• StrictlyVC: July 20, 2015

    Happy Monday, everyone! Hope you had a fabulous weekend.

    Two quick things. First, beginning next week, StrictlyVC is dialing back for few weeks to max and relax with family. While we’re taking a bit of a break, our good friend and active investor Semil Shah is taking over the column portion of the newsletter, and he already has loads of great material planned for you. You can check out what’s coming here.

    Also, our next evening event is coming up quickly all of a sudden. Roughly two-thirds of tickets have sold; we’d love to see you there, too, on Wednesday, September 16. Chamath Palihapitiya of Social + Capital will be speaking, as well as famed investor Steve Jurvetson, investor-entrepreneur Tony Conrad, and Automattic founder Matt Mullenweg. (And there’s more on the content front.) Tickets can be purchased here. Giant thanks to the wonderful people at Bolt and Gerson Lehrman Group for their help with the event, which takes place at the Autodesk Gallery at 1 Market Street in San Francisco.


    Top News in the A.M.

    PayPal is now officially an independent company — and it’s already valued at more than $50 billion.

    Despite “steep losses and looming competition with Amazon,” reports the WSJ, the yet-to-launch online retailer Jet is in talks with investors for yet another round of funding that could value it at $3 billion. More here.


    Survata Raises $6 Million to Take on Entrenched Survey Players

    Survata is a three-year-old, 10-person, San Francisco-based startup that creates consumer surveys for ad agencies, hedge funds, consumer packaged goods companies, and many others that are looking for feedback about their offerings. If Chipotle is thinking of introducing a new salsa concept, for example, Survata — which works with a network of publishers, from blogs to online magazines to video sites — will create a survey that targets the demographic from which Chipotle wants to learn.

    It’s easy to appreciate the company’s appeal. It’s a channel for consumers to access content for free. (Publishers ask readers to complete surveys to readers in lieu of paying.) It’s a cheaper, faster alternative to traditional research. To wit, Survata charges a flat rate of $1 dollar per survey response, in contrast with a company like Nielsen, whose starting costs can be around $30,000. Survata’s surveys also represent a new revenue stream for its publishing partners. Say Chipotle – a real customer – wants 500 responses about that new salsa. Survata shares the $500 it’s paid by Chipotle with its publishers.

    Despite heavyweight competition from the likes of SurveyMonkey and Qualtrics, among others, investors apparently like the traction it’s gaining. This morning, the company is announcing $6 million in Series A funding led by IDG Ventures, with participation from Bloomberg Beta and numerous angel investors, including Alexis Ohanian and Garry Tan. The company — a Y Combinator alum – has now raised $8.1 million altogether, including from earlier backers SoftTech VC and PivotNorth.

    To learn more about Survata and how it helps it clients (including VCs), we talked Friday with CEO Chris Kelly. Our chat, right here, has been edited for length.


    New Fundings

    Axial Healthcare, a three-year-old, Nashville, Tn.-based company whose cloud-based data and analytics platform aims to help manage the cost and quality of patient care, has raised $8 million in Series A funding led by .406 Ventures, with participation from earlier backers BlueCross BlueShield Venture Partners and Sandbox Industries. The company raised $1.75 million in funding roughly a year ago.

    Chinac, a five-year-old, Wuxi, China-based cloud computing firm, has raised $100 million in Series C funding from Haitong Securities, according to Chinese media reports. The company had previously raised “tens of millions” of dollars from investors, including the Yongjin Group, SIG Asia and Intel Capital.

    LivQuik, a three-year-old, Mumbai, India-based company behind a mobile payments platform called QuikWallet, has raised $1.6 million in funding from Snow Leopard Ventures. More here.

    Luna, a year-old, San Francisco-based company whose “connected” mattress cover can be adjusted for temperature and to track a user’s sleep patterns, has raised  $1.3 million in funding from undisclosed private investors. Earlier this year, the company — currently part of the Y Combinator summer class — raised $1 million via a crowdfunding campaign. TechCrunch has more here.

    Made.com, a five-year-old, London-based home goods e-commerce business that works directly with designers to create its goods, has raised $60 million in funding led by Partech Growth Fund, with participation from Fidelity Growth Partners and earlier backer Level Equity. The company has now raised $81.1 million altogether, shows Crunchbase. TechCrunch has more here.

    Protagonist Therapeutics, a 14-year-old, Bribane, Ca.-based biotech developing a drug candidate for inflammatory bowel diseases, has raised $40 million in Series C funding led by Canaan Partners, with participation from Adage Capital Management, RA Capital Management, and Foresite Capital. The company has now raised $67 million altogether. More here.

    Revolut, a year-old, London-based alternative foreign exchange service, has raised $2.3 million (£1.5 million) from Balderton Capital. TechWorld has more here.

    ShoCard, a months-old, Palo Alto, Ca.-based maker of a digital identity card, has raised $1.5 million from Morado Ventures Partners, AME Cloud Ventures, Enspire Capital and Digital Currency Group. TechCrunch has more here.

    SuperAwesome, the two-year-old, London-based “kid safe” digital marketing platform that enables brands to put their wares in front of children, has raised $7 million in Series A funding led by IBIS TMT, Twenty Ten Capital, and Sandbox and Co. Earlier backers, including Hoxton Ventures, also participated. TechCrunch has more here.

    Vroom, a two-year-old, New York-based startup that’s selling cars via smartphones, has raised $54 million in funding led by Catterton, with participation from General Catalyst Partners and, in a departure from funding later-stage deals, T. Rowe Price. Venture Capital Dispatch has more here.

    Zo Rooms, a year-old, New Delhi, India-based budget hotels marketing place, has raised nearly $15 million in Series A funding led by Tiger Global Management, with participation from Orios Venture Partners, reports the Economic Times. More here.


    New Funds

    A new accelerator and early-stage venture fund that’s targeting up to $50 million are coming to Newark, N.J., to help create a more vibrant technology industry in the city. Venture Capital Dispatch has the story here.

    London-based Fidelity Growth Partners Europe has a new, $150 million fund, and a new brand: Eight Roads Ventures. TechCrunch has more here.


    Apptio, an eight-year-old, Bellevue, Wa.-based maker of cloud-based software, is planning an IPO that could value the company at roughly $1 billion, reports the WSJ. Apptio has raised roughly $136 million over the years, including from Andreessen Horowitz, Greylock Partners, Madrona Venture Group, and Shasta VenturesMore here.

    vTv Therapeutics, a 17-year-old, High Point, N.C.-based biotech company that’s developing treatments for Alzheimer’s disease and type 2 diabetes, announced terms for its IPO today, revealing plans to raise $125 million by offering 7.8 million shares at a price range of $15 to $17. At the midpoint of the proposed range, the company — which is majority owned by billionaire Ronald Perelman, who holds a 73.6 percent stake  — would be valued at $525 million.



    Adallom, a three-year-old, Israel-based cyber security company that develops cloud security platforms, is being acquired by Microsoft for $320 million, the Calcalist financial newspaper reported earlier today. Adallom has raised about $50 million from Rembrandt Venture PartnersSequoia CapitalIndex Ventures, and Hewlett-Packard, among others. Reuters has the story here.

    Google is scooping up the technical team behind Homejoy, an on-demand home-cleaning services company that is shutting down operations at month’s end. Homejoy had raised roughly $40 million from investors, including First Round Capital, Andreessen Horowitz, Pejman Mar Ventures, Redpoint Ventures, and Google Ventures. Recode has the story here.

    OrderUp, a six-year-old, Baltimore, Md.-based food-delivery marketplace for restaurants, has been acquired by Groupon for undisclosed terms. According to Crunchbase, the company had raised roughly $10 million from investors, including Revolution, Expansion Venture Capital, and Five Elms Capital.

    SimilarWeb, a six-year-old, London-based company whose esearch tools help users understand insights about any websites and mobile apps, has acquired the Tel Aviv-based content discovery platform Swayy for less than $5 million. Swayy had previously raised $550,000 from investors, including Elevator Fund, Star Farm Ventures and RSL Venture Partners. More here.

    SunEdison is strengthening its positiion in the solar power industry with a $2.2 billion purchase of rooftop panel installer Vivint Solar — paying a 52 percent premium over Vivint’s closing stock price last week. Bloomberg has more here.



    Nikesh Arora, Softbank’s new president, is winding down the conglomerate’s venture arm, Softbank Capital, in a move away from early-stage companies and toward bigger investments in fewer, more mature businesses. Recode has more here.

    A former Googler says she exposed company-wide pay inequality with a spreadsheet.

    Earlier today, at The Royal Society in London, investor Yuri Milner announced that he’s planning to spend up to $100 million over the next decade to fund the search for extraterrestrial life. His plan is called “Breakthrough Listen.” More here.

    Meet Maye Musk, the glamorous model mother of billionaire Elon Musk.



    Siemens is looking to add a principal to its corporate venture group. The job is in Boston.



    decade of VC funding history: trend analysis dating back to 2005 by Mattermark. (Two of the fastest-growing areas of investment, says the report:bitcoin and space travel.)


    Essential Reads

    The SEC is quietly ramping up its regulation of the pre-IPO market.

    Online food delivery ordering is about to overtake phone ordering in the U.S.



    London pub where drinks prices rise and fall like stocks. (H/T: J. Michel.)

    The 10 best public universities in the U.S.

    Paul Rudd, unheroic super hero.


    Retail Therapy

    The penthouse that hedge fund billionaire Steve Cohen cannot sell.

  • Talking 1099 Workers (and More) with Redpoint’s Ryan Sarver

    Ryan SarverLast week, the California Labor Commission found that a San Francisco-based Uber driver should have been legally classified as an employee, and not a contract worker, by the company.

    The ruling could be a very big deal for Uber and many other on-demand companies that argue they’re an appealing alternative to people who want to work flexible hours and to be their own bosses — even if they aren’t paying them unemployment, workers compensation or health benefits, all of which would cost such companies roughly 30 percent more per worker.

    The ruling could also be a big deal for investors who’ve poured hundreds of millions of dollars into such companies, though at a dinner last week with partner Ryan Sarver of Redpoint Ventures, it was clear that Sarver isn’t concerned about Uber and its ilk losing this fight. We talked at some length about the case, as well as what types of on-demand companies Sarver wouldn’t be inclined to fund, regulatory tussles notwithstanding. Our chat has been edited for length.

    You’ve invested in a number of on-demand companies, including [the peer-to-peer car buying and selling marketplace] Beepi and [home-cleaning service] Homejoy. If contract workers are reclassified as full-time workers, what happens to them?

    It’s so hard to predict where things are going to go. There’s a huge new class of people who really want flexible work, and that shift is happening and it’s growing and it’s not going away. You’re then trying to match regulation to them that was written in the 1930s and hasn’t been updated since. I don’t know where we land, but we need regulation that maps to those trends.

    What if we don’t get it? How big an impact would that make on, say, Luxe [an on-demand valet service that Redpoint has also backed]?

    It’s hard to say until we know what the rulings are going to look like, but labor is really important and Luxe is competing for it with Uber and Beepi and other [on-demand services]; it’s competitive. And [success] will come down to who can attract and retain that labor.

    Toward that end, what should these companies’ priorities be? Helping their contract workers land health care? Educating them about savings? Beyond the break room and free snacks, how do you win the labor race?

    Churn on the supply side is a big problem for a lot of these on-demand companies, so many of them are focused on hiring, training, and retaining [contract workers]. I think you need more than [break rooms], I agree. What Luxe is doing is giving employees a career path. If you become a really good valet, you become a shift captain. If you become a good shift captain, you can move inside Luxe’s operations center and become a full-time employee. I think smart companies are telling these employees: maybe you want flexible schedules now, but down the road, if you want to move into a full-time position, we’re also going to offer that to you.

    A new layer of companies is emerging to cater to these contract workers, providing them with shift-management software and other things. As an investor, do you think they’re interesting?

    The on-demand labor market is still pretty small; even with a million or so [on-demand] drivers around the world – that’s still a small labor force. As it continues to grow, maybe it becomes more interesting over time, but I think it’s a little too early to tell [what the potential] of those services will be.

    What’s the craziest business you’ve been pitched?

    Well, I did see bodyguards on demand. [Laughs.]

    Are you interested in telemedicine or these other on-demand startups that don’t require big city rollouts?

    I’m a big Doctor on Demand user and I love it, but it’s super infrequent. You’re going to use it in the moment, not every week [because it costs $40 for a 15-minute consultation]. There’s another startup, Better, that gives users access to “personal health assistants” that you might use on a more frequent basis, like, “Hey, our little guy has a rash, what should we do?” I think eventually, there will be a blending of the two, so that you can touch a service in a lightweight way and escalate [to the doctor level] if you need to.

    [Most consumer spending] goes to transportation, food, and housing, though healthcare is also an enormous one.

    Housing is interesting. What do you think of OpenDoor, the on-demand online home-selling service?

    We [invested in] Beepi and they’re very similar models from what I know. OpenDoor will take inventory and buy it from you and fix it up and resell it. Beepi won’t fix up your car, but they’ll send in a mechanic who has a very structured checklist and goes through the service and gives you a price to buy it that day and take it off your hands and bring it into their inventory. Then someone can buy it sight unseen because they trust that the mechanic has done the work and priced it properly.

    I think OpenDoor is doing something very similar, but they’re trying to increase the value of the homes. It’s really interesting and much more complicated than what Beepi is doing. It’s a very big swing.

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