(Photo via CBI Insights)

CB Insights released a new report about venture capital financing for the first quarter of 2013, and after a bleak 2012, things are looking up for New York startups. The state beat out Massachusetts for the second time in the last two years on “overall number of deals and funding” (not exclusive to tech companies), placing just behind California.

The report notes that the number of Internet deals hit its highest spike since the first quarter of 2010, with 379 deals.  Social websites aren't faring as well. The report mused that they're “so 2007,” as they accounted for just four percent of deals. Nationally, VCs invested $6.9 billion across 841 deals, making deal activity the “highest level since dot com days.” Seed funding "still registered a strong quarter," though it didn't near its Q3 of 2012 highs.

Meanwhile, clean tech deals are plummeting, with less than $500 million being invested in the sector in the year’s first quarter. “In the past, a single Clean Tech deal might be greater than that,” the report notes.

In New York, funding increased to a five-quarter high of $715 million, with funding climbing a "gargantuan" 113 percent since the first quarter of 2011. It's "no surprise,” writes the report, that Internet-related deals topped the number of deals made (71 percent) and money invested (74 percent share of investment dollars).

The report also ranked Warby Parker’s $41.5 million funding round as a “top” deal. Other deals of note include Aereo, SR Labs and AppNexus. Manhattan racked up 84 deals in the first quarter, totaling $642 million; Brooklyn had eight deals, totaling $13 million.

What bubble?

This is apparently what Valleyites imagine upon seeing a birthday prior to the Iran Hostage Crisis. (Photo: Shermanave.com)

All the world loves a prodigy, but nowhere more so than Silicon Valley. Investors love to talk about all the exciting ideas flowing forth from the 20-somethings, and it sometimes seems startups are half business, half playroom.

It's all very exciting if you're a college kid looking for an alternative to the 9 to 5 grind. But if you're a technology veteran in his fifth or sixth decade, it looks a lot different. In fact, as Reuters reports, it looks a whole lot like age discrimination run rampant.

Ageism is notoriously tough to prove. But Reuters says that, in discrimination claims, age is cited more commonly in California than nationally. And there's a mountain of anecdotal evidence. Take the tale of 60-year-old Randy Adams, who kept losing jobs to younger applications until he finally just shaved his head and slapped on a pair of Converses. Apparently, that was all it took:

"I don't think I would have been able to get this CEO job if I hadn't shaved my head," says Adams, who has founded eight venture-backed companies.

Nor has he stopped there!

Adams has supplemented his makeover by trading in his button-down shirts for T-shirts, making sure he owns the latest gadgets, and getting an eyelid lift.

It seems Mr. Adams has all sorts of informal rules to which older applicants should hew if they want a fair shot. Backpacks, not briefcases. Androids and Apples, not Dells and Blackberries. And for the love of God, no wristwatches: "'The worst would be a gold Rolex,' he says. 'Tacky, and old.'"

Silicon Valley loves to wax poetic about the creative juices of youth, but the ageism side of the coin is rarely discussed. Sexism, for all its prevalence, at least gets a hearing: Just today, women in the gaming industry have been swapping stories of appalling treatment on Twitter. But it's not exactly a secret, either. HR departments can't screen outright for youngsters, but investors run around saying things like this:

Khosla Ventures' Vinod Khosla, 57, told conference goers last year that "people over 45 basically die in terms of new ideas."

Mr. Khosla told Reuters, "I was encouraging people to try new things that go against conventional wisdom," but that still sounds pretty much like No Olds Need Apply to us.

As the Reuters piece points out, there are plenty of legitimate reasons startups tend to hire young. 25-year-old singles don't have to rush home to put the kids to bed, and newly minted college grads are up on the latest in computer science.

But running a business isn't all grandiose pitch decks and TechCrunch Disrupt appearances. Sometimes it takes a steadier, more experienced hand, and sometimes that means hiring someone over the age of 40. Maybe if Silicon Valley kept around a few more wizened ancients, they'd be able to do a little bit better on the pattern recognition.

High Peaks cofounder Brad Svrluga, whom Sidetour cofounder Mark Webster thinks is handsome. (Photo: VYou)

When we first joined VYou back in its beta phase, it seemed like just another platform for innocuous oversharing, albeit a higher maintenance one: instead of oversharing from bed in your PJs, you had to look rather presentable to record a video of yourself.

But now, as celebrities flock to the video question and answer platform as a new way to connect with fans, VYou is focusing on building out another aspect of its site: video-based knowledge sharing. In the upcoming weeks, VYou will be assembling groups of experts in various areas. Users can ask them questions and get responses directly from the experts.

To inaugurate this upcoming feature, VYou has launched an "Ask Angel Investors & Venture Capitalist" group, featuring a slew of New York bigwigs like Dave Tisch, Adam Ludwin and Alex Taussig.

"This is the first group that we’ve done and it’s the first one that’s really focused on expert knowledge," Steve Spurgat, VYou's CEO, told Betabeat by phone. "In the past we’ve had channels; many of what were formerly channels will become groups. But we’re evolving this even further into the ability for people to define themselves as having a certain level of knowledge or a certain interest and then be able to accept question or answer questions that are around that interest. This group is our first foray into that."

Mr. Spurgat admitted that this Q&A knowledge sharing effort does bear some resemblance to Quora, but that asking and recording answers on video "gives a more intimate view into how people are sharing information." It also lends legitimacy to experts, who users might otherwise assume have assistants run their social media accounts. Of course, just because you're video recording your answer doesn't necessarily keep you from bullshitting.

"Venture capitalists are definitely people that others want to learn from and interact with, but they don’t always feel very accessible," Mr. Spurgat added.

And yes, all of the VCs that VYou got to participate in this group so far are investors in VYou themselves (surprise, surprise).

The folks at VYou were kind enough to allow Betabeat to ask a handful of questions of the investors and we expended a lot of energy controlling ourselves from asking flat out, "Do you ever feel like you're full of shit?" Instead, our questions touched on hardware vs. software startups, vulture capital and portfolio financial metrics. We also asked, "What's a thing that a portfolio company could spend money on that would annoy you?"

Mr. Taussig was unfailingly diplomatic in his response, but when "forced," he replied that "other than gross offenses like private planes," he would have to go with "spending a lot of money on paid advertising before you're ready." Mr. Nova was equally gracious. "Most of the companies we invest in are pretty smart with our money. We typically don't like to see fancy office spaces or furniture or crazy travel and entertainment budgets. But in 20 years of investing I haven't seen a company overspend in these areas." Mr. Tisch said that really excessive founder salaries "don't make sense."

You can watch some of their answers here, or embedded below.

Swap Ryan Phillippe for @aplusk, of course. (Photo: Wikipedia)

Let's face it: There's a reason clubs will pay reality stars just to come hang out. People are more intrigued by a famous face. Silicon Valley might think itself above crass fame-whoring, but that doesn't mean tech folk are immune to the siren song of social proof. Witness, for example, the rise of the so-called "party round."

Today TechCrunch takes on the topic of these early-stage "family-style" rounds, where angel investors and VC firms pony up a bit of cash (often as a kind of option for later investments), but no one quite leads the pack. The process is compared to--what else?--high school:

Second tier VCs want to be in the same rounds as first tier VCs and third tier VCs want to get in on the deals offered to 2nd tier VCs. It’s all very high school if you think about it on any sort of anthropological level.

Only in the Valley: "I don't know if I feel like going out. Who's coming?" "Marc Andreessen." "Well, why didn't you say so?"

Hm, that triggers more recent memories, namely: standing in long lines outside clubs that, once you're finally admitted, aren't actually all that great. Because the problem with party rounds is that everyone has a stake but no one has a big enough stake to give much of a damn. There's therefore little incentive for investors to step up when inexperienced founders face challenges.

This recent post from Chris Dixon argues they're also bad for investors:

It’s hard to disentangle cause and effect here, but most likely there are a few causes: 1) higher-than-market valuations due to no lead investor there to negotiate and lower price sensitivity of investors “buying options” on the next round 2) small checks reflect lack of investor confidence which in turn reflect something else risky about the startups’ fundamentals 3) worse exits in the downside scenarios because investors don’t help out.

The thing about raging parties is that, all too often, one wakes up the following morning with a raging hangover.

Original photo: (flickr.com/niallkennedy)

We've got to hand it to 500 Startups founder Dave McClure: dude sure knows how to make a point. GeekWire reported yesterday that at the GROW business conference in Vancouver, Mr. McClure went on an obscenity-laced tirade against VCs, calling them "insufferable, arrogant, fucking assholes." Whoa, what's the punishment for investor-on-investor crime?

Mr. McClure apparently has quite the vocabulary: he reportedly "dropped the F-bomb and the word asshole more than a dozen times," which makes us think 500 Startups is actually a secret fight club where founders learn to verbally abuse each other until the loser cries. (We hear Regina George is a mentor.)

The colorful Mr. McClure also stressed that wearing a suit is the "stupidest thing," as it scares off engineers, to which we have one reply: "But dudes look sooo good in them!"

"The last 10 to 20 years, you’d think that it has been all about VCs making money, because that’s all we hear about,” Geekwire quotes Mr. McClure as saying. “But really it is all about VCs failing and failing to return capital and being f**king idiots. VCs are stupid."

Mr. McClure then asked anyone to challenge him on that claim, prompting conference attendees to look nervously down at their hands and fumble with the program, fearing the consequences of accidentally making eye contact.

It's tough to argue with the foul-mouthed sailor-turned-incubator founder, though. The data supports his claims, except maybe the "insufferable" part. We just don't have metrics for that yet.

(Photo: Noobpreneur.com)

Here's an interesting take on why Twitter is suddenly giving the finger to API devs: "I suspect the reason that Twitter is cutting off apps from using its 'friend finder' feature is because most people do not create content in Twitter and therefore have no incentive to use Twitter outside of the value of its graph." [Dustin Curtis]

Fred Wilson thinks venture capital funds have grown too big and has some ideas on how to fix them. [Technology Review]

There are fewer and fewer women in Google's inner circle, so the GOOG engineers dealt with it the only way they know how: by building a predictive algorithm to help them recruit and retain more female employees. [New York Times]

Turns out the freemium model is not exactly free for businesses. [Wall Street Journal]

Here's why the FTC let Facebook buy Instagram. (Hint: ’cuz Facebook Camera sucks.) [TechCrunch]

(cbinsights.com)

News flash: it is not 1999 anymore, and it appears that corporate venture capitalists have adjusted accordingly. CB Insights released its Q1 Corporate Venture Capital Report yesterday, revealing that CVCs participated in just 84 deals totaling $1.09 billion, a record low for the past five quarters.

But while overall CVC funding is down 20 percent, funding for the Internet sector is up 30 percent, with CVC deals in that sector increasing for the third straight quarter.

Corporate venture capital refers to the direct investment of corporate funds into external startups—as opposed to corporate venturing, which involves internal innovation support. For example, AOL Ventures, the venture capital arm of AOL, which invested in TastemakerX last quarter, and Time Warner Investments, which made deals with Conviva and Bluefin Labs this spring.

CB Insights analyzed data on the activity of over 200 corporate venture capital arms, concluding that corporate deal and funding volume continue to fall. CVCs participated in only 11 percent of all venture deals for the first quarter. CVC funding in the mobile and telecom sector fell 45 percent from last quarter, although CB insights expects to see an increase in Q2’12. Corporate funding for the green sector is also at a five quarter low.

The report found that when CVCs do invest, they tend to be involved in larger deals. According to CB Insights, CVCs spent, on average, $5.5 million more per deal than traditional VCs in Q1 2012.

CVCs were also found to be later stage investors—only 32 percent of all CVC deals were early stage investments in Q1 2012—as well as frequent co-investors. The average CVC deal in Q1 had 4.3 investors, and over 90 percent of CVC deals involved at least one co-investor.

Findings revealed that CVC activity in New York and Massachusetts has fallen for the fourth consecutive quarter, with Texas nearly overtaking New York for the third place spot. California remains in the lead, having received 60 percent of national corporate funding in Q1.

“CVCs are not partying like it’s 1999,” concluded CB Insights CEO and co-founder Anand Sanwal.

(flickr.com/seanvenn)

Steps to success Moteevate, formerly known as Fitango and self described as “the motivational social network,” went live last week. The site makes achieving your goals sound really easy by breaking them down into three steps: choosing from over 600 action plans (or making up your own), inviting your friends to “motivate and cheer you on,” and, finally, following the plan to accomplish your goal.

Keep running Fitocracy, the fitness social network that lets you track your workout progress and compete against your friends, has made some changes to their team. Cofounder and former CTO Richard Talens is now the Chief of Growth and Analytics, and senior engineer Daniel Roesler is stepping in as the new CTO. The company has also hired Jay Patel as a new backend developer.

New and improved The Tumblr app for iOS just got a makeover and is now faster and also looks better, with support for higher resolution photos as well as redesigned notification tabs which make navigation much easier. The improved app also includes offline support, which allows users to write blog posts, reblog, and leave comments while offline, which will be posted automatically the next time the iPhone connects to the Internet.

Perfect pitch The Harvard Business School Alumni Angels of Greater New York (HBSAANY) and the National Association of Investment Companies announced the finalists for their inaugural Venture Capital Access Program, intended to provide “women and diverse entrepreneurs” with access to venture capital through accredited investors. The six finalists, Castle Surgical, MetaLayer, Shadow Digital, Take the Interview, Tiger Trade, and Torsch, Inc. will present their to HBSAANY on Wednesday.

Better Homes and Gardens Hometalk, the online home and garden social network, just launched a redesign. The site also announced that it now has a community of over 100,000 homeowners, renters and home improvement professionals.

Hablo espanol ZocDoc en Espanol launched last week, providing Spanish-speaking users with a free online service that helps find nearby Spanish-speaking doctors and dentists and book appointments.

Now hiring We hear that MoviePass is looking for a Full Stack Lead Developer & Architect, Alta Investors needs a Graphic Designer, and Boxee wants an iPad and iPhone Developer.

Ms. Pao (kpcb.com)

Ellen Pao has broken her silence to issue a short statement regarding her position at Kleiner Perkins, the firm she is suing for gender discrimination--on Quora, of all places. (Quora: a publicist's nightmare?)

On a question asking if she had left the firm following her lawsuit, Ms. Pao wrote the following simple yet powerful statement: "No, and I don't plan to quit." The answer received over 250 upvotes, primarily from bloggers and techies, as well as 13 comments. Of note is one comment from 500 Startups cofounder and prominent VC Dave McClure, who responded with a strong gesture of support. "Hang in there ellen :)," he wrote, and 24 people upvoted it.

The vast majority of the comments were immensely supportive. "Fight the good fight," wrote one user. Added another: "Hang tough, Ellen. Lots of people are rooting for you. (Many anonymously, unfortunately, given the circumstances)."

That last comment seems to encompass a lot of the reticence and anxiety embedded in a lawsuit of this magnitude. If she is telling the truth, Ms. Pao will hopefully shed light on what is demonstratively a male-dominated industry. But if she's not, the consequences for women in VC will be dire.

It does seem that the notion of women in venture capital has been weighing on Ms. Pao for quite some time. In 2010, she responded to a Quora thread wondering about the gender breakdown of various venture capital firms: "Kleiner Perkins is at 23% with 8 female partners," she wrote at the time. Since then, the firm has hired four more partners, bringing its ratio of female partners to 24 percent.

(rso.cornell.edu)

An interesting question showed up in our Quora digest email this afternoon. "What is the worst part of being a VC?" one user wondered. No, "sexism" wasn't one of the answers, but apparently there are quite a few grievances for the partners on Sand Hill Road. The main complaint? Turns out there sure are a lot of assholes in the VC business.

An anonymous poster who claims to be "a VC general partner for nearly 10 years at a large brand name fund" posted the following missive:

But if forced to pick - the worst parts of the job are:

1. Dealing with your partners. At a large fund, there are lots of partners. And what it takes to become a partner at a big fund and stay there for years is often a high asshole factor, ability and desire to deal with firm politics and internal jockeying for power.

Don't get me wrong. There are some great great partners.  But I think 2/3rds of the people in the GP ranks at big firms have massive egos.

He added, "As one LP put it 'VCs have more ego per dollar of return than any asset class we know of.'" Dude's got jokes!

The poster continues to elaborate on the ways this assholery manifests itself, including being a partner in name but not actually have control, and "crazy backroom politics," where VCs agree, "'You vote for my deal at a Monday meeting and I will vote for yours.'"

The answer received 23 comments, almost all of them gushing in their approval of the poster's honesty. Roger Ehrenberg, a managing partner at IA Ventures, lauded it as "a truly brilliant and candid response."

We can't disagree. In fact, all of the answers to the thread provide some compelling insights into the walled garden of venture capitalism.

Ramy Adeeb, a principal at Khosla Ventures, was more blunt about the drawbacks: "Wasting your life cheering on the sidelines instead of making things happen." Do we detect a hint of bitterness, good sir?

Other cons mentioned:

• The fact that VC is an inherently lonely business.
• Having to say "no" all the time.
• Dealing with the failure of a company you invested in and really believed in.

In the end, we're more partial to VC Mark Suster's response: "You'd have to be a pretty big baby to complain about being a VC." It does seem like a pretty cushy gig, at least for dudes.