PE Week Wire: Wed., Nov. 21, 2007

In the spirit of tomorrow’s holiday, please take a moment to give thanks for all the singles, doubles, triples and homeruns you’ve hit over your career. I’ll even give you a paragraph break to reflect…

Moment over? Good, because what follows is all about the strikeouts:

InsideCRM yesterday published a list of what it called the 20 Worst Venture Capital Investments of All Time. My initial follow-up was to get comments from VCs who were involved in the aforementioned busts, to kind of create an anti-anti-portfolio. But it was apparently a case of piling on, or perhaps these particular VCs simply are unaccustomed to self-depreciation. Replies were few and very far between.

So I decided to make my own list, by using the Venture Economics database. It includes how much money each company received, and its Top 20 diverges quite a bit from what was compiled by InsideCRM. For example, our top dog is Formus Communications Inc., which raised over $500 million between 1996 and 2000. In place and show were Digital Access Inc. ($490m) and VeloCom ($442m). InsideCRM “leader” Amp’D Mobile doesn’t appear on our chart until number 7.

In all, we uncovered 4,300 VC-backed busts that raised over $63 billion in funding. To qualify, a company had to meet three qualification: (1) Raised VC funding between 1990 and 2007; (2) Be based in the United States; and (3) Have since gone out of business and/or declared Chapter 7 or Chapter 11 bankruptcy. Unlike InsideCRM, we did not include companies that were acquired (even if the sale price was a pittance compared to the initial investment). Not because there aren’t hundreds deserving of bust status, but because it made the database work too complex.

I also did a couple of related searches. First up was a look at which VC firms had backed the most losers. It’s an interesting grouping, with some selection bias toward firms that do lots of deals. It goes like this:

JPMorgan Partners

New Enterprise Associates

Intel Capital

Bessemer Venture Partners

Oak Investment Partners

Kleiner Perkins Caufield & Byers

Sequoia Capital

Mayfield Fund

Windspeed Ventures

BancBoston Ventures/BancBoston Capital

In addition, I broke down the entire grouping by industry sector (using MoneyTree categories). It looks like this:

Telecom (19.96% in terms of dollars lost)

Software (14.75%)

Networking & Equipment (11.27%)

Media & Entertainment (9.37%)

IT Services (8.12%)

Retailing/Distribution (5.59%)

Consumer Products & Services (5.03%)

Biz Products & Services (3.84%)

Financial Services (3.44%)

Medical Devices (3.03%)

Industrial/Energy (3.02%)

Semiconductors (3.01%)

Healthcare Services (3%)

Computers/Peripherals (2.63%)

Biotech (2.62%)

Electronics/Instrumentation (1.06%)

Other (0.26%)

*** peHUB learns that The Association for Corporate Growth (ACG) has parted ways with its first-ever president.

*** Darts & laurels for the Walker Report, which is designed to (sorta) regulate UK private equity firms. You can download the actual report here.

*** Adam Lashinsky on the Al Gore/Kleiner/carried interest issue.

*** The World Bank with a country-by-country chart on the ease of opening and closing businesses, paying taxes, protecting investors, etc. (hat tip: Paul Kedrosky).

*** Dana Cimilluca says the latest KKR hires are another indication that it’s moving forward with its ill-advised IPO (I added the “ill-advised” part). And I think he’s right, given what people keep telling me.

*** Today is your last PE Week Wire until Monday, as we’re off tomorrow and I’m just not expecting much news to break on Friday. For junkies, I’ll keep posting at peHUB… Enjoy the feast, football and family…

Top Three, a Chinese video sharing website, has raised $25 million in third-round funding. Brookside Capital Partners was joined by return backers Sutter Hill Ventures, Chengwei Ventures and Farallon Capital. The company has now raised a total of $40 million.

The Carlyle Group has sold Hispanic Teleservices Corp. to Teleperformance (Paris: ROCH) for an undisclosed amount. HTP is a Mexico-based provider of customized bilingual call center services to companies serving their Hispanic customers in the U.S. It is the first exit for Carlyle’s Mexican buyout team, which acquired HTC in December 2005.

Sun Capital Partners has agreed to acquire a controlling interest in American Standard Americas, a company recently formed by Bain Capital via its $1.76 billion acquisition of the Global Bath and Kitchen business of American Standard Companies Inc. (NYSE:ASD). No financial terms were disclosed. Bain Capital will retain a minority interest in ASA, and will remain the majority owner of American Standard International (in which Sun will not hold an interest).

VC Deals

LabNow Inc., an Austin, Texas-based provider of point-of-care diagnostic systems, has raised $20 million in Series B funding. Sammons Enterprises led the deal, and was joined by return backer Austin Ventures.

Quantenna Communications Corp., a Sunnyvale, Calif.-based fabless maker of wireless chipsets, has raised $12.74 million in Series B funding, according to a regulatory filing. Backers include Grazia Equity, Sequoia Capital, Sigma Partners and Venrock.

Interactive Supercomputing Inc., a Waltham, Mass.-based developer of a software platform that delivers interactive parallel computing power to the desktop, has raised $11.08 million in Series B funding, according to a regulatory filing. Backers include Fletcher Spaght Ventures and Ascent Venture Partners were joined by return backers Flagship Ventures and Rock Maple Ventures.

Kalido Inc., a Burlington, Mass.-based provider of data warehousing and management software, has raised $10 million in Series D funding, according to a regulatory filing. Return backers include Atlas Venture, Balderton Capital and Matrix Partners. The company has now raised $29 million in total VC funding., a Chinese online travel search engine, reportedly has raised $10 million in Series B funding. Lehman Brothers Private Equity led the round, and was joined by return backers GSR Ventures and Mayfield.

ProspectHills Inc., a Saratoga, Calif.-based IT startup run by former Protego Networks CEO Imin Lee, has raised nearly $2.7 million in Series A funding led by Miramar Venture Partners, according to a regulatory filing.

TeamPages, a Victoria, British Columbia-based online organization tool for sports teams, has raised an undisclosed amount of Series A funding led by Burda Digital Ventures.

SGX Pharmaceuticals Inc. (Nasdaq: SGXP), a San Diego-based drug company focused on cancer therapeutics, has raised $25 million in a private placement of common stock and warrants from an institutional investor group that includes OrbiMed Advisors and Great Point Partners. OrbiMed had been one of SGX’s venture capital backers, prior to the company’s early 2006 IPO.

Buyout Deals

Arcapita and Fulcrum Power Services have agreed to acquire the Bosque power generation facility from LS Power Group. No financial terms were disclosed. The Laguna Park, Texas-based Bosque facility launched as a natural gas-fired power plant in 2000, and is being converted into a combined cycle facility with a capacity of over 800 megawatts. Bosque sells its energy and ancillary services into the Texas power market.

Bridgepoint has acquired CTL Logistics, a Poland-based provider of rail logistics and operation in Central and Eastern Europe. No financial terms were disclosed. CTL generated €285 million in 2006 revenue, and employs over 2,500 people. ING and Commerzbank. Advisers provided leveraged financing.

Inflexion Private Equity has sponsored a £44 million management buyout of Eurotel Holdings Ltd., a provider off telephony services to small and mid-sized enterprises in the UK. Company management and existing backer Young Associates have also invested, while a £21.5 million leveraged finance package was committed by Lloyds TSB Corporate Markets.

Brazos Private Equity Partners has sponsored a leveraged recapitalization of Sadler’s Bar-B-Que Sales Ltd., a Henderson, Texas-based maker of smoked meats, including brisket, chopped/shredded products, ribs and other ready-to-eat barbecue related products. No financial terms were disclosed.

PE-Backed IPOs

Aegerion Pharmaceuticals Inc., a Bridgewater, N.J.-based drug company focused on cardiovascular and metabolic diseases, has filed for an $86.25 million IPO. This is the company’s second stab at the public markets, having filed for an $86.25 million IPO this past January that it later pulled due to “market conditions.” It plans to trade on the Nasdaq under ticker symbol AEGR, with Piper Jaffray and Thomas Weisel serving as co-lead underwriters. Prior underwriter Lehman Brothers is not listed on the new filing. Aegerion has raised around $40 million in total VC funding, including a recent $17.5 million Series B infusion. Shareholders include Index Ventures (20% pre-IPO stake), Advent International (18.5%), Alta Partners (17.3%), Scheer & Co. (8.9%) and MVM Life Science Partners (6.1%).

Paradigm Ltd., a Cayman Islands-based provider of enterprise software for the global oil and gas exploration and production market, has withdrawn registration for a $200 million IPO. No explanation was provided. The company had planned to trade on the Nasdaq, with Lehman Brothers, UBS and Banc of America Securities serving as co-lead underwriters. Fox Paine holds a 92.3% ownership stake.

PE Exits

Aleris International Inc. has agreed to sell its US Zinc business to affiliates of Votorantim Metais Ltd. for $295 million. Aleris is a Beachwood, Ohio-based metals company taken private late last year by TPG Capital.

PE-Backed M&A

Cryptek Inc., a Sterling, Va.-based provider of identity and access control solutions, has agreed to acquire substantially all the assets of ION Networks Inc. (OTC BB: IONN), a South Plainfield, N.J.–based provider of remote management and secure access products. No pricing terms were disclosed for the all-cash deal, which is expected to close next month. Cryptek has raised around $40 million in VC funding from firms like Walden International, Westbury Partners, Angelo Gordon & Co. and VAL Investment Group.

DirectPointe Inc., a Lindon, Utah–based provider of IT outsourcing services, has acquired Sweet Spot Solutions, a Mesa, Ariz.-based provider of clientless VPN technology for flash memory devices. No financial terms were disclosed. DirectPointe has raised around $5.6 million in VC funding from Canopy Group.

TriTech Software Systems, a San Diego-based provider of public safety software solutions, has acquired IMC, a North Grafton, Mass.–based provider of software for public safety agencies. No financial terms were disclosed. WestView Capital Partners completed a minority recap of TriTech late last year.

USI Holdings Corp., a Briarcliff Manor, N.Y.–based distributor of insurance and financial services to businesses, has acquired Treadwell & Harry Insurance LLC, a Memphis, Tenn.-based provider of property & casualty products and services to clients in the Memphis area. No financial terms were disclosed. USI is owned by Goldman Sachs Capital Partners.

Firms & Funds

Baigo Capital, a Frankfurt-based private equity firm focused on the European healthcare market, has held a €100 million first close on its debut fund. It plans to hold a final close on €300 million.

Human Resources

Kohlberg Kravis Roberts & Co. has made three new hires: David Sorkin, former M&A attorney with Simpson Thacher & Bartlett LLP, as general counsel; Robert Gottlieb, former HR manager with Goldman Sachs, as chief human resources officer; and Edward Brandman, former managing director with PwC, as chief information officer.