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PE Week Wire — Friday 8/23

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Agilent Technologies Inc. (NYSE:A) today announced that Agilent Ventures (AV) has participated in the Series B-1 Preferred Stock funding round for Big Bear Networks Inc., a privately held company that designs and manufactures highly integrated, optoelectronic interface solutions for next generation high-speed optical transmission operating at rates from 10 Gb/s to greater than 40 Gb/s. The AV follow-on investment was part of a Series “B” preferred round of funding, led by Menlo Ventures, which raised over $40 million in equity.

John Montgomery has left his post as co-chair of the venture capital practice at law firm Brobeck, Phleger & Harrison. He is now with Palo Alto, Calif.-based Carr & Ferrell, a 40-lawyer corporate, intellectual property and litigation firm founded 10 years ago by two partners out of Fenwick & West.

Yell, the UK-based phone book company reported yesterday that it paid financial advisors like PricewaterhouseCoopers £15m for a £4 billion floatation that never happened due to market troubles. The charge helped push Yell down into the red for the first quarter, which can’t be good news for buyout firms Apax Partners and Hicks, Muse, Tate & Furst – which paid £2.14 billion last year to carve the then-profitable directories business out of British Telecom.

Wave7 Optics Inc., an Atlanta-based developer of optical access equipment for the fiber-to-the-home and business (FTTX) market, today announced that is has raised a third round of funding totaling $15.5 million, bringing the company’s total funds raised to $47.5 million. Oak Investment Partners led the Series C round, while all prior investors, Morgenthaler Ventures, Advanced Technology Ventures, Lucent Venture Partners, Mellon Ventures, and Armada Venture Partners also participated in the round. Additionally, Dave Walrod, general partner of Oak Investment Partners, will join the Wave7 board of directors.

Dynavax Technologies Corp. has named William J. Dawson to the position of vice president, finance and operations, and chief financial officer. Dawson was most recently corporate senior vice president, business development, for McKesson Corp. (NYSE: MCK), where he was responsible for mergers and acquisitions and venture capital investing for the San Francisco-based healthcare services company.

NetScreen Technologies Inc. yesterday announced that it has signed a definitive agreement to acquire OneSecure Inc., developers of an innovative intrusion prevention and detection solution, for approximately $40.3 million in NetScreen stock and the assumption of OneSecure’s outstanding options. Under the terms of the transaction, NetScreen also retains the option to substitute cash for a portion of the stock consideration. OneSecure has raised a total of $92 million over two round of venture funding from such venture firms as Crescendo Venture Management, First Union Capital Partners, Norwest Equity Partners, Telecom Partners and Wachovia Capital Partners. When it last raised funding in the beginning of 2001, the plans were for an eventual public offering.
News From Thursday 8/22

John Doerr of Kleiner, Perkins, Caufield & Byers has become ensnared in Martha Stewart’s insider trading mess. The famed Silicon Valley VC and his firm were named yesterday as defendants in a class action lawsuit brought on behalf of those who purchased stock in Martha Stewart Living Omnimedia Inc. (NYSE: MSO) between January 8, 2002 and July 24, 2002. The suit claims that Doerr and Kleiner, among others, dumped millions of dollars worth of Martha Stewart Living shares just before news broke of Stewart’s supposed insider trading of ImClone stock. Doerr was a past director of Martha Stewart Living, and Kleiner is reported to have sold its 2 million shares on March 14 at around $19 per share. The suit further alleges that Doerr resigned his board seat following the sale without giving any public notice.

Insight Equity, a Dallas-based private equity firm focused on underperforming, asset intensive businesses with less than $500 million in revenues formally opened its doors yesterrday. “I believe the time is right to establish an independent private equity firm focused on an under served portion of the market – the less than $500M revenue, asset intensive segment” said Ted Beneski, CEO and Managing Partner. “With a long term track record of achieving strong financial results for both investors and clients at The Carlyle Group and Bain & Company, we are excited to write a new chapter in this value creation story.” As founding members and principals of Carlyle Management Group, Ted and his partner, Chief Restructuring Officer, Ross Gatlin, helped manage a portfolio of 3 companies to 100% cash on cash returns with a conservative IRR of 61%.

Intense Photonics, a Scotland-based developer of innovative integrated optical components has announced that it has closed a GBP10.5 million ($16 m) series B funding round. Cazenove Private Equity leads the round with a syndicate containing first round investors, 3i and ACT Venture Capital, together with two further European venture capital funds, FNI Venture Capital and TTP Ventures. Intense Photonics will use the funds to accelerate the development of its product range and strengthen its marketing effort.

Evolve (Nasdaq: EVLV ), an Emeryville, Calif.-based provider of service delivery solutions that optimize the way organizations drive revenue and value through people and projects, today announced that it has closed on a private placement investment of $7.0 million in Series B Preferred Stock from existing investors led by Warburg Pincus LLC. Also participating in the financing was Sierra Ventures.

CreditTrade, a New York-based provider of transaction, data and information services to the credit markets, today announced it has closed a third round of investment raising over US$8 million. This round of investment was led by European venture capital firm Favonius Ventures and existing investor Internet Capital Group (ICG). It also included Richard B. Fisher, Chairman Emeritus of Morgan Stanley.

Burrill & Co., a San Francisco based life sciences merchant bank today announced that John L. Haag has joined the firm as Chief Operating Officer/Chief Financial Officer. Mr. Haag has more than twenty years of venture capital and investment banking experience. Prior to joining Burrill & Co., Mr. Haag was a Principal and Vice President of Finance & Administration for Softbank Emerging Markets of San Francisco, California, a VC firm targeting investments in Internet technologies in emerging markets.

Republic Engineered Products LLC, a company sponsored by KPS Special Situations Fund LP and Hunt Investment Group, LP, announced today it has completed the acquisition of a substantial portion of the assets of Republic Technologies International LLC pursuant to a Section 363 sale of assets in a Chapter 11 bankruptcy proceeding. As a result of this transaction, Republic Engineered Products LLC, based in Fairlawn, Ohio, is the nation’s leading producer of high-quality steel bars.
News From Wednesday 8/21
MediSpectra Inc., a Lexington, Mass.-based medical device company, announced today that a $13 million round in venture capital investment has been completed, bringing the total dollar amount raised to $57 million. AIG Global Investment Corp. led the Series F Preferred Rights Offering. Other participants in this round included Euclid SR Partners, Domain Partners, Origin Partners, Banc of America Securities, Mayo Medical Ventures and Kingsbury Associates, all whom have contributed to the previous five rounds. Concurrent with the funding, Richard Drake, Vice President, private equity at AIG and Jim Hutchens, General Partner at Origin, will be joining the board of directors at MediSpectra.

Maxima Corp., a developer of next-generation high capacity optical wireless transmission systems, has raised an additional $4.2 million in its Series A Round, bringing the total raised to $7.2 million. Proceeds are being used to accelerate the commercialization process of its second generation All-weather Optical Wireless (AOW) technology, including extensive field testing with service providers worldwide. Maxima AOW technology overcomes problems of bad weather and short distances plaguing current Free Space Optics (FSO) systems.

The California Public Employees’ Retirement System (CalPERS) has named Robert D. Walton its Interim Chief Executive Officer (CEO) effective Sept. 1. The CalPERS Board of Administration, which made the appointment today, expects to name a new CEO within the next two months after candidate interviews. Meanwhile, Walton will oversee the System’s day-to-day operations. Walton is Assistant Executive Officer in charge of Governmental Affairs, Planning and Research and the Customer Call Center. He began working for CalPERS in 1971. He also served with the state Department of General Services from 1974 to 1978.

Panscopic Corp., a San Francisco-based developer of Analytic Reporting solutions, announced today that it raised $5.3M in its first round of financing from DCM — Doll Capital Management and Discovery Ventures. Panscopic has pioneered Analytic Reporting, a new category within the Business Intelligence market that combines powerful data analysis and viewing capabilities, with the ease of use, and scalability required by large groups of intranet and extranet-based viewers. Rob Theis, general partner of DCM, and Arnold Silverman, principle of Discovery Ventures, have agreed to join Panscopic’s board of directors.

TEAMM Pharmaceuticals Inc., a specialty pharmaceutical company, today announced that it has closed on an additional $6.5 million round of financing. The round consisted of a mix of debt and equity financing. The round was led by Harbert Management Corporation, and followed on by investments from, Hopkins Capital, TEAMM’s angel investors and founders. The funds will be used for working capital to support the companies’ recent acquisition of the Histex(TM) line of cough, cold and allergy products. The Histex(TM) Line of products currently competes in a $2 billion plus cough, cold and allergy marketplace in the United States.

eHealthContracts, a Hayward, Calif.-based provider of Contract-Revenue-Cycle solutions for the Healthcare industry, announced today that it has secured $16.25 million in venture capital financing. This significant capital infusion reflects the Company’s burgeoning success in both the healthcare provider and payer markets. This Series C round of financing includes a new investor Mobius Venture Capital, as well as existing investors Versant Ventures and Three Arch Partners. With over $2.5 billion under management and extensive experience in technology and services, Mobius Venture Capital complements the existing group of industry-leading healthcare investors.

Fortress Technologies, a Tampa, Fla.-based provider of security infrastructure products for wireless networks, today announced that it has closed a new $13 million round of venture capital financing. The funding was provided by Liberty Partners, a private equity investment firm in New York City, and a group of current investors including Robert Trump. Fortress will use the proceeds to expand sales and marketing for its AirFortress(TM) Wireless Security Solution, the only FIPS-140-1 certified 802.11 wireless network security product.

Circuit Semantics Inc. (CSI), a San Jose, Calif.-based provider of timing and characterization solutions for high-performance integrated circuit (IC) design, today announced that has closed its latest round of funding, bringing the total amount raised to $11.9 million since its founding in 1997. Funds will be used as working capital to expand Circuit Semantics’ technology development and sales efforts. Financing was led by Crescent Ventures Investors, headed by Kevin Hall, previously of Norwest Venture Partners, and included an equity investment from a leading computer manufacturer and Circuit Semantics strategic customer

ShieldIP Inc., a New york-based provider of flexible Digital Rights Protection (DRP) solutions, today announced that it has received an initial round of funding and has introduced its product offering for independent software vendors (ISVs) and content vendors. The $4.2 million investment round was led by Charter Ventures.

Peregrine Semiconductor, a San Diego-based supplier of high-performance integrated circuits for wireless communications, today announced that it has raised $14M in yet another round of venture funding. The investment was led by Morgenthaler Ventures and Wasserstein Ventures, and included continued support from existing backers APAX Partners, CSK Ventures, CDIB Ventures, H&Q Global Alliance, Intel Capital, Needham Capital Partners and Roser Ventures. Although the press release calls the deal the first tranche of a Series A1 round, the company has raised nearly $95 million over eight rounds of funding since being founded in 1990.
News From Tuesday 8/20
Qwest Communications International Inc. (NYSE: ) today announced it has agreed to sell for $7.05 billion its QwestDex publishing business to a new entity formed by the private equity firms of The Carlyle Group and Welsh, Carson, Anderson & Stowe. The transaction, which is for less than the $8 billion to $10 billion Qwest was looking for — will be completed in two stages. The first stage, involving the sale of QwestDex operations in Colorado, Iowa, Minnesota, Nebraska, New Mexico, North Dakota and South Dakota, is for $2.75 billion and is expected to close in the fourth quarter of 2002. The second phase, which includes Arizona, Idaho, Montana, Oregon, Utah, Washington and Wyoming, is for $4.30 billion and is expected to close in 2003.

Dune Networks Inc., a Agoura Hills, Calif.-based fabless provider of silicon solutions for communication platforms, announced today that it has raised $24 million in its first round of funding. The investment was co-led by Aurum-SBC Ventures, Jerusalem Venture Partners and Pitango Venture Capital and includes investments from Alta Berkeley Venture Partners and Elwin Capital Partners. The funding enables Dune to aggressively pursue its development and marketing goals for introducing its first generation of products.

Tarari Inc., a new San Diego-based company focused on high-speed content processing, announced its formation today. As a spin-out from Intel Corp.’s (Nasdaq:INTC) Network Processing Group, Tarari will produce hardware and software solutions designed to accelerate key applications used in network security and Web services deployed into standard, high-volume servers and network appliances. Tarari has received $13 million in a Series A round of funding from Crosspoint Venture Partners and XMLFund. Tarari also becomes a portfolio company of Intel Capital, Intel’s corporate venture arm, with Intel holding an equity investment in the new venture.

Vestcom International Inc. (NASDAQ: VESC) announced today that on Friday, August 16, 2002, it was served with a Complaint by H.I.G. Capital, L.L.C. and Nantucket Holdings, Inc. In addition to the Company, Vector Investment Holdings, Inc., Vector Merger Corp., Cornerstone Equity Partners IV, L.P. and Joel Cartun are named as defendants. The Complaint, which was filed in the Superior Court of New Jersey, Chancery Division – Essex County, alleges, among other things, that the directors of the Company disregarded their fiduciary duties by entering into the previously announced merger agreement with Vector Investment Holdings, Inc. and Vector Merger Corp. and that the no shop and termination fee provisions contained in such merger agreement are illegal. The Complaint also alleges that the Company violated the New Jersey Shareholders Protection Act by entering into the merger agreement. The plaintiffs were unsuccessful bidders for the Company. Vestcom vigorously denies all of the material allegations made by the plaintiffs in the Complaint, believes it has substantial and meritorious defenses against the plaintiffs’ claims and intends to exercise all its rights and remedies in connection with this matter, including pursuing available counterclaims against the plaintiffs.

Serenex Inc. announced today the successful completion of a Series B financing totaling $15 million. The Durham, N.C.-based company’s financing was led by Intersouth Partners, and included new investors, Lilly BioVentures and Seaflower Ventures, as well as the existing founding investor, Mediphase Venture Partners. The investment will be used to fully optimize Serenex’s Proteome Mining and Functional Proteome Fractionation technologies, and to deploy these technologies to successfully discover and develop novel therapeutics.

CenDyne Inc., a Santa Ana, Calif.-based optical storage and PC peripherals products company in the U.S. retail channel, today announced that it has created a joint venture investment involving a cash infusion and worldwide logistics infrastructure support by Test Rite Inc. based in Taipei, Taiwan. In addition, CenDyne is expecting to finalize an agreement with its financial institutions for an increase in its credit line of approximately $30 million U.S. The investment will continue CenDyne’s tremendous growth in the PC market and expand operations overseas.

Adexa Inc., a Los Angeles-based provider of supply chain and enterprise business planning solutions, today announced it has closed venture financing for $15 Million with new investor Wasserstein Venture Capital leading the round. Additional new investors BEV Capital and Mitsubishi joined previous investors Sutter Hill Ventures, Information Technology Ventures, J & W Seligman, and DRW Venture Partners LP in this latest funding round. Townsend Ziebold, president of Wasserstein Venture Capital and Marc Singer, partner with BEV Capital, will join Adexa’s Board of Directors.

Concentric Medical Inc. today announced the completion of a $12.0 million Series B round of financing led by H&Q Capital Management and with a syndicate including ProQuest Investments and existing investors New Enterprise Associates, New Venture Partners and NeuroVentures. Mountain View, Calif.-based Concentric, a privately held interventional medicine company developing devices for the treatment of ischemic stroke, hemorrhagic stroke and tumors, will use this funding to expand the clinical development of these proprietary devices.

Ventures West, one of Canada’s largest privately owned venture capital companies, has announced that Dr. Michael Albin, Ph.D, has joined the company as an Entrepreneur in Residence (EIR). Dr. Albin, based in the Vancouver office, will focus on deal generation and working with existing portfolio companies in the biotech sector. Dr. Albin formerly served as Vice President, Strategic Technologies for Applera Corp., where he was responsible for technology assessment and business development and was a member of the company’s Management Executive Committee. Prior to being elevated to the corporate level, Dr. Albin was with Applied Biosystems, an Applera company, for 12 years, and before that, he was a Senior Scientist at SYVA Diagnostics.

Vigilos Inc. today announced the final closing of its Series A funding round with an additional $2.0 million from initial investor Northwest Venture Associates (NWVA) and new investor Highway 12 Ventures, a part of the Village Ventures network. This Series A second closing brings Seattle-based Vigilos’ total Series A funds raised to $7.6 million. The company also announced the appointment of Steven Clifford to the Vigilos board of directors, Karin Anderson as the Director of Sales, and Al Voels to a newly formed position, Director of Retail Solutions.

Agrilink Foods Inc. and Vestar Capital Partners today announced the completion of a $175 million equity investment in Agrilink by affiliates of Vestar. The change in control transaction, originally announced on June 21, 2002, values Agrilink at approximately $800 million. Agrilink had been a wholly owned subsidiary of Pro-Fac Cooperative Inc. (Nasdaq: PFACP), a 500-member grower cooperative. Pro-Fac will continue to hold a significant minority interest in Agrilink.

Aduva Inc., a Sunnyvale, Calif.-based enterprise systems management developer and marketer specializing in Linux systems, today announced that Elwin Capital Partners has invested $4.0 million in the company. This investment is part of an $18.0 million Series C financing round initiated earlier this year by BMC Software Inc. and the Intel 64 Fund, with participation from the company’s previous investors, Evergreen, Cap Ventures and The Capital Group.

The California Public Employees’ Retirement System (CalPERS) has voted to adopt a set of investor protection principles that CalPERS staff will implement with the intent of requiring contracting money management firms to be more transparent and more responsive to corporate governance and financial reporting variables. These new regulations do not seem to directly affect the pension fund’s private equity investment program.

Kenneth Wisdom is moving to the East Coast to join Darien Conn.-based Portfolio Advisors. He was recently with PrivateTrade, and has also served as head of private equity investments at the University of California and a senior investment analyst with the Massachusetts Pension Reserves Investment Management Board (MassPRIM).

PRG-Schultz International Inc. (Nasdaq: PRGX) announced today that Howard Schultz, chairman, Andrew Schultz, executive vice president and director, and certain of their affiliates have entered into agreements to sell approximately $75.7 million, or approximately 8.68 million shares, of PRG-Schultz common stock to certain affiliates of Berkshire Partners LLC and Blum Capital Partners LP, in private transactions. Berkshire and Blum will each purchase approximately $37.8 million, or approximately 4.34 million shares, of PRG-Schultz common stock. Both investment firms are currently represented on the Company’s board of directors.
News From Monday 8/19

Sonim Technologies Inc., a San Mateo, Calif.-based provider of Instant Communication solutions for wireless data networks worldwide, today announced that it has secured $18.6 million in its first round of institutional financing, co-led by 3i and Apax Partners. Both 3i and Apax Partners are leading international private equity firms that have created and developed some of the world’s most successful businesses.

Top Layer Networks Inc. , a Westborough, Mass.-based provider of globally proven network security solutions, today announced that it has received venture capital investment of $28 million. The funding will be used for product development, channel development, and sales and marketing activities. Led by 3i US, the deal included investments from new buyers Investcorp, Wasserstein Ventures and Westbury Partners. Existing investors Egan-Managed Capital, Granite Ventures and TI Ventures also participated. The last time Top Layer received venture funding was at the beginning of 2001, when it received a post-money valuation of $340 million.

PGP Corp. announced today that it has received $14 million in venture funding from Doll Capital Management and Venrock Associates. The funds will be used to establish and operate PGP Corporation as a new, independent company providing secure messaging and data storage products to corporations and individuals. In a separate press release today, PGP Corp. has purchased the technology assets from Network Associates, additionally announcing that the company will upgrade existing product lines, develop new technology and retain reserves sufficient to reach operating profitability.

Cenzic Inc. will announce today that it has closed a two-part Series A deal worth $8 million. The Campbell, Calif.-based network security software maker will use its first round of venture capital to support the launch of its software package and to build out its sales and marketing effort. In January the company secured its first tranche of institutional money, raising $5 million from Hummer Winblad Venture Partners’ Mark Gorenberg and JK&B Capital’s Marc Sokol. Today it is expected to announce it has secured an addition $3 million from Mohr Davidow Ventures and Symantec. Gorenberg and Sokol, both partners in their firms, sit on the company’s board of directors alongside MDV General Partner Erik Straser. PE Week subscribers can read more by clicking here.

Azanda Network Devices today will announce that it has closed its Series B funding round with a total of $33 million. The Sunnyvale, Calif.-based company held a $19 million first close in March (See PE Week 3/11/02), a $7 million second close in April and the final $7 million piece earlier this month. Investors involved on the final tranche include 75 Wall Street Technology Partners, Parker Price Venture Capital and China Development Industrial Bank. Previous investors included Bessemer Venture Partners, Commonwealth Capital Ventures, Goldman Sachs and Highland Capital Partners. To date, the company has raised $43 million since being founded in March 2000.

MidStream Technologies, a Bellevue, Wash.-based developer of broadcast quality Video on Demand (VoD) servers and solutions, announced today that it has closed a $26 million financing round. New investors in the Series C Round include Canaan Venture Partners, which led the round, Frazier Technology Ventures, ProVen Private Equity, and The University of North Carolina. The company’s prior investors Polaris Venture Partners, ARCH Venture Partners, Xilinx, Inc. (Nasdaq:XLNX) and Fluke Ventures also participated. As a result of the transaction, Mark Mangiola, Venture Partner, Canaan Venture Partners and Richard von Riesen of Frazier Technology Ventures, will join MidStream’s Board of Directors.

Clayton, Dubilier & Rice Inc., a leading global private equity investment firm, announced today that Olivier Cognet, formerly Director of Corporate Strategic Business Development for Cisco Systems in Europe, has joined the firm. Mr. Cognet will be based in CD&R’s London office.

Cicada Semiconductor Corp., an Austin, Texas-based developer of DSP and mixed-signal integrated circuits (ICs) that enable broadband communications within Local, Wide and Storage Area Networks, announced today the completion of $17.4 million in third round funding, bringing the company’s total private debt and equity funding to $37 million to date. Participants in the round include strategic investors and existing shareholders Sevin Rosen Funds and Perot Investments. The company will use the new funding to further accelerate its product development, expand its applications support effort and augment its current sales and marketing efforts.

Nobska Group, today announced an investment and strategic consulting relationship with Koolspan LLC, a Bethesda, Md.-based development-stage company. Koolspan provides groundbreaking solutions for 802.11 Wireless LAN (local area network) security, authentication and application development.

Ponte Nossa Acquisition Corp. (OTCBB:PNSO) today announced it has obtained a commitment for additional funds of $250,000 from Wharton Equity Partners for the interim financing of Visijet to continue product development during the anticipated merger of the two companies. Wharton Equity Partners, a New York-based company specializing in emerging growth investments, has already agreed to provide financing of $800,000 upon completion of the Ponte Nossa/Visijet merger and this new funding raises their commitment to $1,050,000.

Spanish News Digest is reporting that Spanish savings bank Caixa Catalunya will invest EUR 30 million ($29.6M) in the purchase of minority stakes in venture capital small and medium-sized enterprises (SMEs), by the end of 2006. The investment will be carried out through a venture capital company, Invercartera Capital SCR, and will include ten SMEs.

Comerica (NYSE: CMA ) and Strategic Management Group Inc. announced today that Comerica’s Technology and Life Sciences Division has provided SMG with a $7 million revolving line of credit. The funds will be used to finance company growth.

Softchoice Corp. (TSX Venture Exchange: SO), a Toronto-based software direct marketer, today announced a secondary private placement of 2,082,813 common shares at a price of $6.00 per common share, representing a transaction of $12,496,878. Purchasers include Manvest Inc., as well as various institutional and individual investors. None of the proceeds of the transaction will accrue to the Company. In association with the private placement, Softchoice is pleased to announce the appointment of William P. Robinson to the Company’s Board of Directors. Mr. Robinson is the President and a Director of Manvest Inc., a Calgary based private equity investment company.

The Florida Venture Capital Conference is pleased to announce that six presenters from the January 2002 Conference have raised $13.9 million in capital. The Florida Venture Capital Conference, Florida’s only statewide later stage venture capital conference, has attracted millions of dollars of venture capital into Florida-based companies over the last decade.

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