• Employees Wise Up

    timthumbThis week, a Bay Area founder was taken aback when an engineer being recruited by his startup asked for both its cap table and information regarding the liquidation preferences of its venture backers. The candidate presumably “worked somewhere where he discovered that these things matter,” says the founder, who asked not to be named in this story.

    Though the startup is still debating how much information to give to the candidate, it will likely need to come up with a policy around such requests soon. The amount of information that privately-held companies share with employees is becoming a bigger issue, largely owing to the rise of so many billion-dollar valuations.

    Just yesterday, CB Insights, the research firm, published an attention-grabbing report about “unicorn” valuations, reporting that 2015 has already seen growth of $143 billion in combined unicorn valuations year-to-date, a 47 percent increase over their aggregate valuation at the end of 2013. It also reported that the number of still-private companies now valued at $1 billion or more has grow by around 50 percent in 2015. (That jump represents a stunning 39 companies that have been assigned billion-dollar valuations by their investors this year.)

    More here.

  • StrictlyVC: March 24, 2015

    Hi, everyone! (Web visitors, click here for an easier-to-read version of this morning’s email newsletter.)


    Top News in the A.M.

    Here are the many companies that presented yesterday at Y Combinator‘s first (of two) demo days. Mattermark, the venture analysis company, looks at 10 of the fastest growing startups in the batch here.

    Facebook has reportedly been talking with at least half a dozen media companies about hosting their content inside Facebook.


    Did Pinterest Just Change the Game?

    In tech, employees often join startups with the idea that they might become millionaires if those companies go public or are sold. But even experienced startup veterans often underestimate the costs involved in exiting one’s stake. Purchasing equity that has appreciated can run into the hundreds of thousands of dollars — if not millions — and most startup documents only give employees 90 days to exercise their fully vested options once they move on.

    Pinterest is rejecting that age-old program. According to Fortune, the digital scrapbooking company has told employees that if they’ve been an employee for at least two years and leave the company — or are let go — they’ll have up to seven years to exercise their vested options.

    Presumably, Pinterest is trying to attract the best and brightest by offering them more freedom than a typical startup payment package would allow.

    Whether other startups follow suit anytime soon remains to be seen. There are plenty of reasons things work they way they do, after all, including that it’s often in a startup’s best interests to be able to reclaim equity if an employee can’t purchase his or her shares within 90 days of his or her exit. Machiavellian as it may seem, companies might also want to retain their leverage over talented employees to keep them right where they are.

    And there are other arguments to preserve the status quo. For example, you could imagine companies’ unwillingness to provide financial information to a lot of former employees who might be entitled to it under the law, yet who might have gone on to work at a competing company.

    There are also plenty of secondary buyers capable of providing employees with some liquidity.

    Of course, anyone who has been through a secondary sale can attest that they involve plenty of pros and cons. Demand and supply have to align. Many buyers want information rights that can give them assurance about the startups in which they’re investing, yet many companies don’t want to provide that information. Secondary buyers also tend to drive a very hard bargain because they know it’s not a liquid market.

    Our bet? As more companies take their time in going public and those golden handcuffs become more onerous for employees, something is going to give. Trying to maintain the same kinds of controls won’t remain feasible forever.

    Pinterest employees who wait to exercise their shares may face a much bigger tax bill years from now. But they’ll also have much more time to line up a secondary buyer or otherwise plan to raise the capital to buy their shares and deal with that tax hit.

    It’s going to be very hard for other startups to compete with that kind of advantage. Over time, it might prove impossible.


    New Fundings

    Aeglea Biotherapeutics, a two-year-old, Austin, Tex.-based biopharmaceutical company that’s developing therapies targeting tumor metabolism, has raised $44 million in Series B funding led by earlier backers Lilly Ventures and Novartis Venture Fund, with participation by earlier backer UT Horizon Fund and new investors OrbiMed, Jennison Associates, Venrock, RA Capital Management, Rock Springs CapitalAlly Bridge Group and Cowen Investments.

    Augmented Pixels, a 4.5-year-old, Palo Alto, Ca.-based company that produces sales platforms for real estate and retail customers using virtual and augmented reality technology, has raised $1 million in seed funding led by The Hive, a three-year-old, Palo Alto, Ca.-based incubator and accelerator

    BitReserve, a two-year-old, San Francisco-based company seeking to use bitcoin to transfer funds across borders and minimize exchange fees, now counts Mexican billionaire Ricardo Salinas-Pliego, the chair and CEO of Grupo Salinas, as its biggest investor, according to the startup. It hasn’t disclosed how much Salinas-Pliego, the fourth richest person in Mexico, has committed to the company. BitReserve was founded by CNet cofounder Halsey Minor, who famously ran into financial trouble after the 2008 financial crisis.

    Cadre, a six-month-old, New York-based startup that aims to connect institutional investors with opportunities in gateway markets, has just raised $18.3 million from Thrive Capital and General Catalyst Partners, with participation from some of New York real estate’s biggest players, including former Vornado Realty Trust CEO Michael Fascitelli. The company was founded by Jared and Joshua Kushner. (As readers will know, Joshua also cofounded Thrive Capital.) The Real Deal has much more here.

    Coding, a 15-month-old, Shenzhen-based company whose cloud-based tools are used by developers to access and manage their projects, has raised roughly $10 million in Series B funding led by Lightspeed Venture Partners, with participation from IDG Capital.

    Cyanogen, the five-year-old, Palo Alto, Ca.-based custom Android software developer, has raised $80 million in Series C funding led byPremji Invest. Other new investors include Twitter VenturesQualcomm, Telefónica Ventures, Smartfren Telecom, Index VenturesAccess Industries and individual investors Rupert Murdoch and Vivi Nevo. Earlier backers Andreessen Horowitz, Benchmark, Redpoint Ventures and Tencent Holdings also participated in the round. The company has now raised $110 million altogether.

    Day1 Solutions, a three-year-old, McLean, Va.-based cloud services startup, has raised $2 million in funding from 10 unnamed investors.

    Dragonfly Technology, an eight-month-old, Bay Area company that’s operating in stealth mode (but relates to consumer electronics), has raised $4.5 million in funding, according to an SEC filing. Backers include iD Ventures America and the Tokyo-based investment firm UTEC.The company looks to be targeting $6 million altogether, shows the filing.

    Flower Orthopedics, a three-year-old, Horsham, Pa.-based company that designs and manufactures bone-fixation implants and instruments, has raised $4.5 million in Series C funding from undisclosed investors.

    Improbable, a three-year-old, London-based company that has developed an operating environment that makes building simulated worlds possible, just raised $20 million in funding from Andreessen Horowitz. Chris Dixon, who joins the board, writes about the investment here.

    Keywee, a two-year-old, New York-based company that analyzes marketing content and finds qualified audiences for it, has raised $9.1 million in Series A funding led by Innovation Endeavors and Marker, with participation from The New York Times Company and UpWest Labs.

    Lendio, a nine-year-old, South Jordan, Ut.-based small business lending marketplace, has raised a $20.5 million in funding led by the private equity firm Napier Park, with participation from Blumberg Capital, North Hill Ventures, Pivot Investment Partners and prior investors Tribeca Venture Partners, Runa Capital and Highway 12 Ventures. The company has now raised $33 million altogether.

    M.Gemi, a new, Boston-based e-commerce company that features new, limited edition styles of Italian shoes every week, has raised $14 million in seed and Series A funding General Catalyst Partners, Forerunner Ventures and Breakaway Ventures. The company was founded by Ben Fischman, founder of the flash sale fashion site Ruelala. Business Insider has more here.

    Mojio, a 2.5-year-old, Vancouver, Canada-based connected car platform, has raised $8 million in Series A funding led by Telekom Capital, the investment arm of Deutsche Telekom. Other participants in the round include Relay Ventures, the Business Development Bank of Canada, and AOL co-founder Steve Case. The company previously raised a $2.3 million seed round. TechCrunch has more here.

    Rubrik, a year-old, Palo Alto, Ca.-based company that offers live data access for recovery and application development, has raised $10 million in Series A funding led by Lightspeed Venture Partners, with participation from numerous high-profile individual investors, including Veritas’s founding CEO Mark Leslie.

    SecurityScorecard, a two-year-old, New York-based security risk assessment service for cloud-based information systems, has raised $12.5 million in Series A financing led by Sequoia Capital, with participation from earlier backers Boldstart and Evolution Equity Partners. The company has now raised a total of $14.7 million.

    Slack, the two-year-old, San Francisco-based company whose software helps people collaborate at work, is talking with investors about a new round that would value the company at more than $2 billion, according to Bloomberg. In October, the company raised $120 million in a round of financing co-led by Kleiner Perkins Caufield & Byers and Google Ventures that valued the company at $1.12 billion.

    ZipMatch, a two-year-old, Taguig, Philippines-based online property portal, has raised $2.5 million in Series A funding led by Monk Hill Ventures, with participation from earlier backer 500 Startups. The company had previously raised $1 million in funding. TechCrunch has more here.


    New Funds

    Accel Partners has raised its fourth India-focused fund with $305 million in commitments. Like the firm’s earlier funds, Accel India IV will focus on early-stage ventures, though a spokesman tells us it will also invest in “select” growth equity opportunities. Accel is among India’s most active investors, with bets that include the 7.5-year-old e-commerce giant Flipkart. The appeal, says the firm: India is one of the world’s fastest-growing economies, nearly doubling its GDP between 2003 and 2013; it has a large, growing middle class that’s expected to include 100 million households by 2020; and it’s home to 576 million people who are under the age of 25 (compared with the U.S., which is home to 106 million people aged 24 or younger).

    Andreessen Horowitz, the six-year-old, Sand Hill Road firm, has raised a separate new venture fund called PinAH with $36.7 million in commitments, according to an SEC filing. (The firm hasn’t responded to questions about it; likely it has something to do with the firm’s investment in Pinterest, which is in the process of raising half a billion dollars.)

    Golden Gate Ventures, a 3.5-year-old, Singapore-based seed-stage fund, has raised its second fund, closing on $50 million, up from the $10 million it had been investing with its debut fund. The firm looks for investment opportunities in Southeast Asia; it will also reportedly begin shopping for startups in other parts of Asia, including in Hong Kong and Taiwan.

    Jerusalem Venture Partners, the 23-year-old, Jerusalem-based venture firm, has a new limited partner: Alibaba Group has joined the firm’s seventh fund as an LP, kicking in $15 million, says a source to the Wall Street Journal. Alibaba is reportedly interested in cyber security related deal flow, for which JVP is well-known. Apparently, it’s also interested in the firm’s storage and networks bets given that such technologies could ultimately help Alibaba reduce its operational costs.

    Joe Montana, the famous former football player, is close to wrapping up a new investment fund of between $20 million and $25 million, he tells Business Insider. The new fund will be called Liquid Two and won’t feature a specific area of focus, he says.

    Joint Polish Investment Fund Management, a new, Warsaw, Poland-based venture capital fund, has closed its debut fund with $42 million. It’s the first institutional venture capital fund operating out of Poland that is completely dedicated to life-science investments, says the outfit, which will fund early- and mid-stage companies with a close relationship to Poland.

    SVB Financial is raising what sounds like a late-stage venture fund, called the Venture Overage Fund. According to an SEC filing, it hasn’t begun fundraising yet, but it’s targeting $275 million for the effort.



    Blueprint Medicines, a seven-year-old, Cambridge, Ma.-based preclinical biotech developing kinase inhibitors for cancer and genetic diseases, has publicly filed to raise up to $100 million in an IPO. The company first filed confidentially last month. Its biggest shareholders are Third Rock Ventures, which owns 41.8 percent of the company, and Beacon Bioventures, which owns 13.43 percent.



    Edocr, an eight-year-old, Manchester, England-based document sharing company, has been acquired by Accusoft, a privately held, 24-year-old, Tampa, Fl.-based software business for document, content and imaging needs. TechCrunch has more here.

    Viralheat, a four-year-old, San Mateo, Ca.-based maker of enterprise-content marketing and social-media management software, has been acquired by the Chicago-based media intelligence company Cision for an undisclosed sum. Viralheat had raised at least $4.3 million from investors, shows Crunchbase. Its backers include Mayfield Fund and Idealab.



    CNBC is taking viewers inside the $70 million, Beverly Hills manse of “Minecraft” creator Markus Persson. (Appointments include a $200,000 wall filled with 25 types of candy.) More here.

    Ruth Porat, currently CFO at Morgan Stanley, will join Google‘s management team as CFO in May. Porat joined Morgan Stanley in 1987. She replaces Patrick Pichette, who has served as Google’s CFO since 2008 and who announced earlier this month that he was planning to retire this year.



    Johns Hopkins University is looking to hire an associate director to help enable to commercialization of the school’s technologies. The job is in Baltimore.


    Essential Reads

    Yesterday, payments startup Square introduced a tweak to its cash-transfer app allowing it to profit when businesses use the service.

    Twitter‘s quiet push into venture capital has officially begun.



    Life in the age of irrational parenting.

    When Elon Musk lived on $1 a day.

    A pretty serious marketing fail.


    Retail Therapy

    The Blackphone, for encrypted communications.

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