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    PE Week Wire -- Monday, January 23

Just Linking Around…

*** Some academics are finally saying what we’ve all known for a long time: The 1990-2002 U.S. venture capital market was driven more by fund-size supply than by entrepreneurial demand beginning in the early 1990s. Why? Because pension funds clouded the market with limited partner commitments. Two quick notes: I wish the researchers hadn’t stopped at 2002, since the VC market has shown remarkable fund size restraint in the subsequent years (even though most public pension funds remain actively involved in the market). Also, one must wonder if a similar analysis of the buyout market circa 2003-2006 would be even more damning.

*** Not surprisingly, 2005 venture capital disbursements into U.S. companies rose to their highest level since 2001, according to data released today by Ernst & Young and VentureOne. Overall it found $22.13 billion invested during 2,239 deals during 2005, which represents around a 2% increase over 2004. Q4 2005 figures, however, showed a slight drop from Q3 2005. We’ll dig deeper into the year-end data tomorrow, when PwC, the NVCA and Thomson Financial release the MoneyTree Survey results.

*** Why get funded in a conference room, when you can get funded in a bathroom?

*** Bill Burnham on leaving Celsius Capital, in his own words.

*** Niel Robertson, CTO of Newmerix, provides an entrepreneur’s view on early-stage venture financing terms.

*** Voting for EVCJ's annual awards has now closed. Winners will be announced at a drinks reception taking place at the Trafalgar Hotel in central London on Tuesday 31 January (at which I’ll provide some opening remarks before grabbing those aforementioned drinks). For further information about the event please visit To reserve your place, please go here.

*** Yup, the Internship Drive will begin tomorrow. Last chance to get your firm involved. For those firms that already have indicated interest, I’ll be sending info later today…

    Top Three

ITA Software Inc., a Cambridge, Mass.-based provider of IT platforms for the airline industry, has raised $100 million in first-round funding. Battery Ventures led the deal, and was joined by General Catalyst Partners, PAR Investment Partners, Sequoia Capital and Spectrum Equity. ITA Software was founded in 1996, but had not taken any venture capital until this deal.

Albertson’s Inc. (NYSE: ABS) has agreed to be sold for around $17.4 billion to a group that includes Supervalu Inc., CVS Corp., Cerberus Capital and Kimco Realty.

Vestar Capital Partners has closed its fifth fund with $3.7 billion in capital commitments. An initial close on $3 billion came last August, while the final close occurred in December. Monument Group assisted in the fund-raising.

European VC & PE Journal's Annual Awards Reception

Register now for the European VC & PE Journal's annual awards
reception on Tuesday, Jan. 31 at the Trafalgar Hotel in London,
a free networking opportunity that brings together the top
players in Europe's VC & PE communities.

For more info go to

or Contact Della Sullivan at
+44(0)20 7369 7311 or

    VC Deals

SpikeSource Inc., a Redwood City, Calif.-based open source IT infrastructure company, has secured $15 million of a $20 million Series B funding round, according to a regulatory filing. Duff Ackerman & Goodrich was joined on the deal by return backers Fidelity Ventures and Kleiner Perkins Caufield & Byers.

StrongMail Systems Inc., a Redwood Shores, Calif.-based provider of email infrastructure software, has raised $9.5 million in Series B funding. Globespan Capital Partners led the deal, and was joined by return backers Sequoia Capital and Evercore

ProFind Inc., a Rolling Meadows, Ill.-based provider of recruiting technology solutions, has raised $4.5 million in Series A funding. River Cities Capital Fund led the deal, and was joined by Velocity Equity Partners.

TeleCIS Wireless Inc., a Santa Clara, Calif.-based developer of broadband wireless chipset technology, has held a $10 million first close on a $16 million Series C funding round. ATA Ventures led the deal, and was joined by PMC-Sierra Inc.

SignalDemand, a San Francisco-based provider of sales and profit optimization software for food and consumer goods manufacturers, has raised $7.5 million in Series B funding. General Catalyst Partners led the deal, and was joined by return backers Hummer Winblad Venture Partners and Catamount Ventures.

H-Stream Wireless Inc., a San Carlos, Calif.-based provider of wireless electronic equipment, has raised $11.88 million in Series A funding, according to a regulatory filing. Backers include Tallwood Venture Capital and Granite Ventures.

Attainia Inc., a San Jose, Calif.-based provider of capital equipment software to the healthcare industry, has secured $800,000 of a $1 million Series C funding round, according to a regulatory filing. Company backers include Startup Capital Ventures and Neoforma Inc.

DirectoryM Inc., a Cambridge, Mass.-based provider of online advertising solutions, has secured around $3.65 million of a $7.23 million Series C funding round, according to a regulatory filing. Backers include Matrix Partners, BV Capital and FdG Associates.

Clearwell Systems Inc., a Santa Clara, Calif.-based provider of corporate email intelligence solutions, has raised an undisclosed amount of first-round funding from Sequoia Capital.

UCLT Ltd., an Israeli provider of laser-based yield enhancement tools for the semiconductor manufacturing industry, has raised $8.7 million first-round funding from Lightspeed Venture Partners.

Avokia Inc., a Toronto-based provider of database middleware software, has raised US$7.4 million in second-round funding. Globespan Capital Partners led the deal, and was joined by SAP Ventures and return backers Ventures West and BDC Venture Capital.

Clarabridge, a Falls Chuch, Va.-based provider of text-mining software, has raised $3 million in VC funding from Boulder Ventures.

    Buyout Deals

Providence Equity Partners has received German regulatory approval to acquire another 61% of Kabel Deutschland GmbH, giving it a 95% position (company management holds the remainder). The sellers are Goldman Sachs Capital Partners and Apax Partners, which teamed with Providence in 2003 to acquire Kabel Deutschland for 1.7 billion euros. No financial terms have been disclosed.

Titan International Inc. (NYSE: TWI) says that it is considering an $18 per share buyout offer from One Equity Partners.

Leonard Green & Partners has agreed to buy The Sports Authority Inc. (NYSE: TSA) for $37.25 per share. The overall deal is valued at around $1.3 billion, including assumed debt.

Bally Total Fitness (NYSE: BFT) has completed the sale of its Crunch Fitness division for $45 million in cash to health-club entrepreneur Marc Tascher and the private equity group of Angelo, Gordon & Co.

H.I.G. Capital has acquired the Greenville, Pa.-based extruded products division of Werner Co. The division will be renamed WXP Inc., and provides aluminum extrusion products and alloyed aluminum billet to North American customers. No financial terms were disclosed for the deal, which closed at the end of 2005.

The Riverside Co. has acquired RCS Management Corp., a Carmel, Ind.–based respiratory care provider. No pricing terms were disclosed for the deal, which included leverage from PNC Bank and Gladstone Capital. Jerry Baker & Associates represented RCS.

    PE-Backed IPOs

Acorda Therapeutics Inc., a Hawthorne, N.Y.-based biotech company focused on spinal cord injuries, has set its proposed IPO terms to 5.5 million common shares to be offered at between $11 and $13 per share. It plans to trade on the Nasdaq under ticker symbol ACOR, with Banc of America Securities serving as lead underwriter. This is the second IPO attempt for Acorda, which filed for a $75 million offering in September 2003, but withdrew it in early 2004. The company has raised around $140 million in total VC funding since its 1995 inception, from firms like MPM Capital, Elan Corp., Forward Ventures, Easton Hunt Ventures, Crossroads Atlantic Partners, TVM and MDS Health Ventures.

    PE-Related M&A

Evergreen Copyright Acquisitions LLC, a new music publishing company backed by Lehman Brothers Merchant Banking, has made five acquisitions: the Rykomusic assets and Warlock Music catalog (featuring the major works of Nick Drake), the Teddy Riley catalog, the Audigram catalog (including a number of works by J.J. Cale), the Bill Monroe Music catalog and the Matt Slocum catalog.

Broadcom Corp. (Nasdaq: BRCM) has agreed to acquire Sandburst Corp., an Andover, Mass.-based provider of scalable packet switching and routing systems-on-a-chip that are deployed in enterprise core and metropolitan Ethernet networks. The deal is valued at approximately $80 million, including $75 million in cash. Sandburst has raised around $70 million in VC funding since its 2000 inception, from firms like Greylock, 3i Group, Boston University Community Technology Fund, Matrix Partners, Intel Capital, SpaceVest, NeoCarta Ventures and Investor Growth Capital.

WebMD Health Corp. (Nasdaq: WBMD) has acquired Inc., an Omaha, Neb.-based online publisher of medical reference information for physicians and other healthcare professionals. The purchase price was $25.5 million. EMedicine had raised around $16 million in VC funding from firms like H.I.G. Capital, Omnicom Group and Tenet Healthcare.

Raser Technologies Inc. (PCX: RZ) ("Raser") has agreed to acquire Amp Resources LLC, a Salt Lake City-based developer of power generation technologies. The total deal is valued at approximately $260 million, including $38 million in cash and up to 10 million shares of Raser common stock (which gives Amp stockholders a 16% stake in Raser). Amp Resources is a portfolio company of Highland Capital Partners.

Allscripts (Nasdaq: MDRX) has agreed to acquire A4 Health Systems, a Cary, N.C. –based provider of practice management and electronic health record solutions for small and mid-sized physician groups. The deal is valued at approximately $272 million, including $215 million in cash and 3.5 million Allscripts shares. A4 Health Systems has raised over $31 million in VC funding from groups like Wachovia Corp., Wakefield Group and McConnell Venture Partners.

BuzzMetrics Inc., a New York-based provider of online consumer-generated media analysis, has agreed to acquire Cincinatti-based rival Intelliseek Inc. Buzzmetrics is backed by VNU, while Intelliseek has raised over $21 million in VC funding from firms like BlueRun Ventures, River Cities Capital Funds, ChrysCapital, Ford motor Co. and In-Q-Tel.

Citadel Broadcasting Corp. (NYSE: CDL) reportedly has emerged as the leading bidder for the ABC Radio unit of Walt Disney Co. The deal could be valued at upwards of $3 billion, with both Entercom Communications and KKR believed to have been rival bidders. Citadel counts Forstmann Little & Co. as a major shareholder.

    Firm & Fund News

General Catalyst Partners has closed its fourth fund with “nearly $400 million” in capital commitments.

Hicks Holdings LLC, a Dallas-based family investment office headed by Tom Hicks, has formed a hotel development joint venture with Gatehouse Capital Corp., a Dallas-based real estate firm and the largest third-party developer of W Hotels. The new effort will involve co-investments in high-end hotel and residential real estate projects in Texas and California, including the W Hollywood Hotel and Residences project in Los Angeles.

    Human Resources

David Liu has agreed to join Kohlberg Kravis Roberts & Co. as a managing director focused on opportunities in Asia. He previously served as head of Morgan Stanley Private Equity Asia.

Ralph Snyderman has joined New Enterprise Associates as a venture partner focused on opportunities in the healthcare space. He is chancellor emeritus of Duke University and a professor of medicine at the Duke School of Medicine.

Jed Katz has joined DFJ Gotham Ventures as a venture partner. He is expected to become a general partner once the firm raises its next fund, and previously served as COO of Yamcon and as co-founder and COO of Rent Net (acquired by Cendant).

Andy Sandham has joined Abingworth Management as a venture partner. He previously served as CEO and co-founder of Ionix Pharmaceuticals.

CMEA Ventures has promoted Andrea Tobias to the position of partner. She joined the firm in July 2001, and had been a venture partner focused on life sciences.

Frank Plastina has joined telecom products company Tekelec (Nasdaq: TKLC) as president and CEO. He had joined Warburg Pincus as an executive-in-residence in 2003, after which he became CEO of Warburg portfolio company Proxim Corp. Once Proxim’s assets were bought out of bankruptcy last year by Terabeam, Plastina returned to his entrepreneur-in-residence role with Warburg Pincus.

Robert Joyal has joined the board of Jefferies Group Inc. (NYSE: JEF). He had served as president of Babson Capital Management from 2001 until his retirement in June 2003.

Private Equity Week

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January 23, 2006

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