July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

FundersClub is bringing direct access to Y Combinator startups out from behind closed doors.

The online venture capital firm has raised a $1.1 million fund as part of its new “Accelerate Series” that will support startups from Y Combinator’s Winter 2013 batch.

FundersClub is an investing platform that presents accredited investors with a curated selection of investment opportunities. Featured startups have a profile on the site with a fundraising goal. Members of the community — individuals with an annual salary of over $200,000 or net worth of over $1 million — can make investments in the companies that appeal to them. FundersClub then bundles the money together into one fund and gives it to the startup as one entity on the cap table, under the FundersClub name.

Now, with one “check,” members can invest in 11 promising companies.

Y Combinator is generally considered to be the most elite accelerator program in Silicon Valley. Its demo day is an invite-only event that gives selected investors direct access to startups in its portfolio. FundersClub itself participated in Y Combinator, and its first round of featured startups were all fellow YC companies. With the Accelerate Series, FundersClub is taking more of a Start Fund style approach.

StartFund was formed by Russian billionaire Yuri Milner and SV Angel legend Ron Conway in 2011 to put $150,000 into all Y Combinator companies. Andreessen Horowitz and General Catalyst were also contributors, and this money was one of the perks of the program. However as the program grew and valuations shot up, the money was difficult to manage and YC decided to do a little reshuffling. It created its own fund called YC VC where startups receive $80,000, and later announced that it would cut down class size from 84 in summer 2012 to fewer than 50 in winter 2013.

While it won’t invest in every startup in the class, the Accelerate Series funds will give any investor the chance to invest in a good portion of the YC portfolio, rather than just billionaires and hallowed VCs. It is the latest step in FundersClub’s goal to democratize venture capital.

“We are dedicated to evening the VC playing field which is traditionally insider’s only for certain investors and certain companies,” said cofounder and CEO Alex Mittal in an interview with VentureBeat. “FundersClub is opening access to quality startups to any accredited investor, even those without connections. It is online, more inclusive, and more democratic.”

FundersClub carries out the due diligence process for investors and acts as an intermediary between angel investors and the companies. The SEC recognized it as the first ever online VC in March and the National Venture Capital Association admitted FundersClub into its ranks, which was validation that its approach does not violate SEC regulations. Regardless of what happens with the JOBS Act, FundersClub’s activities are above-board. To date, it has invested more than $5 million in 25 companies and has more than 6,000 accredited investor members.

The YC startups that will get FundersClub investment are CircuitLab, Goldbely, Medisas, Meldium, Padlet, Prizeo, Screenhero, Strikingly, Teespring, and Thalmic Labs.

FundersClub closed a $6 million seed round last year from an impressive roster of investors. It is based in San Francisco, Calif.

Photo Credit: FundersClub 

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Mercatus announced today that it has raised more than $2 million for the introduction of a credit score for projects in the energy industry.

The company hopes to increase energy developers’ understanding of what makes a project worthy of receiving capital in the eyes of investors while also decreasing the time and difficulty of finding fundable projects for institutional investors.

The Santa Clara, Calif.-based company was founded in 2009 as SCS Renewables and is a software solutions provider for the energy finance industry. Since its inception it has enabled $250 million in investments and transactions. It currently serves more than 40 percent of the U.S. commercial and utility solar markets.

According to Caroline Venza, PR spokesperson for Mercatus, the company’s software solutions are aimed at institutional investors who for a long time have found new energy industries either too small or too difficult to consider for serious investment. The company plans on opening up the industry to sources of finance other than angels and venture capitalists and Venza believes that the credit score is a big step towards that goal.

The credit score, a first for the industry, is calculated using eight different criteria that are assembled to create an economic and risk profile for a project. Should a developer want her project to receive a score, she can submit the project to Mercatus and in 48 hours will receive her score. This score is then made visible to both developers and institutional investors in the hopes of attracting investment.

“When talking to investors they called the score a single point of truth because it eliminates human bias,” said Venza.

The $2 million represents the company’s first round of institutional funding and was led by Vision Ridge Partners and included investment from Augment Ventures and Shah Capital.

Photo credit: Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

So the government is secretly mining our data from major tech companies. WTF. If you need me, I’ll be searching for a handgun, a landline, and an isolated hideout with my coworkers. In the meantime, here is today’s funding roundup.

Brand Networks casts off bootstraps with first $68M ”warchest’ of funding

Brand Networks has raised $68 million in its first round of funding from private equity firm AEA. Brand Networks combines enterprise-style software with agency-like services. The company works with big brands that have different social goals across their various departments, business units, sub-brands and locations. It was founded in 2006 and has not taken funding until now, when the “social marketing ecosystem is mature enough.” Read more on VentureBeat.

Panzura raises $25M to make cloud storage faster, nears profitability 

Panzura, the cloud storage company, has closed a $25 million funding round. The San Jose Calif.-based company provides faster web-based services for its corporate customers than the alternative: storage devices attached to locally-hosted servers. This fourth round was oversubscribed, as the company expects to reach profitability in the near future. Late stage venture firm Meritech Capital led the round, with participation from existing investors Matrix Ventures, Khosla Ventures, Opus Capital and Chevron Technology Ventures, the investment arm of the third largest oil conglomerate in the world. Read more on VentureBeat.

Mirantis takes another $10M in strategic investment for OpenStack clouds  

OpenStack system integrator Mirantis has raised an additional $10 million in strategic investment to accelerate development for its Fuel product. OpenStack is a cloud operating system that enables any organization to create and offer cloud computing services running on standard hardware. Fuel is described as “Do-it-Yourself” kit for OpenStack so businesses can deploy and manage the architecture on their own.Ericsson, Red Hat, and SAP Ventures led this follow-on round and are all using Fuel. Previous investor West Summit also added into this second round of Series A financing. Read more on VentureBeat.

Nexus Venture Partners injects $2.5M in an Indian real estate startup

Indian housing marketplace Housing.co.in recently raised $2.5 million in funding from Nexus Venture Partners. This comes from Nexus Venture Partners’ largest fund to date – $270 million – that it closed last September to fuel the tech scene in India. Much like Zillow, Housing.co.in is a real estate search portal that helps you find housing based on the number of rooms you want and geography.The Mumbai-based company recently added Bangalore to its service and operates in five cities.

Cuyana raises $1.7M to update your closet with fashion that doesn’t harm humanity

Cuyana is an e-commerce startup that wants you to buy less. Or at least less crap. The company has raised $1.7 million and unveiled a new business model that emphasizes quality over quantity. Cuyana is a fashion brand that sells apparel and accessories that are made with high-end materials, craftsmanship, and sustainably sourced. Canaan Partners led this round of funding. Read more on VentureBeat.

Springshot raises $1.6M to turn service work into a mobile game

Yet another startup in the “bring your own device” movement has raised money. Springshot filed with the SEC for a $1.6 million first round of funding. Springshot is a “mobile worker productivity platform” that supports people who work on-the-go The company has built mobile applications that deliver training, work schedules, and assignments to service employees, like janitors or security guards. Adam DeVito and George Landegger are listed as directors on the filing. Read more on VentureBeat.

Photo Credit: guyfromlarge/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Bloomberg is launching a new $75 million venture capital fund to support early-stage companies.

The fund will be called Bloomberg Beta and will invest in startups that are “producing insights from data” and “making the experience of work better.” This could involve anything from content discovery to human-computer interaction technology. Bloomberg has already invested in Newsle, Nodejitsu, Codecademy, Errplane, and ProsperWorks.

Bloomberg is a large international mass media company that distributes information about financial data. The Bloomberg Professional Service has more than 315,000 global subscribers. The corporation also provides enterprise solutions and financial software tools, such as analytics and equity trading platforms, data services, and news.

With this venture capital fund, Bloomberg will continue its “longstanding pattern of entrepreneurialism” and the belief that “the best investors are entrepreneurs and the best entrepreneurs are investors.”

Roy Bahat will head up the fund in San Francisco. He previously led IGN Entertainment and is the chairman of hardware startup Ouya. Karen Klein will take the lead in New York. She is the former head of new initiatives at Bloomberg and was VP at Softbank’s venture fund. The third team member, James Cham, recently worked as a principal to Trinity Ventures and was previously vice president of Bessemer Venture Partners.

Photo Credit: Michael  Tapp

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Signia Venture Partners is raising a $100 million fund, according to an SEC filing.

Signia Venture Partners is an early stage fund that makes investments in mobile, gaming, online video, and education technology. It was formed by Playdom Inc founder Rick Thompson– who sold his company to Disney for $763.2 million in 2010– and fellow tech industry veterans Dan Fiden, Ed Cluss, and Sunny Dhillon in 2012. The group committed $20 million of their own money for the first fund and has made just shy of 30 investments to date.

Signia Venture Partners is based in Menlo Park, California. Thompson is a prolific tech investor. All told, Thompson has had exits valued in excess of $5 billion during his career. He loves to play poker and chess; he has been an investor and entrepreneur since 1995; and he is focused on what he calls the founder-investor model, where he gets closely involved with the early-stage companies he works with.

Thompson left Playdom in August 2011, and since then, he has funded the next generation of game companies, including mobile gaming firm Funzio, which Gree bought last year for $210 million. He has also invested in Wild Needle (acquired by Zynga for $3.8 million), Idle Games, Red Robot Labs, Grand Cru, Rumble Entertainment, Project Slice, Fun+, Airy Labs, Noise Toys, Viki, Social Shield, Udemy, Triangulate, AdChina, and Iddiction. That probably makes him one of the most active investors in games to date. He serves on the advisory board and is a general partner of Signia Venture Partners.

Thompson has had the luck of being at the right place at the right time. At Playdom, his team built Mobsters with six people in a week. Within 30 days, the game was generating $4 million a month. In an interview, Thompson told GamesBeat that he had turned his attention to investing in mobile gaming, since no one dominates that market and there are lots of problems that entrepreneurs can solve. He said that he preferred to invest in multiple game companies because that gives him a much better feel for the state of the market, in contrast to investors who make maybe one investment in games.

Of the transition from consoles games to mobile games, he said, “The challenge in a changing market is to get on the new horse and get up to speed as the other one starts to wear down. That certainly creates pressure on companies. The good news is that people are spending a lot more time gaming than they were previously. As the industry moves forward, some of the monetization does fall off, though, and that does create some short-term pain.”

We are still waiting on a comment from the firm.

Dean Takahashi contributed to this report.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The playbook looks strangely familiar now: Start a blog, sell it to AOL, parlay your success into a series of conferences highlighting up-and-coming startups, then leverage your influence and access to raise a venture fund and invest in the companies you highlight.

Mike Arrington did it with TechCrunch and his $20 million Crunchfund.

Now Launch founder Jason Calacanis (who found success with the sale of Weblogs Inc. to AOL in 2005) is raising a $10 million fund of his own, which will invest exclusively in companies that appear at one of his four Launch events. The new fund will be called, appropriately enough, the Launch Fund.

It’s win-win for the companies, who gain funding as well as exposure and prestige from their association with the conference. Launch is an increasingly hot series of events, including the main Launch Festival, an education-focused Launch event, a mobile-focused event, and a Launch Hackathon.

“We are not disclosing the size of the fund,” Calacanis told PE Hub (although an SEC filing discloses a $10 million target). “We will invest in 5 to 10 startups a year, $25-100k.”

Calacanis will be the sole general partner, meaning he’ll be primarily responsible for all the investment decisions. He also said he has invested in about 30 startups as an angel investor over the years and that he’s one of the top 10 angels according to AngelList, so “it made sense to make a fund.” (He’s actually 4th on AngelList, by number of followers.)

Calacanis cited Demo founder turned VC Stewart Alsop as inspiration for both Launch and the new fund.

Along with his own money, Calacanis’ new fund will include an investment from Yammer co-founder David Sacks, and a yet-to-be-named third LP.

(Disclosures: VentureBeat competes with TechCrunch and Launch with our publications and events. VentureBeat also co-produced DEMO, with IDG, from 2008 to 2012. And I used to work for Stewart Alsop, when he was editor-in-chief of InfoWorld.)

Hat tip: PE Hub

Photo credit: Joi Ito/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

It seems like mustaches, like ride-sharing, is a trend that is here to stay. Lyft, the ride-sharing company that emblazons pink mustaches on its cars, attracted a whopping $60 million today for its third round of funding. I might try to grow a mustache myself.

Lyft team gets $60M more; now it must prove ride-sharing can go global

Ride-sharing startup Lyft has closed a $60 million funding round led by venture firm Andreessen Horowitz, the company announced on its blog. The startup with the tagline, “your friend with a car,” has developed an iPhone and Android app that lets you order a ride from a stranger in a matter of minutes. Lyft has seen some impressive traction since it launched. The company announced today that it is now facilitating 30,000 rides each week. For this reason, it’s attracted significant attention from investors; Lyft has now raised a total of $85 million. Zimmer said that Lyft intends to spread across the country — and eventually across the world — by the end of next year. With the new boost in capital, it will focus on building out the team. Read more on VentureBeat.

Loyal3 helps consumers put their money where their mouth is

Loyal3 has raised $18 million to  make buying stock more social and accessible for people who don’t have much experience with the stock market. In three steps, you can invest as little as $10 in well-known companies like Apple, Amazon, Facebook, Starbucks, Disney, Google, Coca Cola, Walmart etc…DNS-L3, LLC, an entity owned by Michael and Gigi Pritzker Pucker, led this round, along with existing investors Cris Kelly (former Chief Privacy Officer of Facebook) and Barry Schneider, Loyal3′s CEO. This is the company’s third round of financing. Loyal3 is based in San Francisco. Read more on VentureBeat.

Wibidata raises $15M so small businesses can compete using Big Data

Big data is a big trend right now, and Wibidata has raised $15 million to help businesses take advantage of it. Wibidata builds and sells big data applications that companies can use to uncover consumer insights and react in real-time. This technology enables companies to gather data from a range of sources and deploy apps that incorporate content personalization, search relevance, predictive recommendations, and anomaly detection.Canaan Partners led this second round with participation from existing investors NEA and Google Chairman Eric Schmidt. This brings Wibidata’s total capital raised to $20 million. Read more on VentureBeat.

Messaging app Imo.im chats its way into $13M, updates iOS & Android apps

Multi-platform messaging service Imo.im has raised $13 million in second-round funding and updated its iOS and Android apps with a new feature called “Broadcasts.” Palo Alto, Calif.-based Imo.im offers web, iPhone, iPad, and Android apps for communicating with friends and family.Imo.im claims that its apps have been downloaded more than 7 million times and that its 750,000 unique daily visitors send 50 million messages per day. The new funding was led by Imo.im co-founder Georges Harik, who is also known for being one of Google’s first 10 employees. Read more on VentureBeat.

Slyce slices into $3.75M  

Slyce, a startup that provides a “point of interest purchasing platform” has closed its seed round at $3.75 million. Slyce’s technology allows users to identify an object when they see it using visual recognition technology, as well as video and audio recognition, QR and barcode scanning, and NFC. Once an item is scanned, consumers can instantly purchase the item online or be directed to the nearest retail location. Product discovieres can be shared on social media and receive commission when a friend also buys.

SimpleRelevance raises $1M for tech that gives emails a personal touch

Impersonal, mass emails are easy to dislike and ignore, which is why SimpleRelevance has raised $1 million. Simple Relevance’s platform gathers customer data and then personalized emails to specifically target individuals. The technology looks at information like past purchase behavior and combines it with geographic, social, and demographic’ data to send highly targeted emails. SimpleRelevance recently graduated from TechStar’s Chicago’s inaugural 2013 class. Hyde Park Angels and Hyde Park Venture Partners led this round with participation from i2A Fund and additional angels. The funding will be used for recruiting and hiring, and to expand its enterprise-level solutions. Read more on VentureBeat.   

Funding for digital health grew dramatically in 2012 and is continuing to climb. The health market is pegged at $6 trillion worldwide, and there are far-reaching opportunities for entrepreneurs to transform how we practice health care. At the same time, funding for life sciences and medial devices is drying up. Health IT is the darling of investors, and venture capital firms are all trying to get in on the action.

“There are so many carrots and sticks to take advantage of here and venture capitalists like to invest in big trends,” said Stephen Kraus, a partner and Bessemer Venture Partners. “You can’t get in on a bigger trend than 20 percent of the GDP. This is a sector with massive problems, and the government throwing money at it. You would have to be missing a brain not to pick up on this fact.”

Krause participated in a panel discussion about venture capital and growth equity in health IT at VentureBeat’s HealthBeat conference today. The panel discussed trends in health IT/digital health as well as what investors look for in portfolio companies and success stories. Also on the panel was Dana Mead, a partner at Kleiner Perkins Caufield & Byers who focuses in life sciences investments. He said despite the fact that interest and funding is moving away from life sciences at the moment, this is a period of transition and evolution, and like digital health, there are plenty of opportunities for innovation.

“With digital health, you see traditional life sciences investors and traditional IT investors looking at the same space,” Mead said.”There are a number of companies that could be successful in this second wave of digital health, and everyone is experimenting with business models and finding out who will pay for these products and services. It all goes in cycles. Frankly life sciences got too big and will grow back in a big way.”

Mead said that most consumers view health care as an entitlement and that investors are looking for products that have a clear return-on-investment (ROI). Promod Haque, a partner at Norwest Venture Partners, approaches the sector from an IT background and is interested in companies that bring traditional IT concepts to health care. Like Mead, he emphasized the importance of figuring out a viable business model.

“The big question is ‘Who pays for these things?’ Haque said. “If you are selling health care services to large enterprise providers, you have to convince them that there will be a fast ROI and then investors are interested. There is a general awareness among institutional and strategic corporate investors that this health vertical is very important going forward. Too many companies will get funded eventually, and then there will be a consolidation play. Big companies are not growing, and their revenue is declining, which is where acquisitions come in.”

Most of the conversation focused on enterprise products geared towards clinicians, healthcare providers, and payers. Warren Hogarth is a partner at Sequoia Capital, which has made investments in 20 health companies. He said that in addition to IT products, consumer products also have large and global potential. Certain products and business models may work in the U.S., but not in international markets where the health care industry is not structured in the same way. Mobile technology is growing fast and building products that help consumers manage and control their health care is universally appealing.

“Traditionally, health care is very silo’d– it is different in the U.S.,” he said. “Mobile is a ubiquitous world. On the consumer side, there are opportunities to be a global business from day one.”

Rock Health predicted 2013 would be a record year for digital health. VC interest in this sector is high, but this sector is still new. It came into being over the past couple years in response to seismic shifts in national policy, cultural attitudes, and new forms of technology. It is still early days, and these investors’ strategy is to find forward-thinking, experienced entrepreneurs who can lead the way into the next generation of health care, and generate large returns while they are at it.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Give me your smart, your educated, your startup founders yearning to build companies?

As research indicates that the U.S. is an increasingly difficult place for foreign founders to come and build companies and founders tell horror stories of the massive challenges they faced dealing with byzantine U.S. immigration policies, Canada is burnishing its reputation as open for business — and open for new residents.

Canada’s new startup visa has received a huge amount of attention in the U.S. as the the global war for talent heats up. Senators such as Jerry Moran (R-Kan.) have tried to address the situation via legislation like the Startup Act 3.0, but that’s a slim hope after deaths of 1.0 and 2.0.

Source: Wikipedia

Jason Kenney, Canadian Minister of Citizenship, Immigration, and Multiculturalism.

The Startup Visa provides immediate permanent residency in Canada if a founder meets just three criteria. An applicant must:

1. Secure an investment from a designated Canadian VC or fund
2. Demonstrate English language proficiency
3. Have at least one year of postsecondary education

This weekend, Canadian member of parliament and Citizenship, Immigration, and Multiculturalism Minister Jason Kenney is in Silicon Valley promoting his country’s Startup Visa.

We chatted with Kenney about the visa’s goals, his intentions, and the U.S. immigration system.

VentureBeat: What’s the ultimate goal of the Startup Visa?

Jason Kenney: We want a pathway for the world’s best and brightest to come to Canada and to harness that drive and innovation to be at the cutting edge of the modern economy.

VentureBeat: Why are you coming to Silicon Valley right now?

Kenney: The U.S. immigration system is dysfunctional, and it’s really difficult for talented immigrants to stay in the U.S. permanently. I’m coming to further raise the profile of the program and send the message that Canada’s open for business.

If you’re a young startup entrepreneur having trouble renewing your visa, come here! We offer immediate permanent residency.

VentureBeat: What’s the response been so far?

Kenney: There’s been a great amount of interest, but we only opened for applications on April 4, so it’s too early to tell. We will issue up to 2,500 per year, but I don’t anticipate it will be fully subscribed for the first year because it’s still new.

I know there’s a huge pent-up demand in the U.S., and I think the word is going to spread virally: If you want to stay permanently in NA, think of Canada.

VentureBeat: You’re offering permanent residency to anyone in who secures an investment. What about those who fail?

Kenney: Many countries, such as Australia, only offer temporary resident status. In Canada, we’re going to give you the “green card” right up front.

We know full well the rate of failure in startups is high, but if they come up here and don’t succeed, they have demonstrated they they have high human capital. And in the long run, their chances of succeeding and building a successful enterprise are high.

We want Canada to become a magnet for people like that.

VentureBeat: Why is Canada a good place to come build a startup?

Kenney: We have really strong tech sectors in Kitchener/Waterloo, Toronto, Vancouver, Montreal, and a few other places, an increasingly strong venture capital industry, and very well-run industry associations, angel associations.

Plus, we have the lowest business taxes in the developed world, and the strongest fiscal position in the developed world.

In terms of macro-economic terms, that’s important … Canada weathered the storm of the economic downturn better than any other country.

In addition, we have an immigration system that works, which means you have access to global talent … and human capital is even more important than financial capital.

VentureBeat: Any other message for Silicon Valley?

Kenney: While here we’ll be meeting with the CEOs of many major IT companies just to emphasize what a great place Canada is to invest in.

I think we’re really going to kick this into hyperdrive.

photo credit: PhOtOnQuAnTiQuE via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Washington, D.C., has an emerging startup scene, but most of its entrepreneurs still struggle to raise investment from local firms.

Grotech Ventures is one of the leading venture capital firms funneling money into the region. Today, the Vienna-based firm announced the close of its eighth fund at $225 million. It brings GroTech’s total capital under management to $1.3 billion.

“We give money to people who have shown they can do a lot with a little and can make things happen,” said Grotech General Partner Don Rainey in an interview. “We are looking for responsible leaders and capable people. It is more impressive to have a guy or gal come in that is taking $20,000 and made something material happen than the guy or gal who needs a million dollars to prove anything.

Grotech makes early stage investments in “underserved” markets along the East Coast and in Colorado. The investment strategy is to put in a small amount of capital early on and continue to invest in a company over time. Areas of interest include digital media; social, mobile and cloud computing; enterprise and infrastructure software; security technologies; consumer internet and e-commerce; and energy and health care IT. Portfolio companies include LivingSocial, HelloWallet, Booker, Invincea, Personal, and recently acquired NextGen Storage.

Washington, D.C., is home to an enormous amount of talent, and traditionally the bulk of that talent goes to work for big government contractors, consulting firms, or the public sector. The notion of “entrepreneurship as a way to save America” is gaining momentum in the nation’s capital and coworking spaces, tech events, and accelerator programs are becoming more common. This excitement does not necessarily extend into to venture capital and the investor community in the region tends to be more risk-averse and conservative.

Grotech has already made twelve investments from the new fund.

Photo credit: cod_gabriel/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The highly anticipated Great Gatsby movie comes out at midnight. Gatsby is a classic example of an entrepreneur who dreams of fame and fortune and sets out to create his own destiny. True, he comes to a tragic ending and cares far more about clothing than the average tech entrepreneur, but the man sure knew how to create something from nothing. Early reviews say the movie is terrible, but that won’t stop me from dressing up in a head-to-toe flapper ensemble and hitting up my favorite speakeasies. Whether you are closing a round of funding or pretending to live in the 1920s, champagne is in order.

X marks the spot: Matrix closes Fund X

Matrix Partners closes its tenth fund, pooling together $450 million for investments in consumer Internet, mobile, enterprise, software and IT infrastructure startups in the US. The firm was founded way back in 1977. 50 of its portfolio companies have gone public and 75 have been acquired. The firm has offices in Silicon Valley and Boston, as well as in India and China. Notable investments include Apple, Gilt, Huddle, HubSpot, JustFab, and Zendesk.

e.Bricks stacks up $100M fund for startups

Brrazilian media corporation RBS Group has expanded its operations into startups with a new $100 million fund. The fund will be run by e.Bricks, an investment arm in the digital sector of the RBS Group, and will make between 10 and 15 investments in early stage companies per year. The fund will focus on digital media, e-commerce, and mobile technology. The portfolio currently has eight companies. The Brazilian landscape for startups and venture capital is growing fast and RBS wants to position itself at the center of this activity.

Online lender AvantCredit secures $34M in funding

AvantCredit, a Chicago-based consumer e-lender, yesterday announced the completion of a $34 million round of equity and debt funding from August Capital and Victory Park Capital. AvantCredit offers personal loans to the tune of $1,000 to $10,000. AvantCredit makes use of customer attributes such as credit, social media, and user action data, to offer low interest rates to a wide range of customers. This is its first round of funding, including a $9 million Series A equity investment. The round was led by August Capital, with participation from asset management firm, Victory Park Capital. In addition, Victory Park also issued a $25 million credit facility to the e-lender, taking the total funding to $34 million. Read more on VentureBeat.

Cloud data-protection firm PerspecSys raises $12M, plans for global sales push

PerspecSys, the Toronto-based cloud data protection company, has closed $12 million in its second round of funding. The company plans to use the capital injection to further develop global sales and marketing efforts and continue product development. The company supports a variety of popular cloud-based applications, such as Salesforce.com and Oracle CRM On Demand, while using validated encryption solutions from companies like Voltage Security, McAfee, SafeNet, Symantec, and RSA. This round of funding was co-led by new investors Paladin Capital Group and Ascent Venture Partners. They were joined by return backer Intel Capital and other institutional investors. Total investment in PerspecSys now totals over $20 million. Read more on VentureBeat.

SendUs launches with $17M to help brands harness user videos

SendUs launched out of stealth mode with $17 million in funding from private investors today. The company provides a video submission and management platform so brands can use video content created by fans to their own advantage. Brands put out a call for content and consumers can submit their own videos for review and possible publishing. The Los Angeles company works with brands like FremantleMedia (creators of American Idol), Singapore Airlines, Peugeot, Nextel International, Sierra Club, and the Susan G. Komen foundation. Read more on VentureBeat.

With $3.2M in funding, Dekko unveils a clever tech to insert animations into the real world

Dekko is launching an “operating system for the real world,” which is a fancy way of saying a new augmented-reality system. Dekko inserts animated images such as cartoon characters into the real world, where they can interact with it. The company is announcing this technology for the first time today. San Francisco-based Dekko is also announcing that it has raised $3.2 million from Bessemer Venture Partners, Echo Ventures, and others. Read more on VentureBeat.

Los Angeles startup Yekra nets $3M for its digital movie distribution platform

Digital entertainment distribution startup Yekra has raised $3 million in new funding to give studios a way to distribute DRM-protected content without it being burdensome, the company announced today. Los Angeles-based Yekra’s goal is to help distribute movies online with the full blessing of Hollywood. Movies will have copyright protections but still be available to be viewed through the web, smartphones, tablets, and connected TVs.The new funding was led by Las Vegas angel investor Maurice Gallagher, with participation by Bray Capital, Shay O’Brien, and Michael Rogers. Read more on VentureBeat.

Beyond Verbal secures $2.8M, detects human emotions and character through voice recognition

Beyond Verbal Communications, an Israel-based startup that’s just pulled in a $2.8 million seed round of funding, uses what it calls Emotions Analytics to determine someone’s emotions and character traits in real-time as they speak. Beyond Verbal licenses its technology for use in consumer applications. The first mobile application using its API will launch in the near future, and Beyond Verbal is building a web tool that allows people to use the platform to analyze voices. The company launched in May 2013. The funding was led by angel investor Kenges Rakishev, and new VC Genesis Angels. Read more on VentureBeat.

MadeiraCloud nabs $1.5M from Sequoia for AWS-based visual cloud management

Amazon Web Services visualization startup MadeiraCloud has raised $1.5 million from Sequoia Capital its first round of funding with the promise of helping developers better understand how their applications fit into the cloud. MadeiraCloud offers a relatively painless drag-and-drop tool for designing, provisioning, monitoring, and managing an application stack and cloud resources inside AWS. The company launched its public beta in June 2012 and claims to service small startups all the way up to teams within large enterprises. It now oversees management of more than $25 million worth of AWS resources. Read more on VentureBeat.

Workspace solutions platform LiquidSpace raises $1.3M in follow-on funds

LiquidSpace, the two-pronged workspace solutions platform, announced today that it has raised $1.3 million in follow-on investment to the $6 million raised in the company’s second round of funding that closed earlier this year. The San Francisco-based company serves two sets of customers: modern professionals who use the platform to book office or meeting spaces instantly, and companies who employ LiquidSpace to manage their workforce’s workspace needs. It boasts over 2,000 workspaces and meeting rooms in over 250 U.S. cities. The follow-on investment comes from two strategic partners: Steelcase and CBRE Group. Both have global experience in workplace strategy and commercial real estate. Read more on VentureBeat.

RingDNA releases mobile call tracking app to ‘make sales reps smarter’ 

RingDNA released a voice communications platform today that provides sales reps with relevant, contextual data when they need it to make the most of their sales calls. The company also announced raising a $1.9 million seed round. This iPhone app integrates with Salesforce, Twilio, LinkedIn, Twitter, Facebook, and company news feeds. When a call comes in, RingDNA delivers CRM data, social media activity, and behavioral marketing information to eliminate “blind spots” and give reps “actionable business opportunities” in real time. The funding came from angel investors. Read more on VentureBeat.

Plated serves up $1.4M from investors

We’d all love to whip up a delicious home cooked meal on-the-fly, but then a lack of time, inspiration, and motivation get in the way. Plated eliminates excuses by making home-cooking as easy as possible. Each week, the startup posts a selection of chef-designed meals. You choose the meals you want and order online. Plated delivers all the ingredients to your door with everything portioned out and all you have to do is put it together. Pricing is on an a la carte or monthly subscription basis. According to a report in TechCrunch, Plated has raised a $1.4 million seed round led by ff Venture Capital along with TechStars and angel investors.

Photo Credit: Debby Wong / Shutterstock.com

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Canadians: humble, mild, polite, with a global reputation for being non-aggressive.

Except, of course, at a hockey game. And, increasingly, in Ontario, where startups, government, industry, universities, angels, and venture capitalists are working aggressively to try to create the world’s leading technology hub.

Source: John Koetsier

Inside Waterloo, Ontario’s new $160M center for quantum computing.

“We want the world’s next biggest tech company to be built in Ontario,” the most populous Canadian province’s minister of research and innovation, Reza Moridi, told a small group of journalists recently in Toronto.

That’s aggression — even if spoken in a kinder, gentler way by an urbane, mild-mannered politician.

It also might strike some as hubris, given that Ontario’s biggest technology story to date is that of a dying smartphone manufacturer, BlackBerry (formerly known as Research In Motion).

But it’s not just words, and it’s not just the government that’s behind this effort.

Ontario’s reverse brain drain

Ontario is home to about 40 percent of Canada’s population and accounts for 48 percent of Canada’s gross domestic product. It’s the fourth-largest population center in North America, after Mexico City, New York, and Los Angeles, and it produces more cars than any other region in North America, including Michigan. Ontario also has the Americas’ second-biggest financial services sector, after New York.

More to the point, it’s North America’s second-leading cluster for technology companies, after California, and has the third-largest concentration of life sciences companies on the continent.

Source: John Koetsier

Google bought local startup BufferBox in late 2012

The government has invested $3.6 billion in those sectors, primarily, over the last decade, with two-thirds going to research and development, and one-third focused on building the entrepreneurship ecosystem.

That money has had an impact.

For years, countries like Canada and the U.K. have complained about a brain drain, with the best talent heading stateside for more options and better pay. Not anymore. In fact, quite the reverse.

“My co-founder left Silicon Valley to come here,” Cream.hr CEO Kateline McGregor told me.

She’s starting her company at Communitech, a thriving, almost frenetic community of startups, accelerators, massive technology companies, students, and coworkers in Waterloo, Ontario. An hour’s drive up the 401 from Toronto, Waterloo is a city of 98,000 that saw more than 500 startups take root in 2012. And the massive burst of innovation has not gone unnoticed.

“Something very interesting is happening here,” Google’s top Canadian employee, Steve Woods, told me. “This area has a very high proportion of startups to population. Google loves startups … and we love to hire entrepreneurial people.”

Woods himself is a Silicon Valley refugee, returning home to Canada after building several companies in the Valley. Google recruited him over the course of several years to lead its Canadian operations.

He points directly to U.S. immigration policies that pose a critical problem for both startups and large, wealthy corporations such as Google. Getting into the U.S. to build a company or join a startup is notoriously difficult and expensive.

Where Woods works: This Google office has a real fireman’s pole, slide, cattle walkway, and more (gallery)

Meanwhile, Canada has just recently taken even more steps — such as the Startup Visa — to make it simpler, quicker, and cheaper to come to Canada.

“Because of visa situations, Canada has received a disproportionate amount of the talent that is coming into North America,” Woods said.

All of that translates into a significant competitive advantage for Canadian startups and tech companies.

More education, more startups

Another competitive advantage, particularly in the Waterloo region, is the constant stream of high-quality students coming out of engineering, math, and computer science schools. I heard this ad nauseam from government representatives I met with, and credible sources in the industry confirmed it.

Source: John Koetsier

University of Waterloo students build startups at Velocity Garage, a for-credit accelerator-like program.

“Waterloo University produces an amazing kind of talent,” Woods told me. “It gives students a great grounding in computer science, but also by the time they graduate they’ve passed through four summers of co-op programs, so they’ve worked at Facebook, at Google, Microsoft, BlackBerry, or other companies.”

Ontario’s 44 universities produce about 30,000 computer science and engineering graduates each year, a steady flow of new talent for the province’s startups as well as established IT, life sciences, and aerospace companies.

By contrast, California — a state with about three times the population of Ontario — produces only 21,000 STEM graduates per year. The results are clear, at least for Woods.

“People that come into Google from the University of Waterloo do disproportionately well,” Woods says.

Source: John Koetsier

One of the meeting rooms at Communitech, a startup mecca in Waterloo, Ontario. Google also has an office here.

Rob Crowe, executive-in-residence for Waterloo-based Institute for Quantum Computing, the second-largest quantum computing research center in the world, agrees.  And he points out another advantage that translates to more startups coming out of key Canadian universities.

According to Crowe, a key difference between the U.S. and Canada is that many Canadian universities have followed the European model of education-funded research and development. Essentially, professors and researchers at the University of Waterloo own any intellectual property they develop, not the institution they work and teach for. That’s an incentive for academics to put their best foot forward while on faculty, and to kickstart companies when their ideas result in a viable product or company.

“This is the university that throws off more startups than any other university in the country,” Crowe told me.

Less tax, more benefits, more investment

All of the above regional traits are excellent for students, researchers, and startups, but there’s also good news for investors. Moridi’s ministry of research and innovation has helped reduce corporate tax, while also providing significant tax credits for companies doing innovative work.

“Ontario has one of the lowest corporate tax rates in North America, at 22 percent,” says John Marshall, president and CEO of the Ontario Capital Growth Corp., Ontario’s voice in two venture funds totaling about $500 million. The funds were raised partially by government, which recently announced intentions to pump in another $50 million, but mostly by venture capitalists and institutional investors.

Source: John Koetsier

Google has invested significantly in Waterloo, Ontario, hiring 200 engineers for its Canadian engineering headquarters.

The goal is simple: Invest in potential high-growth venture-stage startups in Ontario via a fund-of-funds approach that ensures industry participation and leadership in every specific investment. In other words, Marshall puts money into funds assembled by local VCs such as Omers, Northleaf Capital Partners, and Rho Canada. Those VCs in turn drive the actual investments into companies like Shopify, Desire2Learn (which recently closed an $80 million round), Polar Mobile, and BlueCat Networks.

“Our overall aim is to build the ecosystem for innovation,” Marshall says. “That includes the demand side, with accelerators and startups, and the supply side: seed funding, angel investors, and venture capitalists.”

The fund-of-funds strategy appears to be working. Two years ago the average fund size in Canada was $60 million, compared to $180 million in the U.S., but now the average Canadian VC fund is $90 million. Other venture entities, such as Intel Capital and Samsung Venture Investment, are following the money and making their own investments.

When that money gets into the hands of actual startups, it goes further, according to the companies I talked to. The reason is Canada’s federal and provincial research and development credits, which the Ontario government says are “among the most generous of the OECD countries.”

Source: John Koetsier

Ontario had 500 startups in 2012 in Waterloo alone.

Taken as a whole, those credits can reduce the after-tax cost of $100 worth of R&D to just $57 for corporations and just $39 for startups.

Fixmo CEO Rick Segal, an ex-patriate American, says those tax credits are one of the key reasons he chose Toronto as the location for his latest mobile security startup. The CEO of online advertising startup Chango, Chris Sukornyk, told me the same thing.

Marshall says that the credits simply add on to a startup environment that has long stretched every single dollar as far as it can go.

“Our entrepreneurs have already been so capital efficient by necessity,” he says, adding that now that Ontario’s entrepreneurs have access to more money, they’re still using it wisely.

That capital is starting to flow more freely lately, with VC investment up in Ontario in the past few years. But startups, who benefit most from the R&D tax credits, also have additional benefits. Almost every startup that graduates from a major Canadian accelerator such as Hyperdrive and Extreme Startups in Ontario, FounderFuel in Montréal, and GrowLabs in Vancouver, gets offered a $500,000 convertible note by the Business Development Bank of Canada.

That’s cheap and none-dilutive money, and provides more runway for startups. Most of which, realistically, need more than a three-month stint in an accelerator program to become real companies.

Ambition, meet reality

There’s no doubt that Ontario is taking smart steps with the ultimate goal of dominating the business of technology. But can it really out-innovate the innovation capital of the world, Silicon Valley?

Toronto currently ranks eighth on the Startup Genome’s list of global startup ecosystems, just above another Canadian technology hub, Vancouver. Tiny Waterloo ranks 16th with its population of just under 100,000, bringing to mind Tel Aviv, the super-fertile startup ecosystem of 400,000 people that currently holds third place.

Source: John Koetsier

Toronto’s CN Tower

In addition, Ontario officials quietly let me know that they believe Ottawa would have won a spot in the top 20 as well, if Startup Genome had analyzed the data just a bit differently. That would, of course, have given Ontario three cities in the global top 20.

But even considering the province’s leading contender, there’s still a long way between eighth and first. And every country in the world, seemingly, wants to follow the Silicon Valley model to the yellow brick road of employment and riches.

Few succeed.

VC investment in Canada overall is still just a fraction of that in the U.S., with about $1.5 billion invested in the entire country over all sectors in 2012, compared to $8.3 billion invested in the U.S.  in software alone, and another $6.7 billion just in web-based startups. In Ontario specifically, VC investment was just $603 million, compared to California’s U.S.-leading $14.1 billion.

And RIM, with revenues of $18 billion in fiscal 2012 dropping to $11.1 billion in fiscal 2013, is still probably the province’s biggest tech company.

That’s not a good sign.

Turning to BlackBerry for inspiration

Despite the small numbers, startups are increasingly choosing Ontario as home. Taxation and immigration policies as well as investments from blue-chip funds like Union Square and Kleiner Perkins are having a massive cumulative effect.

Even BlackBerry is feeding the culture of innovation in Ontario, despite being in what are perhaps its death throes.

Fixmo CEO Segal says BlackBerry has been an amazing influence in Ontario, and continues to be influential. “There are lots of alumni from RIM, both voluntary and involuntary,” he says with a wry grin.

Marshall says the growth of BlackBerry from nothing to its heights as the first key innovator of the smartphone revolution has had its own impact, regardless of the company’s current situation.

“Now you’ve got kids coming up who saw their parents do it,” he says. “So they believe they can do it too.”

500 new startups in Waterloo in 2012 alone attest to that fact.

In the against-all-odds world of the startup, belief is the key ingredient of success.

Image credits: John Koetsier

Disclosure: Ontario’s ministry of economic development invited VentureBeat to visit the province, and paid my expenses. My reporting, however, remains my own.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

This is a guest post by startup lawyer Mick Bain. 

As a lawyer who advises startups, I’m increasingly asked by clients how to make the company more appealing to venture capitalists.

This doesn’t surprise me, given the industry’s navel gazing over the so-called “Series A Crunch.” And it’s true that the growth in the number of new startups has outpaced growth in venture capital outlays, creating a more competitive funding environment.

So what do I tell startup founders who ask this question? I often respond by asking, how killer is your idea? That’s still what matters most to VCs.

But the conception of what constitutes a good idea has evolved in the last several business cycles. Like most of us in today’s economy, VCs are under pressure to do more with less. Venture asset classes have lost value in recent years, so limited partners are favoring startups that aren’t capital intensive, and that can demonstrate a strong likelihood of generating real revenues in the first few years.

The upshot is that VCs are favoring ideas that solve big but practical problems. Often these ideas respond to large-scale needs of businesses, rather than consumers. The ideas also don’t require the imagination of a futurist to understand their potential market value. They are a product or service that is clearly needed now and is likely to be adopted with relative alacrity and limited risk.

If a VC is sold on an idea, he or she will then consider other factors that influence a startup’s success, such as talent, experience and technical resources. Unfortunately for first-time entrepreneurs, those who have already started a successful company will have an advantage in this area.

VCs also prefer companies that don’t require big capital expenditures for expensive assets like manufacturing equipment or telecommunications infrastructure. Doing more with less is a watchword that continues to carry weight in Silicon Valley, Boston and New York.

It’s also important to demonstrate a keen understanding of the micro and macroeconomic trends and dynamics that affect the broader economy and your market niche. Show that you know your sector well enough to adapt to changing circumstances. It can take months, or years, in some cases, to bring a new product to market. During that time conditions can change — are you prepared to make the quick decisions needed to remain a viable force for growth?

The last thing I often tell startup founders anxious about first round funding is to remember that many companies have been successful without it. Today’s technology is relatively affordable and accessible, often allowing entrepreneurs to create valuable companies with very little overhead. Part of being an entrepreneur is finding a path to realize a vision regardless of the barriers. In the end, vision and commitment of this kind are the most important assets of any emerging company.

Mick Bain is the partner in charge of WilmerHale’s Waltham, Massachusetts office and co-chair of the firm’s Emerging Company and Venture Capital practices.

Top image of a consulting lawyer via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Surviving in the tech world and surviving in the wild share some interesting similarities and differences. There are predators in both, although the wild’s are generally more hairy with larger teeth (this is not an absolute). In both scenarios, the ‘survivors’ need to be aware of their surroundings, attuned to impending danger and opportunities, and fearsomely protect their territory. And with these eleven nuggets of funding news, I leave you to ponder man vs. wild, investor vs. founder, and startup vs. startup. I’ll be off fighting a bear.

Lending Club shuffles around shareholders to make room for Google

Google has taken a minority stake worth in online investment community Lending Club. The deal was part of a $125 million secondary transaction where existing investors sold portions of their shares to new investor Google and previous investor Foundation Capital. No new money is going into the company, rather it is a reshuffling of equity to allow room for Google on the board. Lending Club is now valued at $1.55 billion, which represents a threefold increase in 12 months. Read more on VentureBeat.

SJF Ventures hits a triple with its third fund

Venture capital firm SJF Ventures closed its third fund with more than $90 million in capital, which is more than three times the size of its previous $28 million fund. SJF Ventures investments focus in clean tech, sustainability, and tech-enhanced services sectors. It has 36 portfolio companies. Investors in this fund include banks, insurance, and financial services firms as well as endowments, mutual and pension funds, and others. SJF Ventures is based in Durham, North Carolina. Read the press release.

Cintrifuse closes $51 million to spur innovation in Ohio 

Cincinatti-based fund Cintrifuse has added investors to its “fund of funds,” which has now closed at $51 million. Cintrifuse supports both regional and national early-stage venture capital funds with a focus on life sciences, consumer goods and services, technology, and energy. Participants said in a statement the Greater Cincinnati is ripe for growth and this fund will go towards growing its innovation ecosystem.

Twentysomething forms New York City’s newest VC firm

Venture capitalist Mike Brown has formed an independent fund of $33 million to support early-stage startups that work in the marketing and technology layer of large enterprise. According to a report in CNN, Brown expects the fund to back 25 companies in seed and Series A rounds of between $250,000 and $3 million. Brown started out working for Virgin Group and then cofounded AOL Ventures. His firm is called Bowery Capital and is based in New York City. Partners include members of AOL Ventures portfolio companies, including the founders/CEOs of Sailthru, CodeAcademy, and Premise Data. Read more on CNN.

DocuTAP taps into $11.9M to save lives using software

DocuTAP has raised $11.9 million from Bessemer Venture Partners to help urgent care clinics digitalize their operations to make them more efficient and less reliant on paper. The software integrates electronic health records (EHR) and “practice management” technology so all the information and tools needed to operate an efficient practice is one place. The company was founded in 2000 and this marks its second round of funding. Bluff Point Associates led the first round of $12 million in March 2012. This financing will be used to increase market presence, accelerate sales, and continue to improve the products. It’s based in Sioux Falls, S.D. Read more on VentureBeat.

Poppin raises $11.1M in new funding 

The New York-based e-tailer of office furniture and workstyle products Poppin today announced 11.1 million in Series B financing, taking the total funding to $17.1 million. The round is led by TrilogyGrowth, with participation from Shasta Ventures, First Round Capital and Poppin’s founder, J. Christopher Burch. Poppin aspires to make buying and browsing office products an “extraordinary experience.” Clients include Fab.com, Kate Spade, LinkedIn, and Pandora. With the new investment, the company plans to expand its product offering with a focus on growing its furniture collection. Read more on VentureBeat.

Mobile app-building platform FeedHenry raises $9M

FeedHenry is yet another company that wants to help “the modern developer” quickly build mobile apps for iOS, Android, and mobile web. But it’s such a profitable, popular space that even in a crowded market, this startup secured a healthy $9 million round of investment capital. Today’s funding was led by Intel Capital with participation from existing investors Kernel Capital, VMware, Enterprise Ireland, and new investor ACT Venture Capital. A previous seed round of around $1 million or less took place in mid-2011. FeedHenry is based in Waterford, Ireland, with offices in Burlington, Mass. Read more on VentureBeat.

Pure Energies Group ramp up with $6M of pure capital

Pure Energies Group received $6 million in funding from NEA and NGEN for its approach to residential solar technology. PEG advises homeowners on adopting the solar energy system that works best for them. The company helps them navigate the confusing world of power purchase and lease agreements as well as prepay options and escalation tables, and it partners with major solar suppliers for installation. PEG recently made two acquisitions that helped gain traction in local markets and the financing will support continued expansion. It is based in Toronto, Ontario.

Investors drop $2.3 into Dropico

Dropico Mobile has raised $2.3 million for its product MasterFX, an iPhoto application that combines “the fun and ease of Instagram” with “the power of photoshop.” MasterFX offers photo editing tools that go beyond filters, but is easier to use than more sophisticated photo-editing tools. The app is free and has over 1,500 photo elements, effects, characters, and brushes. Angel investors comprised this initial round for Dropico, which is based in Herzliya, Israel.

Joytunes sings to the tune of $1.5M in funding

JoyTunes is the “Rosetta Stone” of music education. The application combines new media, gamification, and audio technology to make practicing an acoustic instrument feel like a game. Its first two games, Piano Dust Buster and Piano Mania, are designed to make piano playing more fun and engaging, and therefore encourage more playtime. Genesis Partners led this round, with participation from Founder Collective, Kaedan Capital, and angel investors. JoyTunes is based in Israel.

SocialWire pulls in additional seeds and new CEO

Ad-tech startup SocialWire has added $1M onto its seed round, according to a report in TechCrunch. SocialWire’s technology is supposed to “make Facebook ads work” by helping online retailers leverage customer data to automate advertising and target the right customers. Its recommendation engine for ads is designed to personalize the ads as effectively as possible. This extension follows the company’s $2 million seed round from November 2012. New investor SoftTech VC participated, as well as existing investors First Round Capital, 500 Startups, Accelerator Ventures and Joi Ito.

Photo Credit: grenada_turnier/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

It’s not often that child television stars go on to launch startups, but today the hottest funding story involved Soleil Moon Frye’s (formerly known as Punky Brewster) new mobile startup that brings DIY projects to parents on-the-fly. She is not the first star-turned-momtrepreneur — fellow actress Jessica Alba founded The Honest Company. What’s next? A vegan baby food delivery startup by Alicia Silverstone? A virtual nursery design studio from Tiffani Amber Thiessan? So many ideas.

Bookshout! raises $6M to amplify authors’ digital voices

Reading is generally a quiet activity, but today Bookshout! is proclaiming that it has raised $6 million. Bookshout offers multiple tools to support reader engagement. On the consumer side, Bookshout has a social reading app where people can find books and connect with their friends and authors. On Bookshout’s platform suite, publishers, and authors can promote their content and deepen engagement with audiences. This is Bookshout’s second round of funding, and it’s significant for the North Texas investment community which the Dallas Morning News called “lackluster.” Read more on VentureBeat.

Startup gets $5M to boost employment in the developing world using phones

Mobile recruitment startup Assured Labor has just raised $5.5 million to help spread its message of employment opportunities via cellphone communication throughout the world. The startup, which got its start at MIT’s MediaLab, focuses on helping people find jobs (and helping recruiters fill vacancies) in emerging markets through the power of simple mobile interfaces. Today’s funding was led by Capital Indigo with participation from existing investors Great Oaks Venture Capital, Nexus Venture Partners, Kima Ventures, Enzyme Venture Capital, and others. Read more on VentureBeat.

Punky Brewster-turned-’momtrepeneur’ raises $2.5M to boost family creativity

TV actress Soleil Moon Frye of Punky Brewster fame is launching a mobile app, Moonfrye, backed by $2.5 million in venture capital. Moonfrye will feature kid-friendly project ideas and connects parents with the materials needed to execute them. The mobile app builds off the website, which features arts-and-crafts project ideas in a Pinterest-style format. The details of the commerce-focused business model have not yet been disclosed. RP Partners led this seed round, with participation from Greycroft, Daher Capital and Google Ventures. Advisors inlude Dan Rosensweig, Tim Ferriss, Randi Zuckerberg, Gina Bianchini, Erik Lammerding and Rick Marini. Read more on VentureBeat.

KelDoc, the ‘French ZocDoc,’ scores €700K from Alven Capital

KelDoc, a young French startup that books doctor and dentist appointments online, has just nabbed €700,000 ($913,010) in funding from Alven Capital. KelDoc co-founder Eduardo Ronzano told VentureBeat that the average waiting time to see a doctor in France is between one week and six months. This has led to a substantial rise in people searching for information online about other doctors in the area and trying to book appointments faster. The funding will go toward hiring new members for its sales and technical teams to help it expand more quickly. Read more on VentureBeat.

Photo credit: Mark and Allegra/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Venture capitalist confidence is up for the third straight quarter, even though recent returns haven’t been great, and some venture funds are getting squeezed out at the money-raising phase.

And, while founders are seeing evidence of an A-round crunch, angels and accelerators are picking up the slack.

Mark Cannice, professor of entrepreneurship and innovate at the University of San Francisco, recently completed his 37th consecutive survey of Silicon Valley venture capitalist confidence. And VC confidence is up for each of the last three quarters, hitting 3.73 on a 5-point scale.

This quarter, even the depressed exit market for venture-backed firms typified by Zynga and Groupon was not enough to dampen VCs’ increasingly rose-tinted view of the future.

I talked to Cannice this morning.

VentureBeat: VC confidence is up. Why?

Cannice: It runs a little bit counter to some of the quantitative numbers that have come out recently, however, there’s confidence in the future over the 6-18 months.

Part of the reason is that VCs tend to have a longer-term horizon, they look further down the road, so even though current measures of performance for Q1 aren’t that good, it looks like some of the pressures on the VC model will ease somewhat, and acquisitions from corporations are likely to pick up.

VentureBeat: Which Q1 measures aren’t good?

Cannice: The national VC association measures each quarter for IPOs and fundraising, and they found that for fundraising the amount raised is not that different from a year ago, but the number of funds is down.

What that points to is a concentration in funds which corresponds to a lot of funds closing up over the last year or so.

In addition, acquisitions and IPOs of venture-backed firms and capital raised is down significantly over the last year.

VentureBeat: Which Q1 measures aren’t good?

Cannice: Particularly in life-sciences … some of the regulatory hurdles have tightened up over the last few years. That extends the time for approval, and extends the time for medical device and life science companies to appear to be good investments. And, of course, it requires more money.

When you change the structure … then the finance and metrics may not work. As a result, most of the funds are not able to perform as well; therefore the LP investors are started to draw the purse strings tighter.

The long-term effect is less private capital available for some life science related new ventures, and this will have an impact on the level of innovation in life-sciences.

In clean-tech … some of the headlines like Solyndra have had a negative impact.

But some of the lower venture captial requirement industries like software have been more effective.

VentureBeat: We’ve been hearing in the last few months about an A-round crunch. What’s going on?

Cannice: There’s a few things at work here.

Over the last few years the overall return on funds hasn’t been great. So while there’s more money going into venture capital, it’s tending to concentrate into fewer, name-brand funds.

But that requires some of those funds to make larger investment than if they were smaller, so some of the dynamics are working to necessitate larger investments … which tends to squeeze out some of the earlier, lower capital needs business.

Which has opened up a opportunity for smaller, angel-type funds and accelerators to replace them – angel groups are filling the hole.

VentureBeat: VC confidence has been boomeranging around the last few years. Why?

Cannice: There’s a clear correlation with the macro-economic environment, which has boomeranged too.

And there’s also — from a government point of view — the oversight of the industry is not necessarily as popular as it could be.  When there’s external influences that has a negative impact on any part of the VC business model, that tends to find its way into the confidence levels.

VentureBeat: What’s the take-away for founders and entrepreneurs?

Cannice: What I’ve seen really consistently is while there’s waves of positive and negative sentiment related to macro-economic factors, throughout all that, I’ve always seen confidence in both venture capitalists and entrepreneurs.

That’s never wavered.

And that’s the hope for the future, that Silicon Valley continues to attract many of the best and brightest of the entrepreneurs around the world.

photo credit: dariusmonsef via photopin cc

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Today, we saw an inordinate amount of funding announcements from startups based in Silicon Valley and in tech hubs around the world. As far afield as Japan, disruptive companies raised multimillions to bring their products to the next phase of growth.

Whether it’s 3D printing or a new take on enterprise search, here’s our list of today’s cool tech funding deals.

Not your grandmother’s search: SRCH2 launches ‘Google-like’ tech for the enterprise

SRCH2, the startup with a new take on corporate search, was founded by a group of ex-Googlers. Today, the Irvine-Calif. based company raised an undisclosed amount of seed capital from a roster of high-profile investors, including Data Collective’s Zachary Bogue and Matt Ocko, Redpoint’s Brad Jones, Horizen Ventures, and TenOneTen Ventures. Read the full story on VentureBeat. 

Chris Dixon and Andreessen Horowitz invest $30M in 3D printing marketplace Shapeways

If you weren’t sure whether this whole consumer 3D printing thing was going take off, Chris Dixon and Andreessen Horowitz may have answered your doubts. Dixon and company made a hugely symbolic $30 million investment in Shapeways, a 3D printing marketplace where designers may upload and print their 3D creations. Read the full story on VentureBeat.

Japanese translation service Gengo gets $12M from Intel Capital

Gengo, a Tokyo-based startup specializing in people-powered translation, has just taken its second round of institutional funding. The deal, which totals $12 million, was led by Intel Capital with participation from previous investor Atomico as well as new investors Iris Capital, Infocomm (Singapore), NTT-IP (Japan), and STCV (Saudi Arabia). Read the full story on VentureBeat.

Infer raises $10M to help companies win customers with their data

Infer is a new predictive data applications company founded by the former architect of Yahoo BOSS Search Vik Singh.  The company claims its already profitable and counts Box, Jive, Yammer and others among its first competitors. The first round of funding was led by Redpoint Ventures with participation from Andreessen Horowitz, Social+Capital Partnership, and Sutter Hill Ventures.

SkyKick raises $3.7M to hustle businesses onto Microsoft’s cloud

SkyKick publicly launched an application suite today to help migrate small and medium-sized businesses to Office 365. It also announced a new $3.7 million in funding. SkyKick is headquartered in Seattle. Read the full story on VentureBeat.

Ad startup Nativo gets $3.5M

Another day, another online ad startup funding deal. Today, it’s a Nativo‘s moment in the sun. The startup’s first institutional round, totaling $3.5 million, comes from  Greycroft Partners with participation from Signia Venture Partner and e.ventures. Nativo makes a platform that lets advertisers and publishers deploy and manage native ad campaigns across multiple media properties.

Zooz’s people-first payments platform zooms off with $2M

Zooz is a payments platform that helps e-commerce vendors create the “ultimate checkout experience.” Today, the company announced closing $2 million in funding to add new products, customers, and partnerships. XSeed capital led the first institutional round. Read the full story on VentureBeat.

Investor buys $2 billion of MSFT, says Microsoft ‘will win out’ as stock jumps 4%

Hedge fund manager Jeffrey W. Ubben disclosed that his fund, ValueAct Capital, has taken a $2 billion position in Microsoft stock, causing an almost immediate 4 percent jump in the stock. Read the full story on VentureBeat.

Top image via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

If the venture capital community’s New Year’s Resolution was to be more active, it needs to try a little harder.

A report issued by venture capital research firm Pitchbook found that deal flow continued to decline in the first quarter of 2013. With $6.3 billion across 753 deals, it marks the lowest quarterly totals in more than two years.

“At this time last year, the venture capital (VC) industry looked poised for prolonged growth,” the report said. “Deal-making was steadily increasing quarter-over-quarter — reaching all-time highs in both 1Q and 2Q 2012 — and fundraising was also on the upswing. Investors let off the gas in mid-2012, however, and have coasted along ever since. To that end, 1Q 2013 marked the third consecutive quarter of declining deal activity.”

Pitchbook also found that exits hit an “abysmal” four-year low. Furthermore, the number of early stage investments shrunk by 8 percent as compared to the first quarter last year, and the number and value of late stage deals declined as well. Angel and seed round investments, however, expanded from 24 percent to 29 percent of total venture capital deals, and late stage financings are growing as a proportion of overall venture capital activity. This data speaks to the much-discussed “Series A crunch,” because it presents the bottleneck forming between angel and seed rounds and early stage deals.

PricewaterhouseCoopers and the National Venture Capital Associate had similar findings in the MoneyTree report, based on data from Thomson Reuters. Both reports found that software was a “bright spot,” with deal volume and capital increasing in Q1 2013 by 8 percent from the previous quarter.

“It was not unexpected that the levels of venture capital continue to decline as the industry continues to go back to where it was in the early ’90s,” said Tracy Lefteroff, the global managing partner of venture capital practice at PwC, in an interview. “It was a pleasant surprise to see a software uptick in dollars and deals. This is reflective of the returns environment right now. Money follows returns.”

Lefteroff said this explains why the life sciences and clean technology sectors continue to decline. These sectors are capital-intensive, whereas software and IT are more capital-efficient and often have shorter timelines for a liquidity event. The number of IPOs and mergers-and-acquisitions for clean tech or life sciences companies remains low. Investors are more reluctant to put their money into these areas, particularly since venture capital is going through a “contraction phase” and firms are struggling to raise new funds.

“If stock earnings and the stock market continue to hold up, we could see some general improvement in amount of venture capitalists being put to work,” Lefteroff said. “If we continue to limp along and have disappointments from a recovery standpoint, it is still going to be a tough environment. This isn’t a collapse in the industry by any means, there is a very significant role for venture capital and will continue to be, it’s just at what dollar level are people going to participate in the amount of funds allocated to these sectors.”

Eleven of the 17 MoneyTree sectors declined, however Pitchbook found that the median deal sizes have increased or remained steady, and valuations have seen steady growth since 2011 in all stages of the company lifecycle. Some of the more notable seed and angel deals from the first quarter were Virool, BlueData, and Blaze Bioscience. Among early stage deals, Pitchbook identified Leap Motion’s $30.8 million Series B and Warby Parker’s $41.5 million as significant. Airwatch, Pinterest, SevOne and Acifio ranked him for late stage deals. MoneyTree also cited LivingSocial, Nest Labs, and AppNexus as making “top deals” last quarter.

Accelerator and seed fund Y Combinator and 500 Startups were the most prolific angel/seed round investors in the first quarter, making 19 and 18 deals respectively. Bessemer Venture Partners, First Round Capital, Kleiner Perkins Caufield & Byers, and New Enterprise Associates made the most early stage deals, and Intel Capital led the field for late stage deals.

Read the MoneyTree press release. 

Photo credits: Pitchbook and graibeard/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

I’ll be honest with you, some of the companies that receiving funding today took some mental stretching to wrap my head around. Fabless semiconductors for flow processing, living web protocols,  and holistic big data analytic solutions for telecommunications companies are somewhat more difficult to comprehend than say, photo-sharing and e-commerce. As a result, I decided to look up brain food to help power me through these trying times. Walnuts, spinach, sardines, beets, coffee, berries, garlic, and avocados are all thought to improve cognitive function. Just don’t put them all together. That would be stupid.

Silver Lake’s $10.3B fund is makes millions seems like ponds

Private equity firm Silver Lake has pooled together $10.3 billion (that’s right, billion) to focus on technology buyouts. According to Reuters, a majority of investors in Silver Lake IV are based outside the United States, with a significant amount from Asia and the Middle East. The fund is the largest ever pool dedicated to technology buyouts, Silver Lake said in a statement. Silver Lake is known as the parter of Michael Dell in a $24.4 billion deal and as an investor in Skype and Chinese e-commerce giant Alibaba Group. The previous fund Silver Lake Partners II closed at $9.3 billion in 2007 and was valued at 1.37 times the amount investors put into it.

Smart grid startup Enlighted lights up with $20M in new funds

Smart electricity and lighting startup Enlighted has raised $20 million in new funds to expand and bring its smart sensor tech that cuts electric use to many more companies. Enlighted’s sensor tech and software now covers more than 10 million square feet of commercial real estate, which is double the space it covered just five months ago. The company claims more than 55 Fortune 1000 companies have reduced lighting energy costs by 50 to 75 percent using its products. Customers include Google, LinkedIn, Turner Broadcasting, and Bank of New York. The new funding round was led by new investor RockPort Capital, with participation by Kleiner Perkins Caufield & Byers, Draper Fisher Jurvetson, Intel Capital, and DFJ JAIC. Including the new funding, Enlighted has raised $35.4 million to date. Read more on VentureBeat.

Netronome keeps things flowing with $19M for flow processing

Netronome has raised $19 million in its fifth round of funding to accelerate research and development for its flow processing technology. Flow processing keeps traffic through a network running smoothly. With increasing numbers of users and activity, many enterprise companies need greater support for their applications. Flow processing means that an application can keep an active state on every conversation from start to finish, as opposed to packet-by-packet processing. Sourcefire, Intel Capital, DFJ Esprit, and The Raptor Group participated in this round. Read more on VentureBeat.

Kaazing! ‘Living web’ startup pulls $15M from investor hats

Kaazing enables the “living web,” which it describes as the “dynamic, interactive online world populated by applications that are always on, always connected, and always real time.” With the proliferation of mobile devices and the rise of Bring-Your-Own-Device culture, enterprise organizations have a growing need to build and adapt applications that work effectively across multiple channels. To fuel the company’s growth, Kaazing raised $15 million from New Enerprise Associaes and Columbus Technology Partners as well as existing investors. It brings the company’s total capital raised to $39 million. Read more on VentureBeat.

mBlox stacks up $14M in loans

Mobile messaging company mBlox closed $14 milliion in venture loans from NXT Capital Finance to fund strategic growth initiatives. mBox’s global network reaches more than 800 mobile operators and 5.8 billion devices. The company’s solutions help brands, agencies, and enterprises engage with their consumers on mobile devices, enabling things like interactive text message campaigns and push notifications. mBlox’ venture backers include Norwest Venture Partners, Scale Venture Partners, and Trident Capital.

Guavus ripens up with an additional $9M

Big data company Guavus has raised an additional $9 million from Goldman Sachs and TransLink. Guavus provides “holistic” big data analytics solutions for telecommunications companies. The Guavus Reflex platform and analytics applications provide data-based insights that can inform decisions surrounding network operations, marketing, customer care and monetization. Clients include two of the top three mobile operators and backbone carriers in the US.  This brings the total capital raised to $87M. Read more on VentureBeat.

‘Virtual fitting room’ startup shows off $7.64M

Fits.me has closed its first round of institutional funding for software that sets up virtual fitting rooms for online clothing retailers. Fits.me tries to improve conversion rates and lower for e-commerce companies by taking some of the guesswork out of online shopping. The London-based company also provides analytics. Existing investors SmartCap invested in this round, with new investors Conor Venture Partners, Fostergate Holdings Limited, and The Entrepreneur’s Fund. Clients include Adidas, Ermenegildo Zegna, Hugo Boss, and Thomas Pink.

Yodo1 builds $5M bridge between Western game developers and China

Beijing-based mobile gaming platform Yodo1 has raised $5 million from Singapore firm SingTel Innov8 to support further expansion into China. Yodo1 helps Western developers distribute their games in the Chinese market by handling localization, publishing, promotion, and even protecting partners’ IP from copycats and piracy. The Chinese market for gaming is huge and Yodo1 raised this additional funding continue growing. Read more on VentureBeat. 

Connected home platform raises $3.8M to power your smart house

Zonoff, which provides home automation software solutions, raised $3.8 million in venture capital funding from Valhalla Partners and Grotech Ventures. Founded in 2011, Zonoff can enable smart devices, like HDTVs, Blu-ray players, wireless routers, and thermostats, present in your home to work seamlessly together and communicate with one other. Its core technology brings together a wide range of such devices available on the market in a single system. You can control everything with one app instead of using multiple apps to run different systems in the home. Read more on VentureBeat.

GoCardless won’t go capital-less with $3.3M

GoCardless has raised its first round of funding to help businesses do exactly that. This Y Combinator startup offers “next generation direct debit,” enabling businesses to quickly and easily set up automatic and recurring payments online. The technology is geared towards interbank transfers, or ACH, in cases where credit card payments are not ideal. GoCardless is based in London. This round was led by Accel Partners and Passion Capital, and brings the total amount to $4.8 million.

Photo Credit: Joannaverdan/Flickr

Funding for digital health startups skyrocketed in the first quarter of 2013, according to a report released today.

Companies in the health care IT space raised almost half a billion dollars (approximately $493 million) in a single quarter. A report from Mercom Capital Group, a global consulting firm, found that 104 startups received funding this quarter compared to 51 in the previous quarter. Many of the early-stage deals were fueled by health accelerators, which have popped up in recent years, including HealthBox and Rock Health.

A recent shift is that the majority of the startups that received funding are marketed to consumers rather than practices, and these include telehealth, mobile health, and scheduling apps for patients.

This trend in favor of consumer health technologies has proliferated despite the increasing interest in electronic health records (EHRs), which doctors are being pushed to adopt by 2015 — or risk paying penalties.

“The enormous market opportunity in consumer-focused health has appeared to pique the interest of investors and is likely to continue to grow as witnessed by the surge in VC activity,” said Raj Prabhu, the CEO of Mercom Capital Group.

While investment in health IT continued at a “torrid pace,” Prabhu’s research team found that mergers and acquisitions remained steady. There were 46 in the health IT space, which is on par with the previous quarter.

The top five health deals of the quarter?

• Health Catalyst for a $41 series B round .
• xG Health Solutions for a $40 million round.
• NantHealth for a $31 million round.
• Fitbit for a $30 million round (although this was reported as an intent to raise).
• One Medical Group for a $30 million series F round .

For more in-depth research, which projects a record year for digital health, check out Rock Health’s report.

Investment in health IT is one of the key themes that will be discussed at HealthBeat, VentureBeat’s upcoming health conference. 

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The life sciences sector is ailing.

Today Fenwick & West released a study stating that the number of life science financings continued to decline in 2012, falling by more than $5 billion over the past five years.

This sector reached a high in 2008. However, venture capital for life sciences “fell off markedly” after the 2008 recession and has not yet recovered. Fenwick & West estimates that fundraising fell from an average of $7.8 billion a year in 2007 and 2008, to $2.5 billion in 2012, and the percentage of venture capital fundraising allocated to life sciences declined from 19 percent in 2009 to 12.5 percent in 2012.

“The life science venture financing environment remains challenging, with an increasingly short supply of capital, despite factors such as aging world populations and rising living standards in developing countries that will help support long-run demand for life science innovation,” said partner Matt Rossiter. “While funding from corporate investors, wealthy individuals and disease foundations is helping to fill some of the gap, entrepreneurs that plan to seek venture capital financing would do well to carefully consider factors, such as capital efficiency and a faster path to exit, that can increase the odds of raising scarce funding.”

The shortage of venture capital has led to a few key trends that Fenwick & West identified in the market. First, life science venture capitalists are making fewer new investments. Pricewaterhouse Cooper and the National Venture Capital association reported that 2012 saw the fewest “first time” investments in life sciences companies of any year since 1995. Those who are investing are more likely to back companies with less technological or development risk, such as those involving smaller clinical trials or an accelerated regulatory pathway, or that require less capital to reach commercial markets.

With venture capital lagging, large life sciences companies are playing an increasingly significant role in supporting startups through partnerships, funding, and/or mergers and acquisitions. M&A activity remained fairly consistent in 2012, although a majority of life sciences companies that went public were priced below their target range. In its analysis, Fenwick & West found that companies and investors are taking steps to achieve earlier exits as a result.

The good news is that valuations for the venture-backed companies continued to “trend modestly upward” from 2011. “Up rounds” outpaced “down rounds” 52 percent to 17 percent, which partner Barry Kramer said suggests that while raising venture financing is becoming more difficult, those companies that do raise additional money are doing so at improved valuations.

Interestingly, the decline in life sciences funding occurred at the same time as funding for digital health shot up dramatically. in 2012,  digital health and healthcare IT companies attracted $1.4 billion in venture funding, representing a 46 percent increase in dollars and a 56 percent increase in the number of deals from 2011. While investments in biotech, biopharmaceuticals, and medical devices may be dwindling, the same is not true for companies working in health consumer engagement, data analytics, or technology to make practicing medicine more efficient.

Shifts in national policy, cultural attitudes, and mobile technology has changed the way people relate to their bodies and the way clinicians practice medicine. Along with these shifts comes a change in the business surrounding healthcare, and the types of companies that attract investor and consumer attention. However, Rossiter said this survey has an important subtext, begging the question of whether venture capitalists are “over-correcting.”

“Has Life Sciences Venture Capital swung too far the other way, pulling out when we need drugs and treatments that are effective and reduce the overall system cost?” he asked in an email. “In a few years, VCs may look back and ask, ‘Did we miss an opportunity?  Did we pull out just when there were a lot of good companies to invest in and make a lot of money, when we could have had our pick?’

Read the release. 

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Today’s funding daily is dedicated to peanut butter and banana sandwiches. Why? Because a startup that delivers homemade, organic, peanut butter and banana sandwiches to your door raised money. Not really. Rather, it is because this unfortunate writer has been plagued by a bout of flu, and peanut butter and banana sandwiches are the only thing getting her through. That, the the excitement of the day’s wheelings and dealings.

Foursquare raises $41M as it doubles-down on search and ad ops

Foursquare announced today that it has raised $41 million in a fourth round of funding led by private equity firm Silver Lake Partners. With the additional funds, Foursquare has time to actually build up its business by focusing more on ad operations, sales, and local search features. Most of the investment is in the form of a multi-year loan from Silver Lake, while the rest is made up of convertible debt from VC firms including Union Square Ventures and Andreesseen Horowitz. Read more on VentureBeat.

Pharma startup gets $30M for genetic cancer treatments

Syros Pharmaceuticals, a company that aims to revolutionize the treatment of cancer and other diseases, announced today it received $30 million in financing from Flagship Ventures and ARCH Venture Partners. Syros Pharmaceuticals integrates gene control research and drug discovery with disease biology and genomic data. This is the company’s first round of institutional funding, making the $30 million figure even more remarkable. The capital will be used to fast-track discovery and development of gene control medicines. Read more on VentureBeat.

Health accelerator gets $16M to find cures for rare diseases 

Venture firm New Enterprise Associates hopes to find new cures for rare diseases with its latest investment. Today, the Silicon Valley firm led a $16 million round in Cydan, an accelerator program for ideas, research, and strategic partnerships that would find cures for rare diseases. Cydan specializes in accelerating the commercialization of so-called “orphan drugs” designed to treat these diseases. Pfizer Venture Investments and Alexandria Real Estate Equities also participated in the round.Read more on VentureBeat. 

Check out this learn-to-code platform just for kids

A new service called Tynker launched today to help younger children learn how to code. Its core philosophy is that elementary school-aged children should understand the basics of how computers work and how they’re programmed. The startup launched today with a sizable ~$3 million in seed funding from 500 Startups, NEA, Felicis Ventures, and a slew of other angels and institutions. Read more on VentureBeat.  

Sticky gets $3M to track your eyeballs

Sticky is a startup that’s all about tracking your eye movements while you’re online to determine which ads you like (or ignore). Using this data, the company can tell advertisers whether anyone actually sees those annoying banner ads floating around the web and just how much it costs to get anyone’s real, legitimate attention online these days. The company has just announced a $3 million round of funding, its second institutional infusion of cash. The funding comes from Euro-firm Northzone and Conor Venture Partners, a VC firm based in Finland.

Rackware racks up $1.8M to make enterprise clouds better, faster, strong, better 

RackWare is a cloud startup that has raised $1.8 million in its first round of funding. RackWare has developed a series of enterprise solutions to bring “intelligence and automation to the cloud.” The RackWare Management Module (RMM) helps businesses scale across private, public, or hybrid cloud environments, without changing applications. This $1.8 million is part of an intended $2.67 million, according to an SEC filing. . The investors are undisclosed, although VentureBeat has reached out to RackWare for comment. Read more on VentureBeat.

LevelEleven lands another $500K to gamify sales and CRM

Enterprise gamification startup LevelEleven has raised $500,000 in new seed funds to motivate sales people around the world. Detroit-based LevelEleven offers software that makes sales and selling a game. The company’s flagship product is ContestBuilder, which pushes sales people with a leaderboard, has them mark completed tasks, dangles potential rewards for the top sales people, and more. ContestBuilder is the most popular gamification app on the Salesforce AppExchange. LevelEleven raised $1 million back in October, bringing its total seed funding to $1.5 million. The seed funding was led by Detroit Venture Partners, with participation by Hyde Park Venture Partners, The First Step Fund, and private equity investor Rick Inatome. Read more on VentureBeat.

OpenCoin raises seed round so ‘anyone in the world can trade any amount of money in any currency’

OpenCoin is a startup building a simple, global, open currency system. Today, the company announced it has an angel round of funding to expand the Ripple protocol, a virtual currency and payments system that allows “anyone in the world to trade any amount of money in any currency.” Ripples are a virtual currency. The Ripple network is a decentralized, open source, peer-to-peer payment network that enables free payments to merchants, consumers, and developers in any currency. Andreessen Horowitz, FF Angel IV, Lightspeed Venture Partners, Vast Ventures, and Bitcoin Opportunity Fund participated in this round. Read more on VentureBeat.

Photo Credit: ktread/Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Industry veteran Ken Coleman is joining elite venture capital firm Andreessen Horowitz as a “special advisor.” Coleman has had a impressive career as the founder and former chairman of ITM Software. He also serves on the board of directors of City National Bank and has held executive positions at Hewlett-Packard, Activision, and Silicon Graphics, which is where he first met Ben Horowitz.

“We are the best in the business at providing mentorship and skills to founders and we put those founders in a world class network,” Horowitz said in an interview with VentureBeat. “Ken is a great turbo booster of those efforts. He was my mentor when he hired me into the tech industry as a twenty-year old, and has been teaching me about business, leadership, and management culture ever since. He helped create the model today for how you innovate for a large company.”

As a special advisor, Coleman joined former mayor of DC Adrian Fenty and former Treasury Secretary Larry Summers. In this role, he will provide entrepreneurs in Andreessen Horowitz’s elite portfolio with advice, partnerships, asking pertinent questions, making connections, providing insight, and sometimes, he said, just listening.

“Ben and I have been close for twenty-six years,” Coleman said on the call. “I’ve gotten to know more people since the firm got started and what its trying to do. I am very excited because I never contemplated working with a venture firm, but this is a different kind of venture firm. They are building companies that have had exits. I appreciate how important that is, and how difficult and challenging and time consuming. I’ve been a builder my whole career, and I am excited to be an enabler and help entrepreneurs build great companies.”

As Horowitz put it in his blog post, Coleman helped take him from “the outhouse to the penthouse,” going from washing dishes to working at a hot Silicon Valley tech company. Horowitz said he was not properly socialized for life in a big corporation at the time, and Coleman was his “personal guardian angel,” helping him find his way and build a successful career.

“This fits in very well with how we think about Andreessen Horowitz,” Horowitz said the blog post. “We help technical founders learn how to be CEOS, we help engineers find the right company and we help executives find the right match. So it’s natural, obvious and awesome that today we announce that Ken Coleman is joining Andreessen Horowitz as a Special Advisor.”

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Foundation Capital announced its seventh fund today, a $282 million pool of money that the venture firm plans on investing in early-stage startups.

Menlo Park, Calif.-based Foundation Capital has handled a total of $2.7 billion since it was first founded 17 years ago. This firm primarily invests in early-stage companies and plans to focus this current fund on consumer technology, information technology, and clean technology.

Eight of the venture firm’s partners will invest from this funding, including Charles Moldow and Ashmeet Sidana who we chatted with last year about the state of venture capital and then unique relationship VCs have with each other. Moldow refers to it as “coopatition” a little cooperation and little competition mixed in together.

Some of the most well-known companies that Foundation Capital has invested in includes Chegg, Ebates, and Netflix.

Money image via Shutterstock

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Glen Hellman is the founder and chief entrepreneureator of Driven Forward LLC. This post originally appeared on his blog.

It’s every startup founder’s dream: Having a venture capital firm invest in your company.  Let’s celebrate! We’ve finally made it! We’re going to be big … right?

Well, most likely not.

First off, only 20 percent of venture funded companies are considered a success by their investors, and of those, not every company exits with the founding team intact.

Here’s a list of some of the unintended consequences of VC funding caused by the unnatural acts of mixing the needs of a VC with the realities of growing a company.

1. Increased Difficulty of An Exit – When a founder raises big money at a high valuation investors inject funding terms like board control, preferences and participation to ensure that the founders are 100 percent focused on delivering a BFE (Big Friggin Exit). Investors want a 10X return and aren’t going to agree to a puny $10 million exit. There are a large universe of potential buyers in the $10 million range.  There are an order of magnitude fewer exits opportunities in the $50M+ range.
2. Lower Return for Founders – You raised $5 million from investors. They’re targeting a $50 Million return (10X) for themselves. So now you found one of the few companies that can buy you and pay $50 million. Your investors most likely have dictated deal terms that either guaranteed that they will get a large portion — if not all — of that money or they will veto the deal. Founders may have to sell for $60+ million, a Herculean feat, to earn as much as they would in a buy-out of a bootstrapped company sold for a more easily obtainable $5 – 10 million.
3. Less Flexibility – Your company has grown to $10 million in revenue and is creating $2 million in free cash flow. If you’re bootstrapped, you and your co-founder pivot to a lifestyle company and pocket a million dollars a year, not counting salary and bonus. If you’re venture funded and the company growth is stalled, you may get replaced. If you’re not ejected and your compensation committee (staffed by investors and not you) will insure your compensation is such that you need a big exit.  You won’t be pulling down the big bucks until the VCs get theirs.
4. Pushed to a Half-Baked Exit – Venture funds typically have a 10 year life. VCs are focused on winding down the fund at the end of fund-life and exiting out of all investments. A three-year-old fund is going to push you to sell your company within 5 to 6 years of investing in you… whether the cake is fully baked or not.
5. Purgatory – File this under “Crazy But True.” Sometimes a venture firm will keep a company alive, even when pulling the plug is the obvious and humane outcome. They’ll pare down the staff, cut the burn, and allow the company to survive long enough for other portfolio gains to outweigh writing off the loss of your brain-dead company. I’ve been the CEO of a company kept on life support, fed only enough cash to live another day and not enough cash to grow and thrive. I pulled my own plug from that painful life without dignity.

Keep in mind that closing a round of funding is just a stage in your company’s growth. It adds capital that can accomplish great things and it adds risk. Celebrating a funding event is like celebrating a team’s selection to NCAA basketball tournament. It’s not time to pop the champagne. You’re not the tourney champs yet. It’s tougher than the regular season because you have a lot of games in front of you and one loss by even 1 point knocks you out of competition.

Glen Hellman is a former serial entrepreneur and hired gun turn around CEO for VCs. Today he’s an Angel Investor, Executive Leadership Coach, and blogger.

Photo credit: TaxCredits.net

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Cowboy boots don’t get enough love from the tech community. Not only are they snazzy and made for two-steppin’, but they give everybody who wears them an extra little dash of swagger. Finally, at long last, cowboy boots came to the forefront of the venture capital world thanks to a little-known Arkansas startup. Read more to see what else attracted investment today.

For more funding news as it happens, subscribe to our Deals Channel feed. You can also follow VentureBeat on Twitter, @venturebeat, to view funding news as it’s published.

Arkansas startup raises $83M for cowboy boots, Carhartt, camping gear  

Acumen Brands has raised a whopping $83 million from General Atlantic to support growth of its portfolio of e-commerce companies. The company leverages knowledge of SEO, social media, marketing, business strategy, and data analytics to operate branded online storefronts for businesses like CountryOutfitter, Tough Weld Workwear, and Scrub Shopper. this new financing will support the move to a 200,000 square-foot facility and the addition of 20 to 30 new KIva Systems robots.Acumen Brands is based in Fayetteville, Arkansas and has raised $93 million to date. Read more on VentureBeat.

[x+1] secures $17M in funding to grow business and acquisition strategy

Digital marketing and data management software provider [x+1] announced today the company received $17 million in funding from Ares Capital. [x+1] works with companies to synchronize consumer engagements through a variety of marketing channels. It will use the investment to support its overall market expansion as well as the company’s growth strategy of targeted acquisitions. Read more on VentureBeat.

Zerto closes $13M to disaster-proof company data in the cloud

disaster recovery startup Zerto is attempting to make the process less painful and more efficient. Today the startup also closed a $13 million round of funding to grow its recovery platform, which uses visualization to back up its clients systems on the cloud. The new round was led by led by RTP Ventures (an affiliate of ru-Net Holdings,) with participation from existing investors Battery Ventures, Greylock IL and U.S. Venture Partners. Read more on VentureBeat.

War of the Dongles gets another venture-backed player

The battlefield for mobile point-of-sale companies is getting as crowded as the battle for Kings Landing. Jusp, an Italian Square clone, has raised $6 million from Italian venture capital firms Principia Sgr and Vertis Sgr to fuel expansion into other Kingdoms. I mean countries. Jusp enters the fray along with European competitors iZettle and Payleven, not to mention PayPal and Square (The Baratheon and Lannister contingents if you will).

With $5.7M, Flexiant flexes its cloud muscles

Flexiant, a British provider of cloud management software and cloud orchestration, has raised $5.7M from private London investors. This financing will be used to expand it offering into the European and North American markets. Flexiant’s services give hosting companies, service providers and telecom companies support in provisioning/commercializing cloud services.

Asthmapolis inhales $5M to tackle a 50M person, $50B problem

Asthmapolis has raised $5 million from the Social+Capital Partnership to address chronic respiratory disease. The system combines a sensor that snaps onto asthma inhalers with a mobile app that displays data to the user and provides insights about their treatment. There is also a dashboard to help physicians monitor their patients. Founder David Sickle formerly worked as a epidemiologist focusing on asthma and respiratory health at the Centers for Disease Control and Prevention. Read more on VentureBeat.

EveryMove gets $3.5M for its apps that reward healthy employees

Seattle-based EveryMove has closed $3.5 million in funding for its health care mileage program. The company also just launched its Android app, which follows an iPhone app that lets employees gain points and rewards from brands for eating nutritious meals and going to the gym. The first round of funding comes from BlueCross BlueShield Venture Partners, Sandbox Industries, and Blue Cross and Blue Shield of Nebraska. Read more on VentureBeat.

Because going out to eat is too hard, Kitchensurfing gets $3.5M to connect you to chefs

Kitchensurfing grabbed $3.5 million today to feed you. No, I’m not kidding. The company created an online marketplace for chefs where you can choose a chef, have them cook food for you, and then leave a review Yelp-style on the Kitchensurfing website. The company processes all of your payments as well, so you won’t have to use cash or cut the chef and awkward check at the end of the evening.  The funding comes from Union Square Ventures and Spark Capital.

MBA & Company finds money in talent

Digital talent marketplace MBA & Company has raised $1.218 million to expand its inventory of “highly qualified freelance consultants” and businesses interested in hiring them. Since its founding in 2009, MBA & Company has attracted over 16,000 professionals from around the world with at least five years experience and advanced degrees, to work on projects large and small. The site operates a curated selection process and follows a pay-as-you-go business model. MMC Ventures led this round, with participation from Piton Capital and Cabiedes.

Europeans are still excited about daily deals…at least Bownty and its investors hope so

A European startup is hopping on the long-departed daily deals aggregator train. Bownty, a company based in Denmark, has raised $1.1 million from Danish SEED Capital and Accelerace Invest to further expand further across Europe. The site currently aggregates over 2,5000 deals from over 100 daily deal sites, targeting the UK, France, Spain, Germany, and Denmark.

Photo Credit: Screwtape/ Flickr

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

Carlos Eduardo Espinal is a partner at London-based startup accelerator and investment fund SeedCamp.

Investments, like the ocean, can come in waves, but that doesn’t mean they should.

A “tranched investment” is an investment that is split into one or more parts. In order for the company to receive the latter parts of a tranched investment, it usually has to achieve goals or objectives set as part of the conditions of investment. A typical example of a tranche is: the investors give you half the investment amount right now, and half the investment when your revenues reach ‘x’.

Generally speaking, the current thinking around tranches by most investors is that they are a good tool to motivate founders to reach a milestone or alternatively to reduce their exposure to risk. However, tranches are more damaging to the long term success of a company than investors may typically consider, particularly if milestones are not met or the company comes dangerously close to just meeting them.

Specifically, I think tranches can:

•  de-motivate founders and potentially reduce a founder’s drive (according to Daniel H. Pink’s view of extrinsic motivation, see below for more on this)
• reduce a founding team’s creativity on how to grow the business in a way that might be long-term better, but short-term fails to achieve the next pre-determined milestone. Think of a company sticking to a product rather than pivoting in hopes to hit a deadline, but then ultimately sticking with a product that long term will not yield the maximum returns.
• potentially reduce good-behavior (read: cheating to hit numbers). If someone is really really needing the cash, temptation to do something to cut corners is there.
• promotes “sandbagging” by the investor rather than full commitment
• creates a self-fulfilling prophecy. In the words of the CEO of Zemanta, Bostjan Spetic, “the cash you are raising is usually what you need to get to a significant milestone, like break-even. Tying that budget to sub-milestones implicitly reduces the chances to actually hitting the big milestone, because it increases the risk of running out of cash prematurely. I firmly believe that.”
• create an accelerated cash burn to achieve the goal, and then if missed by a little, leaves the company in a vulnerable position for subsequent fundraising.
• makes the company toxic for an external investor that would be interested in investing, if the company doesn’t receive the tranche from its existing investors.

My recommendation for both these questions is to get a dialog going to agree on one of the following three potential alternatives:

1. Reduce the amount of money and target a closer-term milestone for the startup to achieve. Yes, this implies that if the startups hits its milestone, it may command a higher valuation and the investor will not have been able to secure the economics of a tranched investment, but in exchange, the investor is getting a higher probability of overall success for their investment.

2. If an investor really needs to have tranches, implement “binary” milestones that are simple and clear. What you want to avoid are tranches that have partial or subjective achievement, such as when a company comes pretty close to hitting its revenue figure or number of users. An example of an ideal binary milestone would be: You will get a sum of money unlocked equaling the salary of a new CFO when you hire that CFO. The target is clear (hire CFO), it is not ambiguous or ‘close enough’; you either hired the CFO or you didn’t, and then the amount of money is tied to that achievement.

3. If you can’t agree on either of the above, that implies either the company is overvalued for where it is, or the investor may be overly cautious; if the latter, then the founder might want to reconsider taking them on as investor (assuming he/she has a choice).

One more thought on why the carrot/stick theory behind tranches doesn’t work: In his book Drive, author Daniel H. Pink walks through classical motivation models and compares them to his observations on actual motivation. He makes a very compelling case for companies, managers, parents, and just about anyone to rethink their preconceived notions on motivation, particularly around old carrot vs. stick methods.

He says the old form of motivation fails because for three reasons. One, It doesn’t mesh with the way many new business models are organizing what we do — because we’re intrinsically motivated purpose maximizers. Secondly, It doesn’t comport with the way that 21st century economics thinks about what we do — because economists are finally realizing that we’re full-fledged human beings, not single-minded economic robots. Finally, it’s hard to reconcile with much of what we actually do at work — because for growing numbers of people, work is often creative, interesting, and self-directed rather than unrelentingly routine, boring, and other-directed.

This topic may yield contrasting views on the efficacy of tranches by investors, but I sit squarely on the side that tranches, as they are generally used, are more value dilutive than value accretive for all parties involved.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

No action is good action. At least for the online investment platform FundersClub, which today received a “no-action letter” from the Securities and Exchange Commission stating that it will not recommend enforcement action.

The letter is a green light for FundersClub and validation that its investment model is legal. The news is significant for the venture capital and finance industries as well as startups looking for more flexible methods of fundraising.

“Venture capital has supported iconic innovative companies, but interestingly enough, the industry itself has been untouched by the Internet,” said FundersClub founder and CEO Alex Mittal in an interview with VentureBeat. “This letter from the SEC officially recognizes that FundersClub is a venture capital adviser. This is the first time in history the SEC has recognized the concept of online venture capital.”

FundersClub is a controversial company that pioneered a new form of investment when it launched out of Y Combinator last year. It provides a platform in which accredited investors access a selection of profiles of promising early-stage companies, vetted and curated by the FundersClub. Members of the community may make small investments in companies that appeal to them. FundersClub then combines the money together into one fund and gives it to the startup under its own name. While the funding is crowdsourced, it shows up as one entity on the cap table.

Many people questioned the legality of this approach because FundersClub is not a registered broker-dealer and the SEC has yet to fully implement the JOBS Act. FundersClub refutes these claims by stating that it is simply turning the already legal offline work of a venture capital adviser into an online process.

The SEC, as of today, officially agrees.

“We are not broker-dealers, we are not working within the JOBS Act provisions or exemptions, and we are not crowdfunding,” Mittal said. “We are the first to demonstrate that it is possible to practice traditional venture capital online. Anything that is new will be looked at from different angles and sometimes bucketed with other things that it is not. It take time for new models to be understood, but we are doing something new and revolutionary that has big implications.”

Making venture capital work online is not just about getting around/approval from the SEC. The industry has remained offline because deals are heavily based on relationships. Investors are understandably reluctant to write checks to companies they have not vetted personally (if not in person), and many of the deals happen through in-person interactions and referrals from within an existing network.

However, angel investment is changing. Accredited investors often aim for a diverse portfolio, but they don’t have the time or resources to perform due diligence for a range of companies. Furthermore, investors from outside Silicon Valley are interested in tech startups, but through geographical and network barriers, they do not have the connections they need to find desirable prospects. FundersClub gives them a chance to get involved with choice opportunities and easily make investments. Startups, who are wary of an overcrowded cap table, appreciate that FundersClub takes care of the leg work.

In October, FundersClub raised a massive $6 million seed round and just last week announced a $1.1 million fund to invest in Y Combinator startups. The first startups FundersClub featured were members of the same Y Combinator class. Each successfully achieved its fundraising goal, raising hundreds of thousands of dollars, and the platform has since expanded to include startups in other sectors and locations. To date, FundersClub has invested $4 million in startups, and portfolio companies have raised a total of nearly $26 million.

The National Venture Capital Association accepted FundersClub into its ranks earlier this year, making it the first and only online platform in the group of over 400 members. While that news was also exciting for the team, it did not offer the same degree of legitimacy, nor the comfort of knowing they won’t be prosecuted.

The JOBS Act is still in limbo, but the SEC’s no-action letter sets the stage for an entirely new environment for early-stage fundraising that is more flexible for people on both sides of the equation. Read the letter from the SEC.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

The enterprise may be sexy again, but consumer startups are still looking pretty good. At least Maveron thinks so. Today, the venture capital firm announced the formation of a new early-stage investment program that will provide seed funding to consumer-facing startups.

As part of this initiative, Maveron aims to make at least one seed investment a month ranging from $100,000 to $150,000 in companies working in commerce, education, and health and wellness. Cofounder Dan Levitan said that tech-enabled consumer businesses have created almost a trillion dollars in equity over the past 10 years, and this interest in seed stage companies will make Maveron a central player in the next generation of consumer success stories.

“With new technology enabling consumer-facing businesses to spread their message to consumers faster than ever, there couldn’t be a better time to build the next big billion-dollar consumer business,” Levitan said in an email to VentureBeat. “This is why Maveron remains very bullish on investing in early stage consumer businesses. We believe the technological innovation that began transforming consumer businesses more than a decade ago, will continue apace, if not accelerate, the creation of vastly disruptive new businesses.”

Levitan cofounded Maveron with Starbucks chairman and CEO Howard Schultz. The firm invests exclusively in consumer companies. Like most venture capital institutions, it traditionally held off investing until a startup progressed beyond the seed stage and demonstrated traction, growth and/or revenue. However, the environment for seed financing is changing. Venture capitalists are investing in startups earlier in their lifecycle in an effort to snag larger chunks of equity and guide the fledgling companies to their next milestones.

Building a successful, sustainable company is about more than a great idea. The ability to execute, iterate, and build a strong connections are also important, and venture capital firms can offer strategic support in these areas as well as financing. Maveron’s expertise on consumer habits and network of resources and partnerships can benefit younger companies and help them build enduring brands.

Maveron has made more than 15 seed investments in the past two years, including well-known startups like Everlane, CircleUp, CourseHero, and Julep, which recently raised a $10.6 million round led by Andreessen Horowitz, with participation from Maveron, and is one of the fastest growing beauty brands in the country.

“Many venture capital firms told me point blank that they only did a handful of deals a year, and they didn’t want to work with a beauty company,” said Julep CEO Jane Park. “What they didn’t understand is that I wanted to do more than create a beauty company, I wanted to use the potential of the web and social media as the foundation to build the next great enduring beauty brand. Maveron got it immediately.”

Maveron was founded in 1998 by Levitan and Schultz and has offices in Seattle and San Francisco. Portfolio companies include eBay, Groupon, Lemon, Lively, Shutterfly, and Zulily, as well as nontech businesses like Pinkberry and Potbelly sandwich works.

July 9-10, 2013
San Francisco, CA

Tickets On Sale Now

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