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Term Sheet — Friday, February 13

February 13, 2015, 3:00 PM UTC

Random Ramblings

When Fortune asked me and Erin Griffith last month to write a cover story on "unicorns," the first thing we had to do was come up with a common definition. We knew we wanted it to be a bit broader than the "U.S.-based software companies" criteria that Aileen Lee had used for her landmark post in late 2013, so we basically took out the U.S.-based and software parts, so that we could include both international and non-software companies. One thing we did keep, however, was that the company had to still be private and have raised venture capital.

Tying those two criteria together made sense, given that a private companies without VC funding don't really have objective (or quasi-objective) valuations. But yesterday I spent time at a private tech company that never raised venture funding (nor debt), yet would clearly be an official unicorn if it had just raised a dollar or two (albeit a very gray one, as the company was launched more than a decade ago).

It's called eClinicalWorks, and was one of the pioneers of electronic health records. CEO Girish Kumar helped originally bootstrap the company by selling some stock in a company where he previously worked, and now leads an organization that generated over $320 in annual revenue. More importantly, eClinicalWorks doesn't recognize partner revenue (if it did, the 2014 figure would have exceeded $750 million). It anticipates 15-20% growth on both the top and bottom lines in 2015.

Here are some notes from our conversation:

eClinicalWorks has 4,000 employees, but just 20 in sales and fewer than 10 in marketing. On the other hand, it has more than 400 developers and 1,000 people in customer service. "When you cannot rely on sales and marketing to be your driver of growth, you rely on your customer to be your driver of growth... As a result, become paranoid about your product and service becoming better. I think it actually builds a much deeper foundation when you don't rely on a very large sales and marketing team to get your brand out."

The Westborough, Mass.-based company never raised venture capital because Kumar couldn't stomach the idea of someone else calling the shots, particularly if that someone else was ultimately looking to exit.

Kumar has pledged that eClinicalWorks will never go public. When I asked if he might be temped to do so when he nears retirement, he replied that he and his co-founders intentionally put their ownership stakes into trusts so that they don't have the legal ability to cash in. "I don't need to be the richest man in Massachusetts," says Kumar, who still lives in the same home he lived in before founding the company.

He acknowledges that the lack of public shares can make it harder to do acquisitions, but feels it is balanced out by not needing to acquire for the primary purpose of meeting Wall Street growth expectations. As for hiring, eClinicalWorks has a profit-sharing arrangement with employees. "The one thing employees like getting more than stock options is cash... then they can buy stock in Apple."

project 15-0% growth every year top/bottom line. don't

Quiz Time: Can you name the tech incubator (of sorts) that just got a big-name private equity backer?

#GetLiquid: Our Boston Liquidity Event is sold out, with more than 800 of you expected to attend. We hope to pull a few folks off the waiting list so, if you'd like to add your name, please do so by going here.

Publishing note: Term Sheet will not publish on Monday, in observance of Presidents Day. Have a great long weekend, and we'll chat on Tuesday...


Freescale Semiconductor (NYSE: FSL) is in talks to be acquired, according to the NY Post. The chipmaker has a current market cap of around $10.6 billion, and four private equity firms – TPG Capital, The Carlyle Group, The Blackstone Group and Permira -- each hold 16% ownership stakes. Read more.

VENTURE CAPITAL DEALS, a Palo Alto, Calif.-based provider of integrated bill payment solutions, has raised $50 million in new funding. Silicon Valley Bank led the round, and was joined by DCM Ventures, Scale Venture Partners, August Capital, Napier Park Global Capital, American Express Ventures and Commerce Ventures. It is unclear how much of the round was equity.

 CloudVelox, a Santa Clara, Calif.-based provider of hybrid cloud disaster recovery and migration solutions, has raised $15 million in Series C funding. Cisco Investments was joined by return backers Mayfield Fund, Pelion Venture Partners and Third Point Ventures.

 Bivarus, a Durham, N.C.-based provider of patient experience analytics for healthcare organizations, has raised $1.9 million in VC funding led by Excelerate Health Ventures.

 ActionSprout, a Portland, Ore.-based source of tools and advice for nonprofits seeking to use Facebook, has raised $1.7 million in VC funding. Oregon Angel Fund led the round, and was joined by Bellingham Angel Fund and Portland Seed Fund.


 Accruent LLC, an Austin, Texas–based provider of cloud-based SaaS real estate and facilities management solutions, has acquired VFA Inc., a Boston-based provider of strategic facilities capital planning solutions, software and business consulting services. No financial terms were disclosed. Accruent is a portfolio company of TA Associates and Vista Equity Partners, while VFA had been backed by Edison Partners.

 Bain Capital has agreed to acquire Oedo-Onsen Holdings, an operator of resort hotels and bathhouses in Japan, according to The Nikkei. The deal is valued at approximately $419 million. Read more.

 Influence Health, a Birmingham, Ala.-based portfolio company of Silver Lake, has acquired Atlanta-based digital marketing firm BrightWhistle Inc. No financial terms were disclosed, but the Atlanta Business Journal puts the price-tag north of $20 million. BrightWhistle had raised VC funding from such groups as Atlanta Technology Angels, Eastside Partners, Hamilton Ventures and the Advanced Technology Development Center. Read more.

 Quadrivio, an Italian private equity firm, has acquired Pantex International, an Italian maker of fabrics for the personal and household care markets, from Vision Capital. No financial terms were disclosed.

 Siris Capital Group has completed its previously-acquired $840 million, or $26 per share, acquisition of Digital River Inc., a Minneapolis–based provider of commerce-as-a-service solutions. Digital River has delisted from the Nasdaq.

 Spire Capital has invested an undisclosed amount into Lighthouse eDiscovery, a Seattle–based provider of e-discovery services.

 TPG Capital has agreed to acquire Aptalis Pharmaceutical Technologies, a pharmaceutical outsourcing and R&D business in North America and Europe, from Actavis PLC (NYSE: ACT). No financial terms were disclosed.

 Vista Equity Partners and portfolio company STATS LLC have acquired Automated Insights Inc., a Durham, N.C.-based artificial intelligence company that provides real-time content automation solutions. No financial terms were disclosed. Automated Insights had raised around $10 million in VC funding from groups like Court Square Ventures, OCA Ventures, Osage Venture Partners, BoxGroup, Samsung Ventures and IDEA Fund Partners.


 Valeritas Inc., a Bridgewater, N.J.-based maker of insulin delivery devices for Type 2 diabetics, has filed for a $90 million IPO. It plans to trade on the Nasdaq under ticker symbol VLRX, with Piper Jaffray and Leerink Partners serving as lead underwriters. The company reports nearly a $50 million net loss on $9.5 million in revenue for the first nine months of 2014. Shareholders include Welsh Carson Anderson & Stowe, Onset Ventures and Pitango Venture Capital.


 Acadia Healthcare Co. (Nasdaq: ARCHC) has completed its previously-announced $1.175 billion acquisition of CRC Health Group, a Cupertino, Calif.-based provider of behavioral health services, from Bain Capital. Waud Capital Partners holds an 18.48% stake in Acadia Healthcare.

 British Gas (LSE: BG) has agreed to acquire AlertMe, a UK-based provider of online residential energy management solution, for approximately $100 million. AlertMe had raised over $35 million in VC funding from such firms as British Gas, Index Ventures, Good Energies, SET Venture Partners and VantagePoint Venture Partners.

 Swander Pace Capital is in talks to sell Applegate Farms LLC, a Bridgewater, N.J.-based producer of organic hot dogs, bacon and sausages, to Hormel Foods Corp. (NYSE: HRL) according to Reuters. The deal could be worth anywhere from $600 million to $1 billion. Read more.

 Unison Capital has agreed to sell Japanese wine retailer Enoteca Co Ltd. to Asahi Group Holdings Ltd. (Tokyo: 2502) for an undisclosed amount. Read more.


 ConnectWise, a Tampa, Fla.-based business management platform for tech companies, has acquired ScreenConnect, a Raleigh, N.C.-based stand-alone remote control solution. No financial terms were disclosed.

 Didi Dache and Kuaidi Dache, two of China’s largest taxi e-hail apps, are in merger talks, according to the WSJ. Read more.

 Shire PLC (LSE: SHP) is prepping a bid for Raleigh, N.C.-based drugmaker Salix Pharmaceuticals (Nasdaq: SLXP), according to Reuters. Salix also is expected to receive a takeover offer from Valeant Pharmaceuticals (TSX: VRX), and now has a market cap north of $9.5 billion. Read more.


 Carrick Capital Partners, a San Francisco-based growth equity firm focused on tech-enabled services, has closed its second fund with $275 million in capital commitments.

 Exponent Private Equity is nearing a £1 billion final close on its third fund, according to Private Equity International.

 MidOcean Partners, a New York-based middle-market private equity firm, is raising a $300 million bridge fund, according to peHUB. The vehicle also would be designed to have $600 million of investment power, based on additional co-investment commitments, and would not charge a management fee. Read more.

 Siris Capital Group, a tech-focused private equity firm, has closed its third fund with $1.81 billion in capital commitments. Park Hill Group served as placement agent.


 Greg Brogger is rejoining SharesPost as CEO, effective immediately. He founded the private company liquidity platform back in 2009, and served as CEO until March 2013 (after which he helped launch NASDAQ Private Market).

 Martin Giles has joined Wing Venture Capital as a partner focused on research and content creation. He previously was a San Francisco-based writer for The Economist.

 Mark Papa has joined energy and power-focused private equity firm Riverstone Holdings LLC as a Houston-based partner. He previously was chairman and CEO of EOG Resources.

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