peHUB Wire: Thursday, September 3, 2009

Three months ago, Steve Gillmor write that “it’s time to get completely off RSS and switch to Twitter.” Sam Diaz piled on last week, calling RSS a Web 1.0 application whose time has passed. And things got even worse yesterday, when news leaked that former Feedburner chief Dick Costello has agreed to join Twitter as chief operating officer.

All of this made me wonder whatever happened to RSS Investors, a venture capital firm formed in 2005 to focus exclusively on real simple syndication. What I learned was that RSS Investors is even deader than RSS (note: I say RSS is dead in the sense of being a billion dollar business onto itself — the technology, of course, can survive and have many useful applications).

RSS Investors was the brainchild of Jim Moore and John Palfrey, both of whom hailed from the Berkman Center for Internet & Society at Harvard Law School. Neither had too much VC experience, so they teamed up with former GE Capital pros Richard Fishman and Steve Smith. Pretty good team, albeit one with a strategy so narrow that it caused claustrophobia among skeptics.

Perhaps more importantly, RSS Investors never really had much money. The firm launched with a press release touting “the creation of a $100 million fund,” but that was basically a! PR stunt. RSS Investors wanted to raise $100 million, buthad only$20 million from a cornerstone commitment by Ritchie Capital. As Palfrey told me yesterday, it never raised additional funds (Palfrey adds that Ritchie Capital’s subsequent troubles played no role in RSS Investors’ demise).

The firm made a series of investments, in companies like Attensa, KnowNow (defunct) and Edgeio (assets sold to But new deals stopped when RSS Investors ran out of cash, andthe decision was made to close up shop.

“We never officially dissolved the fund, but we stopped making investments and everyone’s moved on to other things,” said Palfrey, whonow teaches law at Harvard and is a venture executive with Highland Capital Partners. “The only active investment we have left is StyleFeeder, here in Cambridge.”

So if you feel the urge to say an RIP for RSS, don’t forget to put in a word for RSS Investors…

*** A bunch of changes over a! t Battery Ventures: Mark Sherman and Battery have “come to the mutual conclusion” that Sherman will leave the firm once the new investment period of Battery VIII is concluded. That apparently will be at the end of Q1 2010, which means that new blue books might be out before year-end (seems a bit fast to me, but this is straight from a firm spokeswoman).

Sherman had been part of the firm’s push into India, but that now will be scaled back significantly. Battery will no longer build a team in Mumbai, instead focusing on India investments out of Silicon Valley. Guatam Patel, currently Battery’s sole employee in Mumbai, will leave to “seek other opportunities.” That mo! ve also is expected to occur at the end of Q1 2010. (kudos to VentureW ire for the initial scoop).

*** A bunch of changes to peHUB, as well: First, we’ve (finally) added Twitter and Facebook share buttons at the bottom of each post. Second, we’ve created something called FileRoom, which is where we will store stuff like data spreadsheets, white papers, lawsuits, etc.

We also will use FileRoom to post docs that we don’t have time to write full posts about, but which we think could be of interest. For example, yesterday we posted a reaction to the FDIC vote and a paper on considerations for sponsors lending to their own portfolio companies. Take a look and let me know your thoughts…

*** Yes Dallas, there will be a peHUB Shindig on October 14. Further details to come ! in two weeks.

*** A reminder to get your early-bird ticket for our Boston cleantech evening, which will focus on how to navigate the federal funding and regulatory waters. Full agenda and registration info here.

Top Three

Abbott (NYSE: ABT)has agreed to acquire Visiogen Inc., an Irvine, Calif.-based developer of products for cataract and refractive patients, for $400 million in cash. Visiogen had raised around $97 million in VC funding since 2001, from firms likeThree Arch Partners, New Leaf Venture Partners, Novartis Venture Fund, Prospect Venture Partners, CMEA Capital and Foundation Medical Partners.

Samsonite Corp., a luggage maker owned by CVC Capital Partners, said that its retail business has filed for Chapter 11 bankruptcy protection. The move is part of a reorganization that would result in the closure of around half of Samsonite’s 173 U.S. stores. CVC bought Samsonite in 2007 for $1.7 billion.

Roger Gray has been named chief investment officer of UK pension system Universities Superannuation Scheme (USS). He previously was CIO of Hermes Investment Management, and succeeds the retiring Peter Moon.

VC Deals

Neuronetics Inc., a Malvern, Penn.-based developer of therapies for psychiatric and neurological disorders using MRI-strength magnetic field pulses, has raised $30 million in Series D funding. New Leaf Venture Partners led the round, and was joined by return backers Investor Growth Capital, Quaker BioVentures, Three Arch Partners, Onset Ventures, Interwest Partners and KBL Healthcare Ventures. The company previously raised $62.5 million.

Glacier Bay Inc., a Union City, Calif.-based developer of system-integrated DC power and thermal management technologies, has raised $10 million in Series C funding. The Westley Group led the round, and was joined by return backers Quercus Trust and New Enterprise Associates. The company previously raised over $30 million.

Mix1 Bev! erage Co., a Boulder, Colo.-based provider of all-natural beverages, has raised $6 million in first-round funding from the Highland Consumer Fund. The capital will be used to help fund a national rollout.

Buyouts Deals

ABRY Partners has agreed to acquire a majority stake in Grande Communications Inc., a San Marcos, Texas-based telecom provider. No financial terms were disclosed, although a March VentureWire report said that ABRY was trying to secure more than $125 million in debt financing through SunTrust Bank. Grande has raised over $340 million in VC funding since 2000, from firms like BancBoston Capital, Kinetic Ventures, Atlas Venture, Whitney & Co., Centennial Ventures, HarbourVest Partners, South Atlantic Venture Funds, PNC Equity, TD Capital, Trinity Ventures, Lightspeed Venture Partners, Austin Ventures, CIBC, GE Equity, Alta Communications, Convergent Investors, Opus Capital, Norwest Equity Partners and Prime New Ventures. The ABRY deal is not expected to serve as an exit for the venture capitalists.

CVC Capital! Partners and Spain’s Cosmen family have increased their buyout offer for UK bus and rail operator National Express (LSE: NEX) to £765 million. CVC and Cosmen originally bid £600 million, but were rebuffed.

Regency Energy Partners (Nasdaq: RGNC) has raised $80 million in a private placement from Harvest Partners and MTP Energy Management.

Teakwood Capital, a Dallas-based private equity firm, has acquired MyOpenJobs, an operator of vertical career sites and Web-based recruiting management software. No financial terms were disclosed.

MDS Inc. (TSX: MDS) said that it will seek buyers for its pharmaceutical division, and also announced a deal to sell its analytical technologies unit to Danaher Corp. (NYSE: DHR) for $650 million.

PE-Backed IPOs

Open Link Financial Inc., a Uniondale, N.Y.-based provider of cross-asset trading, risk management and portfolio management software, has withdrawn registration for a $200 million IPO. The company had originally filed back in May 2008, withCredit Suisse and Citi are serving as co-lead underwriters. In its withdrawal, Open Link cited “unfavorable market conditions for initial price offerings.” TA Associates acquired majority control of the company in February 2006, via a recapitalization.

PE Exits

DivX Inc. (Nasdaq: DIVX) has acquired AnySource Media LLC, a Malvern, Penn.-based provider of a turnkey Internet-enabled TV platform. No financial terms were disclosed. AnySource Media raised $3.2 million in VC funding earlier this year from NextStage Capital, Murex Investments and individual angels.

Informatica Corp. (Nasdaq: INFA) has acquired Agent Logic, an Arlington, Va.-based provider of complex event processing software. No financial terms were disclosed. Agent Logic had raised a small amount of VC funding earlier from Walker Ventures and In-Q-Tel. Read more…

Thermo Fisher Scientific Inc. (NYSE: TMO) has agreed to acquire BRAHMS AG, a Germany-based provider of provider of specialty in-vitro diagnostic ! tests, for €330 million. BRAHMS is owned by HBM BioVentures and company management.


Freedom Communications, a newspaper publisher whose titles include the Orange County Register, has filed for Chapter 11 bankruptcy protection. The Blackstone Group and Providence Equity Partners bought a 40% stake in Freedom Communications in 2004 for approximately $460 million.

Human Resources

Will McIntosh has been named chief investment officer of Fund Evaluation Group. He previously was a finance professor and dean of the business college at the University of Cincinnati.

Michael Guilday has joined Ropes & Gray as a Hong Kong-based partner, as part of the firm’s private investment fund and hedge fund practice. He previously was with Linklaters.