• Exits and Commitments

    Semil ShahBy Semil Shah

    Today wraps up the third summer I’ve had the luxury (and wielded the power!) of being a guest curator for StrictlyVC while Connie takes some well-deserved R&R on the beach with her family. This year, along with the standard Q&A’s with fellow investors, I’ve been reflecting on my few years as a small investor. Last Friday, I tried to collect and synthesize the questions I’ve received over the years about starting a fund as an “FAQ.” This Friday, I’ve been thinking about exits.

    The job of a fund manager, beyond allocating capital and helping those founders along the way, is to return capital. It’s ultimately the only thing a manager is judged on, professionally speaking. Everyone reading this newsletter already knows that. Yet, on this judgment metric, managers aren’t often in control of how or when those events occur. It typically takes Fund 2’s and 3’s to see what works, and yet, as the old adage goes, past performance is no guarantee of future performance.

    For newer, smaller funds like mine and many others, folks hope for public offerings down the road, though lately those outcomes feel harder to come by for a variety of reasons. Folks also hope for large acquisitions, and while many investors believe those may pick up over time, large ones are rare. Then there are secondaries and partial stock sales to newer investors from larger investment firms that have higher thresholds for ownership targets in their fund models.

    Investors and pundits chatter enough about an IPO or the large acquisitions they’re involved with or monitoring, but secondaries are not typically discussed for a host of reasons: reputation, private information, signaling, etc. I was afraid to discuss the topic myself until I realized they happen quite frequently, that secondaries have been discussed openly by one of the best venture investors in the world, and that they aren’t that big a deal for smaller funds that aren’t “an investor of record” in a company. (I should be clear here in stating that the investors who take concentrated positions in companies, join their boards, and manage larger funds have many reasons not to engage in secondaries because they need to play for a larger outcome, and any shuffling of a syndicate can be interpreted as a potentially negative signal by the private market.)

    Secondaries do not magically occur, however. They require creativity, patience, and, most importantly, the acceptance of other people in the deal on the table, including the existing investors, the new investors, and, of course, the CEO. The early investor has to ask for permission. He or she has to explain their rationale honestly. Signatures need to be collected. He or she still helps out, too. The relationship doesn’t end, and often it’s the companies helping the investor out more than the other way around.

    These decisions, I’d argue, are not necessarily intuitive for most small fund managers, most of whom do not have experience managing institutional money. Whereas most very early-stage decisions are made without much data, decisions to sell in future rounds when companies are doing well require an entirely different level of analysis. I can only speak for myself, but I’ve found that process significantly more challenging and the learning curve steeper.

    Still, secondaries are still comparatively easy for small funds to execute if they really want to. The absolute dollars at issue are often not material enough to arouse emotions. It’s considerably harder for bigger funds with classic partnership structures, whose general partners may make one to two new investments per year, sit on boards, and continue to follow-on in their investments all the way to the finish line. Larger funds often can’t, like smaller funds, invest in a bunch of companies per year and see what happens; they have to be selective and commit for a longer period of time. They often can’t, like smaller funds, scale down their ownership because those signals may negatively impact a specific company. They often can’t, like smaller funds, not maintain ownership because their fund sizes require large outcomes.

    I’m not saying these larger VC firms are saints or always helping out, but it’s a complicated dynamic that’s often overlooked or dismissed in the current environment of exploding company creation and exploding new fund formation. We should keep in mind the commitment of those founders and their early VC investors who take on and embrace long-term risk. Three years into the game, that’s most of what’s on my mind.

    Thanks for reading, and welcome back, Connie!

    Connie

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  • StrictlyVC: November 24, 2014

    Good Monday morning, everyone, and happy almost Thanksgiving! (Web visitors, this version of today’s email is a little easier to read than what you see below.)

    —–

    Top News in the A.M.

    Over the weekend, computer security researchers at Symantec announced that they’ve discovered a piece of malware circulating the world that appears to be used for spying and was likely created by a government agency (possibly one of ours). Recode has more here.

    —–

    A Part-Time VC No Longer

    About a year ago, I sat down with Semil Shah, a plugged-in networker who, back then, was working nearly full time at a podcasting company called Swell and spending his spare time participating in some of the hottest seed-stage financings in Silicon Valley.

    Today, Shah is no longer at Swell, which was acquired by Apple last July. Instead, the part-time VC, as I’d dubbed him, is moving closer to the life he has long wanted as a full-time investor, with a new fund and roles as a venture advisor at two very different venture firms, GGV Capital andBullpen Capital. We caught up on Friday to chat about how he’s pulling it off.

    Last December, you were investing a $1 million fund. You’d backed 16 companies and you were beginning to think about a $5 million fund. Now I hear that you’re almost there with a second fund.

    Yes, I wound up investing that $1 million vehicle pretty evenly across 35 companies. The idea was to get my feet wet and learn all the little things about investing, like what referrals are like and how you decide to invest and how you interact with a company when you want to fund it and how you interact with a company when you don’t. I learned a lot. Raising a million dollars was not easy. Just trying to put $25,000 into companies wasn’t easy. You have to explain a lot [about the value you bring] and you need other people who are investing to support you. The amount of work and reputation required, even to make a small investment, was surprising.

    What would you say is the standout of that first fund, and have you had an exits?

    The standout is probably [the same-day grocery delivery company] Instacart, which has grown quickly and attracted a lot of attention, though there are a number that are on a great trajectory: DoorDash, Hired, Coin, HashiCorp.

    I’ve had a couple of exits in fund one, but the money wasn’t significant enough to distribute, so I’m still holding it. I could technically recycle it versus distribute it, but I’m not sure I’ll have the opportunity to do that. In fund two, my hope is to follow on in one or two companies, but that’s always up to the entrepreneur, not investors.

    Are you getting enough ownership in these startups to make this model work?

    If you go in early enough, you can have decent size ownership without doing a follow-on. I’m looking at companies before they get to Y Combinator. Part of the reason I enjoy writing so much and being active on Twitter is that I can explain what I’m thinking in real time and people reach out. I’ve had people contact me who don’t know me and introduce me to startups; they’ll just say, I know you like this stuff, and I thought you’d like this company.

    You also seem masterful at networking.

    Honestly, everything I’ve done has been born out of pain more than opportunity. I’d hoped to invest for a long time but I don’t have the typical background required and there are very few jobs. A couple of my friends [in the industry] kind of pulled me aside a couple of years ago and slapped me and said, You have to stop asking people for a job and figure out how to do it yourself.

    Have you been making investments from your newest fund?

    I’ve invested in 20 so far, including Chain, a block chain company that ended up being funded by Khosla Ventures, and [office cleaning startup] Managed by Q.

    Where do you want to be five years from now?

    Right now I’m operating on instinct and making decisions in three, four, five days. I put a lot of thought into each investment, but there isn’t much data to go off. As I invest more, I’d like it to be on a path of more concentrated investments.

    I also know I don’t want to be investing by myself. In general, it can be lonely, but you can also get stuck in your own way of thinking. I definitely want to be investing in the early stage somewhere, though.

    —–

    New Fundings

    BitHound, a year-old, Toronto-based software analytics platform that helps developers improve their code quality, has raised $2 million in seed funding led by Difference Capital, with participation from BDC Capital and additional angel investors.

    EBrevia, a two-year-old, Stamford, Ct.-based company whose service applies machine learning to help review legal contracts, has raised $1.5 million in seed funding led by Connecticut Innovations, along with unnamed angel investors. The company has now raised $2.1 million altogether.

    Host Analytics, a 13-year-old, Redwood City, Ca.-based company that makes web-based enterprise financial management software, has raised $25 million in funding led by Centerview Capital Technology, with participation from Advanced Technology Ventures, Next World Capital, StarVest Partners, and Trident Capital. The company has now raised at least $85.9 million to date, shows Crunchbase.

    Memoir, a two-year-old, New York-based photo-sharing smartphone application, has raised $5.5 million led by Redpoint Ventures, with participation from earlier investors, including Founder Collective, Box Group, Lerer Ventures and Thrive Capital. The company has raised $6.7 million to date. Venture Capital Dispatch has more here.

    Mirador Financial, a 1.5-year-old, Portland, Or.-based small business lending platform, has raised $2 million in seed funding from investors, including Collaborative Fund, Crosslink Capital, Vesta Corporation,Wicklow Capital and angels Eric Bunting, Bruce Gibney, Robert Harteveldt, Awy Julianto, George Kenny, Bruce Weinstein and Bill Ullman.

    Rentlytics, a 21-month-old, San Francisco-based online platform that enables apartment owners to provide their property metrics to clients to view and analyze, has raised $4 million in seed funding led by earlier investors Trinity Ventures and Rincon Venture Partners, reports VentureWire. The company has now raised $5 million altogether.

    Scrollback, a 15-month-old, Singapore- and India-based chat platform for online communities, has raised $400,000 in seed funding led by Jungle Ventures. E27 has more here.

    Sentient Technologies, a 7.5-year-old, San Francisco-based company that’s been quietly developing technology to distribute artificial intelligence software to computer processors around the world, has raised $103.5 million in Series C funding from Access Industries and Tata Communications, along with earlier investor Horizon Ventures. The company has now raised $143 million altogether. Venture Capital Dispatch has much more here.

    SimplyTapp, a two-year-old, Austin, Tx.-based mobile payment software maker that enables users to make transactions with their smartphones, has raised $6 million in Series B funding, shows a new SEC filing. The round was led by a new, undisclosed lead investor with both Lightspeed Venture Partners and Blue Sky Capital participating. The company has now raised $7.6 million to date, shows Crunchbase.

    Tugg, a three-year-old, Austin, Tx.-based crowdfunding and social networking platform for film buffs, has just raised $5.9 million from 11 backers, according to an SEC filing. Built in Austin has more here.

    VidCoin, a nearly-year-old, Lyon, France-based in-app video advertising start-up, has raised 1 million euros ($1.24 million) from Virtual Network and Kima Ventures.

    Yik Yak, the 13-month-old, Atlanta-based anonymous-messaging app that has spread rapidly across college campuses, has raised $62 million in new funding led by Sequoia Capital, according to WSJ sources. The investment marks the third round this year in the young company, whose valuation has reportedly soared into the low hundreds of millions of dollars. Jim Goetz, the partner who led Sequoia’s WhatsApp investment three years ago, is joining Yik Yak’s board, says the WSJ. Yik Yak has now raised $73.5 million altogether, including from DCM, Azure Capital, Vaizra Investments, and Atlanta Ventures. Crunchbase also lists Niko Bonatsos as an individual investor in Yik Yak. Bonatsos, a principal at General Catalyst Ventures, is widely credited with bringing Snapchat to his firm.

    —–

    New Funds

    Lip-Bu Tan, who famously founded Walden International in 1987, is raising a new fund called China Walden Venture Investments II, according to an SEC filing that says the “first sale has yet to occur.” The fund has a $150 million target.

    Matter Ventures, a nearly three-year-old, San Francisco-based seed fund and accelerator, is raising a second, $12 million fund, shows, an SEC filingthat states the first sale has yet to occur. Matter invests $50,000 and five months of mentoring and support in early-stage media companies.

    Nicholas Chirls is raising $6 million for a Brooklyn, N.Y.-based venture fund entity called Notation Capital, according to an SEC filing. Chirls previously led seed investments at Betaworks, and founded alphaworks, a now nine-month-old, crowdfunding platform that helps startups sell equity to investors under their own label at their own sites. According to the filing, Chirls’s cofounder in the endeavor is Alex Lines, who spent the last five years at Betaworks and whose LinkedIn profile still lists him as a technical adviser to the Betaworks company Chartbeat.

    Polaris Partners, the Boston-based venture capital firm, has raised a new fund of $450 million, it announced this morning. The fund is the firm’s seventh and represents a sizable step up from its sixth, $375 million fund. BostInno has more here.

    Upfront Ventures, the 18-year-old, Santa Monica, Ca.-based early stage venture firm, is looking to raise up to $250 million for its fifth fund, shows an SEC filing. It closed its most recent fund with $200 million in 2013.

    Tech in Asia shines a light on Convergence Accel, Indonesia’s newest venture firm.

    Venture Capital Dispatch dives into Work Bench, a New York-based accelerator for enterprise tech startups.

    —–

    IPOs

    Jasper, a 10-year-old, Mountain View, Ca.-based company that offers its own Internet of Things management technology and also manages and brokers agreements between service providers, is working with Morgan Stanley, Goldman Sachs, and other banks in preparation for an IPO for next year, according to VentureWire’s sources. The offering could raise $150 million for the business, which has already raised roughly $205 million from private investors, including Benchmark, Sequoia Capital, and AllianceBernstein.

    —–

    People

    Venture capitalist Steve Jurvetson on commercial air flight: “Beyond self-driving cars, I think all airplanes should go pilotless. Get the pilots out of there. Even better, have no cockpit at all, and turn it into a nice lounge with a bar. Why give people the illusion of control with a steering wheel? Take the wheel out. If you cut the pilot out, immediately the plane can no longer be used as a weapon of terror or be steered into a building.” (This is a good interview.)

    Tom Rikert is the newest partner at Next World Capital, a San Francisco-based venture firm that invests in growth-stage companies and helps them expand in Europe. Rikert joins the firm from Andreessen Horowitz, where he helped bring numerous enterprise investments into the firm, including Zenefits, Optimizely, OpenGov, and Dwolla. Prior to Andreessen Horowitz, Rikert was the director of product management at Wildfire, a SaaS social marketing platform acquired by Google. At Next World, he’ll specialize in enterprise applications and the Internet of Things.

    Whitney Wolfe, an early employee at the dating app Tinder, who sued the company for sexual harassment and workplace discrimination, has joined up with two other early Tinder employees to launch a direct competitor to Tinder called Bumble. TechCrunch has the story here.

    —–

    Job Listings

    Vulcan, which manages the business and charitable endeavors of Microsoft cofounder Paul Allen, is looking for a chief investment officer. The job is in Seattle.

    —–

    Essential Reads

    Not all is well at Samsung, which is reportedly considering a major leadership shake-up after a difficult year.

    Tech interns get paid.

    When G.M. was Google: The art of the corporate devotional.

    —–

    Detours

    In medicine, an unexpectedly precious commodity.

    The dirty truth about “man buns.”

    Back-home ballers.

    —–

    Retail Therapy

    The Aldo Lounger. For cosseted pets that have grown accustomed to a certain standard of living.

    Connie

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  • Semil Shah: A Part-Time VC No Longer

    semil.shahAbout a year ago, I sat down with Semil Shah, a plugged-in networker who, back then, was working nearly full time at a podcasting company called Swell and spending his spare time participating in some of the hottest seed-stage financings in Silicon Valley.

    Today, Shah is no longer at Swell, which was acquired by Apple last July. Instead, the part-time VC, as I’d dubbed him, is moving closer to the life he has long wanted as a full-time investor, with a new fund and roles as a venture advisor at two very different venture firms, GGV Capital and Bullpen Capital. We chatted on Friday about how he’s pulling it off. Our conversation has been edited for length.

    Last December, you were investing a $1 million fund. You’d backed 16 companies and you were beginning to think about a $5 million fund. Now I hear that you’re almost there with a second fund.

    Yes, I wound up investing that $1 million vehicle pretty evenly across 35 companies. The idea was to get my feet wet and learn all the little things about investing, like what referrals are like and how you decide to invest and how you interact with a company when you want to fund it and how you interact with a company when you don’t. I learned a lot. Raising a million dollars was not easy. Just trying to put $25,000 into companies wasn’t easy. You have to explain a lot [about the value you bring] and you need other people who are investing to support you. The amount of work and reputation required, even to make a small investment, was surprising.

    What would you say is the standout of that first fund, and have you had an exits?

    The standout is probably [the same-day grocery delivery company] Instacart, which has grown quickly and attracted a lot of attention, though there are a number that are on a great trajectory: DoorDash, Hired, Coin, HashiCorp.

    I’ve had a couple of exits in fund one, but the money wasn’t significant enough to distribute, so I’m still holding it. I could technically recycle it versus distribute it, but I’m not sure I’ll have the opportunity to do that. In fund two, my hope is to follow on in one or two companies, but that’s always up to the entrepreneur, not investors.

    Are you getting enough ownership in these startups to make this model work?

    If you go in early enough, you can have decent size ownership without doing a follow-on. I’m looking at companies before they get to Y Combinator. Part of the reason I enjoy writing so much and being active on Twitter is that I can explain what I’m thinking in real time and people reach out. I’ve had people contact me who don’t know me and introduce me to startups; they’ll just say, I know you like this stuff, and I thought you’d like this company.

    You also seem masterful at networking.

    Honestly, everything I’ve done has been born out of pain more than opportunity. I’d hoped to invest for a long time but I don’t have the typical background required and there are very few jobs. A couple of my friends [in the industry] kind of pulled me aside a couple of years ago and slapped me and said, You have to stop asking people for a job and figure out how to do it yourself.

    Have you been making investments from your newest fund?

    I’ve invested in 20 companies so far, including Chain, a block chain company that ended up being funded by Khosla Ventures, and [office cleaning startup] Managed by Q.

    Where do you want to be five years from now?

    Right now I’m operating on instinct and making decisions in three, four, five days. I put a lot of thought into each investment, but there isn’t much data to go off. As I invest more, I’d like it to be on a path of more concentrated investments.

    I also know I don’t want to be investing by myself. In general, it can be lonely, but you can also get stuck in your own way of thinking. I definitely want to be investing in the early stage somewhere, though.

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

    Connie

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  • What I’ve Learned in My First 18 Months of Investing

    Semil ShahI’ve been investing for a year and a half, and I’ve learned more than I would’ve imagined by just jumping into the game. Now, I’m playing with very small amounts of capital, and whatever lessons I’ve gathered for myself aren’t necessarily “right” and aren’t generally applicable to everyone. With that disclaimer, I wanted to briefly share what the key learnings (so far) have been for me in this final column for my guest run with StrictlyVC:

    Polite But Clear, Direct Language: When I’ve been talking to a founder and decide I’d like to invest, I will usually write in email: “I would love to invest in the company if you’d have me.” In a way, it is asking for permission. The investor is not in control; the founders grant access. For every investment, there are many “no’s” to deliver. I try to do these quickly over email or even in a meeting. I’ve received so many “no’s” before that it helps me deliver them, too — I hope. I also briefly describe how I expect to help once the check is deposited. As a small investor at the table, I generally ask founders to contact me anytime they need to, and I will proactively focus on helping set up the company up for future financings.

    Following Founders Versus Predicting the Future: When I started, I thought: “Hey, I’ll pick some spaces I like.” Wrong. Founders define the future and dollars simply follow. Originally, I thought I’d take a portfolio approach and focus in some areas, but as things have evolved, I just focus on the people I get to meet and make sure I pay attention to every word, every pixel, and every slide. I cannot predict the future, so I try to find people who can invent it.

    Pro Rata is a Privilege, Not a Right: Pro-rata rights are very important for small, early-stage investors. I don’t ask for them, because I don’t think I’d get them, and mostly because I don’t feel like I deserve them. Without pro rata, early-stage investments suffer quite a bit of dilution, so there’s extra pressure to be a “high-contact” hitter who hits for batting average. Over time, I hope I earn the right to ask for pro rata.

    Dialogue Over Time Pressure: I will trade many emails with a founder to ask key questions and learn more. I like email as a medium. Most people would rather talk in person or at least on the phone, but my personal preference is to get up to speed via email and then engage in live conversation. This doesn’t work for everyone, and I’ll miss things because of that, but that’s one of the things I’ve just come to accept.

    Tough Love Over Coddling: I don’t talk or write about it much, but I was a founder of a life sciences technology company before coming to the Bay Area. It was both a great and painful experience, and in part why I’ve held off starting something again. I kind of just fell into it, and I wasn’t ready. Back then, in the Boston area, there wasn’t anyone around to support or coddle us. Then, I came here and got my a__ kicked for 11 months straight. It was bad. All of these experiences make me think about existential risk. I see an early-stage company and think: “Hey, you’re awesome, but hey, you could run out of funds pretty quickly and then evaporate.” So, in the course of early-stage investing, yeah — at times, you sense existential risk for others, and then if you’re outspoken and direct like me, you have the delicate job of pointing out that existential risk. In those moments, I tend to be driven by tough love over coddling. It’s not right or wrong, and there’s always room to improve, but that’s how I’m wired, for better or worse.

    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: December 11, 2013

    110611_2084620_176987_imageGood morning!

    —–

    Top News in the A.M.

    That new Palantir Technologies round, the one valuing it at $9 billion, has shot past $107 million, according to an SEC filing. TechCrunch has more here.

    —–

    The Part-Time VC

    Semil Shah has a full-time job, spending most of each week doing mobile product marketing for a company called Swell in Palo Alto. The rest of the time, Shah is either writing a weekly column for TechCrunch; working as an informal (but paid) mobile technology consultant to several Sand Hill Road firms; or trying to participate in competitive seed-stage financings using a $1 million fund called Haystack that he raised last year.

    Shah — who has so far backed 16 companies and is beginning to think about a $5 million to $10 million second fund – calls his schedule “not normal.” However unusual it may be, Shah could well represent the future of early-stage investing given its ongoing atomization. I talked with him about his immediate plans over coffee last week. Our conversation has been edited for length.

    How does someone with a.) a regular job and b.) no investing track record raise a million dollars?

    I’ve always been interested in investing and basically wanted to get practice, so I turned to [VCs and founders] who I know for help. There’s a ton of trust involved and every LP is different. Even just getting a $25,000 LP check from someone who has the means isn’t easy. But I think people knew that I wanted to do it and was having a hard time, and [eventually] I sort of passed the passion test. I also invested some of my own money [in the pool] and didn’t charge a management fee.

    How has it been going?

    I’ve now invested in 16 startups across four areas, including marketplaces, core infrastructure, online and offline commerce logistics, and mobile computing. Quite a few are doing well, includingHired [which marries tech talent with jobs]; Paddle8 [a virtual art auction house that has already gone on to raise a Series B round] andInstacart [a same-day delivery grocery startup that counts Sequoia Capital’s Mike Moritz as a board member].

    What size checks are you writing, and what are you getting in return for them?

    I can write between checks of between $25,000 and $100,000, though they’ve usually been around $25,000. And as someone on the edge of these deals, you aren’t setting the terms; you’re asking to be in the deal. For me, you take what you can get. It’s very competitive; I was surprised by how competitive it is.

    How are you selling yourself to sought-after entrepreneurs?

    I do think that by working full-time in mobile, I connect better with entrepreneurs because my operational knowledge is sharper. I also tell everyone my terms of engagement, which are that I’m on call for the entrepreneurs. I let them know that I think [they’ll] figure out what they need to do, then to call me if I can help in a certain area or just to talk to, because I’m not one of the big players. I kind of underpromise and try to be helpful and available, rather than say, “I’m going to do all these awesome things for you.”

    For those who might like to do what you’re doing, how would you advise them to separate themselves from the pack?

    I think firms and individuals have to brand themselves because it’s so competitive, and there are three ways to do it: there’s content marketing, including through blogs and social media; there’s referral marketing – you work with someone and give them an amazing reference; and there’s performance marketing. At the beginning, what do you do? You media market to gain exposure. Either way, entrepreneurs are smart; they figure out [who adds value and who doesn’t].

    Any big surprises now that you’re so entrenched in the market? What trends are you seeing?

    There are a lot of companies coming out of Y Combinator and [other high-profile incubators] that are getting fancy with terms and trying to get cute with the caps, and the market doesn’t really bear that out. I think sometimes with first-time founders, you get into the game, and you just get caught up in everything.

    I think another thing that most people on the founding side don’t understand is the exit profile of most companies. There’s a $20 million to $50 million band, and a $50 million to $100 million band, then the curve just drops. Entrepreneurs and investors publicly say, “Oh, we’re not going to talk about exits,” but everyone is silently making their own exit profile when they’re considering making an investment.

    Do you think when the time comes to raise a second fund, investors will be ready to bet on you again?

    I hope so. I’ve gotten lot of inbound [deal flow] from my other deals. I feel like I’ve passed the trust threshold and also the he-got-into-early deals threshold. I want to be investing in private, early-stage technology for the rest of my life.

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    New Fundings

    CarbonCure Technologies, a six-year-old, Halifax, Nova Scotia-based company that repurposes waste carbon dioxide to make “greener and stronger” concrete, has raised $3.5 million led by BDC Venture Capital. Other investors in the round include Eagle Cliff Partners, 350 Capital, Innovacorp and an unnamed strategic Shanghai-based investor. The company previously raised $1.4 million, in January 2012.

    Datahero, a two-year-old, Palo Alto, Calif.-based company whose Web application helps users visualize and understand their data, has raised $3.15 million in additional seed funding by existing investorFoundry Group. Foundry committed $1 million to the company last year, along with Neu Venture Capital and numerous individual investors.

    Doctor on Demand, a new, San Francisco-based company behind a mobile app that connects users with physicians for a $40 consultation fee, has raised $3 million in seed funding. The capital comes fromVenrock, Andreessen Horowitz, Google Ventures, Lerer Ventures,Shasta Ventures, and Athena Health chief executive Jonathan Bush. VentureBeat has more here.

    Egnyte, a seven-year-old, Mountain View, Calif.-based company provides enterprise file-sharing and storage, has raised $29.5 million in Series D funding led by Seagate, CenturyLink, and Northgate Capital. Previous investors Kleiner Perkins Caufield & Byers,Google Ventures and Polaris Partners also joined the round, which brings the company’s total funding to $62.5 million.

    Extole, a four-year-old, San Francisco-based referral marketing platform, has raised $5 million from Norwest Ventures, Shasta Ventures, Redpoint Ventures and Trident Capital.

    FirstFuel Software, a four-year-old, Lexington, Mass.-based energy analytics business, has raised $8.5 million in Series B funding led by new investor E.ON SE. Previous investors Battery Ventures,Rockport Capital and Nth Power also participated in the round, which brings the company’s total backing to $21 million.

    Jamf Software, an 11-year-old, Minneapolis, Minn.-based maker of Apple device management software, has raised $30 million in funding led by Summit Partners, which was joined by GSV Capital Corp.

    Loop Commerce, a two-year-old, Mountain View, Calif.-based “gifting service,” has raised $4 million from PayPal. The funding, which comes just one month after Loop closed on a $7.2 million Series A round, brings the company’s total funding to $12.2 million.

    Novomer, a nine-year-old, Waltham, Mass.-based chemistry technology company, has raised an undisclosed amount of venture funding from Saudi Aramco Energy Ventures, the corporate venture arm of Saudi Aramco. Novomer has disclosed previous funding of $31.4 million, according to Crunchbase, including from Physic Ventures and Flagship Ventures.

    Simulmedia, a four-year-old, New York-based company specializing in so-called “targeted” TV advertising, has raised $25 million in Series D funding led by Valiant Capital. R&R Venture Partners, a new fund created by Dick Parsons and Ronald Lauder, also participated in the round, alongside previous investors Avalon Ventures, Union Square Ventures, Time Warner Investments and Allen & Company. Simulmedia has raised nearly $59 million to date.

    StarMaker Interactive, a three-year-old, San Francisco-based music entertainment platform behind mobile apps like “The Voice,” has raised $4 million in Series A financing from Qualcomm Ventures andiGlobe Partners.

    Talend, an eight-year-old, Los Altos, Calif.-based open-source data integration company, has raised $40 million from Bpifrance, Iris Capital, and Silver Lake Sumeru. The company has now raised just north of $100 million, according to Crunchbase.

    Utilidata, a Providence, R.I.-based maker of grid management systems for the electric utility industry, has raised more than $20 million in Series B financing, it announced yesterday. Formation 8 Partners and Saudi Aramco Energy Ventures led the round, joined by existing investors Braemar Energy Ventures and American Electric Power.

    Yodo1, a three-year-old, Beijing-based mobile games publisher and platform, has raised $11 million in Series B funding led by GGV Capital. Singtel Innov8, Pavillion Capital, and Iris Capital also participated in the round, which brings the company’s total funding to $18 million.

    The Zebra, a two-year-old, Austin, Tex.-based automotive insurance comparison platform, has closed $3 million as an add-on to $1.5 million that the company had previously raised for its seed round. Investors in the financing include U.K tech entrepreneur Simon Nixon, Mark Cuban, Mike Maples, Jr., Floodgate, Silverton Partners, Birchmere Labs and Swallow Point Ventures.

    —–

    New Funds

    Dubai-based investors Arya Bolurfrushan and Paul Kenny have formed a new, early-stage venture capital firm called Emerge Ventures that will focus on Middle East technology companies. The firm isn’t disclosing how much money it will be investing, but it has already backed three companies, including Lumba, a San Francisco-based mobile-gaming company that caters to the Arabic-speaking world.

    —–

    People

    Chip Wilson, who founded Lululemon in 1998, is stepping down from his role as chairman after offending the company’s customers with some public comments. (Most notably, he suggested that women’s thighs make Lululemon’s yoga pants see-through, telling a Bloomberg interviewer: “It’s really about the rubbing through the thighs, how much pressure is there over a period of time and how much they use [the item].” Wilson, one of Canada’s richest businessmen, will remain on the board. The company has also named a new CEO. More on the story here.

    Yahoo CEO Marissa Mayer really wants to acquire Imgur, reports Business Insider, saying Yahoo has been talking with the four-year-old, San Francisco-based photo-sharing service all fall. If founder Alan Schaaf sells the company for as much as BI speculates that it’s worth, he’ll make a huge fortune; Schaaf has never raised outside funding.

    —–

    Exits

    Ideeli, a six-year-old, New York-based women-focused flash sales site that has raised more than $100 million from investors, is trying to sell itself whole or piecemeal, sources tell AllThingsD. The company’s investors include Next World Capital, StarVest Partners, andKodiak Venture Partners.

    —–

    Happenings

    Harvard is hosting its Conference on Web and Internet Economics today through Saturday in Cambridge. You can learn more here.

    The Le Web Paris conference rolls into its second day. The agenda is here; you can find video of the event here.

    —–

    Job Listings

    Comcast Ventures is looking to hire an associate in San Francisco. To apply, you need at least two years of experience at a venture capital firm, investment bank, or consulting firm; people with biz dev or product management experience will also be considered. Applicants should also have an “established industry network” within the San Francisco venture and startup community.

    —–

    Data

    According to the WSJ, companies aren’t waiting nearly as long as they once did to stage secondary offerings. The median time this year between a company’s IPO and the completion of its second stock offering has been just 151 days, down from 368 days in 2011.

    —–

    Essential Reads

    As the world awaits the announcement of Microsoft’s newest CEO, Microsoft’s top executives, and Steve Ballmer himself, reflect on the man and his legacy.

    Vanity Fair takes a fresh look at numerous tech giants’ sudden interest in architecture, and what the choices of Apple, Google, Facebook, and Amazon say about their culture.

    —–

    Detours

    Forget cocaine; drug cartels are now selling our stolen iPhones.

    Malcolm Gladwell on why being nice really isn’t so awful.

    Even as content goes digital, “talent” is stuck with obsolete contractsthat give most “home video” proceeds to studios, which once needed the money to make and distribute VHS tapes.

    Time looks back at 2013, publishing a “selection of underreported, improbable and astounding images” that we couldn’t stop scrolling through.

    —–

    Retail Therapy

    It’s too cold for camping, but come springtime, this flashlight, which doubles as a USB backup battery source, could come in very handy.

    “Ah, this sweater is precisely what I’ve been looking for,” said no grown man ever.

    —–

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

     

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  • The Part-Time VC

    Semil ShahSemil Shah has a full-time job, spending most of each week doing mobile product marketing for a company called Swell in Palo Alto. The rest of the time, Shah is either writing a weekly column for TechCrunch; working as an informal (but paid) mobile technology consultant to several Sand Hill Road firms; or trying to participate in competitive seed-stage financings using a $1 million fund called Haystack that he raised last year.

    Shah — who has so far backed 16 companies and is beginning to think about a $5 million to $10 million second fund – calls his schedule “not normal.” However unusual it may be, Shah could well represent the future of early-stage investing given its ongoing atomization. I talked with him about his immediate plans over coffee last week. Our conversation has been edited for length.

    How does someone with a.) a regular job and b.) no investing track record raise a million dollars?

    I’ve always been interested in investing and basically wanted to get practice, so I turned to [VCs and founders] who I know for help. There’s a ton of trust involved and every LP is different. Even just getting a $25,000 LP check from someone who has the means isn’t easy. But I think people knew that I wanted to do it and was having a hard time, and [eventually] I sort of passed the passion test. I also invested some of my own money [in the pool] and didn’t charge a management fee.

    How has it been going?

    I’ve now invested in 16 startups across four areas, including marketplaces, core infrastructure, online and offline commerce logistics, and mobile computing. Quite a few are doing well, including Hired [which marries tech talent with jobs]; Paddle8 [a virtual art auction house that has already gone on to raise a Series B round] and Instacart [a same-day delivery grocery startup that counts Sequoia Capital’s Mike Moritz as a board member].

    What size checks are you writing, and what are you getting in return for them?

    I can write between checks of between $25,000 and $100,000, though they’ve usually been around $25,000. And as someone on the edge of these deals, you aren’t setting the terms; you’re asking to be in the deal. For me, you take what you can get. It’s very competitive; I was surprised by how competitive it is.

    How are you selling yourself to sought-after entrepreneurs?

    I do think that by working full-time in mobile, I connect better with entrepreneurs because my operational knowledge is sharper. I also tell everyone my terms of engagement, which are that I’m on call for the entrepreneurs. I let them know that I think [they’ll] figure out what they need to do, then to call me if I can help in a certain area or just to talk to, because I’m not one of the big players. I kind of underpromise and try to be helpful and available, rather than say, “I’m going to do all these awesome things for you.”

    For those who might like to do what you’re doing, how would you advise them to separate themselves from the pack?

    I think firms and individuals have to brand themselves because it’s so competitive, and there are three ways to do it: there’s content marketing, including through blogs and social media; there’s referral marketing – you work with someone and give them an amazing reference; and there’s performance marketing. At the beginning, what do you do? You media market to gain exposure. Either way, entrepreneurs are smart; they figure out [who adds value and who doesn’t].

    Any big surprises now that you’re so entrenched in the market? What trends are you seeing?

    There are a lot of companies coming out of Y Combinator and [other high-profile incubators] that are getting fancy with terms and trying to get cute with the caps, and the market doesn’t really bear that out. I think sometimes with first-time founders, you get into the game, and you just get caught up in everything.

    I think another thing that most people on the founding side don’t understand is the exit profile of most companies. There’s a $20 million to $50 million band, and a $50 million to $100 million band, then the curve just drops. Entrepreneurs and investors publicly say, “Oh, we’re not going to talk about exits,” but everyone is silently making their own exit profile when they’re considering making an investment.

    Do you think when the time comes to raise a second fund, investors will be ready to bet on you again?

    I hope so. I’ve gotten lot of inbound [deal flow] from my other deals. I feel like I’ve passed the trust threshold and also the he-got-into-early deals threshold. I want to be investing in private, early-stage technology for the rest of my life.

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  • VCs Start Thinking More Creatively About AngelList

    The-ThinkerThis week, three-year-old Kima Ventures, a Paris-based seed fund that backs one to two startups a week, made headlines for a new way that it plans to use AngelList, the popular platform for startups and investors. As Kima’s cofounder Jeremie Berrebi told me, the firm will invest $150,000 a shot in up to 50 startups in exchange for a 15 percent equity stake in each company. Kima says the funds will be transferred to each winning startup within 15 days. Companies have to apply for the money on AngelList.

    Kima’s AngelList play may be the splashiest to date, but it’s one of a growing number of venture firms that’s looking for ways to work with AngelList in new and different ways.

    Indeed, AngelList’s months-old Syndicate’s platform, which allows a “lead investor” to syndicate investments on a deal-by-deal basis in exchange for carry, seems to be bringing out the creative side of many investors.

    Renowned VC Tim Draper, for example, told me recently via email that “I certainly plan to syndicate on AngelList.”  Draper wasn’t specific about a timeline or his plans, but he said it’s all part of the natural evolution of things. “I want launching a company to be a snap,” including the funding process, he wrote.

    Similarly Semil Shah, who manages a seed-fund called Haystack, recently voiced enthusiasm over Syndicates as we chatted over coffee in downtown San Francisco. “I’m not 100 percent sure how I’m going to use it,” he admitted, “but I’m definitely going to use it.”

    Jeff Fagnan, a partner at Atlas Venture, which has invested in AngelList, says Atlas has “identified a dozen very influential serial entrepreneurs and angels in Boston who we think could [further spur the growth of the startup] ecosystem [locally], and we’re telling them that anything they invest in as a lead [using the Syndicates platform], we’ll invest up to an additional $250,000 per any of their projects.”

    “I don’t think we know what kind of activity it will result in,” says Fagnan, but he says it beats “scout programs,” which he calls “archaic and wrong. It’s like, ‘You’re our scout. Bring us back some dealflow and we’ll throw you a few ducats.’” Atlas is open to anyone else joining a Syndicate that involves the firm. “We just want to promote as much early-stage innovation as possible,” he says.

    The firms won’t be the first to publicly embrace the platform; in October, Foundry Group, the Boulder, Colorado-based venture firm, said that it plans to start investing in startups using Syndicates. But they seem to signal that VCs would rather experiment with the platform than let it cannibalize their business.

    As Shah puts it, “After the noise of the launch of Syndicates, there’s going to long education process, and mistakes will be made. But we’ll definitely see a major venture capital firm” use the platform soon. “General frustration with [traditional] venture capital has been building up to the point that it’s inevitable,” he says.

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