Blog Archives

Jonathan’s Internet and Digital Media Weekly – 2014-06-30

Private Financing
US

  • San Francisco-based BetterDoctor, which operates an online referral service for dentists and doctors (including specialists), raised $10.4M in new venture funding. BetterDoctor had previously attracted $2.6M in seed funding. The funding was provided by SoftTechVC and Burrill & Co., with participation from 500 Startups, among others. BetterDoctors was founded in 2011 by chief executive Ari Tulla and chief technical officer Tapio Tolvanen and went nationwide in 2012.
  • Sprout Social, a social media management platform for enterprise, has raised $8M in new funding from Lightbank and NEA. Sprout Social helps companies manage social media, providing engagement, publishing, and analytics tools for more than 10,000 customers. Founded in 2010 in Chicago, Sprout Social has raised $19M to date and will use the latest funding to open a European headquarters and drive international expansion.
  • First Round Capital, seed-stage investment firm with offices in Philadelphia and San Francisco, has closed a fifth fund of $175M, up just slightly from its $160M previous fund. The firm also announced that New York City-based partner Phin Barnes is relocating to San Francisco and that Wiley Cerilli, founder of former portfolio company SinglePlatform, is joining as a venture partner.
  • Sport Ngin, Minneapolis, Mn.-based company that helps sports organizations build websites and mobile applications, has raised $25M in Series D funding led by Piper Jaffray Merchant Banking and Causeway Media Partners, with participation from existing investor ICON Venture Partners. The company has raised $35.1M to date.
  • Plumgrid, Sunnyvale, Ca.-based network infrastructure software vendor that helps secure cloud networks for public and private clouds, has raised $16.2M in Series B funding led by Longworth Venture Partners. U.S. Venture Partners, Hummer Winblad Venture Partners, Qualcomm Ventures and Swisscom Ventures also participated in the round, which brings Plumgrid’s total funding to $29M.
  • IgnitionOne, Atlanta, Ga.-based digital marketing technology company, has raised $20M in Series B funding led by SoftBank Capital. Earlier investors ABS Capital Partners and Brown Savano — a company that buys private company shares from founders and early investors — also participated in the round. The company has now raised roughly $68M.
  • Distractify, New York-based new media startup that competes with the likes of Upworthy, has raised $7M in Series A funding led by Lightspeed Venture Partners. Other participants in the round included Lerer Hippeau Ventures, Advancit Capital, and CAA.
  • Chloe & Isabel, New York-based jewelry company that connects its customers through their own social selling experience, has raised $15M in fresh funding led by Softbank Capital, at a valuation of more than $100M, reports VentureWire. The company had previously raised $17.5M from investors, including General Catalyst Partners, First Round Capital, Felicis Ventures, Floodgate and individuals Ashton Kutcher, Mike Duda, Andy Dunn, Kirsten Green, and Ron Conway, among others.
  • Wish, a fast-growing mobile-shopping app, raised $50M from venture-capital investors who believe there is still room for upstarts in an industry dominated by Amazon.com, eBay and Groupon. The funding came from new investor Founders Fund and existing investors Formation 8, GGV Capital and Yahoo co-founder Jerry Yang, among others, and gives the San Francisco startup a valuation of roughly $400M. The deal comes only about two months after Wish raised $19M in funding. Wish offers users a feed of products from various online merchants at discounted prices. As users save products to their “wishlists” or recommend them, the software learns about interests. Users can buy the goods directly through the Wish app.
  • Truveris, a New-York based prescription auditing service, has raised $12.75M in a new round of funding led by Canaan Partners while previous investors New Leaf Venture Partners, Tribeca Venture Partners, New Atlantic Ventures, and First Round Capital all participated in the financing. As a result of the investment, Canaan Partners’ Stephen Bloch will be taking a seat on the board.
  • CrowdTwist, New York-based company that sells loyalty and analytics software to marketers, has raised $9M in Series B funding led by StarVest Partners, with investment from earlier backers, including Fairhaven Capital and SoftBank Capital. The company has raised $16.2M altogether.
  • CareCloud, which provides cloud-based practice management, electronic health records (EHR), and medical billing software to medical groups, says it’s taken $25.5M in new venture debt financing from Hercules Technology Growth Capital. Miami Springs, Florida-based CareCloud has now taken a total investment of $81.9M since its launch in 2009. Before the new debt funding it had taken $56.4M in venture capital funding.
  • Tastemade, an online food network, has raised $25M in Series C funding from Scripps Interactive Media and Liberty Media along with return backers Comcast Ventures, Redpoint Ventures and Raine Ventures. Tastemade provides food-centric video content, producing a variety of its own cooking shows, and currently has more than 19M uniques per month. Founded in Santa Monica in 2012, Tastemade has raised over $40M to date and will use the latest cash to ramp up hiring and produce more content.
  • First Round Capital announced its fifth fund — a $175M round from existing limited partners. First Round’s fifth fund is its largest to date, up from $135M in 2012, $126.4M in 2010, and 125M in 2008. Alongside the funding announcement, First Round’s Josh Kopelman shares that SinglePlatform founder Wiley Cerilli will join the firm as a venture partner in New York. SinglePlatform was bought by Constant Contact for $100M in 2012.
  • Truveris, New York-based health information technology company that provides pricing and analysis tools to sponsors of prescription benefit plans, has raised $12.75M in Series C funding led by Canaan Partners. Earlier investors New Leaf Venture Partners, Tribeca Venture Partners, New Atlantic Ventures and First Round Capital also participated in the round, which brings the company’s funding to roughly $26.5M.
  • TapZen, L.A.-based mobile gaming startup, has raised $8M in new funding from Tencent Holdings. The company has raised $10M in “seed” funding from social games giant Zynga.
  • RedOwl Analytics, Baltimore, Md.-based company whose software helps organizations analyze their internal corporate data streams, has raised $4.6M from investors, including Salesforce CEO Marc Benioff; Igor Sill of Geneva Venture Group; Christian Lawless of Conversion Capital; Attractor Ventures; Propel Baltimore; and Tedco’s new Veterans’ Opportunity Fund.The company has raised $7.5M altogether.
  • CoPatient, Portland, Or.-based medical-billing company that helps patients spot mistakes in their medical bills, has raised $3.6M in Series A funding led by .406 Ventures. Earlier investors Cambia Health Solutions and Athenahealth executive Jonathan Bush also participated in the round. CoPatient had previously raised $1.1M in seed funding.
  • Coherent Path, Arlington Heights, Ma.-based retail analytics startup, has raised $6.3M in Series A funding led by Sigma Prime Ventures and GrandBanks Capital. The company has raised roughly $7M altogether, including from dunnhumby Ventures, CommonAngels, and BOLDstart Ventures.
  • White Ops, New York-based company focused on online fraud detection (it says it isolates and eliminates bot-infected traffic), has raised $7M in funding from new investors Paladin Capital Group and Grotech Ventures.
  • The Bouqs, Venice, Ca.-based cut-to-order online flower delivery service, has raised $6M in Series A financing led by Azure Capital Partners, which was joined by KEC Ventures. The company had previously raised $1.1M in seed funding from numerous individual investors and firms, including Mich Mathews, Dennis Phelps, Andy Dunn, Brian Spaly, Telegraph Hill Capital, Quest Venture Partners, and Siemer Ventures.
  • Wickr, an app that lets you securely send self-destructing text, audio, and video messages, announced that it has raised a second funding round of $30M. The round was led by Jim Breyer, founder and CEO of Breyer Capital, who’s also joining the company’s board. The news comes only a few months after Wickr announced its $9M first round. Wickr claims it now has the resources to “build the most trusted communications system in the world.”
  • BlockScore, an identity-verification startup and member of Y Combinator’s latest batch that is launching with $2M in funding from Battery Ventures, Khosla Ventures, Lightspeed Venture Partners, New Atlantic Ventures, Boost VC, Y Combinator, and several angels.
  • Bite-size e-learning platform Coursmos, which reckons there’s room to squeeze a little learning into busy digital users’ lives by breaking study topics down into small, easily digested video chunks, has closed a new round of funding — topping up the seed money that saw it through to launch last year. The $530,000 in new funding comes from Russian VC Imperious Group and an unnamed angel investor.
  • General Electric and the four-year-old, San Juan Capistrano, Ca.-based venture firm Frost Data Capital are setting up a new incubator for industrial technologies. Called Frost I3, it expects to help advance ten companies per year over the next three years. A two-week-old SEC filing shows that Frost Data has raised at least $38.4M for its Frost VP Early Stage Fund II LP. Frost typically partners with major corporations to identify gaps in their big data analytics arsenals, has spun out a number of companies, including Predixion Software, Cirro, and OspreyData. The firm was founded by Stuart Frost, the founder of DatAllegro, a maker of data warehouse appliances that Microsoft acquired in 2008 for $275M.
  • WebPT, Phoenix, Az.-based company that says its Web-based medical records software is now used by more than 35,000 rehabilitation therapists in the U.S. and Canada, has raised an undisclosed amount of funding from Battery Ventures.
  • Tasktop Technologies, Vancouver-based maker of so-called software lifestyle integration software, has raised $11M in Series A funding led by Austin Ventures. Yaletown Venture Partners also participated in the round.
  • SmashFly Technologies, Stow, Ma.-based maker of recruiting software, has raised $9M in Series A funding led by OpenView Venture Partners.
  • Schoology, New York-based learning management system that helps educators use apps and other tech more effectively to teach and manage their classwork, has raised $15M in Series C funding led by Intel Capital. Great Oaks Venture Capital and Great Road Holdings also participated in the round, alongside earlier investors FirstMark Capital and Meakem Becker Venture Capital. The company has now raised at least $23M altogether.
  • One Month, New York-based online education company that offers one month’s worth of tutorials on front-end Web development, growth hacking, Web security, and more (the idea is to teach users just enough to get a Web app up and running), has raised $770,000 in seed funding from Winklevoss Capital, Innovation Works, Andreessen Horowitz, General Catalyst, Start Fund, Oliver Jung, Lew Moorman, Y Combinator, FundersClub, and the crowdfunding platform WeFunder.
  • Aerospike, Mountain View, Ca.-based flash optimized, in-memory and NoSQL startup, has $20M in Series C funding led by New Enterprise Associates. Columbus Nova Technology Partners, Alsop Louie Partners and Regis McKenna also participated in the round, which brings the company’s total known funding to $22M. (It raised an undisclosed amount of Series B funding in 2012.)
  • Kids’ app developer Fingerprint has raised $10.85M in new funding led by DreamWorks. The company develops apps like “Kids Learn Mandarin” and “Wonder Bunny Math Race,” and it also publishes submissions from third-party developers who use its software development kit. The company currently has about 250 apps across all of its app networks and expects to reach 600 by the end of the year. Book publisher Reed Elsevier and media firm Corus Entertainment also contributed to Fingerprint’s new funding round alongside DreamWorks. Corus was an early Fingerprint investor, pouring $7.75M into the app maker back in August 2012.
  • Jason Kilar, former chief exec of streaming TV service Hulu, has secured $75M round of funding for his new startup Vessel led by Benchmark, Greylock Partners, and Bezos Expeditions — the personal investment company of Amazon head honcho (and Kilar’s old boss) Jeff Bezos.
  • Sapho, San Francisco-based mobile app that uses software APIs to pull from a company’s various enterprise applications and provide relevant updates for each user, has raised $3M in funding from a group of investors that includes Raymond Tonsing of Caffeinated Capital, Bloomberg Beta, Redpoint Ventures founder Brad Jones, and Andy Rankin.
  • Epoxy, Venice, Ca.-based company that builds tools to help YouTube startups and other video creators deepen their relationship with audiences, has raised $6.5M in Series A funding led by Upfront Ventures and Time Warner Investments. Earlier investors, including Advancit Capital, Bertelsmann Digital Media Investments, Greycroft Partners and Robert Downey Jr.’s Downey Ventures, also participated in the round, which brings the company’s total funding to $14M.
  • Transifex, Menlo Park, Ca., and Athens, Greece-based startup that helps developers translate sites and apps into multiple languages quickly and inexpensively (comparatively), has raised $2.5M in seed funding led by New Enterprise Associates. Other participants in the round included Toba Capital, Arafura Ventures, and several individual angel investors.
  • Soundhawk, Cupertino, Ca.-based company that makes a “smart listening” system that looks like a Bluetooth headset to help people hear what they’re listening for in noisy environments, has raised $5.5M in funding from tech manufacturing giant Foxconn Group. The WSJ has much more on the company here. Soundhawk had previously raised $5.7M from True Ventures.
  • RelayRides, San Francisco-based peer-to-peer car sharing marketplace that now focuses only on providing long-term (day-long, at least) rentals, has raised $25M in Series B funding led by Canaan Partners. Earlier investors August Capital, Google Ventures and Shasta Ventures also participated in the round, which brings the company’s total funding to $44M.
  • Phunware, Austin-based company focused on creating mobile experiences for brands, including through mobile software development, has raised $30.7M in Series E funding led by Firsthand Technology Value Fund. Other investors in the round included Fraser McCombs Ventures, Maxima Ventures, Wild Basin Investment, the Central Texas Angel Network, Cisco Systems, World Wrestling Entertainment, and Samsung Ventures. The company has now raised $48.3M to date.
  • Patreon, San Francisco-based subscription platform that enables fans and sponsors to support artists and creators, has raised $15M in Series A funding led by Index Ventures, with participation from Alexis Ohanian, Sam Altman, David Marcus, Joshua Reeves and numerous other individual investors.
  • Passare, San Francisco-based startup that’s “simplifying end-of-life management” through an online portal where family and friends of the deceased can make funeral and travel arrangements, create online memorials and invite guests, has raised $6M from a group of funeral homes, angel investors and the Abilene, Tx.-based insurance company Funeral Directors Life Insurance Company.
  • OwnerIQ, Boston, Ma.-based company that provides real-time media buying services to advertisers, has raised $11M in funding led by existing investors in a round that was closed over two tranches, beginning in April. The company, which looks to have raised roughly $40M to date, counts Kepha Partners, Longworth Venture Partners, Egan-Managed Capital, CommonAngels, Massachusetts Technology Development Corporation, and Atlas Venture among its backers.
  • LIFX, San Francisco-based company making a Wi-Fi enabled, multi-color LED light bulb, has raised $12M in Series A funding led by Sequoia Capital. The company had also raised $1.3M via a Kickstarter campaign in 2012.
  • Grand Rounds, San Francisco-based startup that provides medical second opinions online, has raised $40M in Series B funding led by Greylock Partners. Earlier investors Venrock and Harrison Metal also participated in the round, which brings the company’s total funding to $51M. Re/code has more on the company here.
  • Cargomatic, Venice, Ca.-based company that connects available truck drivers with companies needing to move freight (it calls itself the “Uber of trucking”), has raised $2.6M led by Morado Ventures, SV Angel, and Sherpa Ventures, reports Venture Capital Dispatch. Winklevoss Capital, Acequia Capital, Structure Capital and several angel investors also participated in the round.
  • Lerer Hippeau Ventures, the New York-based investment firm whose portfolio includes BuzzFeed, Chartbeat, and Warby Parker (among others), has closed its fourth fund, with a total of $62M in capital commitments.
  • Helpshift has raised $10M in venture capital funding to finance its expansion as the help desk for mobile app publishers. The company helps mobile game publishers like Supercell deal withMs of customer-service queries by intercepting more than 90 percent of those queries before they ever reach a real person. San Francisco-based Helpshift, which was the winner of last year’s Innovation Showdown at our MobileBeat 2013 conference, has created a platform for customer service on mobile devices. It can be used to create frequently asked question (FAQ) documents that are easily searchable, even when the user it tapping away with thumbs on a mobile device. Intel Capital led the round, with participation from Visionnaire Ventures, a new venture capital fund whose partners include Taizo Son, brother of Japan’s Masayoshi Son, head of SoftBank. Other participants include existing investors True Ventures and Nexus Venture Partners.
  • CloudPhysics, a startup that has developed software for keeping tabs on the health of clusters of servers in companies’ data centers, has taken on $15M in fresh venture capital led by Jafco Ventures. Kleiner Perkins Caufield & Byers and Mayfield Fund also participated. Previously, VMware co-founders Diane Greene and Mendel Rosenblum invested in CloudPhysics. To date, Mountain View, Calif.-based CloudPhysics has raised $27.5M, including a $10M round last year and a $2.5M round in 2012. CloudPhysics has focused on providing analytics for data center operators that chop up their servers into virtual machines and maintain them with VMware’s popular vSphere software.
  • Slyce, Calgary-based visual product search platform, has raised $12M from the likes of Canaccord Genuity Corp. and including Salman Partners Inc., Cormark Securities Inc., and Beacon Securities Ltd. It comes just a few months after Slyce raised $10.75M from PI Financial, Salman Partners, Harrington Global and other investors. Before that it raised a convertable debenture round of $2.2M, and in total it has raised $27M. The Slyce technology enables a retailer’s customer to snap a smartphone picture of any item they find in the real world, or hover over any image online, and be instantly provided with all direct, or close-matching products from the retailer’s Inventory which can be purchased instantly – at the exact moment of consumer impulse.
  • Patreon, a subscription-based funding site for artists, has just raised $15M in a Series A from Alexis Ohanian, Sam Altman, David Marcus, Joshua Reeves and a bevy of other tech entrepreneurs. There were 17 angel investors and VCs in all who contributed to this series, with Danny Rimer of Index Ventures leading the round.
  • Scivantage, Jersey City, N.J.-based company that sells Web-based front and middle-office technologies to the financial services industry, has raised $20M from earlier investors Brown Brothers Harriman Capital Partners and Edison Ventures. The round also included debt financing provided by Comerica Bank and ORIX Ventures.
  • Inpria, Corvallis, Or.-based developer of high-resolution photoresists, has raised $1.45M led by the Oregon Angel Fund. The capital comes on the heels of a separate, $7.3M round of funding the company announced in February, led by Samsung Ventures, with participation from Intel Capital and Applied Ventures.
  • AnyPerk, an employee perk and discount startup based in San Francisco, has raised $3M in additional seed funding from VegasTech Fund, FundersClub, Vayner/RSE, and a handful of angel investors. AnyPerk helps companies create and distribute employee perks such as discounted gym memberships, hotel deals and movie tickets. Founded in 2012 and incubated by Y Combinator, AnyPerk already works with over 2,500 customers and will use the new cash to create a location-aware mobile app for employees.
  • Skyhigh Networks, a cloud access security company, has raised $40M in a Series C round led by previous investors Sequoia and Greylock with participation from new strategic investor Salesforce. Based in Cupertino, Skyhigh makes security software that manages and analyzes data from apps used by employees. Founded in 2011, Skyhigh has raised $66.5M to date and will use the new funding to ramp up hiring and develop new products.
  • Tanium, an enterprise security and systems management startup out of Berkeley, CA, has raised $90M from Andreessen Horowitz in its first venture capital round to date. Tanium allows IT professionals to control and manage an entire network through its natural language search console. Founded in 2007, Tanium plans to use the new cash to back continued product development and expansion. The investment values the company at $900M.

EMEA

  • Templafy, a business template management startup out of Denmark, has raised $2.5M in seed funding from SEED Capital and Sunstone. Templafy helps managers ensure visual and legal compliance in employee-produced business documents across all devices. Founded in December of 2013, Templafy will use the latest cash to fund global expansion.
  • Social trip planner startup CreateTrips has closed a $600,000 seed round of funding, with investment coming from Butterfly Ventures, Frontier and Rkapital.
  • Finnish mobile-first narrative-driven startup Seriously has announced it’s closed a $2.65M round of what it calls “Series B Seed” funding. Previous investor Upfront Ventures was the lead investor, with previous investors Sunstone Capital and new investor Daher Capital also participating. This round takes Seriously’s total funding to-date to $5M.
  • Deliveroo, food delivery service for premium restaurants that don’t traditionally offer a take-out service, has closed a £2.7M series A round led by Index Ventures, with participation from Hoxton Ventures and a number of individual investors. Currently operating in London only, Deliveroo solves the problem that a lot of take-out food does’t really cut it, and yet most premium or higher-end restaurants don’t deliver to homes or businesses. To do this, it’s built its own online ordering and logistics platform, including recruiting a fleet of drivers.
  • MyOptique Group, London-based online optical retailer, has raised roughly $27.2M in Series C funding from Korys, Beringea, Cipio Partners, Silicon Valley Bank, Acton Capital Partners, Highland Capital Partners, and Index Ventures. The company has raised $55.4M to date.
  • Nutmeg, the UK-based online investment management startup, intends to disrupt the world of financial investing by making it affordable for the masses. But to do that it needs cash. Lots of cash. they’ve raised another $32M, taking their total funds raised to $50m. The investors in’s round include Carphone Warehouse founder Charles Dunstone, asset management house Schroders, and top-tier European VC Balderton Capital. Existing investors include Draper Associates and Daniel Aegerter from Armada Investment Group also participated. The new funds will be spent on customer acquisition and product development. Tim Draper calls Nutmeg “among the very best” of “exciting new financial technology businesses.”
  • Definiens, Munich, Germany-based pathology image-analysis company, has raised $20M in new funding led by Wellington Partners. Earlier investors Gilde Healthcare Partners, Cipio Partners, and TVM Capital also joined the round. The company has raised at least $33.3M to date.
  • Kreditech, the credit rating service for enterprise which offer micro-loans to costumers based on social and commerce data, has closed a $40M Series B funding round, the largest ever for a German financial services technology company and one of the largest rounds in Germany in 2014. The lead investor is Värde Partners, a PE fund, which was joined by existing shareholder Blumberg Capital and Point Nine Capital. Kreditech will use money to broaden its financial products and expand into new markets. It claims to have approved more than 1.5M individual loans inside the last 20 months. In January this year it secured $15M in debt financing from Kreos Capital. The company now operates in Poland, Spain, Czech Republic, Russia and Mexico and launched in Australia in Q1, and operates in Peru. Planned for this year is the Dominican Republic and Romania. Brazil is planned for 2015. From 2012 and 2013 they raised $25M funding.
  • VocalIQ, Cambridge, England-based company whose software aims to improve dialogue interactions in voice-activated systems, has raised $1.27M in seed funding. The round was led by Amadeus Capital Partners, with participation from Cambridge Enterprise. The company is a spin-out of the University of Cambridge’s Dialogue Systems Group.

Asia

  • Performance Lab, Auckland, New Zealand-based maker and marketer of real-time exercise measurement analysis and virtual coaching software, has raised an undisclosed amount of funding from Intel Capital.
  • Moi Corporation, the Tokyo-based startup behind Twitcasting, announced a US$5M series A funding round that will be used to increase the live-streaming platform’s presence outside of Japan. The investment was led by Indonesia’s Sinar Mas, marking the first time that a non-Japanese VC has invested in the company. Seed investor East Ventures1 also contributed. Twitcasting, already the largest live-streaming community in Japan, hopes to grow its user-base in the US and Brazil specifically. Twitcasting received US$640,000 in seed funding from East Ventures in May 2013. In just over a year, its user-base has ballooned from 2.4M users to 6.5M, with 15,000 new signups each day. More than 80 percent of Twitcasting users are under 24 years old and the company claims that, as of late last year, Twitcasting is more popular with Japanese teens and university students than Facebook.
  • Qianmi, a Chinese e-commerce system and service provider, announced 50M yuan (around US$8) of Series A financing led by Bangsheng Capital, a venture capital affiliate of GOVTOR Capital. The funding will be used to accelerate the construction of service outlets nationwide. Launched in Oct. 2013, Qianmi is the wholly-owned subsidiary of Ofpay.com, a leading e-commerce platform for digital products in China. Qianmi is now focused on providing e-commerce services in five industries of local life, mobile, gaming, fast moving consumer goods and office supplies. The startup now claimed more than 2,000 enterprise clients with over 300K outlets nationwide and a monthly turnover of 2.5 billion yuan. According to data from Qianmi, its e-commerce system now covers 80% of first- and second-tier cities, and 95% of third- and lower-tier cities.
  • JPY 51M (US$500,000)M poured into social problem solving service Any+Times. The startup announced the round of funding, noting that gaming giant DeNA and venture capital firm Incubate Fund led the financing. Any+Times has raised six previous funding rounds. Any+Times allows users to crowdsource solutions to everyday problems from their neighbors. Any+Times says it will use the funds to strengthen its business strategy, expand hiring, beef up its technical systems, and increase marketing spend.
  • Housing.com, Mumbai, India-based online real estate portal that helps people rent and buy homes, has raised $19M in its fourth round of funding, from Helion Venture Partners, Nexus Venture Partners, and Qualcomm Ventures.
  • Bigtree Entertainment, India-based company that owns the online entertainment ticketing property BookMyShow, has raised $25M from new investor SAIF Partners. Earlier investors Accel Partners and Network18 also participated in the round, which brings the company’s total funding to $43M.
  • Meet You (aka Meiyou), a Chinese app that originated as a menstruation tracker that since evolved into a social network for all-things-ladylike, closed a US$35M series C investment round led by SIG. The round comes just five months after the company completed a US$15M round led by US-based Matrix Partners. It also comes days after competing startup Dayima netted US$30M from a group of investors that included Sequoia Capital. These are pretty large rounds by any standard, let alone for an app that hasn’t yet monetized. For comparison’s sake, Glow, the highest-profile Silicon Valley analogue, raised US$6M back in August 2013. Meet You claims to have 50M registered users and 3.5M “active users.” Dayima, meanwhile, has 45M registered users and over 3M daily active users.
  • ProjectManager, Auckland, New Zealand-based maker of online project management software has raised $3.5M in Series A funding led by New Zealand’s Zeus Management.
  • KDDI is investing in news curation app Gunosy with a 1.2 billion yen (US$11.8M) funding round – after already providing US$12M in March to fund a Gunosy television advertisement campaign. Jafco and B Dash Ventures joined KDDI for the latest investment.

Other emerging markets

  • Curiyo, Jerusalem-based company whose browser app enables users to look up names, places, and other terms in a pop-up window without leaving a Web page, has raised $1.9M in seed funding from OurCrowd, Cedar Fund, Morton Meyerson, Kima Ventures, Tom Glocer, Gigi Levy, JumpSpeed Ventures, and other private investors. Curiyo was founded by Bob Rosenschein, founder and former CEO of Answers.com. The company has raised $3.3M to date.
  • Israeli startup Parko successfully raised $1.1M in seed funding for its API, which uses crowdsourced data to help drivers find available parking spots in real time. SparkLabs, Global Ventures, OurCrowd, and European angel investors participated in the round. VoIP pioneer and Vonage co-founder Jeff Pulver also joined Parko’s board of advisors. Parko also analyzes parking habits from users who opt in. Using these bits of information, Parko’s algorithms build real time maps of parking availability that are continuously updated from data sourced from the crowd.
  • Webydo, Tel Aviv-based software as a service startup whose technology helps professional graphic designers to create sites on fly, without manual coding, has raised $7M in Series B funding led by the crowdfunding platform OurCrowd, along with Magna Capital Partners and unnamed strategic investors. Webydo has raised $9.7M to date. The business was founded back in 2010.
  • Dynamic Yield, Tel Aviv, Israel-based developer of a real-time website optimization and personalization platform, has raised $12M in Series B funding led by Marker, with participation from existing investors Bessemer Venture Partners, ProSiebenSat.1 Media AG, Innovation Endeavors, and the New York Times Co. The company has raised $14.2M to date.

Mergers & Acquisitions
US

  • Submodal, a five-year-old, Laguna Beach, Ca.-based Web design and software development studio, has been acquired by Tustin, Ca.-based Mophie, maker of the popular mobile battery case. Terms of the deal were not disclosed.
  • Longmaster Information & Technology Co. Ltd., a Chinese software developer founded in 1998, acquired 39.net in cash and stock. The price reportedly is RMB650M (more than US$100). Launched in March 2000 by China’s state-owned pharmaceutical company 999Group, 39.net was one of the first health websites in China. In 2006, when 999Group was under restructuring, 39.net introduced funding from IDG Capital Partners, a China-focused investment firm, acquired the site for RMB30M. The site started offering medical and health information and then added features for users to ask doctors questions. The site covers 120M users, with 48% on mobile.
  • Appurify, San Francisco-based startup that makes it possible for developers to automate the testing and optimization of their mobile apps and websites, has been acquired by Google, the search giant announced yesterday. Terms of the deal aren’t being disclosed, but TechCrunch says it will “stay open as freemium cross-platform service.” Appurify had raised $6.3M from investors, shows Crunchbase, including Google Ventures, Foundation Capital, Radar Partners, Felicis Ventures, Webb Investment Network, Data Collective, Inspovation Ventures and individual investors.
  • Virtual reality firm Oculus VR has acquired Carbon Design, the product development studio that built the Xbox 360 controller for Microsoft. Oculus said it hopes to close the deal by the end of summer. Carbon Design will remain in its Seattle offices and work closely with the Oculus R&D team in nearby Redmond.
  • Opera has confirmed that it has acquired AdColony in a deal for $75M in cash, plus potential earnouts of $275M that bring the deal up to $350M. AdColony had raised an undisclosed amount of funding. Insight Venture Partners was among its backers. The deal will bring together one of the bigger startups in mobile video ads with Opera, a company that has built a business in web browsers for mobile handsets, PCs, and TVs. Opera is an alternative to the likes of Google’s Chrome and Apple’s Safari, as it’s a portal to search for apps.
  • 99dresses, New York-based platform whose app helped connect people wanting to buy and sell used clothing, is closing, according to its cofounder and CEO, Nikki Durki. The company, a Y Combinator alum, has raised an undisclosed amount of funding from Draper Associates, Persefon Ventures, and Fenox Venture Capital.
  • Oracle Corp agreed to buy Micros Systems, a company that sells Internet-connected cash registers, and the software and technical services to power them, to restaurants, retail shops, casinos and other companies. The deal is valued at about $5.3 billion including items such as options, and $4.6 billion net of Micros’s cash. The transaction, expected to close in the second half of this year, requires that Micros’s stockholders tender a majority of the company’s shares outstanding and shares representing vested equity incentive awards.

EMEA

  • Expedia has agreed to acquire the European car-rental reservation company Auto Escape Group from Montefiore Investment and Auto Escape Group’s management. Terms of the deal weren’t disclosed..
  • A Little Market, Paris-based online marketplace for handmade items, has been acquired by its bigger U.S. peer Etsy for an undisclosed amount of money, reports TechCrunch. Etsy says it is its “sixth and largest acquisition to date.” A Little Market will continue to operate independently. Etsy has raised $97.3M in funding from Accel Partners, Union Square Ventures, Index Ventures and other investors.

Asia

  • Chinese web giant Tencent– now best known as being the maker of WeChat – announced that it’s paying US$736M for a 19.9% stake in 58.com, which is China’s answer to Craigslist. 58.com, which has 130M monthly unique users, IPO’d last October. Tencent revealed that 58.com’s listings will be integrated in some way with WeChat, the popular messaging app, as well as with Tencent’s QQ IM. Tencent is paying $40 per share for 58.com, which is below the $51.77 at which the stock ended Thursday’s trading. In October it floated at $22 per share, so early investors are still riding a strong return.
  • Chinese Universe Publishing and Media Company bought a 100 percent stake in Elex Technology Company for RMB 2.7 billion. Chinese Universe distributes and publishes books, teaching materials, and other publications including audio and video products. It also has a logistics arm. Some of the biggest games that Elex has helped export include Happy Farm (a.k.a. Happy Harvest), Age of Warring Empire, and Chi-Star. The lattermost has over 300M monthly active users, 50M of them paying subscribers. Elex’s investors include Chinese internet giant Tencent and venture capital and incubation firm Innovation Works. Chinese Universe paid with 130M shares and about RMB 1 billion (US$160M) in cash. The report didn’t mention how the two companies plan to work together down the line.
  • Hong Kong-based Animoca Brands Corporation, mobile publisher Animoca in May 2014 to run its branded games business – including Garfield, Mr Bean, Ben10, Astro Boy etc., is going through a reverse takeover which will see it effectively buy into a currently listed company on the Australian Stock Exchange called Black Fire Minerals. This company will sell off its existing assets, and be renamed Animoca Brands Corporation, while two of its current directors will resign, replaced by five new directors from Animoca Brands Corporation and its parent company Appionics (aka Animoca). As part of the deal, Black Fire Minerals/Animoca Brands will raise between $3 – $5M from the issue of new shares, which will then be used by the ongoing business as its starting capital. In total, Animoca has seen its games and entertainment apps downloaded more than 230M times, mainly on Android, while its Garfield-branded mobile games have recently passed the 30M total.
  • Chinese web portal Sina fully acquired lottery service Aicai.com and rebranded the site as Sina Aicai recently. The founding team of Aicai will remain with the company after the transaction. Aicai is a lottery ticket sales and information platform established in 2007 with Sina as a majority shareholder. The startup is also responsible for building and managing Sina’s own lottery ticket sales and information platform. The company launched a mobile website in May 2009, which partnered with Sina’s mobile portal in August of the same year.
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Jonathan’s Internet and Digital Media Weekly – 2013-11-11

Private financing
US
  • Building Robotics, a startup that makes intelligent software systems for office buildings, has raised $1.14 million in a seed round led by Claremont Creek Ventures (CCV), Google Ventures, Formation 8, Navitas Capital, Red Swan Ventures and other angel investors. The Oakland, Calif.-based company says it will use the funds to add expertise in building management, development, back-end operators and user experience design.
  • Newsle, a network (and person)-oriented news alert service which tracks more than 100 million people and processes more than one million articles each day from over 100,000 sources, serving users filtered, personalized alerts based on their preferences, raised $1.85 million Series A financing round led by Advance Publications. Participating alongside the strategic investor were Maveron, DFJ, Transmedia Capital, Launny Steffens and previous investor Rockwell Schnabel.
  • Espresso Logic received $1.6 million in seed funding today for its backend as a service to connect web and mobile applications to external databases including MySQL, Oracle Server and Microsoft SQL Server. Inventus Capital led the funding along with angel investors including Gokul Rajaram, lead product engineer at Square and one of the creators of Google AdSense.
  • Austin-based VC firm Silverton Partners raised $75 million for its fourth fund, which will be committed to investing solely in early-stage Austin startups. That includes $10 million of which was raised from local entrepreneurs and founders that the company has worked with, who wish to re-invest in the startup ecosystem. In addition to traditional LPs and university endowments, Silverton Partners Fund IV includes $10 million from 40 local entrepreneurs that the firm has worked with who wished to invest in the fund.
  • Securly set out to help K-12 schools across the U.S. prevent their bright young minds from being exposed to the not-so-savory side of the Internet, raises $1m from NewSchool.
  • GAIN, a tracking app for a wide range of activities, from weight training to Pilates, endeavoring to unbundle the fitness class and become a marketplace for fitness trainers and workout plans, raised $2.1 million in venture funding led by InterWest, with contributions from its existing investors ncluding Keith Rabois, Ben Ling and InterWest Partners, among others.
  • Granify, a software-as-a-service platform that uses big data and machine learning to identify the points in an e-commerce transaction where users are most likely to convert, raised $1.5 million in seed funding from a group of investors that includes Peter Thiel’s Valar Ventures, Klass Capital, iNovia Capital, BDC, Extreme Startups, Social Starts, Jared Kopf, Jerry Neumann, Giordano Contestabile, Tom O’Connell, Adam Caplan, Nick Koudas, Nilesh Bansal, Jamie McDonald, and Jonathan James. Granify is currently processing more than 5.3 billion data points a month. And it’s doing that by seamlessly integrating with e-commerce stores, and works on a pay-per-performance basis.
  • Appboy, a company that helps mobile app marketers better retain users and keep them engaged, is today announcing $7.6 million in Series A funding. The round was led by Icon Venture Partners, and saw participation from new investors IDG Ventures, and Mike Lazerow, founder of Buddy Media. Existing seed investors, including Blumberg Capital, Accelerator Ventures, Bullpen Capital and T5 Capital, also participated. The company has raised a total of $7.6 million. However, in addition to the $5.1 million in Series A funding, Appboy previously raised $2.5 million via convertible note seed financings, which have now converted.
  • GeoPoll, which says it is the world’s largest real-time mobile survey platform, enables companies to conduct surveys by SMS, voice messages or on the Web, launched with a $6.6 million Series A round, which brings its total raised so far to $11.6 million. GeoPoll will use proceeds from its Series A to expand its team and grow its footprint, with the goal of reaching 100 million people by the end of 2013, and 500 million by the end of 2014.
  • Zoomingo, a two-year old shopping and deal-finding app designed for use out in the real world, has raised an additional $1.25 million from its existing investors Benaroya Capital and Naya Ventures, along with other angels, including Rudy Gadre, former General Counsel at Facebook. The new funding brings Zoomingo’s total raise to date to $2.75 million. Zoomingo today has 1.3 million registered users on iOS and Android, and is generally found in the top 10 in the Catalogs section of the iTunes App Store. The company remains a relatively small, ten-person team based in Seattle.
  • Content recommendation service Zemanta raised $2 million in new funding from Union Square Ventures and Social Starts. Zemanta has launched a “content discovery network,” and it also introduced related products like Streams, which offers an endless stream of related articles directly below a mobile article page.
  • Zola, the new wedding registry startup emerging from Gilt And AlleyCorp founder Kevin Ryan and a group of former Gilt employees, has raised $3.25 million in Series A funding led by Thrive Capital. Joshua Kushner, founder and managing partner of Thrive Capital, will join Zola’s Board of Directors. Ryan, who led the seed funding for the startup, is also contributing to the A round. The company is part content, part Pinterest-like inspiration sharing, and part wish list/registry. The result is a well-designed. easy to use wedding registry that tells a story of a couple.
  • Y Combinator-backed startup Lob launched a new developer API which lets companies easily integrate printing and shipping services into their applications, has announced $2.4 million in seed funding from various YC partners and angel investors. Participating in the round were Kevin Hale, Dalton Caldwell, Sam Altman, Joshua Schachter, Alexis Ohanian, Paul Buchheit, Garry Tan, Polaris Partners, and other undisclosed investors. The company says it now has over 1,000 paying customers, and just hit $40,000 in revenue at the end of last month. It has also printed a million dollars worth of checks.
  • MediaSpike, which runs a marketplace for in-game product placement, has raised $5.2 million in Series A funding. The round was led by CMEA Capital, with the participation of existing investors 500 Startups, Google Ventures, and Raptor Capital. New backers include Andreessen Horowitz, Inspovation Ventures, and angel investors such as Jonathan Abrams, Othman Laraki, Rick Marini and Naval Ravikant. MediaSpike’s goal is to make it easier to run product placements in mobile and social games. Developers creating listings for standardized placements in their games and advertisers bid for those placements. A couple of weeks ago, the company said its network now reaches 20 million unique users, a 20x increase in fewer than five months.
  • AetherPal, a pre-loaded software allows mobile carriers remote access to your smartphone, secured a $6 million Series A round led by New Venture Partners and Boston-based Point Judith Capital. The $6 million in new funding will also be put to use to grow AetherPals’ 50-person team with hires in sales, product and exec roles.
  • Hinge, a mobile online dating app, raised a $4 million Series A from Great Oaks, Social + Capital, and more to bring its relationships app beyond DC, New York, and Boston. With $4 million, Hinge has some ammunition to fight off competitors and pay for growth. The money will help the startup break into new cities, and revamp its apps.
EMEA
  • Israel-based startup TabTale, an app publishers with a suite of over 240 apps that have more than 220 million downloads, announced a $12 million in Series B financing, led by Qualcomm Ventures and Magma Venture Partners, with contributions from Vintage Investment Ventures and existing investors. It’s now raised $13.5 million to date and claims more than 20 million active monthly users and done so behind girly games like “princess party planner” and while largely flying under the radar.
  • Lime&Tonic, the digital concierge app for iOS that provides personalised recommendations of “unforgettable” experiences to help users fill their social agendas, has announced that it’s closed a €1 million round of angel funding. The list of backers includes VCs Julie Meyer (Ariadne Capital), Cem Sortoglu (Earlybird Capital), Daniel Lynch (3TS Capital), and Miroslav Boublik (Craig Capital), all of whom have invested in a personal capacity, along with Graham Potts, co-founder of Jobsite. The UK startup says it will use the new funding to further develop the Lime&Tonic product, which currently consists of a web version and iOS app only.
  • Swiss mobile cloud-based field service app maker Coresystems has raised $15.5 million in Series A funding — its first external funding round, despite being founded in 2002. The investment comes from a consortium of private Swiss investors and well-known German tech investor Peter Zencke, a former SAP executive board member and head of research and development. Coresystems says the new funding will be used to accelerate product enhancements and business development and sales efforts to meet growing demand for its mobile cloud apps and software products, which help both small and large companies manage and deliver customer service out in the field.
  • Moscow-based Runa Capital, given that today it is making a $500,000 seed investment into Wallarm a “next gen” web security solution to protect online businesses from application level hacker attacks. The cash will go into developing the company which is switching from a service model to a product business model, and partnering with managed service providers, public and private clouds, PaaS/IaaS, monitoring and log management systems, cloud IPS/IDS services.
  • London-based U.K. startup what3words has closed a $500,000 seed round of financing from a group of angel investors, including Shutl’s Guy Westlake. The startup launched an ambitious bid to reinvent ZIP codes/postcodes back in July using location-pinpointing alternatives made up of a combination of three words each representing a 3m x 3m square of the globe. what3words claimed to have sold 10,000 OneWords a week after launching, priced at £0.99/$1.50 per year. Today it said it’s now sold 25,000 OneWords after around four months up and running. It’s also had some 12,000 app downloads and 200,000 unique visits to its website since launching the service on July 2.
  • Seriously, a new gaming startup from the execs who oversaw Angry Birds-maker Rovio’s game slate and licensing business, raised $2.35 million in seed funding led by Los Angeles’ Upfront Ventures (the firm formerly known GRP) and Denmark’s Sunstone Capital. The company is looking to build what he calls “casual plus” games, even as the rest of the market moves more mid-core with companies.
  • BugBuster, a startup spun out of the Operating Systems Laboratory at the Swiss Federal Institute of Technology (EPFL), has raised just over $1 million in what’s being described as a Series A round — such is the state of available funding in some parts of Europe. This adds to the $1 million previously raised by the company since it was founded in 2011. The investment, from a consortium of angels (BAS and Go Beyond), and previous backers Polytech Ventures, and Hasler Foundation, will be used by BugBuster to bring its cloud-based automated bug detection software for Web apps to market following the completion of Beta testing this month, and for further development.
  • London-based Fantoo raised £450,000 on crowdfunding platform Crowdcube — a seed round it says has been oversubscribed, surpassing the original £400,000 target. It plans to use the investment to launch its AI-driven corporate email solution. Fantoo’s cloud-based email client will use machine-learning to anticipate and automatically categorise a user’s email, presenting it as an optional tapestry of images
  • Rapid-I — a German specialist in analytics tools that wants to become the industry standard for how enterprises predict the future — is today announcing its first round of funding, a rebrand to RapidMiner, and a new HQ in Boston to jump with two feet into growing its business in North America. The Series A of $5 million — the first money ever raised by RapidMiner — is led by Earlybird Venture Capital and Open Ocean, the investment firm backed by the founders of MySQL.
Asia
  • Zomato, South Asia’s largest restaurant guide, listing over 74,500 restaurants in 19 cities across India, UAE, UK, Qatar, and Sri Lanka, closed a $37 million funding round from Sequoia Capital and existing local investor Info Edge to supersize its international expansion plans. It’s raised a total of around $55 million to date. Currently Zomato is operating in eight markets, including the U.K., with around two-thirds of its traffic (15 million monthly users across the web and its apps) coming from its home market of India, vs. 100 percent one year ago before it kicked off its international expansion. It’s currently profitable in India and the UAE.
Mergers & Acquisitions
US
  • Kno, the education startup that started life as a hardware business and later pivoted into software — specifically via apps that let students read interactive versions of digitized textbooks, has been acquired by Intel. The company had raised some $73.4 million in funding since being founded in 2009, with Intel leading its Series C round in 2011. In that $37.5m round, Intel invested $20m.
  • Sincerely, the mobile gifting startup behind the Postagram, Ink, and Sesame apps which allow users to send everything from postcards to greeting cards to even physical gifts from their smartphones, has been acquired by Provide Commerce, the e-commerce business behind a number of big-name brands, including ProFlowers, Shari’s Berries, Red Envelope, and Personal Creations, in an all-cash deal. The company had previously raised $5.5 million in outside funding from Spark Capital, First Round Capital, Charles River Ventures, SV Angel, and others, though only $3 million in funding had been publicly reported before now. Brezina declined to say whether this additional funding was a Series B, or when it closed, however.
  • Origami, the family-focused social service that arose from Y Combinator-backed mobile social network Everyme’s earlier efforts, has been sold. The acquirer, Indiana-based eFamily, has taken over the company’s branding and software, and will continue to develop and support the product, which is good news for current users. Origami publicly launched its family-focused sharing service earlier this summer after a year of development. The product was something of a spin-off of Everyme, a private messaging and photo-sharing app that never really took off, despite having raised $3.66 million in outside funding. But Everyme allowed the startup to gain some early insights it used to build Origami.
  • Dice Holdings acquired onTargetjobs from Warburg Pincus, including recruiting sites HEALTHeCAREERS and Hcareers. Dice Holdings, Inc. purchased the outstanding shares of onTargetjobs for $50m in cash. The sites generated trailing 12 months revenues of approximately $38m.
EMEA
  • Meetic, the France based provider of online dating and matchmaking services, announces the filing on November 6, 2013 by Match.com France Limited of the draft prospectus for a cash simplified public tender offer for all of the outstanding shares of Meetic S.A. at a price of EUR 18.75 per share.
  • Crealogix, the Swiss market leader in comprehensive e-banking solutions, is acquiring a share in the Icelandic software company Meniga. PFM pioneer Meniga is a leading white-label provider of Personal Finance Management (PFM) software for integration into existing digital banking systems in Europe.
Asia
  • Groupon has acquired Korea’s Ticket Monster, for $260 million, to build out its mobile commerce operations in Asia through event ticketing and other commerce services. Ticket Monster had been owned by Groupon competitor Living Social. As part of the purchase, Groupon says it will be acquiring Living Social Korea. (We’re asking if it intends to keep that business fully operational; for now Groupon says that all management staff and brand is coming over to Groupon and there will be further transition plans revealed after the deal is closed. The acquisition is being made for $100 million in cash, with the remaining $160 million in Groupon shares, the company says, with the deal closing some time in the first half of 2014.
  • Monster Worldwide, Inc. (NYSE:MWW), and H&Q Korea, a leading private equity firm in Korea, have reached an agreement for H&Q Korea to acquire 49.9% of JobKorea, Monster’s South Korean operations and the leading career website in the country, for an aggregate purchase price of $90m. Monster will retain management control of the company and leverage H&Q Korea’s expertise and extensive Asian Pacific regional network to enhance and grow this profitable business.
  • HomeAway, Inc, the world’s leading online marketplace for vacation rentals, today announced it has secured a 55% stake in Bookabach Limited, the operator of a leading vacation rental site in New Zealand, in an all-cash transaction. The acquisition also includes Bookastay, the company’s affiliated Australian vacation rental site. Bookabach and Bookastay together feature more than 8,000 property listings in New Zealand, Australia and the Pacific islands.

What to look for when making angel investments?

Here, I’ll try to share some of the things I had to learn the hard way so that for whoever wishes to enter into angel investor, there’s some work cut out for them.

Note: this is something I am still learning along the way so please do correct me if I got it wrong

 

Investment philosophy
Everybody has their own philosophy (or simply put, whatever makes them tick). Here I’m sharing some of mine:

  1. Investor base – I only invest in companies along with other high profile investors (which would allow the company to have great access for future business development if or when required)
  2. Winning formula – I invest in companies with a winning angle (either by a special algorithm, patent protection, lack of competition etc). User traction is important but is not the only factor
  3. Profitability –  Having sheer user numbers is meaningless since a company could spend more money on performance marketing. A clear path to profitability is way more important (and how marketing turns into revenue)
  4. Valuation – I am ok with high valuation but it has to have some sort of support to it.
  5. Region – Most people invest in regions they are close to / understand well. I only invest in US startups but increasingly consider European and Asian ones (yet to do my first one)
  6. Management team – Some people insist of having the management team having successfully exited at least 1-2 startups. For me, I don’t have much of this restriction – as long as they aren’t straight off from college / business school.

The key here is to stick with the rules you set for yourself here. There would be occasions where you see investment opportunities which meets 4 or 5 out of 6 of the criteria, and you are really debating whether to break the rule just this once or not. (And don’t kid yourself, it happens more often than you think!). Rule of thumb is – never break / twist rules you set for yourself to meet one investment opportunity. Better ones will always present themselves further down the line.

Valuation 101
There are a couple of terminologies used which you would frequently see: Capital raisepre-money and post-money valuation.

  • Capital raise: the total amount a company is raising in a particular fundraising round
  • Pre-money valuation: the value (equity value) placed on a company before adding the capital being raised
  • Post-money valuation: Pre-money + capital raise

You would constantly see a company quoting a pre-money valuation in any given round as a basis, simply because pre-money valuation would stay the same while you continue to build up the amount you are raising, and to prevent re-calculation / re-drafting of termsheets if you quote a post-money valuation.

Type of security
There are two ways one could invest in a startup – Straight equity or convertible note. From many perspectives there are lots of differences, which I’ll try to layout a few.

1. Convertible note: Essentially a company is issuing a debt to investors, with the upside of converting to equity shares upon a few pre-determined conditions. Typical financial terms to look for include

  • Principal amount: The amount you are subscribing to in that particular convertible note
  • Interest rate: An accrued interest payment, calculated from the date of signature of the convertible note until the conversion of the note into equity secuirities
  • Equity cap: Different styles of convertible notes would call them slightly differently, but essentially this is the maximum pre-money valuation of your particular conversion, whereas the Series A priced round could be converting at the same time at a higher pre-money valuation. This matters particularly when you expect the Series A pre-money valuation is significantly ABOVE than the equity cap quoted here.
  • Discount rate: In case the Series A pre-money valuation is BELOW equity cap amount stated, then the pre-money valuation for the convertible note holder would be the pre-money stated by the Series A lead investor, less the discount rate stated here.

  • Expiry date: If the company does not raise an equity round on or before the expiry date, the convertible note is automatically converted (unless with written consent from both ends to forfeit the conversion and company agrees to pay investors back in debt holdings)

2. Equity round: Much less terms to look for (Pre-money valuation, capital raise) etc, but there are much more non-financial terms to look for within an SPA (share purchase agreement), e.g. voting rights, board seats, right-of-first-refusal (ROFR), right-of-first-offer (ROFO), and any other terms to protect minority shareholders investing into the company. The SPA can be a handful to read, spanning some 60-80 pages of legal languages. There would also be preference shares terms, as well as a money cap (e.g. 2x / 3x invested  capital)

A convertible note is very popular in US for multiple reasons

  1. Timing and legal issues: Drafting a convertible note purchase agreement is very fast, usually taking a few hours based on set templates. An SPA, however, could take days for the company attorney to draft, and another few days for investors to review and comment. If more than one investor(s) have edits on SPA, that could go on for much longer, and adding to due diligence period, an equity round takes months from termsheet to closing.
  2. Valuation: Placing a pre-money valuation at such early stage could be difficult. If too high then there isn’t enough risk-reward benefit for angel investors; too low then the founders risk selling too much at early stage. The convertible note is a “time buffer” which allows both parties to leave the valuation issue to the Series A lead investor, after proper due diligence and analysis.
  3. Equity cap gain: Usually when convertible note investors subscribe to the note, there is a good expectation of the company leading to a Series A equity round within a short period of time (6-12 months). There would also be an expectation that the equity cap amount is significantly low enough that, upon a Series A conversion, would allow the angel investors have a much lower pre-money valuation than the Series A investors. Effectively, their price per share is much lower
  4. Security: If an angel investor subscribes to an equity round pre-Series A, they get common shares. If a convertible note holder convert as Series A, all investors get Series A preference shares pari passu. There is downside protection to preference shareholders, and if upon a sale / IPO of the company that the asset is higher than the money cap, then all preference shareholders will elect to convert to common shares (i.e. upside is the same)

Usually a convertible note has a minimum commitment of $25k (although there are occasions where startups might accept smaller commitments). If you only have a few thousands to space, AngelList’s Invest Online function could be another option (although as I stated previously, I personally don’t prefer it)

Hopefully after the above, you’re equipped with the basics to understand how to do angel investments!