VENTURE CAPITAL MARKET REVIEW, ISSUE 35 (APRIL, 27 – MAY, 3)
Last week on the venture capital market was full of news connected with market’ newcomers: different venture firms, funds and accelerators started theeir work. News came from all parts of the world: Europe, Asia, North and South America. Background was diluted with few big M&A deals.
M&A. IAC-Owned Ask.fm Acquires Recipe Network Foodily
IAC-owned social network Ask.fm has acquired the entire team behind recipe network Foodily, the companies are announcing, which includes those focused on product, engineering and design. These nine team members will now be tasked with the continued development of Ask.fm’s Q&A platform, while the Foodily website and mobile app will be maintained by a separate division within IAC. The new team members will join Ask.fm in both its Oakland and Latvia locations, Ask.com says in a brief announcement.
Terms of the deal are not being disclosed, but Foodily had raised $7.7 million in outside funding from Index Ventures and others since its founding back in 2010.
Foodily itself has little crossover with what Ask.fm does today in terms of overall theme. Foodily offers a social network for discovering and sharing favorite recipes with others, which can also be organized into collections by its users.
It’s not surprising that the service was in need of an exit, given that social bookmarking site Pinterest is now the current favorite way that users are grouping and sharing their online finds, which very often includes recipes. In fact, the writing was on the wall for Foodily years ago, when it revamped its product focus more on social features just as recipe-sharing on Pinterest was exploding.
On the other side, Ask.fm reports having 150 million monthly uniques.
But while the two sites haven’t been focused on the same niche – one does recipes, the other Q&A – they both fit into the larger category of social networking. For Ask.fm, this deal means the chance to bring in new talent that can help it improve its social aspects and design. (Foodily once won a Webby award for its magazine-style layout, for example.)
M&A. SolarWinds Acquires Log Management Service Papertrail
The publicly traded IT performance management service SolarWinds today that it has acquired Papertrail, a log management service, for $41 million in cash. SolarWinds may not be a household name, but it’s the parent company of website monitoring service Pingdom, which it acquired last year, and cloud monitoring service Librato, which it acquired earlier this year.
With the Papertrail acquisition, SolarWinds aims to expand its monitoring portfolio. “The acquisition of Papertrail adds another key element of that overall performance monitoring experience and we look forward to having the Papertrail team and technology as a part of our organization,” SolarWinds CEO Kevin Thompson said in a statement.
Papertrail allows companies to aggregate log files from a wide variety of popular products like Apache, MySQL and Heroku, as well as Ruby on Rails apps, different cloud hosting services and other standard text log files. Papertrail customers can then use the company’s browser-based search interface or its command-line tools to search through these files to diagnose bugs and performance issues. Conveniently, the tools also integrates with the SolarWinds-owned Librato, as well as Geckoboard, for graphing results.
Current Papertrail users include Adobe, GitHub and DNSimple. The company told that Papertrail will continue to operate as usual and SolarWinds will continue to develop and sell the product under the Papertrail monicker.
M&A. Bigcommerce Acquires Software Startup Zing
E-commerce platform Bigcommerce announced that it has made its first acquisition, point-of-sale and inventory management software startup Zing. The value of the deal was undisclosed.
Bigcommerce has raised $125 million so far from investors including General Catalyst, Softbank, and American Express, and is pursuing rapid growth in the U.S. and Asia. It faces formidable competition, however, from other e-commerce platforms like Shopify (which recently filed for a $100 million IPO) and Magento, as well as marketplaces such as eBay and Amazon that target smaller vendors.
In its announcement, Bigcommerce said the purchase of Zing will allow it to give retailers better tools and APIs to manage inventory and sales across multiple channels, such as an online store and brick-and-mortar location.
More than 30 percent of Bigcommerce’s 85,000 clients currently operate at least one physical storefront in addition to their web stores, and the integration with Zing will allow them to handle O2O services like in-store pickup and shipping from store inventory more easily.
STARTUP. Scanadu Raises $35M Series B
Scanadu, a health tech startup working on devices that can scan and upload medical-grade diagnostic tests to a smartphone, has raised $35 million in Series B financing.
The round was led by Chinese investment firms Fosun International and Tencent Holdings Limited, with participation from China Broadband Capital and Iglobe Partners of Singapore, as well as previous investors Relay Ventures, Redmile Group, Ame Cloud Ventures and Three Leaf Ventures. This now brings the total funding amount up to $49.7 million.
Scanadu came out of the X Prize Foundation’s Qualcomm Tricorder competition, but soon broke an Indiegogo record, raising more than $1.6 million in less than a month for the Scout, a medical device that could check for heart rate, blood pressure and body temperature.
The startup out of the NASA-Ames Research Center in Mountain View, California has since started shipping the more than 8,000 orders for the Scout and has created another device called Scanaflo, which is essentially a pee stick that can detect things like blood in urine, pregnancy and STD’s when the information is uploaded to your smartphone.
Scanadu is working with the FDA to get full approval for these devices and has so far been given the green light to test them out on individuals as “investigational devices.”
The new funding will help the startup further push these devices out in the market for testing and continue on the path to FDA approval as a hand-held medical device for commercial use.
STARTUP. Personal Finance Startup MX Pulls In $30 Million Series A Funding
MX, the personal finance startup formerly known as Money Desktop, has just inked a $30 million Series A funding deal led by a subsidiary of USAA. Tokyo-based VC firm Digital Garage also participated in the round.
MX previously raised a healthy seed round from various early-stage investors for $20 million late last year. This brings the total amount of funding to $50 million for the startup.
Much like Mint, Simple and others in the personal finance space, MX aims to make financial management easy for consumers by providing real-time monetary data from various banking institutions and money accounts.
INVESTMENT. Credo Ventures Closes New €34 Million Fund
Credo Ventures, the Prague-based VC targeting the CEE region, has closed its second fund, Credo 2, which, at €34 million, is more than twice that of the firm’s original €18 million fund launched in 2010.
As a reminder, Credo 1 has made a total of 16 investments in Central Europe, two of which — Brainient and TVbeat — are actually headquartered in London (Disclaimer: as was Beepl, another startup Credo backed, of which I was co-founder and CEO).
The VC tends to co-invest with other funds, and these have thus far included Seedcamp, TechStars, Index, Arts Alliance, hub:raum, Atlas, Flybridge, Baseline amongst others.
It’s also noteworthy that, in contrast to the majority of local VCs in the region who in part invest public, largely EU, money, Credo Ventures’ LPs are entirely private.
To date the firm has seen 4 exits but, arguably, only one exit of note, Cognitve Security, which was acquired by Cisco for an undisclosed amount. The other exits are Klick2Contact, Intellitix and Beepl.
INVESTMENT. ICONYC Labs Builds A Bridge Between Israeli Tech And NYC’s Startup Scene
Eyal Bino has been working for years to bring Israeli entrepreneurs into the New York City tech ecosystem, and his latest venture, ICONYC Labs is the culmination of that work.
Together with his partner Arie Abecassis, a partner and mentor at Dreamit Ventures, Bino has established an accelerator for young entrepreneurs coming from Israel to build out their businesses in the hear of New York’s burgeoning technology scene.
Beginning with an initial cohort of five companies (each receiving $20,000 in early stage funding) and a 6% to 10% stake in each, ICONYC will follow the traditional accelerator model of mentoring and consulting to get the entrepreneurs in front of the connections they need to get a foothold in the U.S. market, the founders said.
INVESTMENT. Slow Ventures Raises A New $65 Million Fund
Slow Ventures, previously run by early Facebook employees Dave Morin and Kevin Colleran, has raised a new $65 million fourth fund.
Sam Lessin, another former Facebook employee who left in August last year, will be joining as a partner. The fund has made investments in many of the closest-watched startups in Silicon Valley, including Pinterest, Meerkat, Postmates and Slack. Colleran will lead the fund as managing director, and all of his investment activities will now be made through it.
In total, Slow Ventures has invested in more than 180 companies across its previous three funds — which Morin and Colleran personally invested in with other early Facebook executives. This latest fund’s investors include some venture capital firms, as well as other CEOs and entrepreneurs in the tech community. The firm is not focused on leading investments and usually does not take board seats.
INVESTMENT. Tandem Adds Two New Partners
Tandem, which recently raised a $100 million fund to back mobile startups, has added two new partners — Shashi Seth, formerly an executive at Google and Yahoo, and Couchsurfing co-founder Daniel Hoffer.
The firm says it now has 15 team members working with its portfolio companies. It invests $200,000 initially and hosts those startups in Tandem’s Burlingame, Calif., office for six months.
INVESTMENT. Acceleprise Accelerator Aims $3.5M Fund At Early Stage Enterprise Apps
Acceleprise Ventures, a San Francisco-based incubator anchored by investor Sean Glass, announced a new $3.5 million fund with a pronounced enterprise app bent. It also announced 10 newly funded companies.
The company works with 8-12 pre-seed B2B companies per round to help them grow from acquiring their first customers “to building scalable and repeatable processes that can fuel growth,” managing director, Michael Cardamone explained.
“We launched in June of last year, receiving about 100 applications for our first cohort and ultimately took seven companies that went through the program from August – December 2014. By December, we received about 215 applications for our second cohort that started in January and accepted 10 companies (less than a 5 percent acceptance rate),” he wrote in an email.
The company plans to use this fund to eventually invest in a total of 50-60 companies over five rounds. “We are in our second of the five we plan to do with this fund. The rest will be used for follow-on investments in subsequent rounds. We are doing two [rounds] per year from January to May and again from July to November,” he said.
INVESTMENT. Start-Up Chile SCALE Fund Makes Its First 9 Investments
Start-Up Chile SCALE, the follow-on fund backed by the Chilean government to boost local startup growth, is making its first nine investments.
The nine companies, all graduates of Start-Up Chile’s past three classes, will receive $100K each in equity-free funding. In exchange, the founders agree to keep their companies in Chile for at least a year and serve as mentors to three Chilean startups while they’re there.
Sebastian Vidal, director of Start-Up Chile, calls this “social equity.”
“In Latin America there’s a lack of experts — you can count on your fingers the success stories that we have,” says Vidal. So the solution, for now, is recruiting external talent to jump-start the local tech ecosystem through the accelerator, and provide incentives for entrepreneurs to stay in Chile after the program ends.