Private Equity Week Wire for Monday, 7-30

NEW YORK — Patricof & Co. Ventures Inc., as the lead for a syndicate of venture capital firms, announced today an agreement to purchase drug-discovery company, Affymax Research Institute, from GlaxoSmithKline (GSK). The company will be called Affymax, Inc. Under the terms of the purchase, which are subject to a definitive agreement, Patricof & Co. will lead the syndicate that invests $51 million in Affymax and holds a majority interest. GSK will receive non-voting preferred stock in exchange for its interest in Affymax. The transaction is expected to be completed within the next month.

NEW YORK — Venture capitalists invested $10.6 billion in 982 companies in the
second quarter
of 2001 with a notable investment increase in the life sciences sector, according to Venture Economics and the National Venture Capital Association (NVCA). During the quarter, 13.8% of dollars invested went to Medical/Health/Life Science companies, whereas only 11.2% went to such companies in the first quarter of 2001 and only 3.95% went to such companies in the second quarter of 2000. While the $10.6 billion figure represents a 12% decline from Q1 and a 61% decline from one year ago, this quarter’s investment pace is on par with the then record levels set in early 1999.

Expansion stage companies received a greater percentage of the total investment in the second quarter compared to the first quarter of 2001. In the second quarter, 54.9% of all venture capital went to expansion companies versus 47.4% in the first quarter. Both the early and later stage categories saw a slight decrease in terms of percentage of overall investment. This trend can be attributed to the commitment of venture capitalists to their existing portfolio companies.

WILLIAMSTOWN, MASS.— Matthew Warta has joined Village Ventures, Inc., as a regional managing director. Warta, who most recently was vice president of corporate development and finance at Fort Collins, CO-based CyberCrop.com, Inc., becomes the sixth regional managing director at the Williamstown, MA-based financial services company. Warta is based in Colorado.

PLEASANTON, CALIF.— Insevo Inc., a leading provider of e-business infrastructure, today announced that it has raised $3 million in its first institutional funding round including $2 million from 3i, the leading international venture capital company. The additional financing will be used to accelerate Insevo’s go to market strategy for the Insevo business process connector infrastructure. The Insevo products allow companies to use enterprise information systems while harnessing the power of J2EE application servers in a fully integrated Web-based, e-business strategy.

NEW YORK — EurekaGGN, a full-service integrated communications provider, announced today it has received $20 million in additional equity financing, fully funding the company to profitability and facilitating continued growth in its target markets of New York and Los Angeles.

New investor Apollo Real Estate Investment Fund IV completed the financing round, which also included follow on investments from Spectrum Equity Investors, Lazard Technology Partners, LLR Equity Partners and Mellon Ventures. In connection with the financing, EurekaGGN acquired the New York assets of Wired Environments, a building-centric Internet service provider whose primary investor was Apollo.

RALEIGH, N.C. — Empliant Inc., providers of ASP-delivered, employee self-reliant technology solutions, announced today that the company has closed its initial round of financing valued at $500,000.
An influential group of local Angel investors funded the round, including
local start-up veterans Timothy Buckley and Howard Jacobson of Red Hat, former SAS executive and current CEO of FullSeven Technologies Barrett Joyner, and the founder of OpenSite Technologies Michael Brader-Araje. Other investors include the partners at the law firm of Smith, Anderson, Blount, Dorsett, Mitchell and Jernigan; Rick Deckelbaum and partners from Fortune Personnel Consultants of Raleigh; and Brian Kinnahan, Clay Thorp and John Crumpler of Catalysta Partners.

Empliant, which develops web-engineered total human resources solutions,
will use the funding to further growth through increased development, sales
and marketing efforts. Empliant’s solutions are ASP-delivered and accessed
with a standard web browser, enabling small to medium-sized companies to offer
human resources technology solutions at levels normally associated with
budgets and IT infrastructures of much larger enterprises.

FOSTER CITY, CALIF. — Furthering its position as the
leading provider of instant messaging (IM) applications for enterprise
businesses, FaceTime Communications today announced that it has received a fourth round of financing, raising the amount of venture capital investment in the company to over $40M. This round marks the second investment in FaceTime from TH Lee. Putnam Internet Partners and Sutter Hill Ventures.

The fourth round of venture capital financing will enable FaceTime to broaden its position as the leader in providing IM applications to Global 2000 enterprise businesses, and move the company toward its profitability goals. FaceTime will utilize the investment to further the development and marketing of applications and services designed to help enterprise businesses leverage IM for time-sensitive communications and problem resolution.

CHICAGO — ShopTalk, a leading developer of automated voice application software, today announced that it has closed $12 million in its third round of financing from new and existing investors. The funding news comes amidst new management team additions and a strategic repositioning of the company. Venture Strategy Partners of San Francisco led the financing round. Rocket Ventures of Menlo Park, CA, also joined in the financing, along with existing investors Bay Partners, KB Partners, Maveron Equity Partners, Staenberg Private Capital, and Dakota Capital Partners. The funds are expected to carry the firm to profitability.

SEVERNA PARK, MD.— Despite the sharp decline in venture investment for technology companies during the past year, Metastorm, Inc. announced today receipt of a $4 million investment from Dresdner Kleinwort Capital, bringing total investment in the last six weeks to $24 million. With this level of funding, Metastorm, the market leader for business process management (BPM) software, estimates it will be profitable before the start of Q1 2002. As in the previous $20 million infusion led by UBS Capital Americas II, L.P. with strong participation from Ironside Ventures and 3I Group, Metastorm will use the funds to expand its global sales, marketing and distribution network.

OVERLAND PARK, KAN. — EHSmanager(R), the leading
provider of Environmental, Health and Safety (EHS) Risk Management
applications today announced it has closed US $3.5 million in parallel with
its Datachest acquisition. High-tech venture capitalists, Innovatech Grand
Montreal, Knorr Capital Partner Inc. and Desjardins Venture Capital Group participated in this round of financing.

The investment follows on the heels of EHSmanager’s announced acquisition of EHS content provider Datachest, and will be used to advance key strategic alliances and fund operational growth and expansion. The funding will accelerate EHSmanager’s continued rapid development as a global EHS solutions provider in this specialized market. EHSmanager has already begun a second round of financing to be finalized this fall.

BOTHELL, Wash. — MedManage Systems Inc., an innovator in alternative prescription drug sample management, announced today the completion of a second round of venture financing totaling $3 million from existing investors, bringing the total capital invested in the company to $13 million. The additional funds reflect MedManage’s solid revenue growth stemming from its flagship product, eMedSample, a drug sample voucher program which assists pharmaceutical manufacturers in generating prescriptions for new drug products. The financing was led by MedManage’s lead venture capital investors, which include Prism Venture Partners, Tredegar Investments and additional private investors.