For Those Not On Vacation... A huge amount of VC funding news today, including a $110 million Series B round for online dating company EHarmony.com. That's right, venture capitalists have plugged back into www.koolaid.com just in time for the holidays. Rather than ruining LP mornings by delving into that frightful situation, let's do a brief follow-up to a pair of matters discussed in this space last week: Greg Prow's departure from Mobius Venture Capital and that unnamed private equity firm that had severely cut its proposed fund target. Prow, you might remember, was Mobius' administrative partner, but left because Mobius no longer plans to raise another billion dollar-plus fund. No animosity, just a realization that the firm will secure almost all of its next $300 million or so from existing LPs, and no longer needs so much in-house administrative help, particularly since it also has a full-time controller. That unnamed firm (better known as Spectrum Equity Investors) had raised $1.95 billion for its fourth fund in 2000, and sent out Fund V books a few months back with a $2 billion cover price, although it was interested in raising upwards of $2.5 billion. Recently, the target was cut to $1.5 billion, with a handful of tranched-out closes expected to begin shortly. Why combine two seemingly unrelated events? Because folks close to Spectrum argue that its fund-raising difficulties have been caused, in large part, by its lack of an in-house fundraiser/marketer. The firm does employ some full-time financial folks -- and hired Lazard to pitch its book -- but hasn't had someone beating the LP drums for the past year, like some of its peers have had. That has proven problematic, given that Spectrum is looking for well over $1 billion, which was the magic number for Prow. In fact, I'm told that Spectrum would likely hire an in-house fundraiser were it to raise a sixth fund (assuming it can get this one done). I believe the preceding argument to have some strains of legitimacy, but do not believe that it provides a full accounting of Spectrum's fund-raising dilemma. Instead, two other factors also seem to be in play: (A) Spectrum launched its effort within the same general time period as did new funds from Providence Equity Partners and ABRY Partners, two firms that share Spectrum's (B) Spectrum also has fallen a bit into what I refer to as the JPMorgan Partners trap, in that it often appears like it's trying to be all things to all people. JPMorgan Partners was a particularly egregious case of this, thanks to its generalized industry focus and yo-yo approach toward investment stage ("We're a VC firm that does LBO deals. no ,we're an LBO firm that does VC deals. no, we're the world's largest producer of multi-colored confetti."). Most LPs today seem to want specificity (as opposed to generality), which Spectrum has in terms of industry focus, but not in terms of industry stage (i.e., half the JPMorgan Partners trap). It's not that Spectrum has changed its strategy -- some expansion capital, some late-stage VC, some LBO - but rather that its strategy is currently out of favor. Not Spectrum's fault, but it is Spectrum's problem. Interested in placing your text ad in this spot? Click Here
EHarmony.com, a PanAmSat Holding Corp., a Wilton, Conn.-based, has filed to raise $1.12 billion via an IPO of common stock on the Nasdaq. The company is controlled by KKR, The Carlyle Group and Providence Equity Partners, which teamed up earlier this year to acquire PanAmSat for approximately $4.4 billion, including $2.6 billion of equity. www.panamsat.com Centric Software Inc., a San Jose, Calif.-based, has raised $4.5 million in additional Series A recap funding from Oak Investment Partners and Bank of America, bringing the round total to $23.5 million. . The company had held a $19 million first close in October, led by Oak, and also including Masthead Venture Partners and return backer Boston Capital Ventures. The company now has raised over $70 million in total VC funding since its 1989 inception, including a $30 million Series D round in 2000 at a post-money valuation of approximately $96 million. In other Centric Software news, the company has acquired Framework Technologies Inc., a Burlington, Mass.-based developer of project collaboration, product innovation and portfolio management solutions. No deal terms were disclosed. Framework had raised approximately $60 million in total VC funding since its 1995 inception, from firms like Bessemer Venture Partners, Charles River Ventures, JPMorgan Partners, Granite Ventures, Intel Capital, Mason Wells Private Equity, Norwest Venture Partners and Thomas Weisel Venture Partners. www.centricsoftware.com www.frametech.com
Myocor Inc., a Minneapolis-based medical device company, has raised $24 million in Series D funding. Prism Venture Partners led the deal, and was joined by Affinity Capital Management, Alta Partners, Coral Ventures, Institutional Venture Partners, Investor growth Capital, St. Paul Venture Capital and Tullis-Dickerson. The company has raised over $50 million in total VC funding since its December 2000 inception, including an $18.75 million Series C round in 2001 at a post-money valuation of approximately $55 million. www.myocor.com
MFormation Technologies Inc., an Edison, N.J.-based provider of wireless device management solutions for the mobile industry, has raised $9 million in Series D funding. Intel Capital led the round, and was joined by return backers Battery Ventures, Carmel Ventures, Kingdon Capital and North Bridge Venture Partners. MFormation has raised $34.5 million in total VC funding since its 1999 inception, including a $9 million Series C infusion last year at a post-money valuation of approximately $17 million. www.mformation.com Kayak Software Corp., a Norwalk, Conn.-based operator of a travel information website, has raised $7 million in Series B funding. Sequoia Capital led the deal, and was joined by return backers General Catalyst Partners and America Online. The company has raised $15.5 million in total VC funding since its January 2004 inception. www.kayak.com TechTarget, a Needham, Mass.-based IT media company, has raised $15 million in Series C funding from return backers Technology Crossover Ventures and Polaris Venture Partners. The company has raised $127 million in total VC funding since its 1999 inception, including a $70 million Series B round earlier this year. www.techtarget.com Motion Computing Inc., an Austin, Texas.-based, has raised $25 million in third-round VC funding. Institutional Venture Partners led the deal with a $15 million infusion, and was joined by return backers New Enterprise Associates, SVB Capital and G-51 Capital. www.motioncomputing.com Travel Holdings Inc., an Orlando, Fla.-based company formed earlier this year by the merger of Tourico Holiday Tours, LastMinuteTravel.com and Travel Global Systems, has raised $15 million in first-round funding. Investors included Pharos Capital, Massey Birch, New Media Holdings, Everest Capital, BEV Capital, Maariv Publishing and Greenberg Ventures. www.travelholdings.com ELynx Ltd., a Cincinnati-based provider of secure electronic document delivery solutions, has received an undisclosed amount of private equity funding from American Capital Strategies. www.elynx.com Cymbet Corp., an Enpirion Inc., a
Bridgepoint Capital has completed its sale of UK-based insurance broker and group benefits consultancy Opus Holdings Ltd. to Willis Group Holdings Ltd. (NYSE: WSH). No financial terms were disclosed for the deal, which originally was announced last month. www.opuscompany.com Pivotal Private Equity has acquired Phoenix-based health food company M.D. Labs, and renamed it Wellements. No financial terms were disclosed. www.pivotalgroup.com www.wellements.com Nordic Capital has agreed to acquire a majority position in Swedish car parts company Cinven and French cable company Altice have agreed to purchase part of the cable business of France Telecom and Canal Plus for 528 million euros.
Sterling Commerce, a wholly-owned subsidiary of SBC Communications Inc. (NYSE: SBC), has agreed to acquire Yantra Corp., a Tewksbury, Mass.-based provider of distributed order management and supply chain fulfillment solutions. The deal is valued at approximately $170 million in cash, and is expected to close by the end of Q1 2005. Yantra has raised around $80 million in total VC funding since its 1995 inception, from investors like Charles River Ventures, Infosys, Boston Millennia Ventures, Flagship Ventures, Accenture Technology Ventures, JPMorgan Partners, Rho Ventures and Morgan Stanley Venture Partners. www.sterlingcommerce.com www.yantra.com Cisco Systems Inc. (Nasdaq: CSCO) has agreed to acquire Protego Networks Inc., a Sunnyvale, Calif.-based provider of security monitoring and threat management appliances for small-to-medium sized enterprise networks. The deal is valued at $65 million in cash, and is expected to close within the next six weeks. Protego Networks has raised over $8 million in total VC funding since its 2002 inception, from firms like Miramar Venture Partners and Global Alliance Ltd. www.cisco.com www.protegonetworks.com Bell Sports Holding Corp., a portfolio company of Fenway Partners, has acquired Sports Instruments, an Augora Hills, Calif.-based provider of electronic performance enhancing devices for athletes, such as heart rate monitors and cycle computers. No financial terms were disclosed. www.bellsports.com www.sportsinstruments.com A4 Health Systems, a Cary, N.C.-based provider of electronic health record solutions, has agreed to acquire Canopy Systems Inc., a
FriedbergMilstein LLC, a New York-based alternative investment management firm, has closed its FriedbergMilstein Private Capital Fund I with $584 million. The vehicle is structured as a collateralized debt obligation, and will provide first-lien senior loans, second-lien loans and mezzanine financing for middle-market companies. www.friedbergmilstein.com Bisys Group Inc. (NYSE: BSG) , has agreed to acquire RK Consulting, a Roseland, N.J.-based provider of investment fund administration services to the hedge fund and private equity markets. No financial terms were disclosed. www.bisys.com
Adams Harkness Inc. announced yesterday that president and CEO Timothy McMahon is resigning, effective
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December 21, 2004 
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