• AngelPad Shows Off 13 New Companies

    IMG_1640AngelPad, a five-year-old incubator that twice a year chooses roughly a dozen startups to coach over a three-month period, held its ninth “demo day” yesterday in San Francisco. As has become routine, its founders presented to a densely packed audience of invite-only guests.

    We weren’t surprised, walking onto the crowded scene. At this point, Angelpad, founded by husband-and-wife team Thomas Korte and Carine Magescas, has earned a solid reputation for finding interesting new entrepreneurs. (MoPub and Crittercism are two of its better-known discoveries.)

    The outfit — which provides each company with a $55,000 convertible note and an addition $4,000 per founder in exchange for 7 percent of their startup — also seems to be attracting more sophisticated entrepreneurs. That, or else Korte and Magescas are getting better at identifying talent. As Magescas told us, while companies are “usually just getting off the ground here,” Angelpad’s current batch of 13 companies “has an enormous amount of traction already,” to the tune of $2.5 million in combined revenue. “That’s not intentional,” she says. “Some are just [taking off] earlier than we thought.”

    Continue reading for an overview of the presenting companies.

    Connie

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  • Kinnek, a Small Biz Marketplace, Raises $20 Million Led by Thrive

    LogoKinnek, a 3.5-year-old, New York-based marketplace for small businesses to find suppliers and manage purchasing, has just raised $20 million in Series B funding led by Thrive Capital.

    It already looks like a smart bet.

    The company currently has 20,000 businesses and 2,000 suppliers using its marketplace, and they’re striking millions of dollars worth of deals every week, says cofounder Karthik Sridharan. Considering the company’s age and the fragmented landscape in which it’s operating – think restaurants to distilleries to manufacturers – that kind of traction is meaningful.

    It’s also just the tip of the iceberg, apparently. According to a spokesperson for the company, Kinnek “conservatively” estimates that U.S. businesses with up to 100 employees and $20 million in yearly sales spend more than $2.2 trillion annually on machinery, equipment and physical goods based on data from Visa, Intuit, and the Bureau of Labor Statistics.

    While we can’t vouch for the accuracy of that number (there are lots of different figures floating around out there), what is clear is the competition, or lack of it, facing Kinnek.

    More here.

    Connie

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  • StrictlyVC: January 21, 2015

    Hi, everyone! Hope your Wednesday is off to a great start. (Web visitors, you might click here for an easier to read version of this newsletter.)

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    Top News in the A.M.

    This morning, Microsoft is detailing how its Windows 10 will run across PCs, phones, tablets, and even its Xbox One gaming console. The Verge has more here.

    Users of third-party WhatsApp clients have reportedly been banned from the service for 24 hours. “The company is apparently cracking down [on them] as a breach of the terms of service, and is justifying their actions under the premise of protecting user safety,” says the outlet 9to5.

    —–

    AngelPad Elbows 13 Young Startups Into the World

    The demo days of five-year-old AngelPad — an accelerator program run by married founders Thomas Korte and Carine Magescas – have become a hot ticket both in New York and San Francisco. Yesterday afternoon was no different. In downtown San Francisco, in a crowded co-working office space, 13 companies that had been groomed over the preceding four months pitched select investors, and they appeared to like what they heard.

    No doubt the investors were expecting big things. AngelPad works with two batches of roughly 12 companies twice a year – one on each coast—and nearly all of them have snagged seed funding from investors, with a handful of startups going on to raise tens of millions of dollars, including Vungle, Crittercism, and Postmates.

    AngelPad — which takes a 7 percent stake in each startup in exchange for $50,000 (plus another $4,000 per founder) — has even come close to a billion-dollar exit in MoPub, a mobile advertising startup that Twitter acquired for $350 million in stock in September 2013; the company was worth roughly $800 million when Twitter went public two months later.

    Whether AngelPad’s newest batch — its eighth — will prove as promising remains to be seen. But at least a handful of companies looked like strong contenders for follow-on funding.

    One of our favorites, for example, was CstorePro, a SaaS application that promises to help convenience store owners more easily track their sundry, disparate products, as well as assist them in buying what they need, in the right amounts, from the cheapest wholesalers.

    The company isn’t alone in the space. StoreTender and Retalix are just two other vendors trying to help owners streamline their store operations. The world of convenience stores is also highly fractured. According to the research group IBISWorld, roughly 68.2 percent of convenience-store operators employ less than five people. Still, there’s seemingly money to be made. According to IBIS, as of 2012, the U.S. convenience store and truck stop industry included about 120,000 stores with combined annual revenue of about $355 billion.

    A second company that piqued our interest is Allay, an easy-to-use online HR and benefits platform for the country’s 500,000 insurance brokers — many of whom are getting knocked around by the fast-growing health insurance broker Zenefits. Given those brokers stand to lose $32.5 billion in yearly commissions, you can bet there’s a big opportunity in helping them figure out a better way to pair buyers and sellers of health care, and quickly.

    We also really liked HelloSponsor, an online platform that helps brand advertisers find, buy, and track sponsorships at scale. Roughly $3 billion is spent yearly on consumer events, and anyone who has tried to raise money for one can tell you that it’s a pain in the neck. The big question is whether sponsors will be as eager to scour opportunities on the platform – including by industry and geography – as event organizers will be eager to be found.

    Of course, you’re the investors! If you’d like to take a look at the full list of companies that presented yesterday to form an opinion for yourself, you can find a tear sheet here. AngelPad has also made it simple to meet with any or all of them. Just click here.

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    New Fundings

    AppsFlyer, a nearly four-year-old, Tel Aviv, Israel-based mobile ad analytics company, has raised $20 million in a Series B funding led by Fidelity Growth Partners Europe, with participation from earlier investors Magma Venture Partners and Pitango Venture Capital. The company has now raised $28 million to date.

    The Black Tux, a three-year-old, Santa Monica, Ca.-based tuxedo and suit rental service, has raised roughly $10 million in new funding led by First Round Capital, reports Dealbook. The company had previously raised $2.6 million in seed funding from a long list of investors, including RRE Ventures, Founder Collective, and Menlo Ventures.

    Bloom Energy, the 14-year-old, Sunnyvale, Ca.-based maker of fuel cells, is raising $160 million in the form of convertible notes, reports Venture Capital Dispatch, which says $130 million had been raised as of one month ago (though it isn’t clear from whom). The company has already attracted more than $1.2 billion in equity from investors since it was founded.

    Dig Inn, a 2.5-year-old, New York-based company that has developed an online ordering platform for restaurants, has raised $15 million in Series C funding led by Wexford Capital.

    Farm Hill, a 1.5-year-old, Redwood City, Ca.-based healthy meal delivery service, has raised $1 million in seed financing led by Eagle Cliff Partners, with participation from Liberty City Ventures and Stanford StartX Fund.

    Jibo, a 2.5-year-old, Cambridge, Ma.-based company behind a “social” robot for the home that features two high-resolution cameras, a 360-degree microphone, and the capacity to personalize experiences based on the identity of a user, has raised $25.3 million in Series A funding led byRRE Ventures, with participation from Flybridge Capital Partners, Two Sigma Investments, Formation 8 and Samsung Ventures. Earlier backers CRV, Fairhaven Capital Partners and Osage Venture Partners also joined the round. The company has now raised $33.9 million altogether. Venture Capital Dispatch has more here.

    LendingRobot, a 2.5-year-old, Bellevue, Wa.-based automated investment service for online lending, has raised $3 million in Series A funding led by the European venture firm Runa Capital. The company had previously raised an undisclosed amount of seed funding. TechCrunch has more on how the company works here.

    Pillow Homes (formerly Airenvy), a year-old, San Francisco-based online property management system that focuses on short-term rentals, has raised $2.65 million in seed financing led by Homebrew, with participation from Sherpa Ventures and Tim Draper.

    Ravello Systems, a four-year-old, Palo Alto, Ca.-based company whose SaaS-based application enables developers to use “the public cloud” to develop and test their applications, has raised $28 million in fresh funding led by Qualcomm Ventures and SanDisk Ventures. Earlier and new investors Sequoia Capital, Bessemer Venture Partners, Norwest Venture Partners and Vintage Investment Partners also joined the round, which brings the company’s total funding to $54 million.

    RealMatch, an eight-year-old, New York-based maker of recruitment advertising and job-board software, has raised $8 million in Series C-1 funding led by Edison Partners, with participation from Carmel Ventures and Orix Ventures. The company has now raised $22.7 million altogether, shows Crunchbase.

    Motif Investing, a 4.5-year-old, San Mateo, Ca.-based company whose site allows users to create, share and invest in baskets of stocks around common themes, has raised $40 million from the Beijing-based social media giant Renren. The company has now raised more than $120 million from investors, including Ignition Partners, Norwest Venture Partners and Foundation Capital. The WSJ has more on Renren’s interest in Motif and in backing financial tech startups more broadly here.

    Regenxbio, a six-year-old, Washington, D.C.-based gene therapy company, has raised $30 million in Series C funding led by Venrock and Brookside Capital, with participation from Deerfield Management and an unnamed new investor. The company’s earlier backers, FoxKiser and Fidelity BioSciences, also participated in the round.

    Ringly, a 1.5-year-old, New York-based maker of smart jewelry for women, including high-tech rings that alert wearers when someone phones or texts them, has raised $5.1 million in Series A funding led by Andreessen Horowitz, with participation from Highline Ventures and Silas Capital. Earlier backers First Round Capital, The Social+Capital Partnership, Mesa+, Brooklyn Bridge Ventures and PCH International also joined the round, which brings Ringly’s total funding to $6.1 million.

    Shazam Entertainment, the 13-year-old, New York-based music discovery company that uses audio-recognition technology to help people identify songs on the radio or television, has raised $30 million from investors in a round that values the company at $1 billion. The investors’ names aren’t being disclosed, but Shazam’s prior backers include billionaire Carlos Slim, Kleiner Perkins Caufield & Byers, Institutional Venture Partners and DN Capital. Bloomberg has more here.

    SpaceX, the 13-year-old, Hawthorne, Ca.-based space exploration startup, has confirmed that it has raised $1 billion in new funding in a round that includes Google, Fidelity, and earlier backers Founders Fund, DFJ, Valor Equity Partners and Capricorn Venture Partners. Google and Fidelity reportedly get an ownership stake of just less than 10 percent in exchange for their investment.

    Stack Exchange, a 6.5-year-old, New York-based network of community-driven question-and-answer sites (the company says it now has the world’s largest online repository of programming knowledge), has raised $40 million in new funding led by Andreessen Horowitz, with participation from earlier backers Bezos Expeditions, Index Ventures, Spark Capital and Union Square Ventures. The company has now raised $70 million altogether.

    Taykey, a six-year-old, New York-based maker of advertising software, just raised $15 million in fresh funding from Innovation Endeavors, MSR Capital and earlier backers, including Marker, Sequoia Capital, SoftBank Capital and Tenaya Capital. The company has now raised $32 million altogether.

    VMTurbo, a 4.5-year-old, Boston-based intelligent workload management software company, has raised $50 million in Series D funding led byICONIQ Capital, with participation from earlier backers Bain Capital, Globespan Capital Partners and Highland Capital Partners. The company had previously raised a $10 million round, and another, undisclosed round of funding.

    Work Market, a 4.5-year-old, New York-based marketplace for managing contractors and freelancers, has raised $20 million from earlier backers led by Union Square Ventures, with participation from Spark Capital, SoftBank Capital, Industry Ventures and Silicon Valley Bank.

    —–

    IPOs

    On the eve of Box‘s Wall Street debut, tech analysts debate its post-IPO future.

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    Exits

    CloudOn, a 5.5-year-old, Mountain View, Ca.-based maker of mobile productivity tools, with an engineering hub in Herzliya, Israel, has just been acquired for undisclosed terms by the cloud-storage giant Dropbox, which is reportedly turning its new Israeli office into a base from which to aggressively hire in the region. CloudOn had raised $26 million from investors including The Social+Capital Partnership, TransLink Capital, Foundation Capital and Rembrandt Venture Partners. The WSJ has the story here.

    Equivio, a 10-year-old, Rockville, Md.-based text analytics service for legal e-discovery and other things, has been acquired by Microsoft. Terms of the deal weren’t disclosed, but WSJ sources pegged the price at around $200 million back in October.

    Kosei, a 10-month-old, San Francisco-based still-stealth startup that specializes in personalized recommendation systems that match mobile advertisements with the right consumers, has been acquired by Pinterest for undisclosed terms. Venture Capital Dispatch has more here.

    Semetric, a 6.5-year-old, London-based whose software provides analytics, recommendations, and targeting services to entertainment businesses, has been acquired by Apple as part of its plans to relaunch its Beats Music streaming music service this year, reports the Guardian, which notes the acquisition appears to have taken place last fall. Semetric had raised £3m of funding in January 2013 from Imperial Innovations Group and Pentech Ventures.

    —–

    People

    Longtime FTV Capital partners Ben Cukier and Eric Byunn have left the firm to launch their own growth-stage, financial-services focused, New York-based firm, called Centana Growth Partners. The outlet peHUB has more here.

    Jeremy Gordon, a former engineering VP with Twitter, has joinedRedpoint Ventures as the firm’s newest entrepreneur-in-residence, reports Re/code. Before leaving Twitter in October, Gordon led engineering for all of Twitter’s consumer products.

    Mike Randall, recruited from Facebook in June to join Snapchat as its vice president of business and marketing partnerships, has left the company, reports Recode. No word on why he’s out the door, but Randall isn’t the first Snapchat executive to leave after a brief stay, notes Recode. Last summer, the company also lost its VP of engineering, Peter Magnusson, just six months after he’d joined the company.

    Dharmesh Thakker, a former Intel Capital managing director, has joined Battery Ventures as a general partner. Thakker had joined Intel Capital in 2011 after working as an enterprise-focused venture capitalist at Advanced Technology Ventures.

    —–

    Jobs

    3i is looking to hire an associate in New York.

    Visa is looking to add a VP to its Innovation and Strategic Partnerships organization. The job is in San Francisco.

    —–

    Essential Reads

    A new Oxfam study has found that by next year, 1 percent of the world’s population will own more wealth than the other 99 percent, based on current trends.

    Apple is stepping up its lobbying efforts in Washington.

    —–

    Detours

    Before and after GIFs that show just how fake ad photography can be.

    A designer’s war on misleading parking signs.

    Closing your eyes helps you remember stuff.

    —–

    Retail Therapy

    Wine Yoke. It’s no joke.

    Connie

  • AngelPad Elbows 13 Young Startups Into the World

    AngelPad Demo DayThe demo days of five-year-old AngelPad — an accelerator program run by married founders Thomas Korte and Carine Magescas – have become a hot ticket both in New York and San Francisco. Yesterday afternoon was no different. In downtown San Francisco, in a crowded co-working office space, 13 companies that had been groomed over the preceding four months pitched select investors, and they appeared to like what they heard.

    No doubt the investors were expecting big things. AngelPad works with two batches of roughly 12 companies twice a year – one on each coast—and nearly all of them have snagged seed funding from investors, with a handful of startups going on to raise tens of millions of dollars, including Vungle, Crittercism, and Postmates.

    AngelPad — which takes a 7 percent stake in each startup in exchange for $50,000 (plus another $4,000 per founder) — has even come close to a billion-dollar exit in MoPub, a mobile advertising startup that Twitter acquired for $350 million in stock in September 2013; the company was worth roughly $800 million when Twitter went public two months later.

    Whether AngelPad’s newest batch — its eighth — will prove as promising remains to be seen. But at least a handful of companies looked like strong contenders for follow-on funding.

    One of our favorites, for example, was CstorePro, a SaaS application that promises to help convenience store owners more easily track their sundry, disparate products, as well as assist them in buying what they need, in the right amounts, from the cheapest wholesalers.

    The company isn’t alone in the space. StoreTender and Retalix are just two other vendors trying to help owners streamline their store operations. The world of convenience stores is also highly fractured — which could be a challenge or an opportunity, depending on your vantage point. According to the research group IBISWorld, roughly 68.2 percent of convenience-store operators employ less than five people. Still, there’s a giant market to pursue here. According to IBIS, as of 2012, the U.S. convenience store and truck stop industry included about 120,000 stores with combined annual revenue of about $355 billion.

    A second company that piqued our interest is Allay, an easy-to-use online HR and benefits platform for the country’s 500,000 insurance brokers — many of whom are getting knocked around by the fast-growing health insurance broker Zenefits. Given those brokers stand to lose $32.5 billion in yearly commissions, you can bet there’s a big opportunity in helping them figure out a better way to pair buyers and sellers of health care, and quickly.

    We also really liked HelloSponsor, an online platform that helps brand advertisers find, buy, and track sponsorships at scale. Roughly $3 billion is spent yearly on consumer events, and anyone who has tried to raise money for one can tell you that it’s a pain in the neck. The big question is whether sponsors will be as eager to scour opportunities on the platform – including by industry and geography – as event organizers will be eager to be found.

    Of course, you’re the investors! If you’d like to form your own opinions about the startups that presented yesterday, you can find the full list on a tear sheet here. AngelPad has also made it simple to meet with any or all of them. Just click here.

    Connie

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  • Same Companies, Different Impressions

    OLYMPUS DIGITAL CAMERAVenture capitalists are a lucky lot. Their work is prestigious, the pay can be exceptional, and they’re educated daily by smart entrepreneurs.

    One job hazard, however, is missed opportunities. For example, many in Silicon Valley passed on Uber, one of the fastest-growing companies on the planet. (To his credit, Uber’s hard-charging CEO, Travis Kalanick, appears to have talked to everyone before the company raised its first round.)

    You might wonder now how so many investors missed Uber’s potential, but the reality is that finding the Next New Thing is a lot harder than it looks. Indeed, last week at the “demo day” of the incubator program AngelPad in San Francisco, one could find many savvy investors making radically different calculations about the same companies.

    PeopleGoal, a New York-based startup whose performance management software aims to wring the best out of employees, captured the attention of Josh Breinlinger, a venture partner at Sigma West who was among the earliest employees of the freelance marketplace ODesk. “That’s one of two that really stood out to me,” he said after the companies’ presentations.

    Hiveary, an infrastructure monitoring platform, and TapFwd, a big data mobile ad platform, were more interesting to Niko Bonatsos, a principal at General Catalyst Partners who said he liked the technology behind both, as well as that both seemed like they were addressing “real problems in hot markets.” Of Hiveary, in particular, Bonatsos said, “If you talk to enterprise [software developers and IT departments who collaborate to speed the deployment of new applications and services], they will describe that they need a solution for this problem.”

    Meanwhile, Paintzen, a marketplace for home and office painting, stood out the most to Manu Kumar, the founder of the seed-stage venture firm K9 Ventures, one of the earliest investors in the ride-share service Lyft. “It just feels like an industry that’s ripe for disruption,” said Kumar, who especially liked the team’s argument that it can eventually expand into other verticals, including flooring, cabinets, and windows. “If they can go after those other areas, they can scale,” said Kumar.

    Breinlinger made the same point separately. “If Paintzen can do the same thing they’ve done for painting for other home services, I think it becomes really interesting,” he said.

    But Bonatsos was less impressed with Paintzen. “It sounds interesting. They make [arranging a paint job] very easy. I don’t know how big the market is, though. It’s one and done; it’s not frequency. How often do you paint your house?”

    Asked about the other verticals that Paintzen wants to pursue, Bonatsos said that “to me, that’s not a good sign” that Paintzen is pursuing a big-enough market from the get-go. “The numbers [the founders] gave out – [a] $10 billion [market] for painting in the top metro areas. Well, let’s say they capture $1 billion out of the $10 billion, and their piece is 30 percent. It’s a $300 million market for them. That’s interesting,” said Bonatsos, “But it’s not like, ‘Oh, my God.’”

    (For a full tearsheet of AngelPad’s newest batch of startups, click here.)

    Connie

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  • Demo Day for AngelPad: The Anti Y Combinator

    OLYMPUS DIGITAL CAMERAToday, AngelPad, the San Francisco-based incubator, is hosting an invitation-only “demo day” for 150 to 200 angels and VCs, and you can bet these investors are going to bring their checkbooks.

    In four years’ time, AngelPad has become one of the most reliable hit machines in Silicon Valley. And it’s done it largely by operating as a kind of anti-Y Combinator, even while the famed incubator was its inspiration.

    There’s the cosmetic difference, for starters. While Y Combinator is located in sunny Mountain View, Ca., AngelPad, which also has offices in New York, rents out space on a gritty block of San Francisco’s Tenderloin neighborhood. (It’s a little too gritty for its demo day; AngelPad is hosting its event today at an upscale restaurant roughly a mile away.)

    AngelPad isn’t as widely known as Y Combinator, and intentionally so. Founder Thomas Korte, who spent seven years as an international product manager at Google, likes to keep things intimate, stressing the importance of community to the startups that pass through AngelPad as well as the network of investors with which he works. (Even the press who can attend its demo day is tightly restricted.)

    In another departure from Y Combinator’s mode, AngelPad tends to focus on enterprise companies, typically admitting just one or two consumer-facing startups into each of its “cohorts.” For Y Combinator, working with startups that cater to businesses is a much newer development.

    Perhaps the biggest difference, though, is that while Y Combinator looks to grow even bigger, adding ever more partners to work with its startups, AngelPad is, in a sense, shrinking. Korte once relied heavily on former Google colleagues to help mentor startups at AngelPad. Today, he and his wife and AngelPad partner, Carine Magescas, coach all of the startups themselves.

    (Korte does make one notable exception. He still arranges for each startup passing through the program to meet once with one of his trusted advisors — friends like Wesley Chan, currently an entrepreneur-in-residence at Google Ventures. It’s a kind of “reality check. You need outside input once in a while,” says Korte.)

    Clearly, AngelPad’s approach is working. AngelPad startups in the news include Storefront ($7.3 million Series A led by Spark Capital), Crittercism ($30 million Series C), and Boxbee ($2.3 million seed round), and Korte tells me that another AngelPad company, the mobile advertising startup MoPub — acquired by Twitter for $350 million in stock last fall — will be worth roughly one billion dollars when Twitter’s lock-up expires in the next couple of weeks.

    So how does the AngelPad process work? Twice a year, Korte and Magescas stage an open application process that usually attracts about 2,000 applicants who are asked to submit a two-minute video, along with an essay, about their company. The couple then whittles the list down to between 100 and 200 of the most promising teams, interviews each for 25 minutes over a two- to three-month period, then chooses a dozen of them to coach over the following 10 to 12 weeks.

    Each team receives $60,000 in exchange for 6 to 7 percent of their company. (AngelPad uses capped convertible notes.) At the end of the program, a demo day is staged, and Korte and Magescas then spend the next six weeks or so working with the startups to secure seed funding.

    Most of the money is coming from the couple’s bank account. (Korte was among the first couple of hundred of Google employees.) Korte says “several individuals also participate in each cohort,” and that AngelPad also raised a $7 million fund last year to help fund its startups.

    As for what he’s looking for, he mentions numerous things, including “mobile-enhanced” businesses that do things in a way that we’ve always done them but in a more efficient way. (He points to the delivery service PostMates, another AngelPad startup that has gone on to raise significant funding.)

    Korte says he doesn’t rule out applicants that are entering well-covered terrain, either, a lesson he learned at Google. “Apart from self-driving cars, Google has almost never been the first in anything, honestly,” he notes. “What they’ve done is be significantly better at every single one of those,” he adds.

    Seemingly, the same could be said for AngelPad itself.

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

    Connie

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