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Posts Tagged ‘sequoia’

Earlier today GigaOm reported that Dropbox raised a new $7.25 million funding round over the summer (a number they derived from a SEC filing but that CEO Drew Houston wouldn’t confirm). We just spoke to Houston, who says that figure is wrong, and it’s off by nearly a year: Dropbox did close a Series A funding round, but it was for $6 million, and it was back in October 2008. And it was led by Sequoia, not Accel (though Accel did participate in the round).

Previously, Dropbox raised a seed round from Sequoia that was $1.2 million in convertible debt (they also raised money through the Y Combinator program).

Aside from the not-so-recent funding, Dropbox has been killing it lately. Houston tells us their membership numbers were up 25% in October, spurred in part by their new iPhone app. And the company also managed to gain control over Dropbox.com (previously their service was hosted on the domain getdropbox.com). They’ve also recently hit 3 million users, only two months after they passed the 2 million user milestone.

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There’s a ton of buzz around location right now. Our discussion on it at the RealTime CrunchUp this past Friday easily could have gone on twice as long as it did. There are just so many interesting facets: Business models, privacy, real-life social implications, and so on. Not surprisingly, we’re seeing an explosion of services that are built around it. One such service was a TechCrunch50 demo pit company this year, OnTheRoad.

Started in 2004 in the Czech Republic to connect travelers, newer devices like smartphones with GPS are poised to take the service to the next level. While a lot of location services such Foursquare, Gowalla, and now Loopt are built around the idea of “checking-in” to venues, OnTheRoad takes a different approach. It’s more about creating a geotagged travel diary when you specifically go on a trip somewhere.

Visitors to your OnTheRoad travel page see a map with various locations marked. On the other side of the screen there is a dynamic timeline of entries depending on what place on the map they click on. (A good example is the page the OnTheRoad team created for their TechCrunch50 trip.) This journal can contain both text and pictures. The use of this map-plus-timeline to navigate through your trip makes a lot of sense. There is also a horizontal timeline along the top of the page to go step-by-step through a trip that way.

And for the person on the trip, it’s easy to update on the go, which is obviously key. You can update your OnTheRoad journal via SMS, email, IM, or the service’s dedicated mobile apps. But what’s great is that even if you don’t have access to something like GPS to tag an entry, if you simply state where you are, the service will be able to figure it out. And if you do have access to the service’s Android or iPhone apps (the latest version of the iPhone app was rejected recently due to an API issue that they are resolving, we’re told), it’s even easier to update.

The company says Symbian and BlackBerry apps are also in the works. They also have an API they will be launching later this week. If you choose to update your page through the main website admin center, it’s a little cluttered, but overall seems to be pretty intuitive. But again, the mobile way to update seems to be key.

Though, as I said, OnTheRoad originally launched in 2004, the new direction for the service as a location-based travel journal only came about around 9 months ago. Since then, they have added about 5,000 registered users with over 50% of those coming from mobile devices. And the service is only currently localized for three areas, the Czech Republic, Germany, and the U.S. (with Japan and China in beta testing). They hope the new iPhone app, when approved, will help them make a stronger push in the U.S.

So what’s the plan to make money? Next year, the team has “5 or 6 revenue streams” they’re going to look at, U.S. marketing manager Michaela Romanova tells us. One is looking at subscription-based premium features, such as breaking news for locations. Another interesting idea involves using OnTheRoad to supply worldwide 911 numbers to travelers. In Europe, the company has already been monetizing a bit, having launched in the past year a promotion with a new Volkswagon SUV that had OnTheRoad built in to the dashboard console.

They face some competition from the likes of TripIt and Dopplr, but really this trying to be something else. It will no doubt help you organize trips a bit better like those services do, but this is more about simply sharing stories and pictures from where you are while on the go with people back home.

OnTheRoad may not be the Ker0uac novel, but it’s interesting.

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This morning we broke the news that Canopy Financial, no. 12 on this year’s Inc. 500 list of fastest growing companies, is a complete sham.

And it’s no surprise that today, everyone is trying to point the finger at everyone else.

The company’s investment bank, Financial Technology Partners, which has represented Canopy Financial through at least two separate rounds of fraudulent fundraising, emailed to say:

“Hi there, I’d respectfully ask for some consideration here and would like to have our information / logos / screenshots taken off of your Canopy Financial posts. We clearly had no clue about any such wrongdoing and exposure to this is not something we are interested in. Understand you guys are all about the news, but we’re a small firm and had nothing to do with this. Please pass to Michael Arrington if you don’t mind.”

Let me just highlight one part of that email – “We clearly had no clue about any such wrongdoing.” Err, what? You are the investment bank that was out pitching the deal to venture capitalists. You proudly stated that you were the company’s “sole strategic and financial advisor.” And you never made a call to KPMG to see if they actually represented the company and if their financial statements were real? A 10 second phone call could have cleared this up before investors plowed $85 million into the company.

But even better is CEO Vikram Kashyap’s comment, which comes via his attorney:

Statement from Ismail Ramsey, Vik Kashyap’s Attorney Regarding Allegations of Fraud at Canopy Financial

Vik Kashyap had no prior knowledge whatsoever of any fraud regarding Canopy’s financial statements. He is as surprised as anyone about these allegations. He relied on financial and legal professionals in accepting the authenticity of the company’s financials. Going forward, he will leave his role as CEO of Canopy, but will remain as Chairman of the Board of Directors, helping to ensure that anyone who committed fraud is held fully accountable.

I mean, sure, he’s just the CEO. What does he know? The company was engaging in long term financial fraud with completely made up numbers. And he’s the victim. Never fear, though, he’s “helping to ensure that anyone who committed fraud is held fully accountable.”

Except himself.

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Gideon Yu, the former Facebook CFO unceremoniously shown the door in late March, has joined Khosla Ventures as a General Partner, we’ve heard from multiple sources.

Prior to Facebook, Yu has held positions at Yahoo (SVP Finance), YouTube (CFO) and, most recently, a short stint as a partner at Sequoia Capital. He is credited with being one of the main architects of the landmark $1.65 billion Google acquisition of YouTube in 2006.

Khosla Ventures has been in the news recently - they are raising another $1 billion to fund investments in a wide variety of startups (Internet, cleantech, mobile, fundamental science, etc.). A list of their investments is on their Crunchbase profile.

This is the second former Sequoia partner to join Khosla Ventures. Pierre Lamond joined the firm in March 2009.

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BEIJING, CHINA– Starbucks is a franchise in China that worked. The company opened locations at the bottom of all the major tourist hotels and downtown areas where returning Chinese, expats and business people traveling to China would pop in for some familiarity and to hold meetings, much like they do in the U.S. For people hoping to mix with that crowd, Starbucks became something of an aspirational brand in China. Tea was what your parents drank; a latte was something exotic and western.

No one thought Starbucks would work in China, but it did. Sequoia Capital, however, is not Starbucks.

There are a few ways to set up venture activity in China. One is to become a limited partner for a local firm. Another is to relocate an existing partner to build an office. The most common is to hire well-known, connected investors already in China, and Intel Capital, which has been investing in China longer than almost anyone, is one of a few farm systems for that. Typically this is known as  the “franchise model.” The hired China partners operate under the Kleiner Perkins or Sequoia brand name and typically share the same limited partners, but the funds themselves are separate. In exchange for that name and fund raising advantage, the Valley firms take a healthy chunk of the carry.

It seemed like the best of all strategies a few years ago. These firms want experts but don’t necessarily want to slow down or meddle in their deal making. But the cache of the top Valley brands only goes so far over here. In 2008 Kleiner Perkins’ China partnership exploded, with two of its four partners quitting in a dispute that was far more contentious than a lot of Valley media reported at the time. In a week of touring China’s start-up scene, I’ve barely heard the KPCB brand mentioned at all. Now, it seems it’s Sequoia’s turn for some humble China pie.

It’s no secret Mike Mortiz has been traveling back-and-forth to China a great deal, and he’s fond of telling reporters that’s because of all the opportunity. I asked him at Kenshoo’s recent US launch party about the unique challenges of investing in China versus the US, Europe or Israel. He said he wasn’t trying to stonewall on the answer, but that all venture investing was just hard, no one place more than another.

Really? Several sources in China and Silicon Valley have confirmed Moritz has been in China this week addressing Sequoia’s so-called “China Problem.” In February, one of Sequoia China’s founding partners, Zhang Fan, resigned due to “personal reasons.” I’ve now talked to close to twenty sources in the venture scene in Beijing and Shanghai who say those “reasons” were that Zhang was well known for taking bribes, kickbacks and other unethical behavior. People are fond of pointing out that Zhang’s biggest hit was Asia Media Company, which later had to de-list from the Tokyo Stock Exchange under a scandal. Whether it’s true or not, he certainly didn’t do Sequoia’s brand any favors here.

That left the other founding managing director at the helm, the highly respected Neil Shen, who founded Ctrip.com, the so-called “Expedia of China,” and Home Inns & Hotels Management. I’ve talked to several VCs and entrepreneurs in China who say Shen is a prickly guy but his deal judgment is unparalleled in the country. He’s even a bit of a hero to some entrepreneurs. But unfortunately, Shen too is in hot water. U.S. firm Carlyle Group is suing Shen for more than $200 million in damages for allegedly blocking a Carlyle deal in a Chinese medical research firm. Said one person close to Sequoia in China, “Moritz will have to fire him. He has no choice.”

If that’s the case, it may not be obvious at first. Venture capitalists tend to fire partners gradually and quietly. Frequently they’re still given offices and assistants as they phase out of decision making.

Even the widespread speculation could be a big blow for Sequoia, which at one point seemed to be one of the better-adapted Valley names here. It still employs two other managing directors and several more vice presidents and associates in China, but for many Chinese entrepreneurs Shen represented the brand as much as Moritz does in the U.S. There are few China investors with solid operating experience, particularly in the Internet.

And it can’t be good news for Sequoia’s limited partners who haven’t taken to kindly to Sequoia’s pressure to make them invest in not only China, but in other unproven Sequoia funds aimed at India and later stage U.S. companies, according to very wide-spread reports and my own reporting.

Player hating is part of human nature, so it’s no surprise that other Valley investors have whispered with glee that the once-dominant Sequoia seems distracted by all this. The competition’s biggest fear: Moritz solves the problems and Sequoia starts to focus on what it does well again.

(Sequoia did not respond to a detailed request for comment or clairification of this story and has a long-standing policy of not commenting on the firm’s internal matters.)

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