• For DFJ, a Quick Close on Fund XII

    VentureTeamDFJ_hr (1)DFJ, the 31-year-old, Sand Hill Road venture firm, is announcing a new, $350 million fund this morning — the firm’s 12th early-stage vehicle.

    We chatted with managing director Josh Stein yesterday about the effort, which he says took about two months from start to finish.

    The biggest takeaway: Expect more of the same from the firm, which typically plugs between $10 million and $15 million into its startups; has six investment partners, including firm cofounder Steve Jurvetson; and has become known, largely owing to Jurvetson’s bets, as an outfit willing to gamble on companies that are little out there — sometimes literally.

    Among the firm’s many Jurvetson-led investments: the rocket company SpaceX, the satellite company Planet Labs, and the electric car company Tesla Motors. Indeed, Jurvetson accepted a Crunchie award on behalf of SpaceX at last night’s Crunchies awards ceremony. The company won for the category of best technology achievement for its two-stage rocket, the Falcon 9, which was designed to transport satellites and SpaceX’s own Dragon spacecraft into orbit.

    Stein wouldn’t talk yesterday about the internal rate of return of any of the firm’s previous funds. He did say DFJ’s last fund — a $325 million vehicle closed exactly two years ago — has backed an as-yet-undisclosed autonomous transportation startup that “we think could be the biggest company we’ve ever been involved with.”

    More here.

    Connie

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  • At Venture Firms, Balancing Brands Within Brands

    size-500x500There was a time in venture capital when it was almost unthinkable for investing professionals to make personal bets on startups outside their firms. That seemingly began to change about a decade ago. For example, after Accel Partners made an early bet on Facebook that would prove among the most lucrative in venture history, the high-profile partner who’d taken a seat on Facebook’s board, Jim Breyer, began backing a variety of companies through a personal fund, Breyer Capital. Tim Draper, a cofounder of DFJ, similarly began making investments unrelated to DFJ long before leaving an active investing role at the firm in late 2013.

    Whether VCs are doing more angel investing today is an open question; no one yet tracks their collective personal investments. But it’s a rare week when at least some funding announcements don’t feature VCs who are backing startups with their own checks.

    It’s easy to appreciate why. Sometimes, the investments being made are too small for a fund, or they fall outside a firm’s wheelhouse. In a crowded landscape, the brand of an individual VC can also help a firm win competitive deals; allowing the VC’s involvement in as many promising companies as possible is a means toward that end.

    But there are pitfalls. For one thing, conflicts can arise. If a VC has a personal stake in a new productivity app, what happens if another partner brings a different, competing productivity app into the firm? An employee’s headspace can be taken up by a company that’s not part of the firm’s portfolio. You could probably also argue that every side deal a VC makes undermines the decision-making process of his or her partners — especially in cases where those angel investments turn into home runs.

    The last is a particularly thorny issue for a firm’s LPs. Says one San Francisco-based institutional investor: “If an investor funds a company that hits it big, and the firm isn’t in it, the LPs are going to be mad. They’re going to ask why the hell wasn’t the fund in that deal.”

    Still, done right, the trend can be a win for everyone involved. First, side deals can become portfolio companies. Bill Pescatello, a partner at Lightbank in Chicago, has made three angel investments outside his firm, all startups where he “had a direct connection with the founders and/or a very specific connection to the business through my own interests.”

    Pescatello adds that in each case, he ran the investment opportunity by Lightbank, which passed on two of the startups but has funded the third.

    Niko Bonatsos, a principal at General Catalyst Partners in Palo Alto, Ca., has similarly made two “unique” investments that he first ran past his partners. One of of his checks went to Raise, a Chicago-based gift card marketplace that has since attracted $81.2 million from investors, including $56 million that the company announced just last month. New Enterprise Associates led the deal.

    Bonatsos also personally invested in the 2.5-year-old, Atlanta, Ga.-based anonymous messaging startup Yik Yak. When Bonatsos wrote a check to Yik Yak – he was its first angel investor — it was barely a speck on anyone’s radar. Last November, the company announced $62 million in funding led by Sequoia Capital. (The company has raised $73 million altogether.)

    Bonatsos — who scans roughly 30 newsletters and outlets before he starts his day each morning – notes that both were risks, particularly given that principals don’t necessarily have the same bank balance as more established VCs.

    He is also quick to add that his firm’s “interests always come first. I’m first and foremost a General Catalyst team member.” Sometimes, he explains, “a founder doesn’t want to raise capital from a venture capital firm right away, and in order for the firm to maintain a relationship with that entrepreneur, it makes sense for someone at the firm to write a personal check.”

    In fact, says Bonatsos, if General Catalyst opts to invest in either company down the road, he’ll sell the firm his stake at cost, per a standard arrangement with the firm.

    Of course, General Catalyst could also pass again. Yik Yak was the sixth most popular social networking app in the world three months ago, according to the analytics firm App Annie. Right now, it’s the 24th most popular social networking app.

    “If the VC firm doesn’t [acquire an employee’s stake later], you’re stuck with the angel investment,” says Bonatsos, acknowledging the possibility.

    “If things work out, it’s great for you. But there’s also a good chance you’ll lose your money.”

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

    Connie

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  • StrictlyVC: November 17, 2014

    Good morning, everyone! Hope you had a wonderful weekend. (Web visitors, here’s an easier-to-read version of today’s email.)

    —–

    Top News in the A.M.

    Facebook to enterprises: You want workplace collaboration tools? We’ve got your workplace collaboration tools.

    Sometimes, a record-breaking IPO isn’t enough. According to Reuters, Chinese e-commerce giant Alibaba will be sounding out investors this week as it mulls its first bond offering. (The WSJ talks with cofounder Joe Tsai about some of the company’s other plans here.)

    —–

    Tim Draper on Life Outside DFJ

    Almost exactly a year ago, Fortune reported that billionaire investor Tim Draper would no longer be actively investing on behalf of DFJ, the firm he cofounded in 1985. As the news rippled throughout VC circles, Draper wrote StrictlyVC to clarify that was “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. He added: “I will of course be an investor in any new fund we create.”

    Draper, already known for his boundless energy, has seemingly been in overdrive since. In addition to his involvement with his 1.5-year-old Draper University — once characterized as an “unconventional boarding school for aspiring tech moguls” — Draper has become a highly active seed-stage investor. He’s betting heavily on bitcoin, too. In fact, in July, he purchased the 30,000 bitcoin seized when the feds took down the online drug bazaar Silk Road in October 2013. That’s saying nothing of his efforts this year to get an initiative on the California ballot to carve the state into six “startup” states. (It failed to qualify.)

    How does he find the time? StrictlyVC asked Draper if he could answer a few questions about the past year; we emailed this past weekend in an exchange that has been edited lightly for length.

    Last year, you said you decided to “skip a fund” at DFJ. How are you feeling one year later?

    Everything I do helps all my funds, whether they be DFJ or Draper Associates [Draper’s seed fund].

    Draper University; Boost.vc [son Adam’s investment fund], Hero City [Draper University’s coworking space]; and my long history in the VC world have all become an amazing source of deal flow.

    What’s been the best part about this past year? What’s been the most challenging?

    The best part is that I am able to innovate in the finance world. There are some things that can be done better for the entrepreneurs, and some that can be done better for the LPs. There are also some real technological innovations that are happening that I have been able to identify and apply to venture capital [including around bitcoin].

    Also, [Draper University] has provided me a new vehicle for investment, new contacts I never would have made without it, and innovations I never would have seen without it.

    The most challenging [thing for me] has been the sheer volume of opportunities I now have for investment.

    You seem to be investing more actively than ever.

    I think I am at my normal pace.

    Would you ever raise institutional funding again?

    Yes.

    What percentage of your bets this past year have been bitcoin-related?

    Maybe 20 percent and rising.

    When you successfully bid on those 30,000 bitcoin, you told Dealbook that you wanted to provide liquidity to markets that have been hamstrung by weak currencies. First, have you ever disclosed how much you paid? More importantly, how are you executing on that plan?

    We have done it. [Editor’s note: Here, Draper points me to his portfolio company Mirror, formerly Vaurum, an exchange platform for bitcoin investors.] And the price I paid for the bitcoin was higher than the current price, but my belief is that the price of bitcoin will exceed $10,000 within three years because the infrastructure is being built that will lay the groundwork for universal adoption. We will be using bitcoin for transactions and all we will know is that the transaction was made faster, smoother and cheaper than it would have been with just fiat currency.

    Will you invest as actively in bitcoin in 2015 or have you covered a lot of your bases at this point?

    This is just the tip of the iceberg. I expect bitcoin and the blockchain to be as prevalent in banking, commerce and finance as the Internet is in information, communications and software.

    A lot of very smart people are divided about bitcoin. Like you, Marc Andreessen is a famous bull. In contrast, Peter Thiel recently said that he’s skeptical, that it’s “not obvious how easy it is to get a seamless payment system attached to [bitcoin].”

    It is happening. I look forward to giving Peter a tour of Draper University and Hero City. Marc has already been there.

    Andreessen and Thiel have also become very public figures. Meanwhile, you did a lot of press around your Six Californias initiative, but as an investor, you seem to have pulled back.

    We just finished up another amazing session at Draper University. We are challenging the count at Six Californias. Draper Associates has been making some brilliant investments that I expect to have even greater outcomes than those I have made in the past. We have news cycles, too.:)

    Your three children are now making their own startup bets. What’s the best piece of advice you’ve given them about being investors in Silicon Valley?

    Yes, Jesse, the Valley Girl, is one of the top supporters of women in entrepreneurship, and she has made some exciting investments. My son Adam is running Boost.vc, and my son Billy works with me making investments for Draper Associates. They all look at the world as something that can be improved through entrepreneurship. [The] best piece of advice [I’ve given them]: “Fail and fail again until you succeed.”

    —–

    New Fundings

    Axcient, an eight-year-old, Mountain View, Ca.-based company whose data protection service aims to make online backup simple for smaller businesses, has raised $10 million in Series E funding, according to anSEC filing that lists a $13.2 million target. The company had previously raised at least $64.2 million, including from Allegis Capital, Scale Venture Partners, and Thomvest Ventures.

    BeiGene, a four-year-old, Beijing-based biotech company that develops targeted and immune-oncology therapeutics, has raised 450 million yuan ($75 million) in Series A funding from new investors CITIC Capital Partners, Hillhouse Capital, and an undisclosed U.S. public-investment fund, along with earlier, unnamed angel investors.

    Bion Pharma, a new, Princeton, N.J.-based company that aims to help Indian and European drug makers receive regulatory clearance and expand their distribution rights in the U.S., has raised $21 million from two investors, according to an SEC filing that shows a $30 million target. Bio was founded by five U.S.-based execs who left Indian generic drugmaker Ranbaxy last month. MedCity News has the story.

    Curatio Healthcare, a nine-year-old, Chennai, India-based mobile healthcare engagement platform, has raised Rs 100 crore ($16.2 million) from Sequoia Capital in exchange for a reported 20 to 25 percent stake. Times of India has more here.

    InsightSquared, a four-year-old, Cambridge, Ma.-based business intelligence company, has raised $13.5 million in Series C funding from earlier backers Atlas Ventures, DFJ, and NextView Ventures along with new investor Two Sigma Ventures. The company has now raised $27 million to date.

    Into the Gloss, a four-year-old, New York-based beauty site and maker of its own skin and beauty products that ship directly to consumers, has raised $8.4 million from Thrive Capital and other investors, says VentureWire. The company had earlier raised $2 million in seed funding from Lerer Hippeau Ventures and Forerunner Ventures.

    Onename, a 1.5-year-old, New York-based company that makes it easy for anyone to be listed in the directory for Bitcoin, has raised $1.5 million in seed funding Union Square Ventures, with participation from Barry Silbert, Naval Ravikant, Cyan and Scott Banister, SV Angel, High Line Venture Partners, and others. Onename graduated from Y Combinator’s Summer 2014 batch. VentureBeat has more here.

    Scaled Inference, a six-month-old, Palo Alto, Ca.-based startup that’s building a cloud-based platform for third parties that want to use artificial intelligence and machine learning tools to run their apps and services, has raised $8 million in Series A funding from Khosla Ventures. The company has now raised $13.6 million, following a seed round earlier this year that included Tencent and Felicis Ventures, among others. TechCrunch hasmore here.

    Sliced Investing, a months-old, San Francisco-based graduate of this summer’s Y Combinator class, has raised $2 million in seed funding to pursue its plans to bring crowd funding to hedge funds. Participants in the round include Khosla Ventures, Data Collective, and TriplePoint Venture Growth.

    SomaLogic, a 15-year-old, Boulder, Co.-based clinical diagnostics company that provides protein detection equipment and more to its customers, has raised $16.5 million, including from Novartis AG, which recently extended a research agreement with SomaLogic. CEO Byron Hewett tells VentureWire that the company, which has raised more than $200 million over the years, is targeting $40 million for this current round.

    SysCloud, a four-year-old, Cranford, N.J.-based company that sells a suite of tools that provides protection for data in Google Apps through real-time backups, has raised $2.5 million in Series A funding led by Inventus Capital Partners, with participation from earlier investor KAE Capital.

    —–

    IPOs

    FibroGen, a 21-year-old, San Francisco-based company that’s developing drugs in anemia, fibrosis and cancer, debuted on Nasdaq Friday, after pricing 8.1 million shares at $18 apiece, near the top of its projected range of $16 to $19 per share; its shares closed the day at $22 per share.

    —–

    People

    Karen Mills, Obama’s former SBA chief, is now working part-time at Harvard Business School. She’s also writing checks as an angel investor, often alongside General Catalyst Partners, reports BostInno.

    Mahbod Moghadam, the ousted co-founder of Genius.com (formerly Rap Genius) posted a how-to story on Friday that’s generating a lot of attention, and not the good kind. Moghadam wrote about shrinking his tab at Whole Foods by switching price tags, pocketing fruit, putting pricey food in soup containers and (unfortunately) much, much more.

    Michael Solomon and Rishon Blumberg, longtime talent agents, have begun serving as agents for desirable developers, and their firm, 10x, is crushing it, reports the New Yorker in an entertaining new profile.

    —–

    Job Listings

    Bridge Ventures, a U.K.-based investment firm that funds businesses that are located in or serve underserved communities, is looking for a partner in New York.

    Golden Seeds, an early-stage firm focused on women-led businesses, is looking for a venture fund analyst. The job is in New York.

    —–

    Essential Reads

    The future of Google Glass grows cloudier.

    —–

    Detours

    Baltic Sea photography.

    Fastest roast turkey.

    Three years ago, he was flipping burgers at McDonald’s. Today Matt Haag, 22, skinny and blindingly pale, makes more than $1 million a year by playing the popular war game Call of Duty.

    —–

    Retail Therapy

    Oh, hey, for the right price, the first official Batmobile can now be yours.

    Connie

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  • Tim Draper on Life Outside DFJ

    tim-draperA year ago, Fortune reported that billionaire investor Tim Draper would no longer be actively investing on behalf of DFJ, the firm he cofounded in 1985. As the news rippled throughout VC circles, Draper wrote StrictlyVC to clarify that he was “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. He added: “I will of course be an investor in any new fund we create.”

    Draper, already known for his boundless energy, has seemingly been in overdrive since. In addition to his involvement with his 1.5-year-old Draper University — once characterized as an “unconventional boarding school for aspiring tech moguls” — Draper has become a highly active seed-stage investor. He’s betting heavily on bitcoin, too. In fact, in July, he purchased the 30,000 bitcoin seized when the feds took down the online drug bazaar Silk Road in October 2013. That’s saying nothing of his efforts this year to get an initiative on the California ballot to carve the state into six “startup” states. (It failed to qualify.)

    How does he find the time? StrictlyVC asked Draper if he could answer a few questions about the past year; we emailed this past weekend in an exchange that has been edited lightly for length.

    Last year, you said you decided to “skip a fund” at DFJ. How are you feeling one year later?

    Everything I do helps all my funds, whether they be DFJ or Draper Associates [Draper’s seed fund].

    Draper University; Boost.vc [son Adam’s investment fund], Hero City [Draper University’s coworking space]; and my long history in the VC world have all become an amazing source of deal flow.

    What’s been the best part about this past year? What’s been the most challenging?

    The best part is that I am able to innovate in the finance world. There are some things that can be done better for the entrepreneurs, and some that can be done better for the LPs. There are also some real technological innovations that are happening that I have been able to identify and apply to venture capital [including around bitcoin].

    Also, [Draper University] has provided me a new vehicle for investment, new contacts I never would have made without it, and innovations I never would have seen without it.

    The most challenging [thing for me] has been the sheer volume of opportunities I now have for investment.

    You seem to be investing more actively than ever.

    I think I am at my normal pace.

    Would you ever raise institutional funding again?

    Yes.

    What percentage of your bets this past year have been bitcoin-related?

    Maybe 20 percent and rising.

    When you successfully bid on those 30,000 bitcoin, you told Dealbook that you wanted to provide liquidity to markets that have been hamstrung by weak currencies. First, have you ever disclosed how much you paid? More importantly, how are you executing on that plan?

    We have done it. [Editor’s note: Here, Draper points me to his portfolio company Mirror, formerly Vaurum, an exchange platform for bitcoin investors.] And the price I paid for the bitcoin was higher than the current price, but my belief is that the price of bitcoin will exceed $10,000 within three years because the infrastructure is being built that will lay the groundwork for universal adoption. We will be using bitcoin for transactions and all we will know is that the transaction was made faster, smoother and cheaper than it would have been with just fiat currency.

    Will you invest as actively in bitcoin in 2015 or have you covered a lot of your bases at this point?

    This is just the tip of the iceberg. I expect bitcoin and the blockchain to be as prevalent in banking, commerce and finance as the Internet is in information, communications and software.

    A lot of very smart people are divided about bitcoin. Like you, Marc Andreessen is a famous bull. In contrast, Peter Thiel recently said that he’s skeptical, that it’s “not obvious how easy it is to get a seamless payment system attached to [bitcoin].”

    It is happening. I look forward to giving Peter a tour of Draper University and Hero City. Marc has already been there.

    Andreessen and Thiel have also become very public figures. Meanwhile, you did a lot of press around your Six Californias initiative, but as an investor, you seem to have pulled back.

    We just finished up another amazing session at Draper University. We are challenging the count at Six Californias. Draper Associates has been making some brilliant investments that I expect to have even greater outcomes than those I have made in the past. We have news cycles, too.:)

    Your three children are now making their own startup bets. What’s the best piece of advice you’ve given them about being investors in Silicon Valley?

    Yes, Jesse, the Valley Girl, is one of the top supporters of women in entrepreneurship, and she has made some exciting investments. My son Adam is running Boost.vc, and my son Billy works with me making investments for Draper Associates. They all look at the world as something that can be improved through entrepreneurship. [The] best piece of advice [I’ve given them]: “Fail and fail again until you succeed.”

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

    Connie

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  • Bubba Murarka: “We’re Underinvested as an Industry in Android”

    bubba_lifestyle_001DFJ’s newest managing director, Bubba Murarka, knows a thing or two about mobile. He has numerous bets on mobile companies, both personal and professional; he blogs and closely follows the writings of top mobile analysts, including Horace Dediu; and, oh, yeah, he was the first product manager at Facebook to get behind Android. (StrictlyVC previously wrote about Murarka’s background, including his seven years at Microsoft, here.)

    If you want to know about mobile trends, in short, you could do worse than talk with Murarka, which we did last week. Some outtakes from that conversation follow.

    You’ve written that it’s no longer about iOS versus Android but which Android “versions” and “flavors” startups should get behind. Do you think the best days of the iOS are behind it?

    There are two different ways to frame it – that it’s a zero sum game and only iOS or Android can win, or that both are important parts of the mobile ecosystem. I subscribe to the latter. But we’re underinvested as an industry in the Android portion of the ecosystem. Four out of five phones sold have Android on them. It’s an insanely big switch, and Android will be leaping to more and more types of devices. Google announced [last] week its new wearable platform. That means all wearables could conceivably run Android. Google announced at CES the Open Automotive Alliance, so they are porting the Android to the car. You can imagine over time that Android will be the defacto, default OS for everything. And in that world, you need to start — as a venture industry and startup community — making more bets on Android.

    What’s the hold-up?

    I think it’s harder in the Bay Area. I can count the number of Android phones I see carried in a day by entrepreneurs – it’s usually none. And I think it’s hard to imagine something that you don’t use every day. I do think there’s an underrepresented opportunity that startups are beginning to go after, but I’d say it’s still way less than 50 percent, which, to me, would seem reasonable.

    You have a giant phone. Is this the future of smartphones? As importantly, where do you carry it?

    I have a man purse. [Laughs]. No, it fits in my pocket. I have an Android phone and an iOS phone and got the [Samsung Galaxy] Note [to see how I’d use it]. And since getting it, I’m using my iPad a lot less because I don’t mind watching video on it.

    If you look at where data consumption happens on mobile, more than 50 percent is video, so in that world, this bigger screen makes a lot of sense. [Taking into account] socioeconomic situations in other countries, where maybe they can’t afford to buy a phone and a tablet but one device, this also starts to make a lot more sense. You also get really crazy [good] battery life.

    You’ve written about subscription opportunities over smart phones. What do you see coming?

    Right now, people are pretty much subscribing to either storage or to music. I think communication apps are probably [going to become bigger and more capable of charging subscribers, too] like WhatsApp’s 99 cent [per year] model.

    It wouldn’t surprise me to see others like game companies adopt that same kind of subscription model. So instead of offering in-app purchases, [they could] start to offer a dollar-per-month unlimited in-app purchasing. That creates a much more sustainable, predictable model. What happens if you just give everything to a user for 99 cents a month?

    What about mobile multitasking? Do you see opportunities for startups to make that easier to do?

    Android actually allows it. I can use two apps at the same time on my Note, though it’s a little clunky. There are rumors already about iOS 8 having some inner-app communication functionality, too, so I think there will be new ways to do it.

    An opportunity I see specifically isn’t for a company to build an app themselves but rather to build their app to be embedded in other apps. Like, it would be interesting to me if Microsoft never shipped Office for iPad or iOS devices but rather shipped the Office Document Viewer; all of sudden, every app [would have] access to viewing and editing [in] a Microsoft Office doc, so now you [could] multitask within an application.

    If you think about common problems that every app needs to solve, an interesting company is Layer [a communications platform that can be added to any mobile app by adding fewer than 10 lines of code]. It doesn’t have its own standalone messaging app; it’s messaging for other apps, all happening in the context of other apps. And that’s intensely powerful.

    Connie

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  • An Early Bet on Box Looks to Pay Huge Dividends

    Aaron Levie and Dylan SmithA few weeks ago, I talked shop with DFJ managing director Josh Stein about everything from Bitcoin (he’s bearish on the digital currency) to which firms are doing the most “fringe” investing (Khosla Ventures, Founders Fund, Google).

    Naturally, one of the topics we covered was Stein’s very early investment in the online storage company Box. It was a “very risky bet,” as he said at the time.  Lucky for DFJ, as it turns out.

    When earlier today Box publicly revealed its plans to raise up to $250 million in an IPO, many were surprised by the size of DFJ’s stake. Its 25.5 percent of the company is nearly twice the size stake of Box’s next-biggest shareholder, U.S. Venture Partners, which owns 13 percent. It also dwarfs the ownership positions of  Box cofounders Aaron Levie and Dylan Smith, who respectively own 4.1 percent and 1.8 percent.

    Altogether, Box has raised $414 million, including its most recent, $100 million, round, which closed in December at what Levie told reporters was a $2 billion valuation. Almost none of the firms that led Box’s later rounds are listed on its S-1; meanwhile, DFJ, which invested a total of $30 million in the company, could clear roughly $500 million if Box maintains its current valuation holds up.

    When I’d asked Stein what he saw in Levie and Smith seven-plus years ago, he told me that DFJ always looks for two things: “Markets that have the potential to be big, and entrepreneurs who are passionate and driven and kind of unreasonable. They aren’t willing to accept the conventional wisdom. They’re doing things that by their nature are very hard, and most people will tell them they’re wrong, and they’re so committed in their vision that they bull through that.”

    Even though Box  had just thousands of users at the time, Stein saw a big market opportunity.  It “struck us as a product that could be very horizontal – not just for salespeople or doctors but for everybody,” he said.

    Also, Levie and Smith were appropriately unreasonable. They were “obviously sharp, bright, and hard-working,” Stein observed, noting that when presented with questions they couldn’t immediately answer, they’d often provide long, thoughtful responses within a few hours.

    But Stein also based his investment thesis on something that firm cofounder Tim Draper told him when he first joined the firm. Draper had told Stein to “think why something could work, rather than why it couldn’t.”

    Why not, indeed.

    Connie

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  • StrictlyVC: March 24, 2014

    Hello, and happy Monday!

    —–

    Top News in the A.M.

    Move over, Amazon. Cisco Systems say it plans to begin offering “cloud” computing service to corporate customers, pledging to spend $1 billion over the next two years to enter the market, reports the Wall Street Journal.

    —–

    Bubba Muraka: DFJ’s Latest Whiz

    Steve Jurvetson has always been DFJ’s boy wonder, a polymath whose interests range from nanoscience to space travel and who received his electrical engineering degree from Stanford in two-and-a-half years (then he nabbed his master’s, then an MBA).

    Now, the Sand Hill Road venture firm appears to have found a new whiz in Bubba Muraka, who was brought on as a managing director last May and has some pretty impressive credentials of his own.

    The son of a scientist and an engineer, Muraka grew up in San Jose and Cupertino before heading off to Cal Poly in San Luis Obispo, “mostly because I wanted to go somewhere my parents couldn’t drive to see me by surprise,” he tells me over coffee at San Francisco’s Epicenter Café.

    As he was graduating, Microsoft recruited him to Seattle, where in 2001, Muraka was among a group of graduates to invent one of the earliest versions of social networking, an online application called Three Degrees. Eighteen months after Muraka arrived at Microsoft, however, his group was reorganized, its resources cut, and Muraka headed back to Cal Poly and earned his master’s degree.

    Again, Microsoft came knocking, this time offering Muraka the chance to run all product for Bing in the Bay Area. He happily stayed another three years. But by 2008, like a lot of top talent, Muraka — who speaks fast and smiles often — found himself at Facebook, where he talked his way into a business development role. He wanted to learn something new. What he discovered was how to handily outmaneuver traditional biz dev people. “I’d built Web software and desktop software and I understood the product and the engineering side of things,” he says. “The business person would have to bring in the engineer or product manager and I’d just start negotiating directly with that person and all of a sudden, we’d have an awesome deal for Facebook. It was sort of like a superpower.”

    It became too rote, in fact, so in early 2011, Muraka asked to switch to product management. With the move, he became the third product manager at Facebook to focus on mobile, and the first to zero in on Android specifically, eventually leading more than 50 people in the creation of Facebook’s Android app. (Given Android’s adoption, it’s probably the most-used interface for Facebook at this point.)

    Whether all of that experience will translate into success at DFJ is an open question, though it’s easy to see how it might.

    Muraka, for example, recently led the Series A round of CircleCI, a “continuous integration platform” that basically takes code sitting on a developer’s GitHub repository and quickly runs tests on it on Amazon’s Web services, pushing out what’s working to end users. The company has plenty of competitors, including CloudBees and Semaphore. But CircleCI has “built the best product out there,” says Muraka, “and as one of the few VCs who has written and shipped desktop, Web, and mobile software, I think I uniquely get it. I really see the power of the future they’ve created.”

    In the meantime, Muraka, a nut for all things mobile, can’t resist developing a still-stealth mobile company in parallel. “The agreement I had with DFJ was that I’d finish the company building, so I’m chairman but I got out of an operational role at the end of 2013.” Muraka replaced himself as CEO with a former COO of Virgin Mobile. “So, it’s like, going to be a thing,” he says excitedly.

    I ask the newly minted VC if his startup has raised any capital. “None so far,” he says with a slight smirk. “We’re still debating.” (Smart guy.)

    dropcam_300x250_learn

    New Fundings

    Actifio, a five-year-old, Boston-based data storage company, has raised $100 million at a $1 billion, reports Dealbook. The round was led by Tiger Global Management, which participation from earlier investorsAndreessen Horowitz, Greylock Partners, North Bridge Venture Partners, and other venture capital firms. Actifio’s newest round brings its total funding to roughly $212 million. Dealbook takes a look at its place in the data storage universe.

    Avazu, a 4.5-year-old, Shanghai-based programmatic ad platform, has raised $48 million in Series A financing led by Gaorong Capital. Other investors include “domestic and international companies, as well as an experienced U.S. Internet-focused private equity fund,” according to a release.

    CounterTack, a 6.5-year-old, Waltham, Ma.-based threat detection software company, has raised an additional $3 million in funding that pushes its Series B round to $15 million. The funding comes from Siemens Venture Capital; CounterTack’s other investors, including Goldman Sachs, Fairhaven Capital, and OnPoint Technologies, have provided the company with $25 million in funding altogether.

    Kolltan Pharmaceuticals, a 6.5-year-old, New Haven, Cn.-based drug developer focused on treatments across breast, lung, and ovarian cancers, has raised $60 million in fresh funding, according to a Form D first flagged by Med City News. The Yale spin-off has raised roughly $150 million to date, including from Purdue Pharma, HBM BioCapital, Celtic Therapeutics Management, Tichenor Ventures and Osage University Partners.

    Leju Holdings, a six-year-old, Beijing-based online-to-offline real estate services and advertising platform, has agreed to sell China’s Tencent Holdings 15 percent of its business for $180 million. The move underscores Tencent’s designs on broadening its services to better compete with Alibaba Group Holding. Leju offers services including mobile apps and payment mechanisms for real-estate buyers and property agents. Earlier this month, it filed with the SEC to go public.

    Off-Grid Electric, a two-year-old, Arusha,Tanzania-based company providing solar lighting services in Africa, has raised $7 million in funding from SolarCity, Vulcan Capital, and Omidyar Network. VentureBeat has much more here.

    Procured Health, a two-year-old, Chicago-based company whose software aims to help control hospital supply spend, has raised $4 million in Series A funding. FCA Venture Partners out of Nashville, Tn., led the round. The company has raised $5.1 million altogether, including from Bessemer Venture Partners, Zimmerman Ventures, and Fidelity Biosciences.

    Vicarious, a four-year-old, San Francisco-based artificial intelligence company that aims to create a machine that can think like humans, has raised $40 million in fresh funding led by Formation 8. Other investors in the round included Tesla and SpaceX CEO Elon Musk, Facebook CEO Mark Zuckerberg, actor Ashton Kutcher, Box CEO Aaron Levie, Y Combinator president Sam Altman, Braintree founder Bryan Johnson, Khosla Ventures, Good Ventures Foundation, Felicis Ventures, Initialized Capital, Open Field Capital, Zarco Investment Group, Metaplanet Holdings and Founders Fund. Vicarious received $15 million in a first round in 2012. Last month, the WSJ took an extensive look at the company, which has now raised $60 million altogether.

    WelVU, a 15-month-old, Portland, Oregon-based whose software allows doctors and nurses to create and send interactive presentations to patients with such information as their vital signs, scheduling, X-rays, blood results, and notes, has raised $1.25 million in seed financing from undisclosed sources. VentureBeat has more here.

    —–

    IPOs

    Globoforce Group, a 17-year-old, Southborough, Ma.-based software firm, cancelled its planned IPO late last week, citing unfavorable market conditions. PitchBook, the research firm, says the move also suggests that large financial institutions are becoming picky about which stocks to back.

    Hold on to your hats. The IPO of “Candy Crush Saga” maker King Digital is slated for Wednesday.

    —–

    Exits

    Berkeley Design Automation, a 13-year-old, Santa Clara, Ca.-based company focused on nanometer analog, mixed-signal, and RF circuit verification, has been acquired by publicly traded Mentor Graphics for undisclosed terms. Berkeley Design Automation had raised roughly $20 million over the years, including from Bessemer Venture Partners, Panasonic, Woodside Fund, and Western Technology Investment.

    YourBus, a three-year-old, Bangalore, India-based GPS-based bus tracking and analytics platform, has been acquired by the e-commerce and online travel company IbiboGroup for undisclosed terms. IbiboGroup is a joint venture between the South Africa-based media and Internet company Naspers and Tencent.

    —–

    People

    Business Insider has produced one of its famous “lists of the most important people in Silicon Valley.” Here’s who they came up with, laid out on one page.

    Mark Fasciano, a managing director at Canrock Ventures, a four-year-old venture firm in Brookville, New York, is embroiled in a controversy over whether Canrock violated conflict-of-interest rules by investing taxpayer dollars in five startups in which it has stakes — four of them reportedly founded by Fasciano. In 2012, Canrock was among seven venture firms chosen by New York State to invest a total of $35 million in federal funds in tech startups across the state. Newsday has more here.

    Sara Haider, a mobile engineer and technical lead at Twitter for four-plus years, is leaving for the anonymous social startup Secret, where she’ll be responsible for launching an Android version of the app. Twitter’s VP of analytics and business intelligence, Cayley Torgeson, is also leaving the company, which Re/code’s sources characterize as a big loss for the company. As Re/code notes, Torgeson is in charge of Twitter’s internal analytics. “In a nutshell, he’s the guy who can tell top brass if Twitter is ‘working’ or not.”

    Venture capitalist Vinod Khosla is reportedly coming to the aid of the publicly traded, advanced biofuel producer Kior, which he personally incubated and that last week warned that liquidity constraints could force a default or even a bankruptcy filing. Khosla and Bill Gates poured $100 million into Kior just last fall; now, “final terms and conditions are currently being negotiated” for a $25 million loan from Khosla, a Kior spokeswoman told The Deal.

    Larry Page, CEO of Google, gave stock in his company valued at roughly $177 million to charity in February, according to SEC documents discovered by the Chronicle of Philanthropy. The outlet’s conclusion: that Page is “much more charitable than he let on in a TED conference conversation with interviewer Charlie Rose [last] week.”

    LinkedIn CEO Jeff Weiner now tops Glassdoor’s list of the 50 highest-rated CEOs, per employee feedback on the jobs site. Weiner steals the slot from Facebook‘s Mark Zuckerberg, who apparently fell all the way to ninth place. Qualcomm CEO Paul Jacobs and Intuit CEO Brad Smith are also well-liked by employees, judging by the list. Vator has more here.

    —–

    Happenings

    Y Combinator is hosting its bi-annual Demo Day on Tuesday in Mountain View, Ca., from 10 am. to 5 pm PST.

    The CoinSummit conference also kicks off tomorrow in San Francisco and features an all-star line-up, including Marc Andreessen, Micky Malka of Ribbit Capital, and Jeremy Liew of Lightspeed Venture Partners, among others. If you can’t make it, you can watch a live stream here.

    —–

    Job Listings

    Here, a Nokia business unit that brings together Nokia’s mapping and location assets under one brand, is looking for a head of business development in Sunnyvale, Ca.

    —–

    Data

    Ad agencies have become active startup investors; four ad agencies alone have participated in 52 financing deals worth more than $500 million since 2011. CB Insights looks at who has been funding what.

    —–

    Essential Reads

    Over the weekend, PandoDaily dug up shocking court documents relating to an ongoing civil suit involving seven tech giants and the many employees whose wages they’ve being accused of conspiring to curb.

    A big fight is beginning to brew over who owns car data, reports The Recorder. (Subscription required.) Last week, Senator Bill Monning of Carmel, Ca., introduced legislation that would give drivers control of their vehicle-generated data — from their locations to their driving habits to even, potentially, their musical preferences. And car makers, tech developers, and privacy advocates are watching closely to see what happens. The data will “implicate the privacy interests of people both inside and outside the car,” Nate Cardozo, staff attorney for the Electronic Frontier Foundation, told the outlet. “This is definitely new ground.”

    —–

    Detours

    The overprotected kid.

    Silicon Valley’s brutal ageism.

    Airbnb’s first pitch deck.

    The best part of Google co-founder Sergey Brin’s first resume.

    —–

    Retail Therapy

    Boxed card sets from Thornwillow Press.

    Bill Murray pillows.

    —–

    To sign up for StrictlyVC, click here. To advertise, click here.

    Connie

    ,

  • Bubba Murarka: DFJ’s Newest Whiz

    bubba_headSteve Jurvetson has always been DFJ’s boy wonder, a polymath whose interests range from nanoscience to space travel and who received his electrical engineering degree from Stanford in two-and-a-half years (then he nabbed his master’s, then an MBA).

    Now, the Sand Hill Road venture firm appears to have found a new whiz in Bubba Murarka, who was brought on as a managing director last May and has some pretty impressive credentials of his own.

    The son of a scientist and an engineer, Murarka grew up in San Jose and Cupertino before heading off to Cal Poly in San Luis Obispo, Ca., “mostly because I wanted to go somewhere my parents couldn’t drive to see me by surprise,” he tells me over coffee at San Francisco’s Epicenter Café.

    As he was graduating, Microsoft recruited him to Seattle, where in 2001, Murarka was among a group of graduates to invent one of the earliest versions of social networking, an online application called Three Degrees. Eighteen months after Murarka arrived at Microsoft, however, his group was reorganized, its resources cut, and Murarka headed back to Cal Poly and earned his master’s degree.

    Again, Microsoft came knocking, this time offering Murarka the chance to run all product for Bing in the Bay Area. He happily stayed another three years. But by 2008, like a lot of top talent, Murarka — who speaks fast and smiles often — found himself at Facebook, where he talked his way into a business development role. He says he wanted to learn something new. What he discovered was how to handily outmaneuver traditional biz dev people. “I’d built Web software and desktop software and I understood the product and the engineering side of things,” he says. “The business person would have to bring in the engineer or product manager and I’d just start negotiating directly with that person and all of a sudden, we’d have an awesome deal for Facebook. It was sort of like a superpower.”

    It became too rote, in fact, so in early 2011, Murarka asked to switch to product management. With the move, he became the third product manager at Facebook to focus on mobile, and the first to zero in on Android specifically, eventually leading more than 50 people in the creation of Facebook’s Android app. (Given Android’s adoption, it’s probably the most-used interface for Facebook at this point.)

    Whether all of that experience will translate into success at DFJ is an open question, though it’s easy to see how it might.

    Murarka, for example, recently led the Series A round of CircleCI, a “continuous integration platform” that basically takes code sitting on a developer’s GitHub repository and quickly runs tests on it on Amazon’s Web services, pushing out what’s working to end users. The company has plenty of competitors, including CloudBees and Semaphore. But CircleCI has “built the best product out there,” says Murarka, “and as one of the few VCs who has written and shipped desktop, Web, and mobile software, I think I uniquely get it. I really see the power of the future they’ve created.”

    In the meantime, Murarka, a nut for all things mobile, can’t resist developing a still-stealth mobile company in parallel. “The agreement I had with DFJ was that I’d finish the company building, so I’m chairman but I got out of an operational role at the end of 2013.”

    Murarka replaced himself as CEO with a former COO of Virgin Mobile. “So, it’s like, going to be a thing,” he says excitedly.

    I ask the newly minted VC if his startup has raised any capital. “None so far,” he says with a slight smirk. “We’re still debating.”

    Connie

    , ,

  • StrictlyVC: March 10, 2014

    Good Monday morning, everyone! Hope you had a great weekend.

    —–

    Top News in the A.M.

    Yesterday, Google pledged to help developers create wearable devices, saying it will release an Android-based software development kit in the next two weeks.

    —–

    Josh Stein on the New DFJ

    DFJ has done what a lot of firms struggle to pull off; it has undergone a management shift without completely spooking LPs, who recently committed to give the firm $325 million for its newest fund. The transition was 18 months in the making, says Josh Stein, who joined DFJ a decade ago and who now, along with longtime partners Andreas Stavropoulos and Steve Jurvetson, runs DFJ without firm cofounders Tim Draper and John Fisher. (Draper and Fisher remain on the management committee.)

    Late last week, I talked with Stein — who has led investments for DFJ inYammer, Redfin, and Box, among other companies – to learn about the new vision for the firm. Our conversation has been edited lightly for length.

    Along with transition at the top of Draper, the firm has decided to return its focus to mostly U.S. companies, cut out clean tech as a sector of interest, and scale back on the size of its partnership. What drove the latter decision?

    DFJ had broadened pretty significantly [in numerous ways] and we thought we made better decisions when we had five or six people around the table rather than 10 or 12. We just think venture is very idiosyncratic in that it doesn’t scale very well. One person making all the decisions himself doesn’t have that cognitive diversity. But 10 or 15 [people around the table] is like a corporate meeting.

    We’re also focused on developing the next generation team, so bringing in people like Bubba [Muraka, a former product manager at both Facebook and Microsoft who joined the firm last May]. I’m 40, and [during this last fundraise], I got questions about LPs about my own succession plan. I said, “Really? I just got here.”

    You’re focusing on consumer tech, mobile, business and enterprise technology. What else should we expect to see from DFJ going forward?

    We also focus on disruptive technology, things that aren’t about building an app or putting together a Web site. Something like Uber is an incredible service with powerful network effects, but there’s no real technical innovation there. Contrast that to [DFJ-backed] Tesla or SpaceX or [biofuels startup] Synthetic Genomics or [D-Wave Systems], our quantum computing company. Just [Wednesday], we announced that we’re backing [human genome pioneer] Craig Venter in his newest endeavor, Human Longevity. [Editor’s note: Venter’s new company, which just closed a $70 million Series A round, plans to scan the DNA of as many as 100,000 people a year with the hope that the information will lead to new, life-extending therapies. Venter is also the cofounder of Synthetic Genomics.]

    Steve Jurvetson is the partner who most associate with DFJ’s more disruptive startups. Is that still the case?

    Definitely. Within our three pillars, Andreas and Bubba lead our consumer efforts, I tend to lead the firm’s enterprise efforts, and Steve leads our disruptive efforts. But it’s player-coach; we all do deals that fall into all three categories; there [just happen to be certain partners] who push the thinking forward.

    Are you seeing many disruptive deals? What’s particularly intriguing to the firm of late?

    Well, we’d love to see a third of our capital [flow to disruptive deals] but it’s less than a third [owing to lack of opportunity]. We see lots of brilliant, revolutionary ideas, but they have to be achievable within a reason period of time or they’re just science projects. Of course, sometimes, it’s counterintuitive. When we did SpaceX, a lot of people thought we were nuts, that we’d headed down a 10-year-long rat hole. Now, it’s a very big company according to every big metric.

    One thing we’re seeing a lot of innovation around right now is dynamic systems, and specifically things that are using some kind of artificial intelligence combined with sensors and actuators. A self-driving car would be the best example, or autonomous robots that can walk over uneven terrain. We don’t have a huge number of [related] bets, but we’re really excited about the ones we have.

    Is there a natural ecosystem of syndicate partners for DFJ on these types of deals? Who else is looking most closely at “out there” stuff?

    There’s a small ecosystem of investors looking. Khosla Ventures and Founders Fund are two that jump to mind. I think Google Ventures and Google as a corporate entity have also been very forward leaning. But I think [that ecosystem] is getting broader every day now that firms are seeing successes like Tesla, which is valued at $30 billion.

    DFJ raised its newest growth fund last year. Do you have thoughts about some of the seemingly crazy valuations we’re seeing for later-stage deals? What’s your gut tell you about the health of the market?

    I think people like to predict doom too fast. If the market is soft, technology is ending; it it’s hot, it’s a bubble. The truth is always somewhere in between.

    The way I think about growth investments is less about valuation but total loss of principal versus partial loss of principal. When you buy Google or Apple stock, you could say the shares are highly valued, but you won’t lose all your money. The odds of Google going out of business in the next 10 years is probably zero. Even with a massive correction, Google maybe goes down 50 percent.

    [Similarly], with Workday’s last private round [an $85 million injection in 2011, about 20 months before it went public], it was doing $100 million in revenue. With [online real estate broker] Redfin, the [still-private, DFJ-backed] company isn’t too far off from doing $100 million in revenue. These are stable businesses with recurring revenue, so there’s not a lot of capital risk there; it’s just a question of how big your return is going to be.

    The deals where you could lose all your money in at a huge valuation – a Snapchat where you could literally lose [everything] if the company doesn’t figure out a business model or the next hot thing comes along and people move on – that’s what scares me.

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    New Fundings

    Brammo, a 12-year-old, Ashland, Or.-based electric motorcycle maker, has raised $9.5 million in a still-open Series D fundraising round, reports EVWorld. The new funding comes from Canadian venture firm Terracap Ventures and the international insurance company Aviva Investors. The company is targeting $16 million; it has raised $63 million to date, including from Polaris Industries, Alpine Energy, and NorthPort Investments.

    DataRPM, a two-year-old, Fairfax, Va.-based company that promises to let anyone quickly create and deploy a custom analytics platform, has raised roughly $6 million in funding, including from Interwest Partners, shows an SEC filing.

    Domain Surgical, a 6.5-year-old, Salt Lake City-based medical device company that claims to have developed an advanced surgical technology, has raised $35 million in new funding from OrbiMed Advisors andBioStar Ventures.

    Huodongxing, a Beijing-based online ticketing platform, has raised “tens of millions of U.S. dollars” in Series B financing, says China Money Network. SAIF Partners led the round, with earlier investors Qualcommand DCM — which led the company’s Series A round in 2011 — also participating.

    Illumagear, a two-year-old, Seattle-based company whose hardware product can attach to any hard hat to produce a ring of light around the wearer, has raised $1.9 million, according to an SEC filing that shows the company is targeting a round of $2.7 million. The company had previously raised $750,000 in funding.

    JD.com, the 16-year-old, Beijing-based Chinese e-commerce company, has sold a 15 percent stake in its business to Tencent Holdings, one of China’s biggest Internet companies, for $214.7 million. Tencent has also agreed to buy an additional 5 percent stake in JD.com after its planned $1.5 billion listing on the Nasdaq is completed. (JD.com filed for the offering in late January.)

    Kannact, a two-year-old, Portland, Or.-based tablet-based, healthcare collaboration tool that promises to help providers, caregivers, and patients proactively manage a patient’s health through individualized care plans and real-time video conferencing with the patient, has raised $165.3 million, according to an SEC filing that shows a target of $200 million. No investors are listing on the filing.

    Knowledge Delivery Systems, a 13-year-old, New York-based online learning platform that promises to help users further their professional development, including through state certification and master’s degree programs, has raised $6 million in funding led by Edison Ventures. The round was characterized as the company’s first institutional capital.

    Lyft, the 6.5-year-old, San Francisco-based company whose ride-sharing app competes with Uber, has partially raised a $150 million round of fresh funding, Re/code reported on Saturday after spying this filing. Re/code notes that no investor names appear in the filing, but its sources say that the private equity firm Coatue Management is among other firms that have been in advanced talks with Lyft.

    Secret, a six-month-old, San Francisco-based mobile app that lets people anonymously share information with friends, has raised $10 million in venture funding at a post-money valuation of $50 million, says TechCrunch. Google Ventures reportedly led the round, with Kleiner Perkins Caufield & Byers participating. In December, Secret raised $1.2 million in seed funding from Google Ventures, Kleiner Perkins, SV Angel,Index Ventures and others.

    ShowEvidence, a three-year-old, Santa Clara, Ca.-based company that makes cloud-based performance-assessment software (for students, professional development and more), has raised an undisclosed amount of money from Follett Corporation.

    Specialists on Call, a 10-year-old, Reston, Va.-based platform that provides hospitals with emergency telemedicine consultations with board certified specialists, has raised $31.6 million in new funding, shows anSEC filing. An affiliate of Warburg Pincus provided the funds. The company has raised roughly $37 million to date, shows Crunchbase.

    Wayfair, the 12-year-old, Boston-based online retailer of home furnishings and decor, has raised $157 million in Series B financing led by T. Rowe Price Associates. The company has now raised around $360 million to date, shows Crunchbase, including from Battery Ventures, Great Hill Partners, HarbourVest Partners, and Spark Capital.

    Workable, a 20-month-old, Athens, Greece-based company whose online platform aims to simplify the recruiting process, has raised $1.5 million in funding led by Greylock IL, an affiliated fund of Greylock Partners in Silicon Valley. Workable raised $950,000 in seed funding last year.

    —–

    New Funds

    A new investment fund has sprung up in Polson, Montana, called Frontier Angel Fund II. The founder, Liz Marchi, declined to tell the local paper how much the fund will be investing or if it’s still fundraising but said the plans to work with a syndicate of angel investment funds around the country to back regional startups, and that the operation will be based out of her barn. (Love.)

    —–

    IPOs

    Shares of the digital coupon company Coupons.com nearly doubled in their trading debut Friday, closing at $28.50 from their offering price of $16 each. Bloomberg columnist Jonathan Weil doesn’t get why.

    —–

    Exits

    Bustle, a women’s lifestyle site launched seven months ago by Bleacher Report founder Bryan Goldberg, has parted ways with one of its seed investors, Google Ventures. TechCrunch reports that Google pulled its initial funding of $100,000 out of the company in the wake of some “tone deaf” comments made by Goldberg about Bustle’s mission. PandoDaily reports that Goldberg, a regular contributor to PandoDaily, opted to buy out Google Ventures with his own money as his relationship with the outfit became strained over time.

    Yahoo may be in talks to buy a Galway, Ireland-based technology company, SindiceTech, to “gain control of the company’s know-how,”reports the Sunday Independent. According to its report, Yahoo had originally planned to buy the company in December for roughly $25 million, but the negotiations collapsed.

    —–

    People

    On Friday, Salesforce CEO Marc Benioff and the nonprofit Tipping Point took the wraps off a new initiative called SF Gives that hopes to raise $10 million over the next 60 days for Bay Area antipoverty programs. Persuading 20 companies to contribute $500,000 apiece is just the start, says Benioff, who hopes the program will ultimately raise $100 million. Not that it will be easy, he tells the San Francisco Chronicle. Though numerous tech companies have already written out checks to the program, including LinkedIn, Google, Jawbone and Box, “We still have some pretty epic companies here who have had IPOs and aren’t giving – and aren’t part of this and won’t join,” says Benioff. “There is a dark side here. We get a guy on the phone, and he will say, ‘No. No. That’s not for us. We’re not doing this.’ ”

    Paul Ceglia, who famously claimed in 2010 that he was entitled to half of Facebook, lost a bid on Friday to throw out charges that he faked a contract, destroyed evidence and created bogus e-mails in a civil suit against Facebook cofounder Mark Zuckerberg. A federal grand jury in Manhattan had indicted Ceglia in 2012 on charges of mail fraud and wire fraud, but his attorney, David Patton, has been trying to argue that federal statutes for those crimes can’t be applied to false claims made in civil litigation.

    Renowned investor Ron Conway and wife Gayle hosted a gala in San Francisco last weekend in honor of Pinterest CEO Ben Silbermann, and the tech cognoscenti showed up in full force, including Square founderJack Dorsey, Sequoia‘s Roelof Botha, and Vinod Khosla of Khosla Ventures. You can see pictures of the event at the site of Drew Alitzer, San Francisco’s favorite society photographer.

    Chris Kay, who has spent the last seven years or so as a managing director of Citi Ventures — the last four of them as its global head — just left to join the publicly traded health care company Humana. Before joining Citi’s corporate venture arm, Kay spent 12 years in various leadership positions at Target.

    Bill Maris, Google Ventures‘ managing partner, has sold a condominium in Palo Alto, Ca., that was widely reported to be located next door to Apple CEO Tim Cook. No word on who paid the $2.8 million for the property, though if Cook acquired it for privacy’s sake, he’d join a growing number of CEOs who’ve nabbed neighboring properties for the much the same reason, including Elon Musk, Mark Zuckerberg, and (maybe) Marissa Mayer.

    —–

    Happenings

    The Game Developers Conference is around the corner, taking place in San Francisco March 17th through the 21st. Speakers include Gavin Moore, the creative director of Sony Computer Entertainment, and Chris DeWolfe, CEO of SGN.

    Box‘s developers conference in San Francisco is coming up Wednesday, March 26, with informational sessions that will feature Andreessen Horowitz cofounder Ben Horowitz, Palantir cofounder Joe Lonsdale, and Evernote CEO Phil Libin, among others. Click here to register, and use the promo code nextgendev.

    Meanwhile, the SXSW festival is already well underway in Austin; if you aren’t there and want to keep up on some of what’s happening, click here.

    —–

    Pulsar Venture Capital, an early-stage venture firm firm that was founded in Russia in 2009, is looking for a venture capital associate who will be based in the Bay Area.

    —–

    Data

    Global IPO activity has leaped 70 percent to hit $28.2 billion in 2014 so far, compared with the same period last year, reports Reuters.

    —–
    Essential Reads

    Instagram has inked its first major ad deal with an agency, securing a year-long commitment from Omnicom to spend up to $100 million, but the an even bigger revenue stream for the Facebook subsidiary may be tied to e-commerce, suggests Jenna Wortham of the New York Times.

    Google was built with the help of an army of “spiders” deployed to crawl the Web, and sophisticated algorithms to rank the value of pages. But it can’t easily navigate the apps where users are spending most of their time,reports the WSJ.

    “[A]nyone working on a TorCoin, PKICoin, or other AppCoin, do get in touch,” says Andreessen Horowitz partner Balaji Srinivasan, tweeting that he and Angellist cofounder Naval Ravikant “think of this as [the] next kind of startup.” Ravikant outlines why here.

    —–

    Detours

    Tom Coates’s San Francisco home live-tweets the movements of its many gadgets, from the lighting in the kitchen to Coates’s weigh-ins. For a time,reports the Times, it also tweeted the results. “I have stopped doing that recently because I’ve put on a ton of weight,” Coates said.

    The origins of 13 “True Detective” set pieces. (Speaking of which, what’sso funny about the show anyway, asks the New Yorker.)

    Did you invent bitcoin? Take this quiz to find out.

    The activist hedge fund manager Bill Ackman bet a billion dollars on the collapse of the nutritional supplement company Herbalife, then launched an extraordinary, if unsuccessful, campaign to kill it.

    —–

    A painting that’s also a wireless speaker.

    Black playing cards.

    “Oud Wood.” “Oud Tobacco.” “Tuscan Leather.” Tom Ford, what’s next? “Humidor?” “Boat Shoe”? “Squash Ball”? We are on tenterhooks.

    —–

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    Connie

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  • Josh Stein on the New DFJ

    JoshSteinDFJ as done what a lot of firms struggle to pull off; it has undergone a management shift without completely spooking LPs, who recently committed to give the firm $325 million for its newest fund. The transition was 18 months in the making, says Josh Stein, who joined DFJ a decade ago and who now, along with longtime partners Andreas Stavropoulos and Steve Jurvetson, runs DFJ without firm cofounders Tim Draper and John Fisher. (Draper and Fisher remain on the management committee.)

    Late last week, I talked with Stein — who has led investments for DFJ inYammer, Redfin, and Box, among other companies – to learn about the new vision for the firm. Our conversation has been edited lightly for length.

    Along with transition at the top of Draper, the firm has decided to return its focus to mostly U.S. companies, cut out clean tech as a sector of interest, and scale back on the size of its partnership. What drove the latter decision?

    DFJ had broadened pretty significantly [in numerous ways] and we thought we made better decisions when we had five or six people around the table rather than 10 or 12. We just think venture is very idiosyncratic in that it doesn’t scale very well. One person making all the decisions himself doesn’t have that cognitive diversity. But 10 or 15 [people around the table] is like a corporate meeting.

    We’re also focused on developing the next generation team, so bringing in people like Bubba [Muraka, a former product manager at both Facebook and Microsoft who joined the firm last May]. I’m 40, and [during this last fundraise], I got questions about LPs about my own succession plan. I said, “Really? I just got here.”

    You’re focusing on consumer tech, mobile, business and enterprise technology. What else should we expect to see from DFJ going forward?

    We also focus on disruptive technology, things that aren’t about building an app or putting together a Web site. Something like Uber is an incredible service with powerful network effects, but there’s no real technical innovation there. Contrast that to [DFJ-backed] Tesla or SpaceX or [biofuels startup] Synthetic Genomics or [D-Wave Systems], our quantum computing company. Just [Wednesday], we announced that we’re backing [human genome pioneer] Craig Venter in his newest endeavor, Human Longevity. [Editor’s note: Venter’s new company, which just closed a $70 million Series A round, plans to scan the DNA of as many as 100,000 people a year with the hope that the information will lead to new, life-extending therapies. Venter is also the cofounder of Synthetic Genomics.]

    Steve Jurvetson is the partner who most associate with DFJ’s more disruptive startups. Is that still the case?

    Definitely. Within our three pillars, Andreas and Bubba lead our consumer efforts, I tend to lead the firm’s enterprise efforts, and Steve leads our disruptive efforts. But it’s player-coach; we all do deals that fall into all three categories; there [just happen to be certain partners] who push the thinking forward.

    Are you seeing many disruptive deals? What’s particularly intriguing to the firm of late?

    Well, we’d love to see a third of our capital [flow to disruptive deals] but it’s less than a third [owing to lack of opportunity]. We see lots of brilliant, revolutionary ideas, but they have to be achievable within a reason period of time or they’re just science projects. Of course, sometimes, it’s counterintuitive. When we did SpaceX, a lot of people thought we were nuts, that we’d headed down a 10-year-long rat hole. Now, it’s a very big company according to every big metric.

    One thing we’re seeing a lot of innovation around right now is dynamic systems, and specifically things that are using some kind of artificial intelligence combined with sensors and actuators. A self-driving car would be the best example, or autonomous robots that can walk over uneven terrain. We don’t have a huge number of [related] bets, but we’re really excited about the ones we have.

    Is there a natural ecosystem of syndicate partners for DFJ on these types of deals? Who else is looking most closely at “out there” stuff?

    There’s a small ecosystem of investors looking. Khosla Ventures and Founders Fund are two that jump to mind. I think Google Ventures and Google as a corporate entity have also been very forward leaning. But I think [that ecosystem] is getting broader every day now that firms are seeing successes like Tesla, which is valued at $30 billion.

    DFJ raised its newest growth fund last year. Do you have thoughts about some of the seemingly crazy valuations we’re seeing for later-stage deals? What’s your gut tell you about the health of the market?

    I think people like to predict doom too fast. If the market is soft, technology is ending; it it’s hot, it’s a bubble. The truth is always somewhere in between.

    The way I think about growth investments is less about valuation but total loss of principal versus partial loss of principal. When you buy Google or Apple stock, you could say the shares are highly valued, but you won’t lose all your money. The odds of Google going out of business in the next 10 years is probably zero. Even with a massive correction, Google maybe goes down 50 percent.

    [Similarly], with Workday’s last private round [an $85 million injection in 2011, about 20 months before it went public], it was doing $100 million in revenue. With [online real estate broker] Redfin, the [still-private, DFJ-backed] company isn’t too far off from doing $100 million in revenue. These are stable businesses with recurring revenue, so there’s not a lot of capital risk there; it’s just a question of how big your return is going to be.

    The deals where you could lose all your money in at a huge valuation – a Snapchat where you could literally lose [everything] if the company doesn’t figure out a business model or the next hot thing comes along and people move on – that’s what scares me.

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    Connie

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