Deserved Desserts?
Redpoint Ventures are the Boston Red Sox of venture capital. Both have plenty of big-name players, but also have a historic penchant for underachieving. Recently, each had a very well-publicized success, which seems to have caused patrons to forgive – or possibly even forget – past failure. As goes the refrain: “They’ve done it once, so they can do it again.
This is the same fractured logic that keeps blackjack players at the table after hitting 21.
For Redpoint, patron forgiveness recently manifested itself in the form of $400 million in limited partner commitments for its third fund. This comes despite the fact the Redpoint’s first two funds not only feature negative IRRs, but also are looking up at industry benchmarks. It also comes despite Redpoint’s continued insistence on a 30% carried interest, which would make some actual top-tier funds blush.
Before continuing, a quick analysis of Redpoint’s returns. This is done by comparing University of California data for Redpoint to industry-wide benchmarks from Thomson Venture Economics, so take it as guidance rather than cold hard fact (since UC and Thomson use slightly different IRR metrics). Redpoint’s first fund featured an IRR of -18.5 percent through 9/30/05, which would put it in the third quartile according to Thomson. The median IRR for 1999-vintage VC funds was -11.7%, and Redpoint’s effort even underperforms the median for first-time funds of that time. Redpoint’s second fund performs a bit better, in that it squares right on the Thomson median of -7.9 percent. In neither case, however, could Redpoint be considered above-average, let alone top-tier or top-quartile.
So, given such middling performance, how did Redpoint manage to secure $400 million? Part of it has to do with loyalty to a group of nice guys who last decade hit homeruns for other firms. It also has to do with overcapitalized limited partners, and the fact that Redpoint had originally secured $1.25 billion for its previous fund (i.e., could lose over half its LP commitments and still be fine). More to the point, however, Redpoint raised its fund because it invested in MySpace.com.
MySpace is the ubiquitous/controversial personal homepage and social networking site that was acquired last year by News Corp. The sale generated strong ROI for Redpoint (albeit not amazing), but the exit financials weren’t what attracted limited partners. Instead, it was proof of concept, or the renewed belief that Geoff Yang and company were once again plugged in to the next wave of digital innovation.
Now it’s entirely possible that Fund III limited partners are correct. But at what point does Redpoint stop receiving mulligans? Not only has it underperformed the market, but its above-average carry means LPs are actually doing a bit worse than the IRRs indicate.
Redpoint declined to comment on its new fund, citing a policy of not discussing issues that involve its limited partners (relatively new policy, as it was quoted in stories about its first two fund closes). Firm co-founder Jeff Brody did email me, however, to say that Redpoint will continue to focus on early-stage tech companies, with current investment focuses in mobile wireless platforms and applications, consumer Internet services and platforms, enabling technologies for the digital home and infrastructure systems and software.
So I am left with mixed emotions for Redpoint. Like the Red Sox, I root for them to succeed. Also like the Red Sox, however, I wouldn’t bet on them to do so.
*** Unrelated note: Good Technology yesterday confirmed that it had expanded its Series E round to $95 million. It also said that $20 million of the new capital came from ValueAct Capital.
|
|
|
Top Three |
EndoGastric Solutions Inc., a Richmond, Wash.-based medical device company focused on endoluminal reconstructive gastric procedures, has raised $32 million in Series C funding. Chicago Growth Partners led the deal, and was joined by Oakwood Medical Investors and return backers MPM Capital, Advanced Technology Ventures and Foundation Medical Partners. www.endogastricsolutions.com
Brad Greenspan, founder of Intermix Media Inc., has sued VantagePoint Venture Partners and current Intermix executives and directors. He claims that the defendants breached their fiduciary duty in selling Intermix to News Corp. last year for $580 million – a price he believes didn’t reflect the growth potential of Intermix property MySpace.com. Greenspan tried to use his remaining Intermix equity position to block the takeover, but failed. www.intermix.com
Michael Gross has resigned as CEO of Apollo Investment Corp. (Nasdaq: AINV), a business development company formed in 2004 by Apollo Management. Apollo management co-founder John Hannan will become Apollo Investment CEO, while Art Penn will serve as president and retain his COO role. No word yet on Gross’ future plans.
|
VC Deals |
Command Information Inc., a Herndon, Va.-based provider of Internet protocol version 6 (IPv6) consulting and product development services to Fortune 1000 and government customers, has secured $16 million of a $25 million Series A funding round, according to a regulatory filing. Backers include Carlyle Venture Partners, Novak Biddle Venture Partners and Blue Water Capital. www.commandinformation.com
A Place for Mom, an eldercare referral service, has raised $9.5 million in Series A funding from Battery Ventures. http://aplaceformom.com
Stream Energy, a Dallas-based retail electricity provider, has raised $10 million in Series A funding from Natural Gas Partners. NGP also provided $2 million in additional credit under Stream’s revolving loan facility. www.streamenergy.net
Neterion Inc., a Cupertino, Calif.-based provider of 10 gigabit Ethernet adapters, has raised $6.48 million in Series D funding, according to a regulatory filing. Return backers include Menlo Ventures, JAFCO Ventures and Vengrowth. www.neterion.com
Tribe Networks Inc., a San Francisco-based online classifieds company, has secured $3.05 million of an $11 million Series B funding round (preferred and convertible), according to a regulatory filing. Return backers include Mayfield, Knight Ridder and The Washington Post Co.
CODA Genomics Inc., an Irvine, Calif.-based synthetic biology and protein expression company, has raised around $1.64 million in Series B funding, according to a regulatory filing. Backers include Monitor Venture Management, Seraphim Fund and Life Science Angel Investors. www.codagenomics.com
Surfasys, a Québec–based developer of tools for the automation of industrial moulds and parts polishing, has raised Cdn$1.2 million in venture funding from SOVAR and BDC Venture Capital.
|
Buyout Deals |
Bridgepoint has agreed to acquire a controlling position in French optician Alian Afflelou SA for 487.5 million euros from Apax Partners and company management. www.alainafflelou.com
Gores Technology Group is looking to sell Belgium-based Real Software NV, according to De Tijd. www.realsoftware.be
|
PE-Backed IPOs |
Liquidity Services Inc., a Washington, D.C.-based operator of an online auction marketplace for wholesale, surplus and salvage assets, priced around 7.69 million common shares at $10 per share (middle of $9-$11 range), for an IPO take of approximately $76.9 million. It will trade on the Nasdaq under ticker symbol LQDT, while Friedman Billings Ramsey and RBC Capital Markets serving as lead underwriters. The company raised around $20 million in VC funding from ABS Capital Partners in late 2004. www.liquidityservicesinc.com
NexTest Systems Inc., a San Jose, Calif.-based provider of automated test equipment for the semiconductor industry, has set its proposed IPO terms to 5.4 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol NEXT, with Merrill Lynch serving as lead underwriter. Significant shareholders include Needham Capital Partners and J&W Seligman & Co. www.nextest.com
|
PE-Related M&A |
Xiotech Corp., an Eden Prairie, Minn.-based provider of data storage and data discovery solutions, has acquired Daticon Inc., a Norwich, Conn.-based provider of document management services to the litigation support sector. The deal was valued at $30 million. Xiotech is backed by Oak Investment Partners, while Daticon had been owned by Thoma Cressey Equity Partners. www.xiotech.com
Teradata, a division of NCR Corp. (NYSE: NCR), has acquired the assets of SeeCommerce Inc., a Palo Alto, Calif.-based provider of supply chain performance management applications. No financial terms were disclosed. SeeCommerce has raised around $85 million in VC funding since its 1996 inception, from firms like Integral Capital Partners, Focus Ventures, Insight Venture Partners, Sierra Ventures and Voyager Capital. www.teradata.com
|
Firm & Fund News |
Tudor Ventures is raising up to $250 million for its third fund, according to a regulatory filing. It already has secured around $120.25 million. www.tudorventures.com
MS Angel Fund, a Jackson, Miss.-based group focused on startup and early-stage companies whose technology was developed in Mississippi universities and research institutions, is raising $30 million for its inaugural fund, according to a regulatory filing.
|
Human Resources |
Bill Price, co-founder of Texas Pacific Group, has decided not to participate as a general partner in the firm’s new fund, according to Private Equity Insider. The vehicle is expected to raise between $10 billion and $12 billion, and will feature two tiers of keymen. The top tier consists of fellow co-founders David Bonderman and Jim Coulter, while the second tier includes Richard Boyce, Jonathan Coslet, Philippe Costeletos, Kelvin Davis, John Marren and Stephen Peel. In other TPG news, the firm reportedly will look to raise $1 billion for a new distressed debt vehicle called TPG Credit Management. www.texaspacificgroup.com
Robert W. Baird & Co. has promoted Rodney Tyson to director of M&A business development. He joined the firm in 1998, and is based in Chicago. www.rwbaird.com
Henry Jackson is leaving Deutsche Bank, where he runs the European retail and consumer group. He is expected to launch a European retail private equity fund called Mercapita.
THURSDAY, FEBRUARY 23
Random Ramblings
We are just one day away from the NTP vs. RIM showdown in Richmond, Va., which could result in a court-mandated shutdown of BlackBerry sales and service. In the meantime, private RIM competitors continue to stock up on venture capital funding. Maybe they’re betting that RIM will lose, wither and die. Maybe they’re betting that the OEMs will (finally) come up with preferable device alternatives. Maybe they believe that Microsoft will give up on internal development efforts, and simply fix/bolster its mobile messaging service via acquisition. Maybe they’re simply unwilling to turn down VC largesse.
The latest such company to nab money is Good Technology Inc., with about $40 million extra dollars. This brings its Series E round total to approximately $95 million (initial closes occurred last year), and its overall venture capitalization to around $240 million. This basically matches what Visto has raised (Seven Networks has secured far less), but nonetheless is a mystifying amount of private fund-raising for a company in this line of work. Ken Dulaney, an analyst with Gartner, not only was surprised that Good required more capital, but also was surprised that any such need would be sated by VCs instead of by the public markets.
Good declined to comment or confirm the extra VC funding, which was uncovered in a regulatory filing. The filing indicates return participation from firms like Kleiner Perkins, Benchmark Capital, k1 Ventures and Crosslink Capital. No mention of NTP, which has hedged its bets with stakes in both Good and Visto (even though the latter is suing the former for alleged patent infringement).
*** Too bad I’m not at the SuperReturn private equity event in Germany this week. After all, there’s nothing quite so spectacular as “locusts” landing. Among the reported highlights so far: Joe Moulton of Alchemy asserting that mega-firms are asking for “ludicrous and inappropriate” fees and Steve Schwarzman of Blackstone Group warning that some recent purchase prices are in “nose bleed territory” and that the “seeds of excess” are being planted. He also said: “High prices are the cosmic enemy. Once you create a deal at the wrong price, you have to hope the economy keeps going … God forbid you hit a recession.
*** Since some readers have asked: I think the brouhaha over the Dubai Ports deal is selective xenophobia, plain and simple. Sure Congress should investigate the deal, because it has constitutional oversight responsibility (even if it’s abdicated said responsibility for several years), and it should confirm that the selection process was on the up-and-up. But the general idea – put forth by politicians of both parties – that Dubai is somehow not responsible/friendly enough to run our port operations is unfounded. It’s not a question of terrorism, since UAE is a U.S. ally. It’s not a question of human rights, since we let Chinese companies run certain ports. It is, however, a question of demagoguery.
If this deal gets killed without very valid reason, expect a heightened backlash when U.S. firms — such as private equity firms — look to make defense-related acquisitions abroad.
*** My colleague Matthew Sheahan has moved over to Buyouts Magazine, after previously writing for Venture Capital Journal and PE Week. That means we’ve got an open reporter slot. If interested, please email relevant info to me, and I’ll forward it on.
*** Finally, we hit the 30,000 subscriber mark yesterday (actually, 30,038). Much thanks to all. Therefore: Every time the PE Week wire adds another thousand subscribers, I like to remind you that these daily ramblings are just a speck in our editorial ocean. To subscribe to PE Week, Venture Capital Journal or Buyouts Magazine, just email Robert.Mills@thomson.com. Or, if you’d like get spread your message to our 30,000 strong, please contact ad guru Naz.Bayazit@thomson.com
|
|
|
Top Three |
mBlox Inc., a Sunnyvale, Calif.-based mobile transaction network operator, has raised $25 million in fourth-round funding. Trident Capital led the deal, and was joined by return backers BA Venture Partners, Norwest Venture Partners, Novus Ventures and Avanti Capital. www.mblox.com
3i Group is sponsoring a Gbp111 million management buyout of Chorion PLC, a UK-based owner of classic literary-based brands and content. The deal includes Gbp79.8 million from 3i, Gbp7.4 million from company management and Gbp23.8 million in debt. www.3i.com www.chorion.co.uk
Ashok Nayyar has joined Morgan Stanley as a managing director and co-head of leveraged and acquisition finance, effective May 1. He has spent the past 17 years with Salomon Brothers and Citigroup, and in 2001 was named head of U.S. leveraged finance. www.morganstanley.com
|
VC Deals |
Wikia Inc., a St. Petersburg, Fla.-based wiki hosting company, has raised $4 million in Series A funding led by Bessemer Venture Partners, according to a regulatory filing. Board members include Jeremy Levine of Bessemer and Joi Ito. www.wikia.com
Mauj Telecom, an India-based mobile entertainment company, has raised $10 million in first-round funding. Backers include WestBridge Capital Partners led the deal, and was joined by Intel Capital and Sequoia Capital. www.mauj.com
LeadPoint Inc., a Los Angeles-based provider of an online lead exchange marketplace, has raised $2 million in Series B funding from Redpoint Ventures. www.leadpoint.com
PowerReviews, a Millbrae, Calif.-based provider of consumer product review services to retailers, has raised $6.25 million in Series A funding from Menlo Ventures and Draper Richards. www.powerreviews.com
VeinRx Inc., a Miami, Fla.-based developer of a way to deliver fluids to the peripheral vasculature, has raised $15 million in Series B funding. De Novo Ventures led the deal, and was joined by return backers Three Arch Partners and CHL Medical Partners. www.vein-rx.com
Oryxe Energy International Inc., an Irvine, Calif.–based developer and distributor of environmental fuel additives, has raised $27 million in Series C funding. Backers include Paladin Capital group, Ridgewood Capital, Odyssey Venture Partners and DSM Venturing. www.oryxe-energy.com
Prosper Marketplace Inc., a San Francisco-based P2P lending marketplace, has raised around $12 million in Series B funding. Fidelity Ventures led the deal, and was joined by return backers Accel Partners, Benchmark Capital and Omidyar Network. www.prosper.com
VideoNext, a Vienna, Va.-based security technology company, has raised $2 million in venture funding from Newlight Associates and Longstreet Partners. www.videonext.com
|
Buyout Deals |
Change Capital Partners has agreed to acquire Jil Sander Group from Prada Group SpA for an undisclosed amount. Jil Sander is a woman’s fashion brand founded in Germany in 1975, and acquired by Prada in 1999. www.changecapitalpartners.com www.jilsander.com
Lehman Brothers Merchant Banking has agreed to acquire the European seafood business of H.J. Heinz Co. (NYSE: HNZ) for 425 million euros. The deal is expected to close at the end of March, pending regulatory approval. No terms have been disclosed. The unit was put on the block last year, and includes around 5,000 employees and annual sales of over 400 million euros. www.heinz.com
|
PE-Related M&A |
Axia Health Management, a Tempe, Ariz.-based provider of preventative health programs, has acquired Harris HealthTrends Inc., a Toledo, Ohio–based provider of personalized health management services. No financial terms were disclosed. Axia is a portfolio company of Nautic Partners. www.axiahealth.com www.hhtinc.com
Sun Microsystems Inc. (Nasdaq: SUNW) has agreed to acquire Aduva Inc., a Sunnyvale, Calif.-based provider of patch management software for Linux and Solaris platforms. No financial terms were disclosed. Aduva has raised VC funding from firms like Evergreen, CAP Ventures, IBM, Intel Capital, BMC Software and Elwin Capital Partners. www.sun.com www.aduva.com
I2 Technologies Inc. (Nasdaq: ITWO) has acquired the assets of RiverOne Inc., an Irvine, Calif.-based provider of supply chain software and services for the electronics industry. No financial terms were disclosed. RiverOne had raised around $50 million in VC funding from firms like Rustic Canyon Ventures and Baker Capital. www.i2.com www.riverone.com
Actix Ltd., a UK-based provider of wireless performance engineering solutions has acquired Radioplan GmbH, a Dresden, Germany-based provider of automated network optimization software. No financial terms were disclosed. Summit Partners last year acquired a majority stake in Actix for approximately Gbp40.6 million. www.radioplan.com www.actix.com
|
Firm & Fund News |
ArcLight Capital, a Boston-based private equity firm focused on the energy sector, is looking to raise upwards of $2.25 billion for its third fund. According to a regulatory filing, it already has secured $629.25 million. www.arclightcapital.com
|
Human Resources |
Ajay Chopra has joined Trinity Ventures as a venture consultant, focused on digital media. He previously co-founded Pinnacle Systems. www.trinityventures.com
Zander Lurie has joined CNet Networks Inc. (Nasdaq: CNET) as senior vice president for strategy and development, according to MarketWatch. He was previously a vice president in JPMorgan’s San Francisco technology I-banking group. www.cnet.com
Robert Paine has joined GSC Partners as senior managing director. He will run a hedge fund focused on the leveraged and distressed markets, and previously managed a distressed debt hedge fund for Stanfield Capital Partners. www.gscpartners.com
Cipio Partners has promoted Roland Dennert to partner. www.cipiopartners.com
WEDNESDAY, FEBRUARY 22
Internship Rodeo: Wrangle Yourself A Job
Welcome to the final installment of our Third Annual Internship Drive. We’ve got six new listings, plus continued listings for 35 other positions (a few opted out, as they already have hired or are about to hire). Some firms are looking for one intern, some are looking for multiple interns. Some of the positions are paid, some are not. Each position is only open to first-year MBA candidates looking for summer employment. For those who qualify:
1. Scan the list of available opportunities below. If one interests you, please send a resume and cover letter to the appropriate email address. The poster is not required to respond or acknowledge receipt. If interested, the poster will contact you. I know it’s hard writing a cover letter to an anonymous firm, but “To Whom It May Concern” is a safe bet.
2. In order to help prospective employers wade through the flood of applicants, please include the following in the email subject header: “Your Name – Name of your favorite movie.”
3. Do not copy me on your emails. My inbox is full enough. Also, it is possible that these Yahoo and Hotmail accounts will fill up quickly. If your email bounces back, just wait a few hours, and hopefully the firm will clear out space.
Job: Life sciences-focused merchant bank
Location: Charlotte, NC
Email: pewireinterns100@yahoo.com
Job: Direct secondary private equity
Location: San Francisco
Email: pewireinterns101@yahoo.com
Job: Private equity
Location: New York, Hong Kong, Singapore
Email: pewireinterns102@yahoo.com
Job: Life sciences-focused VC
Location: Waltham, MA
Email: pewireinterns103@yahoo.com
Job: Venture capital
Location: San Francisco, Santa Fe and Albuquerque
Email: mailto:pewireinterns104@yahoo.com
Job: Mid-market private equity
Location: Chicago
Email: pewireinterns105@yahoo.com
Job: Private equity focused on real estate & distressed debt
Location: Baltimore, Birmingham, Michigan
Email: pewireinterns106@yahoo.com
Job: Emerging markets-focused placement and advisory
Location: Boston
Email: pewireinterns50@yahoo.com
Job: M&A boutique
Location: Minneapolis
Email: pewireinterns60@yahoo.com
Job: Hedge FoF & Private Equity
Location: Philadelphia
Email: pewireinterns61@yahoo.com
Job: Middle-market I-bank
Location: Chicago
Email: mailto:pewireinterns62@2yahoo.com
Job: VC firm focused on nanotech, advanced materials
Location: New York
Email: pewireinterns1@yahoo.com
Job: Middle-market LBO
Location: Waltham, MA
Email: pewireinterns3@yahoo.com
Job: Middle-market LBO
Location: New York
Email: pewireinterns4@hotmail.com
Job: Early-stage VC, tech focus
Location: Boston & Albany
Email: pewireinterns5@yahoo.com
Job: LBO — generalist
Location: Saddle Brook, N.J.
Email: pewireinterns7@yahoo.com
Job: VC firm
Location: Los Angeles
Email: pewireinterns8@yahoo.com
Job: Secondary investing at F-o-F
Location: London
Email: pewireinterns9@yahoo.com
Job: PE firm focused on clean tech
Location: Washington, DC
Email: pewireinterns11@yahoo.com
Job: M&A I-bank – creating deal database focused on SPACs
Location: New York
Email: pewireinterns12@yahoo.com
Job: Fund-of-funds
Location: New York or Palo Alto
Email: pewireinterns13@yahoo.com
Job: I-bank
Location: Boston
Email: pewireinterns14@yahoo.com
Job: Seed and early-stage VC
Location: Chicago or Kansas City
Email: pewireinterns15@yahoo.com
Job: Middle-market M&A
Location: Houston, Texas
Email: pewireinterns17@yahoo.com
Job: Seed-stage VC
Location: Chicago
Email: pewireinterns18@yahoo.com
Job: Lower middle-market LBO, healthcare focus
Location: New York
Email: pewireinterns19@yahoo.com
Job: VC/PE focused on direct marketing cos.
Location: Philadelphia
Email: pewireinterns20@yahoo.com
Job: LBO/Buy-side acquisition search services
Location: New York
Email: pewireinterns21@yahoo.com
Job: PE-backed natural gas company, M&A unit
Location: Houston
Email: pewireinterns22@yahoo.com
Job: Research & info provider for PE/VC firms
Location: London
Email: pewireinterns23@yahoo.com
Job: PE and M&A I-bank with software focus
Location: San Francisco
Email: pewireinterns24@yahoo.com
Job: Early-stage VC w/ social and healthcare focus
Location: Boston
Email: pewireinterns25@yahoo.com
Job: Early-stage VC w/ clean energy focus
Location: Boston
Email: pewireinterns26@yahoo.com
Job: Private Equity
Location: Los Angeles
Email: pewireinterns29@hotmail.com
Job: Secondaries
Location: New York
Email: pewireinterns30@hotmail.com
Job: Corporate VC/M&A for semiconductor company
Location: San Jose, CA
Email: pewireinterns31@hotmail.com
Job: PE industry services firm, market research position
Location: New York
Email: pewireinterns32@hotmail.com
Job: Early-stage VC, tech & life sciences
Location: New York
Email: pewireinterns33@hotmail.com
Job: Junior capital provider for lower middle-market cos.
Location: Hanover, MD (between Baltimore/Wash DC)
Email: pewireinterns34@hotmail.com
Job: Progressive investment policy advocacy group
Location: Pittsburgh/Harrisburg, PA
Email: pewireinterns36@hotmail.com
Job: M&A
Location: Cherry Hill, N.J.
Email: pewireinterns40@hotmail.com
Job: VC/PE
Location: Baltimore & Northbrook, IL
Email: pewireinterns41@hotmail.com
*** Oh, and a quick 30-by-30 update. We’re just 18 subscribers away, so I’ve extended the artificial deadline until the end of my 30th birthday (i.e., end of today). Thanks to everyone who’s been asking friends and colleagues to sign up…
|
|
|
Top Three |
Cadence Pharmaceuticals Inc., a San Diego-based hospital-focused drug company, has raised $53.8 million in second-round funding. Frazier Healthcare Ventures led the deal, which will help finance Cadence’s acquisition of an intravenous formulation of acetaminophen (IV APAP) from Bristol-Myers Squibb Co. Other new backers include Versant Ventures and Technology Partners, while returning shareholders include Domain Associates, ProQuest Investments, BB Biotech Ventures, CDIB BioScience Venture and Management. Cadence also announced that it has completed a $7 million debt financing agreement. Last year, it raised $25 million in Series A funding last year. www.cadencepharm.com
InterMedia Partners has agreed to sponsor a $473 million – or $29.85 per share — going-private transaction for Thomas Nelson Inc. (NYSE: TNM), a Nashville, Tenn.-based publisher and distributor of English-language bibles and related publications. The deal is expected to close on June 30, with Credit Suisse providing debt financing. www.thomasnelson.com
Legrand SA, a France-based maker of low-voltage electrical fittings and accessories, is planning to raise at least one billion euros via an April floatation. It is controlled by Kohlberg Kravis Roberts & Co. and Wendel Investissement, which led a 3.7 billion euros buyout in late 2002. Other shareholders include West LB, HSBC and Goldman Sachs Capital Partners. www.legrand.fr
|
VC Deals |
Major League Gaming Inc., a New York-based professional video game league, has raised $10 million in Series A funding from Ritchie Capital. The company also has hired Matthew Bromberg, former general manager of Moviefone and AOL Games, as president and chief operating officer. www.mlgpro.com
Aesthera Corp., a Pleasanton, Calif.-based developer of photopneumatic-based aesthetic treatment systems, has raised $11 million in third-round funding. Kleiner Perkins Caufield & Byers led the deal, and was joined by return backers MedVenture Associates and Adams Street Partners. www.aesthera.com
EnVysion Inc., a Boulder, Colo.-based broadband video surveillance company, has raised $3 million in first round funding. Participants included Columbia Capital and Bear Equity, a private firm owned by EnVysion executive chairman Dan Caruso. Also involved were existing angel backers and strategic partner Ledcor Technical Services. www.envysion.com
Penthera Technologies Inc., a Pittsburgh, Pa.-based provider of mobile broadcast multimedia software, has raised $6.55 million in Series A funding. Warburg Pincus led the deal, and was joined by Modeo LLC and ITU Ventures. www.penthera.com
SupportKids Inc., an Austin, Texas-based child support enforcement company, has raised nearly $2.73 million in Series C-1 funding, according to a regulatory filing. Backers include Austin Ventures, J.H. Whitney & Co. and Private Equity Partners. The company has raised around $40 million in total VC funding since 1997. www.supportkids.com
PINC Solutions, a Berkeley, Calif.-based provider of real-time location systems, has raised $1.7 million in Series B funding, according to a regulatory filing. Backers include Sutter Hill Ventures and Siemens. http://pinc-solutions.com
Syncro Medical Innovations Inc., a Canfield, Ohio-based developer of magnetically-guided feeding tubes, has raised $2.2 million in first-round funding led by Norwich Ventures. www.magnetictubes.com
Heartscape Technologies Inc., a Columbia Md.-based cardiology device company focused on early diagnosis of heart attacks and ischemia, has raised $3 million in Series A funding. Radius Ventures led the deal, and was joined by Delta Partners and company management.
Synchrony Inc., a Roanoke, Va.-based provider of magnetic bearings, power and control systems, has raised $5 million in Series A funding from NewVa Capital Partners and Third Security. www.synchrony.com
AirBand Communications Inc., a Dallas-based fixed wireless company for business customers, has raised $8 million in fourth-round funding. Key Venture Partners led the deal, and was joined by return backers Sevin Rosen Funds, Crescendo Ventures and Dolphin Equity Partners. www.airband.com
Deutsche Breitband Dienste GmbH (DBD), a Germany-based wireless telecom services provider, has received an undisclosed amount of strategic funding from Intel Capital. DBD will use the funding to expand its broadband wireless access efforts within Germany. www.dslonair.de
Movimento Group AB, a Sweden-based provider of automotive electronics, has raised $3.8 million in new VC funding from Eqvitec Partners. www.movimentogroup.com
|
Buyout Deals |
Advent International has sold Argentina-based generic drug company Fada Pharma SA to Chile-based Laboratorios Polygon for an undisclosed amount. www.adventinternational.com
Golden Gate Capital has acquired a control stake in Hansen Information Technologies, a Rancho Cordova, Calif.–based provider of software solutions to state and local governments. No financial terms were disclosed, although LBOWire puts the disbursement at more than $50 million. www.hansen.com www.goldengatecap.com
|
PE-Backed IPOs |
TAM SA, a Brazilian airline carrier, has filed to raise around $927 million via an IPO of American depository shares. It plans to trade on the NYSE under ticker symbol TAM, with Credit Suisse and Pactual Capital serving as lead underwriters. TAM has received private equity funding from affiliates of Credit Suisse. www.tam.com.br
|
PE-Related M&A |
MB Inv*stment Partners, a wealth management firm backed by Centre Partners, has merged with Ironwood Capital Management, in order to worm a wealth management and institutional platform with more tan $1.1 billion in total assets under management. Centre Partners will continue to support the company. www.mbipinc.com www.ironwoodcapitalmanagement.com
Trans World Entertainment Corp. has signed a tentative agreement to buy Musicland Holding Corp.’s assets out of bankruptcy for around $104 million. Musicland was acquired in 2003 by Sun Capital Partners. www.musicland.com
|
Firm & Fund News |
ITU Ventures has closed its third fund with $120 million in capital commitments. The Los Angeles–based firm provides seed and early-stage funding to tech companies emerging from universities, research institutions and corporations. www.itu.com
HarbourVest Partners and AlpInvest Partners have teamed up to form Paragon Partners Secondary LP, which subsequently acquired an existing portfolio of three European companies from German private equity fund manager Afinum. HarbourVest and AlpInvest committed 47 million euros to Paragon, which gives it enough flexibility to make follow-on inv*stments in the portfolio companies and to pursue further secondary transactions. www.paragon-partners.de
|
Human Resources |
Eric Wright has joined Ropes & Gray as a partner focused on the formation and operation of venture capital and private equity funds. He will work out of the firm’s Palo Alto, Calif. office, and previously was a partner with Wilson Sonsini Goodrich & Rosati. www.ropesgray.com
Louis Singer has joined law firm Morgan, Lewis & Bockius LLP as head of its private fund practice. He previously was with Orrick, Herrington & Sutcliffe. In related news, former Orrick Herrington attorneys Jedd Wider and Georgette Schafer also have joined the Morgan Lewis private fund practice as partners. www.morganlewis.com
James Schaefer has joined UBS as a managing director in its global power I-banking group. He previously served as a managing director in Lehman Brothers’ power group. www.ubs.com
Grotech Capital Group has promoted Chuck Cullen, Erick Morris, Steve Frederick and Joel Radtke to the position of principal. www.grotech.com
Jay Kim has joined Ropes & Gray as a partner, focused on private debt financing, high-yield bonds and bridge financing. He previously served as counsel with Shearman & Sterling. www.ropesgray.com
Lucatonio Salvi has joined Sheppard, Mullin, Richter & Hampton LLP as a partner in the firm’s corporate practice group. He will work out of Washington, D.C., and previously was with Latham & Watkins. www.sheppardmullin.com
TUESDAY, FEBRUARY 21
Just Linking Around…
I had promised expanded Internship Drive listings this morning, but a corporate email glitch is preventing me from accessing the necessary files. If our crack IT team can figure this out within the next few hours, I’ll post the listings at www.pewnews.com. If not, they’ll be in tomorrow or Thursday’s Wire. In the meantime…
*** Two weeks ago, I moderated a Harvard Business School debate between Howard Anderson (current MIT professor and reformed VC) and Todd Dagres (current VC and reformed film producer). At issue was the future viability of venture capital investing, with particular attention paid to the rationale Anderson gave last year in saying Goodbye to Venture Capital.
According to votes submitted on the back of business cards, Dagres won the debate – which isn’t terribly surprising given that a number of audience members envision future VC careers. Plus, Anderson’s argument is: (A) Extremely narrow in that he only includes early-stage IT investing without giving much thought to later-stage or life sciences VC (although he doesn’t like the idea of backing drug firms that rely on government regulators); (B) Even narrower in that he believes Dagres’ new firm – Spark Capital – will succeed, despite its stated focus on early-stage IT investing (i.e., only certain early-stage IT firms will fail, which seems to be true in all eras, not just this one); and (C) Seemingly fixated on the disappearance of 1990s-style tech market dislocations, without considering current tech market dislocations. Not that Howard didn’t make many good points interspersed with amusing one-liners, but Dagres was more convincing (Note: My job, to a large extent, also relies on VC market viability, so perhaps I’m as biased as the b-school audience).
For yet another take on the current state of venture capital, take a look at this blog posting from Peter Rip of Leapfrog Ventures. Or a possible look into the future from Bill Burnham.
*** Texas Pacific Group always has viewed itself as a contrarian’s paradise. After all, it did start with the acquisition of a troubled airline carrier, went to China before almost any other U.S. firm, etc. But it has joined the mainstream in at least one regard (or perhaps two regards, given the $12 billion it’s apparently raising for a new fund): TPG finally has a website. Sure it’s bare bones, but it leaves Thomas H. Lee Partners alone in the wilderness as the only major PE shop to remain offline.
*** Lots of entrepreneurs think they need venture capital, when they’d really be better off with a business loan. Lucky for them, a friend of mine named Neil Berdiev has written a readable how-to guide for those who don’t even know where to begin. You can order it here, or go to www.LoanFinancingGuide.com for more info. He’ll also be at the Harvard Coop on Tuesday March 2 at 7pm, if you’d like to ask questions in person.
*** I am not a Kleinerologist, but Matt Marshall is. He gets more in-depth on last week’s fund announcements, including additional partnership info and reasons why KP might not back the latest Dean Kamen venture (as I asserted it would).
*** Less than one day to go in the 30-by-30 Drive, and it’s looking a bit dicey. We need around 80 more subscribers in order to give me the best gift this side of a Ms. Pacman arcade machine (J. mistakenly let it slip that she’s been trying to secure one via eBay).
|
|
|
Top Three |
The Carlyle Group has agreed to acquire MultiPlan Inc., the largest independent preferred provider organization (PPO) in America. No financial terms were disclosed. www.carlyle.com www.multiplan.com
Red Swoosh Inc., a San Mateo, Calif.-based distributed networking infrastructure company, has raised around $1.73 million in Series A funding, according to a regulatory filing. Backers include August Capital and Radical Investments. www.redswoosh.net
Netifice Communications Inc., a Costa Mesa, Calif.-based provider of IP VPN Solutions, has agreed to acquire MegaPath Networks Inc., a Pleasanton, Calif.-based provider of secure access and managed business network solutions. No financial terms of the cash and stock deal were disclosed, except that it includes $35 million in additional funding from shareholders of both companies. Returning Netifice backers include Boston Millennia Partners, Columbia Capital, Dolphin Equity Partners, Fidelity Ventures, H.I.G. Capital and Rho Ventures, while returning MegaPath backers include Comcast Interactive Capital, Performance Equity Management, Trident Capital and U.S. Venture Partners. Prior to this deal, Netifice had raised around $105 million in VC funding, while MegaPath had raised around $58 million. www.netifice.com www.megapath.net
|
VC Deals |
Supernus Pharmaceuticals Inc. of Rockville, Md. has raised $17.5 million in additional Series A funding. The company was formed last month with $27.5 million from New Enterprise Associates and OriMed Advisors, which helped it acquire the product formulation and development business of Shire Laboratories Inc. from Shire PLC. The new capital was provided by NEA and Abingworth Management. www.supernuspharma.com
Solidcore Systems Inc., a Palo Alto, Calif.-based provider of IT control solutions, has raised $10 million in Series C funding. Return backers include Matrix Partners, Menlo Ventures and Sevin Rosen Funds. www.solidcore.com
Linux NetworkX Inc., a Bluffdale, Utah-based provider of Linux computer cluster applications, has secured $10 million of a $13.44 million Series C funding round, according to a regulatory filing. Return backers include Oak Investment Partners and Tudor Ventures. www.linuxnetworx.com
Anaqua, a provider of intellectual asset management software, has raised $4 million in Series A funding led by Northstar Global Partners. The company also has moved its headquarters from London to Boston. www.anaqua.com
Vizu Corp., a San Francisco-based online provider of public polling services, has raised $1 million in Series A funding. WR Hambrecht & Co. led the deal, and was joined by Amicus Capital and angel backers like Ron Conway, Esther Dyson, Don Hutchinson and Mike Maples Jr. www.vizu.com
Third Screen Media, a Boston-based provider of mobile advertising and marketing software, has raised $5 million in Series B funding. TD Capital Ventures led the deal, and was joined by fellow return backer Blue Chip Venture Capital Co. www.thirdscreenmedia.com
|
Buyout Deals |
Apax Partners has entered exclusive talks to sell French jeweler Histoire d’Or to PPM Capital, according to Les Echos. The deal is expected to be valued at around 230 million euros, and had attracted interest from Advent International and Sagard. www.apax.com
Nautic Partners has acquired Oasis Outsourcing LLC from H.I.G. Capital for an undisclosed amount. Oasis is a West Palm Beach, Fla.-based professional employer organization. www.oasisadvantage.com
The Blackstone Group has agreed to acquire MeriStar Hospitality Corp. (NYSE: MHX), a Bethesda, Md.–based hotel REIT, for approximately $2.6 billion. Acquisition financing is being provided by Bear Stearns, Bank of America and Merrill Lynch. Lehman Brothers advised MeriStar on the deal. www.meristar.com www.blackstone.com
|
PE-Backed IPOs |
Eagle Test Systems Inc., a Mundelein, Ill.-based provider of automated test equipment for the semiconductor manufacturing industry, has set its proposed IPO terms to 6.5 million common shares being offered at between $14 and $16 per share. It plans to trade on the Nasdaq under ticker symbol EGLT, with Banc of America Securities and Lehman Brothers serving as lead underwriters. TA Associates is Eagle Test Systems’ majority shareholder. www.eagletest.com
Debitel AG, a Germany-based mobile telecom company, is considering a flotation on the Frankfurt Stock Exchange, according to Reuters. The offering would value Debitel at around one billion euros, and would occur near the end of this year. Debitel is owned by Permira, and has retained JPMorgan as an advisor. www.debitel.com
|
PE-Related M&A |
3i Group and MCH Private Equity have sold Spanish industrial door manufacturer Grupo Combursa to Sweden-based Cardo for 34.11 million euros. www.combursa.com
|
Firm & Fund News |
AXA Private Equity has led a secondary purchase of Steadfast Capital Beteligungen I, which includes 14 holdings in small and mid-sized enterprises and other private equity funds. Participating alongside AXA were CSFB Strategic Partners and Paul Capital Partners, while ING was the seller. No financial terms were disclosed. In related news, AXA will invest a second Steadfast Capital fund, which is targeting up to 250 million euros with 140 million euros in capital already committed. www.axa-im.com www.steadfastcapital.de
The Saudi Arabian General Investment Authority, Venture Capital Bank (Bahrain) and Global Emerging Markets plan to form a $100 million fund to provide later-stage funding to companies within Saudi Arabia. The fund will follow Islamic law.
|
Human Resources |
Mohammas Azab has joined Ventures West as an entrepreneur-in-residence focused on biotech opportunities. He previously served as executive vice president of R&D and chief medical officer of QLT Inc. www.ventureswest.com
MONDAY, FEBRUARY 20
American Capital Ventures Out
Tony Abate and Andy Fillat have spent the past year as venture capital nomads. Today, however, they will announce permanent residency with a new tech-focused VC program from publicly-traded American Capital Strategies Ltd. (Nasdaq: ACAS)
Abate is a former partner with Battery Ventures and Ironside Ventures, who left Ironside last March after it couldn’t hits its $150 million third fund target. Fillat is Advent International’s former head of North American venture capital, who left because Advent decided to close its North American VC practice.
Before continuing, let me be the first to say: Thank goodness. There might not be two free agent VCs who have been linked to more firms than these guys. Always flirty bridesmaids, never brides. The pair even came precipitously close to forming their own firm – along with Doug Schrier of Argo Global Capital – but bailed after Fillat received feelers from ACAS.
The ACAS offer was immediately attractive to Fillat for three reasons: First, he would not be strangled by deal size/stage or industry cycle restrictions. Instead, ACAS would give him the freedom to do everything from $5 million pre-revenue plays to $50m-$100m growth equity financings. And, if a particular niche sector had fallen out of favor, he’d be under no obligation to invest there. Second, he wouldn’t have to fund-raise, since the effort’s capital would come from ACAS’ publicly-traded evergreen pools. Finally, ACAS is a professional investment firm preoccupied with profits, rather than a corporate venture shop focused on more strategic aims.
Fillat soon signed on, and recruited Abate. The program is called American Capital Technologies, and will feature six managing directors working out of new ACAS offices in both Boston and Silicon Valley. Fillat and Abate (both Boston) are the only two MDs signed on so far, but report that ACAS is in final negotiations with two experienced, albeit undisclosed, West Coasters. The team also will be supplemented with a full cadre of principal- and associate-level folks. Also involved will be current ACAS pros Miles Armone, a onetime entrepreneur-in-residence with Charthouse Group International, and Dave Gessel, former head of technology engineering company Black Rose Technology.
American Capital Technologies does not have a specific fund size or allocation, but one can safely assume that it has more available cash than almost any other VC firm on the planet. ACAS manages nearly $7 billion, invested around $3.2 billion last year (mostly buyouts, recaps, mezzanine deals) and returned around $1.3 billion. It also has around 300 employees with nine offices (or 11, once the new ones are opened).
The VC practice likely won’t move the ACAS needle too much, but is nonetheless an important component of the firm’s overall desire to cover the private tech investment spectrum.
;Two years ago we decided to build out the organization so that it would have the capacity to do other things in the areas of equity and sub debt,” says Malon Wilkus, president, chairman and CEO of ACAS. “Specifically, getting into venture capital is part of a somewhat larger strategy involving tech-driven companies. We’ve already been working on later-stage and mature tech companies, and now we’ll also be able to focus on earlier-stage companies.
Now it’s just a question of finalizing some leases, recruiting some more people and getting to work. Fillat and Abate already have begun due diligence on a few deals, with an initial investment possible within the next month or two.
|
|
|
Top Three |
The UK Treasury and Revenue & Customs are considering substantial tax rate increases on private equity firms, according to a letter sent last Thursday to members of the British Venture Capital Association. The news was first reported yesterday by The Sunday Times of London.
Restaurant Technologies Inc., an Eagan, Minn.-based provider of bulk-cooking oil management services to the food services industry, has raised $60 million in combined equity and debt funding. Return backers Parthenon Capital and ABS Capital Partners led the equity tranche, while the senior subordinated debt facility was provided by Sankaty Advisors (credit affiliate of Bain Capital) and MCG Capital Corp. www.rti-inc.com
Lawrence Calcano is leaving Goldman Sachs, where he serves as co-head of technology I-banking, in order to pursue private equity opportunities. He has not yet decided whether he will join an existing firm or form a new partnership. www.gs.com
|
VC Deals |
ApaceWave Technologies Inc., a Saratoga, Calif.-based provider of broadband wireless solutions, has raised nearly $12.1 million in Series A funding, according to a regulatory filing. Backers include Venrock Associates and DCM-Doll Capital Management. www.apacewave.com
Six Apart Ltd., a San Mateo, Calif.-based provider of blogging software, has raised $12 million in new VC funding, according to Investment Dealers’ Digest. No word on the new backers for Six Apart, which previously raised money from August Capital. www.sixapart.com
Precision Therapeutics Inc., a Pittsburgh-based oncology services company, has raised $20 million in fifth-round funding. Quaker BioVentures led the deal, and was joined by Adams Capital Management, Birchmere Ventures, Techno Venture Management and Draper Triangle Ventures. The company has raised over $83 million in total VC funding since its 1995 inception. www.precisiontherapeutics.com
SigNav Pty Ltd., an Australia-based provider of GPS solutions, has raised Au$2.5 million in Series C funding. Neo Technology Ventures led the deal, and was joined by return backer Nanyang Ventures. www.signav.com
EssensiumNV, a Belgium–based fabless provider of system-on-a-chip application-specific ICs, has raised 6 million euros in strategic funding from Atlantic Quantum, whose parent company is Khazanah Nasional.
|
Buyout Deals |
Natural Gas Partners has sponsored the formation of PSI Midstream Partners LP, a new company focused on midstream asset opportunities along the Texas and Louisiana Gulf Coast and the Gulf of Mexico. No financial terms were disclosed. The PSI management team is led by: Lee Powell, formerly with Superior Natural Gas; Eric Pitcher, chairman of Synergy Oil & Gas; and Richard Fitt, previously with El Paso Field Operations Co. www.ngptrs.com
BC Partners has received European Commission approval to buy a 51% stake in Hyatt Regency Hotels and Tourism SA from Hellenic Casinos Co. for approximately 476 million euros (or 11 euros per share).
CDC Entreprises Capital has agreed to acquire French jewelry and watch retailer Marc Orian from the founding Krief family (75% ownership) and Credit Agricole Private Equity (25%). No financial terms were disclosed, but Les Echos puts the price at around 140 million euros, including leverage. www.cdcentreprises.fr
KKR and CVC Capital Partners are considering an offer for Dutch conglomerate Stork NV, according to UK newspaper The Business. The publicly-listed company is valued at around 1.6 billion euros, and has retained ABN Amro to manage the auction.
Permira has offered to sponsor a Gbp600 million management buyout of UK asset management firm Gartmore, according to UK newspaper The Business. Gartmore was recently put on the block by parent company Nationwide Mutual Insurance Co. www.gartmore.com
|
PE-Backed IPOs |
Wintegra Inc., an Austin, Texas-based provider of access processing semiconductors, has filed to raise $86.25 million via an IPO of common stock. It plans to trade on the Nasdaq under ticker symbol WNTG, with Goldman Sachs and JPMorgan serving as lead underwriters. It has raised around $26 million in VC funding from firms like Magnum Communications Fund, Concord Ventures, Texas Instruments, Genesis Partners and China Development Industrial Bank. www.wintegra.com
AGI Therapeutics Ltd., a Dublin, Ireland-based drug company focused on gastrointestinal diseases and disorders, reportedly is planning to raise 42.5 million euros via a public flotation on London’s AIM. The company has raised VC funding from such firms as ACT Venture Capital, Merlin Biomed, Delta Partners and Seroba Bioventures.
Rock Mobile Corp., a Taiwan-based provider of mobile music services, reportedly is planning an IPO on the Nasdaq in the second half of this year. The company is a 2002 spinout from Chinese-language music publisher Rock Music Group., and has raised over $30 million in venture capital funding from such firms as Acer Technology Ventures, Goldman Sachs, Id Tech Ventures, Legend Capital and Siemens Mobile Acceleration. www.rockmobile.com.cn
|
PE-Related M&A |
Microsoft Corp. has acquired MotionBridge Inc., a Paris, France–based provider of search technology for mobile operations and the mobile Internet. No financial terms were disclosed. MotionBridge had raised venture funding from Siemens Mobile Acceleration. www.microsoft.com www.motionbridge.com
|
Firm & Fund News |
The Illinois Teachers’ Retirement System has hired R.V. Kuhns & Associates as its general investment consultant, with responsibilities to include asset allocation studies, investment manager research and performance reporting. R.V. Kuhns will replace Callan Associates, whose contract with Illinois TRS expired at the end of 2005. TRS also announced the following private equity fund commitments: Madison Dearborn Capital Partners V ($100m), Belvedere Capital Fund II ($20m), Carlyle/Riverstone III ($90m), Energy Capital Partners ($50m). http://trs.illinois.gov
AIG Global Investment Group has closed its Pinestar Capital fund with $700 million in capital commitments. PineStar is a secondary portfolio of approximately 150 private equity funds that AIGGIG acquired from Dresdner Bank and certain affiliates in March 2005. www.aig.com
Hydro Technology Ventures, the VC arm of Norwegian energy and aluminum company Norsk Hydro ASA, has closed its second fund with 400 million Norwegian crown ($59.2 million). The group focuses on energy sector opportunities. www.hydro.com
|
Human Resources |
Michael Carroll has joined Triton Pacific Capital Partners as controller and investment relations manager. He most recently served as treasurer for the losing Virginia gubernatorial campaign of Jerry Kilgore. www.tritonpacific.com
Email Daniel.Primack@thomson.com
If you do not receive this within five minutes, please try and sign in again. If the problem persists, please
email: