peHUB Wire: Wednesday, September 2, 2009

Some of you pointed out yesterday that I was missing “size” as part of my definition of a venture capital fund (for the purposes of regulation). This was a bit galling, considering that size had been something I harped about when the registration requirements were first proposed.

So, yes, I believe size should also be a qualifying (or disqualifying factor). What that number should be, however, is a bit trickier. My best shot would be a $1 billion AUM threshold. Some of you might think the number should be fund-specific, but then certain firms would just create enough sidecars to limbo under the bar (and, thus violate the spirit of the rule).

Others might think the $1 billion figure is too low, given that it would snare a firm with a couple active funds of $500m or more. My answer for that argument would be that if you have incoming management fees on $500m+, then you can comfortably afford the extra layer of administrative costs.

*** Greystripe, ! a rich media ad platform for mobile, today announced that it had raised $2 million in additional Series C funding from Peacock Equity Fund (first close was one $5.5m earlier this year).

Worth noting that existing shareholder Steamboat Ventures is a Walt Disney Co. affiliate, which means that Greystripe has effectively raised capital from the parent companies of both NBC and ABC. I asked CEO Michael Chang if this meant Viacom was next on the list. He laughed it off, but I don’t think he’d turn it down…

*** eBay’s press release announcing the Skype sale did not mention anything about debt, but Silver Lake’s statement said that financing had been committed by J.P. Morgan, Barclays and RBC Capital Markets. In other words, this is a leveraged buyout.

That’s the easy part. The hard part is figuring out where it ranks on the list of 2009’s largest LBOs.

We could argue that it’s the year’s largest U.S. leveraged buyo ut, given that current parent company eBay is based in Silicon Valley. If we use Skype’s Luxembourg headquarters as our geographic reference, however, it becomes the third-largest global LBO. Just to complicate things, it would actually be the second-largest global LBO, once CVC formally pulls its rejected offer for National Express.

*** A reminder to get your ticket for our Boston cleantech evening, which will focus on how to navigate the federal funding and regulatory waters. Our panelists will be:

• David Brown, C Change Investments

• Nick d’Arbeloff, New England Clean Energy Council

• Pat Cloney, Massachusetts Clean Energy Center

• Rob Day, Black Coral Capital

• Scott DePasquale, Braemar Energy Ventures

• Barry Direnfeld, Bingham & McCutcheon

Full agenda and registration info here.

*** Finally, I’m looking for one more sponsor to make our Dallas Shindig a go. Email me if you’re interested…

Top Three

Virtustream Inc., a provider of a virtualization technology platform for infrastructure services, has raised $25 million in VC funding from Columbia Capital and Blue Lagoon Capital. Virtustream has offices in the UK and Bethesda, Maryland.

Industrial Opportunity Partners has sponsored a management recap of Carlson Systems Inc., an Omaha, Neb.-based distributor of product assembly systems for Midwestern construction, industrial and OEM customers. No financial terms were disclosed, except that First National Bank of Omaha provided financing.

Advent International has hire! d three new operating partners to focus on the tech and telecom sectors: Richard Atkins, a former IBM exec; Sergio Giacoletto, former executive VP of Oracle;and John Hughes, current non-executive chairman of Telecity Group PLC, Intec Telecom SystemsPLC and Spectris PLC.

VC Deals

Coupa Software Inc., a San Mateo, Calif.-based provider of e-procurement software, has raised $7.5 million in Series C funding. El Dorado Ventures led the round, and was joined by return backers Blue Run Ventures and Battery Ventures. Coupa previously raised around $7.14 million.

SkyFire Labs, a Mountain View, Calif.-based developer of mobile Web browsers, has raised $5 million in third-round funding, according to a regulatory filing. The company previously raised $17.8 million from Lightspeed Venture Partners, Matrix Partners and Trinity Ventures.

Vinfolio Inc., a San Francisco-based online wine marketplace, has raised $4.5 million in Series A funding led by Panorama Capital.

Athena Feminine Technologies, an Emeryville, Calif.-based maker of a device for female incontinence, has raised $2 million in Series A funding from vSpring Capital.

BrightScope, a San Diego-based provider of 401k ratings and analytics, has raised $2 million in Series B funding. Jim Caccavo (Steelpoint Capital Partners) led the round, and was joined by other individual angels.

Greystripe, a San Francisco-based rich media ad platform for mobile, has raised $2 million in additional Series C funding from Peacock Equity Fund, a VC unit of NBC Universal. Thisis an extension of a round that held a $5.5 million first close earlier this year, from Incubic Venture Capital, Monitor Ventures and Steamboat Ventures.

PinPointe USA Inc., a Chico, Calif.-based developer of laser-enabled devicesto address onychomycosis and other footcare issues,has raised an undisclosed amount of VC funding from Western Technology Investment.

Buyouts Deals

BC Partners has agreed to acquire and merge two European lab-testing companies: Vienna-based FutureLAB and a 40% stake in Germany-based Synlab.

Cardinal Equity Partners has led a recapitalization of Advanced Physical Therapy LLC, a provider of physical therapy services in Indiana. No financial terms were disclosed. Centerfield Capital Partners also participated.

ComVest Group has been named the stalking horse bidder for Cynergy Data LLC, a payments processor that yesterday filed for Chapter 11 bankruptcy protection.

One Equity Partners has completed its $75 million investment into ArthroCare Corp. (OTC BB: ARTC), an Austin, Texas-based maker of minimally-invasive surgical products. The investment was be in the form of newly-issued Series A convertible preferred stock, convertible into common stock at $15 per share.

Roark Capital Group has completed its acquisition of Pet Valu Inc., a Toronto-listed pet supplies retailer. The deal was valued at approximately C$143.7 million, or C$13.68 per Pet Valu share

TCW Group’s chief investment officer said yesterday that it has not spoken to any private equity firm about being acquired from parent company Societe Generale. The NY Post reported that KKR is among a handful of firms in talks about a possible buyout of! TCW.

TGP Investments has acquired the Event Media unit of Ascend Media Holdings. No financial terms were disclosed. Ascend Media is currently controlled by its lenders, led by Wells Fargo. It previously was owned by CCMP Capital and Veronis Suhler Stevenson, until defaulting on its debt covenants earlier this year.

Tricor Pacific Capital has completed its acquisition of FabPro Oriented Polymers LLC from Polymer Group Inc. (OTC BB: POLGE). No financial terms were disclosed. FabPro is a Kingman, Kan.-based maker of performance polymers and synthetic fibers for the agricultural, construction and commercial segments.

PE Exits

EMC Corp. (NYSE: EMC) has agreed to acquire Kazeon Systems Inc., a Mountain View, Calif.-based provider of e-discovery software. No financial terms were disclosed for the deal, which is expected to close later this month. Kazeon had raised around $75 million in VC funding since 2003, from firms like Goldman Sachs, Menlo Ventures, Wilson Sonsini, JK&B Capital, Focus Ventures, Clearstone Venture Partners and Redpoint Ventures.

Raytheon Co. (NYSE: RTN) has agreed to acquire BBN Technologies Inc., a Cambridge, Mass.-based provider of R&D and solutions for national defense and security missions. No financial terms were disclosed for the deal, which is expected to close next quarter. Shareholders include Accel Partners, General Catalyst Partners and Commonwealth Capital Ventures.

PE-Backed M&A

Dachis Group, a business advisory acquisition platform formed last year by Austin Ventures, has acquired Headshift Ltd., a London-based social business consultancy. No financial terms were disclosed.

McKenzie Sports Products LLC, a portfolio company of Gridiron Capital, has acquired Van Dyke’s Taxidermy Inc. from Cabela’s Inc. (NYSE: CAB). No financial terms were disclosed. Van Dyke’s is a Woonsocket, S.D.-based provider of taxidermy products and supplies.

UC Synergetic, a portfolio company of Falfurrias Capital Parttners, has acquired PowerComm Engineering Inc., a Tampa, Fla.-based provider of engineering solutions for the elect! ric utility and wireless telecommunications markets. No financial terms were disclosed, except that Falfurrias arranged the financing and provided new equity.


Freedom Communications, a newspaper publisher whose titles include the Orange County Register,yesterday 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

Casey Zmijeski has joined Fifth Street Finance as a managing director. He will be based in New York and previously was with Churchill Financial.

Lance Stier will become VP of business development with Nassau Candy Distributors Inc., effective next Monday. He had been an associate with private equity firm Paine & Partners.