Chicago, and there he was.

Are you an LP in Floodgate?

Yes, though I help these guys, then invest in their firms, but I don’t get any special treatment.

Who else have you helped get started?

We [at Foundation] were investors in [entrepreneur-investor] Mar Hershenson’s companies. We invested in her [analog circuit company Barcelona Design], and when she developed this consumer penchant and hooked up with [angel investor] Pejman Nozad to launch their venture fund, I said, “Let me help you; I know classy institutional investors that will invest.” Even though I loved what they were doing, their written business plan was a goddamned mess. It was very random. And your slides have to be credible to go raise money from decent investors. I still see [Nozad and Hershenson] all the time to talk about things that are happening and give them ideas, and I’m an investor [in their fund].

Most recently, I worked with Ashmeet Sidana, who was a GP at Foundation Capital for [nine years] and [left in September 2013] and started doing his own angel investing. We’d get together at a coffee shop in Portola Valley and I’d ask him what he was doing, and I was like, “This stuff is f_cking great, you should be doing this in a bigger way.” So we wrote his business plan, created his slides, I introduced him to several of his investors – he also has several Indian investors – and he just closed his first solo fund with $33 million. I think his firm, Engineering Capital, will be very successful.

People will read this and start reaching out to you for introductions.

I don’t want people calling me. I’m not going to help you raise your super sucky fund. I’ve know Mar for 20 years, Maples for 15. I’ve known Ashmeet for 15 years.

I feel like I’m in the best of the best [of these small funds]. I think all the good ones are getting started or have started.

For more of our interview with Gould, including the advice she always gives newer investors, click here.

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New Fundings

AlleyNYC, a two-year-old, New York-based co-working space, has raised $16 million in funding led by Vandewater Capital Holdings, with participation from Entrepreneur Media.

Brickell Biotech, a six-year-old, Miami, Fl.-based pharmaceutical company focused on acquiring, developing, and commercializing drug therapies for skin conditions, has raised $10 million in Series C financing from undisclosed investors. The company has now raised $25.4 million altogether, including from Palisade Capital Management and the South Korean beauty products company AmorePacific Ventures.

DriverUp, a newly launched, Dallas-based company that hopes to draw accredited investors into the business of auto lending, has raised $50 million in Series A funding led by Emerald Development Managers and RRE Ventures. You can check out its site here.

Grabble, a 1.5-year-old, London-based social fashion discovery and commerce platform, has raised £1.2 million ($1.9 million) in funding from a long list of mostly European angel investors.

M4JAM (Money For Jam), a 10-month-old, Cape Town, South Africa-based platform that breaks large projects into smaller jobs and enlists independent contractors to complete them, has raised an undisclosed amount of funding from Tencent Holdings and Naspers, via their joint WeChat Africa venture. TechCrunch has more on why the deal is strategically interesting here.

Main Street Hub, a 4.5-year-old, Austin, Tx.-based company that helps small, independently run businesses manage their social media marketing, has received $20 million in debt financing from Silicon Valley Bank. The company has now raised a total of $40 million, including from Harrison Metal and Bessemer Venture Partners. TechCrunch has more here.

NoBroker, a two-year-old, Bangalore, India-based peer-to-peer property listings startup that aims to squeeze brokers out of the rental process, has raised $3 million in Series A funding from SAIF Partners and Fulcrum Ventures. According to TechCrunch, the company had previously raised an undisclosed amount of seed funding. More here.

OrbitHCI, a five-month-old, Boston-based company that’s developing a watch and a tablet that aim to make it easier for the elderly to remotely see and communicate with loved ones, has raised $1 million in seed funding from Google Ventures and Atlas Venture. Venture Capital Dispatch has much more here.

Pepperfry, a four-year-old, Bangalore, India-based home and lifestyle e-commerce platform, is reportedly talking with new and earlier investors about a $70 million to $80 million Series D round. The company has so far raised $28 million across three rounds to date, including from Norwest Venture Partners and Bertelsmann. BusinessLine has the story here.

Philz Coffee, a 12-year-old, San Francisco-based chain of coffee shops, has raised $15 million in Series B funding led by earlier investor Summit Partners, with participation from Cowboy Ventures, Crunchfund and individual investors. The company has now raised $30 million altogether.

Postmates, a nearly four-year-old, on-demand delivery service, has raised $35 million in Series C funding from earlier backer Spark Capital, reports Techcrunch. Postmates is a service that lets users order anything from local stores and have it delivered directly to their home for a small delivery fee. The company has raised a total of $58 million, including from Matrix Partners, SoftTech VC, Crosslink Capital, Scott Banister, Naval Ravikant, Russell Simmons, Thomas Korte, Shervin Pishevar, Dave Morin and David Sacks.

Round.me, a year-old, Palo Alto, Ca.-based company that turns panoramic photos into virtual tours, has raised a $3 million in funding led by April Capital. TechCrunch has more here.

Tilson Technology Management, an 18-year-old, Portland, Me.-based company that builds telecommunications networks, has raised $2.2 million in funding from Rand Capital, a Buffalo-based venture firm, and CEI Ventures of Maine. The company has raised $2.9 million altogether, it says.

TrueFacet, a 14-month-old, New York-based platform that sells pre-owned jewelry, has raised $1.7 million in seed funding from Founders’ Co-Op,Maveron, Social Leverage, Trilogy Equity Partners and individual investors. The company had earlier raised $118,000 in funding from Techstars.

Urban Airship, a five-year-old, Portland, Ore.-based mobile marketing company, has raised $21 million in Series D funding, including from Franklin Park & Associates and QuestMark Partners. The company has now raised $67.6 million altogether, including from August Capital, Foundry Group, True Ventures and Verizon Ventures.

Viv Labs, a 2.5-year-old, TK-based artificial-intelligence startup whose three cofounders also cofounded the virtual personal assistant company Siri (famously acquired by Apple in 2010), has raised $12.5 million in Series B funding. The round was led by Iconiq Capital, with participation from earlier backer Horizon Venture and Pritzker Group Venture Capital. The company has now raised $22.5 million altogether, reports TechCrunch.

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New Funds

Homebrew, the nearly two-year-old, San Francisco-based early-stage venture firm cofounded by Hunter Walk and Satya Patel, has closed its second fund with $50 million, up from the $35 million it had raised for its inaugural fund. Walk, who says the firm has backed 17 startups to date, writes about the firm’s new fund here. Among Homebrew’s newest investments is Eero, a year-old, San Francisco-based company whose routers aim to blanket its customers’ homes in fast, reliable WiFi.

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IPOs

eASIC, a 16-year-old, Santa Clara, Ca.-based integrated-circuits company, has filed to raise up to $75 million in an IPO, despite an inhospitable environment for chip companies. One analyst tells the San Jose Mercury News that it has a “tough row to hoe.” Says another: “I’m not sure this IPO is going to go through, to be honest with you.” The company’s biggest backers include Seagate, which owns 14.6 percent of the company;Khosla Ventures, which owns 20.8 percent; Crescendo Ventures, which owns 15 percent; and Kleiner Perkins Caufield & Byers, which owns 8.8 percent. More here.

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Exits

Airpost, a two-year-old, Toronto-based startup that helps IT managers monitor their employees’ cloud applications, has been acquired by Box for undisclosed terms. More here.

Flexus Biosciences, a two-year-old, San Carlos, Ca.-based immune-oncology company, has been acquired by Bristol-Myers Squibb in a deal worth up to $1.25 billion, including an $800 million up-front payment and up to $450 million in future payments depending on various milestones. Flexus has raised just $38 million from investors, including the publicly traded drug maker Celgene, Kleiner Perkins Caulfield & Byers, and The Column Group. Xconomy has more here.

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People

Austin Ventures is closing shop.

Jon Bradford, the head of TechStars London, is leaving the network, reports TechCrunch. Bradford has been involved in accelerator programs for years, including as founder of a U.K.-based accelerator called Ignite and cofounder and CEO of Springboard Cambridge & London. No word yet on his next move.

Josh Miller, a product manager at Facebook, is among a growing number of privacy-minded “Tweet deleters,” reports Fusion. Explains Miller of why he wrote a piece of code that deletes his tweets after seven days, “My opinions aren’t permanent in my head (I often change my mind over time), and they’re not permanent when shared around the dinner table (nobody is recording our conversations) . . . So it just doesn’t make sense to me that they would be permanent online.”

Facebook CEO Mark Zuckerberg talks with Bloomberg about the company’s mission to get everyone in the world online: “The reality is just that a lot people can’t afford to pay for data access in some of these areas; then they probably aren’t ad markets, and it’s probably not going to be a place where it’s going to be particularly profitable [for Facebook] in the near term. In fact, we’ll probably lose a bunch of money—just because supporting Facebook as a service, and storing the photos and content that people want to share, costs money. We probably won’t offset it by making much.”

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Jobs

Twilio is looking for a new head of corporate and business development. The job is in San Francisco.

Zynga is looking for a director of corporate development. The job is in San Francisco.

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Essential Reads

Google’s Android Auto team built its own driver distraction lab to help determine which tasks people do frequently while driving, and which should be banned, reports the New York Times. According to its story: “Music is most definitely in. Streaming video? Most definitely not. Most social media will also be blocked, and texts can be sent only with voice commands.”

How Etsy alienated crafters and lost its soul.

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Detours

New, fascinating work by the digital artist Erik Johansson.

How we talk about our teachers.

Going commando takes on new meaning.

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Retail Therapy

You could buy a second home in Healdsburg. A castle outside of Paris would be more interesting, though.