• The “15” Meme Fallacy

    magic-numberBy Greg Gretsch

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

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

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

    Overlooked in this march toward the “winner’s circle” is the time required to build a company to $100 million in revenue. It took EqualLogic roughly 6 years, Responsys roughly 12 years, and oDesk a decade. The aforementioned research covered a span of time through the mid 2000s. All of my $100 million companies were founded in those cohort years but reached the magical $100 million mark in more recent years, meaning they wouldn’t have been in that 15-per-companies-per-year estimate.

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

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

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

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

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

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

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

    Greg Gretsch is a managing director at Sigma West.  Follow him @greggretsch

    Related articles

    Connie

    , , , ,

  • StrictlyVC: December 1, 2014

    Welcome back, everyone! We hope you had a terrific break.

    (Psst, web visitors, this version of today’s email is easier to read.)

    —–

    Top News in the A.M.

    It’s Cyber Monday, if you didn’t notice from the dozens of emails clogging your inbox and Twitter stream today. Amazon gives Wired a peek at the robots driving its “epic” Cyper Monday operation.

    At least five new movies from Sony Pictures are being downloaded in high volume via copyright-infringing file-sharing hubs in the biggest piracy incident since July. Variety has more here.

    —–

    How Many Tech Companies Break Out Each Year? And Where?

    In recent years, it’s become the conventional wisdom that roughly 15 companies each year go on to produce all the returns in venture capital. Marc Andreessen was the first to make a very public case for the approach, citing the research of Andy Rachleff, who cofounded the venture firm Benchmark and who today teaches at Stanford and is the executive chairman of the investment firm Wealthfront.

    “Basically, between roughly the mid-‘80s and the mid-2000s—a good cross-section of time across a couple of different cycles—what [Rachleff] found is that there are about 15 companies a year that are founded in the tech industry that will eventually get to $100 million in annual revenue,” Andreessen told me when Andreessen Horowitz was closing its first fund in 2009. “His data show that they [account for] 97 percent of all public returns, which is a good proxy for all returns. So those are the companies that matter.”

    Rachleff’s reasoning explains much about how Andreessen Horowitz has operated from the start. Persuaded by the rise of Andreessen Horowitz, Rachleff’s research has also found its way into the thinking of every other top and second-tier venture firm (not to mention many hedge funds and mutual funds).

    Interestingly, it’s hard to prove whether or not Rachleff’s findings still apply to today’s market. He never published the research, which he’d prepared for a speech. And he lost all of the data when his computer’s hard disk crashed in 2006, he once told me. When earlier this month, I asked him if he thinks today’s winner’s circle has changed in size, given falling startup costs and more ubiquitous broadband penetration (among other factors), Rachleff politely offered that he didn’t have time to explore the topic.

    There is, of course, the oft-cited research of Aileen Lee of Cowboy Ventures, who looked at breakout companies last year and concluded that just four “unicorns” — or tech companies that go on to be valued at $1 billion or more — are founded each year. But Lee’s much newer dataset centered on U.S.-based tech companies that were launched in January 2003 and afterward. And comparing “unicorns” to tech companies that produce at least $100 million in revenue isn’t necessarily an apples-to-apples comparison.

    Unfortunately, Lee didn’t respond to a recent request to discuss whether her findings and those of Rachleff are complementary or at odds.

    More recent research suggests that Rachleff’s research holds up, though. In an 11-page paper written last year, economist Paul Kedrosky found “there are there are, on average, fifteen to twenty technology companies founded per year in the United States that one day get to $100 million in revenues.” He added that the “pace at which the United States produces $100-million companies has been surprisingly stable over time, despite changes in the nature of the U.S. economy.” (It’s highly remarkable, in our opinion.)

    Kedrosky added that the biggest “hidden changes” in the way U.S. tech giants are created is where they are founded, suggesting that if investors with big funds are going to chase after breakout companies, they’d be smart to cast a net far beyond Silicon Valley. Indeed, according to him, of the 15 to 20 tech companies to break out each year, just four, or 20 percent, are now founded in California, “usually.” In the 1990s, meanwhile, California’s share of $100-million technology companies was roughly 35 percent.

    —–

    New Fundings

    Bowery, a 1.5-year-old, New York-based company whose cloud service enables programmers to quickly create developer environments, then upgrade and share them with co-workers in real time, has raised $1.5 million in a convertible note. Investors include Betaworks, Bloomberg Beta, BOLDstart Ventures, Deep Fork Capital, Google Ventures, Homebrew, Magnet Agency, RRE Ventures and SV Angel. General Catalyst Partners’s Rough Draft Ventures and First Round Capital’s Dorm Room Fund, which both previously invested $50,000 in February, also contributed along with private investors Naveen Selvadurai and Ryan Holmes. Venture Capital Dispatch has more here.

    Carousell, a two-year-old, Singapore, China-based mobile marketplace that helps facilitate the sale of goods between people, has raised $6 million in funding led by Sequoia Capital. Earlier backers Rakuten Ventures, Golden Gate Ventures, 500 Startups and serial entrepreneur Darius Cheung also participated in the round. The Economic Times has more here.

    ChainSync, a two-year-old, London-based scalable franchise management system, has raised $500,000 in seed funding from one, unnamed angel investor. The company says it has 500 franchise users.

    Cirba, a 15-year-old, Toronto, Ontario-based company that sells infrastructure control software for private cloud, virtualization and software-defined environments, has raised $6.2 million from investors, shows anSEC filing. The company’s backers include the Washington, D.C.-based firm Updata Partners and Tandem Expansion Fund of Montreal.

    Glide, a 1.5-year-old, New York-based company whose app combines video chat with texting, has raised $20 million in Series B funding led by Marker LLC, with participation from Two Sigma Ventures, Menlo Ventures and other, earlier investors. The company had raised two previous rounds of undisclosed amounts, shows Crunchbase.

    Lazada, a 2.5-year-old, Kuala Lumpur-based online mall that was incubated by Rocket Internet, has raised roughly $250 million in new funding led by Singapore’s Temasek Holdings, with participation from earlier backers Rocket Internet, Kinnevik, and Verlinvest. The company, which has taken off in Southeast Asia, has now raised $436 million to date, shows Crunchbase.

    Narrative Science, a nearly five-year-old, Chicago-based company whose software can sift through data to automatically create written internal reports and the like for its corporate clients, has raised $10 million in fresh funding, reports Recode. The round was led by one of the startup’s newest customers, the United Services Automobile Association. Earlier investors Sapphire Ventures, Jump Capital, and Battery Ventures also joined the round, which brings the company’s total funding to $32 million.

    Pieris, a 13-year-old, Munich, Germany-based biotech, has raised €6.6m ($8.2 million) from numerous life sciences venture firms, including earlier backers Gilde Healthcare Fund, OrbiMed, Global Life Science Ventures, BioM Venture Capital, BayTech Venture Capital and Ally Bridge Group. Pieris had previously raised at least $45.9 million, according to Crunchbase.

    QLL, a seven-year-old, Taipei-based company that makes educational mobile apps, has raised $450,000 in funding led by B Dash Ventures, with participation from Incubate Fund, Pinehurst Advisors, Viling, and Coent Venture Partners. TechCrunch has more here.

    Socrata, a seven-year-old, Seattle-based cloud software company whose open-data platform is used at all levels of government to present information for the general public, has raised raised $30 million in new funding, shows an SEC filing. The company had previously raised $24.5 million, including from Morgenthaler Ventures, Frazier Technology Ventures, In-Q-Tel, and OpenView Venture Partners.

    Vox Media, a four-year-old, New York-based publisher with a fast-growing portfolio of online lifestyle and news brands, including The Verge and Eater, has raised $46.5 million in new funding from General Atlantic in a deal that values the company at $380 million, reports Dealbook. The company has now raised $107.6 million altogether, shows Crunchbase. Its previous backers include Comcast Ventures, Khosla Ventures, Accel Partners, Ted Leonsis, and Allen & Co.

    —–

    New Funds

    You might not guess that Hasso Plattner Ventures had outside investors, but apparently, it did. Indeed, the nine-year-old firm, named after the billionaire cofounder of the software giant SAP, has just announced it won’t raise another fund with the help of limited partners but that it will instead rely solely on the funds of Plattner himself, whose fortune has been estimated at roughly $8 billion. The outlet Unquote has more here.

    Middle East Venture Partners, a Beirut, Dubai, and Silicon Valley-based venture capital firm, has begun raising a $30 million pool to invest in between 10 and 15 companies from the United Arab Emirates in the next three years, reports Arabian Business. The firm, which is currently managing $75 million in assets, will be looking specifically for e-commerce, “edutainment,” and e-payment start-ups to add to its existing portfolio of 25 tech companies.

    Tiger Global Management has closed on $2.5 billion in new funding, shows an SEC filing. The money comes just eight months after Tiger closed on a separate, $1.5 billion pool and will likely worry those who were already dismayed about the amount of money flooding into late-stage companies. The money is reportedly being split between a Global Internet Opportunities fund that will launch next month with $1.5 billion, and a $1 billion Global Long Opportunities fund.

    —–

    IPOs

    LendingClub, the seven-year-old, San Francisco-based, online peer-to-peer financing company, has boosted the size of its planned IPO to $650 million, after initially looking to sell $500 million worth of stock, reports the Financial Times. The company will likely set a valuation range that starts at $3.8 billion, say the report. LendingClub’s biggest institutional shareholders are Norwest Venture Partners, which owns 16.5 percent of the company; Canaan Partners, which owns 15.9 percent; Foundation Capital, which owns 12.8 percent; and Morgenthaler Venture Partners, which owns 9.2 percent.

    Momo, a three-year-old, Beijing, China-based company that makes a popular location-based services instant messaging application, expects to raise $256.6 million from a planned stock offering, according to an updatedSEC filing that shows it plans to price its American Depositary Shares between $12.50 and $14.50 per share. The company had registered to go public early last month.

    Outbrain, an eight-year-old, New York-based provider of “native ads,” filed confidentially with the SEC earlier this month, according to VentureWire sources. Outbrain is expected to seek a valuation of around $1 billion,reports the the outlet. The company has raised roughly $100 million to date, including from Rhodium, GlenRock Israel, Lightspeed Venture Partners, Carmel Ventures, HarbourVest Partners, Gemini Israel Ventures, and Index Ventures.

    —–

    Exits

    Microsoft appears to have acquired Acompli, a mobile email application that helps customers quickly find emails in their inboxes, reports TechCrunch. The 1.5-year-old, San Francisco-based company has raised at least $7.3 million from investors, shows Crunchbase. Its investors include Felicis Ventures, Harrison Metal, and Redpoint Ventures.

    NSynergy, an 11-year-old, Melbourne, Australia-based Microsoft-centric cloud business focusing on Office365 implementations, has been acquired by the 11-year-old, subscription software licensing firm Rhipe (also based in Melbourne) in a $23.5 million deal. More here.

    PasswordBox, a two-year-old, Montreal-based maker of digital identity management software, has been acquired by Intel for undisclosed terms. The company had raised at least $6 million from investors, including Real Ventures, OMERS Ventures, and individuals Lee Linden, Mark Britto, and Greg Wolfond, shows Crunchbase. TechCrunch has more here.

    —–

    People

    Former Hewlett-Packard CEO Carly Fiorina is exploring a run for president and been talking privately with potential donors, recruiting campaign staffers, and courting grass-roots activists in early caucus and primary states. The Washington Post has the story here. Fiorina, a Republican, has never held office; she ran unsuccessfully for Senate in 2010.

    Since his death in 2011, former Apple CEO Steve Jobs has won 141 patents. That’s more than most inventors win during their lifetimes, notes Technology Review. More here.

    Billionaire Vinod Khosla’s big plans for biofuels have mostly failed to take off. The Washington Post lingers on some of the biggest misfires, including KiOR, a biofuel outfit that filed for bankruptcy early last month, leaving behind 2,067 creditors, including the state of Mississippi, which had given KiOR a $75 million, 20-year, no-interest loan after the company assured officials that it would invest $500 million in the plant and create 1,000 jobs by December 2015.

    Uber has concluded an investigation of New York City general manager Josh Mohrer for alleged privacy violations and has “taken disciplinary actions” against him, reports Slate. Uber began looking into Mohrer after a BuzzFeed journalist reported that he’d accessed her Uber travel data without her permission multiple times. Uber has declined to comment on any specifics of the “disciplinary actions” but says Mohrer will retain his role.

    Amit Srivastava has joined the Montreal-based firm Cycle Capital Management as a senior partner. Srivastava was formerly the managing Partner and CEO of Entrepia Ventures. Prior to joining Entrepia in 2001, he worked for seven years at JP Morgan Chase.

    —–

    Happenings

    The Post.Seed Conference takes place tomorrow in San Francisco, where numerous high-profile investors are set to speak on a wide range of early-stage financing issues, including Chris Dixon, Paul Martino, Keith Rabois, Naval Ravikant, Ryan Sarver, Semil Shah and Hunter Walk. (I’ll be there, too, moderating a panel.) More information here.

    —–

    Job Listings

    GSV Capital, the publicly traded firm that invests in private venture-capital backed companies, is looking for a partner to “manage the firm’s capital raising initiatives.” More here.

    —–

    Essential Reads

    For younger Indians, buying a car is seen as a “total waste of money,” a local IT consultant tells Businessweek in an interesting piece about the rise of car-sharing services in the country, which has long been plagued by traffic congestion and poor public transportation options.

    Intel will be “inside” your Google Glass beginning next year, reports the WSJ.

    —–

    Detours

    Power doodles.

    Anamorphic installations made of random objects.

    The science of politely ending a conversation.

    —–

    Retail Therapy

    Gravity-defying bookshelves.

    Perfect bacon bowls. (A real product.)

    A company boldly takes ugly Christmas sweaters to the next level.

    Connie

    , ,

  • How Many Tech Companies Break Out Each Year? And Where?

    breakout cosIn recent years, it’s become the conventional wisdom that roughly 15 companies each year go on to produce all the returns in venture capital. Marc Andreessen was the first to make a very public case for the approach, citing the research of Andy Rachleff, who cofounded the venture firm Benchmark and who today teaches at Stanford and is the executive chairman of the investment firm Wealthfront.

    “Basically, between roughly the mid-‘80s and the mid-2000s—a good cross-section of time across a couple of different cycles—what [Rachleff] found is that there are about 15 companies a year that are founded in the tech industry that will eventually get to $100 million in annual revenue,” Andreessen told me when Andreessen Horowitz was closing its first fund in 2009. “His data show that they [account for] 97 percent of all public returns, which is a good proxy for all returns. So those are the companies that matter.”

    Rachleff’s reasoning explains much about how Andreessen Horowitz has operated from the start. Persuaded by the rise of Andreessen Horowitz, Rachleff’s research has also found its way into the thinking of every other top and second-tier venture firm (not to mention many hedge funds and mutual funds).

    Interestingly, it’s hard to prove whether or not Rachleff’s findings still apply to today’s market. He never published the research, which he’d prepared for a speech. And he lost all of the data when his computer’s hard disk crashed in 2006, he once told me. When earlier this month, I asked him if he thinks today’s winner’s circle has changed in size, given falling startup costs and more ubiquitous broadband penetration (among other factors), Rachleff politely offered that he didn’t have time to explore the topic.

    There is, of course, the oft-cited research of Aileen Lee of Cowboy Ventures, who looked at breakout companies last year and concluded that just four “unicorns” — or tech companies that go on to be valued at $1 billion or more — are founded each year. But Lee’s much newer dataset centered on U.S.-based tech companies that were launched in January 2003 and afterward. And comparing “unicorns” to tech companies that produce at least $100 million in revenue isn’t necessarily an apples-to-apples comparison.

    Unfortunately, Lee didn’t respond to a recent request to discuss whether her findings and those of Rachleff are complementary or at odds. More recent research suggests that Rachleff’s research holds up, though. In an 11-page paper written last year, economist Paul Kedrosky found “there are there are, on average, fifteen to twenty technology companies founded per year in the United States that one day get to $100 million in revenues.” He added that the “pace at which the United States produces $100-million companies has been surprisingly stable over time, despite changes in the nature of the U.S. economy.” (It’s highly remarkable, in our opinion.)

    Kedrosky added that the biggest “hidden changes” in the way U.S. tech giants are created is where they are founded, suggesting that if investors with big funds are going to chase after breakout companies, they’d be smart to cast a net far beyond Silicon Valley. Indeed, according to him, of the 15 to 20 tech companies to break out each year, just four, or 20 percent, are now founded in California, “usually.” In the 1990s, meanwhile, California’s share of $100-million technology companies was roughly 35 percent.

    Sign up for our morning missive, StrictlyVC, featuring all the venture-related news you need to start you day.

    Connie

    ,
    , , , , , ,

  • StrictlyVC: November 20, 2013

    110611_2084620_176987_imageHappy Wednesday, and thank you for reading!

    —–

    Top News in the A.M.

    Tim Draper is leaving Draper Fisher Jurvetson, but not forever, he says, as was reported by Fortune yesterday afternoon. In an email to StrictlyVC last night, Draper said that Fortune “got it wrong. I am not leaving DFJ. Ever. I am just skipping a fund to do some work building Draper University and experimenting with new models for venture capital. I expect both my experimenting and my continued angel investing will provide great intelligence and deal flow to our team at DFJ. I will of course be an investor in any new fund we create.”

    Asked whether he will now be more involved with his personal investing vehicle, Draper Associates, which focuses on seed-stage opportunities, Draper wrote, “I started as an angel investor, and I continued throughout my career. It helps with deal flow, intelligence, etc.”

    Fortune reported yesterday that Draper isn’t the only one to be parting ways with the firm in the near future. According to its sources, cofounder John Fisher is also leaving, as are longtime managing directors Jennifer Fonstad and Don Wood and China investment chief Hope Chen. You can learn much more here. (Incidentally, StrictlyVC authored the now infamous cover story for which Draper posed as Captain America. For what it’s worth, it was the photographer’s last-minute idea, and Draper was very sporting about the whole thing.)

    —–

    In VC, Going it Alone, with Plenty of Company

    A growing number of venture firms have been springing up around a single general partner, including PivotNorth, led by Tim Connors; Acero Capital, led by Rami Elkhatib; Cowboy Ventures, led by Aileen Lee; and K9 Ventures, led by Manu Kumar.

    Now add to the list Cindy Padnos, the lone GP of Illuminate Ventures, an Oakland, Calif.-based outfit that is today announcing a new, enterprise-focused, $20 million fund. In a call on Monday, Padnos said she was able to raise the new pool after investing a “few million dollars” in an earlier, proof-of-concept “Spotlight Fund” that has taken off.

    Two of Spotlight’s five portfolio companies have been acquired: 3D game design platform Wild Pockets was purchased by Autodesk in 2010, and data and audience management platform Red Aril was acquired in 2011 by Hearst Corporation. (Terms of both deals remain private.) Meanwhile, the fund’s three other portfolio companies have been marked up considerably since Padnos invested. Among them: the SEO management platform company BrightEdge, which Illuminate backed as a Series A investor; the startup has gone on to raise nearly $62 million altogether, including from Battery Ventures, Intel Capital, and Insight Venture Partners.

    Padnos – a Booz, Allen consultant turned operator turned venture capitalist – gives a lot of credit for her success thus far to a venture partner in Seattle and an advisory counsel of roughly 40 people whom she has assembled over the years.

    She also believes she has struck on a strategy that clicks in a today’s market, investing in enterprise startups that are bootstrapped or angel financed but not quite ready for a large-scale Series A rounds.

    Indeed, Padnos — who says her “sweet spot” is writing initial checks of $500,000 as part of $1 million to $3 million rounds — has already made several new investments out of her new fund: Hoopla, a company that makes “workplace gamification” software; Influitive, a marketing company that analyzes data around social media; and Opsmatic, the newest startup by former Digg CEO Jay Adelson.

    Asked whether she is seeing any particularly interesting trends, Padnos tells me she’s most closely watching the “whole world of enterprise mobile.”

    But the growing group of single-founder firms that Illuminate has joined is fairly interesting, too.

    dropcam_300x250_learn

    New Fundings

    ALOHA, a two-year-old, New York-based company that makes nutritional supplements, has raised more than $4 million from a long list of investors, including First Round Capital, Highland Capital Partners, FF Angel, Khosla Ventures and Forerunner Ventures. ALOHA’s funding comes just one month after a similar product, out of San Francisco-based Soylent, attracted $1.5 million in seed funding.

    Apartment List, a two-year-old, San Francisco-based company that consolidates the apartment listings of numerous services into a vast, searchable database, has raised a $15 Million Series A investment round led by Matrix Partners.

    August, a year-old, San Francisco-based maker of a “smart” lock for doors that can be controlled through a smartphone, has raised $8 million in Series A funding. Maveron led the round with participation from Cowboy Ventures, Industry Ventures, Rho Ventures and SoftTech VC. The company previously raised $2 million in seed funding from long line of angel investors.

    FinanceIt, a three-year-old, Toronto-based company whose software platform enables its customers to offer point-of-sale financing to their own customers, has raised a $13 million Series A round from TTV Capital, Inter-Atlantic Group, and Second City Capital.

    LittleBits, a two-year-old, New York-based company that makes modular electronics that snap together for good-old user enjoyment, has raised a new, $11 million round of funding, according to an SEC filing that lists Joi Ito, True Ventures, and new investor Foundry Group. The funding appears to bring the capital that LittleBits has raised to date to around $15.5 million.

    —–

    People

    Chris Dixon, the angel investor-turned-VC, talked with investor-entrepreneur Semil Shah this past weekend about why he no longer tweets as actively as he once did. “I actually think Twitter has changed,” said Dixon. “Part of it is Twitter just got more popular…For me, the golden days of Twitter were 2010 maybe, 2011, where it was a bunch of early adopter/startup people…now, everyone realizes that if you say something wrong, it’s going to be excerpted and put on Business Insider…so I just think everyone is vastly more on guard, and it’s just not as fun.” (Click here to watch more of Dixon’s sit-down with Shah.)

    Andy Rachleff, the former Benchmark GP turned CEO of Wealthfront, argues against being stingy when it comes to follow-on equity grants for employees. Here’s what he specifically suggests.

    —–

    IPOs

    Yesterday, China‘s top securities regulator reiterated the country’s commitment to easing control over the IPO process, but he added that the government will intensify its audits of startups in order to prevent “more junk stocks.” (Reuters has much more here.) Last October, of course, the Chinese government banned IPOs because of volatility in the stock market and investor concerns over the financial reporting of some newly public companies.

    Trevena, a six-year-old, King of Prussia, Pa.-based clinical-stage biopharmaceutical company whose lead therapy is an intravenous treatment for acute decompensated heart failure, is scheduled to go public today. The offering is expected to raise $75 million and establish the company’s market cap at around $290 million. Trevena’s biggest shareholders include Alta Partners, HealthCare Ventures, New Enterprise Associates, and Polaris Venture Partners.

    —–

    Exits

    Tier 3, a seven-year-old, Bellevue, Wash.-based enterprise cloud management startup, has been acquired by the Louisiana-based telecommunications heavyweight CenturyLink. Terms of the deal were not disclosed. Tier 3 had raised $18.5 million over the years from Intel Capital, Ignition Partners, and Madrona Venture Group.

    —–

    Happenings

    Goldman Sachs Private Internet Company Conference gets underway in Las Vegas today. TechCrunch has its top-secret agenda, featuring the event’s speakers — who typically represent the startups that Goldman deems the most promising pre-IPO candidates. Unsurprisingly, the execs to present this year include Dave Goldberg of SurveyMonkey, Robert Hohman of Glassdoor, Carrie Dolan of LendingClub, Dave Gilboa of Warby Parker and, yes, Evan Spiegel of Snapchat.

    USB‘s annual, three-day Global Technology and Services Conference rolls into its second day in Sausalito, Calif. You can find the agenda here.

    —–

    Data

    According to CB Insights, all these investments in “quantified self” companies — startups whose technologies monitor consumers’ fitness and stress levels, among other things — are starting to add up. In fact, the research firm says venture investments in both hardware and software-related startups have reached $318 million over the last year. You can find more data on the trend here.

    —–

    Job Listings

    FT Partners, the San Francisco-based investment bank, is looking for an associate to join its SF office in a role that begins next July. According to the firm, associates are involved in “all aspects of originating and executing live transactions, including extensive financial modeling and analysis, company valuation, corporate and industry research, strategic analysis and recommendation, identification of business development opportunities, due diligence” etc. (You get the idea.) To apply, you need previous experience in investment banking, strategic consulting, venture capital, or in a similar industry that requires assigning value to companies.

    —–

    Essential Reads

    Let’s face it. We don’t know a single useful number about the hottest company in tech.

    Facebook? Pinterest? Puh-lease. Venture-backed Wanelo is where the action is happening now, suggests Buzzfeed.

    Touring the new, New York offices of payments startup Square.

    It’s too soon to break out the champagne, but two separate but similar patent troll bills are moving their way up in the Senate and House of Representatives.

    ——

    Detours

    George W. Bush is a surprisingly good artist, judging by this portrait of his daughter’s cat, Eleanor.

    —–

    Retail Therapy

    Japanese company EntreX created a chip dispenser for people who get their arms stuck in Pringles cans. Alas, the dispenser was recently discontinued; apparently the market wasn’t big enough, which is unfortunate, as you could see the product being a good fit for members of Congress. (Zing!)

    —–

    Please feel free to send us any and all story suggestions (anonymous or otherwise) by clicking here. If you’re interested in advertising in our email newsletter, please click here. To sign up for the newsletter, visit strictlyvc.com.

    Connie

    , , ,

StrictlyVC on Twitter