5 Qs WITH A DEALMAKER
Before Rebecca Kaden was a venture capitalist, she was a journalist. She worked for the Economist in London and later as a special projects editor at an online literary publication.
“I was excited about the intersection of technology and content,” she told Term Sheet. “I quickly realized that where publications needed most help was around figuring out how content could make money.”
She then went to business school at Stanford to figure out her next step when she was introduced to the team at Maveron, a consumer-focused early stage venture firm. She worked her way up from associate to partner in a matter of several years and worked on investments including Allbirds, Dia & Co, Newsle (acq. LinkedIn), Periscope (acq. Twitter), and WayUp.
Just five months ago, Kaden joined Union Square Ventures as the first (and only) female general partner. She spoke with Term Sheet about her investment strategy, the intersection of blockchain and consumer, and how she’s worked her way to the top of the industry so quickly. Below is an excerpt of our conversation. Read the full Q&A here.
TERM SHEET: What are the similarities between journalism and venture capital that you think have helped you as an investor?
KADEN: Both are really people-centric jobs, particularly at the early stages of venture. You’re really trying to understand how someone thinks — what’s their motivation? What inspires them? What are they really trying to do? What are they saying versus what do they really mean? You need to be able to quickly develop a relationship in which they divulge things that they may not be telling other people.
You spent six years at Maveron, a firm solely focused on consumer companies, but recently joined USV. What do you focus on now?
KADEN: USV is also a very thesis-driven firm. We’re a tight partnership — there’s six of us. We think about how can we make some big bets on companies in the categories we’re interested in. When the firm first started, there was this macro-thesis of how network effect can create leveraged growth. It evolved from there to include a bunch of other things — vertical networks, the infrastructure that supports networks, and the decentralized Internet.
Network effect is obviously integral to blockchain and cryptocurrencies. How do you foresee those networks evolving in the consumer space?
KADEN: The intersection between blockchain and consumer is not quite there yet. I think it’ll get there, but the heart of blockchain is: Can we build something on a decentralized Internet that doesn’t have aggregated data that’s owned by a third-party?
I think it will eventually intersect with consumer, and there are a couple of use-cases that make sense so far. Collectibles may be the first one. But from a mass consumer point of view, consumers still gain a lot from a centralized Internet. A lot of interaction with brands is built on trust. You trust that someone is facilitating the interaction, and you know that when you have a problem, you can call customer service.
For blockchain to have mass consumer implications, it’s going to have to offer some level of convenience and ease that a lot of centralized services do. I’m just not really sure we’re there, but we’ll continue to keep an eye on this.
You were the first female partner at USV. What was it like to join an all-male partnership that was expanding for the first time?
KADEN:I’m a huge believer in finding lots of ways for venture to expand the percentage of women who are checkwriters. It’s not only healthy for the industry, I think it’s healthy for entrepreneurs. Do I notice that I can bring a different perspective than my partners? Of course I do. Maybe that’s because I’m a woman, maybe that’s because I’m 20 years younger than them, maybe it’s because I just have different life experiences. In general, producing new perspectives around the table is an important thing to do.
As a partner who’s relatively young compared to the industry average, what was it like working with founders in the beginning when you didn’t have decades of experience under your belt?
KADEN: Younger VCs who are rising up the ranks ask me about age a lot. Now, I can point to a list of companies I’ve invested in, but your reputation builds over time. In the beginning, how do you win when you’re just starting out? There are two main ways that worked for me.
The first is that I had really supportive partners, and that was true at both Maveron and USV. At Maveron, the other partners were really good at pushing me out in front and telling entrepreneurs about how great I was rather than talking about themselves. When you work with people who are going to do that for you, that can be your best asset.
And the second thing you can do when you’re just starting out is to tell entrepreneurs: “I’m going to work my ass off for you. Your win is my win.” You need to be determined to help them succeed and show a level of commitment that will stand out. Of course, there are some entrepreneurs that will want the most seasoned person in the room, but I’ve found that there’s a segment of founders who really valued that commitment and work ethic.
THE LATEST FROM FORTUNE…
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• Uber Agrees to Pay $10 Million to Settle Discrimination Lawsuit (by Verne Kopytoff)
• Commentary: Apple Actually Cares About Users’ Data. Facebook Could Learn a Lesson (by Alex Salkever)
• Alphabet Research Arm X Wants to Apply Artificial Intelligence to Farming (by Jonathan Vanian)
• Oscar, a New York-based provider of health insurance plans, raised $165 million in funding at a $3.2 billion valuation. Founders Fund led the round, and was joined by investors including 8VC, Verily Life Sciences, Fidelity, General Catalyst, Capital G, Khosla Ventures, and Thrive Capital.
• Intercom, a San Francisco-based customer platform for internet businesses, raised $125 million in Series D funding at a valuation of $1.275 billion. Kleiner Perkins led the round, and was joined by investors including GV (formerly Google Ventures).
• Relativity Space, a Los Angeles-based 3D printing startup, raised $35 million in Series B funding. Playground Global led the round, and was joined by investors including Social Capital, Y Combinator Continuity and Mark Cuban.
• Canopy, a Lehi, Utah-based cloud-based practice management platform for tax and accounting professionals, raised $30 million in funding. New Enterprise Associates led the round, and was joined by investors including Wells Fargo Strategic Capital, Pelion Ventures, University Growth Fund and EPIC Ventures.
• BetterUp, a San Francisco, Calif.-based provider of performance coaching, raised $26 million in Series B funding. Lightspeed Venture Partners led the round, and was joined by investors including DFJ, Freestyle Capital, and Crosslink Capital.
• Kenna Security, a San Francisco-based provider of predictive cyber risk solutions, raised $25 million in Series C funding. Bessemer Venture Partners led the round, and was joined by investors including US Venture Partners, Costanoa Ventures, PeakSpan Capital, Hyde Park Angels and OurCrowd.
• Pipefy, a San Francisco-based operations platform that deploys back-office processes without IT support, raised $16 million in Series A funding. OpenView and Trinity Ventures led the round, and were joined by investors including Redpoint eventures, Valor Capital, 500 Startups and Founders Fund.
• Spring Labs, a Chicago-based creator of a blockchain-based network, raised $14.75 million in seed funding. August Capital led the round, and was joined by investors including Victory Park Capital, GreatPoint Ventures, Pritzker Group Venture Capital, Multicoin Capital, Wavemaker Genesis (part of the Draper Venture Network), and Jump Capital.
• LetsGetChecked, an Ireland-based startup that offers a health test kit service, raised $12 million in Series A funding, according to TechCrunch. Optum Ventures led the round, and was joined by investors including Optum and Qiming Venture Partners. Read more.
• Remesh, a New York City-based artificial intelligence-focused software company, raised $10 million in Series A funding. General Catalyst led the round, and was joined by investors including LionBird Ventures, North Coast Angel Fund and Techstars Ventures.
• Arraiy, a Palo Alto, Calif.-based computer vision and machine learning platform for the motion picture and television industry, raised more than $10 million in Series A funding. Lux Capital and Softbank Ventures led the round, and were joined by investors including Dentsu Ventures, Cherry Tree Investments, IDG Capital and CRCM Ventures.
• Electric, a New York-based IT support solution for small and mid-size offices, raised $9.3 million in Series A funding. Bessemer Venture Partners led the round, and was joined by investors including Bowery Capital and Primary Venture Partners.
• Atidot, an Israel-based developer of big data and predictive analytics tools for the life insurance industry, raised $5 million in Series A funding. Vertex Ventures led the round, and was joined by investors including The D.E. Shaw Group, Moneta Seeds, and Bank Hapoalim.
• Fastdata.io, a Santa Monica, Calif.-based real-time stream processing company, raised $5 million in seed funding. CrossCut and Pelion Venture Partners led the round, and was joined by investors including NVIDIA.
• Huckleberry, a San Francisco-based provider of insurance products, raised $4.1 million in seed capital. Uncork Capital led the round, and was joined by investors including Crosslink Capital, e.ventures, Great Oaks Venture Capital and Promus Ventures.
• Flipside Crypto, a Boston-based company that uses algorithms to analyze liquid cryptocurrencies, raised $3.4 million in funding. True Ventures led the round, and was joined by investors including The Chernin Group, Resolute Ventures, Boston Seed Capital, Converge and Founder Collective.
• Canvas Medical, a San Francisco-based software developer for the healthcare industry, raised $3 million in funding. Upfront Ventures led the round, and was joined by investors including iSeed Ventures and Village Global.
• LendingCrowd, a U.K.-based peer to peer lending platform, raised 2 million pounds ($2.8 million) in funding. Equity Gap led the round.
• Neighbor, a peer-to-peer storage company, raised $2.5 million in seed funding. Investors include Peak Ventures and Pelion Ventures.
• PreVeil, a Boston-based company dedicated to providing enterprises with private and protected email and files, raised Series A funding of an undisclosed amount. Spark Capital led the round.
PRIVATE EQUITY DEALS
• LLR Partners invested $30 million in Midigator, a Lindon, Utah-based chargeback and fraud technology platform.
• Silver Lake acquired a $500 million minority stake in Credit Karma, a San Francisco-based provider of credit scoring, reporting, and monitoring services.
• Silver Oak Services Partners recapitalized Brilliant Staffing, a provider of temporary and permanent finance, accounting and IT professionals for the Greater Chicago and South Florida markets. Financial terms weren’t disclosed.
• Narrow Gauge Capital acquired Class Appraisal, a Birmingham, Mich.-based provider of real estate asset valuation and appraisal management solutions. Financial terms weren’t disclosed.
• TCV has acquired a controlling interest in Watermark, a New York-based provider of assessment software for higher education institutions. Financial terms weren’t disclosed.
• General Atlantic invested in Landmark Health, a Huntington Beach, Calif.-based risk-based provider group that delivers home medical care for chronically ill patients. Financial terms weren’t disclosed.
• National Response Corporation, a portfolio company of J.F. Lehman & Company, acquired Cleanline Waste Water Solutions Ltd, a U.K.-based provider of specialty compliance and environmental services. Financial terms weren’t disclosed.
• Strand Equity acquired a minority stake in Youth To The People, a Los Angeles-based superfood skincare brand. Financial terms weren’t disclosed.
• Thompson Street Capital Partners agreed to acquire YX Genomics Holding Corp, the holding company of Memphis-based Transnetyx, an automated genotyping company for biomedical researchers. Financial terms weren’t disclosed.
• Hasa, Inc, a portfolio company of Peak Rock Capital, acquired Inter Valley Pool Supply, Inc, a Pomona, Calif.-based packager and distributor of water treatment chemicals.
• OneSmart International Education Group, a Shanghai-based K-12 after-school education provider, raised $179.3 million in an offering of 16.3 million ADSs priced at $11, the low end of its range. The firm posted revenue of $331.3 million in 2017, and earnings of $39.2 million. Carlyle Asia Partners (15.8% pre-offering) and Goldman Sachs (11.4%) back the firm. Morgan Stanley and Deutsche Bank are underwriters in the deal. Read more.
• Homology Medicines, a Bedford, Mass.-based firm treating rare genetics diseases, raised $144 million in an IPO of 9 million shares priced at $16, an upsized IPO at the high end its range. The firm posted loss of $30 million in 2017. 5AM Ventures (24.8% pre-offering), ARCH Venture (22.4%), Deerfield (14.7%), and Novartis (7.3%), back the firm. BofA Merrill Lynch, Cowen, and Evercore ISI are joint bookrunners in the deal. The firm plans to list on the Nasdaq as “FIXX.” Read more.
• GreenTree Hospitality, a Shanghai, China-based hotelier, raised $143 million in an IPO of 10.2 million ADSs priced at $14, below its $16 to $18 range. The firm previously planned to offer about 19.4 million ADSs at the same range. The firm posted revenue of $119.6 million and earnings of $43.8 million in 2017. Morgan Stanley, BofA Merrill Lynch, and UBS are underwriters in the deal. The firm plans to list on the NYSE as “GHG.” Read more.
• Cushman & Wakefield, the real estate brokerage giant, is interviewing advisers for an IPO as early as this year, Bloomberg reports citing sources. TPG backs the firm. Read more.
• Rackspace Hosting, the cloud computing firm, is under consideration for an IPO by owner Apollo Global Management, Bloomberg reports citing sources. Read more.
• Distribuidora de Gas del Centro, the Argentine gas distributor, pulled out of an IPO on the Buenos Aires stock exchange citing market volatility. Read more.
• Pandora (NYSE:P) acquired AdsWizz, a San Mateo, Calif.–based provider of digital audio advertising and data technology, for $145 million in cash and stock. AdsWizz had raised approximately 2 million euro ($2.5 million) in venture funding.
• Lytro, a Mountain View, Calif.-based imaging startup, is shuttering operations. It had raised approximately $215.8 million in venture funding from investors including Qualcomm Ventures, NEA, and Andreessen Horowitz.
FIRMS + FUNDS
• Lightspeed Venture Partners, a Menlo Park, Calif.-based venture capital firm, plans to raise $1.8 billion for its third fund, Lightspeed Venture Partners Select III, according to a regulatory filing.