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Backing Culture Genesis, T.I. launches Tech Cypha, an investment syndicate for tech deals

With an inaugural investment into the Los Angeles-based entertainment startup Culture Genesis, Clifford Harris Jr., who’s better known as “T.I.”, has launched a new syndicated investment vehicle called Tech Cypha.

Launched by the music and cultural impresario with more hustle than hustle and his business partner Jason Geter, the new collaborative investment strategy focused on tech startups will allow high-net-worth individuals to participate in deals.

The strategy has evolved since Geter and Harris made their first investment 12 years ago into a company called Streetcred.com, a site that allowed fans to go online and share opinions about street culture. While that first deal didn’t work out, Geter and Harris both remained interested in the technology and startup scene and saw a new opportunity to leverage their networks and promote new businesses.

“We learned a lot,” says Harris. “Now we know where our demographic is.”

For Geter, that demographic is taking advantage of Atlanta’s surging position as a cultural and technological mecca in the United States. Indeed, Atlanta-area startups raised roughly $1.15 billion in 2018, a record for the region, according to data from PitchBook and the National Venture Capital Association.

“Being in the city of Atlanta and with Georgia Tech producing so much talent, and coming from us being within the hip-hop culture, which is always influencing and promoting things, we saw an opportunity,” says Geter. “In the past, we were always looking through the glass window and looking at ways we can participate earlier. And that’s by coming together to pool our resources so we can invest more.”

Harris and Geter aren’t the first hip-hop entrepreneurs to branch out into tech investment.

Calvin Broadus Jr. (better known as Snoop Dogg) closed a $45 million investment fund last year; Sean Carter, or “Jay-Z” launched Marcy Venture Partners; the Chamillionaire, Hakeem Seriki, is an entrepreneur in residence at the LA-based firm Upfront Ventures and has his own app; and Nas, who founded Queensbridge Venture Partners, recently saw an exit when one of his companies, PillPack, was sold to Amazon for around $750 million.

“We are a group of guys and girls who’ve been doing business together over time. While we’ve been doing just fine on our own we thought that if we surround ourselves with like-minded individuals and pool our resources together we could do much more together than on our own,” says Harris.

Investors and entrepreneurs should think of Tech Cypha as an open-ended investment syndicate — like a rap version of SV Angels out of Silicon Valley.

“It’s people around our constituency who wake up knowing that there is dealing to be done,” says Geter.

While the Culture Genesis crew out of Los Angeles may seem slightly out of the Atlanta-based wheelhouse for Tech Cypha, the company’s co-founder Cedric Rogers spent a lot of time in Atlanta.

“I lived in Atlanta for many years and [Geter] and I have grown a relationship over seven years,” says Rogers. “I’m excited to work with these guys.”

For Harris, the opposite of moderate, immaculately polished with the spirit of a hustler and the swagger of a college kid, the investment into Culture Genesis is indicative of the type of deal that the syndicate will make. It’s got a media component, it’s leveraging new technology and it taps into the incredibly tech-forward community that comprises the rising middle class audience of urban (for lack of a better word) consumers.

Now the only question is whether Harris and Geter can find out what’s up and what’s happening next.

VC funding of cybersecurity companies hits record $5.3B in 2018

2018 wasn’t all bad. It turned out to be a record year for venture capital firms investing in cybersecurity companies.

According to new data out by Strategic Cyber Ventures, a cybersecurity-focused investment firm with a portfolio of four cybersecurity companies, more than $5.3 billion was funneled into companies focused on protecting networks, systems and data across the world, despite fewer deals done during the year.

That’s up from 20 percent — $4.4 billion — from 2017, and up from close to double on 2016.

Part of the reason was several “mega” funding rounds, according to the company. Last year saw some of the big eight companies getting bigger, amassing a total of $1.3 billion in funding last year. That includes Tanium’s combined $375 million investment, Anchorfree’s $295 million and CrowdStrike’s $200 million.

According to the report, North America leads the rest of the world with $4 billion in VC funding, with Europe and Asia neck-and-neck at around $550 million each, but growing year-over-year.

In fact, according to the data, California — where many of the big companies have their headquarters — accounts for nearly half of all VC funding in cybersecurity in 2018. By comparison, only about $300 million went to the “government” region — including Maryland, Virginia and Washington, DC, where many government-backed or focused companies are located.

“As DC residents, we have to think there is more the city could do to entice cybersecurity companies to establish their headquarters in the city,” the firm said. Virtru, an email encryption and data privacy firm, drove the only funding of cybersecurity investment in Washington, DC last year, they added.

“We’ve seen this trend in the broader tech ecosystem as well, with many, large international funds and investment outside of the U.S.,” the firm said. “Simply put, amazing and valuable technology companies are being created outside of the U.S.”

Looking ahead, Tanium and CrowdStrike are highly anticipated to IPO this year — so long as the markets hold stable.

“It’s still unclear what the public equity markets have in store in 2019,” the firm said. “A few weeks in and we’re already experiencing a government shutdown, trade wars with China, and expected slow down in global economic growth.”

“However, only time will tell what 2019 has in store,” the firm concluded.

A look at Birdies, the popular slipper shoe startup that just raised $8 million more from investors

Bianca Gates is a first-generation American, her parents having immigrated to the U.S. from Latin America. As such, she says, after graduating from UC Irvine, she was expected to get a safe job with a 401(k) plan and to live with her parents until she was married.

Things haven’t gone exactly that way, but one can imagine Gates’s parents feeling pretty satisfied with their daughter’s trajectory nevertheless. The reason: Gates and Marisa Sharkey are the co-founders of Birdies, a four-year-old, San Francisco-based footwear brand that has made it chic to step out in shoes that look like elegant slippers, and which just raised $8 million in Series A funding led by Norwest Venture Partners, with participation from Slow Ventures and earlier investor Forerunner Ventures.

Sure, another e-commerce brand, why should you care? Actually, if haven’t seen the shoes out in the wild, there’s a high likelihood that will change soon, including because one of the company’s biggest advocates to date has been Meghan Markle, the actress-turned-Duchess of Sussex, whose fashion choices are copiously detailed by entertainment sites around the world, copied by their readers, then picked up by readers’ friends.

Interestingly, Markle was never meant to step outside in the slippers. But let’s back up a bit first, to Gates’s earlier career, a familiar story that underscores the value of grit — as well as the importance of making the right connections.

As Gates tells it from Birdie’s offices on Union Street, a kind of yuppie haven in San Francisco, “My family was living in Santa Ana and I was commuting every day to Irvine and I just wanted to spread my wings and move to a big city with a lot of diversity after graduating.” Thanks partly to her fluency in Spanish, she landed a job with the broadcast giant Univision as an account executive. After more than three years, and “realizing I didn’t want to be typecast as an Hispanic person working for Hispanic TV,” she left for Viacom, where Gates fell for a colleague.

He landed soon after at Stanford Business School, and after plenty of cross-country flights, the two married and moved to San Francisco to start their family, with Gates opening up an office for Viacom’s MTV in the process. But she was soon feeling antsy again. “It was really convenient for me, but I [felt] after having my first child and working out of a satellite office that I was out of the action. I wanted to be closer to people.”

As it happens, she caught a 2011 commencement speech that Facebook COO Sheryl Sandberg delivered to Barnard College students and decided to apply to Facebook. Six months of interviews later, she landed a job leading retail partnerships, where she helped sales organizations understand what was then a new platform to them.

She also made powerful friends, including Priti Youssef Choksi, a Facebook colleague who was striking corporate and business development deals and whom Gates befriended over a series of events at the home of Sandberg, who quietly hosted employees she identified as eager to do more with their careers. “You didn’t photograph yourself there or talk about [the dinners], but it helped Priti and I form a deeper friendship,” recalls Gates.

The friendship — and Sandberg’s support — would eventually help get Birdies off the ground.

So did Gates’s obsession with finding post-work, pre-slipper-type shoes, which she says dates back a decade. “I just found that more and more, I was being asked to take off my shoes in friends’ homes and I was asking people to do the same. I thought that stylish shoes for indoors made a lot of sense,” but she wasn’t sure if there was a void in the market, or if she just imagined one.

She decided to pursue the idea while recognizing that she couldn’t do it alone. She still had that big job at Facebook that she loved. She also had two young kids at home at this point. So Gates texted her friend, Marisa Sharkey, a former Ross Stores executive who’d moved from Manhattan to Sacramento with her own family and was feeling restless. “I texted her and said, ‘I have this crazy idea; I’ll call you tomorrow.’ Marisa texted back immediately and said, ‘Tell me what it is.’” Within no time at all, Sharkey was fully committed, putting $50,000 into the venture, alongside Gates, who also put $50,000 into the venture.

What did they get for their money? Shoes that today give them both “PTSD,” jokes Gates, but that became the starting point of Birdies.

It wasn’t so easy, but some key connections made the difference, one of which surfaced through good-old-fashioned outreach. “We became so obsessed with our idea that we asked everyone we talked with whether they could help. Through degrees of separation, we were connected to someone who’d just retired from the footwear business in L.A and knew some factories in China and agreed to help introduce us to them.”

It was a game changer, even if what the factories were left working with wasn’t exactly pretty. Think shoes torn apart, their innards — including their memory foam inserts — reassembled on construction paper.

“The shoe industry is very small and it’s really hard to get into a factory unless you know someone,” says Gates. “It isn’t like making apparel, where you can go to a factory in South San Francisco and make 24 dresses and see how it goes. With footwear, you can’t try in small doses.”

It was one of many learnings yet to come, including the realization they had nowhere to store the 1,800 pairs of shoes they’d had to order — and which arrived sooner than expected outside of Sharkey’s home. (They wound up housed in her garage.)

Gates also began worrying about losing her full-time job, eventually writing Sandberg to explain that she was responsible for a garage piled high with slipper shoes that she hoped to sell — then fretting about what the return email would say. As it happens, Sandberg “couldn’t have been more supportive. I even forwarded her note to my manager, saying, look, Sheryl is cool with this,” says Gates, laughing.

Fast-forward several years and Birdies is now a legitimate, if surprisingly small, operation, one with just six employees but a big and fast-growing base of customers.

Its very first customer, Gate’s Facebook friend, Choksi, wound up being an important champion. Choksi left Facebook last year to become a venture capitalist. And as a partner with Norwest Venture Partners, she just led the firm into Birdie’s competitive Series A round, a development about which she sounds excited. “Even that first pair — they didn’t look like the random shoes I was putting on with what I was wearing at home,” recalls Choksi. “I could also get the mail and do quick errands.”

She still has them, she says. “They’re fairly worn out, but I keep them to taunt Bianca.”

Meanwhile, Meghan Markle helped put the company on the map. A short lifestyle piece about Birdies in the SF Chronicle got the ball rolling. “We started to gain traction,” and with that came the nascent attention of fashion editors and celebrity stylists, says Gates. But the company still had very limited resources. It had to choose one celebrity on which to focus and it zeroed in on Markle, then an actor starring in a show called “Suits.”

“We just loved her casual elegance,” says Gates of Markle, whose courtship with Prince Harry was on no one’s radar at the time. “We loved that she often wore simple button-downs and jeans and casual loafers. We also liked that she was this humanitarian.” Birdies sent Markle a complimentary pair of shoes, and to its great delight, Markle took to them. In fact, she began wearing them all the time and tagging them on Instagram, too.

There was just one problem. Markle was wearing them everywhere other than indoors. “It was this amazing, frustrating moment for the brand, because they were made for entertaining in the home.” They might have stewed longer, but a quick call with Bonobos founder Andy Dunn — who’d attended Stanford with Gates’s husband — soon set Gates and Sharkey straight. “He basically said, ‘You just fell into a much bigger opportunity.’”

A thicker rubber sole followed, and the rest is history in the making. Not that it’s all been a walk in the park. The company has at times had waitlists of up to 30,000 people — an enviable but very real problem it hopes its new round of funding will help solve.

As happens with many new brands, it’s also wrestling with price points, offering several limited-edition shoes in partnership with designer Ken Fulk last fall that “brought in a whole new customer” but were also priced at $165, roughly 30 percent more than most of its slippers, says Gates. (Birdies more recently introduced a “resort” slipper that’s priced at $95, and Gates says the company hopes to introduce other, more affordable designs down the line.)

There’s also the challenge of figuring out which new markets to chase while simultaneously hiring, fast. Choksi and Norwest, which has reach into many consumer brands, is helping on the latter front. Meanwhile, Gates says to expect more in the way of bridesmaids’ slippers, as well as other new designs coming this spring and summer.

Like another e-commerce footwear startup that’s taking off  — Rothy’s — which has filed a patent infringement suit against a rival, Birdies also seems poised to see more copycat designs.

Asked about this, Gates doesn’t seem terribly concerned, not yet. “We’ve had friends tell us that Target is offering a similar slipper at a different price point. Everybody copies everybody,” she says. “It’s our job to create a brand beyond the silhouette of a slipper, because that can be knocked off, it’s not defensible. What is defensible is why [a customer] is buying Birdies, and why she is telling her friends to shop us. It’s our job to give her more than a product, to lift her up.”

Birdies has now raised roughly $10 million altogether, including $2 million in seed funding led by Forerunner in the fall of 2017.

Above, left to right, co-founders Bianca Gates and Marisa Sharkey. Photo courtesy of Birdies.