July 9-10, 2013
San Francisco, CA

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It was a big day for funding today. Here’s the quick overview, with links to full stories.

Fab raises $150 million

Fab announced last night that it has raised $150 million in a fourth round of funding led by Chinese company Tencent, who’s also appointing a director to the company’s board. The company’s valuation, excluding the new funding, was $1 billion, and this is only the first tranche of it’s fourth round. Fab started life as a gay social network, the pivoted — and what a pivot it was — to an online design store.

More info

ThousandEyes raises $5.5 million

Cloud performance monitoring company ThousandEyes emerged from stealth mode to help IT teams at companies like Equinix, Evernote, Priceline, ServiceNow, Twitter, Zendesk and Zynga resolve performance problems quickly.

“Performance management products have not kept pace with the innovation in cloud services. Legacy products are ineffective in solving problems enterprises face today, creating migraines for IT,” said Mohit Lad, co-founder and CEO of ThousandEyes. “We have built a product from ground up for the cloud era to help companies get the best performance out of their cloud applications.”

The Series A round was led by Sequoia Capital and un-named Silicon Valley angel investors.

Cortica raises $6.4 million

Image software startup Cortica announced its second round of funding today for $6.4 million.

Cortica creates image recognition software that function similarly to the human brain. It can see something such as a landmark and then provide contextual information about that place. It has a lot of potential for advertising, particularly in wearable computing devices such as Google Glass. The company announced a portion of the funding in May – $1.5 million from Russia’s Mail.Ru.

Today’s funding was led by Horizons Ventures, and others.

SocialRadar raises $12.75 million

SocialRadar combines location-based mobile technology and social media information to make you aware of the people and connections around you. It seems a lot like Highlight, which generated a lot of fanfare at the SXSW conference in 2012 but hasn’t made much noise since. SocialRadar is still in the development phase and is working with iPhone, Android, and Google Glass to “change the way people connect.”

Founder and CEO Michael Chasen was a cofounder and former CEO of ed-tech behemoth Blackboard, where he took the company public in 2004, and then sold it to Providence Equity Partners in 2011 for $1.7 billion.

More info

CRM startup Intercom snags $6 million

Intercom, a software startup that promises to simplify customer relationship management (CRM), has just announced a healthy first round of funding.

The $6 million infusion was led by the Social+Capital Partnership with participation from previous investor Freestyle Capital and David Sacks, the founder and chief executive officer of Yammer.

More info

Entelo raises $3.5 Million

Entelo is building the next generation of talent acquisition tools focused on helping companies better leverage social data. To address demand for its solutions, Entelo will use the funds to accelerate its growth and research and development efforts, specifically to develop additional products leveraging its impressive data set and predictive analytics engine.

The $3.5 million in financing was led by Battery Ventures with participation from Menlo Ventures.

Bunch raises $1 million
Bunch is a platform that lets people share and discuss things online that they are truly passionate about. Bunch users form communities around topics, and the platform allows these users to publish, and then engage around, longer-form content. The company’s vision is to provide users deeper engagement around topics they care about and to be the first social publishing and discussion platform built for the average Internet user.

The company raised $1M from Real Ventures, 500 Startups, BDC Venture Capital, and Round13 Capital.

Image credit: Cash register/ShutterStock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by Matthew Howard, managing partner at Norwest Venture Partners.

There was a time when investors would rush startups to market, but a shift has taken place during the past 20 years where the pace has slowed a bit. Now I find myself increasingly advising entrepreneurs to avoid putting a product to market before it is truly ready.

Seed funding and Series A rounds are intended to help startups tease out their big idea and begin laying the product development groundwork. But it seems best practices for customer validation/product management are being frequently tossed out the window. This is so counter-productive that it will almost certainly place the next funding round at risk and can sink the full enterprise.

Over 30 years of operational and investment experience, I have refined a list of five critical things entrepreneurs should do to maximize their first round of funding. Keep in mind that these goals don’t have to be addressed in a particular order.

Take a look at these five important things you should be doing now.

1. Let customers dictate products

While “fail forward fast” may be good self-improvement advice, it is a recipe for disaster in the world of business. At the same time, one can’t over-build the product and never take off from the runway. This is why the single most important goal at the outset is customer validation. Your time and reputation are your most important assets, and you don’t want to squander either of them on wrong ideas. Burning customer prospects can just about send you back to the Stone Age of productivity.

I often see product development charging ahead without best practices and customer validation, so you need to keep your developer-happy tendencies measured. Resist doing material coding until your prospective customers have weighed in and you have built a product requirements document (PRD) based on their input. You don’t want to build something that ends up requiring substantial alterations.

Enterprise and infrastructure startups in particular should identify about 20 broad-based prospective customers. The number of prospective customers for consumer startups needs to be exponentially higher. They all must be cultivated over multiple engagements, mined thoroughly, and consulted with regularly throughout the life of the business. Every conversation and interaction should produce gold nuggets of insight.

2. Borrow experience

While you are working on your product and business model, start assembling an advisory board. Members might include customers or prospects, former startup CEOs, consultants, and other qualified individuals who become a collection of experts at your company’s disposal. Collectively, your advisory board helps you stay customer-driven and focused, while it also lets you learn from mistakes others have already made and keeps you firmly grounded in market realities.

3. Hire the smartest people you can

Hiring is where first-time entrepreneurs often need the most help from their mentors, and getting the right people on board during these initial stages will immensely shape the company and product.

I like to advise founders to think of themselves as owners of an NFL team trying to hire talent. The NFL is so competitive that a single compromise can make a team non-competitive.

4. Counsel patience

Startups face tremendous odds. According to the U.S. Bureau of Labor Statistics and the Kauffman Foundation, about two-thirds of startups last less than three years, and only one-third make it to 10 years.

As we continue to examine failed companies, we find that some or most of these five important things were never achieved. Careful mentoring, planning, and hiring during the seed round stage are critical. Although taking a shortcut may save time now, it will only cause more pitfalls down the road.

5. Put the customer first

Whether you are in the early stages of developing your first product or preparing your company for an IPO, everything should be tested against your customers. During intense and chaotic times of building the business, sometimes we lose sight of the most basic principles. Chiefly, entrepreneurs must follow this critical commandment: “Thou shall always put the customer first.”

Matthew Howard is a managing partner at Norwest Venture Partners. Matt brings more than 30 years of experience in marketing, product management, engineering, business development, and sales in a wide range of technologies to NVP. Matt has appeared on the Forbes Midas List as a top 100 investor for three years. He currently serves on the boards of Avere Systems, Bitglass Blue Jeans Network, ConteXtream, Exablox, Hadapt, MobileIron, and Pertino Networks.

Young businessman moving knight on a chessboard via ollyy/Shutterstock

July 9-10, 2013
San Francisco, CA

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The Series A crunch has left the realm of Bigfoot and Nessie and is entering the realm of truth, at least according to Fenwick & West.

The law firm released the results of its 2012 Seed Financing Survey today, which found that the number of startups obtaining Series A financing after a seed round declined significantly in 2012.

“Of the companies funded in 2011, 27 percent had raised a Series A financing by the end of the following year [2012], while 45 percent of the companies funded in 2010 had raised a Series A financing by the end of the following year [2011],” the report said.

The Series A crunch is a Silicon Valley urban legend of sorts. Some say it is fact, and others dismiss it as myth. The basic idea is that the number of seed-financed startups far outnumbers the amount of venture capital firms willing to invest in an institutional round. The cost of launching and operating an Internet startup is fairly low, and a strong angel investment community supports young companies as they get off the ground. However, companies that are unable to quickly establish a revenue stream or get acquired need venture capital to keep going, which is where the “crunch” comes into play. Without additional financing, they go under and turn into “zombie startups.”

A significant driver of this phenomenon is a changing scene for seed financing. There has been rapid growth in seed financing over the past few years. As opposed to 472 deals in 2009, Fenwick & West found that there were 1,749 seed deals in 2012, while the number of Series A rounds only rose from 418 to 692.

A few key trends are behind this bottleneck. First, venture capitalists are becoming increasingly involved in seed-stage deals. The percentage of seed deals that venture capitalists led increased from 27 percent in 2011 to 34 percent in 2012. Furthermore, accelerator programs are multiplying like rabbits, which adds to the number of promising startups getting attention from investors. The JOBS Act and the emergence of crowdfunding provide more flexible alternatives to traditional seed financing, and platforms like Angelist help establish a cohesive network between early companies and investors.

Basically, it is easier than ever before for a startup to nab seed funding. The challenge is creating a product strong enough to attract venture dollars (or sustain itself on its own).

“These results show a continued strong and diverse seed stage financing environment in the internet/digital media and software industries,” said Steve Levine, a partner in the Fenwick & West Startups and Venture Capital Group.  “However, the decreased percentage of seed funded companies that had received Series A investment by the end of the following year emphasizes the importance of companies demonstrating traction with the seed investment they receive, in order to obtain Series A funding.”

The survey also found that seed stage deals are beginning to look more like traditional, institutional deals. The number of deals structured around “preferred stock structures,” as opposed to convertible notes, increased, and valuation caps increased in deals based on convertible notes.

Fenwick & West drew these results from an analysis of 61 transactions in 2012 with a high concentration on Silicon Valley. It is a small sample pool that does not necessarily reflect “the larger, geographically dispersed, seed financing environment,” but like sightings of Bigfoot, the thrill is in the mystery.

Photo Credit: Ben Cumming/Flickr

A startup called Sift Science says it can help your website battle fraud in 30 minutes or less.

And the San Francisco-based company closed a $5.5 million funding round today from quite a list of high-profile tech investors.

The cofounders have developed an algorithm that pinpoints one million patterns that help predict, and potentially prevent, incidences of fraud. For instance, those who type text in all caps are almost five times more likely to be fraudsters.

Investors included Salesforce CEO Mark Benioff, Expedia founder Richard Barton, Posterous’ Garry Tan, former Paypal CTO Max Levchin (who led the seed round), Tapjoy cofounder Lee Linden, Y Combinator, First Round Capital, SV Angel, Union Square Ventures, and Reddit’s Ohanian.

Fraud image via Blazej Lyjak// Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Ask a venture capitalist if the much-bemoaned “Series A crunch” is real, and they’ll tell you it is.

And then he’ll spend an hour telling you why it’s not.

“Anecdotally, we’re as busy as ever with Series A deals,” said Bob Ackerman, one of the founders of Allegis Capital, a San Francisco investment firm. In a recent phone conversation with VentureBeat, Ackerman spoke about industry-wide yearly figures as well, saying, “There’s been an increase in activity.”

Let’s take a step back: Over the past week or so, news reports have suggested that some types of entrepreneurs are having a hard time raising Series A funding, which refers to the first round of capital a company gets from institutional investors. These entrepreneurs were able to seal smaller “seed” deals, no problem. But when it came time to raise a round larger than $1.2 million or so, they stalled out.

Pravin Vazirani, one of the partners at Menlo Ventures, said in another phone chat that his own data shows a similar story to Ackerman’s. “In aggregate, the total number of companies getting Series As is still going up. It’s better than it was a year or two ago. … I would say, the number of Series A deals that are getting done, it’s probably comparable or greater than it was in 2007.”

So, what’s everyone moaning about?

Without digressing into navel-gazing, the tech press has been running a few slow-news-day op/eds talking about the so-called Series A crunch. Some of the entrepreneurs cited blame the institutional investors in charge of writing those larger checks. Some of the media blamed the “crunch” on the entrepreneurs, whom they saw as less than deserving.

Crunch or bubble?

But the investors themselves are blaming a new breed of angel investor — a relatively inexperienced person with $50,000 burning a hole in his pocket and whose friend Greg has an awesome idea for an app. The angel gives Greg the $50,000.

What happens next is not Greg’s fault. Greg’s app could probably be a great success, and he even could sell to a big company within the next couple years. But the app doesn’t need a Series A-level investment — at least according to most of the Series A-level investors he’ll approach. So Greg feels the crunch that technically doesn’t exist, the perception of which is created by the big, dumb angel bubble.

Ackerman says he sees features, products, and apps that are great, but they’re not likely to generate venture rates of return. They’re not likely to become sustainable, large-scale companies that need venture capital. So he has to turn the entrepreneurs down.

“You take those same entrepreneurs and introduce them to angels, and there’s going to be a significantly different reaction,” he said. “Then they come back to the venture community looking for a Series A, and our perception hasn’t changed.”

The end result, said Vazirani, is that although actual number of Series A deals is going up, the number of seed deals is rising much faster, making the ratio more off-kilter than in previous years. “There are far more applicants than there are positions, if you will.”

Ackerman sees the downside of the scenario as one of false positive reinforcement. “It’s a lot easier to raise angel capital today, and that’s not necessarily a good thing … Just because you can write a check doesn’t mean you should.”

Throwing dumb money after bad

Angel funding, known as seed funding because its the money entrepreneurs get to build their early prototype and test it out, requires relatively small amounts of money — hundreds of thousands or low millions for a single round composed of several investors — at least for extremely early-stage companies. The low dollar amounts are attractive to less experienced investors, and these days, a couple hackers and hustlers can make a quick million go a long way, thanks to booming mobile and web distribution ecosystems and technology platforms.

“Whenever it’s easy to start something, a lot of inexperienced people are going to pile in, both as entrepreneurs and as investors, which makes a bubble. And that bubble will be corrected at the next stage of financing,” Ackerman said, with a chuckle.

He noted that some of the less knowledgeable angel-noobs seem to think buying into a new mobile app company’s equity is like buying GE stock. (I responded that, without loads of information and context, it’s more like throwing money down a well and hoping a fairy flies back up with a bucket of gold.)

“There are people who invest where they have tremendous area knowledge and experience and separate the wheat from the chaff,” Ackerman said, referring to longtime angel investors like Ron Conway or Esther Dyson or Kevin Rose. “But doing it because everybody’s doing — boy, that’s a recipe for trouble.”

“I would put a different spin on it,” said Vazirani. “It’s a very good thing that there’s capital available for people who want to start companies. And it’s great for [venture capitalists] because it creates more deal flow … We see it as a very healthy, positive thing.”

VCs might relish the sounds of more doorknockers thumping up and down Sand Hill Road, but entrepreneurs aren’t so enthused about hearing more noes and realizing they can’t grow their app beyond just another app.

The new angel

The venture capital community is beholden to the SEC to disclose tons of information about the deals it does; ergo, there’s tons of information available from research firms on VC deals for various geographies and sectors. Angel money and seed money can be different. It’s hard even to find data on the deals making up a lot of the seed-stage froth.

“It’s angels, it’s super-angels, and there’s been a huge growth in the number of seed funds out there, too,” said Vazirani. But Vazirani said the deals are often more casual affairs — deals between friends, between former coworkers, between family members or first-exit fellow entrepreneurs.

“That’s why [the crunch] doesn’t show up in the data: The number of seed and angel deals being done are not reflected in that data,” he said. “If there’s a huge increase in those deals, you wouldn’t see it. And that’s what people are seeing when they talk about the Series A crunch.”

And while Hollywood gets a fair amount of crap for interfering with Silicon Valley’s business, Vazirani said, “[Celebrities] are not responsible for a meaningful percentage of the growth we’ve seen. It’s definitely on the upswing, but more of the growth, I’m guessing, is coming from these institutional seed funds and super-angels.”

Ackerman echoed Vazirani’s comments about the general lack of reporting on these very early-stage deals, but he also said that in spite of the massive influx of underqualified and nonaccredited investors in spite of the drastically higher numbers of unsuccessful San Hill Road door-knockers, “There’s still capital out there.”

The end of the bubble is nigh

Ackerman did say that consolidation within the venture industry means there might be fewer doors to knock on. And he also pointed out that a combination of capital gains changes and difficulties with raising money for early-stage funds might lead to a slight decline in the appetite for Series A deals, driving more investors toward private equity and late-stage funding deals.

Still, Ackerman expressed confidence that a qualified entrepreneur with a great idea wouldn’t be left out in the cold by the greater venture community, angel bubble be damned.

“The access to capital for good entrepreneurs with good ideas is as good or better than it has ever been,” said Vazirani as we wrapped up our chat. “I don’t think … it’s going to be more difficult for high-quality entrepreneurs to raise money.”

What will be more difficult, he said, is sustaining angel or seed activity throughout multiple years of unwise investments in companies that need seven or eight years to mature — or apps that never mature into companies at all.

“I think we’re already seeing signs of [seed activity fading],” said Vazrani. “I think the number of companies that get seed funding is going to go down in 2013.”

You heard it first here, folks. The Seed Funding Crunch of 2013 is at hand.

And as for those inexperienced investors, Vazirani’s words were not ones of comfort: “You’re going to see a lot of mortality. That’s the plainest way I could put it: The mortality rate is going to be high.”

“Writing the check is the easy part,” Ackerman concluded. “When we have a massive influx of angel capital, a couple years down the road, there’s a massive reset. … There’s a reckoning that’s coming.”

Image courtesy of Neale Cousland, Shutterstock

July 9-10, 2013
San Francisco, CA

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Busuu, a startup with a free tool for you to master a new language, has pulled in about $5 million in its first round funding.

The company describes itself as a “social network for language learning” — it offers free and paid-for audio-visual courses in 12 languages, including Spanish and French. There is a free web version, as well as a well-designed mobile and tablet application.

What’s unique about this technology is that every user is a both tutor and a tutee. Using the video tool, anyone can converse with a native speaker, and practice their budding language skills. The company competes with a variety of online language learning tools that help users circumvent the textbook — popular choices are Mango Languages, TellMeMore (which caters to business users) and Living Language.

It makes money through its business English and Spanish courses that helps employees learn typical phrases used in professional situations. The startup plans to release more of these business language courses in the coming months.

The company is showing signs of impressive growth — it has more than 25 million users in over 200 countries and is gaining 40,000 new members per day. It is relocating from Madrid to London as it scales up its operations.

It will use the funding to invest in building out its core product, and to hire more people.

Brent Hoberman, Lastminute.com’s cofounder, will join the board of advisors. “We are looking forward to supporting the company in its future growth plans and shaking up the global language learning market,” said the travel entrepreneur in a statement.

The series A round was led by PROfounders Capital with participation from angel investors.

July 9-10, 2013
San Francisco, CA

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$20 million is quite a hill of beans, and it’s an especially large hill for a coffee chain with 11 locations. But that’s just what Blue Bottle Coffee is sitting on top of right now.

Blue Bottle is a high-quality purveyor of coffee that roasts its beans in small batches using vintage roasting machines, packs them in compostable bags, and sells them within 48 hours of roasting. Like other quality, “slow coffee” shops that have sprung up in the past few years, such as Ritual Roasters and Philz, Blue Bottle’s usual method of preparation is the pour-over: What your dad probably called “drip” coffee, except this is done with great care, one cup at a time, by a specially-trained barista.

The coffee is delicious, and while pricey, it doesn’t seem too expensive for those already softened up by several decades of buying brews at national chains: $2.50 per cup or so.

Perhaps thanks to that high sticker price, Blue Bottle is a surprisingly big business for a coffee chain with seven San Francisco Locations and four in New York. The Wall Street Journal reported in February that the company pulled in $15 to $20 million in revenue last year. Even more attractive to the venture capitalists who are investing in the coffee business is the fact that its revenues have grown by 50 percent every year since the company was founded.

Still, it’s hard to imagine what a coffee chain with seven San Francisco locations, four in New York, and a dedication to craft-roasting beans needs with $20 million. Expansion? A Blue Bottle in every mall? Its own 3-D iPad app?

The fund raise is disclosed in an SEC filing that appeared today. True Ventures led the round, according to Tony Conrad, a venture partner at the VC firm.

Blue Bottle is based in Oakland, Calif. and employs about 200 people in San Francisco and New York.

Corrected 10/17: True Ventures led the funding round, not Index Ventures.

Sept. 9 - 10, 2013 San Francisco, CA

Early Bird Tickets on Sale

For marketers, it’s not always easy to prove return on investment (ROI), particularly for their social media campaigns.

Anametrix is one of a growing number of startups that provide “big data” analytics tools to marketers. Today, the San Diego-based company has raised $4.4m from TVC Capital in its first round of venture funding.

Anametrix says it wants to help CMOs and lower-level marketing professionals increase their ROI, and better-target their email and social media outreach. The technology collects data from any source such as Facebook, Twitter, LinkedIn or community forums, which is analyzed and visually displayed. The idea is that with a better understanding of the data, marketers can uncover new revenue opportunities.

The company was founded in 2010 by WebSideStory’s analytics team. In 2008, WebSideStory was acquired by Omniture for $394 million.

For startups like Anametrix, there is a huge market opportunity. However, to succeed they will need to displace companies like Tableau that provide data visualization tools for marketers, and Salesforce, which recently unveiled its software suite, Marketing Cloud.

A recent study from Gartner, a research firm, shows that marketers will spend more money on IT than CIOs by 2017.

“Our Series A funding enables us to scale sales and marketing efforts to exploit the increasing market demand for digital analytics and to fuel product innovation, particularly in next-generation predictive analysis for marketers,” the company’s CEO, Blaise Barrelet, told me.

With this funding round, Steve Hamerslag of San Diego-based TVC Capital, will be joining the company’s board of directors.

Image via Shutterstock

Convertible debt, the old convertible notes once used as bridge loans for more mature companies, became popular with angel investors in the years after the financial crisis. According to Ressi, by 2011, over 50 percent of angel deals were done through convertible debt.

Today, the Founder Institute teamed up with TheFunded.com to eke out a new financing model to save early-stage startups from debt known as “convertible equity.” The benefits of both convertible equity and debt: It’s cheap, fast, and lets investors bypass valuation negotiations. Unlike convertible debt, this has no repayment requirement for early-stage startups.

Ressi told me that there are benefits for founders beyond being able to call it equity instead of debt. ”If you are loaning a new company money, it makes startups insolvent from a balance sheet perspective,” he said.

This new structure also empowers angel investors in states that require lender licenses (licensing is complex and varies by state-by-stage). Finally, convertible equity does not require repayment so startups need not fear that an investor might force bankruptcy.

View a sample term sheet here. 

Ressi explained that this whole concept of convertible debt is coming to maturity, so we haven’t yet experienced the macro-economic repercussions. “Unsophisticated lenders and startups with no intention of repaying that debt,” he said. “Doesn’t this remind you of the housing crisis [and] the European debt crisis?”

It remains to be seen whether venture capitalists, critical of convertible rounds, will adopt this new model. High-profile investors like Seth Levine, the managing director of the Foundry Group, and Union Square Ventures’ Fred Wilson recently took a stand: “I have been doing venture capital for 25 years now and have also done many angel investments personally along with my wife,” Wilson wrote on his blog, A VC. “We have never done a convertible debt round.”

Ressi told me that he hopes that the new model will appeal to angel investors, and will eliminate convertible debt in the long-term. “Now is the time to nip it in the bud,” he said.

July 9-10, 2013
San Francisco, CA

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Infrastructure-as-a-service startup SingleHop has raised $27.5 million in its first round of funding, cash that will help it quickly accelerate growth, the company announced today.

SingleHop has been slowly making a name for itself in the cloud computing and cloud infrastructure arena. The company’s proprietary management platform, called LEAP, makes it possible for clients to deploy and manage their web infrastructure from a unified platform. Its traction has been so good that it was named No. 25 on the Inc. 500 list for fastest growing companies in the U.S., leaping up from the No. 58 spot a year prior.

The firm’s relatively large first round came from Boston-based Battery Ventures. Battery General Partners Dave Tabors and Morad Elhafed will join SingleHop’s board of directors.

“SingleHop is well positioned given the rise in cloud computing and demand for outsourced IT services. With its automated technology platform, the company has carved out a unique position in the market,” said Tabors, in a statement. “Customers are happy and sticking around, and that’s a direct result of the company’s business model, coupled with superior technology and a smart leadership team. We’re really looking forward to helping this company scale.”

Chicago-based SingleHop was founded in 2006, has 80 employees, and has clients in 114 countries. The company has two data centers in the Chicago-area and more than 10,000 servers online. Next on its to-do list is to open a data center facility in Phoenix.

You can watch SingleHop’s video describing the LEAP3 cloud infrastructure solution below:

Photo credit: Alexander Kirch/Shutterstock

July 9-10, 2013
San Francisco, CA

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Betting that new mommies will want to supply baby with the best toys, outfits, snacks, and goodies vetted by other mommies, investors have handed startup Citrus Lane a bundle of a joy in the form of $5.1 million in fresh funding.

One year-old Citrus Lane is in the monthly care package business, specifically targeting moms-to-be and parents with children under three years of age. The startup takes a pay-per-month subscription approach, so parents are charged $25 a month for a themed package that includes four to five age-appropriate products for their child. Products are curated from partner brands such as Weleda and Green Toys, and are only boxed up after receiving the seal of approval from real moms.

“When I was pregnant with my first child, I knew nothing. I had to do all my own research … and I started by asking my mom friends what products they suggested. And then I realized there is a market for that kind of real-life wisdom,” Citrus Lane founder and CEO Mauria Finley told VentureBeat. “Parents need help cutting through the noise and figuring out what products are really best for their child.”

Citrus Lane’s first institutional round of funding, from GGV Capital and Greylock Partners, will be used to grow the business and hire more aggressively.

“We’re using the money to make our customers’ experience even better in every way we can think of — from expanding our social media presence to offering our loyal customers more opportunities to purchase from the company,” Finley said. “We need to staff up in engineering, design, marketing and operations to continue to deliver a great experience to our customers as we grow.”

The tried-and-true monthly subscription model seems especially appropriate for the new moms market, and the company hopes to reach this highly influential group by supplementing its boxed product offerings with tips and advice on its Facebook Page.

Mountain View, Calif.-based Citrus Lane has 14 employees. The startup previously raised a $1.5 million seed round of funding.

Photo credit: Citrus Lane/Facebook

July 9-10, 2013
San Francisco, CA

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Social events startup Lifecrowd has raised $5 million in its first round of funding, with a goal to expand its evolving marketplace that connects like-minded users connect at nearby events, the company announced Thursday.

The service has come a long way since it debuted at DEMO Fall 2011 conference. In its build up from beta to its first round, the company has clearly defined its purpose. Unlike Meetup, which lets anyone create groups centered around one focus, Lifecrowd offers all kinds of singular events. It’s also different in that users create the events, but Lifecrowd’s team curates the listings to ensure only the best show up.

Lifecrowd’s first round of funding was led by Chicago-based Lightbank, with participation from Bullpen Capital, Baroda Ventures, and Prism VentureWorks. And recently, the company became the first startup to emerge from the relatively new Los Angeles accelerator MuckerLab.

“This powerful group of experienced tech investors brings an incredible collective expertise in localized online commerce to the table, as well as deep experience in marketplace development, scaling up on a domestic and international level, and a thorough understanding of what today’s consumers want,” Lifecrowd CEO Bong Koh said, in a statement. “This combined knowledge and broad network reach will be a tremendous asset as we expand Lifecrowd into new markets and build new platforms and products that help our users enrich their lives and discover new, fun activities.”

Lightbank Partner Paul Lee seems especially enthusiastic about Lifecrowd’s potential growth due the hot social activities space enabled by social networking and the Web.

“We see a tremendous market opportunity for Lifecrowd’s approach to catapult it to the head of the pack,” Lee said, in a statement. “Bong and his team have created a service that resonates with people, that solves the problem of finding fun things to do in your area with an online marketplace of activities that perfectly blends the online and offline components of social networking.”

Lifecrowd is currently live in Los Angeles, San Francisco, Orange County, and San Diego. The site lists 10 cities where the service intends to launch next, including New York, Chicago, Seattle, and Austin.

Lifecrowd screenshot: Lifecrowd homepage

July 9-10, 2013
San Francisco, CA

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Mobile-workspace company CloudOn, formally known as AppToU, has raised $7.7 million in first-round funding, according to the SEC.

Palo Alto-based CloudOn’s marketing materials say the company is “creating a mobile, enterprise, cloud-based workspace” to help workers with productivity and collaboration. Presumably, the company is developing applications for smartphones and tablets with an emphasis on the business and enterprise market.

Outside of its modest website and its profiles on Facebook and Twitter, little is known about the company and its projects. A call left with the company asking for further details was not immediately returned.

CloudOn is led by CEO Milind Gadekar, who previously worked at Cisco for five years as director of marketing. The team also includes co-founder and vice president of research and development Meir Morgenstern, who was a system architecture manager at Cisco for five years, and co-founder and CTO Shuki Binyamin, who led a video and design consulting company for almost five years.

The new $7.7 million in funding comes from Rembrandt Venture Partners and Foundation Capital. Back in October 2010, the company raised $1.8 million in equity and debt funding when it was known as AppToU. Foundation Capital also participated in that funding round.