peHUB Wire: Wednesday, August 25, 2010

When Andreessen Horowitz raised $300 million for its debut fund last year, I suggested that it was too much money. Actually, I said the original $250 million target was too large – particularly for a two-partner firm that said initial investment sizes would average around $500k.

And my argument still makes sense to me. At least in theory.

The reality, however, is that AH has already invested most of its stash — including a giant check for the Skype carve-out — and added staff. Moreover, Marc Andreessen has become even more influential in Silicon Valley, while Ben Horowitz has emerged from his famous partner’s shadow by penning one of the smartest VC blogs around. All of this adds up to AH becoming the hottest VC firm this side of Sequoia.

It also means that AH is back in market for a second fund. Multiple LP sources tell me that the target is $650 million, which the firm says would enable it to make multiple Skype-type bets.

Normally, I would! bet against AH being able to raise this much money. It’s more than twice what it got just a year ago, and the fundraising market hasn’t really improved too much. Moreover, AH will have to answer questions about why it burned through its cash so fast, and if even more staff is needed (since raising Fund I, AH has added one investment partner and brought PR star Margit Wennmachers in-house). And then there are all of Andreessen’s extra-curricular activities (HP and Facebook boards)…

But AH just isn’t a normal firm. Which means I’d either bet against my gut instinct, or maybe just sit this one out…

*** Jake Anderson has quietly joined Sequoia Capital as a partner focused on growth-stage investments in the healthcare sector. He previously spent two years as a senior manager with Cord Blood Registry, and before that was an associate with Pequot Capital.

Jake also has some serious VC lineage: His father is Howard Anderson, co-founder of Battery Ventu! res and current senior lecturer at MIT.

*** Speaking of unan nounced personnel moves: John Bailey has joined TPG Growth as a vice president, after having spent more than four years with North Castle Partners.

*** Venture capitalists have invested nearly $2.44 billion into 263 U.S.-based companies so far this quarter, according to Thomson Reuters. This compares to $2.56 billion raised by 365 U.S.-based companies during the same time period in 2009.

So fewer companies, but larger rounds. Seems at odds with the seed-stage boom we keep hearing about. Maybe that’s because TR doesn’t record angel deals. Or maybe it’s because the bulk of VC investment is in sectors other than consumer Internet, even though Foursquare, etc. suck up all the blog oxygen…

*** Housekeeping: Please note that tomorrow is my last day with Thomson Reuters. Please change your contact email for me to Beginning Friday, peHUB Wires will be delivered by Buyouts editor David Toll. Look for his email in your inboxes after tomorrow…

Top Three

Royal Bank of Scotland has launched an auction for Priory Group, a UK operator of mental healthcare facilities. It hopes to fetch around £1 billion, with several private equity firms expected to bid. Rothschild is managing the process.

TA Associates has acquired just over a 16% stake in Dr Lal PathLabs, an Indian provider of diagnostic and pathology services, from Sequoia Capital India for approximately $35 million. The stake represents around one half of Sequoia’s overall position in Dr Lal PathLabs.

Pandora, an online radio network, reportedly i! s in talks to raise around $100 million from Elevation Partners, according to TechCrunch. The company previously raised around $64 million from Crosslink Capital, DBL Investors, Hearst Corp., Greylock, Allen & Co., GGV Capital, Labrador Ventures, Selby Venture Partners and WaldenVC. Pandora has raised $35 million in new VC funding, aCrosslink Capital, DBL Investors, Hearst Corp., Labrador Ventures, Selby Venture Partners and WaldenVC.

VC Deals

BizArk, a China-based platform for foreign trade and e-commerce services, has raised up to $40 million in VC funding from IDG, according to the Oriental Morning Post.

Atlantis Computing, a Mountain View, Calif.-based provider of virtual desktop infrastructure storage and performance optimization solutions, has raised $10 million in Series C funding. Backers include Partech International, El Dorado Ventures and Cisco Systems.

Vriti Infocom, an Israeli exam prep company, has raised $5 million in Series B funding. Jafco Asia led the round, and was joined by return backer Intel Capital.

DriverSide, a San Francisco-based provider of online car advic! e for consumers, has secured $2 million of a $3 million VC round, according to a regulatory filing. Backers include Allegis Capital and Catamount Ventures.

Moonfruit, a UK-based website design company, has raised $2.25 million in VC funding from Stephens.

Healthsense Inc., a Mendota Heights, Minn.-based provider of wireless sensors and remote monitoring solutions for the senior care market, has raised an undisclosed amount of growth captial. Radius Ventures led the round, and was joined by return backers like The Ziegler Companies.

Buyout Deals

American Industrial Partners has formed Allied Specialty Vehicles, via the merger of three existing portfolio companies: E-ONE, Collins Industries and Halcore Group. A fourth portfolio company, Fleetwood RV, will be merged next quarter. ASV will have revenue of approximately $1 billion.

Sun Capital Partners has acquired Alcan Packaging Beauty from Rio Tinto. No financial terms were disclosed. APB is a French provider of tube, fragrance and cosmetic plastic packaging to the beauty industry.

Triton has agreed to acquire most of European steel producer Ovako, for an undisclosed amount. The deal does not include Ovako’s wire division. No financial terms were disclosed.

PE-Backed IPOs

ISS, a Dutch cleaning services company backed by EQT Partners and GS Capital Partners, is planning a multi-billion euro IPO.

PE Exits

3i Group reportedly is looking to sell Mayborn, a British baby bottle maker, for more than £200 million. 3i acquired the company in 2006 for £137 million, and has hired Hawkpoint to manage the sale process.

Research in Motion (RIM) has acquired CellMania, a Mountain View, Calif.-based provider of mobile commerce solutions. Cellmania had raised over $21 million in VC funding from BroadVision, Pino Venture Partners, Office Depot and ZAP Ventures.

MySpace, a unit of News Corp., has acquired the assets of social messaging platform ThreadBox Inc. No financial terms were disclosed. ThreadBox investors had included Venrock.

Human Resources

Bruce Madding, former CIO and CFO of the Henry J. Kaiser Family Foundation, has joined C.M. Capital Corp. as president and chief investment officer.

Keith Rabois has joined payment startup Square as general manager. He is an active angel investor in Silicon Valley, and previously held executive positions at Slide, LinkedIn and PayPal. Square is backed by investors like Khosla Ventures.