Random Ramblings: Kennedy and Yipes One more day of procrastination before discussing the VCIC event, since my fingers are still tired from pounding out a 4,000-word "diary" piece that will run in an upcoming issue of Venture Capital Journal. In the meantime: Remember a few months back when we had a conversation about how normal folks (i.e., not filthy rich) could inv*st in private equity? Well, it seems that Joe Kennedy was listening. The former Massachusetts Congressman (and future governor, if he ever bothered to run) suggested in a speech last week that Massachusetts should set up a "mirror image" of the $36 billion fund run by the Massachusetts Pension Reserves Investment Management board (PRIM), and give access to regular state residents. The idea isn't so much that PRIM has produced significantly better overall returns than have traditional public equity index funds (it hasn't), but rather that PRIM has access to alternative asset classes that non-accredited inv*stors can only access through a pooled capital structure (such as a PRIM mirror fund). In other words, PRIM makes money from Bain Capital, and so could you. There are, of course, an enormous number of complications that would arise with such a fund, and The Boston Globe's Steve Syre discusses a lot of them in today's paper. Among them are possible tax status implications if PRIM set up such a fund, and also the illiquid nature of VC and private equity partnership interests. Also of concern, although not in Syre's piece, could be public disclosure implications, although I guess that PRIM would serve in a confidential fiduciary role that could shield most FOIA requests. It also could try invoking a law which currently shields PRIM from being required to disclose most alternative inv*stment info, although it voluntarily does so for funds more than five years old. Before completely eviscerating Kennedy's idea, however, it's worth finding out if he has any specific ideas for handling the above issues. It also would be interesting to understand why Kennedy made a specific point of comparing PRIM returns to typical savings account returns, rather than to public equity or bond fund returns. Wouldn't that be the first step, before creating an entire bureaucracy to focus on high-risk alternative assets? I've put in a call to Joe's office, and hopefully will have some added insight tomorrow. Same goes for PRIM executive director Mike Traveligni, who I'll be speaking with later this afternoon (ah, the problems of an early-morning column). ** Yipes Enterprise Services Inc. announced yesterday that it has raised $24 million in Series C funding (see news note below). This is the third formal round since the company was reorganized/recapped in mid-2002, bringing its VC funding total to nearly $94 million. Lots of money for a managed, end-to-end Ethernet solutions provider, but nothing compared to the approximately $385 million it's raised since originally being founded in 1998 as Yipes Communications. That's right: $385 million, including a post-money valuation of around $927 following a February 2001 infusion. The amazing thing here isn't just that Yipes has secured more venture capital than has the average VC fund. Instead, it's that many of the same firms have been opening their checkbooks since the beginning. Groups like Sprout, JPMorgan Partners and Focus Ventures have been with Yipes since at least 2000, although original backer New Enterprise Associates seems to have finally cut bait. I've been having a debate with my editor over how large an exit companies like Webroot would need in order to generate VC-type returns for their shareholders. We haven't come up with a solid answer, but would be safe in multiplying it at least by five when it comes to Yipes. ** PE Week's Matthew Sheahan is reporting in this week's issue that Vector Capital is about to announce a $337 million final close on its new fund, and that Coral Capital Management is seeking between $200 million and $250 million for its seventh fund. Paid subscribers can read more in the protected Weekly Headlines section of www.privateequityweek.com
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August Capital has closed its fourth VC fund with $550 million in LP commitments from groups like Horsley Bridge Partners. The firm also announced that both David Hornick and Vivek Mehra have been promoted to the position of general partner. www.augustcap.com Yipes Enterprise Services Inc., a San Francisco-based provider of managed, end-to-end Ethernet solutions for enterprise customers, has raised $24 million in Series C funding. Crosslink Capital led the deal, and was joined by return backers Norwest Venture Partners, JPMorgan Partners and Sprout Group. The company has raised nearly $94 million in total VC funding since its July 2002 founding, and a whopping $385 million since its original inception as Yipes Communications. www.yipes.com Mintera Corp., a
FirstRain Inc., a New York-based provider of market intelligence software and services, has raised $10.2 million in Series C funding. Ampersand Ventures led the deal, and was joined by Diamondhead Ventures, Myriad Inve*stments and Split Rock Partners. In other company news, FirstRain has named former Simplex Solutions CEO Penny Herscher as its new president and CEO. She succeeds company co-founder Gaurav Rewari, who will assume a chief strategy officer role. www.firstrain.com Pure Digital Technologies Inc., a San Francisco-based provider of digital photograpy solutions, has raised $15 million in Series D funding, according to our VentureXpert database and regulatory filings. Company shareholders include Sequoia Capital, Benchmark Capital, Focus Ventures and Steamboat Ventures (VC arm of Walt Disney Co.). www.puredigitalinc.com
Zilker Labs Inc., an Austin, Texas-based developer of power management ICs, has raised $9 million in Series B funding, according to a regulatory filing. Return backers included Sevin Rosen Funds and North Bridge Venture Partners. www.zilkerlabs.com Idiom Technologies Inc., a Waltham, Mass.-based of global management system solutions, has raised $6 million in Series E funding from firms that include return backer North Bridge Venture Partners, according to our VentureXpert database. www.idiominc.com People Business Network Inc., a Somerville, N.J.-based provider of workforce alignment solutions for Fortune 500 companies, has raised $6.2 million in Series A funding from Trident Capital. www.peoplebusinessnetwork.com
Anystream Inc., a Sterling, Va.-based provider of digital media and distribution software to the media, entertainment and educational industries, has raised $8 million in Series B funding. Softbank Capital led the deal, and was joined by return backer SCP Private Equity Partners. www.anystream.com
Sword Diagnostics Inc., a Chester, N.J.-based developer of diagnostic systems for rapid identification of organisms and pathogens, has received an undisclosed amount of seed funding from the NJTC Venture Fund.
Golden Gate Capital has acquired TDK Semiconductor Corp., an Irvine, Calif.-based unit of TDK Corp. (NYSE: TDK) subsidiary TDK U.S.A. Corp. No financial terms have been disclosed. The acquired company will continue to be led by its current management team, and will retain the TDK Semiconductor name until a new name has been established. www.goldengatecap.com www.tsc.tdk.com
Centre Partners has exited its remaining position in Bumble Bee Seafoods LP, via a sale of units in Connors Bros. Income Fund (TSX: CBF.UN). The firm originally acquired Bumble Bee from ConAgra Foods in May 2003 for $200 million, in concert with Bumble Bee management. The following spring, Centre combined Bumble Bee's operations with those of Connors in a $385 million transaction, creating the largest branded seafood company in The Baring Central European Fund has sold its position in Hungarian printing company Allami Nyomda Rt. to company management and other major shareholder, Lang Biztonsagtechnologiai Holding Rt.No financial terms were disclosed. Gate Gourmet, a Swiss airline catering company owned by Texas Pacific Group, missed a December d*bt repayment deadline, according to Reuters. The move has prompted creditors to give Gate Gourmet until the end of this week to come up with a rescue plan. www.gategourmet.com AXA Private Equity has received European Commission approval for its proposed leveraged management buyout of Imersys roofing product subsidiary Lariviere. The deal values Lariviere at around 155 million euros, with Axa and the management team taking a combined 98.77% stake. www.lariviere-sa.fr Borden Chemical Inc., a portfolio company of Apollo Management, has received European Commission approval for its proposed $315 million buyout of German chemicals and plastics company Bakelite AG from Rueters AG, subject to the implementation of certain raw material supply agreements. www.bordenchem.com Carousel Capital has acquired a majority position in Birmingham, Ala.-based Express Oil Change for an undisclosed amount. www.expressoil.com
Berkline/BenchCraft Holdings Inc., a Morristown, Tenn.-based, has filed to raise $138 million via an IPO of common stock on the Nasdaq, under proposed ticker symbol BLBC. The company was formed in 2002 by private equity firm Code Hennessy & Simmons, for the purpose of acquiring both The Berkline Corp. and the Benchcraft operating division of Universal Furniture. In additional to Code Hennessy, Berkline/BenchCraft shareholders include Ares Capital, BB&T Capital Partners and Randolph Street Partners. www.berkline.com
Trigen Holdings PLC of the
Prudential Capital Partners has closed its second mid-market mezzanine fund with $775 million in capital commitments, plus a co-inv*stment side fund of $32 million from senior Prudential Capital professionals. The group's first mezzanine fund was capped at $619 million in 2001. www.prudential.com Permira, a European private equity firm, is planning to open a Japan-based office in 2006, according to Reuters. It would be staffed with between three and seven professionals, with interviews already having begun. www.permira.com
Mark Lotke has joined FTVentures as a New York-based partner heading up the firm's software team. He most recently served as a general partner with Pequot Ventures, and before that as a managing director with Internet Capital Group and as a principal with General Atlantic. www.ftventures.com George Bell has joined General Catalyst Partners as a special venture partner, focused on new media, interactive marketing, e-commerce and other consumer-facing business sectors. He is current chair of the Massachusetts Software Council, and has served as CEO of both Excite@Home and Upromise. www.generalcatalyst.com Harris Williams & Co., a Richmond, Va.-based M&A advisory, has promoted: Boston-based Jeffery Bistrong to managing director; Richmond-based Michael Hogan to director; and San Francisco-based Todd Morris to director. www.harriswilliams.com John Cassis, a founder partner of Cross Atlantic Partners, has joined the board of Cross Atlantic portfolio company Nutrition 21 Inc. (Nasdaq: NXXI). www.nutrition21.com
Albert "Buddy" Soffa passed away at his Wynnewood, ***************
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April 12, 2005 
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