• Andrew Braccia’s Big Bet on Slack

    518951f510641_andrew-lgAndrew Braccia of Accel Partners doesn’t tweet or write blog posts. He rarely talks with the media. But that doesn’t mean the 39-year-old isn’t working it. In fact, Braccia may have landed as big a deal for Accel as Facebook, whose $12.7 million Series A investment produced billions of dollars for its investors.

    That company? Slack.

    I had coffee with Braccia last week to ask about his early bet on the company, which Accel led with help from Andreessen Horowitz. It could become the defining deal of Braccia’s career, despite his other prescient bets, including on the high-profile Hadoop software company Cloudera (expected to go public sooner than later); Vox Media (owner of The Verge, SB Nation, Vox and Recode); and the 30-year-old, fast-growing online learning company Lynda.com, which had raised nearly $300 million from investors in recent years and announced in April that it was being acquired by LinkedIn for $1.5 billion.

    Our chat, edited for length, here.

    Connie

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  • Arvind Sodhani on the Giant that is Intel Capital

    arvindsodhaniintelcapital-304Last week, at a conference in San Francisco, I was asked to interview Intel Capital’s president Arvind Sodhani, who also holds the title of executive VP of Intel Corporation. The idea was to give the audience insight into how the nine-year-old corporate venture unit – which employs 85 investors around the world and invests between $300 million and $500 million each year – does what it does.

    Suffice it to say that it’s complicated. Here’s a cheat sheet, though, for investors and entrepreneurs looking for more, ahem, intel.

    Intel, like most corporate VCs, won’t invest in something that looks like it could be a financial home run but has no bearing on the company’s business. Every investment has to have the potential of delivering both a strategic and financial return. The good news: In one form or another, Intel’s business touches almost every sector out there, so it’s investing in everything from wearables to semiconductors to Hadoop, the bedrock software of so-called big data businesses — which Intel sees as a growth sector. Indeed, readers might recall that in late March, Intel forked over $740 million for an 18 percent stake in Cloudera, which produces the most popular version of the Hadoop software framework.

    Which raises another point: Intel Capital is stage agnostic. While it sometimes makes a swing-for-the-fences deal like Cloudera, it’s also willing to fund very nascent ideas, Sodhani told me last week, calling the organization’s “sweet spot between $5 million and $20 million – that’s where we’re doing the bulk of our investments.”

    As for where it’s making its bets geographically, Sodhani said that half of Intel Capital’s investments are here in the U.S., with the rest distributed globally, including in China, where the organization recently committed to invest up to $100 million in companies working on smart devices, as well as Israel, Russia, India, Brazil, Japan and elsewhere.

    Unsurprisingly, some places work out better than others. Intel Capital has backed companies in places like Vietnam and Chile, for example, but hasn’t been able to consistently find deal flow in either country. It also recently placed an investor in Nigeria to scout out opportunities in Africa, though Sodhani said it “takes a year-and-a-half to two years before someone new in a country can get going and see investments . . . When you arrive in a new country, it takes time to figure out the legal framework, what instruments are available . . . there are lots of different issues.”

    One of them is helping to develop a tech-friendly ecosystem, which Sodhani credits Intel Capital with doing in a variety of places like Vietnam, where startups are still a relatively new phenomenon. While there are plenty of founders, said Sodhani, wresting potential employees out of their solid jobs to work for those founders is still in an upward battle. “Entrepreneurs are willing to take the risk; the hard part is how do you get the rest of the people to come and join the company.”

    Before we’d parted ways, I’d asked Sodhani to share how investment decisions are made within Intel Capital. He suggested that, despite the sprawling design of the organization, it isn’t unlike most venture firms. Every Tuesday, it holds a weekly partner meeting where all deals receive some air time and potential new investments are presented. Company experts are then brought in to discuss and evaluate new funding prospects, questions are asked and researched, and after at least a second look at a company, a committee of five people within Intel Capital decides whether or not to back it. (Sodhani says that Intel Capital can “move lightening fast when there’s a great deal if we’re made aware that it’s a competitive situation. We can put together a term sheet in less than 24 hours if we want.”)

    Like a lot of firms with deep pockets, Intel Capital is also willing to overlook price if the technology is deemed as a must-have. “Valuations are very [high], and I’d say that we’re probably getting to a point where we need to be careful of them,” Sodhani said. Still, he’d added, “some things we have to hold our noses and say, [Let’s move forward], because the technology is important to us.”

    Open source software is one of those things, he continued. “It’s becoming very expensive, but open source is producing lot of software that’s critical. The whole trend of IT migration to the cloud — that’s a $30 trillion idea.”

    Connie

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  • StrictlyVC: April 1, 2014

    Happy April Fool’s Day, everyone! Have a great day. Don’t get punked.

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    Top News in the A.M.

    Apple is reportedly struggling to make a giant iPhone with a 5.5-inch screen.

    Airbnb is going (more) legit, announcing yesterday that it will begin collecting hotel taxes from its customers in San Francisco.

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    Recommind Bets Big on Big Data Components

    Recommind isn’t a household name, but it looks likely to join the ranks of other business software companies that have gone public in recent years.

    The San Francisco-based company uses machine learning and advanced analytics to identify patterns in email, online documents, voicemail and social media, in the process helping law firms, corporations and the U.S. government tackle one of their biggest headaches — their growing piles of unstructured data. One of Recommind’s clients is the SEC, for example, which began testing Recommind’s software two years ago, and six months later signed up its roughly 1,200 employees to the service.

    Recommind prides itself on having raised just $22.5 million from investors, much of it last fall. As a result, its CEO, Bob Tennant, insists Recommind is in no rush to do anything other than perfect its newest offerings. Still, the company is nearly 14 years old. And with over $70 million in 2012 revenue (the company’s 2013 revenues are still with the auditors), it’s hard not to wonder what’s next for the company, so I asked Tennant. Our chat has been edited for length.

    You’re excited about a new platform that makes building cloud-based applications for big data technologies really easy. On the most basic level, how does it work?

    A typical enterprise app might have million lines of code, which is a lot to [write] from scratch. It’s a little like cooking a meal. You start with some ingredients and put them together in a particular way and, voila, you have an outcome. Now, maybe you cooked everything from scratch, including grounding the flour yourself, but most of us prefer to buy ingredients that are semi or fully prepared. That’s what we’re doing here. One way is to write code from scratch; another is to snap together components. And there’s been a big set of components missing, and we think we’ve got the stuff to fill the hole.

    You’ve traditionally specialized in e-discovery but say this new platform extends to a host of other applications. Can you elaborate, and what industries are you targeting?

    One broader set of applications we call information governance, which is the migration of data and the legally defensible deletion of data. For example, we’re about to close a big deal with a big bank that needs to deal with the e-discovery process, but whose IT department also wants to be able to get rid of data — just delete it, and you can’t do that; you have to [first] satisfy the SEC and the Department of Justice and anyone who might have claims to it.

    Other verticals we’re focused on include insurance, healthcare, technology and energy, so with regard to tech, we do a lot of work for Google and Cisco. Another client is TransCanada [the company seeking to build the Keystone XL pipeline]. Seven of the top 10 banks also use some version of our software, as does the SEC …[and] FINRA, the self-regulatory body, which uses us as its primary investigative tool.

    Why haven’t you gone public yet? Reports suggested that you might go out in 2013.

    We’ve never said that. We’re putting the infrastructure in place to be ready to go public, but we’re not committed to doing that. We don’t have a ton of VC backers [to satisfy] and we’re not burning through cash such that we need to raised bigger and bigger amounts of money.

    Are you open then to another private financing round?

    Yes. We won’t go [public] unless we think we’re completely ready to go out [and] there may well be investment needs prior to the point at which we have all our ducks in a row.

    In the meantime, how does a 14-year-old company keep its engineering talent engaged? Have you allowed employees to cash out some of their holdings on the secondary market?

    We haven’t, but we also don’t have a lot of the same pressure that Silicon Valley companies do, partly because a lot of our engineering work is done in Germany, and those folks aren’t being called every day to go to Twitter. We don’t have trouble attracting talent here, either, because the technology we’re developing is really cool in terms of what it will do from an architectural perspective. It’s unique, no one else is doing it, and that’s even more attractive to engineers than popping [a] stock [the day of its IPO].

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    New Fundings

    2can, a two-year-old, Moscow-based mobile application and card reader that turns smart phones into terminals that can accept credit card payments, has raised $5 million in funding led by InVenture Partners with participation by earlier investors Almaz Capital Partners and ESN Group. The company has raised $7 million altogether.

    Bizzby, a two-year-old, London-based on-demand services marketplace akin to TaskRabbit, has raised $10 million in funding from an undisclosed investor that TechCrunch sources say is a major U.S.-based hedge fund.

    Cloudera, a 5.5-year-old, Palo Alto-based Hadoop vendor, has raised $900 million in financing from Google Ventures, T.Rowe Price, Intel and MSD Capital, the private equity firm of Michael Dell. As part of the round, Intel acquired an 18 percent stake in the company. The round, which includes a $160 million round announced two weeks ago, brings Cloudera’s funding to more than $1 billion — and its valuation to roughly $4.1 billion.

    Cool Planet Energy Systems, a 5.5-year-old, Greenwood Village, Co.-based company creating negative carbon fuels from organic materials, has raised $100 million in Series D financing led by North Bridge Venture Partners and Concord Energy. Earlier investors BP, Energy Technology Ventures, Google Ventures and the Constellation division of Exelon also participated in the round. Cool Planet has raised $121 million altogether, according to Crunchbase.

    Enterra Feed, a 6.5-year-old, Vancouver-based company that creates sustainable animal feed ingredients and concentrated natural fertilizer for food production, has received $5 million in funding from Avrio Capital, a Calgary-based agricultural fund.

    Gamblit Gaming, a four-year-old, Glendale, Ca.-based company that accommodates real-money gambling experiences in online and on-site deployments worldwide, has closed $12 million in financing led by American Capital.

    Industrial Toys, a two-year-old, Pasadena, Ca.-based mobile games developer, has raised $5 million in Series A funding led by Accel Partners.

    Kaizen Platform, a year-old, Tokyo-based the startup behind a user interface A/B testing platform called PlanBCD, has raised $5 million from Fidelity Growth Partners Japan and Gree Ventures, according to the Bridge, a Japan-focused media outlet. The company has raised $5.8 million altogether.

    Mercari, a year-old, Tokyo-based the startup behind a mobile flea market app of the same name, has raised $14.1 million from Global Brain, Globis Capital Partners, Itochu Technology Ventures, GMO Venture Partners, and other unnamed investors. Since the service’s launch last July, the Mercari app has surpassed one million listed items, reports the Bridge.

    Number2andYou, a new, Boston-based, still-stealth startup, is newly flush with $60 million, according to backers Lux Capital and the company’s director, Seymour Pheecis. Details here.

    Ricebook, a year-old Beijing-based application that invites users to photograph their food, then share them with friends over social networks, has raised $7 million in Series B financing, according to Chinese media reports. IDG Capital led the round, with participation from earlier investorCeyuan Ventures.

    SCIenergy, a 4.5-year-old, San Francisco-based building energy management company, has raised $12 million in new funding led by Braemar Energy Ventures. New investors Edison Energy and Mitsui USA also participated in the round. Earlier investors The Westly Group,DFJ Core, DFJ Growth and Triangle Peak Partners also participated in the new financing of the company, which survived a major shake-up less than two years ago.

    T1Visions, a 5.5-year-old, Charlotte, N.C.-based company that makes interactive touch screens, has raised $3.8 million in Series B funding from Fidelis Capital of Birmingham, Al., and an unnamed investment group from Mooresville, N.C. The company has raised a total of $6.7 million to date.

    WalkMe, a three-year-old, San Francisco-based company that helps website owners and app developers create interactive on-screen “walk-thru’s” that help users complete complex tasks, has raised $11 million in new funding led by new investor Scale Venture Partners. Other participants in the round included Mangrove Capital Partners, Giza Venture Capital and Gemini Israel Ventures. The company has raised roughly $17.5 million altogether.

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    New Funds

    Balderton Capital, the London-based venture capital firm, has raised a new, $305 million fund to invest in early stage startups, largely in Europe. The WSJ has much more on the firm, which now manages $2.2 billion in funds, here.

    Data Collective, a three-year-old, San Francisco-based venture firm that invests in data-focused startups, has closed a third fund with $125 million in commitments, reports TechCrunch, which has published a lengthy profile of the firm. Data Collective’s second fund, an $80 million pool, closed in 2012. The firm, founded by Matt Ocko and Zach Bogue, tells TechCrunch that one of its biggest differentiators is 35 “equity partners” who’ve worked in big data at companies like Facebook, Saleforce, and VMWare and who help with deal flow as well as in evaluating startups. Ocko is a longtime investor who spent 21 years at Archimedes Capital and another seven years at Sevin Rosen Funds; Bogue spent much of his earlier career as a corporate attorney, first with Wilson Sonsini Goodrich & Rosati and later with Virtual Law Partners.

    Ribbit Capital, a two-year-old Palo Alto, Ca.-based venture firm that focuses on financial services startups, is in the market for its second fund, shows an SEC filing that lists its target as $110 million. In January of last year, Ribbit Capital closed its inaugural fund with $100 million. The firm, whose investors include Silicon Valley Bank and the Spanish banking group Banco Bilbao Vizcaya Argentaria SA, was founded by serial entrepreneur Micky Malka, who remains its sole general partner.

    Rise Capital, a year-old, San Francisco-based, early-stage venture firm focused on startups in emerging markets, is raising a $146 million fund, according to an SEC filing. Rise was founded by Nazar Yasin, a former Tiger Global Management director. Yasin tells the WSJ that the fund has already held a first close on $100 million and that it listed a higher amount with the SEC in case there was “some leakage over $100 million so we don’t have to re-file again.”

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    IPOs

    Arista Networks, a 10-year-old, Santa Clara, Ca.-based maker of network switches for large data centers, filed to go public yesterday. The company, led by former Cisco executive Jayashree Ullal, was founded by Sun Microsystems cofounder Andy Bechtolsheim and David Cheriton, a computer science professor at Stanford University, with $100 million in funding. In a twist, Arista disclosed in its IPO plans a dispute with another company cofounded by Cheriton called Optumsoft that sent Arista a letter in November, asserting ownership of certain components of Arista’s network operating system. The letter alleged that Arista violated terms of a 2004 licensing agreement covering confidentiality of information and use of the software, Arista said. Optumsoft hasn’t filed legal action, but Arista’s filing said it couldn’t rule litigation out.

    It’s a big week for tech IPOs, and Rubicon Project kicks things off tomorrow, when it begins trading publicly on the New York Stock Exchange. The company has raised $51 million in funding over the years. Its biggest shareholders are Clearstone Venture Partners, which owns 21 percent of its shares going into the offering; News Corporation, which owns 19.3 percent; and Mayfield Fund, which owns 14.2 percent. (All plan to sell part of their stake in the IPO.)

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    Exits

    Yahoo is in preliminary talks to acquire online-video service News Distribution Network, a deal that would help Yahoo compete with Google’s YouTube for viewers and ad dollars, reports the WSJ. Yahoo could pay roughly $300 million for NDN, say WSJ sources.

    The four-year-old, Atlanta-based company, which supplies news outlets and other Web publishers with video clips about news, sports, politics and other topics, has raised an undisclosed amount of seed funding from TomorrowVentures, among others. “We are not in talks to get acquired by Yahoo at this time,” a spokeswoman for NDN, told the WSJ (which apparently has reason to think otherwise).

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    People

    Sam Altman, the newly appointed president of Y Combinator, tells the Silicon Valley Business Journal that the accelerator would never have enjoyed the success it has had it remained in Boston, where it launched. “No. Definitely not. At this point, Boston is not even the number two city for startups. I think New York is now. And the difference between number one and number two is massive. If you want to be the best program in the world, which we really do want to be, you’ve got to be in the best place in the world.”

    Philippe Dauman, Jr. the son of Viacom CEO Philippe Dauman, is joiningTwitter as its director of commerce partnerships after a six-plus-year run at Google, where his most recent title was “Strategic Partner Development Manager” within Google’s mobile commerce division. TechCrunch has more here.

    Fred Davis is leaving CODE Advisors, a tech and media-focused investment bank that he co-founded in 2010 with Quincy Smith and Michael Marquez, reports Fortune. No word yet on where Davis, whose father is music executive Clive Davis, is headed.

    Bill Gurley of Benchmark thinks anonymous apps like Secret and Whisper are going to be “really hard to monetize,” he said in a meeting with Business Insider. Noting the platforms attract mean comments as well as thoughts about suicide and depression — not exactly ideal content for advertisers — Gurley added, “I haven’t felt any anxiety because we aren’t in the one or two companies.”

    Scott Guthrie was appointed the permanent head of Microsoft‘s enterprise group yesterday, a position he has held since Satya Nadella left the role to become CEO of the company. Here is the memo sent to employees by Nadella.

    Chad Gutstein has just been appointed the CEO of venture-backedMachinima, the giant YouTube network, reports Re/code. Gutstein, the former chief operating officer of the small cable network Ovation, is replacing replace Machinima co-founder Allen DeBevoise, who will stay on as chairman at the company.

    Andy Rendich, the chief service and operation officer of the steath-payments startup Clinkle, is the newest exec to beat a quick path out the door of the company, reports Re/code. Just weeks ago, COO Barry McCarthy and design chief Josh Brewer also hit the road. All have stayed for astonishingly short periods of time. Rendich, a Walmart.com and Netflix veteran, joined Clinkle in December.

    Jana Rich, a well-known tech recruiter at Russell Reynolds, is leaving the firm after 12 years as a partner to start her own outfit called the Rich Talent Group. Re/code has more here.

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    Job Listings

    HarbourVest, the institutional investor, is looking to hire a Boston-based associate.

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    Data

    M&A spending in the tech, media and telecom market set a record for the first three months of any year since the dot com implosion of 2000. The aggregate value of first-quarter deals totaled $128 billion, according to 451 Research. The numbers were driven up by Facebook’s $19 billion acquisition of the messaging company WhatsApp, Google’s $3.2 billion acquisition of Nest Labs, and Comcast’s $45 billion purchase of Time Warner Cable. But that’s only part of the story, say 451 Research analysts. Mid-market deals — those between $200 million and $600 million —  are also ballooning, reaching a median size of $391 million in the first quarter, the highest they’ve been in five years.

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    Essential Reads

    What’s going on with publicly traded GSV Capital (and should the rest of us care)?

    You don’t have to work for the NSA to track someone using their metadata, shows Ars Technica.

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    Detours

    One-inch to one-foot scale miniatures of artists and their work spaces by hand, and in exacting detail.

    The jobs with the highest obesity rates.

    This authentic food is delicious, but I think my mouth is on fire.

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    Retail Therapy

    We could learn to love airport trolleys with these numbers.

    Take a luxuriously appointed balloon to outer space. No joke.

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    Connie

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