• Blind, An Anonymous Chat App for Employees, Raises Series A Funding from DCM

    Screen Shot 2015-10-30 at 8.34.11 AMTired of being monitored by your company while wanting to dish with colleagues about said company? Or maybe you’re curious about what people with similar work experience are making at other companies? Blind, a two-year-old app founded in South Korea and newly available in the U.S., may be just the thing for you.

    Its big idea: bringing anonymity to the workplace so you can “share the real you” with other employees. If you happen to figure out what’s really happening in the upper echelons of the company, so much the better.

    Blind’s origins trace back to Naver, the South Korean Internet giant, which long ran a widely used employee forum but pulled the plug when employees began making less-than-flattering remarks about management. When a group of Naver employees left to form Blind, many Naver employees embraced the platform, followed by employees elsewhere.

    It’s been growing ever since, says Osuke Honda, a general partner at DCM, which led an unannounced Series A round of “single digit millions” in the company in May. Indeed, he says that another pivotal moment for Blind came late last year, when a senior Korean Air executive exploded in a rage after a flight attendant presented her peanuts in a bag instead of on a dish.

    More here.

    Connie

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  • At Venture Firms, Balancing Brands Within Brands

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Connie

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  • StrictlyVC: October 30, 2014

    GIANTS. GIANTS. GIANTS.

    (Web visitors, here’s an easier-to-read version of today’s email.)

    —–

    Top News in the A.M.

    Apple CEO Tim Cook has publicly acknowledged that he is gay, saying in a powerful BusinessWeek op-ed this morning that, “I don’t consider myself an activist, but I realize how much I’ve benefited from the sacrifice of others. So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it’s worth the trade-off with my own privacy.”

    —–

    Yik Yak: The Startup in Twitter’s Rearview Mirror

    Yik Yak, an app that acts like a local bulletin board, allowing users within a 1.5-mile range to post to it anonymously, hasn’t received nearly as much press as other anonymous apps, including Whisper and Secret. It’s seeing much more user pick-up, though. As of last night, Yik Yak was the 27th most downloaded free app in the U.S., right behind Twitter, according to app analytics company App Annie. It was also the sixth most downloaded social media app. Twitter was ranked fifth.

    The year-old, Atlanta-based company is almost exclusively a college-based phenomenon for now – and very much by design. Indeed, in August, Yik Yak hired 140 campus “representatives” to plaster universities with its marketing materials, a campaign that appears to have been very effective, though Yik Yak doesn’t disclose user numbers.

    The question is whether the app makes sense beyond college campuses. Yesterday, StrictlyVC talked with Cameron Lester of Azure Capital, one of the company’s backers, about it. Our conversation has been edited for length.

    You found Yik Yak early on. How?

    We found it through outbound research. Anyone who spends time with millennials can see their growing lack of interest in the traditional Facebook experience and gravitation to mobile social; as we were forming a thesis around [what’s next], Yik Yak appeared on our radar. We reached out to one of the company’s seed investors who we know and we ended up participating in its [$1.5 million] seed round. When the company was raising a more formal amount — its $10 million Series A, which came together quickly — DCM led the round and we participated in it, investing well above our pro rata.

    Yik Yak is taking off on college campuses. Why is that, and can it grow beyond universities, or is that a big enough market?

    The advantages to [a college body] are numerous. Yik Yak isn’t offensive relative to some other social media apps that include photos, because from an anonymity perspective, photos create a big problem. The fact that it’s location based, bringing together users in a 1.5-mile radius, also provides a lot of contextual value, particularly if you have a demographic in that range that has a lot of affinity like college students. Yik Yak also [plays into] a big backlash against this concept of [a trackable] online identity. People want the same level of privacy online that they enjoy offline.

    In the meantime, we’re already starting to see Yik Yak bleed out into other places. This summer, for example, when people got off campus, networks sprung up on Wall Street, with Goldman Sachs interns bantering with Merrill Lynch interns. The same thing happened on Capitol Hill, with Democratic and Republican interns. And in summer, the user base was a fraction of what it is today.

    Yik Yak recently made it possible to peek into other Yik Yak feeds anywhere in the world. That would seem to have a lot of really interesting applications, including for journalists who right now rely heavily on Twitter for breaking news.

    Yes, you can now place a pointer on a map of the world and go to Moscow, Hong Kong, Dubai or elsewhere to see what’s going on. It’s pretty crazy. You can’t participate but you can see what’s happening. Basically, American college kids are [introducing it everywhere]. The company’s next phase of growth is urban areas around the globe.

    How will the company make money?

    Step one is to get to critical mass. But Yik Yak is uniquely positioned to monetize around local affinity. We’re living in sharing economy and all kinds of local services would love access to this kind of user base. You can also imagine sponsorships, local advertising through a model like Sponsored Tweets . . . That the audience is especially local and can be segmented provides unique revenue opportunities.

    Yik Yak has already been involved in cases of bullying. To keep the app out of the hands of high school students, who began using it to abuse one another earlier this year, the company had to draw a geofence around nearly every high school and middle school in the country. Do you worry about the liabilities or risk to your brand?

    Back in the spring, I had two middle school students – one just went to high school – and all that [bullying] stuff [in high schools] was going down and my reaction was: No way. Then my son came home and said, “They told us about this app that we shouldn’t use.” Then I was really thinking: No. But these founders are white hat guys; they’ve wanted to build something big and useful and benign from the beginning, and they’ve been very proactive about getting bullying and any kind of comments that shouldn’t be there off the system. I think if anything, we’re on the back side of this. I feel like if there was a risk, that’s already been largely alleviated and what we have to do is more of the same.

    —–

    New Fundings

    AdPushup, a 1.5-year-old, New Delhi, India-based company whose A/B testing platform built for web publishers enables them to create and test different ad placements to optimize their ad revenue, has raised $632,000 in seed funding from Kima Ventures and a long list of angel investors, including SlideShare cofounder Amit Ranjan.

    Affinivax, a new, Cambridge, Ma.-based biotechnology company dedicated to developing vaccines, including for Streptococcus pneumoniae (pneumococcus), has launched with $4 million in funding from the Bill & Melinda Gates Foundation, a commitment that includes additional investments based on the achievement of future milestones.

    Aileron Therapeutics, a nine-year-old, Hardwick, Ma.-based company that develops a class of drugs called stapled peptides, has added $33 million to its Series E round, bringing total funding for the round to $48 million. The new infusion was co-led by AJU IB Investment Co. and two undisclosed private investment groups, and it included participation from earlier investors Apple Tree Partners, Excel Venture Management, Lilly Ventures, Novartis Venture Funds, Roche Venture Fund and SR One.

    Avisa Pharma, a four-year-old, Albuquerque, New Mexico-based company that’s developing a breathalyzer that can quickly detect the presence of serious lung pathogens, has raised $3.7 million in equity, according to a new SEC filing. The company had previously raised $5 million. MedCity News has more here.

    Bitstrips, a seven-year-old, Ontario-based company that makes a personalized comic strip app, has raised $8 million in Series B funding from Kleiner Perkins Caufield & Byers and earlier investor Horizons Ventures. The company has now raised $11 million to date, shows Crunchbase.

    Capriza, a 3.5-year-old, Palo Alto, Ca.-based company whose technology enables non-technical users to abstract portions of complex applications and make them work on mobile devices, has raised $27 million in Series C funding from earlier investors Andreessen Horowitz and CRV and new investors Tenaya Capital, Harmony Partners and Allen & Co. The company has now raised just north of $50 million. Venture Capital Dispatch has the story here.

    Clarify, a four-month-old, Austin, Tx.-based company that’s building search and analytics software for audio and video files, has raised $1 million in seed funding from Projector Ventures and Silverton Partners, as well as early, unnamed Facebook employees. The company also raised $315,000 in debt this summer, shows Crunchbase.

    DeNovo Sciences, a four-year-old, Plymouth, Mi.-based company with a system that detects primarily breast and colon cancer from blood samples, has closed on a Series A round of $2 million from undisclosed sources. The company had won $500,000 in the 2012 Accelerate Michigan Innovation Competition.

    Keen Home, a 1.5-year-old, New York-based company that’s making connected vent covers that allow users to you control what rooms get heat or cooling based on their needs, has raised $1.52 million in seed funding. The round was led by RMR Capital, with participation from R/GA Ventures, Bullet Time Ventures, NYU Innovation Venture Fund,Rugged Ventures, Galvanize Ventures, Brand Foundry Ventures,American Family Ventures and Comporium. GigaOm has more here.

    Krimmeni Technologies, a seven-year-old, Austin, Tx.-based company that’s developing secure communication technologies for cloud-based data centers and the Internet of Things market, has raised $11.7 million in Series A funding from Pelion Venture Partners and Third Point Ventures. The company has now raised $13.9 million to date, shows Crunchbase.

    LiquidSpace, a four-year-old, Palo Alto, Ca.-based online marketplace that helps individuals find and reserve available office and meeting spaces, has raised $14 million in Series C funding led by Roth Capital. Other participants in the round include Black Diamond Ventures, Lucas Venture Group, Shasta Ventures, Avison Young, GPT Group and Steelcase.

    Peraso Technologies, a six-year-old, Toronto-based semiconductor company that specializes in wireless chip sets, has raised $20 million in new funding led by Roadmap Capital, with participation from earlier investors Celtic House Venture Partners, Ontario Emerging Technologies Fund, and VentureLink Funds. The company has raised $37.2 million to date, shows Crunchbase.

    Personal Capital, a five-year-old, Redwood City, Ca.-based digital wealth management firm, has raised 50 million in Series D funding led by the private equity group Corsair Capital. BBVA Ventures and USAA also participated in the round, alongside earlier investors Crosslink Capital,Institutional Venture Partners and Venrock. The company has now raised $104.3 million altogether, shows Crunchbase.

    ProspectWise, an 11-month-old, Santa Monica, Ca.-based crowdsourcing platform that enables smartphone users to survey brick and mortar businesses and collect information about their point-of-sale systems and more, has raised an undisclosed amount of funding from CrossCut Ventures and Launchpad LA, with participation from unnamed angel investors.

    Respicardia, an eight-year-old, Minnetonka, Minn.-based maker of an implantable sleep apnea device, has raised $20 million in funding from the Italian medical-device company Sorin Group, which also obtained European distribution rights as part of the deal. Respicardia has now raised $32 million altogether, shows Crunchbase.

    User Replay, a two-year-old, London-based startup that offers software akin to a black-box recorder to help e-commerce sites track user behavior, has raised $3.2 million in Series A funding led by Episode 1, with participation from earlier investors EC1 Capital, FSE Group, and unnamed angel investors. The company has now raised $5.9 million altogether. TechCrunch has more here.

    —–

    New Funds

    Autodesk has just announced that it plans to invest up to $100 million in what it deems to be the most promising 3D printer companies. GigaOm has more here.

    North Bridge Venture Partners, the 20-year-old venture firm with offices in Palo Alto, Ca., and Waltham, Ma., is looking to raise $200 million for its eighth fund, shows an SEC filing that states the first sale has yet to occur. The target is far smaller than the firm’s last, $530 million fund, closed in 2008, which may be a reflection of what’s expected to be a smaller team moving forward. Back in March, Fortune reported that firm founders Ed Anderson and Rich D’Amore would not be general partners in this eighth fund, and neither would Jeff McCarthy, who has been a partner with the firm since 1998.

    —–

    People

    At a WSJ conference in Laguna Beach earlier this week, Whisper CEO Michael Heyward talked extensively about allegations by the Guardian that Whisper has been violating users’ trust. Here’s a bit of that sit-down.

    Not everyone at Google is thrilled to have Sundar Pichai as Larry’s Page’s second banana, reports Business Insider, writing: “Sundar rose very fast within Google, and the egos of several members of Google’s SVP team who have been around a long time are bruised. ‘Most of Google remembers him in a much more junior role,’ one source says. ‘For some of the old-timers, reporting to the guy that used to be four levels below you is a challenging thing.’”

    Luke Wood, president of Beats Electronics, has purchased an $8.55 million historic home in Los Angeles’ Silver Lake neighborhood that was originally listed for $7.5 million. Curbed has the details, and photos, here.

    —–

    Job Listings

    HP is hiring a corporate development associate in Palo Alto, Ca.

    —–

    Data

    Mobile is eating the world. (It’s worth a look at this new slideshow byBenedict Evans if you’ve missed it.)

    CircleUp, the San Francisco-based online marketplace for private investing in consumer companies, has just released a public tool that lets anyone see average valuations, growth rates, and other data for thousands of private consumer companies across 15 categories that have sought to raise capital on CircleUp over the past two years. The link is here.

    —–

    Essential Reads

    Introducing Microsoft Health.

    How Facebook could end up controlling everything you watch and read online.

    —–

    Detours

    Wow. This is insanity.

    Last-minute tech tips for making your Halloween nice and creepy.

    OK Go’s amazing new video, created with Japanese director Morihiro Harano.

    —–

    Retail Therapy

    The Windrunner, for the coming months. We’ll take one in black.

    Connie

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  • Yik Yak: The Startup in Twitter’s Rearview Mirror

    yik-yak-appYik Yak, an app that acts like a local bulletin board, allowing users within a 1.5-mile range to post to it anonymously, hasn’t received nearly as much press as other anonymous apps, including Whisper and Secret. It’s seeing much more user pick-up, though. As of last night, Yik Yak was the 27th most downloaded free app in the U.S., right behind Twitter, according to app analytics company App Annie. It was also the sixth most downloaded social media app. Twitter was ranked fifth.

    The year-old, Atlanta-based company is almost exclusively a college-based phenomenon for now – and very much by design. Indeed, in August, Yik Yak hired 140 campus “representatives” to plaster universities with its marketing materials, a campaign that appears to have been very effective, though Yik Yak doesn’t disclose user numbers.

    The question is whether the app makes sense beyond college campuses. Yesterday, StrictlyVC talked with Cameron Lester of Azure Capital, one of the company’s backers, about it. Our conversation has been edited for length.

    You found Yik Yak early on. How?

    We found it through outbound research. Anyone who spends time with millennials can see their growing lack of interest in the traditional Facebook experience and gravitation to mobile social; as we were forming a thesis around [what’s next], Yik Yak appeared on our radar. We reached out to one of the company’s seed investors who we know and we ended up participating in its [$1.5 million] seed round. When the company was raising a more formal amount — its $10 million Series A, which came together quickly — DCM led the round and we participated in it, investing well above our pro rata.

    Yik Yak is taking off on college campuses. Why is that, and can it grow beyond universities, or is that a big enough market?

    The advantages to [a college body] are numerous. Yik Yak isn’t offensive relative to some other social media apps that include photos, because from an anonymity perspective, photos create a big problem. The fact that it’s location based, bringing together users in a 1.5-mile radius, also provides a lot of contextual value, particularly if you have a demographic in that range that has a lot of affinity like college students. Yik Yak also [plays into] a big backlash against this concept of [a trackable] online identity. People want the same level of privacy online that they enjoy offline.

    In the meantime, we’re already starting to see Yik Yak bleed out into other places. This summer, for example, when people got off campus, networks sprung up on Wall Street, with Goldman Sachs interns bantering with Merrill Lynch interns. The same thing happened on Capitol Hill, with Democratic and Republican interns. And in summer, the user base was a fraction of what it is today.

    Yik Yak recently made it possible to peek into other Yik Yak feeds anywhere in the world. That would seem to have a lot of really interesting applications, including for journalists who right now rely heavily on Twitter for breaking news.

    Yes, you can now place a pointer on a map of the world and go to Moscow, Hong Kong, Dubai or elsewhere to see what’s going on. It’s pretty crazy. You can’t participate but you can see what’s happening. Basically, American college kids are [introducing it everywhere]. The company’s next phase of growth is urban areas around the globe.

    How will the company make money?

    Step one is to get to critical mass. But Yik Yak is uniquely positioned to monetize around local affinity. We’re living in sharing economy and all kinds of local services would love access to this kind of user base. You can also imagine sponsorships, local advertising through a model like Sponsored Tweets . . . That the audience is especially local and can be segmented provides unique revenue opportunities.

    Yik Yak has already been involved in cases of bullying. To keep the app out of the hands of high school students, who began using it to abuse one another earlier this year, the company had to draw a geofence around nearly every high school and middle school in the country. Do you worry about the liabilities or risk to your brand?

    Back in the spring, I had two middle school students – one just went to high school – and all that [bullying] stuff [in high schools] was going down and my reaction was: No way. Then my son came home and said, “They told us about this app that we shouldn’t use.” Then I was really thinking: No. But these founders are white hat guys; they’ve wanted to build something big and useful and benign from the beginning, and they’ve been very proactive about getting bullying and any kind of comments that shouldn’t be there off the system. I think if anything, we’re on the back side of this. I feel like if there was a risk, that’s already been largely alleviated and what we have to do is more of the same.

    Connie

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