PE Week Wire — Friday 8/2

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NetMotion Wireless Inc., a leading supplier of software solutions for wireless networks, today announced the close of $5 million in Series B funding. The round was led by Series A investors Northwest Venture Associates and SeaPoint Ventures, and included major existing inside investors WRQ Inc., Alexander Hutton Venture Partners, Digital Partners and SilverHaze Partners. The company will use the new capital to accelerate product development, expand sales and marketing efforts, and fund ongoing business operations.

Country Road Communications LLC, today announced the sale of $32 million of preferred stock to ABRY Partners LLC and The Prudential Insurance Co. of America. Proceeds from the sale were used to finance the Morristown, NJ-based company’s acquisition of two Incumbent Local Exchange Carriers. ABRY has also committed up to an additional $50 million to Country Road to fund new acquisitions.

Guidant Corp. (NYSE:GDT)(PCX:GDT), a world leader in the treatment of cardiac and vascular disease, announced today that the company has partnered with two prominent venture capital firms, Vanguard Ventures and Fremont Ventures, to establish Vesalius Ventures, a telemedicine venture accelerator. Houston-based Vesalius Ventures will specifically focus on identifying and funding early stage opportunities in the areas of telemedicine, clinical informatics and Advanced Patient Management.

HandsOn Ventures, a Santa Monica, California-based venture capital company, today announced that it has acquired Savant Consulting Group, a leading information technology (IT) services firm. Savant ranked 4th among all U.S.-based software companies in the 6th annual Entrepreneur/Dun & Bradstreet “Hot 100” list of fastest-growing entrepreneurial businesses. The acquisition of Savant continues a series of milestones for HandsOn Ventures (HOV) since its inception in 2001 to capitalize on the rising demand for outsourced business processes and value investing opportunities in the IT and Business Process Outsourcing (BPO) sectors.

Signal Holdings LLC announced today that Trident II LP has acquired a minority interest in the Company. Proceeds from Trident’s investment will be used to fund the growth of Signal’s existing wireless handset insurance business and its expansion into new warranty markets. Trident is managed by MMC Capital, a global private equity firm, and a wholly owned subsidiary of Marsh & McLennan Cos.
NEWS FROM THURSDAY 8/1
Alnylam Pharmaceuticals, an emerging leader in RNA interference (RNAi) based therapeutics announced today that it has raised a total of $17 million in Series A and B of private equity financing. Polaris Venture Partners, ARCH Venture Partners, and Atlas Venture led the most recent financing. Prior investors included Polaris and Cardinal Partners. The funds will be used to support the company’s continued RNAi research and therapeutic development as well as the expansion of its scientific and executive team. As the result of these financings, Christoph Westphal, Alnylam’s start up CEO and general partner at Polaris Venture Partners, John Clarke, managing general partner at Cardinal Partners and Peter Barrett, senior principal at Atlas Venture will take seats on Alnylam’s board of directors. Bob Nelsen, managing director at Arch Venture Partners will also join the board of directors as an observer.

Millennium Partners LP announced that it has filed a lawsuit in Delaware Chancery Court against the meVC Draper Fisher Jurvetson Fund I (NYSE: MVC, “the Fund”) and the Fund’s board, including directors Larry Gerhard, Harold Hughes, Jr., Chauncey Lufkin and John Grillos, alleging proxy deception and contesting the validity of the Fund’s director elections. The suit seeks to invalidate the election of directors John Grillos and Larry Gerhard at the 2001 and 2002 Annual Meetings, respectively, because the elections were procured by proxy statements that were materially false and misleading. The complaint alleges that: (1) Larry Gerhard was not an “independent” director, as identified in the proxy materials; and, (2) the Company did not disclose that John Grillos was affiliated with a venture capital fund that co-invested with MVC

St. Paul Venture Capital today announced that Raj Alur has been promoted to managing director. Alur joined St. Paul Venture Capital as a principal in February 2001. Since joining the firm, Alur has served as a Boston-based member of St. Paul Venture Capital’s Communications Technology team, specializing in the optical and wireless sectors. From April 2001 until January 2002, he served as president and chief executive officer for Avian Communications (now known as Proquent Systems), a wireless data infrastructure company in St. Paul Venture Capital’s telecommunications portfolio. During his tenure at Avian, Alur raised $22 million in venture financing and recruited the company’s senior management team.

An investor group led by private equity firmsWhitney & Co. LLC and Golden Gate Capital Inc. in partnership with Herbalife distributors and senior management, today announced it has completed the acquisition of Herbalife International Inc. (NASDAQ:HERBA).

Chantry Networks, an Ontario-based developer of Wireless Local Area Network (WLAN) infrastructure products, announced today it has secured CDN $9 million in Series A financing. The syndicate, led by Ventures West, also includes Venture Coaches and Primaxis Technology Ventures Inc.

Garage Technology Ventures announced today the execution of a $10 million investment agreement by the California Public Employees’ Retirement System (CalPERS). The investment will create the Garage California Entrepreneurs Fund, LP, one of the eleven funds selected for CalPERS California Initiative Program. The Garage California Entrepreneurs Fund will make investments ranging from $100,000 to $500,000 in several seed- and early-stage technology companies, primarily in California, with special emphasis on companies emerging from universities and research labs.

According to Reuters, Finnish venture capital firm CapMan on Thursday said it had invested 250 million Danish crowns ($32.77 million) in Danish waste management company RGS90, its largest investment in Scandinavia so far. CapMan said the investment gave it a 40-percent stake in RGS90, which provides industrial waste management and recycling in Denmark.

The Wall Street Journal is reporting that Commonfund chief investment officer Todd Petzel will leave at the end of the year to start an alternative investment firm named Azimuth Alternative Investments LP. The new fund will be based in St. Croix, Virgin Islands.
NEWS FROM WEDNESDAY 7/31
Tasman Networks, formerly Tiara Networks, announced today that it has raised $15 million in its Series F financing round. The new investment coupled with $5 million for the conversion of a bridge loan comes from new and existing investors. This round brings Tasman Networks’ total financing to $75 million since the company began operation in 1997 as Tiara Networks.

Investors in this round include Mayfield, and New Enterprise Associates (NEA) as well as undisclosed new investors. Tasman will use the funds primarily for new customer acquisition, working capital and strategic initiatives designed to increase its market share in the service provider and enterprise markets.

Internet Photonics Inc. today announced it has closed its third round of venture financing for $31M with new investors ComVentures, which led the round; TeleSoft Partners; and previous investors Sprout Group and New Venture Partners LLC. As a result of the financing, Cliff Higgerson, general partner and co-founder of ComVentures, will join Internet Photonics’ Board of Directors.

To date, Internet Photonics has raised $63M since its inception in October of 2000. The new funding will be used for increased sales, marketing and customer support activities, as the company expands its domestic and global market presence and gears up for projected near-term customer shipments of its unique solutions for the service provider and cable operator markets. Internet Photonics expects to become cash flow positive in 2003.

Advent International, the global private equity firm, today announced that it has led an $11.4 million third round of funding for Connexn Technologies, Inc., which provides margin improving software solutions for communications service providers (CSPs). The Series C funding also included previous investors Sequel Partners, Wolf Ventures and A.G. Edwards Capital.

Categoric Software has raised over $4 million in a funding round led by T-Venture. The funds will be used to increase investment in London-based Categoric’s market-leading Xalerts Event Management infrastructure platform and to extend the company’s global OEM and VAR channels. Categoric enables independent software vendors (ISVs) and enterprise developers to rapidly build, deploy and manage interactive Event Management applications.

eFinancial News is reporting that Unigestion, the Swiss alternative assets specialist, has hired Andrew Marchant, a former director at UK buy-out house Cinven, to build up its private equity team in London. Marchant will be a director and act as an adviser to Unigestion’s private equity group, joining the firm’s private equity investment committee as deputy chairman. He will be based in London. Marchant previously worked for Cinven from 1988 to 2001. He has also worked for Prudential Venture Managers, and was a partner at Schroder Ventures.

Robert Gordon pleaded guilty yesterday of defrauding Cisco Systems of approximately $20 million. The former Cisco exec was accused of a variety of scams, including the establishment of fake venture capital funds in Cisco’s name.

The Carlyle Group, GE Equity and EQVITEC Partners have signed an agreement to invest EUR 35 million in Sonera SmartTrust AB of Sweden, a wholly owned subsidiary of Sonera Corporation (HEX:SRA; Nasdaq:SNRA), with revenues of EUR 36 million in 2001. SmartTrust AB is the operating Parent Company of the Sonera SmartTrust Group. Carlyle, through its Carlyle Europe Venture Partners fund, will lead the syndicate.

Schroder Ventures US announced that it sold Market Place Media (“MPM”) to Alloy, Inc. (Nasdaq: ALOY) for $48 million, plus a working capital adjustment of up to $3 million, for a total potential purchase price of $51 million. Schroder Ventures US acquired MPM in partnership with management for $28 million in July 2001 and expects to achieve an internal rate of return of over 80% on its investment. MPM is a major media placement and promotions company serving the college, multi-cultural and military markets through print, broadcast, out-of-home and event media. It will be combined with Alloy’s 360 Youth media and marketing services operation.

NEWS FROM TUESDAY 7/30
Inoveon Corp., a medical services company specializing in detecting, staging and monitoring diseases of the eye, announced today the company has closed a $16 million Preferred Series B round of venture capital financing. The round was led by CenterPoint Ventures of Dallas, with co-investments by Eli Lilly and Company, Indianapolis; Massey Burch Ventures, Nashville; Chisholm Private Capital Partners, Oklahoma City; and Prolog Ventures of St. Louis. Additional participants included Oklahoma Life Sciences Fund, STARTech Seed Fund, Technology Directors and the Enterprise Oklahoma Venture Fund.

Trinity Ventures today announced that Tom Cole has been promoted to general partner. Cole joined Trinity Ventures in 1998 to focus on enterprise software and systems investments. During that time, he has been instrumental in numerous Trinity investments and has worked closely with a number of the firm’s portfolio companies, including Invio Software, a provider of enterprise software that automates information management processes across the networked storage environment; Maranti Networks, a pioneer of application-aware storage switching platforms; and Speedera Networks, a leading global provider of Internet content delivery network services. Cole also helps manage Trinity’s investments in Banderacom and Fuego.

Metrobility Optical Systems today announced that it has closed a $3.5 million round of funding led by North Atlantic Capital. The funding includes participation from both new and existing investors. North Atlantic Capital was able to bring Sierra Ventures, who had previously invested in the company, and CEI Ventures into this financing round.

Zyomyx Inc. announced today that it has raised $27.0 million in a Series E financing. The round was led by existing investor Credit Suisse First Boston Private Equity. New investors include Lilly BioVentures and GE Capital Life Science and Technology Finance. As part of the financing, Michael Schmertzler, of Credit Suisse First Boston Private Equity, and Nick Colangelo, of Lilly BioVentures, have joined Zyomyx’ Board of Directors. The proceeds of this offering will enable Zyomyx to continue building the commercialization infrastructure necessary to launch its first product, the Human Cytokine Protein Profiling Biochip(TM), scheduled for early 2003.

Chanin Capital Partners, an investment bank specializing in corporate restructurings and mergers and acquisitions, announced today the opening of their first international office in the West End region of London. The London office will serve as a European base and will help broaden the transatlantic restructuring and cross-border merger and acquisition services that Chanin offers. Randall Lambert, a managing director of Chanin, will head the London office.

Frictionless Commerce, the enterprise sourcing innovator, today announced that it secured $14.4 million in additional funding led by its current investor Polaris Venture Partners and including Olympus Partners, RRE Ventures, Chevron Texaco Technology Ventures, among others, and also announced that Stephen Sharp is joining the company as President and Chief Executive Officer (CEO).

Eclyptic, a network management solutions company, netted $5 million from Austin Ventures and other private investors.

Abbott Capital Management LLC today announced the final closing of Abbott Capital Private Equity Fund IV at $730 million. ACE IV is Abbott’s fourth fund of funds established for institutional investors around the world. ACE IV will invest in a diversified pool of venture capital, buyout and special situations partnerships and co-investments in the U.S. and other developed markets.

Diversified Biotech Group Inc. (DBGI) announced today that the company has completed its second round of financing by raising $2,018,140 bringing the total dollar amount raised to $7,501,765.

NEWS FROM MONDAY 7/29

Imperito Inc., a maker of computer network security products, today is expected to announce that it has held a first close on an $8 million Series C round. It raised about $5 million from insiders and co-lead investors Charter Ventures and BEV Ventures and angel investor Haruyoshi Hayakawa. The Santa Clara, Calif.-based company expects to raise the remainder (only if needed) in the next 60 to 90 days. To date, it has raised a total of $26 million. Subscribers of PE Week can read more about this story in this week’s print edition, or in the protected section of the website.

HyPerformix Inc., an Atlanta-based developer of enterprise performance software, today announced it has completed a $12 million Series B private placement financing. Investors in the private placement are Morgan Stanley Venture Partners, the venture capital affiliate of Morgan Stanley (NYSE:MWD), and Boston-based M/C Venture Partners.

PANACYA Inc., a developer of Intelligent Application Performance Management (APM) software, today announced the completion of an $11 million private equity funding round led by Lazard Technology Partners. Lazard’s decision to invest in PANACYA was principally based on the market acceptance of PANACYA’s new and radically different approach to application management – distributed intelligent management for distributed new world applications. This capability enables businesses to proactively identify and resolve provisioning infrastructure issues impacting mission-critical applications before they impact their customers. Combining the new capital with revenues from a growing list of customers, an expanding software product suite and an experienced executive team positions the company to take advantage of its lead in the emerging APM market.

Omnipod Inc., a New York-based provider of secure, real-time instant messaging (IM) and file sharing solutions, announced today that it has successfully closed a $5 million Series D preferred stock round. Series D closely follows the conclusion of a $3.9 million Series C round, bringing the total raised to $8.9 million. The financing was led by Lexington Ventures LLC and Mapleton Investments. As part of its investment, Lexington Ventures will join the Omnipod board of directors. Investec Inc. acted as placement advisor for the financing.

SANgate Systems Inc. has raised an additional $7.1 million from existing investors Battery Ventures and Jerusalem Venture Partners, according to The Boston Globe. SANgate made news last year when its CEO was forced out for violating a non-compete clause he signed with former employer EMC Corp.

Softricity Inc., a Boston-based developer of an application deployment and management platform, announced today the completion of an oversubscribed $14.6 million third round of venture funding, bringing its total funding to date to $40 million. New investors TD Capital Technology Ventures and FA Technology Ventures led the round, joined by Hunt Ventures and Markpoint Venture Partners, along with previous investors Prism Venture Partners, Longworth Venture Partners and Technology Link Capital.

Applied Wave Research Inc. and CMEA Ventures today announced the completion of AWR’s Series B Preferred Stock financing totaling $7.4 million. CMEA, who will be taking an equity position and providing representation on AWR’s board of directors, led the round. The investment will be used to accelerate the development of the company’s high-frequency electronic design automation (EDA) solutions and expand AWR’s worldwide sales organization.

Vestar Capital Partners announced today that it has entered into a definitive agreement to acquire SAB WABCO, a EUR 300 million revenue global producer of brake systems for rail vehicles, from Cardo AB, a publicly listed company based in Sweden. The acquisition, valued at approximately EUR 230 million, is expected to close in September, subject to receipt of regulatory approvals and other customary conditions. SAB WABCO is a leading manufacturer of brake systems and related products primarily serving the European passenger transit and rail markets. The Company also provides after market repair and maintenance services to rail operators.

InnerWireless Inc., a Richardson, Texas-based in- building wireless systems and services company, has accepted $7 million in new equity capital from Rho Ventures targeted to expand the company’s sales efforts and accelerate the deployment of the company’s in-building wireless systems. To date, InnerWireless has raised a total of $25 million in equity capital. Rho Ventures, a New York-based venture capital firm, focuses on technology and healthcare investments and joins InnerWireless’ list of high-profile venture capitalists including Sevin Rosen Funds, Technology Associates Management Company (TAMC), Massey Burch Capital Corp. and HO2 Partners.

American Capital Strategies Ltd. (Nasdaq: ACAS) announced today it has invested $13 million in 3SI Security Systems to fund the purchase by 3SI of ICI Security Systems, the leading provider of security solutions utilizing tear-gas and dye-based staining to protect currency from bank robbers. ICI Security Systems is a subsidiary of Imperial Chemical Industries plc. American Capital’s investment takes the form of a senior subordinated note with warrants. Lincolnshire Management Inc. is the equity sponsor. GE Capital is providing $20 million in senior revolving term loan facilities. ICI Security Systems management is investing in the common equity.

Alliance Technology Ventures (ATV) announced today the appointment of Dr. Robert Curry as a venture partner. Dr. Curry will be based out of Silicon Valley and will work closely with Mike Henos, managing general partner of ATV, to identify new investment opportunities and help build value into ATV’s existing portfolio of life sciences companies located throughout the United States.

Bringing more than 18 years of investment experience in life sciences companies, his investments have included ATV portfolio companies Atherogenics, Adeza Biomedical, and Sensys Medical, (formerly Instrumentation Metrics). Prior to joining ATV, Dr. Curry served as both a general and a venture partner at Sprout Group, a venture capital affiliate of Credit Suisse First Boston, where he originated the life sciences investment activity. Dr. Curry joined Sprout in 1991 as a General Partner when Sprout assumed management of two public venture capital funds originated by Merrill Lynch & Company, Inc.

FlexLight Networks, an Atlanta-based optical access pioneer delivering the industry’s first Gigabit Passive Optical Networking (GPON) solution for the last mile, today announced that it has received a $1.5 M investment on behalf of the Office of the Chief Scientist, the research and development arm of the Israeli Ministry of Trade. This investment, recognizing FlexLight Networks’ technological innovation and market direction, is intended to support further development of its optical access technology.

MediaQ Inc., a Santa Clara, Calif.-based leading developer of integrated circuit (IC) solutions for handheld information devices and next-generation smart mobile phones, today announced that it secured $15 million in Series D financing from existing investors and strategic corporate partners. MediaQ will use the working capital to expand its operational infrastructure to meet the challenges of volume growth in sales and production. Led by El Dorado Ventures, all of the investors in this round were also participants in earlier rounds of financing. Venture investors included Weston Presidio Capital, Summit Accelerator Fund, and ViVentures. Strategic corporate investors included National Semiconductor (NYSE: NSM) and Infineon Technologies (NYSE: IFX; FSE).
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