Blueprint Ventures got a measure of redemption last week with the news that portfolio company LANDesk is being bought by Avocent (Nasdaq: AVCT) for $416 million in cash and stock – plus an additional $60 million if LANDesk meets financial targets. It is the first big exit for San Francisco-based Blueprint, which saw its second fund fall short of its goal after the collapse of the tech bubble.
The timing on the LANDesk acquisition couldn’t have been any better: The deal was announced last Thursday, and Blueprint had its annual LP meeting the following day.
LANDesk, which makes software to manage desktop computers in the enterprise, was born within chipmaker Intel Corp. The company spun out on its own in 2002 with one round of funding totaling $17 million from Blueprint, Vector Capital and vSpring Capital. A source familiar with the deal said the investors saw a return on investment in excess of 10x.
“It was a grand slam home run for the investors and for Intel, the corporate spinner,” says Bart Schachter, a managing partner at San Francisco-based Blueprint. (He declined to reveal the ROI.)
Schachter led the deal for Blueprint. He was very familiar with LANDesk because he spent eight years at Intel and was previously director of networking and communication investments for Intel Capital.
The big exit should make Blueprint’s next effort at fund-raising go much smoother than its last one.
After the firm raised an inaugural fund of $150 million in 1999, it set out to raise a second fund of $225 million. Ultimately, the emerging manager was only able to raise $50 million for its second effort and had to let go of three partners it had brought on in anticipation of a larger fund.
“We’re not fund-raising now, but [the LANDesk exit] will certainly help when we do – probably later this year,” Schachter says. “We hope it will be one of several significant exits. It’s a great validation of our strategy of focusing on early stage corporate IP spinouts and a great signal to prospective LPs.”
Blueprint has another portfolio company that’s in play to be purchased this year, and two more that could potentially go public next year, Schachter notes. He declined to name the portfolio companies in question.
The LANDesk investment was made by Blueprint’s first fund. Asked what the exit does for that fund, Schachter replied: “What spinach does to Popeye.” The other potential exits would come from its first and second funds.