• StrictlyVC: October 3, 2013

    110611_2084620_176987_imageGood morning, and thanks to Sigma West for hosting a great party last night at its new San Francisco offices, where a hundred-plus VCs and entrepreneurs gathered for cocktails and canapés. It was great to see some familiar faces, as well as meet some new ones! (Psst, new ones, you can sign up for StrictlyVC here.)

    Have a great Thursday, everyone!


    Top News in the A.M.

    The shutdown enters day three, and President Obama warns that the economic effects of political gridlock will grow a lot worse if Congress doesn’t raise the debt ceiling by Oct. 17.


    Rover: A Dog’s Tale

    Want to get in on potentially massive new opportunity? Here’s the pitch in three words: Home dog boarding.

    It’s not a joke — not to venture capitalists who’ve recently been funding all things dog related, including online marketplaces that connect pet owners with carefully vetted sitters. One such business is 20-month-old DogVacay in L.A., which raised $6 million from Benchmark Capital last November. Another, Seattle-based Rover —  a two-year-old startup that has already raised nearly $16 million in funding from Madrona Venture Group, Foundry Group, and Petco — will be in the market again soon.

    I talked with Rover CEO Aaron Easterly last week about his 26-person company and whether VCs can make money on the concept. Here’s an edited transcript:

    You have close to 200,000 pet owners signed up to your platform, and about 25,000 dog sitters. How much repeat business do you see?

    The repeat usage and stats are incredibly predictable. Once people discover Rover, they stop calling in favors with friends and family and start calling us for day trips and weekends away.

    What’s the average stay, and how much do sitters charge?

    The average stay is a little over four days on average, and prices range from $20 to $45 a night. A sitter who can take the dog to work or work from home, or someone who has access to parks or a backyard [can often] charge more. Also, as a sitter develops a reputation, that person can increase his or her prices.

    What does Rover collect?

    We collect a 15 percent fee on each transaction. We also offer add-ons that people can select, like an annual $49.99 protection package that includes a 24/7 vet consultation and special Rover tag for added safety and security.

    Some VCs might wonder how tech-heavy your platform is.

    You’d be surprised at the analytic rigor that we apply to the business. We only accept about 15 percent of new applicants. We use data modeling and statistical techniques pulled from other industries, so in addition to having a human being vet every applicant who comes into the system, we can predict how successful that person will be within a certain amount of time [among numerous other things], all of which goes into improving the marketplace.

    How many dogs can a sitter watch at once, and how much money can they make?

    They can watch one dog or two but not seven. We have some pet sitters making over six figures annually, and that’s growing.

    What’s your growth strategy?

    We see three ways: through geographic expansion, which can include international; by expanding to pets other than dogs; and by expanding our service range to include things like bathing and walking services and things like that.

    How big is the U.S. market, where people seem particularly likely to treat their pets as children?

    The dog boarding/dog sitting is roughly $6 billion annually in the U.S., but it could be much, much bigger. Many pet owners just despite the idea of taking their dog to a kennel. To them, it’s like taking a kid to an orphanage, a place where dog might sleep and get a meal but could have a terrible experience. If every dog owner used an inexpensive solution like Rover, it could become a $61 billion business. The opportunity here is to figure out this market — which involves just 8 to 9 percent of pet owners — and increase it.


    New Fundings

    BuddyTV, an eight-year-old, Seattle-based company whose apps turn users’ smartphones into viewing guides and remote controls with enhanced social features like chat, has raised $1.52 million in equity and debt, including from aQuantive founder Michael Galgon. The company has raised $10.6 million to date, including from Charles River Ventures and Madrona Venture Group.

    HireVue, a nine-year-old, South Jordan, Utah-based company whose video interviewing platform is used by a long line of corporate customers, including General Motors and Walmart, has raised $25 million in funding led by Sequoia Capital. Other investors to join the round include earlier backers Investor Growth CapitalGranite VenturesPeterson Ventures and Rose Park Advisors. The company has raised $53 million to date.

    Jemstep, a five-year-old, Los Altos, Calif.-based online investment advisor, has raised $4.5 million in funding from Caleo Capital and existing investors. The company has raised $15 million to date.

    Madefire, a Berkeley, Calif.-based company whose storytelling app tries combining the artistry of comics and graphic novels with the iPad’s interactive capabilities, has raised $5.2 million led by True Ventures, with Anthem Venture PartnersCrosslink Ventures and Correlation Ventures. The company had raised a $1.2 million seed round in 2011.

    Netskope, a year-old company in Los Altos, Calif., has raised $21 million in Series A funding from The Social+Capital Partnership and Lightspeed Venture Partners. Netskope sells cloud-based analytics software that enables its enterprise customers to see what apps are running within their organizations, as well as to ensure that they are secure and compliant.

    OneLogin, a four-year-old, San Francisco-based company focused on identify management has raised $13 million in Series B funding from  The Social+Capital Partnership and previous investor Charles River Ventures. The company, whose customers include Carlyle Group and Conde Nast, has raised $17.7 million to date.

    Pursway, an eight-year-old company based in Herzliya, Israel, and Waltham, Mass., has raised $7.2 million in funding from Globespan Capital Partners and Battery Ventures. Pursway makes enterprise software that helps its clients with customer acquisition by mapping out relationships between existing customers and future prospects.

    Quri, a year-old, San Francisco-based analytics company focused on the retail industry has raised $10.2 million in Series B financing led by Matrix Partners. Its previous investors, Catamount Ventures and Simon Equity Partners, also contributed to the round. Quri has raised $14.5 million altogether.


    New Funds

    500 Startups, a Silicon Valley-based investment group that typically invests between $25,000 and $250,000 in early-stage companies, has closed its second seed fund with $44.1 million in commitments. The firm was reportedly targeting $50 million, but the total is roughly 50 percent more than the firm’s original, $29.4 million fund. More here.

    Five Corners Capital, a new, British Columbia-based investment firm, has been appointed general partner to manage the remaining portfolio of Ventures West Capital, one of Canada’s oldest venture capital firms. The 40-year-old outfit is winding down its active operations this month. Five Corners Capital was formed by Kenneth Galbraith and Gary Bridger, both of whom previously worked for Ventures West Capital.



    The Climate Corporation, a seven-year-old, San Francisco-based company, is being acquired by agriculture giant Monsanto Company for $930 million in cash. Previously called Weatherbill, the company’s analytics software helps farmers manage and adapt to climate change in order to improve their operations. It has raised around $110 million over the years, including from AtomicoIndex VenturesNew Enterprise AssociatesFirst Round CapitalGlynn Capital ManagementFounders FundFelicis Ventures and Google Ventures.

    Flutter, a two-year-old company that passed through the Y Combinator program last year, has been acquired by Google for undisclosed terms. TechCrunch sources tell the outlet the price was “around $40 million.”

    Pivotal, a San Mateo, Calif.-based company that began as a joint venture of EMC and VMWare, has acquired Xtreme Labs of Toronto, a mobile development and strategy company. Terms of the deal weren’t disclosed, but AllThingsD’s sources say Pivotal paid $65 million in cash, with additional stock incentives for Xtreme’s 300 employees. The acquisition is a win for venture capitalist Chamath Palihapitiya, the former VP of growth, mobile and international for Facebook and founder of The Social + Capital Partnership. Last year, he personally invested a reported $20 million in the company.



    Wix.com, a seven-year-old company based in Tel Aviv, is planning to raise up to $100 million in an IPO, according to an SEC filing. The company sells cloud-based templates along with more than a hundred different apps that let small businesses design their own websites. Wix has raised roughly $60 million over the years, including from Bessemer Venture PartnersMangrove Capital PartnersBenchmark CapitalInsight Venture Partners, and DAG Ventures.

    Twitter will be going public by November 8 at the latest, says Fortune’s Dan Primack.

    Bloomberg’s Cory Johnson on the impact of the shutdown: Some of the 525 known IPOs pending in the U.S. might not happen in the fourth quarter, and a small number of that group simply won’t survive if they don’t go public when planned.


    Job Listings

    SanDisk, the flash memory giant, is looking for a director to join its year-old investment arm in Milpitas, Calif. The firm is looking for someone to focus on enterprise storage solutions, cloud computing, and software defined storage, and requirements a minimum of three to five years of experience in the enterprise storage industry, and at least two to four years of experience in venture capital or corporate development with a focus on corporate venture capital. An MBA and knowledge of additional languages are a plus.


    Essential Reads

    Meet Ross Ulbricht, the man charged with running Silk Road, the “Amazon.com of drugs.”

    Why are there so few women in science? Look to its teachers, argues this New York Times Magazine piece.

    As Twitter and Facebook battle it out for the second screen, Facebook is getting killed, say TV execs.

    Wedbush Securities estimates that private car service Uber, currently valued at $3.5 billion, will see revenue of $125 million in 2013; it estimates Lyft, a competing ride-sharing service valued at $275 million, will see revenue of $3.1 million.



    Following the government shutdown, Conan O’Brien decides to temporarily lay off all his non-essential staff members.

    Chelsea Clinton tells Glamour that she’s making 2014 “the Year of the Baby,” adding: “Call my mother and tell her that. She asks us about it every single day.” (Moms!)


    Retail Therapy

    Time to get your glen plaid on.

    screwdriver that only Patrick Bateman, or Victor Frankenstein, or a really serious carpenter could love.


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