June 23, 2017

The "other" swamp

What follows is much longer than anything we've previously published in Pro Rata. But I felt it was important to include in its entirety. Preemptive appreciation for your patience...

"What do you know about a VC named Justin Caldbeck?"

That was the question a (now former) colleague asked last year, at the end of an unrelated conversation. I replied that I knew little more than his official bio, including some news I had broken a few years earlier that he had left Lightspeed Venture Partners to form a new firm called Binary Capital with a pal of his who had left General Catalyst. My colleague then said she had heard stories about sexual harassment toward toward female founders, and that it seemed to be an open secret among a subset of Silicon Valley's small (but tight) network of women VCs and founders.

But we were not the only reporters who began chasing this story. Again, open secret. At least two others were onto it as well, including The Information's Reed Albergotti, who yesterday published a must-read account that includes on-the-record statements from three founders:

"The women who made the allegations include Niniane Wang, who co-created Google Desktop and served as CTO of Minted, and Susan Ho and Leiti Hsu, co-founders of Journy, a travel planning and booking service. Ms. Wang alleges Mr. Caldbeck, while informally trying to recruit her for a tech company job, tried to sleep with her. Ms. Ho said that Mr. Caldbeck, while discussing investing in their startup, sent her text messages in the middle of the night suggesting they meet up. Ms. Hsu says that Mr. Caldbeck groped her under a table at a Manhattan hotel bar."

These stories are largely in line with what two other female founders (who requested anonymity) told me about their own experiences while seeking to raise money from Caldbeck, who provided the following statement:

"Obviously, I am deeply disturbed by these allegations. While significant context is missing from the incidents reported by The Information, I deeply regret ever causing anyone to feel uncomfortable. The fact is that I have been privileged to have worked with female entrepreneurs throughout my career and I sincerely apologize to anyone who I made uncomfortable by my actions. There's no denying this is an issue in the venture community, and I hate that my behavior has contributed to it."

To be clear: I also have spoken to some female founders who had no such experiences with Caldbeck. But the consistency in their stories, and the vestigial fury in the voices of those women I spoke with, is too noticeable to ignore or sweep under the rug as he said/she said.

It also would be to ignore separate accusations against Caldbeck by the female founder of a company in which he had led a Lightspeed investment (and where he served as board observer). The situation rose to the broader board level, with the ultimate resolution resulting in non-disclosure agreements on all sides. Lightspeed also would sell some of its existing investment in the company to a different investor, although the exact reason for that remains in dispute (what isn't disputed is that Lightspeed's sold shares would later rise in value).

Moreover, some of the accusations date back to before Caldbeck's time at Lightspeed, from when he was a junior investor at Bain Capital Ventures. From a female founder I spoke with:

"I'm there trying to get an investment from Bain, and he's literally telling me we should finish the conversation in his hotel room. He knew I had a boyfriend, but apparently that meant more to me than it meant to him. This wasn't just casual flirting, which would have been bad enough."

Why it matters: Because it f'ing matters. The power dynamic between venture capitalists and fundraising founders is virtually the same as a boss and an employee. To even give a whiff of a sexual quid pro quo is not only to abuse your position, but is to absolutely devastate (usually first-time) female founders who already know that they stick out in a male-dominated startup ecosystem. If you've even walked up within spitting distance of the line, you've walked too far.

These founders also worry that by speaking up — particularly early in their careers — they could be branded as "that one" who isn't worth the risk. I do hope, however, that women putting their names to these allegations in Albergotti's story, combined with Susan Fowler's nuclear bomb of a blog post, will encourage others to speak up. The unfortunate truth is that I simply could not write this until Albergotti published, as I failed to get anyone on the record, which is virtually essential from a journalistic perspective. This is not to diminish the bravery of those who spoke anonymously, but rather to reflect a basic truth: Only sunlight can burn away this sort of behavior, and protect others from it in the future. These experiences should not be part of startup life.


Enel Group of Italy said that it's U.S. unit has agreed to acquire EnerNOC (Nasdaq: ENOC), a Boston-based provider of energy management solutions like demand response, for around $250 million in cash (excluding assumed debt). The $7.67 per share deal represents a 42% premium to Wednesday's closing price.

  • Why it's the BFD: When EnerNOC went public a decade ago, it was in the vanguard of a group of VC-backed tech companies that promised to both lower energy costs and improve the environment. Its valuation soared to over $1 billion on its first day of post-IPO trading in May 2007 — years before Aileen Lee coined the phrase "unicorn" — with its share price peaking at $49.10 that December. But it has never really recovered from the dual gut-punch of the recession and falling gas prices, despite increased interest in demand response born by a more diversified energy source supply and the rise of IoT.
  • Bottom line: "EnerNOC has been struggling on multiple fronts. In its core U.S. demand response business, it has had to contend with legal threats, market changes, and increasing competition. Meanwhile, its Energy Intelligence Software business -- its name for the stable of software products built or acquired over its lifespan -- hasn't taken off with customers as fast as hoped." — Jeff St. John

Venture Capital Deals

• Kalray, a French developer of low-power microprocessors, has raised $26 million in new VC funding. Safran and Penpai were joined by return backers ACE Management, CEA Investissement, EUREKAP, Héléa Financière and INOCAP Gestion. http://bit.ly/2s2XDi1

• Algorithmia, a Seattle-based public marketplace for AI functions and algorithms, has raised $10.5 million in Series A funding. Backers include Google's new AI-focused fund, Work-Bench and return backers Madrona Venture Group, Rakutan Ventures and Osage Venture Partners. http://bit.ly/2sxoXIE

• Synthio (f.k.a. Social123), an Atlanta-based customer data platform, has raised $10.5 million in new VC funding. Fulcrum Equity Partners led the round, and was joined by return backers Vocap Investment Partners, Spinnaker VC Direct, LLC, Bahns Stanley, Stanley Partners, Ellis Capital, Buckhead Investments, the AIM Group and Silicon Valley Bank. www.synthio.com

• Duocaitou, a Chinese crowdfunding platform for hotel and apartment projects, has raised $10 million in Series A funding. DCM Ventures led the round, and was joined by Shunwei Capital. http://bit.ly/2sy1irx

• Sense, a San Francisco-based engagement platform for contractor work, has raised $10 million in seed and Series A funding. Accel and GV led the rounds, and were joined by Signia Venture Partners, IDG Ventures and Khosla Ventures. http://bit.ly/2tswMh6

• CloudBeds, a San Diego-based provider of hospitality management software, has raised $9 million in Series B funding. PeakSpan Capital led the round, and was joined by Nashville Capital, Cultivation Capital, ClearVision Equity and TTCER Partners. http://bit.ly/2rJxLZg

• Westwell Lab, a Shanghai-based AI chipmaker, has raised an undisclosed amount of Series A funding led by Fosun Group. http://bit.ly/2t2HuxJ

Private Equity Deals

• Gemspring Capital has acquired the assets of Therma Corp., a San Jose, Calif.-based provider of mechanical contracting services for industrial, commercial and biomedical clients. No financial terms were disclosed. www.therma.com

• Global Logistic Properties, a Singapore-listed logistics facilities company, asked for its shares to be halted this morning, with its shares falling 7% on an FT report that several prospective takeover bidders – including The Blackstone Group, KKR, RRJ Capital and TPG Capital – have dropped out of the process. A quasi-insider bid led by China's Hopu Investment Management (which has a director on GLP's board) remains likely. http://on.ft.com/2sxTLcm

• Hilltop Private Capital and KCB Private Equity have acquired Spiral Binding, a Totowa, N.J.-based manufacturer and distributor of print finishing, graphic arts and presentation equipment and services. No financial terms were disclosed. www.spiralbinding.com

• Rockbridge Growth Equity has acquired Kings III Emergency Communications, a Dallas-based provider of installation and monitoring of on-site emergency phones for building owners and property managers. No financial terms were disclosed. http://bit.ly/2s2Xzi0

• That's It Nutrition, a Los Angeles-based maker of healthy snacks focused on fruits and vegetables, has raised an undisclosed amount of growth equity funding from Opus Equity Partners. www.thatsitfruit.com

Liquidity Events

• Home Chef, a Chicago-based meal kit company, is exploring strategic options that could include a sale, according to Reuters. A deal could be worth around $600 million. Home Chef has raised over $50 million in VC funding, from firms like L Catterton, Agility Capital, Shining Capital and Guild Capital. http://reut.rs/2rJGzhu

More M&A

• Modern Times Group (Oslo: MTG) has agreed to acquire San Francisco-based games publisher Kongregate from GameStop (NYSE: GME) for $55 million. http://bit.ly/2sxTKF7

• Vinci SA (Paris: DG) is considering a takeover bid for French airport operator Groupe ADP (Paris: ADP0, were it to be put into a privatization process by the controlling French government, according to Bloomberg. Vinci currently holds around an 8% stake in ADP, which has a market cap north of €14 billion. https://bloom.bg/2sDf1f7

🐖 WhistlePig, a Vermont-based maker of small-batch rye whiskey, is exploring a sale after receiving takeover interest, according to Bloomberg. https://bloom.bg/2sFph6K


• Dyal Capital Partners has acquired a minority stake in the management company of TPG Sixth Street Partners, a global credit and credit-related investment firm. No financial terms were disclosed. www.tpg.com/platforms/tssp

• Iris Capital of Paris has closed its latest VC fund with €250 million in capital commitments. http://bit.ly/2sy800L

• J.P. Morgan Asset Management has closed its second global shipping fund with $480 million in capital commitments. www.jpmorganassetmanagement.com

It's Personnel

• Craig Milius, a former general partner with Austin Ventures, has joined private equity firm Brentwood Associates as a managing director. www.brentwood.com