• 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, CoinHashiCorp.

    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 CapitalStarVest 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.



    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.



    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.



    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.

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