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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Thursday, October 28

Date:

28-10-2010 13:31:59
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Thursday -- October 28, 2010
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Random Ramblings
Kleiner Perkins Caufield & Byers got all sorts of attention last week for its $250 million sFund -- including
from yours truly -- but that just scratches the surface of the venture capital firm's fundraising ambitions. I've
learned that KP is in the process of raising $1.4 billion for a pair of new funds, including one that will house
most of the sFund allocation.
Here's how it breaks down:

KPCB XIV: This is the firm's fourteenth "general" fund, which is targeting $650 million. Of that total,
approximately half will be dedicated to IT investing while the rest will be balanced between
greentech and life sciences. The IT piece includes a $200 million allocation to the sFund initiative -the remaining $50 million of which will be provided by "strategic partners" like Amazon and
Facebook.

KPCB Digital Growth Fund: The firm is targeting $750 million for this effort, and I don't yet have
specific investment strategy details. Judging by the name, however, I'd assume that we're talking
about later-stage IT investments. Kind of like what KP does with its Green Growth fund, except for a
different industry sector.

So, to be clear, the $250 million sFund doesn't actually exist yet. KP already has pitched to limited partners
in Silicon Valley, and soon will do the same in New York City. It isn't expecting any difficulties, despite the

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overall fundraising doldrums for VC firms.

How do I know? Well, because KP announced the sFund via press conference and press release.
Typically, VC firms refrain from announcing new funds before they have actually been raised, pursuant to
an SEC ban on general solicitation for private placements. The only way KP lawyers would have allowed
the sFund show is if the firm already told its potential universe of investors that the new funds were being
raised (i.e., KP can prove that the investors did not learn of the funds via public notice).
Most VC firms wouldn't take such a chance, because their known universe -- usually existing LPs -- might
not pony up enough cash, thus requiring solicitation of new prospects. But in the case of a firm like KP,
such worries don't seem to exist.
*** Correction: In yesterdays item on energy M&A, I misrepresented some of the Thomson Reuters data.
Specifically, I said that the dollar volume of M&A in the U.S. power and energy sector for YTD 2010 is
higher than for year-end 2008 and 2009 combined. I should have said its higher than for YTD 2008 and
2009 combined.
Ive gotten deeper into the numbers and posted a bunch of them at the Term Sheet blog. Get it here.

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way to pick its next CEO, what Google now thinks about its Android deal and video of Vinod Khosla
speaking this week at Caltech.
Dan Primack: More direct secondary funds arrive

David Kaplan: How Waiting for Superman misses

Colin Barr: Bill Gross says it's time to stop blaming Bernanke

Adam Lashinsky: Dear HP and Oracle, Please don't stop fighting

The Big Deal

The Blackstone Group (NYSE: BX) reported a $339 million in third-quarter economic net income, which
represents a 23% increase from Q3 2009. It Private equity revenue dropped from $226.9 million to $214.9
million, which the firm blamed of a decrease in performance fees and allocations. The net return of
Blackstones private equity funds was 5.1%, compared to 3.9% in Q3 2009 and 2.5% in Q3 2008.
The numbers themselves don't seem to be too big of a deal, although the profit increase over Q3 2009 is
actually dwarfed by the increase over Q2 2010. But it gets the top spot today, for the same reason this
morning missive is early: I plan to live-blog Blackstone's media call, which begins at 9:30am ET. To watch,
just go to The Term Sheet blog.

VC Deals

Celeversafe Inc., a Chicago-based developer of storage solutions for storage clouds, has raised $31.4
million in new Series C funding. Backers include Motorola Ventures, New Enterprise Associates, OCA
Ventures and clients of Anderson & Strudwick Inc. www.celeversafe.com
Endgame Systems, an Atlanta-based provider of a cloud-based botnet and malware detection service,
has raised $29 million in Series A funding. Backers include Bessemer Venture Partners, Columbia Capital,
Kleiner Perkins Caufield & Byers and TechOperators. www.endgamesystems.com

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Mind-NRG has raised 10 million in Series A funding from Index Ventures. The Swiss startup is developing
a peptidic neurotrophic factor with disease modifying potential that crosses the blood-brain barrier by a
receptor-mediated transport to reach its target. www.indexventures.com
uCIRRUS, a San Mateo, Calif.-based developer of enterprise operating software, has raised $4 million in
new VC funding. SK Telecom Ventures led the round, and was joined by Qualcomm Ventures and ATA
Ventures. www.uCIRRUS.com
Xero Ltd., a Wellington, New Zealandbased provider of online accounting software, has raised NZ$4
million (US$2.98 million) from Peter Thiel. www.xero.com
Rockabox Media, a UK-based developer of online video distribution technology, has raised an undisclosed
amount of Series A financing from Frog Capital. www.rockaboxmedia.com

Private Equity Deals

Angelo, Gordon & Co. has acquired Indianapolis-based insurance lender Oak Street Funding (Oak
Street). No financial terms were disclosed. www.angelogordon.com
H.I.G. Capital has invested an undisclosed amount in 7(S) Personal GmbH, a Germany-based temporary
staffing agency. www.higcapital.com

PE-backed IPOs
AZ Electronic Materials, a maker of electronic materials for the semiconductor and flat-panel display
markets, has increased the amount it plans to raise via an IPO in London, according to the FT. The
company originally planned to sell $400 million of new shares and $100 million of existing shares, but has
now bumped up the amount to $610 million of new shares and $190 million of existing shares. The Carlyle
Group and Vestar Capital Partners each hold a 41.8% pre-IPO stake in the company, which makes
chemicals used for Apple's iPad. www.az-em.com
ExamWorks Group Inc., an Atlanta-based provider of medical legal services, raised around $164.8 million
in its IPO. The company priced 10.3 million common shares at $16 per share (low end of $16-$18 range),
which gave it an initial market cap of approximately $487 million. It will trade on the NYSE under ticker
symbol EXAM, while Goldman Sachs and Credit Suisse served as co-lead underwriters. Shareholders
include Compass Partners. www.examworksgroup.com
SeaCube Container Leasing Co., a Park Ridge, N.J.-based container leasing company, raised around
$95 million in its IPO. The company priced 9.5 million shares at $10 per share, compared to plans to offer
7.5 million shares at between $16 and $18 per share. It will trade on the NYSE under ticker symbol BOX,
while Citi, J.P. Morgan, Deutsche Bank and Wells Fargo served as co-lead underwriters. SeaCube is a
subsidiary of SeaCastle, a Fortress Investment Group portfolio company that canceled its own IPO last
May. www.seacastleinc.com

Exits
Actis has agreed to sell its 30% stake in in Inpac International, a Chinese manufacturer of printed paper
packaging, to Stora Enso. No financial terms were disclosed. www.act.is
Endologix Inc. (Nasdaq: ELGX) has agreed to acquire Nellix Inc.,a Palo Alto, Calif.-based developer of

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minimally-invasive treatments for aortic disorders. The deal is valued at up to $54 million, including a $15
million up-front stock payment. As part of the deal, Endologix will receive a $15 million investment from
Essex Woodlands Health Ventures, the majority shareholder of Nellix. www.endologix.com

Other Deals
Embanet Corp., a Canadian provider of online learning services for post-secondary educational
institutions, has merged with Orlando, Fla.-based Compass Knowledge Holdings Inc. No financial terms
were disclosed. Embanet is a portfolio company of Technology Crossover Ventures. Compass Knowledge
was advised by Berkery Noyes. www.embanet.com
SunRun, a San Francisco-based provider of residential solar electricity, has secured a new tax equity
commitment from an affiliate of U.S. Bancorp, which will be used to develop 1,900 residential solar
installations. It previously announced a $90 million tax equity deal with U.S. Bancorp in late 2009, and also
has raised over $85 million in VC funding from firms like Accel Partners, Foundation Capital and Sequoia
Capital. www.sunrunhome.com

Firms & Funds

BlackBerry Partners Fund today announced that co-managers JLA Ventures and RBC Venture Partners
are merging under the BlackBerry Partners Fund brand. All future deals from the group will focus on mobile
startups. RBC Ventures non-Blackberry legacy portfolio will be managed by Clairmont Capital.
Credo Ventures, a Czech venture capital firm, has held an 11 million first closing for its debut fund. The
firm is targeting a final close on 20 million. www.credoventures.com
HighStar Capital, a private equity group focused on infrastructure investments, is raising up to $3.5 billion
for its fourth fund, according to a regulatory. It raised the same amount for its third fund in 2007, when the
group was still known as AIG Highstar. www.highstarcapital.com
Lexington Partners has completed its previously-announced acquisition of around a $1.1 billion portfolio
of fund interests from Citigroup. The StepStone Group will manage the assets. www.citi.com
Partners Group has acquired around an $800 million fund portfolio from Caisse de depot et placement
du Quebec, according to Dow Jones.

Moving In, Up and On

Amrit Agrawal has joined Cowan Group as a managing director in the firms capital markets group. He
previously was co-head of tech, media and telecom strategic finance at Bear Stearns.
www.cowangroup.com
Christine Heron has agreed to join Intel Capital as a director. She previously was with First Round
Capital. www.intelcapital.com
Kazushige Kobayashi has joined Capital Dynamics, a Switzerland-based alternative investment group,
as a managing director and head of a new Tokyo office. He previously was president and CEO of
Alternative Investment Capital, the Japanese private equity advisory formed in 2002 by Mitsubishi and
Daido Life Insurance. His successor at AIC is Tappei Shimizu, who has been promoted from executive vice
president. www.capdyn.com

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Ross Levinsohn has joined Yahoo Inc. as executive vice president of the Americas region. He previously
was co-founder and managing director of Fuse Capital, a venture capital firm previously known as Velocity
Interactive Group and ComVentures. www.yahoo.com

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