Deal or No Deal for DataDirect Networks


This post is by Dan Primack from PE Hub Blog: Buyout Deals


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Last week there was an FTC filing that implied a pending transaction between Technology Crossover Ventures and DataDirect Networks, a Chatsworth, Calif.-based provider data storage solutions. These documents usually suggest that the transaction is virtually a done deal, with just a few I’s to dot and T’s to cross. But in might not be so this time.

What follows is part of a statement by DataDirect CEO Alex Bouzari, in reply to my request for comment on the prospective TCV investment:

In order to better serve our customers, DDN is evaluating several strategic initiatives, including potentially partnering with a financial institution. However, in light of the recent developments with 3Par, Dell and HP, we are carefully rethinking our options.

Bouzari added that DataDirect is profitable, and is “on track” to exceed $200 million in annual revenue.

Getting any statement from a “target” CEO is unusual, and this particular one goes out of its way to suggest that conditions have changed since DataDomain DataDirect first entered negotiations with TCV (which declined any comment). (Note: The previous sentence was corrected because the company was referred to by the wrong name. -Ed.)

Maybe Bouzari is just trying to prevent me from prematurely breaking his big news. Or maybe he’s using the statement to lure other suitors. Or maybe it’s just as he said: The past few weeks have been tumultuous for the storage industry, and DataDirect is waiting to see where the chips fall.


Chip Off The Old Block? Jake Anderson Joins Sequoia


This post is by Dan Primack from PE Hub Blog: Human Resources


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Jake Anderson has quietly joined Sequoia Capital, as a Silicon Valley partner associate focused on growth-stage investments in the healthcare sector. He previously spent two years as a senior manager with Cord Blood Registry, and before that was an associate with Pequot Capital.

Jake also has some serious VC lineage: His father is Howard Anderson, co-founder of Battery Ventures and current senior lecturer at MIT…


Andreessen Horowitz Seeks $650 Million for New Fund


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


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When Andreessen Horowitz raised $300 million for its debut fund last year, I suggested that it was too much money. Actually, I said the original $250 million target was too large – particularly for a two-partner firm that said initial investment sizes would average around $500k.

And my argument still makes sense to me. At least in theory.

The reality, however, is that AH has already invested most of its stash — including a giant check for the Skype carve-out — and added staff. Moreover, Marc Andreessen has become even more influential in Silicon Valley, while Ben Horowitz has emerged from his famous partner’s shadow by penning one of the smartest VC blogs around. All of this adds up to AH becoming the hottest VC firm this side of Sequoia.

It also means that AH is back in market for a second fund. Multiple LP sources tell me that the target is $650 million, which the firm says would enable it to make multiple Skype-type bets.

Normally, I would bet against AH being able to raise this much money. It’s more than twice what it got just a year ago, and the fundraising market hasn’t really improved too much. Moreover, AH will have to answer questions about why it burned through its cash so fast, and if even more staff is needed (since raising Fund I, AH has added one investment partner and brought PR star Margit Wennmachers in-house). And then there are all of Andreessen’s extra-curricular activities (HP and Facebook boards)…

But AH just isn’t a normal firm. Which means I’d either bet against my gut instinct, or maybe just sit this one out…

AH declined to comment, citing SEC restrictions (natch)


Data Point of the Day: Q3 Venture Investments


This post is by Dan Primack from PE Hub Blog: Venture Capital Deals


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Venture capitalists have invested nearly $2.44 billion into 263 U.S.-based companies so far this quarter, according to Thomson Reuters. This compares to $2.56 billion raised by 365 U.S.-based companies during the same time period in 2009.

So fewer companies, but larger rounds. Seems at odds with the seed-stage boom we keep hearing about. Maybe that’s because TR doesn’t record angel deals. Or maybe it’s because the bulk of VC investment is in sectors other than consumer Internet, even though Foursquare, etc. suck up all the blog oxygen…


CalPERS “Travelgate” — That’s Not The Ticket


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


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For the past year, CalPERS has been dogged by scandals related to its private equity investments. And most of it has been deserved, as the pension giant allegedly became a revolving door for ex-staffers seeking to make millions off their past service.

Unfortunately, there can be a downside to the exposition of public corruption: Well-intentioned journalists sometimes confuse the appearance of impropriety with actual impropriety.

Such was the case last week, when the Los Angeles Times to Mumbai – which also featured more than a dozen other LPs). Moreover, Mark was contractually required to attend some of these meetings.

At the time, CalPERS policy was to allow the GP to plan the travel. Today, CalPERS plans the travel, and essentially invoices the GP. That new policy, in place since 2008, means that CalPERS staff can no longer fly “above” coach class. This even is true for international travel. Had that Shanghai-to-Mumbai trip taken place last month, CalPERS staff would have been precluded from joining, thus missing out on the due diligence afforded other LPs.

Imagine the uproar if CalPERS messed up an investment because it didn’t conduct proper due diligence…

2. Most other public pension systems also use GP reimbursement for contractually-obligated travel. Some do prohibit private planes. Others mandate coach travel for domestic, business class for international. In short, a rule of thumb often is: “Don’t do anything that you can’t defend in the newspaper.” This is where I find fault with Mark’s actions. He showed callous disregard for public opinion. Not smart, but also not corrupt.

3. Each year, CalPERS staffers are asked to fill out something called the Form 700. This document lists all previously-unreported gifts of over $50. That dollar total is in aggregate from a single source. In other words, if Blackstone had bought Mark three meals of $20 over the course of a year, he would need to report it.

I’m told that Mark has acknowledged that he neglected to include a few items that crossed that aggregate threshold, and is going back to amend his Form 700s. Not only will he include the items mentioned by the LA Times, but also some that weren’t (mostly holiday trinkets and the like).

I can tell you that the Form 700 process regularly flummoxes current and past CalPERS staff. As one told me: “I try to keep track of everything, and make sure to ask how much things cost. For example, if there is lunch served at an advisory board meeting, I try to get a value. Our real lesson s that we need to be much more conservative on those values.”

There is no suggestion anywhere that Mark received anything of significant value for himself or for his family. This is in stark contrast to the alleged placement agent corruption, which involved millions of dollars winding up in personal bank accounts.

The LA Times story quotes a government professional as saying the following:

“Not only should the public have been told that these trips were going on, the public should have been stopping them.”

You want to stop the trips, including commercial and private flights reimbursed by GPs? Fine, but then don’t complain if investments go bad. Want them to always fly coach, even on 10-hour international trips? Fine, but don’t be surprised if they get little work done on the plane (sometimes you can’t even open your laptop) or if they’re mentally-exhausted upon arrival (“Some of those public pension guys are just a mess when they arrive in Europe or Asia,” one non-public LP told me).

Public pension officials obviously must follow a stricter code of conduct than must their private peers, but they should not self-regulate themselves into second-class LP citizenship. I’m hoping that CalPERS realizes this dichotomy, and uses Mark as a bulwark instead of as a scapegoat.


New Startup Plans To Revolutionize “Trunk Shows”


This post is by Dan Primack from PE Hub Blog: Venture Capital Deals


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Flipping through the Form D filings yesterday, I came across one for something called Trunk Show Inc. Seems to have raised a $1.15 million VC round led by New Atlantic Ventures.

NAV isn’t talking – the company is in stealth mode – but I did a bit of digging because the name was intriguing:

In the fashion world, a trunk show is a special sale in which designers present new product directly to a select group of buyers (typically department store or boutique personnel). Trunk Show Inc. is hoping to put that process online – both for the masses and to better facilitate distribution to retailers.

The current plan is that Trunk Show Inc. would stream video of fashion shows to the masses. People then would be able to order direct and quick from the manufacturer (i.e., cut out the middle man). Store buyers also would be expected to use the service. Not only to order based on shows they didn’t attend in person, but also because the fashion industry’s antiquated supply chain protocol leads to long lag-times between catwalks and store racks.

Expect a public launch in Q1 2011. The company’s co-founders are New York-based fashionistas Aslaug Magnusdottir and Lauren Santo Domingo (contributing editor to U.S. Vogue).


More Details on Jesse Rogers’ New Fund


This post is by Dan Primack from PE Hub Blog: Human Resources


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Yesterday we reported that Golden Gate Capital co-founder Jesse Rogers had formed a new firm called Altamont Capital Partners.

We’ve since learned that his partners are a pair of former principals with Golden Gate: Randall Eason and Keoni Schwartz. Each had been with the firm for at least six years.

An LP source also tells me that Altamont is almost done raising its debut fund, which has a hard cap of $450 million. Not yet sure if the structure is traditional, or uses Golden Gate’s current “evergreen” model…


The (Fast) Return of Jesse Rogers?


This post is by Dan Primack from PE Hub Blog: Human Resources


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Back in April, we broke news that Jesse Rogers was leaving Golden Gate Capital, the firm he co-founded in 2000. All indications were that it was a real retirement, with Rogers planning to spend his golden years kite-boarding or playing cribbage (I’m not certain how active a lifestyle he pursues).

But it seems the retirement may have been short-lived. Private Equity Insider today reported that Rogers has formed a new firm called Altamont Capital Partners, which is expected to seek up to $500 million for its debut fund. Moreover, Rogers may “try to recruit some of his old Golden Gate colleagues.”

This sounds like it’s still in the early planning stages, and the only online reference to Altamont is on some recent campaign contributions from Rogers to Meg Whitman’s campaign for California governor. I’m reaching out to some Golden Gate limited partners (at least one so far has confirmed the basics), and hope to have some additional info later today…


Exclusive: George Hornig Leaving Credit Suisse


This post is by Dan Primack from PE Hub Blog: Human Resources


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George Hornig is stepping down as co-COO of Credit Suisse Asset Management, which houses all of the firm’s global alternative investment activities. The move was first announced to Credit Suisse AM staff earlier this afternoon via memo, and confirmed by a firm spokeswoman.

No word yet on his future plans, which one insider suggested could include a continuation of existing charity work.

Also announced recently was that Hornig’s fellow co-COO Gerhard Fusenig is moving into a new role in Switzerland. The pair will be replaced by a single chief operating officer: Thomas Sipp, Credit Suisse Asset Management’s current CFO who is expected to maintain both roles.

I’ve been hearing for weeks about big organizational changes coming at Credit Suisse Asset Management, which in recent months has lost its co-head of fund placement, its co-head of customized fund investments and a bunch of folks from DLJ Merchant Banking. Not sure if today’s moves are related, or just coincidence…

Here is Hornig’s bio, from the Credit Suisse website:

George R. Hornig is a Managing Director of Credit Suisse in the Asset Management business, based in New York. He is Co-Chief Operating Officer (Co-COO) of Asset Management with responsibilities over the global Alternative Investments business and Head of Asset Management Americas. He is a member of the Asset Management Management Committee.

Mr. Hornig rejoined Credit Suisse First Boston in November 1999 from Deutsche Bank where he worked for seven years as an Executive Vice President, responsible for that company’s administration and operations in the Americas. Prior to that, he worked at Wasserstein Perella where he served as Managing Director and Chief Operating Officer. Previously, he worked at Credit Suisse as a banker in the Firm’s M&A group during much of the 1980s.

Mr. Hornig holds an A.B., M.B.A. and J.D. from Harvard University.


Bob Metcalfe’s Portfolio Companies Seek $$$


This post is by Dan Primack from PE Hub Blog: Venture Capital Deals


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Bob Metcalfe, a general partner with Polaris Venture Partners, recently tweeted the following:

“All 5 of my Polaris-backed enertech start-ups are raising rounds, in August. Today, 1 received an offer to buy the company, in August.”

According to the Polaris website, Bob currently serves on seven boards. Two of those, however, are already out of business (Greenfuel and SiCortex). Another, Mintera, has agreed to be acquired by Oclaro (and wasn’t enertech).

That would seem to mean the following four companies are in the market for new funding: 1366, Ember, Infinite Power Solutions and SiOnyx. The fifth one is likely Sun Catalytix, a Cambridge, Mass.-based “solar fuel” startup that aims to commercialize the research of MIT chemistry professor Daniel Nocera. Polaris doesn’t mention Sun Catalytix on its website, but there were press reports late last year about a Polaris-led seed round with Metcalfe taking a board seat.


GM Pulls From PE Ranks for Next CEO


This post is by Dan Primack from PE Hub Blog: Human Resources


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Dan Akerson today agreed to become the new CEO of General Motors, where he presumably will oversee the company’s return to the public markets. He currently serves as a managing director and global head of buyouts for The Carlyle Group, which he joined in 2003 from Forstmann Little.

A Carlyle spokesman tells me that firm co-founder Bill Conway will succeed Akerson as head of global buyouts, a role that he has previously held. This means that Conway will oversee Carlyle’s largest business unit, which includes more than 220 investment professionals.

Akerson also is expected to be replaced on his two Carlyle board seats: Booz Allen Hamilton (in registration for an IPO) and Freescale Semiconductor (expected to file this year for an IPO).

I bunch of people today have asked me about why GM would pull from the private equity ranks for its new CEO, particularly given “private equity’s inability to turn Chrysler around.” Well, the first thing is that Carlyle had nothing to do with Chrysler. Second, Ackerson has been on the GM board since last July, and the company just reported its highest quarterly profit in six years.

Finally, GM has no reason to be scared off by a guy whose past executive experience has been in telecom (MCI, Nextel, XO Communications). After all, departing CEO Ed Whitacre previously ran telecom giant AT&T, and did I mention those profits?


Are PE Firms Living Up To The ILPA Principles?


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


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It’s been nearly one year since the Institutional Limited Partners Association (ILPA) released a set of “best practices” for structuring private equity funds. This was hardly the first attempt to better align interests between GPs and LPs, but is the one that seems to have prompted the most discussion among market professionals.

In preparation of the anniversary, market research firm Preqin decided to examine whether the principles are having a tangible effect on fund structure. The results were decidedly mixed.

Preqin examined all funds of 2009 and 2010 vintage, including those in market and many that actually launched before the ILPA principles were released last September. Yes, that last part is a major methodological flaw — particularly since its includes around three-quarters of the analyzed funds — but the research still gives a good reflection of where things stand today.

The group found that a majority of global funds meet the ILPA recommendation of using an “all contributions-plus-preferred-return-back-first model,” but that the figure drops to just 48% when looking at North American funds (47% go “deal-by-deal”).

When it comes to fee-sharing, 39% of funds follow the ILPA recommendation that 100% of “transaction, monitoring, directory, advisory and exit fees” accrue to limited partners. But most GPs still take a big slice, including 28% that rebate 80%, and 26% that rebate between 50% and 59 percent.

Ninety-seven percent of funds reduce their management fee after the investment period concludes, while only 4% follow an ILPA recommendation that would allow no-fault divorces by vote of two-thirds of LP interests (58% put the threshhold at 80%).

Finally, Preqin reported that 13% of surveyed LPs “would dismiss an opportunity to invest in a fund based solely on its non-adherence to the Principles.” Interesting stat, but it doesn’t quite jive with only 4% of funds following the no-fault divorce clause (unless that 13% of LPs only invested in those 4% of funds over the past two years). 

It’s too bad that Preqin didn’t compare these figures to fund structures from earlier vintages, but my sense is that any pro-LP changes have been driven more by macro-fundraising issues than by ILPA activism.

To me, the ILPA principles are really two things:

(1) An excuse. As in: “We’re not investing in your fund because you don’t follow the ILPA principles.” Now the LP probably wouldn’t have invested anyway, but this is much easier to say than: “We don’t like you very much.”

(2) A tool for LPs to use when negotiating. As in: “You might think this proposed term is crazy, but it’s been ratified by ILPA.” This also works for GPs, when trying to show good faith.

View the Preqin data below, or download it here.

Preqin Press Release ILPA Principles Adherence


What Happened To Demand Media’s Traffic?


This post is by Dan Primack from PE Hub Blog: PE-Backed IPOs


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Take a look at the Quantcast traffic data for Demand Media, the VC-backed online content creator that on Friday filed for a $125 million IPO:

The massive drop-off occured a few days prior to the IPO filing, and has stayed consistent over the past two days of Quantcast reports. It certainly could be an error — the fall is not mirrored by “indirect” traffic analytics groups Compete or Alexa — but let me offer an alternate (and unsubstantiated) theory: Google changed something in its search algorithm to lower the demand for Demand.

Why would “don’t be evil” Google do such a thing? Perhaps because Google is toying with the idea of getting into Demand Media’s business. Not only did Google recently apply for a patent for “identifying inadequate search content,” but Demand’s own S-1 raises the specre of competition:

Google’s access to more comprehensive data regarding user search queries through its search algorithms would give it a significant competitive advantage over everyone in the industry, including us. If this data is used competitively by Google, sold to online publishers or given away for free, our business may face increased competition from companies, including Google, with substantially greater resources, brand recognition and established market presence.

That passage was spotted by Matthew Ingram, who then wrote the following:

It’s worth noting that the “risk factors” section of an IPO filing is designed to lay out every possible threat to a company, no matter how small or unlikely. So the simple fact that Demand refers to Google competing with it is no guarantee that this will actually come to pass — and even if Google does decide to follow through on what it describes in the patent, it could decide to work with Demand rather than going into direct competition with it. It’s also true that Google has plenty of other ways of causing trouble for Demand, including devaluing the company’s commodity content by tweaking its algorithms.

From looking at the Quantcast chart, maybe those tweaks have already occured…

UPDATE: A Demand Media spokeswoman declined to comment, saying that the company was in a pre-IPO “quiet period.” A spokeswoman for Quantcast said that Demand Media’s “measurement tag had fallen off” — although she was unsure how or why that happened. I followed up by asking why, if the tag was off, was Demand still showing more than 1 million daily visits. Her reply, via email:

It looks like a measurement tag is off at the moment – which could be do to them making some modifications to their site. I think you’re looking at Demand Media’s Network traffic in total – which is why you see traffic still being reported. That encompasses many sites.


Report Card: KKR Gets an A- from S&P


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


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KKR today received an A- counterparty credit rating from Standard & Poor’s, about one month after the private equity firm began listing its shares on the New York Stock Exchange. The given outlook was “stable.”

“The stable outlook incorporates our expectation that fee-related earnings should remain stable, while distributable earnings are likely to fluctuate with investment realizations,” wrote analyst Chris Cary.

Cary added that the counterparty credit rating was helped by KKR’s diverse investor base and investment track record, and hindered by the high use of leverage.

Possible downgrades could come if KKR struggles to raise its next big buyout fund, which is expected to begin formal marketing later this year. No downgrade is expected if George Roberts or Henry KRavis were to retire.


VC-Backed IPO Pipeline: Lots of Inflow and Outflow


This post is by Dan Primack from PE Hub Blog: PE-Backed IPOs


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The VC-backed IPO pipeline got a bit more clogged since the last time we checked in, with six new issuers filing to raise around $616 million. Four companies priced offerings during the same period, meaning that the pipeline now holds 40 companies seeking to raise around $3.4 billion.

The new filers are: Demand Media, JHorizon Pharma, Complete Genomics, SiGe Semiconductor, MakeMyTrip and Epocrates. I also considered including Skype, but that’s more of a buyout-backed offering (despite the involvement of Andreessen Horowitz). Those that priced over were: Green Dot, Envestnet, Trius Therapeutics and RealD. 

The full pipeline is below. We lead off with new issuers, and then proceed alphabetically:

[slideshow]

[slide title=”Demand Media”]
Demand Media, a Santa Monica, Calif.-based provider of distributed social media, filed for a $125 million IPO on August 6. It plans to trade on the, with Goldman Sachs, Allen & Co. and Morgan Stanley serving as co-lead underwriters.

The company reported revenue of $198 million in 2009 and $114 million for the six months ended June 30, 2010.

Demand Media has raised nearly $400 million in VC funding, from Goldman Sachs, Generation Capital Partners, Oak Investment Partners, Spectrum Equity Investors and 3i Group (whose shares are now held by W Capital Partners). www.demand.com

[slide title=”Horizon Pharma”]
Horizon Pharma Inc., a Northbrook, Ill.-based drug developer focused on arthritis, pain and inflammatory diseases, filed for an $86.25 million IPO on August 3. It plans to trade on the Nasdaq under ticker symbol HZNP, with Jefferies & Co. and Piper Jaffray serving as co-lead underwriters.

The company has raised around $54 million in VC funding since its 2004 founding as Nitec Pharma. Shareholders include Atlas Venture (17.4% pre-IPO stake), Essex Woodlands Health Ventures (14%), Scale Venture Partners (13.4%), NGN Biomed (9.9%), Sutter Hill Ventures (5.9%), FirstMark Capital (7.9%), Global Life Sciences Ventures (7.8%) and TVM (5.7%). www.nitecpharma.com

[slide title=”Complete Genomics”]
Complete Genomics Inc., a Mountain View, Calif.-based human genome sequencing company, filed for an $86.25 million IPO on July 30. It plans to trade on the Nasdaq under ticker symbol GNOM, with UBS Investment Bank and Jefferies & Co. serving as co-lead underwriters.

The company has raised around $90 million in total VC funding since 2006, from Essex Woodlands Health Ventures, OrbiMed Advisors, Enterprise Partners Venture Capital, OVP Venture Partners, Prospect Venture Partners and Highland Capital Management. www.completegenomics.com

[slide title=”SiGe Semiconductor”]
SiGe Semiconductor Inc., an Ottawa-based supplier of RF front-end solutions for wireless systems, filed for a $143.75 million IPO on July 29. It plans to trade on the Nasdaq under ticker symbol SIGE, with Barclays Capital, Deutsche Bank Securities and Jefferies & Co. serving as co-lead underwriters.

The company reports $20.69 million in revenue for Q1 2010, compared to $16.43 million for Q1 2009.

SiGe Semiconductor has raised around $132 million in VC funding since 1999. Current shareholders include Prism VentureWorks (19.8% pre-IPO stake), VenGrowth (15.5%),  W Capital Partners (11.2%), TD Capital and Caisse de depot et placement du Quebec. www.sige.com

[slide title=”MakeMyTrip”]
MakeMyTrip Ltd., an Indian online travel portal, filed for a $100 million IPO on July 26. It has since set its IPO terms to five million ordinary shares being offered at between $12 and $14 per share. The company plans to trade on the Nasdaq under ticker symbol MMYT, with Morgan Stanley serving as lead underwriter.

MakeMyTrip reports a $6.2 million loss for the fiscal year ending March 31, on $83.56 million in revenue. 

Shareholders include Softbank Asia Infrastructure Fund (51.32% pre-IPO stake), Tiger Global Private Investment Partners (12.14%), Helion Ventures (11.97%) and Sierra Ventures (7.98%). www.makemytrip.com

[slide title=”Epocrates”]
Epocrates Inc., a San Mateo, Calif.-based provider of clinical information and support tools to healthcare professionals, filed for a $75 million IPO on July 16. It originally filed for a $75 million IPO in April 2008, but withdrew later that year, telling the SEC that its offering would have been “discretionary financing.”

The company plans to trade on the Nasdaq under ticker symbol EPOC, with J.P. Morgan and Piper Jaffray serving as co-lead underwriters. Citi had been listed as sole underwriter on the previous S-1, but is not mentioned in the latest filing.

The company has raised over $86 million in VC funding, from firms like The Sprout Group (17.2% stake), Goldman Sachs (16.2%), InterWest Partners (12.8%), Draper Fisher Jurvetson (10.5%), Three Arch Partners (10.4%) and Bay City Capital (7.4%). www.epocrates.com
[slide title=”Aldagen”]
Aldagen Inc., a Durham, N.C.-based developer of clinical-stage regenerative therapies, filed for an $80.5 million IPO on 10/28/09, just weeks after withdrawing an earlier IPO registration due to “market conditions.”

It plans to trade on the Nasdaq, with Wells Fargo and Cowen & Co. serving as co-lead underwriters.

Aldagen has raised around $64 million in VC funding since 2000, from firms like Intersouth Partners, Harbert Venture Partners, The Aurora Funds, Tullis-Dickerson and Trelys Funds. www.aldegen.com

[slide title=”Amyris Biotechnologies”]

Amyris Biotechnologies Inc., an Emeryville, Calif.-based synthetic biology company that developers renewable hydrocarbon biofuels, filed for a $100 million IPO on April 16. It plans to trade under ticker symbol AMRS, with Goldman Sachs, J.P. Morgan and Morgan Stanley serving as co-lead underwriters.

The company reports $64 million in 2009 revenue, compared to $14 million in 2008.

Amyris has raised over $240 million in VC funding, from Kleiner Perkins (15.4% pre-IPO stake), Kohsla Ventures (15.4%), TPG Biotech (12.1%), Advanced Equities (6.7%), Temasek Holdings, DAG Ventures, Votorantim Novos Negocios, Grupo Cornélio Brennand, Naxos UK, The Westly Group and Stratus Group. www.amyrisbiotech.com

[slide title=”Beceem Communications”]
Beceem Communications, a Santa Clara, Calif.-based provider of mobile WiMAX chipsets, filed for a $100 million IPO on April 2. It plans to trade on the Nasdaq under ticker symbol BECM, with J.P. Morgan and Barclays Capital serving as co-lead underwriters.

The company reports $43 million in 2009 revenue, compared to nearly $14 million in 2008.

Beceem Communications has raised around $110 million in VC funding since 2003, from Intel Capital (20.3% pre-IPO stake), Walden International (16.3%), Global Catalyst Partners (16.3%), Khosla Ventures (5.9%), NEC, KTB Ventures, Mitsui, Motorola and Samsung. www.beceem.com

[slide title=”BG Medicine”]
BG Medicine Inc., a Waltham, Mass.-based developer of molecular diagnostics based on biomarkers, filed for an $86.25 million IPO on January 29. It plans to trade on the Nasdaq under ticker symbol BGMD, with Jefferies & Co. and UBS serving as co-lead underwriters. The company previously filed for a $72 million IPO in 2007 with Cowen & Co. as lead underwriter, but later pulled the offering due to “unfavorable market conditions.”

BG Medicine has raised over $37 million in VC funding since 2000, from firms like Flagship Ventures (44.4% pre-IPO stake), Gilde Investment Management (14.1%) and Koniklijke Philips Electronics (5.6%). www.beyondgenomics.com

[slide title=”Broadview Networks”]
Broadview Networks Inc., a Rye Brook, N.Y.-based provider of integrated communications and managed security services, filed for a $287.5 million IPO on 11/30/07 (yes, you read that correctly).

Its most recent amended S-1 filing was in June 2008. It said that the company still plans to trade on the Nasdaq, with Deutsche Bank Securities and Jefferies & Co. serving as co-lead underwriters.

Last August, the company bought select assets of VC-backed Natural Convergence.

Broadview has raised nearly $300 million in total VC funding since 1997, with current shareholders including Baker Capital, MCG Capital, New Enterprise Associates, ComVentures and Lightspeed Venture Partners. www.broadviewnet.com

[slide title=”Digital Domain”]
Digital Domain Inc., a Venice, Calif.-based visual effects and animation company, filed for a $100 million IPO on 12/11/07. It later amended the terms to six million common shares being offered at between $12 and $14 per share. The company would have an initial market cap of approximately $268 million, were it to price at the high end of its offering range.

Digital Domain plans to trade on the Nasdaq under ticker symbol DTWO, with Thomas Weisel Partners and CIBC World Markets serving as co-lead underwriters. Shareholders include Falcon Mezzanine Partners and GunnAllen Venture Partners. www.digitaldomain.com

[slide title=”Energy and Power Solutions”]
Energy and Power Solutions Inc., a Costa Mesa, Calif.-based provider of energy efficiency solutions to the industrial market, filed for a $25 million IPO on March 31. No underwriters were listed.

The company reports around $12 million in 2009 revenue, compared to over $17 million in 2008 revenue. Shareholders include NGEN Partners, SAM Private Equity and Altira Group. www.epsway.com

[slide title=”Everyday Health”]
Everyday Health Inc., a Brooklyn, N.Y.-based, filed for a $100 million IPO on January 22. The company plans to trade on the Nasdaq under ticker symbol EVDY, with Goldman Sachs and J.P. Morgan serving as co-lead underwriters.

Shareholders include WF Holding Co. (29.5% pre-IPO stake), Rho Ventures (24.6%), Scale Venture Partners (7.5%), Foundation Capital (6.1%) and NeoCarta Ventures (6%).

[slide title=”Ellie Mae”]
Ellie Mae Inc., a Pleasanton, Calif.-based electronic mortgage origination network, filed for an $86.25 million IPO on April 30. It plans to trade on the NYSE under ticker symbol ELLI, with Goldman Sachs serving as lead underwriter.

The company reports $37 million in 2009 revenue, up from $33 million in 2008. Net income was $1.66 million, up from negative $1 million in 2008.

Shareholders include Charter Ventures (15.6% pre-IPO stake), Alta Partners (12.18%) and Alloy Ventures (8.6%). www.elliemae.com

[slide title=”EyeBlaster”]

Eyeblaster Inc. (now MediaMind Technologies), a New York-based provider of digital marketing services and technology, filed for a $115 million IPO on March 10. J.P. Morgan and Deutsche Bank are serving as co-lead underwriters.

It since has set its IPO terms to 5 million shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $285 million, were it to price at the high end of its range.

The company first filed for a $115 million IPO in March 2008, but withdrew registration that December. It reports $65 million in 2009 revenue, compared to $63 million in 2008 and $44 million in 2007.

Eyeblaster has raised around $38 million in VC funding. Shareholders include Sycamore Technology Ventures (33.9% pre-IPO stake), Insight Venture Partners (22.6%) and Eli Barkat (managing director of BRM Capital). www.eyeblaster.com

[slide title=”Fallbrook Technologies”]
Fallbrook Technologies Inc., a San Diego-based provider of technology for improving the performance and flexibility of transmissions for vehicles and equipment, filed for a $50 million IPO on February 16. CIBC and Mackie Research Capital are serving as co-lead underwriters.

The company reports $871,000 in revenue for the nine months ending Sept. 30, 2009, compared to $1.96 million during the same period in 2008. Its income loss for the 2009 period was $11.7 million.

Fallbrook has raised around $24 million in VC funding from Robeco (24.1% pre-IPO stake) and NGEN Partners (23.7%). www.fallbrooktech.com

[slide title=”Force10 Networks”]

Force10 Networks Inc., a San Jose, Calif.-based provider of network routing and switching equipment, filed for a $143.75 million IPO on March 2. It plans to trade on the NYSE under ticker symbol FTEN, with J.P. Morgan, Deutsche Bank Securities and Barclays Capital serving as co-lead underwriters.

The company, which early last year merged with Turin Networks, reports 2009 revenue of $113 million and a net loss of $76 million.

Force10 has raised over $400 million in total VC funding since 1999, while Turin Networks had raised over $250 million. Current shareholders include Advanced Equities (28.1% pre-IPO stake), New Enterprise Associates (9.8%), DCM, U.S. Venture Partners and Meritech Capital Partners. www.force10networks.com

[slide title=”GAIN Capital Group”]
GAIN Capital Group, a Bedminster, N.J.-based provider of online foreign exchange trading services for individuals and institutions, filed for a $125 million IPO on 8/31/09. It plans to trade on the Nasdaq, with Morgan Stanley and Deutsche Bank Securities serving as co-lead underwriters.

The company has raised around $172 million in VC funding, from firms like 3i Group, Cross Atlantic Capital Partners, Edison Venture Funds and VantagePoint Venture Partners. www.gaincapital.com

[slide title=”GameFly”]
GameFly Inc., a subscription-based videogame rental company, filed for a $50 million IPO on February 10. It plans to trade on the Nasdaq under ticker symbol GFLY, with BoA Merrill Lynch and Piper Jaffray serving as co-lead underwriters.

The company reports around $47 million in revenue for the second and third quarters of 2009, compared to $39 million over the same period in 2008. Its operating income for the 2009 period was nearly $6 million.

GameFly has raised venture capital from Sequoia Capital (51.56% pre-IPO stake) and Tenaya Capital (5.9%). www.gamefly.com

[slide title=[“Glasshouse Technologies”]
GlassHouse Technologies Inc., a Framingham, Mass.-based provider of storage consulting and services, filed for a $75 million IPO on January 28. It plans to trade on the NYSE, with Goldman Sachs and Credit Suisse serving as co-lead underwriters.

The company reports $65 million in revenue for the first three quarters of 2009, compared to $62 million over the same period in 2008.

GlassHouse has raised over $72 million in VC funding, from firms like Sigma Partners (25.81% pre-IPO stake), GrandBanks Capital (12.49%), Kodiak Venture Partners (10.75%), Paladin Capital Group (9.3%), Jafco, Cisco Systems, Montagu Newhall Associates, Shiprock Capital and Dell Computer.

The company had filed for a $100 million IPO in 2007, but withdrew in early 2008 due to “current public market conditions.” Goldman Sachs was lead underwriter on the offering, which would have had GlassHouse listing on the Nasdaq. www.glasshousetech.com

[slide title=”Inphi”]
Inphi Corp., a Sunnyvale, Calif.-based maker of analog semiconductor solutions for the communications and computing markets, filed for a $115 million IPO on June 16. It plans to trade on the Nasdaq under ticker symbol IPHI, with Morgan Stanley, Deutsche Bank and Jefferies & Co. serving as co-lead underwriters.

The company reports around $7.3 million in 2009 net income, on $58.85 million in revenue.

Inphi has raised more than $50 million in VC funding from Walden International (20.8% pre-IPO stake), Tallwood Venture Capital (20.5%), Mayfield Fund (18.6%) and Dali Hook Partners. www.inphi-corp.com

[slide title=”InvenSense”]
InvenSense Inc., a Sunnyvale, Calif.-based provider of motion sensors for consumer electronics, filed for a $100 million IPO on June 28. It plans to trade on the Nasdaq under ticker symbol INVN, with Goldman Sachs and J.P. Morgan serving as co-lead underwriters.

The company reports $29 million in 2009 revenue, compared to around $7.5 million in 2008.  

The company has raised around $38 million in VC funding from Artiman Ventures (22.7% pre-IPO stake), Partech International (22.6%), Sierra Ventures (8.9%), Qualcomm (7%), Foxconn, Inventec Appliances Corp., Skylake Ventures, DoCoMo Capital and VentureTech Alliance.

[slide title=”IronPlanet”]
Ironplanet Inc., a Pleasanton, California-based operator of an online marketplace for used heavy equipment, filed for a $92 million IPO on March 18.

It plans to trade on the Nasdaq under ticker symbol IRON, with J.P. Morgan and Deutsche Bank serving as co-lead underwriters.

The company has raised nearly $47 million in VC funding, from Accel Partners (19.5% pre-IPO stake), Kleiner Perkins Caufield & Byers (19.5%), Caterpillar (9.79%), Dyncorp, Marubeni Corp., IGNITE Group and Windspeed Ventures. www.ironplanet.com

[slide title=”Newegg”]
NewEgg Inc., a City of Industry, Calif.-based ecommerce company focused on IT products for small and mid-sized businesses, filed for a $175 million IPO on 9/28/09. J.P. Morgan, BoA Merrill Lynch and Citi are serving as co-lead underwriters.

The company said it had been profitable every year since 2001 and generated sales of $2.1 billion in 2008.

Insight Venture Partners holds a 12.7% pre-IPO position, based on a $20 million investment in 2005.

[slide title=”NeoPhotonics”]

NeoPhotonics, a San Jose, Calif.-based maker of optical components using laser-reactive deposition, filed for a $115 million IPO on April 15. It plans to trade on the Nasdaq under ticker symbol NPTN, with J.P. Morgan and Deutsche Bank Securities serving as co-lead underwriters.

The company reports $155 million in 2009 revenue, compared to $133 million in 2008 and nearly $96 million in 2007. Its 2009 net loss was $6.8 million, down from $28 million in 2008.

NeoPhotnics has raised over $240 in VC funding, including a 2004 recap round. Shareholders include Oak Investment Partners, Draper Fisher Jurvetson, Concord Ventures, International Finance Corp. and ATA Ventures. www.neophotonics.com

[slide title=”Nexsan Corp.”]
Nexsan Corp., a Thousand Oaks, Calif.-based maker of disk-based storage systems, filed for an IPO in April 2008, but recently indefinitely postponed the offering due to “market conditions.”

The company had planned to sell five million shares at between $10 and $12 per share, withThomas Weisel Partners serving as lead underwriter. Nexsanhas raised over $17 million in VC funding since 2003, from firms like VantagePoint Venture Partners (23.2% pre-IPO stake), GESFID (20%), RRE Ventures (6.9%) and Beechtree Capital. www.nexsan.com

[slide title=”Nexx Systems”]

NEXX Systems Inc., a Billerica, Mass.-based provider of processing equipment for wafer-level packaging applications, filed for a $42 million IPO on February 11. Canaccord Adams and CIBC are serving as co-lead underwriters.

It reported $22.2 million in net revenue for the first nine months of 2009.

NEXX has raised around $33 million in VC funding, from firms like Sigma Partners and Enterprise Partners Venture Capital. www.nexxsystems.com

[slide title=”NuPathe”]
NuPathe Inc., a Conshohocken, Penn.-based drug developer focused on the central nervous system, filed for an $86.25 million IPO on My 14. It plans to trade on the Nasdaq under ticker symbol PATH, with Lazard Capital Markets and Leerink Swann serving as co-lead underwriters.

It has since set its IPO terms to five million common shares being offered at between $14 and $16 per share. It would have an initial market cap of approximately $225 million, were it to price at the high end of its range.

The company reports $11.3 million in 2009 revenue and a $15.6 million net loss.

NuPathe has raised $53 million in VC funding, from firms like Quaker BioVentures, Safeguard Scientifics, Battelle Ventures, Birchmere Ventures, S.R. One Ltd. www.nupathe.com

[slide title=”Prometheus Laboratories”]
Prometheus Laboratories Inc., a San Diego-based drug and diagnostics company, filed for a $100 million IPO on 12/19/07.

The company has raised $72.8 million in VC funding, from DLJ Merchant Banking Partners (21.4% stake), Split Rock Partners (17.4%), New Leaf Ventures (12.5%), Apax Partners (11%) , Wachovia Capital Partners (11%) and Brentwood Venture Capital (7.5%). Last April, Prometheus invested $8 million of equity into Rosetta Genomics Ltd. (Nasdaq: ROSG), as part of a licensing and collaboration agreement. www.prometheuslabs.com

[slide title=”RealPage”]

RealPage Inc., a Carrolton, Texas-based provider of online property management systems for the multi-family housing market, filed for a $150 million IPO on April 29. It plans to trade on the Nasdaq, with Credit Suisse and Deutsche Bank Securities serving as co-lead underwriters.

The company reports $28 million in net income for 2009, compared to a $3.2 million net loss in 2008. Revenue rose from $112 million in 2008 to $140 million in 2009.

RealPage has raised over $40 million in VC funding since 2003, from Apax Partners (26.4% pre-IPO stake), Advance Capital Partners (6.9%), Camden Partners (4.7%) and Leeds Equity Partners. www.realpage.com

[slide title=”Qlik Technologies”]
Qlik Technologies Inc., a Radnor, Penn.-based provider of business analytics software, filed for a $100 million IPO on April 1. It has since set its IPO terms to 11.2 million shares being offered at between $8.50 and $9.50 a piece. It would have an initial market cap of approximately $712 million, were it to price at the high end of its range.
The company plans to trade on the Nasdaq under ticker symbol QLIK, with Morgan Stanley, Citi and J.P. Morgan serving as co-lead underwriters.
Qlik reports around $157 million in 2009 revenue, compared to $118 million in 2008. Its 2009 net income was $6.86 million.

Shareholders include Accel Partners (26.7% pre-IPO stake), Jerusalem Venture Partners (25.4%) and Stiftelsen Industrifonden (10.1%). www.qlikview.com

[slide title=”ReachLocal”]
ReachLocal Inc., a Woodland Hills, Calif.-based provider of online advertising solutions for local businesses, filed for a $100 million IPO on 12/22/09.

J.P. Morgan and BoA Merrill Lynch are serving as co-lead underwriters.

The company later set its IPO terms to 4.17 million common shares being offered at between $17 and $19 per share. It would have an initial market cap of approximately $515 million, were it to price at the high end of its range.

ReachLocal reported over $203 million in revenue for 2009, compared to around $146 million in 2008. Its net income for the 2009 period is $11.66 million, compared to a $4.47 million loss in 2008. Net income was around $1.4 million, compared to a $7 million net loss in 2008.reported over $143 million in revenue for the first nine months of 2009, compared to around $100 million over the same period one year ago. Its net income for the 2009 period is $11.66 million, compared to a $4.47 million loss in 2008.

The company plans to trade on the Nasdaq under ticker symbol RLOC, with J.P. Morgan and BoA Merrill Lynch serving as co-lead underwriters.

ReachLocal raised around $68 million in VC funding, from VantagePoint Venture Partners (53.22% pre-IPO stake), Rho Ventures (12.94%) and Galleon Group (6.76%). www.reachlocal.com

[slide title=”Reply”]

Reply Inc., a San Ramon, Calif.-based platform to buy and sell online clicks and leads, filed for a $60 million IPO on February 22. It plans to trade on the Nasdaq under ticker symbol RPLY, with Jefferies & Co. and Piper Jaffray serving as co-lead underwriters.

The company reports around $34.3 million in 2009 revenue, compared to $23.33 million in 2008 revenue. Its 2009 net income was around $2.4 million, compared to a $3.3 million loss in 2008.

Reply has raised nearly $23 million in VC funding, from firms like Scale Venture Partners (21.47% pre-IPO stake), Outlook Ventures (6.47%) and ATEL Ventures. www.reply.com

[slide title=”Rules-Based Medicine”]
Rules-Based Medicine Inc., an Austin, Texas-based multiplexed biomarker testing laboratory, filed for a $90 million IPO on 12/23/09. It plans to trade on the Nasdaq under ticker symbol RULE, with Jefferies & co. serving as lead underwriter.

The company reported $14.5 million in revenue and a $911k net loss for the nine months ending 9/30/09.

Rules-Based Medicine raised a $25 million Series A round in 2007 led by Equity Group Investments, with Cross Creek Capital and Stephens Capital Partners also participating. www.rbmmaps.com

[slide title=”SciQuest”]
SciQuest Inc., a Cary, N.C.-based provider of on-demand supply and procurement software, filed for a $75 million IPO on March 26. It plans to trade on the Nasdaq under ticker symbol SQI, with Thomas Weisel Partners serving as lead underwriter.

The company reports $39 million in 2009 revenue, compared to $29 million in 2008.

SciQuest had been VC-backed before going public via a $120 million IPO in 1999. It was then taken private in 2004 by Trinity Ventures. Additional investments were made by Intersouth Partners and River Cities Capital Funds. www.sciquest.com

[slide title=”Tangoe”]
Tangoe Inc., an Orange, Conn.-based provider of communications lifecycle management software and services, filed for a $75 million IPO on April 16. It plans to trade on the Nasdaq under ticker symbol TNGO, with Deutsche Bank Securities and Thomas Weisel Partners serving as co-lead underwriters.

The company reports 2009 revenue of nearly $56 million, compared to $37.5 million in 2008. Its net loss fell to $2.55 million in 2009.

Tangoe has raised over $18 million in VC funding. Shareholders include Edison Venture Funds (21.5% pre-IPO stake), Sevin Rosen Funds (16.8%), Investor Growth Capital (12.4%) and North Atlantic Capital (9.9%). www.tangoe.com

[slide title=”TripWire”]
TripWire Inc., a Portland, Ore.-based provider of IT security and compliance automation software solutions, filed for an $86.25 million IPO on May 28. It plans to trade on the Nasdaq under ticker symbol TPWR, with J.P. Morgan and Thomas Weisel Partners serving as co-lead underwriters.

The company reports $74 million in 2009 revenue, compared to $62 million in 2008 revenue. Its net income rose to $19.58 million from $5.86 million.

TripWire has raised over $110 million in VC funding. Current shareholders include Advanced Technology Ventures (22.38% pre-IPO stake), Bessemer Venture Partners (10.06%), International Venture Partners (8.71%) and Industry Ventures (5.7%). www.tripwire.com

[slide title=”Wintegra”]
Wintegra Inc., an Austin, Texas-based provider of access processing semiconductors, filed for a $115 million IPO on May 7. It plans to trade on the Nasdaq under ticker symbol WNTG, with Barclays Capital and Deutsche Bank Securities.

The company reports $12 million in 2009 revenue, compared to around $6 million in 2008 revenue. Net income moved from a small loss to a small gain.

Wintegra had withdrawn a previous IPO registration in 2006. It has raised around $26 million in VC funding from firms like Magnum Communications Fund, Concord Ventures, Texas Instruments, Genesis Partners and China Development Industrial Bank. www.wintegra.com

[slide title=”ZipCar”]
ZipCar, a Cambridge, Mass.-based provider of car sharing services, filed for a $75 million IPO on June1. It plans to trade on the Nasdaq under ticker symbol ZIP, with Goldman Sachs and J.P. Morgan serving as co-lead underwriters.

The company reports $131 million in 2009 revenue, compared to $105 million in 2008 revenue. Its net loss fell to $4.67 million in 2009 from $14.52 million in 2008 (but increased from $2.97m in first 3 months of 2009 to $5.33m in first 3 months of 2010).

ZipCar has raised over $38 million in VC funding. Shareholders include Revolution Living (22.98% pre-IPO stake). Benchmark Capital (12.64%), Greylock Partners (7.12%), Smedvig Capital (5.57%) and Globespan Capital Partners. www.zipcar.com

[/slideshow]


Steve Nash Drives Into Venture Capital


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


Click here to view on the original site: Original Post




Each summer, advertising firm Deutsch Inc. has dozens of interns scurrying around its Manhattan offices. Most are in their early 20s, unpaid and (so far) relatively unaccomplished. But two years ago, the group also included a 34 year-old whose bank account would dwarf that of firm boss Donny Deutsch.

That intern was Steve Nash, the future basketball Hall of Famer who still slings passes for the Phoenix Suns. His boss that summer was Mike Duda, Deutsch’s chief strategy officer (and occasional peHUB contributor). The pair kept in touch after the internship ended — including work on an annual charity event — and late last year began discussing the creation of a new type of firm: One that would meld brand consulting with venture capital.

The result is Consigliere, a New York-based group that has been meeting with potential investors and partners for the past several months (it also was the answer to a recent blind item).

“There are a lot of guys who finish playing and then have no idea what to do with themselves,” Nash told me during a recent phone call. “I’m not done yet but, when I am, I do not want to become one of them.”

Consigliere plans to invest in seed-stage, consumer-oriented companies with “scalable, large-growth brand potential.” It also will do select Series A and Series B deals, and occasionally sign on as a strategic partner (i.e., the consulting piece) for larger transactions. Those latter deals are designed, in part, to help forge partnerships with large brands that can help out Consigliere’s younger investments.

Here is how the firm explains its strategy, from some marketing materials:

We will invest in consumer sectors such as ecommerce, sports, durables and performance categories. Our marketing consultancy prowess can exist in tandem with investments or as stand-alone engagements derived from relationships with innovation-seeking established brands or financial institutions who might purchase them. In essence, our marketing consultancy provides us with a “sharper blade” approach in making more knowledgeable investments with the fund.

“A lot of VC firms are extremely good at identifying the next great technology or entrepreneur, but don’t necessarily have great networks when it comes to building brand for consumer-focused startups,” Duda explains. “That’s what we’re offering, and really plan to be a partner to the VC community rather than just a new competitor.”

Duda is slowly transitioning out of Deutsche, but on very amicable terms. We hear that a lot, but there seems to be some actual evidence in this case: Donny Deutsch is among the expected investors in Consigliere’s debut fund, which is targeted at $20 million.


Q&A on Micro-VC Funds, With Someone Who Actually Invests In Them


This post is by Dan Primack from Pe Hub Blog: Firms & Funds


Click here to view on the original site: Original Post




We’ve spent a lot of time lately discussing micro-VCs, including last week’s news on Floodgate ($73m fund close) and 500 Startups (new $30m fund being raised). So I spent some time discussing the phenomenon with Chris Douvos, who invests in mico-VC funds through his role as a managing director with The Investment Fund for Foundations:

How long have you been investing in micro-VC funds, or super-angel, funds??

We’ve been active in this space since around 2005, and have invested over time in several of the archetypal managers.

Who are those archetypical managers?

Well, the main one is someone we actually haven’t given money to: Ron Conway. He’s created a fantastic ecosystem. But we’ve backed some of the people who have taken types of things he does and refined them a bit. For example, one of our earliest investments was in First Round. We think those guys have brought an aggressively thoughtful approach to the challenges of investing in seed-stage companies.

I love the O’Reilly AlphaTech guys, whose differential is that they’re leveraging the larger O’Reilly ecosystem. In the case of O’Reilly or First Round or Floodgate, they’ve created brands around themselves that magnetizes interesting people. That helps them punch above their weight.

How do you define a micro-VC fund?

I was at a Silicon Valley Bank shindig the other day, and people were talking about segmenting the space. “Who is a super-angel compared to a seed-stage VC, etc…”

To me, what initially attracted me to the space is that it was about people who had found that the arithmetic was on their side. They were recognizing some really meaningful trends at certain types of startups – capital efficiency and the fast cycling of ideas at IT/Internet companies – and were typically people with some sort of entrepreneurial background with a bit of investing experience thrown in.  They saw a capital cap that they could fill by being nimble in the sense of traditional angels, but also bring a level of activity and DNA-setting that was the hallmark of more institutionally-focused funds.

The idea wasn’t necessarily to supplant VCs, but to be a value-added early processor of companies. The startups would be far better off for having this earlier participation, and then traditional VCs would bring their own skills to the table.

But, lots of those traditional VCs are now launching seed programs of their own. Are you worried that they’re going to overcrowd the seed market?

Warren Buffett famously said that innovators are followed by imitators followed by idiots. Every interesting financial play has that dynamic. We saw a lot of innovation in 2004 to 2006, and now there are a lot of people imitating. Many of them can make lots of money doing so, and are good in their own right. What I worry about is getting to the idiot stage, where people without the right qualifications or backgrounds try exploiting a perceived availability of capital.

So where do you come down on the “micro-VC bubble” argument?

Without sounding too Pollyanna, I think that the competitive dynamic has changed, but I don’t think there’s a bubble yet. And I think it would be difficult for there to be a bubble because the environment is so target-rich.

When we talk about VC, everyone focuses on big outcomes and how few of them there are. But the arithmetic of the micro-VC space is such that you can have outstanding venture returns with extremely modest exits. This translates into giving yourself dozens – maybe even hundreds — of good opportunities per year, rather than just a few.

Is it possible, however, that many of those current targets are only there because the larger economy sucks, thus creating many entrepreneurs who otherwise would have corporate jobs?

That’s a great question. In our experience, we typically see more people who are really committed to entrepreneurship than refugees from  large companies who feel the opportunity cost of their time has gone way down.  If you look at the portfolios of our micro-VCs, the crazy “walk through walls” gene is over-expressed.

Is there a “proper” amount of money for a micro-VC partner to manage?

The answer to that question is a function of their stance toward follow-on investing…

Ok, let’s assume they let a bunch of early bets go, but double or triple down on the strongest ones?

Then the short answer is that there’s an emerging consensus of $30 million per partner. Is that the right number? I’m not sure.

One of the challenges is that we’re in the second or third inning of this ballgame. We really don’t know what the right strategy is, and there may be multiple right strategies. Some will invest early and not follow on aggressively. Others will want to protect their ownership, and will need more capital per deal per partner.

A lot of these guys are going to have to seriously think about reserves and ownership and community. This is not a community that’s been marked so far by sharp elbows, but in time it may become a feature of the landscape.

Every micro-VC fund I’ve seen focuses on IT/Internet/mobile technologies. Have you seen any that involve botech or cleantech or another non-IT sector?

The value proposition is IT, because of the macro trends we discussed earlier. But we are seeing folks across the spectrum pay a lot more attention to capital-efficient companies. We’ve seen capital-efficient cleantech funds. And capital-efficient healthcare funds. So it’s definitely a pervasive thing in the atmosphere. But I think it’s most dynamic and most fluid in the IT world.

Also, it’s important to remember that capital efficiency is only half the story. The other half is about how fast you now can test cycle ideas. That’s hard to do in biotech, where you have the regulatory gauntlet to run, or cleantech, which has long sales cycles with large concentrated end users. So that’s good for IT, although the flipside is that you’ll have the endemic challenge of low barriers to entry.