FundersClub has pioneered some new ideas in venture capital since it launched last July, but this particular model, which will allow for accredited investors to put money behind Y Combinator companies, is interesting. The New York Times recently wrote an extended profile of the Y Combinator incubator program and how investors are often eager to back the companies. It’s not because they’ve necessarily generated strong sales or traction yet, but because there’s a belief that Y Combinator experience can set you apart and predict future success. So by creating incubator-specific funds, FundersClub could give investors easier access to these companies.

However, Alex Mittal, CEO and co-founder, said the new type of fund wasn’t just created to back Y Combinator companies. Instead, these funds can be raised to support a particular class of companies from any incubator or accelerator program, although YC is just the first one they announced so far.

“Theoretically, it does not have to be Y Combinator,” he said. “We didn’t create this feature just for Y Combinator.”

The 11 companies that will recieve backing from this particular fund include  CircuitLab, Goldbely, Medisas, Meldium, Padlet, Prizeo, Screenhero, Strikingly, Teespring and Thalmic Labs. Mittal said the companies were chosen by the FundersClub investment committee, which includes both institutional investors from partners firms as well as FundersClub internal employees.

The group recieved good news in March when the Securities and Exchange Commission told FundersClub that its business model doesn’t violate federal securities rules. And you can read our assessement of the most recent class of YC companies here.

Mittal said that participation in certain funds is generally on a first-come-first-serve basis for investors. He said in the case of the Y Combinator fund, they had anticipated raising half a million dollars, and it came in at $1.1 million.

“We had basically an abundance of interest beyond the half a million, beyond the $1.1 million even, but at some point you have to just proceed forward,” he said.

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Instagram, Pinterest and Tumblr are all hugely popular social companies that aren’t making much money right now (with the exception of Tumblr, and that might be debatable.) They’ve raised huge amounts of venture capital or have been acquired by companies for such large price tags that they’ll have to make money soon. But the core value proposition for these three services, one that’s certainly reflected in the attitudes of the founders, is that that they are beautiful, creative online spaces. So how do you put ads there without ruining the atmosphere you’ve created and that users have come to expect?

Mad Men advertising executives explore the brand new world of video ads in the 1960′s.

Obviously, many forms of advertising have been around for hundreds of years, but only in the past 15 or so have we seen a change in how search and contexual ads have had an impact on the business. This search-driven model existed before Google, but from the time the company launched AdWords in 2000, the concept of text-driven and contextualized ads based on search really began to take off. This data-driven approach has affected much of online advertising since then, and Google has developed a billion dollar business around the practice.

And along with search, display ads have also been a signficant part of the puzzle. In the early years of online advertising, it seemed that banner ads and other forms of display would be able to mimic more old-school advertising methods, since they weren’t all that different from the then-profitable ads in print. But the format is no longer dominant — in fiscal year 2012, search ads brought in 46 percent of revenue from advertising, compared to the 21 percent of revenue coming from display ads, according to an IAB report.

Why advertising should get to know us

Most recently, the rise of social media and smartphones that track everything in our daily lives from location to spending habits to real-world friends have made keyword search or banner ads start to feel fairly impersonal. Now Facebook can serve you ads for cars if they think you’re likely to buy a car soon, or Twitter can show you promoted tweets based on the messages you post. These companies haven’t totally cracked personalized ad-targeting yet, but they’re working on it. As those companies know, advertising needs to feel useful and relevant if it’s going to work — all without seeming creepy or invading of a person’s privacy, and useful to a person on both desktop and mobile.

That’s a tough balance to hit, and it certainly doesn’t seem that those companies have totally succeeded yet. If the Mad Men era Madison Avenue experts figured out how to tap into a person’s core desires to re-create advertising in the 1950s and 1960s, we’re still waiting for someone to do the same with in the current digital era, by adding a layer of emotion and desire to the social media and consumer data that’s out there.

The idea of the moment, which we’ve written about extensively here at paidContent, is native advertising: creating “sponsored content” from brands that fits in with the look and feel of the site but is labeled as an ad and supports that particular brand. Tons of sites, from Buzzfeed to The Atlantic to the New York Times (to GigaOM itself) do sponsored stories. It’s how Tumblr’s ads are rolling out for companies like Denny’s. And in particular, for sites like Instagram, it seems like potentially the only way to preserve the aesthetics of the site while letting brands in the door.

Young founders look to their history books

When the Yahoo/Tumblr deal closed, Yahoo CEO Marissa Mayer talked about her intentions for ads on Tumblr and how CEO David Karp (who had previously decried advertising of any kind) imagined them on his site:

“David talks wistfully about the ads that he saw as a child, that would make him want to go see a movie or own a particular type of car,” Mayer said. “He says the current state of internet advertising doesn’t aspire to be as good as the content itself. We think that should change … we’re aligned in those ideals. When you hear us talk about native ads, where the ads are every bit as good as the content, and maybe even make the content better — that’s what we are aiming for. We want the ads themselves to create that aspirational feel that, for example, television ads or movie ads do.”

And speaking at the Commonwealth Club on Thursday in San Francisco, Instagram CEO Kevin Systrom was equally nostalgic about old-school advertising and how it might work for his own company:

“We made a promise that Instagram would be a self-sustaining business, and that promise still holds true today. The deal makes no sense if you think this thing will never make money. We’ve always had plans, and it’s just about when, and it’s just about how,” he said. “Think about the magazine Vogue, for instance, and how half that magazine is advertising, but that advertising is really compelling.”

Instagram co-founders Kevin Systrom and Mike Krieger talk with Google Ventures’s Kevin Rose at the Castro Theater in San Francisco on May 30, 2013.

Finding the Don Draper approach to social

Systrom and Karp might be inspired by old Vogue ads, but it doesn’t seem that Tumblr users are as enamored by Denny’s gifs, and it’s fair to say that I’d be far less offended by a slightly off-target ad on a news website than one posted in my Instagram feed. The founders have accomplished a remarkable feat of creating companies where users feel personally and emotionally attached to the experiences they have there — just ask someone like Om who’s made a digital friend with someone he’s only “met” through Instagram.

But by raising the bar for what we expect on their services, the founders might have made navigating advertising that much harder for themselves. We’re in a whole new world of digital media, just as Don Draper and his executives faced with the rise of the television. But just as those executives saw the change as a new opportunity to reach consumers in their living rooms, so too could Pinterest and Instagram see this as an opportunity: to make digital advertising personal.

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Over the past few years, the San Jose, Calif.-based life sciences venture capital firm has co-invested with accredited individual investors on a handful of deals.  On Friday, the firm went one big step further with the launch of VentureHealth, an equity crowdfunding site for biomedical technology companies.

As report after report has shown, venture capital funding for life sciences companies has been on the decline. This week, for example, PricewaterhouseCoopers LLP (PwC) and the National Venture Capital Association (NVCA) revealed that venture funding in the life sciences sector dropped 14 percent in the first quarter of this year.

VentureHealth wants to give health startups — both early, but particularly later stage — a new option for raising funding, while embracing a model that enables doctors, health care professionals and others with sufficient means to support companies addressing issues they care about.

“The life sciences venture industry has been shrinking – there’s less capital available for really exciting companies,” said InCube managing director and VentureHealth co-founder Andrew Farquharson. “To the extent that we can mobilize capital into companies that need it, we’re meeting our mission.”

VentureHealth isn’t the first attempt at bringing crowdfunding to health care. MedStartr and Health Tech Hatch offer entrepreneurs a platform for raising relatively small amounts of seed capital without giving up equity. And last week HeathFundr launched an equity crowdfunding site targeting medical device and other health entrepreneurs looking for Series A-range funding.

But unlike HealthFundr, CircleUp and other equity crowdfunding sites that have recently emerged, VentureHealth doesn’t offer securities through a registered broker dealer. Instead of taking a commission on each transaction, it’s compensated through a combination of fees and carried interest, which is a percentage of the profits earned by investors when a company is sold or experiences another kind of liquidity event. While the amount can vary, the company said it will tend to be about 20 percent.

That’s a decent-sized payout, but Farquharson said its model means that VentureHealth only wins when its investors win so it’s extra incentivized to find the best deals.

Over the past decade or so, Farquharson and his co-founder Mir Imran, a medical inventor who holds more than 200 patents, have invested in a range of companies, from BodyMedia, a wearable technology company recently sold to Jawbone to epilepsy treatment company Neurolink. Given their track record and experience, he believes VentureHealth could give interested investors a well-curated selection of deals and entrepreneurs the extra support they may need.

For now, Farquharson said, they interact with every accredited investor on the site but, when it’s implemented, the JOBS Act will enable VentureHealth to reach a broader pool of investors and expand its options.

The site currently has no active deals listed, but Farquharson estimates that it could offer five or six deals over the next 10 months. Once VentureHealth scales sufficiently, InCube plans so spin it off as a standalone company.

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Rich Miner, partner, Google Ventures (c) 2012 Pinar Ozger pinar@pinarozger.com

The rise of Google’s venture capital arm is an interesting one, because unlike a lot of emerging VC firms, Google Ventures isn’t lacking in capital. Instead, the firm has to prove that it’s not just an offshoot of Google, but rather a VC firm in its own right that can compete with other top-tier firms for access to the best — and potentially most profitable — founders.

“We are not your typical strategic corporate fund,” the firm’s enterprise partner Karim Faris told Forbes, in a mantra you hear often from the group.

One way Google Ventures is working to attract young founders is the addition of young, visible partners like former Digg founder Kevin Rose and blogger-turned-VC MG Siegler. While it boasts Android founder Rich Miner as a partner, Miner is based in Boston, and the addition of Rose and Siegler can help Google Ventures build up its local presence and visibility. So far, Google Ventures has invested in a large number of companies including Nest, DocuSign, HomeAway, and Nextdoor.

Digg founder Kevin Rose, now a Google Ventures partner.

One way Google Ventures is trying to distinguish itself from its Valley peers is by preaching a more hands-on approach to investing. Unlike the traditional model, where partners dispense advice to portfolio companies at board meetings or when the companies ask for it, Google Ventures has set up more of a lab-like atmosphere in Mountain View. It has designers, marketers, engineers and other staff on hand to assist and advise the portfolio companies however they need it.

This strategy has worked for firms like Andreessen Horowitz, which also launched around the same time as Google Ventures in 2009 and was originally derided for its flashy, PR-powered operation. But it has quickly become a top-tier firm in a short period of time, investing in companies like Facebook, Instagram, Github, Pinterest, and Twitter.

In November, Google Ventures announced that it now plans to invest $300 million a year, compared to more typical VC firms that invest about $200 million to $500 million over the course of several years. There’s no question that having the resources and support of Google behind the firm has an impact.

“We were lucky. Larry and I, we just wrote up the check,” Google co-founder Sergey Brin told GigaOM in an interview at the time.

When Google Ventures announced plans to increase the size of its fund, managing partner Bill Maris said Page had asked him what he would do with $1 billion. But with the firm already investing in about 80 companies a year and providing resources like engineering, design, and marketing guidance, he worried more about how to scale that kind of operation and provide enough partner attention for the companies that need it. So adding some new partners is a step in that direction.

Building a VC firm that can compete at the highest levels with the likes of Sequoia and Greylock only four years after launch isn’t an easy task, even if the firm had one of the hottest names in technology as partners. But if Google’s forays into driverless cars and Glass are any indication, the company has no problem setting its sights high.

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The numbers bear out the trend. In the first quarter of 2013, VCs dumped nearly $353 million into IT security deals, up 90 percent over that quarter the previous year, according to MoneyTree Report data provided to GigaOM by the National Venture Capital Association. If you divide the total funding by the number of deals, the average amount was more than $16 million, up 125 percent over the $7.1 million amount in the first quarter of 2012.

Security startups that have taken on VC funding rounds this year include Cylance, TraceVector and vArmour Networks, among others.

The intersection of big data and security has been a hot space, as companies move to collect lots of information and analyze it all as fast as possible, just as companies want to derive insights on increasing and more complex data sets that can lead to overhead reductions and new revenue streams. For example, in October, EMC said it would buy Silver Tail Systems, which tracks web and mobile-app traffic and points to unusual behavior and violations that customers can set. To separate the wheat from the chaff of vulnerabilities that multiple security systems might discover and to use security staffers efficiently, Risk I/O prioritizes issues. Last year it got $5.25 million.

Are the cyberattacks nudging VCs to shell out millions? Shirish Sathaye, a general partner at Khosla Ventures, which has invested in Cylance and TraceVector along with Lookout and DB Networks, thinks the cyberattack news onslaught is making a difference.

“The first reason is, yes, every time you open a newspaper, you read about somebody being attacked,” he said, whether against consumers or companies. The likelihood and complexity of attacks only become greater as more people get online, often with multiple devices.

The multiplicity of devices accessing a network — a trend in its own right — could pose security challenges on its own, and Tenable Network Security picked up $50 million last year following the addition of features that look for vulnerabilities popping up as mobile devices and provide information on devices such as whether they are jailbroken. Last month Ionic Security, which keeps data encrypted as it moves to devices, said it had raised $9.4 million in new funding.

Another reason for the security funding boom, Sathaye said, is the success of network security player Palo Alto Networks. Prior to its public offering last year, threats might well have helped its appeal.

From Sathaye’s point of view, it’s critical to nurture the ecosystem of options for strengthening network and endpoint security. “As bad guys keep innovating, good guys have to innovate at least as fast as them, if not faster,” he said. With more money going toward IT-security startups, it does seem that plenty of other VCs think there’s an opportunity here.

Feature image courtesy of Shutterstock user LeventeGyori.

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The venture firm welcomed Solomon in a statement and explained what he would add:

“As Venture Partner, Rob will be evaluating early stage and growth equity opportunities with Accel. He will also play a major role in advising the firm’s portfolio companies on a wide range of strategic and operational issues like product management, scaling infrastructure, business operations, and mergers and acquisitions.”

Accel manages over $9.6 billion in funds and has had some strong successes investing in internet companies like Dropbox, Etsy, Facebook, Kayak, Prezi, Rovio, Trulia, and Vox Media.

Before his tenure at Groupon which ended in July 2012, Solomon worked at the venture firm Technology Crossover Ventures and was the president and CEO of a startup called Sidestep that was acquired by Kayak.

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Troy Henikoff, the program’s managing director, said the 10 startups were selected from an applicant pool of 904, which was double the size of the applicant pool last year. The 10 companies not only reflect a range of industries, he said, the new cohort is geographically diverse, with just three startups from Chicago and a couple from outside the U.S.

Launched three years ago, Excelerate Labs was led by a group of entrepreneurs and venture capitalists, including Henikoff (founder of SurePayroll), OkCupid founder Sam Yagan, Sandbox Industries’ Nick Rosa and New World Ventures’ Adam Koopersmith. Its 30 companies have raised a total of $30 million, the group said. But teaming up with TechStars elevates the program and gives startups access to a national network of mentors and investors.

Here are the program’s 10 new startups:

CaptureProof – Currently in beta, CaptureProof gives patients a secure site for tracking their health with photos and video and then sharing them with their doctors. Through the site, doctors can monitor patients’ health trends and progress remotely.

HIPOM – For parents who want to limit their kids’ access to the internet, HIPOM provides a cloud-based solution for controlling any individual device in the home.

Nexercise - Nexercise is an iPhone and Android app that helps people lose weight and improve their fitness through competitions with friends, alerts and rewards.

Pathful – A web analytics service, Pathful says it tracks all kinds of visitor interactions and doesn’t require tagging.

Peoplematics – Peoplematics is a service that enables employees to find and share information across their personal cloud.

Project Fixup – A matchmaking service, Project Fixup pairs up people for one-on-one dates based on their schedules and interests.

SimpleRelevance – An email marketing platform, SimpleRelevance says its analytics-driven approach can improve revenue per message by 30-300 percent.

SocialCrunch – SocialCrunch says it builds a “behavior graph” of internet users to help marketers learn about and reach a target audience.

Sqord – A “Fitbit for kids” (see disclosure), Sqord’s watch-like fitness tracking device promotes activity through friendly competition.

TradingView – An online community of investors and traders, TradingView aggregates web stock charts and enables investors to share their ideas.

Disclosure: Fitbit is backed by True Ventures, a venture capital firm that is an investor in the parent company of this blog, Giga Omni Media. Om Malik, founder of Giga Omni Media, is also a venture partner at True.

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Considering that before these new additions Tadem had a roster of only three partners, that’s significant growth. Tandem typically accepts into its accelerator program three or four early-stage startups each quarter, making a $200,000 investment in each, as well as providing office space and mentoring.

With its newly bulked up team, though, Tandem plans to host and invest in a larger number of companies each year and expand its scope to more countries – while still maintaining its focus on mobile. Last year, Tandem closed its second fund, raising $32 million.

Tandem on Friday also revealed the three companies that make up its latest accelerator class:

• Tile: Tandem’s first mobile hardware investment, Tile has developed a small mobile tracking device that can be attached to any personal or important item, even pets.
• Swoopt: Currently in beta, Swoopt has developed fantasy sports gaming and tournament software for the mobile phone.
• HomeTapper: This startup is developing a rich-media experience for real-estate listings on the tablet.

Tandem is accepting applications for its summer class until May 1.

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There was Shirish Sathaye, a general partner at Khosla Ventures, calling out at this year’s Open Networking Summit on Tuesday for more software-defined networking startups for him and others to fund. His firm saw the promise of Big Switch Networks a couple of years ago. It seems the hunger for SDN companies to back has not fallen away. It’s not particularly surprising in this golden age of enterprise IT, in which VCs are hunting for enterprise plays following the rise of SDN and other disruptions.

While the other side of the coin is that production-scale use cases from enterprises are still hard to find, managed-hosting service providers have been quicker to try out the benefits of SDN. After all, those companies can improve their bottom lines by rolling out new services and potentially lowering capital and operational expenditures. But the enterprises have looked more hesitant to dive in and see what’s possible.

That level of market penetration — where large data centers and Wall Street banks give SDN a shot — could happen in 2014 or 2015, said Paul Santinelli, a partner at North Bridge Venture Partners who has backed Embrane.

Rather than present software that can impress network administrators, the key for investors is whether SDN startups can solve real business problems, said Alex Benik, a principal at Battery Ventures. “I think it’s kind of incumbent on the community to work together to not overpromise and underliver on what SDN can deliver on a reasonable time scale,” Benik said. That delivery, he said, is not coming right away, but more like the end of this year and throughout 2014. With SDN code on the way from the OpenDaylight Project, founders that have been working on open controllers and other components in stealth mode could now be pivoting, so VCs might have to wait a while for the most promising SDN solutions.

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