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Posts Tagged ‘Silicon Valley Business Jouranl’


No turkeys in flock of best Bay Area venture returns of all time

By  –  TechFlash Editor, Silicon Valley Business Journal

“Returning the fund” is the phrase used in the venture world for investments whose returns cover all the bets a firm made from a particular fund.

But not all bets that “return the fund” are equal. In a week when Americans gather to thank their blessings, here is a CB Insights ranking of the 10 all-time best venture returns involving Bay Area-based companies.

The returns are based on how much was invested before a company’s IPO or sale, compared to its valuation at the time of the exit.

A few deals by Bay Area investors that returned the fund but involved companies that aren’t headquartered here have been left out.

That includes Groupon (NASDAQ:GRPN), which provided the third biggest venture return of all-time and was backed early by Accel Partners and New Enterprise Associates. It went public six years ago at a valuation of $12.7 billion after raising about $700 million in funding.

It also includes Snapchat parent Snap Inc., which was the fifth biggest return and was backed early by Lightspeed Venture Partners and Institutional Venture Partners. It went public this year at a valuation of about $33 billion after raising about $3.4 billion in funding.

In both those cases, however, the current market caps of those companies are a lot lower than they were on their Wall Street debuts — $3.1 billion for Groupon and $14.9 billion for Snap.

Let that be a reminder that it’s OK to push away from the feast before you overindulge.

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Apple and Stanford team up to study how Apple Watch might detect stroke condition

Chances are, you’re probably not wearing a dedicated heart monitor capable of measuring abnormal heart rhythms. If you have an Apple Watch, you just might be.

Apple Inc. is partnering with researchers at Stanford Hospital and Boston-based telemedicine vendor American Well to launch a new study into whether the Apple Watch can accurately detect irregular heartbeats, which can be a precursor to strokes, CNBC reports, citing two unnamed sources.

One of Apple’s goals with the Apple Watch was “performing some measurements of your health that people were not measuring, at least continually,” CEO Tim Cook told Fortune in an interview published this week. “Like your heart. Very few people wore heart monitors. We’re extremely interested in this area. And yes it is a business opportunity.”

Earlier this year, San Francisco-based startup Cardiogram gathered 139 million heart rate measurements from 6,158 Apple Watch users and found they were able to detect irregular heartbeats with 97 percent accuracy.

Apple has a vested interest in turning the Apple Watch from a nice-to-have fitness gadget into a must-have health monitoring wearable. On an earnings call in August, Cook said Apple Watch sales had grown 50 percent year-over-year, but declined to provide specific numbers.

The company is also reportedly pursuing the “holy grail” of life sciences— a noninvasive blood-sugar monitor to help those suffering from diabetes. Apple reportedly has hired at least 30 biomedical engineers to work on the glucose monitoring task.

In June, Apple hired Sumbul Desai, the executive director of Stanford Medicine’s center for digital health, to help lead the company’s Health division. Part of Desai’s work at Stanford centered around the Apple Watch and how its sensors could be used to detect specific health conditions.

Apple and health insurer Aetna have also reportedly held secret meetings in an effort to bring the Apple Watch to Aetna’s more than 23 million customers, an initiative that could launch next year. Such a partnership would be another way for Apple to make its Watch a “must own” for consumers.

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How bitcoin, blockchain and cryptocurrencies can be a safe haven in times of crisis

What is your safe haven? What precautions do you have in place for that “Oh, my goodness” time where you need some protection?

Safe havens are needed in several areas of life. One is your home and the shelter you have in times of dangerous weather. In the Midwest, where I grew up, tornadoes were common, and it was normal to have a cellar or basement stocked with supplies for the family for a few days.

Financial planners advise their clients to have a safety fund for times of emergency. This would include a few months of living expenses, the proper types of insurance, some cash on hand in case ATMs are inoperable, and more.

I like a site called Organize-You.com that gives checklists and guides on essential documents and preparation steps to take for wills, health-related matters and more. Economist Mary Kelly, Ph.D., a professor at the United States Air Force Academy, has put together a valuable checklist that you will want to see.

People in countries like Venezuela, Cyprus, Poland, Argentina and others are vividly aware that their money in the bank is not completely safe. Those funds in the bank can be, and have been, confiscated by governments when a time of crisis comes.

You think it couldn’t happen in the USA? I remind you about Executive Order #6102, when President Franklin Delano Roosevelt made it illegal to own gold in the United States. Those who did not turn in their gold were arrested by the Secret Service. Yes, it can (and did) happen in the USA.

A safe haven

A popular safe haven today for many is cryptocurrencies related to blockchain. In countries like Venezuela, people are losing their currency (the Bolivar) to inflation. Many are using bitcoin and other cryptocurrencies to have a safe haven in times of food shortages, riots and destruction. Those who had savings in bitcoin were able to survive the “bail in” when banks confiscated their funds in Cyprus in 2013.

We’ve seen an increased acceptance of cryptocurrencies this year as never before. More than 200,000 retail stores in Japan are accepting bitcoin for payment. Countries like Russia, China, Australia, Canada, England and others are studying cryptocurrencies and blockchain to determine the best way to blend that technology into their system.

Blockchain is not only accepted around the world, but many people also see it and cryptocurrencies as safe havens. There is no doubt that blockchains and bitcoin are important factors today and can help you with your safe haven planning.

You don’t want all of your portfolio in cryptocurrencies by any stretch of the imagination. However, since cryptocurrencies have been much more mainstream and are accepted worldwide, it is a good idea to explore the possibilities. Check with your financial adviser about having at least a small amount of your safe haven resources in cryptocurrencies.

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Twitter shares surge on report of possible takeover

 

Shares of social media platform Twitter surged more than 20 percent in morning trading Friday on reports that the company will soon receive a formal bid from a high-profile suitor, according to CNBC.

Possible contenders for the acquisition of San Francisco-based Twitter include Salesforce, Google and other high-profile tech names interested in the data it’s collected.

“Twitter’s board of directors is said to be largely desirous of a deal, according to people close to the situation, but no sale is imminent,” CNBC reported Friday.

“One source close to the conversations said that they are picking up momentum and could result in a deal before year-end.”

Requests for comment by the Business Times from Twitter, Google and Salesforce were not returned Friday.

At the end of July, slowing advertiser demand and a weakened revenue forecast walloped Twitter, pushing its share price down as the company scrambled to reassure investors it was on the right path.

Twitter recently ratcheted down its revenue guidance to a range of $590 million to $610 million in the third quarter, a significant drop from the $681.4 million analysts had expected. More importantly, Twitter said it had “less overall advertiser demand than expected,” as brands decided not to invest in the platform, adding to ongoing concern about how it will continue to make money.

On an earnings call Tuesday, CEO Jack Dorsey, CFO Anthony Noto and COO Anthony Bain said they are confident Twitter can continue to attract new users. Twitter is hoping new live video deals will lure in more users, and with them, advertising dollars.

Video streaming is part of a suite of new features rolled out by the company in recent months, including tools to allow users to create polls, make political donations and post photos or videos without affecting the 140-character count of tweets.

Twitter also has introduced the ability to buy products and services via a one-step button.

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Most tech startups exit without raising funds, sell for under $50M

Billion-dollar valuations and mushrooming funding round amounts gathered much of the attention of recent years in startup-land.

But a new report shows that the majority of tech startups exit before they raise any venture or private equity funding and their valuation on exit is less than $50 million.

Venture investment research firm CB Insights said in a report on tech exits in the first half of 2016 that 53 percent involved startups that had raised less than $50 million. Another 26 percent were valued at between $50 million and $200 million.

Only about 4 percent were acquired or went public with a unicorn valuation of $1 billion or more. These included General Motors buying Cruise Automation for $1 billion, Twilio going public with a market cap of $1.2 billion and Cisco Systems buying Jasper Technologies for $1.4 billion.

Marquee acquisitions like Cruise and Jasper have increased during the tech IPO drought of the past year or so, but remain rare, Josh Elman of Greylock Partners said last week.

“That is increasing but it’s really only the strong companies that are getting acquired,” Elman said. “The acquihire market, where every team is worth something, has been falling away.”

It’s easy to see why they say that launching a successful tech startup is hard when you consider all of those numbers in the context of this rule of thumb — between 90 percent and 95 percent of them fail to achieve any sort of exit at all.

But the CB Insights report shows that it may not be necessary to do any venture visits to Sand Hill Road to sell a tech startup for millions or even tens of millions.

About 72 percent of the companies that exited in the first half did so without raising any outside venture, private equity or growth funding. That’s actually down slightly from the first half of last year when the number was 75 percent.

Cromwell Schubarth is TechFlash Editor at the Silicon Valley Business Journal.

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Silicon Valley TechFlash
Benchmark VC Bill Gurley warns winds are shifting on unicorn valuations

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Cromwell Schubarth Senior Technology Reporter Silicon Valley Business Journal

Bill Gurley, a general partner at the Benchmark venture firm, sounded another alarm Thursday night about soaring valuations of VC-backed businesses.
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Bill Gurley, a general partner at the Benchmark venture firm, sounded another alarm… more

Venture investor Bill Gurley sounded another warning about the high valuations at venture-backed companies in an overnight tweetstorm on Thursday.

Volatile global stock markets are going to put pressure on CEOs at the growing crop of VC-backed businesses known as “unicorns” that are valued at $1 billion or more, the Benchmark partner said.

That is going to increase pressure to produce a profit or show how one will come, Gurley said, tweeting,”Which Unicorn entrepreneurs/CEOs are prepared for such a shift? Who can adjust quickly? Can you get to profitability on your last round? Have you even considered such a reality?”

This isn’t the first time that Gurley has warned of a pending correction in soaring valuations that profitless venture-backed companies have been getting. He predicted in an appearance at South by Southwest in March that we may see some dead unicorns in 2015.

The shift in focus by public investors to concerns over profits from excitement about rapid growth is a key reason that tech IPOs slowed dramatically since early last year. A number of venture-backed companies that had been expected to go public by now have instead raised IPO-sized funding from late-stage investors at lofty valuations.

Investment research firm CB Insights reported this week that the number of unicorns in the world has grown to 123 and they have a combined valuation of $469.1 billion. It added that their aggregate worth tops the valuation of every company on the Nasdaq 100 except for Apple, which is valued at more than $660 billion.

But LinkedIn co-founder and Greylock Partners VC Reid Hoffman argued in a blog last weekend that, while some valuations are certainly too high there, there are good reasons to believe that others will be validated eventually on Wall Street. He wrote that the term “unicorn” has created a mistaken belief that these valuations aren’t real.

“While the metaphor may put an implied cap on the number of billion-dollar companies that can credibly exist, VC firms and other investors are betting on technology, not metaphors,” Hoffman wrote in a blog posted to LinkedIn over this past weekend.

Gurley’s not buying that, though, apparently. He points to big drops in some prominent tech stocks and on Chinese markets in the past six weeks.

“The bottom line is that global tech valuation multiples are compressing (coming in). Quickly,” he tweeted Thursday night. “One might reasonably assume that this would have an adverse impact on late stage private market liquidity and valuation. I certainly do.”

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Jan 6, 2014, 7:38am PST

Series A funding crunch be damned, VCs say full speed ahead!

500 Startups, led by co-founder Dave McClure, was the most active VC seed investor again in 2013, according to a new report from CB Insights.

Senior Technology Reporter- Silicon Valley Business Journal

Seed funding by venture capital firms hit a four-year high in 2013, according to a new report, despite growing concerns about pending Series A financing crunch.

There was $893 million invested in 843 seed deals last year, according to funding research firm CB Insights, the most since 2009.

The report only examined the seed rounds that included funding from venture firms, a growing proportion of total startup funding over the past four years.

The surge in seed funding by VCs comes despite concerns that a swelling number of startups won’t be able to attract later stage money from venture firms when they need Series A funding to grow.

The top three seed venture investors were the same as in 2012, with 500 Startups repeating at No. 1. Andreessen Horowitz moved up to No. 2 and SV Angel dropped to No. 3.

The number of VC firms actively investing in seed rounds remained level at 112, but that is nearly double the number from 2012 and almost triple the 2011 tally.

The amount of seed financing by VCs in 2013 was 22 percent higher than in 2012 and 74 percent higher than in 2011. Last year’s third quarter was the biggest in this time span, with $257 million invested across 253 unique funding deals.

The average amount invested in each deal in the fourth quarter of 2013 was $1.5 million, up 50 percent over the last four years. The median was up nearly two-thirds in that same time.

The number of seed funding deals more than doubled in two startup sectors: education/training and human relations/work force management. Funding also more than doubled in those two sectors, as well as for startups in the payments business.

The biggest declines were in photography, gaming and news.

Click here to read CB Insights blog about seed funding by venture firms in 2013 and here to see its blog about who the top VC seed investors are.

Cromwell Schubarth is the Senior Technology Reporter at the Business Journal. His phone number is 408.299.1823.

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