The Daily Startup: Big Bets Continue in Venture Despite Exit Concerns

Investors piled 19.05 billion into U.S.-based venture-backed companies in the third quarter amid growing concerns over valuations and exit markets, Scott Martin reports for The Wall Street Journal. U.S. venture investments soared to $54.6 billion for the first nine months of the year, on pace to blow past the $55.5 billion for 2014. The numbers are still likely to be below the record $94.17 billion invested in 2000 at the height of the dot-com boom.

The increased investment amount comes amid a dearth of initial public offerings as well as mergers and acquisitions for venture-backed companies. It also comes in a year that has seen an uptick in the number of private companies that are valued at $1 billion or more.

ALSO IN TODAY’S VENTUREWIRE (subscription required):

Decibel Therapeutics has launched with $52 million in venture funding and a goal of providing people with severe loss with more options than the hearing aids and cochlear implants they rely on today. Third Rock Ventures, which formed Decibel this year, provided the Series A financing along with SR One.

23andMe Inc. continues to rebound from a regulatory setback in 2013, securing $115 million in Series E financing to expand its genetic-testing and therapeutics businesses. Fidelity Management led the round, which included new backers Casdin Capital, WuXi Healthcare Ventures and Xfund. Previous backers Google Ventures , Illumina Inc., MPM Capital and New Enterprise Associates also participated.

FollowAnalytics Inc. emerged with $10 million and technology that helps marketers pursue the elusive goal of getting the right message to the right customer at the right time, especially when they are on mobile devices. The Series A round was led by Aspect Ventures and includes current investors Sapphire Ventures and Zetta Venture Partners along with another new investor, Salesforce Ventures.

Andreessen Horowitz co-founder Marc Andreessen has joined the board of OpenGov Inc., whose software helps government agencies analyze, share and compare financial data. His firm also invested more money in OpenGov, which raised $25 million from several new and current investors.

Hatch Baby Inc., a company that has added a wireless scale to diaper-changing stations so that parents can more closely track their baby’s weight gain, has come out of stealth with $7 million in funding to continue production of their $299 “smart changing pads.” The funding was led by True Ventures, joined by individual investors.

Bluesmart Inc., which makes smart luggage and plans to develop other high-tech travel products, has raised $6.5 million in Series A funding, according to company co-founders. Investors included Amadeus IT Group , Cota Capital, Fairhaven Capital, Fenox Ventures, FundersClub, Pejman Mar Ventures, Y Combinator and Yunqui Partners, as well as several individual investors.

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ELSEWHERE AROUND THE WEB:

Square Discloses IPO Plans. Payments startup Square Inc. filed to go public Wednesday, The Wall Street Journal’s Greg Bensinger reports. The comapny’s filing comes as other highly valued companies have stayed away from the IPO market, deterred mostly by recent sharp stock-market swings.

FBI, Justice Department Investigating Daily Fantasy Sports Business Model. The U.S. Justice Department and the Federal Bureau of Investigation are probing whether the business model of daily fantasy sports operators–which include two ventrue-backed companies that are valued at more than $1 billion–violates federal law, the WSJ’s Brad Reagan and Devlin Barrett report. FBI agents from the Boston office have been contacting customers of DraftKings Inc. to ask them about their experiences with the Boston-based company, according to a person familiar with the matter. The probe is part of an ongoing discussion within the Justice Department about the legality of daily fantasy sites. FanDuel Inc. also is a venture-backed daily fantasy site.

Write to Mike Billings at mike.billings@wsj.com. Follow him on Twitter at @mbillings