Postini purchase a hit for VCs

Postini Corp.—an e-mail security service provider launched during the depths of the dot-com bust—delivered a huge payback for VCs last week when Google bought the company for $625 million.

Google, which began using Postini’s technology in February to provide messaging security services, announced last week that it would pay cash to acquire the company in a transaction slated to close late this quarter.

Prior to the deal, the San Carlos, Calif.-based company was planning to file for an IPO, says Ryan McIntyre, a Postini board member and former principal at backer Mobius Venture Capital, on his blog. However, after Google and Postini began working together earlier this year, the two companies began to draw up acquisition plans.

McIntyre calls Postini “a great example of a company that managed to grow and prosper during the [2001] nuclear winter in the technology and venture capital industry.” On his blog, he recalled sitting across the dining room table from Postini founder Scott Petry and then-CEO Shinya Akamine on the morning of Sept. 11, 2001, to negotiate the term sheet for Mobius’ investment in the company.

Six years later, the purchase is providing a profitable exit for Mobius and a half-dozen other venture backers, who invested just over $26 million in Postini between 2001 and 2006, according to Thomson Financial (publisher of PE Week).

In addition to Mobius, backers include August Capital Management, Sun Microsystems and Summit Accelerator Fund, all three of which participated in a $6 million round in 2001. Pacifica Fund, AltoTech Ventures and Mobius took part in a $10 million Series C round in 2003. Bessemer Ventures funded a $10 million follow-on round in 2005, while Mobius was the sole backer of a $94,000 Series D in July 2005 and a $356,000 Series E in September 2006.

The Google acquisition provides a much-needed hit for Mobius, which disclosed last year that it will not be raising another fund. The Superior, Colo.-based firm (f.k.a. Softbank Venture Capital) raised a $1.45 billion fund in 2000, but has been short on exits. Several firm members, including McIntyre, have since formed the Foundry Group, a Boulder, Colo.-based early stage fund that focuses on Colorado companies.

As for Google, Postini is the latest in a long string of acquisitions of venture-backed technology companies. Other purchases announced this year include Tonic Systems, GreenBorder Technology, Feedburner (also backed by Mobius), PeakStream and GrandCentral Communications.