VENTURE CAPITAL MARKET OVERVIEW, ISSUE 37 (MAY 11 – 17)
Main news makers of the last week are financial services (debt management, socail network for credits) ans tech startups (face recognition technology, virtual design platform). Also few pieces of news: few M&A deals and few new investment companies founded.
M&A. Brand Networks Acquires Social Ad Platform Shift For $50M
Social marketing company Brand Networks continues to gobble up the competition — it just announced that it’s acquiring Shift in a $50 million cash-and-stock deal.
Back in 2013, it acquired Optimal, another social media advertising company. Brand Networks founder and CEO Jamie Tedford said “the success of our own business on-boarding Optimal” made him confident about integrating Shift.
Tedford added that his company and Shift (previously known as GraphEffect) have been “friendly competitors for many years,” and that it was an attractive acquisition because of Shift’s technology, its team and its client list.
Shift co-founder and CEO James Borow will become chief product officer at Brand Networks (a role once held by Optimal’s Rob Leathern, who’s now working on a new startup), and he said “a very large portion” of his team is moving over as part of the acquisition.
M&A. Alfred Purchases WunWun Tech, Employees In Fire Sale
After nearly three years delivering anything you want on-demand (in the greater New York City area), WunWun is shuttering. As part of the close, Alfred is purchasing assets, including key WunWun technology and parts of the WunWun team.
WunWun founder and CEO Lee Hnetinka will stay on as an advisor to Alfred but will not remain a full-time employee at the company. WunWun Creative Director Bobby McKenna tweeted that WunWun was shutting down and that he was available as a free agent. He deleted the tweet shortly after.
Neither company would comment any further on the terms of the deal, but Alfred cofounder and CEO Marcela Sapone had this to say:
We’re really excited to learn from the experience of the first on-demand company and an early pioneer in the New York tech scene. We’re trying to control the full stack, the entire experience from order to beyond delivery, and this asset purchase helps us do that.
STARTUP. DocuSign Raises $233M Series F At $3B Valuation
DocuSign, a company best known for its work with secure identity and authentication, has raised a $233 million Series F round of capital, at what a source said was a roughly $3 billion valuation.
The dollar amount — the company has now raised over $440 million — may seem staggering, but not to DocuSign’s CEO Keith Krach, who described DocuSign’s addressable business opportunity “one of the biggest markets [he’s] ever seen”.
Krach declined to provide any financial guidance regarding the company’s current revenue, margins, and the like, but he cited the company’s addition of 50,000 new unique users joining its network per day as a key usage statistic.
DocuSign has three goals: Grow its revenue, ramp towards profits, and build its global identity standard. To that end, the new capital will be used at least in part to fuel international expansion. The CEO noted several recent international acquisitions of more than 100 employees in recent years.
Krach declined to comment on a potential IPO path saying that the company would view an IPO as “solely a finance event.” The implication there is that if DocuSign needs additional capital at later date, it could reach for the public markets. But with a fresh quarter billion or so, that date is likely not very soon.
STARTUP. Face++, Whose Facial Recognition Tech Is Used By Alibaba, Raises $25M
Face++, a Chinese startup that makes facial recognition technology used by Alibaba’s financial unit, has secured an additional $25 million for its series B round.
Along with capital raised in November, this brings the company’s total series B to $47 million. A Face++ representative told that existing investors Qiming Venture Partners and Innovation Works returned for the round.
Based in Beijing, Face++ provides an API and SDK, along with custom cloud services, for companies that want to use its facial recognition technology. One of its most notable clients is Ant Financial, the financial subsidiary of Alibaba. Ant Financial, which makes China’s largest online payment platform Alipay, is seeking regulatory approval that would allow it to use Face++’s software to confirm the identities of people who want to set up an online bank account.
The company’s API is also integrated in a wide variety of photography and entertainment apps, ranging from Camera360, one of China’s most popular photo apps to an Ukrainian dating service called Flinch. Over 30,000 developers have used Face++’s tools, it claims.
STARTUP. Credit Monitoring And Debt Management Service Raises $16 Million
Personal finance company Credit Sesame announced that it has raised an additional $16 million in an oversubscribed Series D round of funding, with plans to raise more – as much as $20 million – in the near future. The company was one of the first to market with solutions that allow consumers to monitor their credit and score, protect themselves against identity theft, and reduce their debt through credit and loan management services.
The new round was led by Syncora Alternative Investments, with IA Capital Partners as its advisor, and also included participation from investors Menlo Ventures, IA Capital, Globespan Capital, Inventus Capital, and other high-profile angels. This brings Credit Sesame’s total raise to date to over $35 million.
While many in the personal finance space have focused on helping people manage their money and investments, Credit Sesame has instead targeted the liability side of the balance sheet, explains CEO Adrian Nazari. That has put it in competition with others offering consumer debt management or credit monitoring, like Credit Karma or ReadyForZero, for example.
STARTUP. Vouch Raises $6 Million Series A For Its Social Network For Credit
Vouch, a so-called “social network for credit” founded by ex-PayPal and ex-Prosper alumni, now has an additional $6 million in Series A funding to continue to grow its business. While there are a number of alternative lending startups on the market today, Vouch’s differentiating factor is that it leverages a person’s social connections in order to determine their credit-worthiness. In addition, these connections can choose to “vouch” for a loan recipient – even agreeing to pay back a portion of the debt if the borrower defaults.
New investors in the network include Core Innovation Capital, Data Collective, Stanford StartX Fund and Cooley LLP, and are joined by Vouch’s existing investors, First Round Capital, Greylock, IDG Ventures and AngelList. Combined with an earlier seed round, this brings Vouch’s total raise to date to $9.6 million.
Vouch was co-founded in 2013 by CEO Yee Lee, previously of PayPal, Slide, Skype and more recently, Katango (acquired by Google), and One Jackson (acquired by TaskRabbit); Sue Korn, previously VP of Finance and Head of Operations at peer-to-peer lending marketplace Prosper; and PayPal vet Hugh Olliphant. The team also includes several other execs and engineers hailing from PayPal, Prosper, and Google.
The service has been in beta for a year, but launched publicly last month.
STARTUP. Decorist Raises $4.5M To Bring Affordable Design Advice And Room Makeovers
Design startup Decorist has raised $4.5 million in seed funding from home improve giant Lowe’s Companies, the Women’s Venture Capital Fund and undisclosed angel investors.
The big player in the market is probably Houzz, which allows users to find home design ideas and hire architects, designers and others who can actually make those ideas a reality. The Decorist approach is a bit different — it’s an online platform where users can connect with designers for advice.
CEO Gretchen Hansen said she was inspired to start the company after her own experience buying “these two amazing chairs” for her office and discovering that she “absolutely hated” the way they looked once they were in the room. She asked a designer friend for help, who was able to look at photos and design a much better office.
With Decorist, Hansen said she’s trying to replicate that “virtual design” experience: “People want beautiful homes, but they don’t have that help, that component of assisted commerce.”
The first thing users are asked to do on Decorist is create their ideal living room, which in turn allows the company to build an online profile of their taste. Then you can connect to professional designers through the Ask a Designer feature, or through full room makeovers, which start at $199. And of course you can actually make purchases based on those recommendations.
STARTUP. A Shopping Site For New And Expecting Moms Raises $2.25 Million
Cricket’s Circle, an online baby registry site that aims to not only offer a selection of items to buy, but also recommendations on what you should buy and why, has now closed on $2.25 million in seed funding to continue to grow its business. The round was co-led by West Coast and East Coast investors, Forerunner Ventures and Lerer Hippeau Ventures, respectively.
Also participating were General Catalyst and BoxGroup.
The site was founded by entrepreneur Rachel Blumenthal, a parent herself, as well as a wife and adviser to Warby Parker co-founder Neil Blumenthal. It first launched to the public in January of last year, offering some 600 products across a number of categories, like strollers, diaper pails, bottles, and bibs. Today, the site has around 1,000 products, including color variations.
Blumenthal explained at the time that the idea for the site occurred to her because of the confusion many new moms in particular have over all these baby product buying decisions. In fact, she says there are around 150 different buying decisions that have to be made within baby’s first year, which can be overwhelming.
Cricket’s Circle aims to simplify the matter by only offering three recommendations for each item, based on reviews from the site’s “mom community,” which is a group of 200 or so women who have tested and rated the products in question. Each product also includes a list of pros and cons to help inform consumers’ choices.
INVESTMENT. $474M Fund Will Support Oxford University Spinouts
A new £300 million U.K. fund has been set up to support high tech startups looking to spin out of the University of Oxford. The fund is being raised by Oxford Sciences Innovation (OSI), a newly formed company that is working in partnership with Oxford University and its commercialization arm, Isis Innovation.
The two entities will work to establish new IP-driven businesses based on research conducted at Oxford University — providing investment capital and as well as advice to budding startups.
OSI has been contractually established as the University’s preferred capital provision partner for spinout companies based on research from the Mathematical, Physical, Life Sciences and Medical Sciences divisions.
OSI is in the process of raising the fund, with £210 million committed at this point by six key investors keen to invest in promising science and tech research at an early stage — namely: Invesco Asset Management Limited, IP Group plc, Lansdowne Partners (UK) LLP, Oxford University Endowment Fund, the Wellcome Trust and Woodford Investment Management LLP.
INVESTMENT. European Hardware Accelerator Woos Chinese Investors
Back in summer 2013 shiny new European hardware accelerator, Startupbootcamp HighTechXL, began the search for its first cohort of startups. The Eindhoven, Netherlands-based program has now completed the second edition of its program — with applications open for its third intake.
The 11 teams in its second edition raised a total of $6.3 million on Demo Day and directly afterwards, with six of the teams finding investments of at least €450,000 ($507k), it said today.
While the bulk of the investment has come from European investors, two of the teams have attracted funding from China: namely connected car company ULU, which has raised €500,000 ($560k); and industrial drone company Avular which pulled in €450,000 — both from Chinese investment holding company Fang Group.
Guus Frericks, founder of HighTechXL said the program has focused on intensifying contacts with China, signing a co-operation deal with the China Technology Venture Association last year. Hardware startups especially tend to be pre-occupied with China, given their need to set up a supply chain — and the ready availability of factories and manufacturing expertise in the country. Hence the program forging closer links with the Far East. China is also, of course, a massive market in its own right.
INVESTMENT. Foxconn Invests In Cyanogen
Chinese manufacturing giant Foxconn, best known for being an Apple supplier, has made a strategic investment in the Cyanogen version of the Android mobile OS.
Cyanogen took in $80 million in Series C funding back in March, and it turns out Foxconn was part of that round — announced in a press release.
It’s not clear how much Foxconn has invested. A spokeswoman told: “We do not disclose individual amounts from our investors,” adding: “Foxconn is a strategic investor as we continue to scale our commercial business globally.”
Other previously disclosed investors in the round include Premji Invest, Twitter Ventures, Qualcomm Incorporated, Telefónica Ventures, Smartfren Telecom, Index Ventures, Access Industries and Santander Innoventures. Cyanogen has said its Series C funds will be used to accelerate hiring and product development of its open OS.