LinkedIn: Biggest Internet IPO Since Google

LinkedIn and its investors are selling $352.8 million worth of stock in its IPO, marking the Facebook-for-work as the biggest U.S. Internet IPO since Google.

Bloomberg News

According to data provider Capital IQ, the amount of money LinkedIn is raising makes it the fifth-biggest-ever U.S. IPO in the Internet software and services sector.

Just for some context: Google’s 2004 IPO — which at the time seemed like a bit of bungle — ended up raising $1.67 billion. The offering valued Google at $23 billion, a dollar figure The Wall Street Journal pointed out was bigger than the market value of General Motors.

Nearly seven years later, Google is a cash machine with a market value of $171 billion. And GM, fresh from its bankruptcy filing is worth $47 billion.

Here is the top-10 list of U.S. Internet IPOs, according to Capital IQ:

1) Google/Aug. 2004 — raised $1.67 billion

2) Navteq Corp/Aug. 2004 — raised $880 million

3) Savvis/Feb. 2000– $408 million

4) Northpoint Communications/May 1999 — $360 million

5) LinkedIn/May 2011 — $352.8 million

6) Via Net.Works/Feb. 2000 — $315 million

7) Spark Networks/Feb. 2006 — $259 million

8) Limelight Networks/June 2007 — $240 million

9) Equinix/Aug. 2000 — $240 million

10) Akamai/Oct. 1999 — $234 million

The LinkedIn IPO Millionaires Club

Break out the bottle of Champagne to crack across the bow. LinkedIn is setting sail as a public company, cutting a path for an expected flotilla of big Internet IPOs not seen since those heady days of 2000.

Bloomberg News

LinkedIn said it sold its IPO shares at $45 a pop. That means tomorrow LinkedIn will kick off trading at a market value of roughly $4.3 billion. Call the valuation stupid, call it smart, but either way LinkedIn is making a boatload of shekels for a cluster of lucky folks.

Here’s a peek at the LinkedIn millionaires club:

* Reid Hoffman: LinkedIn’s co-founder and former CEO is the undisputed winner of the lucky duck sweepstakes. At the IPO price, his 21.7% voting stake in LinkedIn is worth $858 million. He’s holding onto nearly his entire stock pile, save for a $5 million slug for a down payment on a new yacht or whatever. Remember that Hoffman already made millions from PayPal, his last company.

Back in 2006, Hoffman told the New York Times that he was a tad envious of Silicon Valley types selling their companies for billions of dollars. “There’s always components of, ‘Wow, you happened to pick the right time,’ and that will always lead to some kind of implicit envy,” he said. Today, it is Hoffman’s turn to the be the subject of envy.

* Goldman Sachs: The investment bank Wall Street loves to hate (or hates to love?) is selling all 871,840 of its shares in LinkedIn. That lets the Squid pocket $39 million from the IPO. Goldman essentially quadrupled its money in three years. The spot of bad news: Goldman rivals Morgan Stanley, Bank of America Merrill Lynch and J.P. Morgan, won the coveted slot of lead underwriters for the LinkedIn IPO.

* McGraw-Hill: The company, owner of Standard & Poor’s, made a $5 million investment in LinkedIn at a valuation of roughly $1 billion, according to people familiar with the three-year-old transaction. At the $4.3 billion IPO valuation, McGraw-Hill will reap $19 million from the sale of its LinkedIn stock. That’s more cash than McGraw-Hill saw in its 2009 sale of BusinessWeek magazine.

* CEO Jeffrey Weiner: He has been in the CEO job for less than two years after stints at venture-capital firms Greylock Partners and Accel Partners, and at current Silicon Valley punching bag Yahoo. Now, Weiner’s 2.5% stake in LinkedIn is worth roughly $105 million on paper, though he is selling just a sprinkling of his stock as part of the IPO.

Dave Getzschman
LinkedIn CEO Jeff Weiner

(Weiner bought some of those shares, by the way, thanks to a loan from LinkedIn. In 2009, LinkedIn agreed to loan about $750,000 to Weiner so he could exercise LinkedIn stock options. Weiner paid back the loan, plus interest, earlier this year.)

Weiner still has a pile of stock options, which are waaay in the money at a rock-bottom exercise price of $2.32.

* Sequoia Capital, Greylock, Bessemer: The trio of private-equity firms were early investors in LinkedIn, and are being rewarded with a stake valued collectively at $1.6 billion. The VC firms also are holding onto their LinkedIn stock, rather than using the IPO to cash out and run off.

LinkedIn Prices At $45 a Share, Raises $352.8 Mln–UPDATED

UPDATE: LinkedIn came in at the top of its expected price range, raising $352.8 million.

The social network for professionals sold 7.84 million shares at $45 each, the top of its $42 to $45 price range, which had been increased earlier this week. It’s previous price range was $32 to $35 a share.

The Wall Street Journal said LinkedIn will begin trading tomorrow with a market value of $4.3 billion.

Bookrunners on the deal include Morgan Stanley, BofA Merrill Lynch, J.P. Morgan. Allen & Co. and UBS are also underwriters on the IPO. The underwriters have the option to buy an additional 1.176 million shares of Class A stock.

LinkedIn itself is selling 4.8 million shares of Class A stock while selling stockholders are offering about 3 million Class A shares. LinkedIn plans to trade tomorrow on the NYSE under the ticker “LNKD.”

The highly anticipated IPO was expected to price toward the high end of its sweetened priced range, according to my compadres at Thomson Reuters. Once it does trade, LinkedIn is expected to do well. But Reuters pointed out that Renren, the Chinese Facebook, has broken in the aftermarket. Renren’s IPO surged nearly 29% earlier this month after pricing at $14 a share. But the offering has fallen below the IPO price and is trading at $13.59.

Who is selling shares in LinkedIn? Reed Hoffman, the company’s co-founder, is offering 115,335 shares, which will cut his holding to 20.1%. At $45 a share, Hoffman’s stands to gain about $5.2 million from the sale. His remaining stake of about 19 million shares will be worth about $855 million. Hoffman will have 21.7% voting power.

LinkedIn has reportedly raised over $100 million in funding from investors including Sequoia Capital, Greylock Partners and Bessemer Venture Partners. Sequoia, Greylock and Bessemer own a combined 39% of LinkedIn before the IPO but are not selling shares.

Sequoia’s 17.8% stake, comprised of 16.8 million shares, will be worth about $756 million (at $45 each). Sequoia will have 19.3% voting power after the offering. Greylock Partners will see its 15.6% stake diluted to 14.9%, but its 14 million shares are expected to be valued at $630 million. They will have 16.1% voting power. Bessemer Venture Partners will have about 4.8% after the IPO. The VC firm’s roughly 4.6 million shares will be valued at $207 million. They will have 5.2% voting power.

Bain Capital Ventures is offloading shares. Bain owns about 4.4 million shares, or 4.8%. They are selling 653,880 shares in the IPO and stands to gain $29.4 million from the sale. Their stake will drop to 3.7 million, or 3.9% (valued at about $166.5 million). Bain is expected to have 4.2% voting power. Also, Goldman Sachs looks like it’s selling all of its shares, or 871,840, in the IPO. They stand to receive about $39.2 million from the sale.

(story has been updated to show share values at $45 each)


peHUB First Read

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Pitango Venture Capital Reportedly Looking to Round Up $350M

According to the Israeli newspaper Globes, the Israeli venture capital firm Pitango is setting out to raise a $350 million sixth fund.

The firm, founded in 1993, closed its fifth fund in 2007 with $330 million. Amazingly, Pitango — whose LPs include the California Public Employees’ Retirement System, the Pennsylvania State Employees’ Retirement System, and the YMCA Retirement Fund — has never received funding from an Israeli institutional investor. Indeed, according to Globes, only foreign investors have invested in all Israeli venture capital funds.

Some of the Pitango’s most recent investments include a stake in the social media center company Boxee, which has raised $26.5 million over its four-year history; Pageonce, a four-year-old daily finance service for mobile devices that has raised $25 million; and five-year-old VideoSurf, a computer vision search engine that lets users more easily find and watch videos from across the Web. VideoSurf has raised $21.5 million to date, including a $16 million round that Pitango led in April.

Pitango also invests in storage and networking, healthcare and clean tech, among other areas. It has backed, for example, Boston-based Kaminario, a solid-state storage company with an Israel-based R&D divison; BrainsGate, a medical device company outside Tel-Aviv that’s developing therapies to combat central nervous system diseases; and Focal Energy, whose mission is to fund and manage income-generating assets in the distributed energy and clean infrastructure sectors.

Kaminario, founded in early 2008, has raised $15 million so far, including from Sequoia Capital and Globespan Capital Partners. BrainsGate, founded in 2000, has raised roughly $42 million over the years, including from Johnson & Johnson. Meanwhile, three-year-old, Cyprus-based Focal Energy has raised one $35 million round of funding, including from Bronfman-Fisher International, Granite Hacarmel, and Ronin Investment Management Co.

Pitango has seen a number of its portfolio companies go public or become acquired over the years. Judging by Thomson Reuters data, it looks like its newest exit centers on China-based Jinko Solar, a semiconductor company whose silicon wafers are used to make photovoltaic solar cells and panels. The five-year-old company, which had raised $35 million from Pitango, Hupumone Capital Partners, Shenzhen Capital Group and CIVC Partners, went public on the New York Stock Exchange last week, raising approximately $64 million.

Whether Jinko Solar’s lackluster performance will impact Pitango’s odds of reaching its target are far from clear. Reluctant LPs may be more focused on the performance of the firm’s earlier funds. As the Globes‘ piece observed, Pitango’s third, $500 million fund, closed in 1999, has a -6% IRR, according to the newest available data from CalPERS. Its fourth, $300 million fund, closed in 2004, has a 2% IRR.

Pitango didn’t respond to a request for comment this morning.


VCs Sidelined on SecondMarket Buy-side to Start ‘11

High net worth individuals are in and VC firms are out. That’s the showing from SecondMarket’s Q1 private stock data, which the auction system released today.

After making 40% of investments conducted on SecondMarket’s platform in the fourth quarter of 2010, VC firms accounted for none of its transactions to start 2011. High net worth individuals made up about 60% of the buyers. SecondMarket attributed this shift to startups increasingly being willing to take on additional shareholders through the auction system’s accredited investor platform.

All told, there was $115 million of deal activity in the private stock segment of the auction system’s business for the first quarter. Private equity firms’ participation was limited.

Data also showed ex-employees, founders and investors made up a growing portion of selling shareholders, while current employees sold less stock. It remains to be seen whether current employees will return as sellers, or if their shying from the marketplace is a result of startups’ placing restrictions on whether, and how, existing staff can utilize their equity.

As SecondMarket looks to broaden its base of stock offerings to its client base, it saw the variety in sell-side shares grow. peHUB reported earlier that SecondMarket is now courting VC firms to sell stakes in their startups via the online auction system, a move that would further expand its platform. Still, the overwhelming majority of investor interest—nearly 80 percent—was reserved for consumer products and services, like Facebook. The SecondMarket report did not indicate specific companies’ stock auction information, or reveal specific buyers.

However, SecondMarket did disclose which companies are increasingly being “watched” by its members over its information network, which contains a news feed of publicly available information on startups. Companies getting more attention over the auction network include Gilt Groupe, Hulu, LivingSocial, Quora, Foursquare, dropbox, Spotify and Alibaba Group.


Jeffrey Bussgang: Five Lessons Entrepreneurs Can Learn from Navy SEALs

There has been a surge in interest with the world of the Navy SEALs since the Osama bin Laden action (this piece in the WSJ was a particularly good profile) and I confess to being caught up in it myself.

One of my portfolio company CEOs, Will Tumulty of Ready Financial, is a former Navy SEAL (1990-1995). Will was kind enough to introduce me to a SEAL classmate of his, Brendan Rogers (SEAL 1990-2000), who joined me and 20 NYC CEOs/founders from the tech scene last night to talk about the SEALs – the training, the planning and the operations behind their combat operations – as well as draw out some relevant lessons for entrepreneurs. Brendan went on to HBS and McKinsey after the SEALs and then started his own hedge fund with a partner, so he had an interesting, multi-faceted perspective.

The discussion was wide-ranging and entertaining. The five key lessons Brendan highlighted were as follows:

What’s hard is good. SEALs go through an intensive 6-month training program called Basic Underwater Demolition/SEAL training (BUD/S). That training program is designed to test a candidate’s physical and mental limits. Traditionally, by the time of SEAL graduation, the attrition rate is as high as 70 percent. SEALs quickly learn that the punishment and pain of training hardens their minds and bodies to adapt to tough environs. Brendan pointed out that startup executives who go through hard times should learn to relish them, recognizing that the hard times will toughen the team and train them properly for “battle.”

80 percent training, 20 percent execution. SEALs are incredibly well-trained and when they are not on actual combat deployments, they are spending the vast majority of their time training for a number of different types of missions. In contrast, at startups, executives typically spend 100 percent of their time executing and zero percent of their time training. Brendan emphasized the importance of training and practice in all areas – employee onboarding, management practices, etc. He commented on the importance of training for unexpected situations. The simultaneous shooting of three Somali pirates at sea as part of a hostage rescue two years ago was an example of the kind of outcome possible when SEALs train under all possible conditions. The CEOs in the room had wide eyes and were certainly thinking hard about their training regimens and scenario planning after that example.

Every seat counts. Brendan pointed out the price of settling for mediocrity, even in a big organization. Every SEAL needs to know with 100 percent confidence that the man behind them will be able to save their life and get them out of a bad situation. The CEOs in the room were asked if they could say the same about their management teams and if those management teams, in turn, could say that about their lieutenants. One CEO objected that he had 1000 employees in his company and couldn’t possibly hire all “A’s.” Brendan replied by citing the example of D Day. Eisenhower planned D Day with a small number of subordinates who he turned to and said, select 12 men underneath you who you can trust with your life to execute this mission. Each of those men did the same and so on and so on. That cascading effect resulted in the successful employment and combat engagement of over 2 million troops throughout Europe. The lesson? Don’t let a large organization be an excuse for mediocrity.

• Everyone is expendable. The SEALs are trained in a nearly identical manner and no one SEAL is indispensable to the unit or the mission. The nature of combat is that anyone can be lost at any time. Entrepreneurial companies have a harder time executing on this philosophy since there are specialists and superstars, but Brendan’s message was to make sure contingency plans were thought through for any set of personnel circumstances.

You never know the measure of a person until they are tested. As mentioned earlier, the SEALs training program weeds out 70 percent of participants. Brendan conveyed that the people he thought would never drop out did while others proved to be more resilient and tougher than imagined. Until your people are really tested (see “what is hard is good”), you can never be sure who will step up and who will falter. One sure sign, based on pattern recognition, is that those that talk tough and are full of bluster are predictably those that are the first to blanche in the face of adversity. Quiet strength and determination in a startup are invaluable. When you see it in your people, bottle it.

Everyone left with a great appreciate for those brave men who serve our country so ably, and the system behind it that produces such a consistent, excellent “product.” Brendan is also the co-founder of the Navy SEALs Foundation, a non-profit that helps take care of the families of SEALs when things don’t go as smoothly as they did in Pakistan a few weeks ago. I was inspired to make a donation to the organization immediately after the dinner.

One final humorous note – Brendan observed that the spouses of Navy SEALs are as tough as nails themselves and impossible to impress. They still make their spouses take out the garbage, do the dishes and change diapers – no matter how impressive their accomplishments in the field of battle. I suspect many startup executives have similar, appropriately humbling marital arrangements.

Jeffrey Bussgang is a general partner at Flybridge Capital Partners. He blogs here and tweets here. Opinions expressed here are entirely his own.


While Competitors Build Scale, Google Builds Energy Reserves

Maybe Larry Page furiously pounded his desk in Mountain View when he learned of the Microsoft-Skype deal. Maybe it really screwed up his morning. Or, maybe, and, possibly more likely, he hit a speed dial key and said “Looks like we’re just going to have to build it now, instead.”

In an age of increasingly camera-equipped laptops and tablets, it is not difficult to imagine how Google could turn its Gchat into a Vchat virtually overnight, with or without the acquisition of Skype. Buying the eBay castoff could have sped along the process, but so many Internet users have adopted a Gmail address that a video component would establish immediate scale. And, by simply employing voice recognition technology, Google could easily turn Vchatters’ discussions into marketing gold mines.

But, once again, when Google tried to make a buy, market forces conspired against it, and this time, Microsoft snatched up Page’s dance partner. Google made overtures to Facebook and to Twitter, but came away with nothing. Groupon? Google practically validated its business model with a buyout offer, drew attention to the industry and helped generate the excitement that would launch a thousand knock-offs. Andrew Mason ought to cut Larry Page a commission check for being a catalyst that got his company, like, almost a billion bucks. There might be no better advertisement for entrepreneurs to VC backers than Google even showing the slightest sign of interest in an acquisition.

However, Google doesn’t need to buy Groupon—it can build its own. The same could be said for its attempted forays into social media. As for Twitter and Facebook, Google’s forthcoming Social Circle is apparently flying too close to Facebook’s territory for the social network’s comfort. So close, in fact, that it hired a PR hit squad to go out and stoke bad press about Google. And, one day, expect that a Google-based video chat will emerge, even though Microsoft won the day.

So, what can’t Google afford to not buy into? Wind power, clearly. Google has plowed cash into wind power operations from Oregon to Oklahoma and overseas, too. Its subsidiary, Google Energy, can buy and sell electricity on wholesale markets, and the company still plans to add on top of the hundreds of millions of dollars in wind energy investments it has already made. With the company’s existing capital reserves (remember, they can’t seem to buy an Internet company), Google could wait out electricity prices until they plummet and acquire oodles of the commodity. They’ll never stop using it, so Page might as well stock up.

No, Google’s data centers run through more energy than Al Gore and his entourage on a book-signing tour. If it were not already apparent why the world’s biggest search engine is lining up alternative energy plays, a recent white paper on renewable energy published at the company’s blog makes it crystal clear: their data centers are increasingly being made dependent on wind power.

If cap and trade ever became law—unlikely at best in the 112th Congress, but certainly feasible long-term—Google’s continuing foray deeper into the alternative energy industry could set it up to reap windfalls in tax incentives. But that’s not the best financial incentive for Google’s alternative energy play. A filthy chunk of coal powered the industrial revolution of the 20th century and a stiff breeze will carry this century’s digital revolution. If, and when, Google’s plans come to fruition, the company could very well become the world’s first perpetual motion search engine. That’s way cooler than any amount of money Facebook, Twitter, Groupon or Skype would have made it, their shareholders will one day attest.


peHUB First Read

NOT Going Private: AOL won’t take financial sponsors’ offers

Gilt-ed Age: Daily deals site chairman Susan Lyne raps with The Deal

Heavy is the Head: Is Goldman’s power waning?

The French Mistake: IMF chief Dominque Strauss-Kahn will remain jailed until his next hearing

Getting Loot: Hipster raises $1 million

Notes, Taken: Snow’s Notes’ David & Erin rap on Skype, PE & American Idol and the musical Gores Brothers

Pricing Up: Fortunately for LinkedIn, its IPO will price at such a range that it absolutely won’t get sued!

Stocks: Wal-Mart whips estimates, futures point north


peHUB Second Opinion

The End or Not? The Winklevoss twins have lost their bid to get 9th Circuit Court of Appeals to reopen their Facebook case.

Denied: No  bail for IMF chief Dominique Strauss-Kahn who allegedly sexually assaulted a chamber maid in a Manhattan hotel. The IMF says it didn’t pay for Kahn’s hotel bill. He was there on “private business.” And, Kahn is going to Rikers.

Giving In: RIM has decided to offer tools for managing and ensuring the security of Blackberry rivals.

Taking Control: Rahm Emanuel is sworn in as da mayor of Chicago.

No Deal: The Nasdaq and ICE withdraw their $11.3 bln hostile bid for NYSE Euronext.

Going Under: Greece is top candidate for default, Bill Gross says.

Staying with Meatloaf: Donald Trump will not be going after President Obama’s job.

A Slice: Nelson Peltz’s Trian Group now owns 9.7% of Domino’s Pizza.


Neuronetics Nets $30M Series E

Neuronetics, the Pennsylvania-based maker of non-invasive, non-systemic treatments for depression, completed a $30 million Series E financing. New investors Polaris Venture Partners and Pfizer Venture Investments led the round and were joined by previous investors Investor Growth Capital, New Leaf Venture Partners, Interwest Partners, Three Arch Partners, Quaker BioVentures, and Onset Ventures.

PRESS RELEASE:

MALVERN, PA — 05/16/11 — Neuronetics, Inc., maker of the NeuroStar TMS (Transcranial Magnetic Stimulation) Therapy® System for the treatment of major depression*, announced today that it has completed its Series E financing totaling $30 million. Two new investors, Polaris Venture Partners and Pfizer Venture Investments, led the round.
Previous investors participating in the round included Investor Growth Capital, New Leaf Venture Partners, Interwest Partners, Three Arch Partners, Quaker BioVentures, and Onset Ventures.
“This financing is a tremendous vote of confidence in the potential of NeuroStar TMS Therapy by two premier life science investors,” said Bruce J. Shook, President and CEO of Neuronetics, Inc. “The financial resources, experience and knowledge that Polaris and Pfizer bring to our company will allow us to build on our success and accelerate our efforts to bring NeuroStar to the millions of people suffering from depression.”
Neuronetics has been marketing the NeuroStar TMS system for the treatment of major depression for patients who have not adequately benefitted from prior antidepressant medication* since it was cleared by the United States Food and Drug Administration (FDA) in October 2008.
“The market opportunity for a novel, non-invasive and non-systemic treatment for major depression like Neuronetics’ NeuroStar TMS Therapy is extremely attractive,” said Kevin Bitterman, Ph.D., Principal at Polaris Venture Partners. “The NeuroStar TMS system gives psychiatrists an entirely new tool in their effort to treat those patients who are struggling with depression and do not get relief from existing therapies. The team at Neuronetics has done an impressive job of bringing this technology into mainstream medical practice, and we look forward to helping advance this important effort.”
Dr. Bitterman will represent Polaris Venture Partners on Neuronetics’ Board of Directors. Elaine Jones, Executive Director, Pfizer Venture Investments will serve as an Observer to the Board. They will join existing Board members Leslie Bottorff, General Partner at Onset Ventures; Michael Dale, former President and CEO of ATS Medical; Brian Farley, CEO of Entellus Medical; Wilfred Jaeger, M.D., Partner at Three Arch Partners; P. Sherrill Neff, Partner at Quaker BioVentures; Dan Sachs, M.D., representative for Investor Growth Capital; and, Bruce Shook.
“Pfizer has had a longstanding interest in treating depression,” said Elaine Jones of Pfizer Venture Investments. “We look at Neuronetics’ progress as the beginning of a potentially important advance in how we treat this often debilitating, chronic and costly disease. We are excited about supporting Neuronetics’ effort to bring a new and innovative solution to psychiatry.”
About Neuronetics
Neuronetics, Inc. is a privately held medical device company focused on developing non-invasive therapies for psychiatric and neurological disorders using MRI-strength magnetic-field pulses. Based in Malvern, Penn., Neuronetics is the leader in the development of NeuroStar TMS Therapy, a non-invasive and non-systemic form of neuromodulation. For more information, please visit www.neuronetics.com.
Neuronetics, Inc. was represented in the Series E financing by Pepper Hamilton, LLP.
About NeuroStar TMS Therapy
Neuronetics’ NeuroStar TMS Therapy system was cleared by the FDA in October 2008 for the treatment of adult patients with major depressive disorder who have failed to achieve satisfactory improvement from one prior antidepressant medication at or above the minimal effective dose and duration in the current episode. NeuroStar TMS Therapy is a non-systemic (does not circulate in the bloodstream throughout the body) and non-invasive (does not involve surgery) form of neuromodulation. It stimulates nerve cells in an area of the brain that has been linked to depression by delivering highly focused MRI-strength magnetic field pulses. The treatment is typically administered daily for four to six weeks.
In clinical trials, patients treated with active NeuroStar TMS Therapy experienced an average reduction in their depression symptom score of 22.1 percent compared to a nine percent reduction in patients receiving inactive treatment.(1) In an open-label clinical trial, which is most like real world clinical practice, approximately one in two patients experienced significant improvement in symptoms, and one in three experienced complete symptom resolution(2). There were no systemic side effects such as those experienced with some antidepressant medications. The most common adverse event related to treatment was scalp pain or discomfort at the treatment area during active treatment.(3) There is a rare risk of seizure with TMS Therapy (0.1 percent of patients under general clinical use).
NeuroStar TMS Therapy is contraindicated in patients with non-removable metallic objects in or around the head. It is not indicated or effective for all patients with depression and it is available only upon the prescription of a psychiatrist. For full safety and prescribing information, visit www.NeuroStar.com.
Availability of NeuroStar TMS Therapy
Treatment with NeuroStar TMS Therapy is available at more than 300 treatment centers in the United States. For specific information on treatment locations with NeuroStar TMS Therapy, please visitwww.NeuroStarTMS.com or call the Neuronetics Customer Service Center at (877) 600-7555.
About Depression
Depression affects at least 14 million American adults each year. Of those suffering from depression, 6.8 million do not even seek treatment (4). Often a debilitating disorder, depression results in a persistent state of sadness that interferes with an individual’s thoughts, behavior, mood, and physical health. It is important to recognize the symptoms and seek treatment as soon as possible.
*NeuroStar TMS Therapy is indicated for the treatment of major depressive disorder in adult patients who have failed to achieve satisfactory improvement from one prior antidepressant medication at or above the minimal effective dose and duration in the current episode.
This press release is neither an offer to sell nor the solicitation of an offer to buy any security.
NeuroStar®, NeuroStar TMS Therapy®, and TMS Therapy® are registered trademarks of Neuronetics, Inc.


VMware Strikes Shavlik Deal

Listed, Calif.-based VMWare Inc. announced Monday it would acquire Shavlik Technologies, a provider of cloud-based technologies for small to medium sized businesses. Shavlik Technologies was founded in 1993 and is based in Minnesota.

PRESS RELEASE:

PALO ALTO, CA–(May 16, 2011) - VMware, Inc. (NYSE: VMW), the global leader in virtualization and cloud infrastructure, today announced that it has entered into a definitive agreement to acquire Shavlik Technologies, a leading provider of easy-to-use, effective cloud-based IT management solutions for small and medium businesses (SMBs). Shavlik Technologies provides a portfolio of on-premise and SaaS-based management solutions that enable SMBs to more effectively manage, monitor and secure their IT environments while addressing their unique needs when moving to virtual and cloud computing IT deployments. Financial terms of the acquisition were not disclosed. The acquisition is expected to be completed later this quarter, subject to satisfaction of customary closing conditions.
Today’s announcement builds upon the successful relationship built between VMware and Shavlik via VMware GO™, a joint SaaS offering assisting SMBs with rapid deployment and management of VMware vSphere®.
“VMware continues to make investments to extend its leadership within the SMB market. With VMware vSphere® Essentials and VMware Go™, VMware is delivering tremendous value to hundreds of thousands of SMBs,” said Raghu Raghuram, Senior Vice President and General Manager, Cloud Infrastructure and Management, VMware. “With the Shavlik acquisition, VMware will be able to provide simple to use and affordable management services developed to address the specific demands of SMBs.”
“It is an exciting time for us to be joining VMware as it builds on our expertise in delivering IT solutions to SMBs, an area we have been dedicated to for many years,” said Mark Shavlik, Chief Executive Officer, Shavlik Technologies. “The enthusiasm, creativity and operational excellence of our two companies will allow us to better serve our global customers and partners by accelerating IT management innovations.”
VMware and Shavlik have proven track records in delivering easy-to-use, cost effective IT solutions that enable hundreds of thousands of SMBs to take advantage of modern, transformative IT models like virtualization and cloud computing, without requiring the skill and staff resources of larger enterprises. Together, the two companies will build upon this success with a complete portfolio for managing, monitoring and securing IT environments, offering SMBs:
• Centralized IT Management Services — Enabling SMBs to manage core IT functions through a single pane of glass, centralizing asset management, security, business continuity and data protection capabilities.
• Simplified Deployment and Automation — Enables SMBs to rapidly evolve existing systems to virtual and cloud models without requiring significant in-house skills or resources.
• Automated IT Management — Delivering efficiency and automation to SMBs for core IT management functions, including patch management, compliance, configuration and more.
SMB Management for Service Providers and Solution Providers
SaaS-based management solutions from Shavlik will create a valuable portfolio of solutions for Managed Service Providers (MSPs) and Solution Providers to better serve their SMB customers. VMware intends to further extend the ability of MSPs to offer automated, remote management capabilities to SMBs seeking additional value-added capabilities via their existing business partners.
VMware GO
This acquisition will extend the successful relationship of VMware and Shavlik via the VMware GO offering. Available since 2009, VMware GO enables SMBs to rapidly deploy and onboard VMware vSphere with simplified installation and management, eliminating key hurdles to SMBs wanting to move their infrastructures to modern, agile virtualized and cloud models. VMware GO (www.vmwarego.com) has attracted over 200,000 registered users creating more than 20,000 VMware Hypervisors and 120,000 Virtual machines by offering:
• Wizard-based installation of free vSphere Hypervisor (ESXi) and basic IT management capabilities (patching, asset management)
• Core IT Management for servers, Virtual Machines and endpoints
• Automated asset management, patch and security capabilities
• Helpdesk and Trouble Ticketing for small business
About Shavlik Technologies
Shavlik Technologies, a global leader in simplifying the complexity of IT management, is dedicated to significantly reducing the time-to-value for IT professionals from months to minutes. Shavlik’s NetChk Protect, NetChk Configure, SCUPdates and IT.Shavlik.com are some of its on-premise and cloud-based solutions that enable customers to manage both physical and virtual machines, deploy software, discover assets, simplify configuration, control power usage and ensure endpoint security. By bringing the sophisticated capabilities enjoyed by large companies to organizations of all sizes and types, Shavlik is driving the democratization of IT. Shavlik Technologies have more than 3500 customers using their on premise IT Management products. For more information, please visit www.shavlik.com.
About VMware
VMware delivers virtualization and cloud infrastructure solutions that enable IT organizations to energize businesses of all sizes. With the industry leading virtualization platform — VMware vSphere® — customers rely on VMware to reduce capital and operating expenses, improve agility, ensure business continuity, strengthen security and go green. With 2010 revenues of $2.9 billion, more than 250,000 customers and 25,000 partners, VMware is the leader in virtualization, which consistently ranks as a top priority among CIOs. VMware is headquartered in Silicon Valley with offices throughout the world and can be found online at www.vmware.com
VMware, VMware vSphere and VMware GO are registered trademarks or trademarks of VMware, Inc. in the United States and/or other jurisdictions. Other marks mentioned herein are trademarks which are proprietary to VMware, Inc. or another company.
Shavlik Technologies is a registered trademark in the United States and certain other countries, of Shavlik Technologies. Additional Shavlik product names are either registered trademarks or trademarks of Shavlik Technologies. All other trademarks mentioned in this document are the property of their respective owners.
Forward-Looking Statements
This press release contains forward-looking statements including, among other things, statements regarding the consummation of the acquisition of Shavlik Technologies, the planned integration of Shavlik technologies with VMware product offerings such as VMware GO and the prospective benefits to SMB and other VMware customers. These forward-looking statements are subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those projected in the forward-looking statements as a result of certain risk factors, including but not limited to: (i) the satisfaction of closing conditions for the transaction; (ii) the successful integration of Shavlik and VMware technologies; (iii) adverse changes in general economic or market conditions; (iv) delays or reductions in consumer or information technology spending; (v) competitive factors, including but not limited to pricing pressures, industry consolidation, entry of new competitors into the virtualization market, and new product and marketing initiatives by our competitors; (vi) our customers’ ability to develop, and to transition to, new products and computing strategies such as cloud computing and desktop virtualization; (vii) the uncertainty of customer acceptance of emerging technology; (viii) rapid technological and market changes in virtualization software and platforms for cloud and desktop computing; (ix) changes to product development timelines; (x) VMware’s ability to protect its proprietary technology; and (xi) VMware’s ability to attract and retain highly qualified employees.. These forward looking statements are based on current expectations and are subject to uncertainties and changes in condition, significance, value and effect as well as other risks detailed in documents filed with the Securities and Exchange Commission, including our most recent reports on Form 10-K and Form 10-Q and current reports on Form 8-K that we may file from time to time, which could cause actual results to vary from expectations. VMware assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release.


Sacre Bleu! Social Network Viadeo Shelves IPO Plan

(Reuters) - Viadeo, the world’s second-biggest social network for professionals behind LinkedIn, is deferring a plan for an initial public offering (IPO), preferring instead to focus on growth in emerging markets, its chief executive said.

The France-based start-up had been mulling an IPO in Europe, the United States or Hong Kong in a bid to surf on a wave of investor interest in technology start-ups that has sent valuations sky-rocketing in recent months.

Viadeo’s rival LinkedIn is in the midst of listing part of its capital on Wall Street and hopes to raise around $150 million to further its product expansion, hiring and acquisitions.

Chief Executive Dan Serfaty told the Reuters Global Technology Summit that Viadeo would reconsider a listing in roughly 18-24 months.

“We saw a tremendous level of interest by bankers, private equity investors and venture capitalists,” said Serfaty. “But we decided that our fundamentals were good enough that we could wait for a listing and instead focus on growing the business.”

Serfaty said he was worried that a flotation would hamper the company’s ability to invest heavily to expand in emerging markets in Asia and Latin America in the coming years.

“We want to grow and not be faced with the pressure to deliver profitability right away,” he said. “There is a risk of going public too early.”

Viadeo, which says it has more than 35 million users, is seeking to position itself as the more international cousin of LinkedIn, with its users coming from Europe, China, India and Latin America.

Serfaty added that there was so much money available from private equity and venture capitalists that even if the company needed funds to fuel its expansion, it could collect them easily without going public.

LinkedIn, which says it has more than 100 million users, focused in the U.S., has set a price range for its IPO that values it at $3 billion or around 12 times 2010 sales.

In comparison, search engine giants Google and Yahoo are valued at 6 and 3.5 times 2010 sales respectively.

Both LinkedIn and Viadeo have business models focused on free initial access for users to post their resumes, followed by paid access for premium users. The sites also sell advertisements to generate revenue.

(By Leila Abboud and Marie Mawad editing by James Regan)


Ziebold Q&A: Why He Left Bruce Wasserstein’s PE Firm For First Beverage

Last week, W. Townsend Ziebold jumped to First Beverage Group, a boutique financial services firm catering to the beverage industry. He joined First Beverage from Bruce Wasserstein’s PE firm, Wasserstein & Co.

Townsend has over 25 years in investment banking and private equity. He’s been a banker with First Boston Corp. and Wasserstein Perella, which was acquired by Dresdner Bank in 2000 (The merchant bank of WP was spun off in 2000 to form Wasserstein & Co.). Townsend has worked on some major deals, including KKR’s purchase of RJR Nabisco and SmithKline’s merger with the Beecham Group. At Wasserstein & Co., he worked on the buys of IMAX Corp., Maybelline Cosmetics and Turtle Mountain, a leading producer of non-dairy desserts.

Townsend, 49, officially joined First Beverage on May 9. I spoke to him by phone last week.

Q: You’ve been with Wasserstein since 1998. Why did you leave?
A. I left Wasserstein as Bruce Wasserstein unexpectedly passed away last year, and the types of investing I was doing for him (growth equity and venture) were no longer a focus of the firm after he passed away.

Q: Wasn’t it hard leaving after so long?
A. I had a very close relationship with Bruce, but after he passed away, the firm’s focus moved away from the smaller growth equity type of investments I was making. It was time to try something new that was both investment banking and PE-related. I actually am still consulting for Wasserstein on a few of the remaining growth equity investments in the fund there.

Q: Why did you join First Beverage?
A. I just think they have a great platform in beverages and consumer. They also focus on both investment banking and private equity which marries well to my background. To compete in today’s market place as a financial service firm, having deep industry expertise is essential for success.

Q: Who are the big players in beverages?
A. In spirits, you have four to five large platforms. The beverage industry is very large but pretty concentrated at the top. Most of those companies, the core brands are flat to moderately in decline. Many of those companies are looking for the next growth investment that they can put into their systems.

We’re seeing a lot of activity with large companies. Pepsi, Coke, Diageo are acquiring brands, because they’re looking for extra growth. They’re looking for the next investment that will take off. They’re looking for growth and to fill gaps.

Q. What are multiples in the sector? Were they affected by the downturn in 2009?
A. They were certainly affected by the downturn. Consumer brands aren’t as cyclical as other business. They weren’t as adversely affected. It’s been a situation where a company sees a strategic acquisition that fills a gap. M&A multiples have been quite high particularly for a small growing brand that can be plugged into a bigger buy. They’re valuing the business on growth and what its worth inside a system, so the multiples can be very high.

Q: Any notable deals you’d like to mention?
A. Coca-cola investing in Honest Tea. They bought 40% in 2008 and in March 2011, they bought the balance. That’s a classic example of a large company acquiring a basically hot growing player in the space. There are lots of emerging vodka and tequila companies that are hot brands that have been acquired by larger spirits companies. ABI (Anheuser-Busch InBev) in March purchased craft brewer Goose Island. This is representative of a transaction where a larger branded company buys a fast growing craft brewer. The beer market is very mature but the craft brewing segment is small and growing very fast.

Q: What about the soy milk? Is that still hot? I am also hearing lots about coconut water.
A. The non-dairy milk market is dominated by soy. But soy is in decline and almond milk and coconut milk are each growing faster than soy. It’s the same exact phenomena. They are smaller segments of the market but growing faster than the more mature soy side of the business.

Coconut water is getting a lot of buzz but the size of market in the U.S. is quite small. It’s an emerging area. The companies in the space have had limited distribution and the brands are small. It’s fascinating that Coke and Pepsi are looking for their next vehicle for growth, and they’ve identified one of these as the coconut water market (peHUB notes that Coke is an investor of ZICO, a producer of coconut water drinks, while PepsiCo owns Amacoco, Brazil’s largest coconut water producer).

Q: Coconut water has lots of electrolytes but it tastes bad.
A. Notwithstanding the mediocre tastes, it’s perceived as a hot market. If someone could improve the taste they’ve got a home.

Q: The first time I had coconut water was after some intense yoga. Do you practice yoga?
A. I practice twice a week and have done so since 2001. I practice Iyengar. I like it for the flexibility and also it’s frankly an hour in which I can just check out.


peHUB First Read

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How We Did It: A Galleon juror speaks

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Everyday Struggle: Evergreen Solar could cease operations if a restructuring plan isn’t agreed upon

Stocks: Shares fall on European, Asian market performance


Being Who You Are

For the past five years I have served as the Managing Partner of Jerusalem Capital I, LP, a venture fund I willed into existence, helped and supported by partners, investors, and of course my family. Now I am in the process of winding that down – and rediscovering who I am and what I want to do with my time. During the past five years Haviva and I welcomed two additional children into our lives (Mishael, who joined the family over three years ago, and most recently Shefa, born two months ago), continue to raise our other five children, moved from Jerusalem to Hanaton where we are helping establish a new community, and much more. In parallel, in my role as seed stage investor, was part of the formation of six companies, two of whom are alive and making progress. The other 4 – victims of the statistics of start-up life. Yes, along the way there was 2008-2009, which was a good excuse for many failures, but those 4 might have failed regardless. So where does that leave me? Well, I can genuinely say I still am very interested in technology, entrepreneurship, and the constant innovation that makes up the start-up ecosystem in Israel and around the world. I know that as a board member, I can add value. But I also know that at 42 years old – I still have the strength and endurance to do it again directly – to start something new. Even if I do manage to return capital with a profit from the fund, which remains a driving motivation for me, I would not raise another fund. For me, the VC business is a lot of talking about, not enough doing. And I am doer. The most important message we try to import to our children is “be who you are.” Some might be familiar with the hasidic tale of Reb Zusha, who fears not being judged against the achievements of others, but rather being questioned in the world to come as to whether he was the best Reb Zusha. I also try and remain open to new possibilities, and that together with realizing what I want to do led me to deciding to go back to my roots – yes, I am co-founding a start-up, where my role is CEO. We (my co-founders and I) are setting out this week to begin our formal fundraising, after giving the “idea” much thought. I am sure we will continue to shape and reshape our plans in light of feedback we receive from the venture community and our potential business partners. I am excited to going back to being who I am  -- a “start-up” guy. Coming together with people who have chosen to work with each other, exploring new ideas, challenging each other, and creating something from nothing. There are no guarantees of success in this business, but definitely will be a fun ride, and I will be who I am. I will keep Continue reading "Being Who You Are"

thredUP Reels in $7M Series B

California-based thredUP, the online platform for swapping children’s accessories, completed a $7 million Series B financing on Friday. Redpoint Ventures led the round with Trinity Ventures and former eBay CEO, Brian Swette participating. Tim Haley of Redpoint Ventures will join Patricia Nakache of Trinity Ventures on thredUP’s Board of Directors. Its aggregate fundraising total is $8.7 million to date. Netflix CEO Reed Hastings and Swette are advisors to thredUP, which was launched by Harvard Business School grads James Reinhart, Oliver Lubin, and Chris Homer.

PRESS RELEASE:

thredUP Inc, the nation’s leading online platform for swapping kids clothes, toys and books, today announced that it has secured $7M in series B financing, bringing total committed capital to $8.7M. Redpoint Ventures led the round with Trinity Ventures and former eBay CEO, Brian Swette participating. Tim Haley of Redpoint Ventures will join Patricia Nakache of Trinity Ventures on thredUP’s Board of Directors.
This new funding comes just one year after thredUP’s launch and significant company milestones. thredUP will swap its millionth item this month and is now adding over 1,000 moms a day.
“We’ve spent the past year building a remarkable swapping experience for moms across the country. thredUP couples the simplicity of traditional hand-me-downs with a massive online network like eBay. We connect strangers in meaningful ways, enabling them to share things they no longer need and become better citizens of the planet,” said James Reinhart, CEO at thredUP.
“We’re excited to have such a great group of investors on board who share our vision. I think this infusion of capital will help us bring thredUP to the homes of millions of families everywhere. We’ve just scratched the surface of what the peer-to-peer space can become.”
thredUP will use this new funding to expand its development team, refine the core product offering and grow its membership base. The company plans to expand swapping categories such as toys, books and maternity. The team is also exploring international opportunities and loyalty partnerships with major retailers. This funding comes just in time for significant customer acquisition pushes around summer reading and back-to-school season.
thredUP’s swapping platform brings a new level of affordability, convenience and eco-consciousness to a highly fragmented, billion-dollar market. thredUP connects thousands of moms across America to swap gently used children’s goods online. For the first time, parents can exchange boxes of stuff their kids no longer use, for boxes ofclothing, books and toys they actually need - all without leaving the house.
About thredUP
thredUP.com is the brainchild of co-founders James Reinhart, Oliver Lubin, and Chris Homer. Both Reinhart and Homer are recent graduates of the Harvard Business School and all three developed the idea in the Spring of 2009. The company is based in San Francisco, CA and is advised by current Netflix CEO Reed Hastings and former eBay CEO Brian Swette.


peHUB Second Opinion

No Shame: Meredith Attwell Baker, an FCC’s commissioner, defends her decision to join Comcast .

We Saw This Coming: Bats global markets files for an IPO.

Rumors: Amazon has a whole bunch of Android devices ready to launch.

Don’t Be a Vick: Dealbreaker provides Jim Cramer’s tweets today.

What About the 72 Virgins? Porn is found in OBL’s Abbottabad’s compound.

Settlement: Limewire agrees to pay four largest record labels $105 million

Google, Facebook Update: The PR hacks that ran Facebook’s attempted smear campaign on Google won’t be fired.

The Fight: Yahoo and Alibaba continue to tussle over Alipay handover.

Possible merger: Dollar Thrifty sticks it to Avis and is working with Hertz to get regulatory approval for their merger.

A Twitter Crime Thriller: How laptop tracking could save some heartache.

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VCJ Report: Appbackr Joins the Crowd Funding Scene

When the U.S. House of Representatives voted in January to allow its members to carry iPads on the floor, Marci Harris, founder and CEO of PopVox in Washington, D.C., had just the app in mind for that.

She envisioned that House members—with her app and iPad in hand—would be able take the pulse of the public on bills under debate in real time.

However, to find the cash needed to realize her dream, Harris side-stepped angel investors and VCs for a different source of money.

She turned to appbackr, a Palo Alto, Calif.-based provider of “crowd funding” or “crowd sourced capital,” which has been around for a few years, but has been growing in popularity. Appbackr, which focuses on the $3 billion-plus app market, matches developers working on iPhone and iPad apps with investors, or what the site calls “backers.”

The company, which says a similar market for Android apps is coming soon, takes a cut of the wholesale transaction, as well as a slice of the retail sales.

Harris of PopVox says appbackr helped her find a developer, as well as setting a price for her app. As of mid-April, Harris had raised about three-fourths of the $40,000 required to build her app.

Launched in October by serial entrepreneurs Trevor Cornwell, Robert Clegg and Sam Zappas, appbackr has raised $725,000 in seed funding from Cambridge West Partners, Hall Financial Group, the Silicon Valley Association of Startup Entrepreneurs and the Zenith Group, plus another $50,000 for winning a PayPal developers challenge in 2010.

Tim Chang, a partner at Norwest Venture Partners in Palo Alto, Calif., says the appearance of “funding platforms” like appbackr is a logical extension of what’s happening as the bar has been lowered for financing a business or project, especially for startups in the mobile app development community, which most often are looking for less several thousand dollars worth of funding.

“The big home run projects that are very risky and take professional teams will still require venture capital,” Chang says. “And for smaller projects of a few hundred thousand, that’s perfect for super angels. But if you just want to build a lightweight app for $5,000 bucks maybe you use a site like appbackr.”

VCJ subscribers can read more about appbackr and crowd funding by clicking here to see a news analysis story in the May 2011 issue. VCJ previously wrote about the rise in crowd funding in an article entitled “Meet Your New Competition,” published in the July 2010 issue.

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And if you want to chime in on the merits of appbackr, crowd funding or any other hot VC-related issue, send an email to VCJ Editor-in-Charge Alastair Goldfisher at alastair.goldfisher@thomsonreuters.com.


Poll Results: More than 80% Believe Microsoft Overpaid for Skype

America has voted, again.

This week, we asked you if Microsoft overpaid when it offered to buy Skype, the Internet phone provider, for $8.5 billion.

Did MSFT get swindled? That’s not clear. However, more than 80% of you thought MSFT’s $8.5 billion was too rich. But everyone differed in how much.

The largest block of readers, or 40%, believed Microsoft overpaid by $3 to $4 billion. Nearly 16% thought MSFT $8.5 billion offer should’ve been lowered by $1 billion to $2 billion. Another chunk, or 12.6%, thought Microsoft’s offer was too rich by $5 billion to $6 billion. There was also a segment of people, 12.6%, who believed MSFT shouldn’t have paid anything for Skype.

Still, some voters didn’t have any issue with the buyout. Nearly one-fifth of readers, or 18.9%, thought Microsoft’s $8.5 billion bid for Skype is just right.