Great to see so many of you come out last night, for the first peHUB event to include actual content. The topic was cleantech, with a specific focus on federal financing and regulatory issues. A few quick takeaways (from memory, since it’s hard to take comprehensive notes and moderate at the same time):
• Lot of discussion about how cleantech is a difficult business for early-stage investment, in that company maturation can push the limits of a traditional VC fund structure. Roger Berry of C Change Investments noted that some infrastructure funds in Europe are actually proposing 15-year or 20-year investment cycles. Hadn’t heard that before. Would make sense from the perspective of matching the money to the opportunity, but I’m not sure any LP would be willing to assume that a core group of partners would stick together for two decades (particularly given that anyone worth investing in for that long already has some career miles under their belt).
• Scott DePasquale of Braemar Energy Ventures backed A123 Systems when he was with GE, and then again with Braemar. He says that the company would still be in business sans the government grants, because the existing investor syndicate would have been willing to put up something approximating the original IPO target (assuming no IPO yet without the grants).
• General agreement that cleantech entrepreneurs should not base their business models on government funding, particularly since awards often seem haphazard. At the same time, however, the feeling that that entrepreneurs need to spend at least some time in DC – meeting with staffers or others for the purpose of explaining their business and learning about the different funding and regulatory issues that could affect them. And, remember, not all grants are created equally.
• Related: Get the sense that VC/PE firms with big cleantech practices need to have a man or woman in Washington. It may be distateful, but worth swallowing.
• Best part about our panel was that the panelists asked questions of one another and disagreed with each other. Cannot stress how deadening it is when a moderator asks a question, a panelist answers and then everyone looks back at the moderator for the next question. This group got that. Wish more did…
• HUGE thanks to law firm Bingham McCutchen, which hosted us in their Federal Street facilities. Great view of the city, quality booze and tasty lollypop lamb chops.
*** Most of this year’s big-dollar VC exits have been in the life sciences sector, and a goodly percentage of those sales have includes big earn-outs. Often a hundred million dollars or so up front, with exponential possibilities down the road.
What’s bizarre, however, is that I can’t find a data provider who actually tracks if those earn-outs get earned. Given that VC dollars into life sciences is now larger than VC dollars into IT, wouldn’t such statistics be valuable to understand if these sales are singles or grand slams? I feel a peHUB project in the works…
*** Also time to examine why there haven’t been a wave of U.S. infrastructure privatizations over the past year. We’ve got state and local governments desperate for cash, alongside plenty of U.S.-based infrastructure funds with available dry powder. I recognize that the politics of public infrastructure privatization are m! uch trickier in the U.S. than in Europe or Asia, but if there was ever a time for such marriages to occur, it would be now.
*** People keep asking me if Highland Capital Partners has closed its new fund — the one that was trying to raise just $400 million compared to its prior $800 million vehicle. Honest answer is that I don’t know. Been tough to get a straight answer from LPs, and every Highland person I ask says that they “can’t talk about it.” That makes me think it hasn’t closed – otherwise why the silence? – but I’ve been wrong in that assumption before…
*** Assuming Highland has closed (or is close), it will be one of very few Boston-area VC firms that don’t want/need to raise new fund capital in 2010. The local print shops are going to make a mint o! n PPMs…
Top Three
VS Holdings Inc., the North Bergen, N.J.-based parent company of retailer The Vitamin Shoppe, raised $162.1 million in its IPO. The company priced 9.1 million common shares at $17 per share, which was above the expected range of between $14 and $16 per share. It will begin trading on the NYSE under ticker symbol VSI, while JPMorgan, BoA and Barclays served as co-lead underwriters. Vitamin Shoppe had been owned since 2002 by Irving Place Capital Management (f.k.a. Bear Stearns Merchant Banking). It had filed for an IPO in 2007, but withdrew the offer due to market conditions.
Vdopia, a San Jose, Calif.-based developer of a pre-app and in-app video advertising platform for the iPhone, has raised $4 million in Series A funding from Nexus! Venture Partners. The company also named Rohit Sharma, former principal with Mohr Davidow Ventures, as its new president and CEO.
Fifth Third Bancorp (Nasdaq: FITB) has formed a private equity lending team, which will focus on transactions in which the target has between $10 million and $50 million in EBITDA. It will be led by managing directors Brian Crabb, formerly with CapitalSource,and Josh VanManen, former head of Fifth Third’s western region team in Denver.
VC Deals
Quinnova Pharmaceuticals Inc., a Newtown, Pa.-based dermatological drug company, has raised $17.4 million in Series B funding. Safeguard Scientifics led the round, and was joined by return backers Thomas, McNerney & Partners, H.I.G. Ventures and a syndicate led by Omnivest (Bermuda) Ltd. The company previously raised a $13.6 million Series A round in 2006.
Powercell Sweden AB, a maker of fuel cells, fuel reformers and auxillary power units, has raised SEK 60 million (US$8.53m) from Fouriertransform, an auto industry-focused VC firm sponsored by the Swedish government. This represents Fouriertransform’s first investment.
Deccan Healthcare, an India-based developer of nutraceut! ical products for boosting immunity and addressing chronic ailments, has raised 15 crore (US$3.2m) in VC funding from Nexus Venture Partners.
StatusNet, a Montreal-based developer of an open-source micro-blogging platform, has raised C$875,000 in seed funding. Backers include Montreal Start Up, iNovia Capital and Oleg Tscheltzoff (Fotolia.com).
Buyouts Deals
Accel-KKR has agreed to acquire the assets and liabilities of customer service software provider KANA Software Inc. (OTC BB: KANA), for approximately $48.9 million.
The Blackstone Group has opened refinancing discussions with lenders to portfolio company Hilton Hotels, according to The Wall Street Journal. Blackstone reportedly is considering an arrangement in which it would invest $800 million of new equity to buy back debt at a discount. The firm acquired Hilton in July 2007 for $26 billion, including $20.6 billion of leverage.
TCW has agreed to buy a 50% equity stake in three UK wind farms from Centrica PLC (LSE: CAN)! , for £84 million in cash.
Triton Pacific Capital Partners has acquired a majority stake in MyPrint Corp., an Irvine, Calif.-based provider of managed print and promotional marketing programs. No financial terms were disclosed.
PE-Backed IPOs
Addus Homecare Corp., a Palatine, Ill.-based provider of social and medical services in the home, raised $54 million in its IPO. The company priced 5.4 million shares at $10 per share, compared to an original plan to offer 5 million shares at between $11 and $13 per share. Addus will begin trading on the Nasdaq under ticker symbolADUS, while Robert W. Baird and Jefferies & Co. served as co-underwriters.Eos Partnersheld a 78.9% pre-IPO position.
PE Exits
TPG Capital has sold its remaining 9% stake in UK department store chain Debenhams to an unnamed hedge fund, for approximately £100 million. The sale was at a slight discount to Debenhams’ market price.
Human Resources
Jon Steinberg has joined Polaris Venture Partners as a New York-based executive-in-residence, according to a message on his blog. He previously was strategic partner development managerfor Google’s Small Medium Business Partnerships group. www.polarisventures.com
Nixon Peabody LLP has named David Martland as head of its M&A and private company transactions practice. He joined Nixon Peabody in 2003, and succeeds Philip Taub, who was named chair of the business and finance department.
Henry Ong and Jasson Hanhave joined the Hong Kong office of law firm Weil, Gotshal & Manges LLP as apartner and partner-level senior consultant, respe! ctively. They previously were with Simmons & Simmons.
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