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Term Sheet — Tuesday, January 13

Jan 13, 2015

Random Ramblings

Time to clear some stuff off the desktop:

•  He's back: It has been nearly two years since Adam Clammer stepped down as head of technology investing at KKR, and now he is in the process of forming a new firm called True Wind Capital. It will be based in San Francisco, and already has hired former Thoma Bravo investor Duncan Gills as a principal.

Also expected to be involved is Jamie Greene, who spent around 26 years as a KKR partner before retiring into an “advisory partner” role in 2013. Greene continues to serve on the boards of such companies as Aricent, Capital Safety Group, Capsugel, SunGard Data Systems and TASC.

True Wind is expected to raise outside capital, but has not yet done so. Clammer declined to comment.

• Speaking of new funds: Also back in the saddle is Jonathan Heiliger, the former Facebook "cloud fixer" who last fall stepped down as a Silicon Valley-based general partner with North Bridge Venture Partners. He has teamed up with In Sik Rhee, formerly a general partner with Rembrandt Venture Partners, to launch a U.S.-focused affiliate of Vertex Ventures, a wholly-owned subsidiary of Singapore sovereign wealth fund Temasek Holdings.

The investment strategy will be to focus on enterprise apps and web infrastructure, with plenty of capital left over for the large follow-on deals that such companies often require.

According to a regulatory filing, Vertex Ventures U.S. already has secured $107.5 million from three investors (of which Temasek is likely one), and word is that more is on the way. There are no current plans to add more general partners. Heiliger declined comment, natch.

•  Biggest VC fund ever? Last fall we reported that New Enterprise Associates was preparing to raise around $2.8 billion for what would be the largest VC fund in history (and a 10% bump from the $2.6 billion it raised in 2012 for Fund XIV). This morning NEA filed a Form D with the SEC that shows a $2.5 billion target, and no securities yet sold. Trying to find out for you if there has been a scaling back of plans, or if the $32.5 billion is just a placeholder. My guess is the latter, given that the original Form D filing for NEA’s previous fund had a target of just $2.3 billion.

•  The dirtiest startup word: One of today’s VC deals is a $22 million round for PeerTransfer, a Boston-based provider of global payment solutions for the education industry. Basically, it helps cross-border students do things like set up bank accounts and pay rent in foreign counties (mostly foreign students studying in the U.S., but also U.S. students in the UK, Australia, etc.). CEO Mike Massaro tells me that the deal was done at a “sizable” increase from the $40 million post-money mark it got last time around, and that the company is profitable.

“My chairman joked with me that it means we’re not spending enough money, but we’re in a very conservative market when it comes to education and education funding," Massaro explains. "A lot of people have gotten burned by ‘here today, gone tomorrow’ financial services providers and software vendors, so getting to profitability is something we always wanted to do, even if it sometimes seems to be a dirty word among startups.”

• Due diligence: Later today I'm going to delve into a report I was sent on active private equity fund valuations, and how they often seem to be inflated. Not surprising, given that past research has shown particular carrying value spikes just a couple of quarters before firms begin raising new funds. So here's my basic question to LPs: When conducting due diligence on a new relationship for a firm that has been around for a while, do you ask for some historical quarteries so you can compare them to actual liquidity? And, if not, why not? It's obviously inappropriate for PE firms to cook the books, but there do seem to be some commonsense steps LPs can take to avoid making a new commitment on faulty data...

THE BIG DEAL

•  Instacart, a San Francisco-based on-demand grocery delivery service, has raised $220 million in Series C funding. Kleiner Perkins Caufield & Byers led the round, and was joined by Comcast Ventures, Dragoneer Investment Group, Thrive Capital, Valiant Capital and return backers Andreessen Horowitz, Khosla Ventures and Sequoia. The deal was done at around a reported $2 billion valuation, and brings the company’s total venture capitalization to $275 million.

Instacart says that its revenue grew by more than 10x to north of $100 million in 2014, with ‘revenue’ inclusive of all orders through its system (i.e., not just delivery charges and the cut it gets from grocers themselves).

The obvious question moving forward is how Instacart can ever get profitable, given the grocery industry’s notoriously small margins and the fact that most delivery fees are well below minimum hourly wage (even though pickup/delivery can easily take an hour, depending on the location). It’s obviously a better business model than Kosmo – and benefits from smartphone adoption – and  Sequoia Capital partner and Instacart board member Mike Moritz says he is confident that the company has identified enough “dials and knobs” to flip from red to black when the time is right. No details from Moritz nor company CEO Apoorva Mehta on what those dials and knobs are, however. www.instacart.com

VENTURE CAPITAL DEALS

•   App Annie, a San Francisco-based “decision-making platform for the mobile app economy,” has raised $55 million in Series D funding. Institutional Venture Partners led the round, and was joined by return backers Sequoia Capital, Greycroft Partners and IDG Capital Partners. www.appannie.com

•  10X Genomics, a Pleasanton, Calif.-based provider of a genomics platform, has raised $55.5 million in Series B funding. Foresite Capital Management led the round, and was joined by Venrock, Paladin Capital Group and Morgan Stanley Investment Management. www.10xgenomics.com

•  Ionic Security Inc., an Atlanta-based provider of a distributed data protection platform for the enterprise, has raised $40.1 million in Series C funding. Meritech Capital Partners led the round, and was joined by Kleiner Perkins Caufield & Byers and return backers Google Ventures, Tech Operators and Jafco Ventures. www.ionicsecurity.com

•  CoLucid Pharmaceuticals Inc., a Durham, N.C.-based developer of oral and intravenous treatments for migraine and other headache pain, has raised $37.1 million in Series C funding. TVM Capital Life Science led the round, and was joined by Novo Ventures, Auriga Partners and return backers Pappas Ventures, Domain Associates, Care Capital, Triathlon Medical Ventures and Pearl Street Ventures. www.colucid.com

•  Personalis Inc., a genomics-based clinical diagnostics lab, has raised $33 million in Series C funding. Lightspeed Venture Partners led the round, and was joined by return backers Abingworth and Mohr Davidow Ventures. Personalis is headquartered in Palo Alto. www.personalis.com

•  Cortendo AB, a Swiss developer of drugs to treat orphan endocrine disorders, has raised upwards of $27.5 million in equity funding from RA Capital Management, New Enterprise Associates and Broadfin Capital. Existing backer HealthCap also participated. www.cortendo.com

•  Momentum Funding LLC, a Boca Raton, Fla.-based provider of non-recourse funding to personal injury plaintiffs, has raised $30 million in funding from Victory Park Capital. www.momentumfunding.com

•  PeerTransfer, a Boston-based provider of global payment solutions for the education industry, has raised $22 million in new VC funding. Bain Capital Ventures led the round, and was joined by return backers Spark Capital,  Accel Partners, Devonshire Investors and QED Investors. www.peertransfer.com

•  MediSafe, an Israel-based medication management platform, has raised $6 million in Series A funding. Pitango Venture Capital led the round, and was joined by 7wire Ventures and return backers Lool Ventures, TriVentures and Eyal Gura. www.medisafe.com

•  Thinkful, a New York-based education startup that teaches coding and design through online mentorship, has raised $5.25 million in new VC funding. Floodgate Fund led the round, and was joined by return backers RRE Ventures and Quotidian. www.thinkful.com

•  Qstream, a Burlington, Mass.-based brain-science research startup, has raised $4 million in Series A funding. Backers include Excel Venture Management, Frontline Ventures and Launchpad Venture Group. www.qstream.com

•  FSLogix, an Suwanee, Ga.-based startup focused on “de-layering the desktop,” has raised $1.1 million in VC funding led by Mosley Ventures. www.fslogix.com

PRIVATE EQUITY DEALS

•  BCI Burke Company LLC, a Fond du Lac, Wis.-based maker of commercial playground and leisure equipment, has raised an undisclosed amount of private equity funding from Incline Equity Partners. www.bciburke.com

•  Cinven has agreed to acquire Premium Credit Ltd., a UK-based specialty finance provider, from GTCR for an enterprise value of £462 million. www.premium-credit.co.uk

•  CIVC Partners has acquired Yellowstone Landscape Group Inc., a Bunnell, Fla.-–based provider of commercial landscape maintenance and installation services. No financial terms were disclosed. Sellers include Gridiron Capital. www.yellowstonelandscape.com

•  Corridor Capital has acquired Circuitronics Inc., an Irving, Texas-based provider of specialized printed circuit board assembly and related electronic manufacturing services, from LongWater Opportunities. No financial terms were disclosed. www.circuitronics.com

•  Market Data Insights LLC, a New York–based provider of market data management solutions to financial services firms, has raised an undisclosed amount of private equity funding from The Blackstone Group. www.marketdatainsights.com

•  RLJ Equity Partners has acquired Phase One Consulting Group LLC, an Alexandria, Va.-based provider of consulting services to U.S. federal civilian agencies. No financial terms were disclosed. www.phaseonecg.com

•  Riordan, Lewis & Haden | Equity Partners has made an investment in Inspirage LLC, a Bellevue, Wash.–based provider of consulting, customization, and implementation solutions for supply chain software. No financial terms were disclosed. www.inspirage.com

•  The Riverside Co. has acquired Greenphire, a King of Prussia, Penn.-based provider of SaaS-based clinical research payment processing management and analytics. No financial terms were disclosed, except that Ares Capital provided debt financing. Sellers include FirstMark Capital. www.greenphire.com

•  Saaswedo, a French provider of telecom expense management software, has raised an undisclosed amount of private equity funding from Ardian. www.saaswedo.com

•  Sandbridge Capital has invested $8.7 million for a minority stake in BackJoy Orthotics LLC, a Van Nuys, Calif.–based provider of posture support products. www.backjoy.com

•  Tritium Partners has acquired a majority stake in Giact Systems LLC, an Allen, Texas–based provider of risk management solutions for electronic payments. No financial terms were disclosed. www.giact.com

IPOs

•  Avenue Financial Holdings Inc., a Nashville, Tenn.-based bank with five branches (four of which are retail), has filed for a $30 million IPO. It plans to trade on the Nasdaq under ticker symbol AVNU, with Keefe, Bruyette & Woods serving as sole underwriter. www.avenuenashville.com

•  Integrated Diagnostics Holdings, an Egypt-based provider of medical lab services in the Middle East, has filed for a London IPO that could value the company at around $600 million. Shareholders include the Abraaj Group and Actis. Read more.

•  Prestige Cruises International Inc. has withdrawn registration for a $250 million IPO it had filed last January, due to its September agreement to be acquired for approximately $3.03 billion by Norwegian Cruise Line Holdings (Nasdaq: NCLH). www.prestigecruiseholdings.com

EXITS

•  Capital One Financial (NYSE: COF) has acquired Level, a San Francisco–based app for tracking consumer spending. No financial terms were disclosed. Level had raised $5 million in Series A funding from backers like Kleiner Perkins, Sandy Weill and Reed Hundt. Read more.

•  Platinum Equity has agreed to sell Ulticom, a Mt. Laurel, N.J.–based provider of signaling software used in communications networks, to Mavenir Systems (NYSE: MVNR). No financial terms were disclosed. www.ulticom.com

•  Teradata (NYSE: TDC) has acquired Appoxee, an Israeli push-messaging startup. No financial terms were disclosed, but TechCrunch reports the price-tag is between $20 million and $25 million. Appoxee had raised VC funding from firms like Orzyn Capital and Cyhawk Ventures. Read more.

OTHER DEALS

•  CIMB Group Holdings and RHB Capital have called off their proposed $20 billion merger, which would have created Malaysia’s largest bank, according to Reuters. Read more.

 Ireland’s government has hired Goldman Sachs to advise on reconfiguring the capital structure of Allied Irish Bank, which was nationalized in 2010. The  process is being viewed as a possible precursor to a sale of at least part of Allied Irish. Read more.

FIRMS & FUNDS

•  American Securities has closed its seventh private equity fund with $5 billion in capital commitments. www.american-securities.com

•  Roark Capital Group has closed its fourth private equity fund with $2.5 billion in capital commitments. Lazard Frères served as placement agent. Roark had raised $1.5 billion for its third fund in 2012. www.roarkcapital.com

•  The TCW Group has formed a power and infrastructure group, which will make middle-market mezzanine, equity and debt investments. It will be led by new managing director Brian Daly, former head of the energy finance group at Babson Capital. Bill Cavers (ex- GE Energy Financial Services) also has joined the group as a senior vice president. www.tcw.com

MOVING IN, UP, ON & OUT

•  Adveq has promoted four professionals to executive director: Benjamin Alt, Sven Gasser, Sven Kupferschmid and Hagen Raab. www.adveq.com

•  Berta Aldrich has joined Franklin Square as chief marketing officer. She previously spent a decade with Vanguard. www.franklinsquare.com

•  Lew Frankfort, former chairman and CEO of Coach Inc., has joined private equity firm Sycamore Partners as executive-in-residence. www.sycamorepartners.com

•  Ian Sellars is planning to retire as a London-based partner with Permira after more than 20 years with the firm, according to Dow Jones. www.permira.com

•  Chris Sheehan, a former managing director with Common Angels, has joined app testing startup Applause as senior director of delivery. He had spent the past two years as COO of TrueLens. www.applause.com

•  Antonio Weiss, global head of investment banking at Lazard, has withdrawn his name from consideration to become undersecretary for the U.S. Treasury Department, following vocal opposition by Democratic legislators like Sen. Elizabeth Warren. He instead will serve as a counselor to to Treasury Secretary Jacob Lew. Read more.

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