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A couple of things before we head out. First, we have a piping-hot StrictlyVC Download for you, featuring early-stage VC Jeff Clavier of Uncork Capital, who talked with us about the joy and pain of investing in a market where startups are drowning in capital. We also talked this week with Sheera Frenkel, the New York Times cybersecurity correspondent and co-author of the new book, "The Ugly Truth: Inside Facebook's Battle for Domination," who shared, among other things, why Sheryl Sandberg has nearly vanished from public view.
Thank you, Tegus, for sponsoring this week's episode. If you're curious about how the Tegus platform can get you up to speed on new companies or markets in hours instead of days (Spark Capital is among its customers), request your free trial here.
Also! For those of you who might have missed the news, we're hosting our one and only StrictlyVC Insider event this year on Thursday night, November 11, thanks to the generosity of the commercial real estate services firm CBRE, which is hosting us in its sky-lined space on the 46th floor of the Salesforce Tower in San Francisco, and also of Eclipse Ventures, our exclusive partner in the evening. You can learn a little more about the evening as it comes together right here.
Hope you have a terrific weekend. More Monday.:)
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Top News
Google has infringed upon Sonos’s patents, according to an initial ruling from a U.S. International Trade Commission judge. Sonos has been locked in battle with the search giant since filing a suit against it early last year. More here and here.
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Carta Says It Just Used Its Own Product To Establish a New, Far Higher, Valuation for Itself
Carta, the nine-year-old, San Francisco-based cap table management and valuation software company, just raised $500 million in its eighth round of funding, at a $7.4 billion valuation. That's more than double where the company was valued eight months ago when it closed its seventh round of funding at a valuation of $3.1 billion.
With so much money flooding into privately held companies, giant leaps in valuation are no longer all that notable. What's different about this particular story is how Carta's new valuation was established, which it says was to run an auction using its own trading platform to sell $100 million of its shares to secondary buyers, then use the valuation at which the shares sold -- $6.9 billion -- as evidence to primary investors of Carta's true value.
For a company that's trying to raise awareness of its trading platform -- Carta wants to sell more of the secondary shares of other companies, too -- it was a smart marketing play. It was Carta eating its own dog food, in the somewhat repellant parlance of the startup world. Still, it's unclear whether we're likely to see it replicated by other companies going forward.
First, what Carta did is -- we think -- unprecedented in establishing a price for secondary shares. Typically, a small group comes together and negotiates a price or, if it's 20 or more sellers who are willing to offload shares to buyers, it's considered a "tender offer" and involves a prospectus-type document, including financial statements, risk factors and all that other jazz, which is sent to a set group of potential buyers.
In Carta's case, as Carta CEO Henry Ward suggests in a new Medium post, by running an auction process, many more investors participated in the price discovery of its shares than might have been possible otherwise. (A prior post by Ward pegs this number at 414 participants that participated in 1,484 executed orders.)
It makes a lot of sense, says longtime startup attorney Tim Harris of Morrison & Foerster, who was not involved in the process but is a student of market efficiencies. "Ward is basically saying, 'We're using a broader market price-seeking process instead of what he describes as one-off. You see it in real estate listings all the time," adds Harris. "There's no reason companies can't do the same."
The question that startup founders may be wondering right now is whether an auction process like Carta's can truly help establish a price for primary shares. Naturally, Ward says it can. Indeed, in his Medium post, he says the auction very much strengthened the case that Carta could make to investors, including Silver Lake, the investment firm that ultimately led Carta's newest $500 million round, a Series G. (Carta has now raised $1.29 billion altogether, it tells us.)
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Massive Fundings
Chime, the eight-year-old, San Francisco-based fintech company that no longer calls itself a bank, has raised $750 million in its latest funding round, at a post-money valuation of $25 billion. Sequoia Capital Global Equities led the round, joined by SoftBank’s Vision Fund 2, as well as existing investors General Atlantic, Tiger Global and Dragoneer Investment Group. The funding round positions Chime for a potential IPO in the first half of 2022, a source tells the WSJ. More here.
Big-But-Not-Crazy-Big Fundings
Aforza, a two-year-old, London-based cloud and mobile app developer for consumer goods businesses, has raised $22 million in Series A funding. DN Capital led the round, joined by Bonfire Ventures, Daher Capital, and Next47. TechCrunch has more here.
Cirkul, a six-year-old, Tampa, Fla.-based startup that produces flavor cartridges that can be inserted into its patented water bottles to create customized drinks, raised $30 million in Series B funding. AF Ventures led the round, joined by Siddhi Capital and SC Holdings. The company has now raised $41.6 million altogether. The Spoon has more here.
Graphite Solutions, a seven-year-old, San Francisco-based platform that connects businesses with on-demand independent consultants, has raised $15 million in funding. Valor Siren Ventures led the round, joined by Communitas Capital Partners, Accomplice, Alumni Ventures Group and Cianna Capital. More here.
Kiddom, a nine-year-old, San Francisco-based platform that offers a digital curriculum that fits the core standards required by states, has raised $35 million in Series C funding led by Altos Ventures, with participation from Owl Ventures, Khosla Ventures and Outcomes Collective. TechCrunch has more here.
Motivo, a nine-year-old, Palo Alto, Ca.-based developer of AI-powered design solutions to speed up the time it takes to design chips, has raised $12.5 million in Series A funding. Intel Capital led the round, joined by Storm Ventures, Seraph Group, and Inventus Capital. TechCrunch has more here.
Wonder Brands, a year-old, Mexico-based firm that acquires and partners with ecommerce companies that sell through MercadoLibre and Amazon, just raised $20 million in seed funding. ALLVP and Mountain Nazca led the round, joined by CoVenture, Victory Park Capital GFC, QED, Korify Capital, and Endeavor Catalyst. TechCrunch has more here.
Blue J, a six-year-old, Toronto-based maker of predictive analytics software for tax and employment law, has raised $9 million in Series B funding. Generation Ventures led the round, joined by Relay Ventures, Mistral Venture Partners, and LDV Partners. BetaKit has more here.
Contact, a year-old, London-based booking platform for models and creatives, has raised £1.4 million ($1.9 million) in seed funding led by Founders Fund, with participation from LAUNCH, Sweet Capital, Rogue VC and angel investors. TechCrunch has more here.
Retrain.ai, a year-old, New York-based startup platform that aims to help governments and organizations retrain and and level-up talent, has raised $7 million from its current investors Square Peg, Hetz Ventures, TechAviv, .406 Ventures, Splunk Ventures, and Schusterman Family Investments. The company has now raised $20 million altogether. TechCrunch has more here.
StatusPRO, a year-old, L.A.-based sports training technology company that uses data, augmented and virtual reality, has raised $5.2 million in seed funding. KB Partners and TitletownTech co-led the round, with participation from Greycroft, Verizon Ventures, Haslam Sports Group, 49ers Enterprises, and SC Holdings. More here.
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Exits
Clearlake Capital Group and Insight Partners have agreed to sell a jointly owned data business in an all-cash transaction for $1.83 billion. They are spinning off Louisville, Ky.-based Appriss Insights, a unit of Appriss, to the data analytics and technology giant Equifax. The two private equity firms will retain parent Appriss, says L.A. Business Journal. Appriss Insights provides data used in public and workplace safety, law enforcement, fraud detection and prevention and healthcare credentialing. More here.
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People
Apple’s tools for flagging child pornography and identifying explicit photos in kids’ messages caused backlash and confusion. Apple software chief Craig Federighi defends the tech to the WSJ.
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Essential Reads
A new dark web service promises to illustrate for cybercriminals how their crypto holdings and transactions could link then to known criminal activity.
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Detours
How the soccer world came to take Transfermarkt so seriously.
The dark side of massive infrastructure spending.
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