5 Qs WITH A DEALMAKER
Good morning, Term Sheet readers.
Exclusive: Foursquare President Steven Rosenblatt is stepping down to launch what is likely to be an early-stage investment firm or accelerator. (Foursquare did not confirm this, but its CEO Jeff Glueck told Fortune that the venture will focus on “early-stage investment and startup advisory services.”) Rosenblatt’s last day as Foursquare’s president is April 2, but he will still be involved with the company as an adviser. Read more at Fortune.
Kirsten Green formed Forerunner Ventures, an early-stage venture capital firm focused on commerce, in 2010 when she noticed a shift in commerce.
“The commerce market was really up for imagination,” Green told Term Sheet. “The access to information had changed everything from what consumers were buying to where they were buying it to how they expected to buy it.”
In a matter of eight years, Green has turned Forerunner into one of the most successful early stage funds in Silicon Valley. It is the only VC firm to have invested in both Dollar Shave Club and Jet.com, which both had exits of more than $1 billion in 2016. Some of Forerunner’s other portfolio companies include Birchbox, Bonobos, Glossier, Hotel Tonight, Warby Parker, and Outdoor Voices.
In a conversation with Term Sheet, Green discusses how she thinks about the evolution of commerce, developing cult-like brand loyalty, and Amazon’s effect on the industry.
In the early stages, how much of a role does the founder’s personality play in their company’s brand?
GREEN: A lot. It’s so powerful when you have a founder who can really embody the brand. Consumers are smart. They connect through authenticity and reject insincerity. If you don’t own your brand in an intimate way, it’s hard to evolve it.
One of the opportunities and one of the challenges with brands today is there are so many more ways to express yourself. If you think about the last cycle, you had a physical location and a glossy photo in a print magazine. It was very two-dimensional in how you could express yourself to the consumer. Today, you have both of those plus a website, plus social media, plus email. The companies with the most reach and the founders with the deepest connection to the consumer are able to show up in all of those different places in unique ways and tie back to the brand’s central mission. That’s very hard to pull off.
Dollar Shave Club, Birchbox, and Glossier all have a cult-like following. How can founders achieve that sort of deep brand loyalty with consumers?
GREEN: Product is really ubiquitous. The nuances of product are often in the eyes of the beholder — we can debate whether you like an Apple phone or a Google phone better. There will be people on either side. So you don’t even have a chance if you can’t deliver an incredible product. But that’s not the win — that’s just table stakes.
We want to spend our time with companies reaching large audiences and having big impact. The thing to compete on, at the end of the day, is delivering a great experience. And a great experience today is honoring the information your customers are willing to give you. It must be personalized to the consumer, and that’s where data plays a huge role.
You recently invested in Hims, a men’s wellness company. It seems like there are quite a few men’s wellness startups popping up these days. Why now, and what opportunities do you see in that space?
GREEN: It’s a result of a couple of things. One, the opening up of telemedicine and the opening up access to prescription medicine. Until recently, the only way to get a prescription was to go into a doctor’s office. Now, there are opportunities to do it otherwise. That’s pretty groundbreaking, and it can be more compelling in particular fields.
Two, there’s a renaissance around men. Men have been the forgotten customer, and that’s mostly because they didn’t ask for more and the industry didn’t deliver them more. Men, just like women, have great access to information they are smart consumers, and they’re taking more things in their own hands. So there’s an opportunity to deliver better to men across many categories.
And three, there are a few prescription drugs in the space that are coming off patent. There otherwise wouldn’t have been the ability to offer those products under any other brand’s name because there was a lock-up on them.
So you have the trifecta of things happening there that makes the timing really great.
You’ve said before that Amazon has done more to open up opportunity for emerging commerce businesses than it has to crush them. Why?
GREEN: When people think of the dawn of e-commerce, they think about Amazon. It’s emerged as the biggest influencer in this entire movement. Consumers used to debate about whether people would be willing to provide their credit card information to shop online or trust that their package would get there on time. Over periods of time, Amazon debunked all of those.
At some point, the consumer was like, “You know what, this is a great way to shop and it is OK to give my credit card information, and generally packages are going to show up on time.” So then they thought: “Why am I not doing everything like this?”
Amazon paved the way for a shift in consumer mindset, and it built confidence with the consumer around this mode of shopping. The company is a formidable force in commerce. I admire Amazon for so many reasons. They’ve been at the leading edge of not just commerce but other things as well, and I have a tremendous amount of respect for them as a business person and a consumer. If I had to guess, I’d say they’ll continue taking market share, but at the same time, I don’t think it’s a one-size-fits all world. They have created a set of rules and expectations with the consumer, and that works for a lot of stuff, but it doesn’t check every box. And this ties back to the fact that the consumer is always asking for more. And that is the challenge and the opportunity.
Industry-wide, female founders received 2% of all venture funding last year. Some VCs have said Katrina Lake’s Stich Fix IPO was huge step forward for women entrepreneurs. Do you agree with this sentiment — that a female-led company going public will have a ripple effect in the tech world?
GREEN: I think role models are really important. Being able to use an example, show how someone did it, and imagine yourself in those shoes is so powerful. Seeing someone like Katrina, who’s done an A-plus job all around on so many levels — as a startup founder, as a leader who scales her company, as a leader who takes her company public — is hugely empowering.
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• Lotus Midstream, a Sugar Land, Texas-based crude oil logistics provider, raised $400 million in funding from EnCap Flatrock Midstream.
• Duetto, a San Francisco-based developer of a revenue strategy platform for the hospitality industry, raised $80 million in Series D funding. Warburg Pincus led the round.
• Varsity Tutors, a St. Louis, Mo.-based provider of academic tutoring services, raised $50 million in Series C funding. Learn Capital led the round, and was joined by investors including The Chan Zuckerberg Initiative and TCV.
• InfluxData, a San Francisco-based provider of open source platforms to manage time-series data at scale, raised $35 million in Series C funding. Sapphire Ventures led the round, and was joined by investors including joined by Harmony Partners, Battery Ventures, Mayfield Fund and Trinity Ventures.
• HackerRank, a Palo Alto, Calif.-based platform that helps companies evaluate technical talent based on skills, raised $30 million in Series C funding. JMI Equity led the round, and was joined by investors including Khosla Ventures, Battery Ventures, Randstad Innovation Fund and Chartline Capital Partners.
• Payfone, a New York and Colorado-based digital identity authentication network, raised $23 million in funding. Investors include Synchrony Financial and MassMutual Ventures.
• Unacast, a New York City-based contextual location data platform, raised $17.5 million in funding. White Star Capital led the round, and was joined by investors including Telia, Open Ocean Capital and Investinor.
• Templafy, a Denmark-based company providing a SaaS platform delivering brand governance across enterprise business communications, raised $17.2 million in Series B funding. Insight Venture Partners led the round, and was joined by investors including SEED Capital and Preben Damgaard.
• Bird, a Santa Monica, Calif.-based dockless electric scooter company, raised $15 million in Series A funding, Craft Ventures led the round with participation from Tusk Ventures, Valor, Lead Edge Capital and Goldcrest Capital.
• NGD Systems Inc, an Irvine, Calif.-based provider of storage devices, raised $12.4 million in Series B funding. Partech Ventures led the round, and was joined by investors including Orange Digital Ventures, Alcor Micro and Benhamou Global Ventures.
• Jobcase, a Cambridge, Mass.-based social platform for the future of work, raised $11.5 million in funding. Providence Equity Partners led the round.
• Kuali, a SaaS software company focused on serving higher education, raised $10 million in funding. The investor was Owl Ventures.
• Overtime, a Brooklyn, N.Y.-based developer of an application that allows users to create and edit sports video highlights, raised a $9.5 million in Series A funding. Andreessen Horowitz led the round, and was joined by investors including Durant Company, Greycroft, Afore Capital, Box Group, Fitz Gate Ventures, Imagination Capital, 645 Ventures and TACK Ventures.
• inVia Robotics, a Westlake Village, Clif.-based provider of robotics warehouse automation solutions for e-commerce fulfillment centers, raised $9 million in funding. Upfront Ventures led the round and was joined by investors including Embark Ventures.
• Loopio, a Canada-based RFP response solution, raised $9 million in Series A funding. OpenView led the round.
• Stealth Security Inc., a Mountain View, Calif.-based cybersecurity startup, raised $8 million in Series A funding. Shasta Ventures led the round.
• Losant, a Cincinatti, Ohio-based enterprise Internet of Things platform, raised $5.2 million in Series A funding. CincyTech led the round, and was joined by investors including Revolution’s Rise of the Rest seed fund, TechNexus, and Vine Street Ventures.
• SEEVA, a Seattle-based company designing visibility systems for mobility, raised $2 million in seed funding. Investors include Trucks VC, Dynamo VC, Expansion VC, Haystack VC and Revolution’s Rise of the Rest Seed Fund.
• Tachyum Inc, a Campbell, Calif.-based cloud chip startup, raised funding of an undisclosed amount. The investor was IPM Growth.
PRIVATE EQUITY DEALS
• JD.com agreed to sell a $2.5 billion stake in its logistics unit JD Logistics o investors including Hillhouse, Sequoia China, China Merchants Group, Tencent, China Life, China Development Bank Capital FOF, China Structural Reform Fund and ICBC International.
• TractManager acquired Equipment Management & Technology Solutions, a Littleton, Colo.-based manager of capital equipment and service contract negotiations for hospitals and health systems. No financial terms were disclosed. TractManager is owned by Arsenal Capital Partners.
• Clayton, Dubilier & Rice agreed to acquire a 60% stake in American Greetings, a Cleveland, Ohio-based maker and distributor of greeting cards. Financial terms weren't disclosed.
• Spectrum Plastics Group, a portfolio company of AEA Investors acquired Apex Resource Technologies, a Pittsfield, Mass.-based provider of specialty plastics for the medical device industry. Financial terms weren't disclosed.
• Accel-KKR made a majority equity investment in FastSpring, a Santa Barbara, Calif.-based subscription-based platform for powering digital commerce. Financial terms weren't disclosed.
• Marlin Equity Partners completed the acquisition of Inkling Systems, a San Francisco, Calif.-based enterprise software platform for field workforce operations management. Financial terms weren't disclosed.
• Harbin Pharmaceutical Group Holding Co will buy an about 40% stake in GNC Holdings Inc (NYSE:GNC) for $300 million and are in talks for a joint venture in China, according to Reuters. Read more.
• Lithium Werks B.V. acquired the assets of Valence Technologies, Inc, an Austin, Texas-based manufacturer and seller of energy systems utilizing its phosphate-based lithium-ion technology. Financial terms weren't disclosed.
• iQiyi, a video streaming service, is planning a U.S. IPO. The company’s parent company, Baidu, said it had filed a draft registration statement with the SEC. Terms of the deal were not disclosed.
FIRMS + FUNDS
• Norwest Venture Partners, a Palo Alto, Calif.-based venture capital and growth equity firm, raised $1.5 billion for Fund XIV.
• Norwest Venture Partners promoted Jon Kossow to managing partner and Lisa Wu to partner on the venture team.
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Polina Marinova produces Term Sheet, and Lucinda Shen compiles the IPO news. Send deal announcements to Polina here and IPO news to Lucinda here.