Term Sheet — Thursday, September 25


Random Ramblings

"Is now the time to double down, or to slam on the brakes?"

That was the question posed to me earlier this week by a portfolio manager who has investments in dozens of venture capital funds, including some of the industry's most illustrious names. I'm not (quite) so egotistical as to think he would make multi-million decisions on my two cents, but the inquiry was sincere. This is an extraordinarily tricky time to be investing in venture capital, perhaps more so than at any other time in the past two decades.

To be clear, I'm not saying that investment returns are underwater. Quite the opposite. Venture capital fund valuations have been climbing for years, and distributions appear to be at record highs thanks to vibrant IPO and M&A markets. For example, Harvard University's endowment reported yesterday that its VC return for fiscal 2014 was 32.8% -- compared to a 15.4% return for its total portfolio and the S&P 500's 21.38% gain over the same time period. Not surprisingly, venture capital firms 

But that's the very problem: Limited partners are not investing a spot prices. They are committing to long-term funds that will (hopefully) begin generating returns several years out. And they worry that if we aren't at a market top today, we'll be there when it comes time to begin harvesting -- leaving their VC managers with overpriced portfolios that have relatively few exit opportunities.

Most limited partners were around for the last tech cycle, and promised to never again get sucked down the same rabbit hole. Now they see a proliferation of VC firms not only raising $1 billion funds, but also a shortening of the fundraising cycle (most notably Tiger Global seeking $1.5 billion just 5 months after closing its last $1.5 billion pool). So there are all sorts of historical data points to support pulling back right now. But what if this is really 1997 or the first half of 1998, instead of 1999? What if you bail to soon, and leave millions of dollars on the table? And what if this time really "is different," due to both better fundamental business models, a larger pool of prospective buyers and a milder economic recovery? But, wait, isn't even considering that "this time is different" a definitive sign to hit the road?

So I gave the portfolio manager my most honest response: I have no idea what he should do, except perhaps to avoid anyone who answers the question with any degree of certainty. 


 Hootsuite, a Vancouver-based provider of social media management solutions, has raised $60 million in new venture capital and debt funding.

Fidelity Investments led the round, and was joined by return backers Accel Partners, Insight Venture Partners and OMERS Ventures. Silicon Valley Bank provided the debt. Hootesuite has now raised $250 million in total funding, and also announced the acquisition of social telephony startup Zeetl. Read more.


 Adaptimmune, a UK-based biotech company focused on the use of T-cell therapy to treat cancer and infectious disease, has raised $104 million in Series A funding. New Enterprise Associates led the round, and was joined by OrbiMed Advisors, Wellington Management, Fidelity Biosciences, Foresite Capital Management, Ridgeback Capital Management, Novo AS, QVT, Rock Springs Capital, VenBio Select and Merlin Nexus. Earlier this year, Adaptimmune entered into a strategic collaboration and licensing agreement with GlaxoSmithKline (LSE: GSK) that could be worth upwards of $350 million. www.adaptimmune.com

 FiveStars Inc., a Mountain View, Calif.-based provider of digital loyalty rewards programs for small merchants, has raised $26 million in Series B funding. Menlo Ventures led the round, and was joined by return backers Lightspeed Venture Partners, DCM and Rogers Communications. www.fivestars.com  

 MasteryConnect, a Salt Lake City-based learning monitoring platform for K-12 educators, has raised $15.2 million in Series B funding. Trinity Ventures led the round, and was joined by return backers Pelion Ventures and Catamount Ventures. www.masteryconnect.com

 Pro.com, pricing engine for estimating the cost of a home project, has raised $14 million in Series A funding co-led by Maveron and Madrona Venture Group. www.pro.com

 Catawiki, a European online auction house focused on “exceptional objects and collectables,” has raised €10 million in Series B funding. Accel Partners led the round, and was joined by Project A Ventures and individual angels. www.catawiki.com

 Uuzuche.com, a Chinese private car-sharing platform, has raised $10 million in Series A funding. Lightspeed China Partners led the round, and was joined by China Renaissance K2 Ventures and angel investor Wang Gang. www.Uuzuche.com

 Apptentive, a Seattle-based SaaS platform for mobile customer communications, has raised $5.3 million in Series A funding. SurveyMonkey and Origin Ventures co-led the round, and were joined by return backers Founders Co-op and Golden Venture Partners. www.apptentive.com

 POW Inc., a Seattle-based maker of gloves and other apparel for snowboarders and other outdoor sports enthusiasts, has raised $2.5 million in VC funding from Columbia Pacific Advisors. www.powgloves.com


 Greybull Capital has agreed to acquire a majority stake in UK-based discount travel and airline group Monarch for approximately £75 million. ww.monarch.co.uk

 F.W. Davison & Co., a Plymouth, Mass.-based based provider of software for the professional employer organization and administrative service organization markets, has secured a minority growth equity investment from Accel-KKR. www.fwdco.com

 Tower Arch Capital has recapitalized Hard Rock Directional Drilling LLC, a San Antonio, Texas-based specialty-boring and services company for the energy industry. No financial terms were disclosed. www.hardrockhdd.com

 Vista Equity Partners and Thoma Bravo are among several private equity firms circling TIBCO Software Inc. (Nasdaq: TIBX), a Palo Alto, Calif.-based provider of enterprise infrastructure and business intelligence software, according to Reuters. The company previously announced that it had hired Goldman Sachs to review strategic options, and has a current market cap of around $3.35 billion. Read more


 Cone Midstream Partners LP, a Canonsburg, Penn.-based 50/50 joint venture between Consol Energy (NYSE: CNX) and Noble Energy (NYSE: NBL) to own pipeline in the Marcellus Shale, raised $385 million in its IPO. The company priced 17.5 million shares at $22 per share (above $19-$21 range). Cone Midstream will trade on the NYSE under ticker symbol CNNX, while Wells Fargo, BofA Merrill Lynch and Baird served as lead underwriters. www.consolenergy.com

 Smart & Final, a Commerce, Calif.-based food and grocery retailer owned by Ares Management, raised $161 million in its IPO. The company priced1 13.45 million shares at $12 per share (low end of $12-$14 range), for an initial market cap of approximately $853 million, were it to price in the middle of its range. It closed its first day of trading virtually unchanged. Smart & Final is now listed on the NYSE under ticker symbol SFS, while Credit Suisse served as lead underwriter. It reports $13.6 million of net income on $1.,56 billion in sales for the 24 weeks ending June 15, 2014, compared to $5.1 million of net income on $1.45 billion in revenue for the year-earlier period. www.smartandfinal.com

 Travelport, an Atlanta-based online travel commerce marketplace owned by The Blackstone Group, raised $480 million in its IPO. The company priced 30 million shares at $16 per share (high end of $14-$16 range), for an initial market cap of approximately $1.92 billion. It will trade on the NYSE under ticker symbol TVPT, while Morgan Stanley served as left-lead underwriter. In addition to Blackstone, Travelport shareholders include Technology Crossover Ventures, One Equity Partners and Morgan Stanley. www.travelport.com

 Vitae Pharmaceuticals, a Fort Washington, Penn.-based drug company whose lead product is focused on Type 2 diabetes, raised $55 million in its IPO. The company priced 6.9 million shares at $8 per share, compared to earlier plans to offer 5 million shares at between $11 and $13 per share. Its initial market cap is around $139 million, but the company closed its first day of trading down 4.87% to $7.61 per share. Vitae is now listed on the Nasdaq under ticker symbol VTAE, while Stifel and BMO Capital Markets served as lead underwriters. Shareholders include Prospect Venture Partners (23.3% pre-IPO stake), New Enterprise Associates (17.8%), Venrock Associates (15.6%), Atlas Venture (11.2%), Boehringer Ingelheim International (10.8%) and Allergan Inc. (5.6%). www.vitaepharma.com


 CVC Capital Partners is prepping a dual-track exit process for Sunrise, a Swiss mobile operator that could be worth upwards of €4.9 billion, according to Reuters. Read more

 SPi Global, a Philippines-based business process outsourcing company owned by CVC Capital Partners, has agreed to sell its healthcare business to Conifer Health Solutions, a unit of Tenet Healthcare (NYSE: THC)  for a reported $235 million. www.coniferhealth.com


 Croatia plans to relaunch the sale next year of state-owned bank Hrvatska Postanska Banka, according to a government official. www.hpb.hr

 LabCorp (NYSE: LH) has agreed to acquire LipoScience Inc. (Nasdaq: LPDX), a provider of cardiovascular diagnostic lab tests based on nuclear magnetic resonance technology, for approximately $85.3 million in cash, or $5.25 per share (64.58% premium on yesterday’s closing price). www.labcorp.com

 Mapfre SA (CATS: MAP), a Spanish insurance company, has agreed to acquire the German and Italian units of British auto insurer Direct Line (LSE: DLG) for €550 million. www.mapfre.com

 Panasonic Corp. (Tokyo: 6752) is in talks to acquire nearly a 50% stake in privately-held Spanish auto parts maker Ficosa International SA for upwards of $275 million, according to Nikkei. www.ficosa.com

 Rosneft, Russia’s largest crude oil producer, may pull out of an agreement to acquire Morgan Stanley’s oil trading unit because “Western sanctions make it virtually impossible to finance day-to-day operations,” according to Reuters. Read more

 Sol Trujillo, the former CEO of Telestra Corp., is trying to line up financing for a $9.6 billion to acquire a sizable stake in Telecom Italia (BIT: TIT), according to Bloomberg. The deal would be designed to install Trujillo as Telecom Italia’s next CEO. Read more


 Commonfund is raising up to $500 million for its eleventh venture capital fund-of-funds, according to a regulatory filing. www.commonfund.org

 Larsen MacColl Partners, a Radnor, Penn.-based private equity firm focused on the lower middle-market, is raising up to $40 million for its third fund, according to a regulatory filing. It already has closed on more than $12 million. www.larsenmaccoll.com


 Philip Hampton is stepping down as chairman of Royal Bank of Scotland (LSE: RBS) next year. He also is expected to join the board of GlaxoSmithKline (LSE: GSK) in January, and take over as chairman next September. www.rbs.com

 New Capital Partners, a Birmingham, Ala.-based private equity firm, has promoted Adam Cranford, Seton Marshall and Paul Pless to principals. It also promoted Ryan Berg to senior associate. www.newcapitalpartners.com

 Nick Tansley has joined The Blackstone Group as a London-based managing director in the firm’s advisory group, where he will head up the European industrials sector. He previously led the EMEA diversified industrials team for Citigroup. www.blackstone.com

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