peHUB Wire: Thursday, August 5, 2010

Greetings from 30,000 feet, as I’m on my way to Atlanta for tonight’s peHUB Shindig. A few quick hits, as it seems we’re landing earlier than expected.

*** Yesterday I guested on This Week in Venture Capital, an online talkshow of sorts hosted by Mark Suster of GRP Partners (you can watch it in First Read).

One of the topics we discussed was signaling risk – the entrepreneurial concern that institutional VCs are basically using seed rounds to buy options, and that the company is viewed as a failure if those same VCs don’t re-up for the next round (thus making it difficult to secure new investors).

You might remember that this is the worry that prompted LearnBoost to syndicate a sub-$1 million seed round to four VC firms. In researching that deal, I spent some time on the phone with Jeff Fagnan of Atlas Venture, which was one of the four participating VC firms. He said that while signaling risk can be a legitimate concern, it also has become overblown.

I agree with Jeff. I generally feel that seed-stage investors are a lot like limited partners in a first-time fund. When such LPs commit dollars, they are tacitly agreeing to do the next fund as well (since it will be too early to accurately judge Fund I returns). There obviously can be exceptions for extraordinary circumstances – fraud, liquidity crisis, etc. – but it’s unlikely that they’ll bail. Not only because it’s too early for proof of concept, but also because such actions can cause reputational damage…

*** Speaking of seed investors: Dave McClure got a bunch of attention last week when he filed with the SEC to raise $30 million for his first institutional fund. Worth noting that McClure has already secured some commitments from individual investors, which makes me wonder if the filing only referred to institutional commitments. He declined comment, natch.

*** Vanity Fair is reporting that Steve Rattner took the 5th numerous times, during an SEC deposition on the NY pay-to-play scandal. More on this later today on the site…

Top Three, a Chinese online video sharing site, has raised $50 million in Series E funding. Temasek Holdings led the round with a $35 million investment, and was joined by return backers IDG Technology Venture Investment, Granite Global Ventures, General Catalyst Partners, Capital today, Jafco Asia, KTB Ventures and JAIC. Todou has now raised $135 million in total VC funding.

Amplimmune has signed a drug development deal with GlaxoSmithKline that includes a $23 million up-front payment and up to $485 million in milestone payments. The agreement relates to PD-1 targeting therapies that may help treat cancer and other diseases. Rockville, Md.-based Amplimmune has raised $20 million from InterWest Partners and Wellcome Trust.

Barnes & Noble (NYSE: BKS) is receiving buyout interest from a number of private equity firms, including Apollo Management, Bain Capital and TPG Capital. The bookseller’s current market value is around $900 million.

VC Deals

Gemin X Pharmaceuticals Inc., an oncology drug developer with offices in both Malvern, Pa. and Montreal, has raised $8 million in Series E funding. Return backers Caxton Advantage Life Sciences Fund and Sanderling Venture Partners co-led the round. The company had announced a $16 million Series D round back in April, which included a $4 million investor option.

Iron Will Innovations, developer of a “glove” that helps wearers control games and applications, has raised $3 million in Series A funding. It also announced that it has begun raising $2 million in Series B funding. No investor information was disclosed.

C2Call, a Germany-based provider of free Internet phone services, has raised $2 million in Series A funding. Backers include Draper Investment Co., High-Tech Grunderfonds and KHK Software co-founder Klaus Wecken.

Recurly, a San Francisco-based provider of billing solutions for subscription-based businesses, has raised $1.6 million in VC funding. Polaris Venture Partners led the round, and was joined by Michael Dearing, Josh Felser, Dave Samuel, Larry Mohr, Dave McClure, Babak Nivi and Naval Ravikant.

HauteLook, a members-only online shopping club, has been sued by Cartier for allegedly “causing immediate and irreparable harm to the Cartier brand and trademark.” HauteLook has raised over $41 million in VC funding from firms like Insight Venture Partners.

Buyouts Deals

Neff Capital Management has acquired Complete Turbine Services LLC, a Ft. Lauderdale, Fla.-based provider of engine performance restoration services to airlines and operating lessors. No financial terms were disclosed.

Prospect Partners has sponsored a recapitalization of Navix Diagnostics Inc., a Taunton, Mass.-based provider of outsourced cardiovascular diagnostic services. No financial terms were disclosed.

Rizvi Traverse Management and Starwood Capital Group have recapitalized Key Air, a provider of aircraft management, worldwide charter and FBO services. No pricing terms were disclosed.

RPI, a Seattle-based provider of automated manufacturing and fulfillment solutions for the consumer make-on-demand printed products market, has raised an undisclosed amount of mezzanine funding from Huntington Capital.

Sun Capital Partners has acquired Betts, a provider of printed laminate tubes for the oral care and personal care sector. No financial terms were disclosed.

PE-Backed IPOs

Gordman’s Stores Inc., an Omaha, Neb.-based off-price department store chain, raised around $58.9 million in its IPO. The company priced 5.36 million common shares being offered at $11 per share, which was below its $13-$15 per share offering range. Sun Capital Partnersacquired Gordman’s in September 2008.

PE-Backed M&A

Cornerstone Healthcare Group, a portfolio company of Highland Capital Management, has merged with Solara Healthcare. Both companies are Dallas-based providers of long-term acute care hospital services. No financial terms were disclosed.

LinkedIn has made its first acquisition: MSpoke, a Pittsburgh-based provider of recommendation technology. No financial terms were disclosed. LinkedIn shareholders include Bain Capital Ventures, Goldman Sachs, McGraw-Hill Cos., SAP Ventures and Bessemer Venture Partners. MSpoke had raised around $1.5 million from groups like Innovation Works and Summa VentureWorks.

PE Exits

Avista Capital Partners has agreed to sell around 52,200 net acres of its Marcellus Shale mineral rights to a unit of Reliance Industries Ltd., for $326.6 million. Avista will continue to hold around 70,000 net acres.

Barclays Private Equity reportedly is in advanced talks to sell its majority stake in German health services company GHD.

Veritas Capital has agreed to sell McNeil Technologies Inc. to Aecom Technology Corp. (NYSE: ACM) for around $355 million in cash. McNeil provides mission-critical services to U.S. federal government clients.

Firms & Funds

Providence Equity Partners has begun pre-marketing for a new buyout fund that could have a target of around $8 billion.

Human Resources

Boudewijn Jansen has joined the wealth management arm of Barclays PLC as head of private equity origination. He previously was head of private equity origination at HSBC Private Bank.

Claudio Galeazzi and Martins de Souza have joined BTG Pactual as partners in the firm’s consumer-focused private equity business. Galeazzi previously was CEO of Pao de Acucar, while Souza was CFO of Lojas Americanas.

Jim McCarvill has joined Madison Williams & Co., to help launch a new fund placement and advisory group. He previously was head of real asset funds at C.P. Eaton Partners.

Stu Bohart has joined Fortress Investment Group as president of liquid markets and senior managing director of strategy. He previously was co-head of Morgan Stanley Investment Management.