peHUB Wire: Friday, July 9, 2010

Dow Jones yesterday published U.S. VC fundraising data for the first half of 2010, showing a 13% bump over the first half of last year. This prompted headlines like: “VC Doesn’t Look So Bad at the Half After All” and story ledes like “There’s good news for venture fundraising this morning.”

I hate to piss all over the parade, but this data is hardly worth celebrating. Here are three reasons why:

1. Bigger fundraising totals do not necessarily translate into better returns. For example, the high-water mark for VC fundraising was set in 2000, when funds secured over $100 billion. Lots of money, but it’s also one of the worst-ever vintage years for VC funds in terms of performance. Cambridge Associates puts the pooled mean (net to LPs) at -1.26 percent. The only weaker vintage (five years or older) was 1999, which happens to have been the second-best VC fundraising year on record.

2. Even if size does matter, improving over H1 2009 is no great feat. When Jason Campbell lines up behind center this year for the Oakland Raiders, his job is not just to be 13% better than JaMarcus Russell. In fact, that type of season would probably get him booted into the Bay.

Fundraising volume might not boost returns, but it does create more fee income, means more companies get funded and signals that institutional investors haven’t completely abandoned the asset class. But this 13% rise barely does any of those things, considering how paltry the H1 2009 figures were from Dow Jones. In fact, that leads me to…

3. There is reason to question the Dow Jones numbers. Their increase in VC fundraising is based on an H1 2009 figure of $6.6 billion. At the same time, data rival NVCA/Thomson Reuters says that VCs raised $9.2 billion over the same time period. Moreover, NVCA/TR will release their own H1 2010 figures on Monday, which are expected to be lower than either their own H1 2009 figures or the Dow Jones H1 2010 figures.

No, I don’t really understand the discrepencies. Both groups use similar fundraising methodology, including a rule that they apply dollars to the quarter in which they were committed (as opposed to Preqin, which lumps entire funds into the final close quarter). Maybe it’s just a case of what is considered a U.S. fund — for example, the two groups differ on a Sequoia China vehicle — or whether certain “growth equity” firms are categorized as VC vs. private equity…

To be clear I’m not claiming that Dow Jones is better or worse at this than is NVCA/TR (even though I work for the latter). Instead, I’m simply saying that there are disagreeable data sets out there. As such, don’t read too much into any of them.

*** Am I the only one who’s surprised that KKR is planning to list in New York before HCA does public? Kind of thought it would be a table-setter…

*** Mentioned this yesterday in First Read, but in case you missed it: Seems that The Blackstone Group missed its June 30 deadline for closing its new mega-fund. LBO Wire reports that the close will now occur “later this year,” as it’s still stuck at around $10.5 billion. Expect some sort of formal update during the firm’s quarterly earnings call on July 22.

*** Quiz Time: Can you name the alternative investment shop that’s in talks to sell a minority ownership stake to a public pension system. Hints: The two have done business together before, the pension is not CalPERS and I’m not talking AlpInvest (although it seems to be on the block).

Top Three

BC Partners and Silver Lake Partners have agreed to buy MultiPlan, a provider of healthcare cost management services to insurers and health plan administrators, from The Carlyle Group and Welsh, Carson, Anderson & Stowe. The deal is valued at approximately $3.1 billion.

cMoney Inc., a Houston-based mobile payment startup, has secured a $100 million funding commitment from AGS Capital Group. The company previously raised $15 million from Kodiak Capital Group.

Intellikine Inc. has sold global development and commercialization rights toits portfolio of inhibitors of the delta and gamma isoforms of phosphoinositide-3-kinase Infinity Pharmaceuticals Inc. (Nasdaq: INFI). The deal could be worth upwards of $488.5 million, including a $13.5 million up-front payment. Intellikine has raised over $63 million in VC funding from Abingworth, CMEA Capital, Novartis Bioventures, U.S. Venture Partners, Biogen Idec, FinTech Global Capitaland Sofinnova Ventures.

VC Deals

Invuity Inc., a San Francisco-based provider of on-field illumination solutions for less invasive medical procedures, has secured $13.2 million of a $16 million VC funding round, according to a regulatory filing. Backers include InterWest Partners and Kleiner Perkins Caufield &, a UK-based operator of an online marketplace for independent fashion boutiques in Europe and North America, has raised $4.5 million in VC funding from Advent Venture Partners.

Solasta, a Newton, Mass.-based developer of nanostructured solar cells, has closed its doors. The news was first reported by Greentech Media, which quotes CTO Michael Naughton as saying that the company already has sold its assets and terminated an active $2.7 million DOE grant. The company raised a small VC round in late 2008 led by Kleiner Perkins Caufield & Byers.

Buyouts Deals

Bain Capital is selling Italian tax and payroll company TeamSystem for up to €600 million. Second-round bidders include Sage (LSE: SGE), Advent International, Cinven and HgCapital.

Mason Wells has agreed to buy the Performance Packaging operations of Appleton. The deal is valued at around $58 million. The newly-independent company will be named NEX Performance Films Inc., and will make single and multilayer polyethylene films.

Ratos has agreed to acquire Stofa, the Danish subsidiary of TeliaSonera, for approximately $186 million.

Warburg Pincus has acquired a majority stake in A Place for Mom, a Seattle-based online resource and referral service for those seeking assisted living facilities. No financial terms were disclosed.

PE-Backed IPOs

Green Dot Corp., a Monrovia, Calif.-based seller of prepaid debit cards, set its IPO terms to 3.85 million common shares being offered at between $32 and $35 per share. It plans to trade on the NYSE under ticker symbol GDOT, with J.P. Morgan and Morgan Stanley serving as co-lead underwriters. Green Dot posted total operating revenue of $66.3 million for 2009, up 26% from a year earlier. Net income rose 78.5% to $10.4 million. Company shareholders include Sequoia Capital (31.9% pre-IPO stake) and Total Technology Partners (10.8%).

PE-Backed M&A

Highwinds, a Winter Park, Fla.-based provider of multi-platform IP services and content distribution solutions, has acquired BandCon, a Costa Mesa, Calif.-based Internet infrastructure service provider. No financial terms were disclosed. Highwinds has raised more than $55 million in equity funding from General Catalyst Partners, Alta Communications and European Founders Fund. It also recently secured $35 million in debt financing from Silicon Valley Bank.

NexTag, a San Mateo, Calif.-based comparison shopping site, has acquired Wize Inc., a San Mateo-based online product recommendation research engine. No financial terms were disclosed. Providence Equity Partners acquired nearly a 70% stake in NexTag two years ago for $830 million. Wize had raised around $6 million in VC funding from Bessemer Venture Partners and Mayfield.

Playdom, a MountainView, Calif.-basedsocial gaming company, has acquired Metaplace Inc., a San Diego-based social gaming technology and game design. No financial terms were disclosed. Metaplace had raised$9.4 million from Charles River Ventures, Crescendo Ventures, Marc Andreessen and Ben Horowitz.

PE Exits

TowerBrook Capital Partners is looking to sell German latex producer PolymerLatex, according to Bloomberg. No asking price was reported. The company generated nearly €400 million in 2009 sales.

Warburg Pincus is looking to sell MLM Information Services LLC, a maker of corporate tax software, according to The Wall Street Journal. The company could garner more than $600 million.