Axxana Raises $9 Million

Axxana, an Israeli developer of data disaster recovery solutions, has raised $9 million in Series B funding. Carmel Ventures led the round, and was joined by return backers Gemini Israel Funds and Moshe Yanai.

PRESS RELEASE
Carmel Ventures announced today that it has led a $9 million Series B investment in Axxana. Axxana’s existing investors, Gemini Israel Funds and the serial entrepreneur Moshe Yanai, also participated in the round. The funds will be used to accelerate the adoption of The Phoenix System™ — the first “Black Box” Enterprise Data Recorder (EDR). Ronen Nir, partner of Carmel Ventures, joined Axxana’s Board of Directors.

Axxana was founded by Alex Winokur, Ph.D., Eli Efrat and Dan Hochberg, veterans of the data storage industry, to address the number one challenge in data protection: recovering data with zero data loss over any distance. Axxana’s first EDR (Enterprise Data Recorder) product, the Phoenix System RP, was demonstrated at EMC World in May 2009.

“Axxana’s EDR brings a disruptive solution that is well poised to transform the entire storage replication market and create a whole new category within it,” said Ronen Nir, Partner at Carmel Ventures. “We are impressed with Axxana’s strong founding team and their achievements so far, including impressive endorsement by leading storage vendors worldwide. We look forward to joining their existing investors in supporting Axxana to become a leader in this fast growing market.”

“This round of investment demonstrates continued confidence in the strength of our technology and its enormous market potential,” said Eli Efrat, Axxana’s CEO. “It is a significant validation of our business strategy and product roadmap. The ability to provide organizations with zero data loss over any distance, combined with an affordable price tag, ensures that SMEs and large enterprises no longer have to compromise their disaster recovery solution.”

Axxana’s first product to the market is the Phoenix System RP, which is the only product to enable 100% disaster recovery with zero data loss (RPO=0) over any distance, for significantly less than the cost of traditional data mirroring alternatives. The Phoenix System RP complements the asynchronous replication solution offered by EMC’s RecoverPoint.

About Carmel Ventures

With over $600 million currently under management, several successful exits, and a growing portfolio of promising start-ups, Carmel is among Israel’s top-tier venture capital funds. Carmel’s investments are focused primarily on early stage companies in the fields of Software, Communications, Internet, Digital Media, Semiconductors, and Consumer Electronics. Founded in 2000 by pioneers and leaders of the Israeli high tech industry, Carmel provides significant capital and active, hands-on support through the growth cycle of its portfolio companies and is recognized as a true company building fund in Israel. Carmel, headquartered in Herzliya, Israel enjoys a worldwide network of industry, strategic and investment resources. Carmel is an affiliate of the Viola Partners Group, a leading innovative private equity investment group with close to $2B under management focused on technology-based investment opportunities in Israel. For more information, visit www.carmelventures.com.

About Axxana

Axxana was founded by veterans of the data storage industry to address the number one challenge in data protection — recovering data with zero data loss over any distance. Axxana’s disaster recovery solution represents a new domain in data protection: Enterprise Data Recording (EDR). Serving enterprises around the world and working in close conjunction with some of the most prestigious names in the data storage industry, Axxana has introduced a solution that will alter the economics behind data protection and disaster recovery. Axxana is a Delaware Corporation and maintains offices in Newton, MA and Tel Aviv, Israel. For more information visit www.axxana.com

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Zeno Corp Raises $20 Million

Zeno Corp., a Houston, Texas-based developer of a handheld device to treat acne, has raised $20 million in new VC funding, according to a regulatory filing. The round includes $6 million in cash and $14 million for “services to be rendered.” Backers include Austin Ventures, Catterton Partners and Sante Ventures. www.myzeno.com

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PicoChip Raises $20 Million

PicoChip, a Bath, England-based provider of signal processing products for wireless communications, has raised $20 million in Series E funding. Backers include Atlas Venture, Highland Capital Partners, Pond Venture Partners, Scottish Equity Partners, Rothschild, AT&T, Intel and Samsung The company previously raised over $64 million.

PRESS RELEASE

picoChip today announced that it has completed a $20 million funding round. Already the dominant supplier for femtocell silicon, supporting all the major HSPA carrier deployments, this additional investment will help picoChip extend its leadership and grasp the growing market opportunity in the femtocell sector.

“This investment comes as the market is taking off for picoChip: it is testament to what we have already achieved, and our investors’ belief in our future,” said picoChip’s CEO Nigel Toon. “picoChip was the pioneer in femtocell technology and we are delighted to see our customers and partners deploying in volume in the rapidly developing global femtocell market. Our customers are already benefiting from picoChip’s substantial head-start, field-proven robust products and unparalleled experience in this market. This investment strengthens our balance sheet and fully funds us through to IPO.”

picoChip’s investors include financial investors, Atlas Venture, Highland Capital Partners, Pond Venture Partners, Scottish Equity Partners, and Rothschild plus strategic investors AT&T, Intel and Samsung. This fresh injection of capital from top tier VCs and institutional investors comes at a time when technology VC investment has decreased markedly, with backers choosing their investments carefully and only the strongest companies able to secure finance.

Dan Rosen, Principal at Highland Capital Partners, commented, “At Highland, we invest in companies that can establish leadership in explosive, high-growth markets. We are very excited about picoChip’s prospects in the Femtocell market. The company continues to win market share with proven best-in-class technology.”

ABI Research forecasts the total available femtocell market in 2010 will reach 2.3 million units, rising to 40 million units in 2014. In 2009 six major network operators have launched femtocell services that cover the USA, Europe and Asia.

Having been the first to market with a femtocell solution in 2005, picoChip is clearly the leading technology supplier for carrier’s HSPA rollouts, with seventeen customers using the field-proven picoXcell™ product. The company today also announced its strategy for an end-to-end femtocell reference solution that will lower barriers to entry, minimize cost and accelerate time-to-market for femtocells.

picoChip’s strong financial position, fast ramping revenues and proven technology leadership have won it the respect of customers and the financial community. In the last year picoChip was a top ranked company in Deloitte’s prestigious FAST 50, a widely acknowledged bellweather for the industry; and has been named one of the ‘Top Ten Private Companies’ to watch by the Financial Times. The additional endorsement of this investment allows the company to consolidate its leadership in next-generation wireless and assist in the next phase in the company’s growth.

picoChip CEO Nigel Toon will be speaking at the Barclays Capital 2009 Technology Private Company Conference in San Francisco on December 7th.

picoChip is bucking the trend with this latest investment that comes at a time when venture investors are extremely cautious. In its August 2009 State of the Semiconductor Industry report*, the Global Semiconductor Association (GSA) highlighted venture capital funding at a historic low. The report quotes figures from J.P. Morgan, presented to the GSA: ‘In the first half of 2009, funding in the semiconductor industry…totaled $569 million, compared to $1.1 billion for the same period a year before – a 48% decline in investments.’ Similarly, Thomson Reuters reported that the first three quarters of 2009 marked the weakest nine month period for new venture capital investments in 15 years.

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Report: BioStar Ventures Raising Second Fund

BioStar Ventures, a firm focused on early-stage medical device startups, is looking to raise $75 million for its second fund, according to VentureWire. The Michigan-based firm has already secured $30 million, and expects to hold a final close next year. www.biostarventures.com

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Breyers Yogurt Gets New Credit Facility

Breyers Yogurt Co., a portfolio company of Catterton Partners, has received a new senior debt facility from Golub Capital. No financial terms were disclosed.

PRESS RELEASE

Golub Capital announced today that it has provided a new senior debt facility to Breyers Yogurt Company, a portfolio company of Catterton Partners.

Breyers Yogurt Company is the largest independent yogurt company and one of the most widely recognized yogurt brands in the United States. Its products include Breyers Fruit-on-the-Bottom, Breyers Light, Breyers Disney and the recently launched Breyers Inspirations yogurts as well as YoCrunch. The new facility provided by Golub will be used to support the Company’s continued growth and market expansion.

“This is our second deal with Catterton Partners, and we are pleased to be working with them again on what we see as a unique opportunity to support industry leading brands,” said Golub Capital Senior Managing Director Andy Steuerman. “Catterton has a record of success in building consumer brands, and they are committed to helping these companies achieve their full potential.”

Scott Dahnke, Managing Partner of Catterton Partners, said, “Breyers Yogurt Company has achieved strong growth and operating performance. The financing provided by Golub Capital, who has been a good partner to us, will help ensure that the Company maintains a strong balance sheet and has the resources necessary to continue this momentum.”

About Golub Capital

Golub Capital is a leading provider of financing solutions for the middle market, including one-loan financings (through the firm’s proprietary GOLD facility), senior, second lien and subordinated debt, preferred stock and co-investment equity. Golub Capital was named “Mezzanine Financing Agent of the Year” for 2009 by the M&A Advisor, “M&A Lender of the Year” for 2008 by Mergers & Acquisitions magazine, and “Middle Market Lender of the Year” for 2008 by Buyouts. For more information, please visit the firm’s website at www.golubcapital.com.

About Catterton Partners

With more than $2.3 billion under management, Catterton Partners is a leading private equity firm in the United States focused exclusively on the consumer industry. Since its founding in 1990, Catterton has leveraged its investment capital, strategic and operating skills, and network of industry contacts to establish one of the strongest investment track records in the consumer industry. More information about the firm can be found at http://www.cpequity.com.

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Immunet Raises $2 Million

Immunet, a Palo Alto, Calif.-based developer of anti-virus technologies, has raised $2 million in Series A funding. Altos Ventures led the round, and was joined by Atlanta-based TechOperators.

PRESS RELEASE
Immunet, developer of next generation AntiVirus technologies, announced today that it has raised $2 million in an oversubscribed Series A round led by Altos Ventures with participation from Atlanta-based TechOperators. Ho Nam, General Partner of Altos Ventures, has joined the board of Immunet.

Immunet launched Immunet Protect, its first product, in August 2009. Immunet Protect is the first free, cloud-based antivirus application focused on protecting your community. Immunet Protect harnesses the growing power of social networks with its community sharing features and “Collective Immunity(TM)” technology to protect personal computers from virus threats.

Upon installing Immunet Protect, users immediately become protected members within the “Immunet Community” (at 20,000 users and expanding rapidly). The Immunet Community leverages the collective knowledge of threats gathered from its users to defend ALL members in real time against thousands of new threats created every day.

Immunet’s defenses grow stronger with every new user that joins the Immunet Community. This provides users with a natural incentive to share the product through its community-sharing features, which use Facebook Connect, Google Mail, Yahoo Mail and regular email.

“Immunet Protect is unlike any antivirus software on the market because it is the first product focused on protecting an individual’s own community,” says Immunet Founder and CEO Oliver Friedrichs, a former Symantec and McAfee security veteran and entrepreneur. “Immunet Protect acts as a shield for entire communities, and that shield becomes stronger with each new user and each new threat that is detected. We want to spread the goodness of antivirus protection with Immunet Protect and allow our users to do so easily. We encourage users to ‘Get Immunet Protect Before You Connect’ ”

“Immunet combines the collective intelligence of the Immunet Community with the power of social networks to create a powerful application that users have a common incentive to share for the greater good for all users,” said Ho Nam of Altos Ventures. “We look forward to working with the Immunet team to support the viral growth of applications in the cloud AntiVirus space over the coming year and are excited to have them in our portfolio.”

About Immunet

Immunet was founded by Anti-Virus industry veterans to address a sweeping shift in the internet threat landscape, partly due to the rising popularity of social networks. Immunet utilizes the latest advances in computing and internetworking, including in-the-cloud, community-based, and collective intelligence concepts combined with web-based software-as-a-service deployment. Immunet Protect defends entire communities of users in real time against thousands of new threats generated every day. For more information, please visit www.immunet.com, and follow us on Twitter @immunet (http://twitter.com/immunet). Collective Immunity is a registered trademark of Immunet Corporation. Get Immunet Protect Before You Connect.

About Altos Ventures

Altos Ventures is a first-stage venture capital firm focused on leading investments in emerging technology companies with the goal of building market leaders. Since 1996, the Altos Ventures team has worked closely with talented entrepreneurs to build companies that have generated more than $1 billion in revenue. Altos manages $200 million in dedicated first-stage capital on behalf of leading endowment, fund-of-funds, financial and family office investors based in the United States and Asia. Altos Ventures is based in Menlo Park, California. Additional information is available at www.altosventures.com.

About TechOperators

TechOperators is an early-stage venture capital firm whose mission is to invest capital and our practical experiences to help entrepreneurs build great technology companies. TechOperators was founded on a simple success formula: that proven operators make the best early-stage venture capitalists. Based in Atlanta, Georgia, the firm is led by a team of partners with recent operational experience in all phases of company growth and is focused on innovative solutions in software, Internet services, cloud computing, security, infrastructure, and mobile computing. For more information, visit us at www.techoperators.com.

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Metalmark Enters into Marcellus Share JV

Metalmark Capital has agreed to partner with Northeast Natural Energy on a joint venture to pursue natural gas drilling, exploration and acquisition in the Marcellus Share. No financial terms were disclosed.

PRESS RELEASE

Northeast Natural Energy, LLC (“NNE”) announced today that it has entered into a partnership agreement with Metalmark Capital to pursue natural gas drilling, exploration, acquisition and joint-venture opportunities in the Marcellus Shale (“Marcellus”), one of the most prolific natural gas shale plays in North America located primarily in Pennsylvania, West Virginia, and New York. Metalmark and NNE management will each be making substantial equity commitments to fund the operations and support the growth of NNE.

NNE is led by its Founder and President, Mike John, who previously served as Vice President of Operations of the Eastern Division for Chesapeake Energy (NYSE: CHK), where he oversaw Chesapeake’s Marcellus activity from 2005 to 2009. Prior to joining Chesapeake Energy, Mr. John was a senior executive occupying various roles at Triana Energy (Metalmark principals’ first investment with the founding executives of NNE) and Columbia Natural Resources. The other founding executives of NNE, John Adams, Mark Williams and Jo Ellen Yeary, all worked together previously at Triana Energy and Columbia Natural Resources. Mr. Adams also worked at Chesapeake Energy from 2005 to 2009, where he was the Director of Reservoir Engineering for the Eastern Division.

“We are pleased to continue our longstanding relationship with Metalmark and pursue the attractive opportunities that exist in the Marcellus,” said John. “Our team possesses an enormous amount of expertise regarding the Marcellus Shale along with considerable knowledge pertaining to the entire Appalachian Basin, given our experience at Chesapeake Energy, Triana Energy, and Columbia Natural Resources. We are well positioned to partner with others or acquire acreage and assets given our deep understanding of the sector and strong financial backing from Metalmark.”

“Consistent with our strategy of backing successful management teams over many years and different platforms, we are delighted to have the opportunity to continue our relationship with Mike John and the NNE team,” added Howard Hoffen, Chairman and CEO of Metalmark. “Mike has proven his ability over many years to build new businesses with substantial scale and scope. We look forward to capitalizing on the substantial opportunities available in the Marcellus.”

About Northeast Natural Energy

Northeast Natural Energy, LLC, headquartered in Charleston, WV, is a private oil and gas company focused on the natural gas drilling, exploration, acquisition and joint-venture opportunities in the Marcellus Shale. The principals of NNE have worked together in various capacities for over 20 years and possess a significant amount of knowledge and operational expertise in the Appalachian Basin, in particular the Marcellus Shale formation.

For more information, please visit www.northeastnaturalenergy.com.

About Metalmark Capital

Metalmark Capital is a leading private equity firm whose principals have a long track record of successful investing in targeted sectors, with particular focus and competence in energy and natural resources, industrials and healthcare. Metalmark Capital seeks to build long-term value through active and supportive partnerships with the companies and management teams in which they invest. Metalmark Capital is an investment center of Citi Capital Advisors.

For more information, please visit www.metalmarkcapital.com.

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Deep Discounts May Drive BDC Consolidation

(Reuters) - A wave of consolidation may sweep through U.S. small business lenders as the beleaguered industry seeks to take advantage of low valuations to combine with rivals or other large companies in a bid to survive.

Once a dominant player in the business development companies (BDC) industry, American Capital Ltd (ACAS.O), which recently restructured its debt, may be the next big target for acquisition in the space, analysts say.

Smaller companies like Kohlberg Capital Corp (KCAP.O), MCG Capital Corp (MCGC.O) and GSC Investment Corp (GNV.N), among others, could also be on the buying list for bigger players.

“I think to the extent business development companies remain undervalued, with a lot of them trading at 60 percent range of the net asset value, it presents an opportunity for a buyer to come in and buy the assets at a substantial discount and enjoy good returns,” Analyst Scot Valentin of FBR Capital Markets said.

Popularly known as BDCs, these business lenders make debt and equity investments in small- and middle-sized companies in return for equity stakes, and have been struggling to raise capital as the financial crisis reduced the value of their portfolio companies to which they make loans.

With the cost of capital remaining high, smaller business lenders think it makes more sense to partner with a larger company, as they can reap the advantage of economies of scale, analysts say.

“I think the catalysts for consolidation are attractive entry price, ability to solve a need whether it be capital or liquidity and the ability of deriving or providing scale,” said analyst John Stilmar of SunTrust Robinson Humphrey.

Recently, in the biggest deal till date in this segment, Ares Capital Corp (ARCC.O) agreed to buy its struggling rival Allied Capital Corp (ALD.N) in an all-stock deal valued at $648 million, providing relief to the debt-laden company.

Distressed private debt funds may also be interested in buying a BDC as they have raised significant amount of distressed debt recently, analyst Greg Mason of Stifel Nicolaus said.

GSC Investment is trading at a price/book value of 0.38, while MCG Capital is trading at 0.54 as of Tuesday, according to Thomson Reuters data.

A price to book ratio below 1 indicates that the market capitalization is less than the value of assets on the company’s books.

ACAS THE NEXT BIG DEAL?

American Capital, with a price/book value at 0.37 as of Tuesday, is looking attractive following the troubled company’s agreement to restructure its $2.4 billion of unsecured debt with its lenders.

Analyst Ross Demmerle of Hilliard Lyons said American Capital looks appealing as it is selling at a discount to book value, and the company’s board would have to address any “significant offer” from a potential acquirer.

“If you’ve been selling at 50 percent of book value for months, you better be pretty certain you can increase the stock price without selling, if you turn it down,” he added.

Stifel’s Mason said while a lot of investors are speculating that American Capital will go the Allied way, he believes that this may not happen as the conditions affecting both the companies are different.

American Capital, which was removed from the Standard & Poor’s 500 index .SPX in February, had breached its covenants and was selling assets at distressed prices to raise cash. The company did not respond to queries seeking comment.

ON THE PROWL

Heavyweight Apollo Investment Corp (AINV.O), which raised $157.5 million in a public offering in August, said it is eyeing acquisitions given the compelling options in the market.

Apollo has most likely reviewed all options, but it has not yet found one, meeting its business criteria, Stilmar said.

Earlier this month, New York-based Prospect Capital Corp (PSEC.O) also said it is evaluating a pipeline of potential additional portfolio and investment opportunities and hopes to seal a deal before the end of the year.

The company may even consider making a “hostile offer” to a potential candidate, its Chief Operating Officer Grier Eliasek said on a call with analysts.

In August, Prospect Capital, a closed-end investment company, agreed to buy its smaller rival Patriot Capital Funding Inc (PCAP.O) for $197 million.

(Reporting by Archana Shankar and Brenton Cordeiro; Editing by Gopakumar Warrier)

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Deutsche Telekom Wins Freenet’s Strato Unit

FRANKFURT (Reuters) - Deutsche Telekom (DTEGn.DE) will become Germany’s No. 2 player in webhosting products by buying freenet’s (FNTGn.DE) Strato unit for 275 million euros ($412 million) in cash.

“Strato complements our activities in the hosting area perfectly and will make a positive contribution to net profit and free cash flow from the very first day of consolidation,” Deutsche Telekom board member Niek Jan van Damme said in a statement on Thursday.

A source close to the sales process had told Reuters in June that freenet was hoping to fetch 300-400 million euros for the division, which employs around 500 staff.

Deutsche Telekom beat out other bidders, which according to sources had included private equity company Bridgepoint Capital Ltd and one other strategic investor at the end of October.

Shares of Deutsche Telekom were up 0.2 percent at 9.70 euros by 0811 GMT, while freenet was down 1 percent at 9.61 euros. (Reporting by Maria Sheahan, Editing by Michael Shields)

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WSJ: Vestar Selling Bird’s Eye to Blackstone’s Pinnacle

(Reuters) - Blackstone Group’s (BX.N) Pinnacle Brands Corp is likely to buy U.S. frozen vegetable company Birds Eye Foods for more than $1.3 billion, the Wall Street Journal said, citing people familiar with the matter.

The all-cash deal for Birds Eye, which is majority owned by private equity firm Vestar Capital Partners, will likely be announced as soon as later on Thursday, the people told the paper.

Blackstone and Birds Eye could not be immediately reached for comment by Reuters outside of regular U.S. business hours.

Last month, Birds Eye filed for an initial public offering to raise up to $350 million.

The Rochester, New York-based company said in the filing it held the top position in the frozen vegetables market with sales of $935.6 million in the fiscal year ended in June 2009. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Hans Peters and Simon Jessop)

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Report: Blackstone Eye’s Citi’s Auto Finance Unit

(Reuters) - Blackstone Group (BX.N) and other private equity firms have held informal talks with Citigroup Inc (C.N) over its auto loan unit CitiFinancial Auto, the New York Post said, citing sources.

The unit maintains a loan portfolio of about $16 billion, according to the paper.

Blackstone and Citigroup could not be immediately reached for comment by Reuters outside regular U.S. business hours.

The U.S. government injected $45 billion into Citigroup and is the bank’s largest shareholder, with a roughly 34 percent stake. (Reporting by Ajay Kamalakaran in Bangalore; Editing by David Holmes)

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Maveron Looking for Permanent Hearth in SF

I thought it was curious when I posted earlier today how Maveron has opened a San Francisco office for Partner Amy Errett to call home.

The office isn’t as curious as the location. The consumer-focused firm said it was hanging its shingle a few blocks west of the heart of the financial district on a short block shadowed by tall buildings.

Just got off the phone with Errett, who says the office locale is temporary. Ideally, they’re looking in the areas South of Market and Jackson Square to setup more permanent digs.

Now that makes sense, since the firm is looking to scout the industry for promising wellness, online education and Internet-based consumer services businesses to back.

Errett says she’s “in the thick” of looking for space and expects to find a locale in early 2010. The temporary office beats having to commute back and forth from San Francisco to Seattle, which is what Errett had been doing.

“We feel entrepreneurial and we don’t want to be in a downtown highrise. We want to be with the startups,”  says Errett, who has been a partner at Settale-based Maveron since August 2008, following a six-month stint as an EIR with Maveron and Trinity Ventures. Before that, she was the CEO of Olivia.com, an online travel site, and a senior officer at E-Trade Financial Corp.

Since joining Maveron, Errett has been involved in three deals, having led the investments in Altius Education, Livemocha and KidZui.

Maveron is currently investing from a $150 million fourth fund that it raised in February 2007.

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Fortinet Shares Soar on First Day of Trading

NEW YORK (Reuters) - Shares of network security provider Fortinet Inc (FTNT.O) soared Wednesday in their debut on the Nasdaq, in what is on track to be among the strongest debuts of any initial public offering in 2009.

The performance comes on the heels of an IPO pricing that beat expectations and will help ease the path for other venture-capital backed IPOs, which have lagged those by private-equity owned companies in 2009, analysts said.

“You’re starting to see the pipeline of IPOs include more venture-backed deals. It’s definitley encouraging for the IPO recovery,” said Eric Guja, an analyst with Connecticut-based investment firm Renaissance Capital.

Fortinet shares were trading at $16.95, or 35.6 percent above the IPO price, at midday on Nasdaq after having traded up as high as $17.50.

Fortinet’s big first-day jump stems in large part from its pricing at a discount to its peers, Guja said.

But that discount was necessary because Fortinet is competing with larger firms like Cisco Systems Inc (CSCO.O) and Juniper Networks Inc (JNPR.N) that are better-known and have enormous financial resources, he said.

Silicon Valley-based Fortinet’s products integrate firewalls, Web-filtering and spam-filtering.

Historically, IPOs have risen between 10 percent and 12 percent in their debuts, as companies look to reward investors for taking a risk on an unknown stock. But very large “first day pops” can indicate that a company was too timid with its pricing and left money on the table.

Several other venture backed companies have put in the best first day performances of the year, including ion-battery maker A123 Systems Inc (AONE.O), which rose 50 percent in its debut in September.

But many companies have not held onto to those early gains. A123 is now up only 18 percent over its IPO price.

Fortinet, whose shareholders include venture capital firms Redpoint Ventures and Meritech Capital, sold 12.5 million shares. Earlier in the week, the company had increased the size of the deal by 500,000 shares to meet strong demand.

Excluding Fortinet, so far this year there have been 10 venture capital-backed IPOs valued at a combined $1.4 billion. There were only six VC-backed IPOs in 2008, totaling $470.2 million, according to Thomson Reuters data.

Fortinet raised $156.5 million in its initial public offering on Tuesday after the stock flotation priced for $12.50, above expectations.

Fortinet had sales of $181.4 million in the first nine months of 2009, up 18.8 percent over a year earlier, with a profit of $16.2 million.

The IPO’s lead underwriters are Morgan Stanley, J.P. Morgan Securities & Co and Deutsche Bank Securities. (Reporting by Clare Baldwin and Phil Wahba; Editing by Derek Caney and Gunna Dickson)

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John Thain Mulls Move to Private Equity

NEW YORK (Reuters) - Former Merrill Lynch Chief Executive John Thain is exploring his next move, which could possibly be to a private equity firm or perhaps a public company.

While he has not yet decided which route he will end up pursuing, Thain said that he is looking for a position that is “interesting and challenging.”

“I’m really exploring a number of different opportunities; there’s a whole range of private equity types of things that I’m looking at, and I wouldn’t be adverse to an opportunity in a public company if one were to come along,” Thain said at the Reuters Global Finance Summit in New York.

“I like dealmaking, but I also like building things,” he said. Thain would also consider a role outside the financial sector, he said, adding with a smile that he has a degree in electrical engineering.

Thain led the New York Stock Exchange when it struck its deal to buy Archipelago, steered its takeover of European markets operator Euronext NV and negotiated the sale of Merrill Lynch to Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), before being ousted from the top job earlier this year.

Prior to heading the NYSE, Thain spent nearly a quarter century at Goldman Sachs Group Inc (GS.N: Quote, Profile, Research, Stock Buzz), where he became No. 2.

The former Merrill CEO defended his tenure at Merrill, saying that he did the “right thing for my shareholders and employees.

Thain said that there are lots of potential opportunities in the private equity arena, but “in terms of big public companies, there are not very many opportunities right now.”

Thain added that he probably wouldn’t start a boutique investment bank-type business, but said there could be opportunities to build companies “in a more start-up mode.”

(Reporting by Megan Davies and Elinor Comlay; Editing by Phil Berlowitz)

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One Equity, Nokia Bid On Some Nortel Assets

NEW YORK (Reuters) - Nokia Siemens Networks and private equity firm One Equity Partners have jointly bid for Nortel Networks Corp’s optical networking and carrier ethernet business, a person familiar with the sale said on Wednesday, challenging Ciena Corp’s $526 million bid for the assets.

Last month, the bankrupt Canadian telecommunications equipment maker said that Ciena’s (CIEN.O) cash-and-stock bid would be the stalking horse offer for these assets.

The Ciena offer of $390 million in cash and 10 million in Ciena shares set a floor price for these assets and allowed Nortel to seek competing offers.

Nortel, once North America’s biggest telecoms equipment maker, filed for bankruptcy protection in January. It is selling off its assets rather than trying to restructure.

Offers for the ethernet business were due Nov 17 after Nortel delayed an initial deadline because of interest from other bidders.

It is unclear if another bidder also put in an offer to rival the one by Nokia Siemens and One Equity, which manages $8 billion for JPMorgan (JPM.N) in private equity investments.

Separately, Nortel said on Wednesday the final auction will be held on Nov 20.

Officials for Ciena and Nokia Siemens were not immediately available for comment. Officials for JPMorgan and Nortel declined to comment.

Shares of Ciena closed down 3 percent at $13.60 on the Nasdaq but rose 40 cents in after-hours trading.

(Reporting by Anupreeta Das; Editing by Carol Bishopric, Bernard Orr)

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Founder Collective Debuts with $40m in the Bank

Back in June we reported news of a new venture firm called Founder Collective, which had gathered around $30 million in commitments. Last week the firm made it official, debuting a web site and describing its philosophy on Partner Chris Dixon’s web site.

Founder Collective is quite literally just that. A collective of founders, looking to invest in seed stage companies. The firm calls it “peer-to-peer” investing.

According to Managing Partner Eric Paley, the firm has closed the fund with $40 million in commitments. The capital comes from around 20 investors, an even mix of entrepreneurs, family offices, and institutional funds of funds, he said. Founder Collective used its partners’ personal investment track records as a selling point. In the last six years, they invested more than $20m in 31 companies, yielding an IRR of greater than 75%, the majority of which is realized.

The New York and Cambridge-based firm has already invested 10% of its fund in around 10 seed stage investments, after looking at “well into the 100s” of companies, Paley said.  ”The demand for this type of capital is extremely high,” he said.

And that’s the whole reason behind the firm. Founder Collective. As founders themselves, the firms partners learned that the venture industry was no longer aligned to the needs of early stage founders. Fund sizes of the best venture firms were too large to allow investments in seed stage companies. “We felt there was a gap in the market for a fund sized for seed stage investing,” Paley said. “We’re not going to play across every stage of a company’s life.”

That means the fund has a long hold time and its holdings get diluted with the founders. Paley said a fund size discipline is important for a seed-stage firm. “Seed stage performs the best historically, but it’s hard to deploy several $100 million at that stage,” he said. The firm also seeks to avoid the pitfalls of taking seed money from a big VCs, which includes sending a negative signal to the market and getting a lower valuation if a firm doesn’t participate in subsequent rounds of funding.

Paley and David Frankel are the firm’s two full-time managing partners. The firm’s other five partners currently run their own businesses as well. That group is Chris Dixon of Hunch, Bill Trenchard of LiveOps, Mark Gerson of Geron Lehrman Group, Zach Klein of Vimeo, and Micah Rosenbloom of Brontes Technologies.

Previously: New Venture Firm #432875982: Founder Collective

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Maveron Gives Some Heart to San Francisco

Seattle-based venture firm Maveron announced today that it has officially opened its San Francisco office.

The consumer-oriented firm — co-founded by Starbucks CEO Howard Schultz — had been scouting for a San Francisco locale ever since it hired Amy Errett as a partner in August 2008.

Errett, who was previously CEO and owner of lifestyle and travel company Olivia, will lead the San Francisco office. Since joining the firm, Errett has focused on Web enabled consumer trends, e-commerce social shopping and online education, according to the Maveron website.

While Maveron is more well-known in the Pacific Northwest, a lot of entrepreneurs in Northern California may not know of the firm, which Errett has previously said compels her to provide its history and other background context that firms already in the area don’t need to bother with.

Joining her in San Francisco is Principal Ben Choi. As peHUB reported in August, Choi came over to Maveron from Storm Ventures, working with portfolio companies like Ad Infuse, Adgregate Markets, DeviceVM, Marketo and YieldBuild.

He also spent time with In-Q-Tel and RRE Ventures.

Speaking of websites, Maveron has also launched what it calls a “totally new website with a completely revamped look and messaging.”

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ShoeDazzle Raises $7 Million

ShoeDazzle.com, a Los Angeles-based online shopping assistant for shoes, has raised $7 million in venture capital funding, according to a regulatory filing. No investors were listed. The only non-executive board member listed is celebrity attorney Robert Shapiro. www.shoedazzle.com

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Maveron Opens San Francisco Office

Seattle-based venture capital firm Maveron LLC is opening an office in San Francisco. It will be led by partner Amy Everett. Also in the office will be new principal Ben Choi, who recently joined Maveron from Storm Ventures.

PRESS RELEASE

Maveron LLC, a Seattle-based venture capital firm, today announced it is expanding to the Bay Area with a new office located in San Francisco.  Maveron Partner Amy Errett will lead the San Francisco office, bringing the firm’s consumer-driven focus and expertise to the Bay Area’s thriving technology investment community.   Maveron also announced that Ben Choi has joined the firm as a principal and will be joining Errett in the San Francisco office.

“Silicon Valley’s venture ecosystem nurtures technology innovation, while Maveron is acutely focused on helping consumer facing companies scale quickly and build enduring brands. The intersection of these perspectives creates significant investment opportunities, and is the key driver behind our expansion into the Bay Area,” said Maveron Co-Founder Dan Levitan.  “Building on our deep roots in Seattle, we have seen that great companies can be forged in the face of difficult market conditions, particularly when they possess a laser-focus on the consumer, market-specific expertise and experienced advisors—which is why we believe now is the right time to expand with a San Francisco office, even while we see other VCs contracting.

“In our firm and portfolio companies, success begins with the right people.  As the head of our San Francisco office, Amy will share her extraordinary talent and passion for building great companies, in addition to an exceptional track record as a founder, operating executive and investor.  She and Ben will give Maveron a strong platform in the San Francisco-Silicon Valley market,” added Levitan.

Maveron’s portfolio includes a range of well-known technology-enabled consumer brands with high profile IPOs including eBay, drugstore.com and Shutterfly.  A leader in the education market, Maveron’s investments include online education innovator Capella Education Company (NASDAQ: CPLA).  Errett led Maveron’s most recent education investment in Altius Education, a San Francisco-based innovator in designing and building high-quality online post-secondary degree programs.

Errett joined the Maveron team in 2007 and is focused on opportunities in Internet-based consumer services. “Maveron’s investment focus for San Francisco is predicated on identifying sectors where web-enabled services can disrupt and disintermediate the existing marketplace,” said Errett.  “Our understanding of how consumers make buying decisions – from everyday purchases to an online college education – is a strong point of differentiation that resonates with entrepreneurs seeking a strong financial partner to help them build world-class, ‘household name’ consumer brands.”

Prior to Maveron, Errett served as CEO of the lifestyle company Olivia and Internet property Olivia.com, where she transformed the travel company into a leading affinity lifestyle media company through aggressive marketing, product development and partnerships.   As a senior officer at E*Trade, she diversified the company’s business beyond brokerage, running  a $200 million division  that included the company’s business-to-business stock option division, and launching a new asset-based products and investment management services division.    A former Ernst & Young Entrepreneur of the Year for Northern California,

Errett also founded The Spectrem Group, an M&A advisory firm that she sold to Interpublic Group.

Choi has an extensive background in technology and Internet-based consumer services. He was previously with Storm Ventures where he had board involvement with Ad Infuse, Adgregate Markets, Boorah, Device VM, Marketo, Mobio, and YieldBuild.  Prior to Storm, he served as VP Strategy at Greystripe, a mobile rich-media ad platform, where he remains a Strategic Advisor.  Choi began his career in venture capital at RRE Ventures, where he helped source and lead the firm’s investment in Massive Inc., an in-game ad network purchased by Microsoft in 2006 for over $200M.  He later joined the strategic venture capital arm of the CIA, In-Q-Tel, where he led their investment in Rhevision, maker of zoom lenses for cell phones.

“Maveron brings a unique vision to Silicon Valley that is intensely focused on customer acquisition, brand building and mass marketing,” said Choi.  “I foresee tremendous synergy with the Valley’s increasingly consumer-oriented emerging technologies.  I think it’s a perfect time for Maveron to strengthen its presence in this market, and I’m thrilled to be on the team.”

About Maveron

Maveron is a leading venture capital firm founded by Dan Levitan and Howard Schultz.  Maveron’s mission is to partner with entrepreneurs in the creation of extraordinary consumer-based companies in order to generate outstanding financial returns.  Current representative Maveron investments include fast-growing consumer companies, such as Potbelly Sandwich Works, Pinkberry and LiveMocha, and powering technology companies such as VideoEgg.  Monetized investments include eBay, Capella Education Company, Shutterfly, Cranium (acquired by Hasbro), Qsent (acquired by TransUnion), Good Technology (acquired by Motorola) and lucy activewear (acquired by VF Corporation).  Based in Seattle, Washington, Maveron has approximately $750 million under management and 22 active portfolio companies nationwide.  For more information about Maveron, visit www.maveron.com.

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Palladium To Buy Global Payments’ Money Transfer Biz

(Reuters) - Global Payments Inc (GPN.N), the company which processes online credit card transactions, said it has agreed to sell its DolEx- and Europhil-branded money transfer businesses to an affiliate of Palladium Equity Partners LLC.

Under the terms, Global Payments will receive proceeds in the range of $85 million to $110 million based on the operating performance of the business at the time of closing, the company said in a statement.

“This transaction will allow us to focus exclusively on our ongoing strategy of expanding our merchant acquiring presence around the world, and as such, we intend to reinvest the sale proceeds in future merchant acquiring growth opportunities,” Chief Executive Paul Garcia said.

Analyst Tien-tsin Huang of J.P. Morgan Securities said the deal makes sense as the money transfer unit was non-core and had been a drag to margins and growth in recent years.

Excluding the money transfer segment, it expects revenue of $1.57 billion to $1.62 billion for fiscal 2010.

Earnings from continuing operations are expected to be $2.31 per share to $2.42 per share for the year, the company said.

Shares of the company were down 1 percent at $52.99 Wednesday morning on the New York Stock Exchange. (Reporting by Brenton Cordeiro in Bangalore; Editing by Ratul Ray Chaudhuri)

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