Welcome to a brutally busy news morning. We’ve got the largest leveraged buyout in history (HCA), WL Ross getting acquired (conference call at 10am), VC disbursement data indicating that Q2 2006 was the busiest quarter since Q1 2001 (MoneyTree Survey figures come tomorrow) and some other multi-billion buyout deals that can’t even crack our Top Three (PagesJaunes, NCO Group). So let’s discuss none of the above until I’ve had time for further digestion:
*** A big reason for first-time fundraising difficulties is that LPs worry about the unknown of new partners working together. Two investors who experienced great success separately won’t necessarily recreate the magic together, and instead might suffer from EECS (extreme ego clash syndrome). So if you want to launch your own fund, some sage advice is to partner with an investor with whom you already have worked on a successful deal.
Case in point is Spark Capital, the Boston-based venture shop formed last year by Todd Dagres and Santo Politi. The pair each worked at different firms — Battery Ventures and Charles River Ventures, respectively – and were known individually for such deals as Akamai (Dagres) and BigBand Networks (Politi). The big selling point for LPs, however, was a joint investment in television-on-demand company Broadbus Inc., which both Dagres and Politi began backing in 2002.
Dagres and Politi came to Broadbus separately, but with a shared belief that TVOD would become a vital part of the cable television model. It was hardly a consensus view at the time, but their dedication helped convince Broadbus founder Jeff Binder to both take the money and move his company from a Chicago suburb to Boxborough, Massachusetts, . Today, TVOD has become a cable company staple, particularly in short-form like a 30-minute episode of HBO’s Entourage. And Broadbus is considered a market leader, after forming a partnership with Tandberg Television that resulted in deployments with major cable companies like Adelphia, Comcast and Time Warner.
I and others had been expecting a possible Broadbus IPO in late 2007 or early 2008, but recent trading troubles for competitors like SeaChange International (Nasdaq: SEAC) helped convince the company to entertain acquisition offers. Now, PE Week has learned that Motorola is close to acquiring Broadbus for approximately $189 million in cash. For context, Battery and CRV co-led the company’s Series A-1 funding at a pre-money valuation of less than $7 million.
“We used Broadbus as a bit of a poster child when we were raising the fund,” Dagres said, when contact on Friday. “It showed that we had gone through a battle together without killing each-other, and had come out with a very well-liked company.”
No one is publicly commenting on the sale, including Dagres, Politi or Broadbus. A Motorola spokesman said that your humble correspondent was “chasing down a rumor until [Motorola makes] a formal announcement.” Apparently Motorola signs asset purchase agreements and press releases simultaneously. Anyway, major validation for both Spark and its LPs, even if Broadbus wasn’t technically a Spark portfolio company.
*** GateHouse Media has filed for an IPO, which means we finally know how much it paid for the community newspaper unit of Herald Media. According to an SEC filing, GateHouse paid $230 million plus the assumption of certain liabilities.
*** Quiz Time: Can you name the Boston-area technology company that is about to accept $70 million in first-time funding. Hint: You’d think the company could just print its own money.
*** Finally, some of you have been asking for reader thoughts on the Israel-Lebanon war, as I promised would be forthcoming. Unfortunately, I’ve gotten more such requests than actual comments. Hoping some more will come in over the next few days, particularly from those actually in either Israel or Lebanon.