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From:

"Dan Primack"

Name:

Dan Primack

Email Address:

Dan_Primack@fortune.chtah.com

Subject:

Term Sheet -- Wednesday, December 15

Date:

15-12-2010 14:51:46
Message

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

TWednesday -- December 15, 2010
Email Dan | Follow Dan on Twitter | Subscribe | Send an anonymous tip

Random Ramblings
It's been a rough couple of weeks for the Boston vs. New York rivalry's southern faction. First, Tom Brady
smacked the f'ing snack out of Rex Ryan's mouth. Then the Red Sox got their men, while Brian Cashman
got Cliff Lee's voicemail.
In the spirit of piling on, let me remind everyone that Boston's venture capital market is still far more vibrant
than New York's venture capital market.
Yeah, I know you've read differently. Some Boston-based VCs might even have told you differently. And
someday they may be right. But not today.
Here are some hard numbers from the first three quarters of 2010, from Thomson Reuters and the NVCA:

Venture capitalists funded 38% more Massachusetts-based companies than New York-based
companies.

Venture capitalists invested 125% more dollars in Massachusetts based companies than in New

York-based companies.
Twenty Massachusetts-based VC firms raised nearly $2.2 billion in new fund capital, compared to

11 New York-based firms raising just over $1 billion.

Each state has seen just two VC-backed IPOs in 2010, but the Massachusetts pair raised more

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money.

38 Massachusetts-based companies with VC backing were acquired, for a disclosed value of $1.49
billion. New York had just 15 M&A exits, with a disclosed value of $172.5 million.

Is there a relevant metric I'm missing? In fact, the only place I see this domination questioned is in a
Factiva search of "New York" and "venture capital" compared to "Boston" and "venture capital" (the former
wins by a margin of 2,053 to 682).
Look, I understand the fascination with New York venture capital. First, most of the people writing about
finance are based there, and to them it feels fresh. Second, much of the New York investment focus is on
digital media and other consumer-oriented companies, while Boston's strengths are biotech and hard
sciences like robotics (Boston is particularly dominant in life sciences, while pure IT investment is just about
even). Finally, a few of Boston's most prolific bloggers seem to have tabs with the Accela meal car.
The reality, however, is that Boston has long led New York in most things venture capital, and is showing
virtually no quantitative signs of letting up. Moreover, I'd argue that the recent relocation of several Route
128 firms into Kendall Square is reflective of an entrepreneurial renaissance at MIT (and, to a lesser extent,
Harvard).
But don't worry New York. You still have the better park...
*** Probably worth noting that I live just outside of Boston and would rather see an NFL lockout than the
Jets win the Super Bowl. Oh, and the above admittedly is a 2nd-place/3rd-place argument. Silicon Valley
still has more funded companies, more fundable companies, more VCs, more portfolio company talent, etc.
*** I know Time Magazine is part of the family here at Fortune, but Mark Zuckerberg as Person of the
Year? Really? Didn't Time already take care of that meme by naming "you" PoY in 2006? Same concept,
differerent vehicle. Was hoping for something more original...
*** Lots of press coverage about how President Obama is meeting today with a large group of CEOs, in
order to put a more business-friendly face on his administration (apparently big business bailouts, major
R&D funding increases and top-earner tax cuts weren't enough capitulation).
What's interesting, however, is the two private-sector attendees who aren't actual CEOs: Mark Gallogly, the
onetime Blackstone pro who now runs Centerbridge Partners, and venture capitalist John Doerr.
I'm not saying they shouldn't have a seat at this type of table. In fact, I thought they already did.
Gallogly and Doerr are both part of Obama's Economic Recovery Advisory Board, formed in early 2009 and
chaired by Paul Volcker. So are fellow meeting attendees Penny Pritzker and Jeffrey Immelt.
Does this mean folks like Gallogly and Doerr are going to run interference for Obama today? After all, they
already should have fairly regular access. Right? Or is it yet another group formed to create a lengthy
report -- ERAB's read like a Choose your Own Adventure, rather than a specific prescription -- that is more
about public relations than public policy? Again, just asking...

5 things to read @Fortune.com

Pre-Marketing, including why VCs shouldn't double down on the overpay, a new name for

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emerging markets, India's shrinking investor population, "Wall Street" banned by partisan ninnies in

DC and video of Colbert winning the "most retweeted" award.

Mark Suster: In a strong wind, even turkeys can fly

Colin Barr: How the bond market could get crazier

Nin-Hai Tseng: Three ways to stabilize the euro

JP Mangalindan: Goodbye Best Buy. Hello specialty retail

The Big Deal

Abound Solar (fka AVA Solar), a Colorado-based maker of cadmium telluride, thin-film photovoltaic
modules, has raised $110 million in new equity funding. BP Alternative Energy Ventures and West Hill
Companies were joined by return backers Invus Group, Bohemian Companies, DCM and Technology
Partners. The company now has raised $260 million in private equity, plus recently secured a $400 million
loan guarantee from the U.S. Department of Energy. www.abound.com

VC Deals
Clustrix, a San Francisco-based developer of clustered database systems for Internet-scale applications,
has raised $12 million in Series B funding. Return backers include U.S. Venture Partners, Sequoia Capital
and ATA Ventures. The company previously raised $18 million. www.clusterix.com
Intelleflex, a Santa Clara, Calif.-based provider of on-demand data visibility solutions, has raised $11.5
million in new Series A funding from return backers Arcapita Ventures and New Venture Partners.
www.intelleflex.com
Lavante, a San Jose, Calif.-based provider of on-demand recovery auditing and supplier information
management solutions, has raised $8 million in new funding from SAP Ventures. www.lavante.com
CradlePoint Technology, a Boise, Idaho-based maker of cellular routers and software that facilitate
mobile computing, has raised $7.5 million in new VC funding. OVP Venture Partners led the round, and
was joined by return backer Highway 12 Ventures. www.cradlepoint.com
Avego, an Ireland-based provider of a ridesharing application that matches drivers and riders in real time,
has raised $5.6 million in VC funding led by SOSventures. The company previously raised $4.5 million in
seed capital. www.avego.com
Spoken Communications, a Bellevue, Wash.-based provider of speech recognition technologies for call
centers and virtual call center systems, has raised $4 million from Ignition Growth Capital.
www.spoken.com
Anomalous Networks Inc., a Montreal-based provider of real-time telecom expense management
solutions, has raised an undisclosed amount of VC funding from BlackBerry Partners Fund and members
of Anges Qubec. www.anomalousnetworks.com

Private Equity Deals

3i Group has agreed to acquire Armor Group, a German provider of mid-priced jewelry, from Pamplona
Capital Management. No financial terms were disclosed. www.3i.com
Azalea Capital has recapitalized KLMK Group LLC, a provider of facility solutions to healthcare providers.

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No pricing terms were disclosed. Patriot Capital provided mezzanine financing, while Cobblestone | Harris
Williams advised KLMK.
Dogan Yayin, Turkeys largest media group, has set today as a deadline for second-round acquisition bids
for its television and newspaper assets. The FT reports that offers could come from strategics and private
equity firms Apax Partners, KKR and TPG. Goldman Sachs is managing the process.
Emergency Medical Services Corp. (NYSE: EMS) said that has hired Goldman Sachs to review strategic
options, including a possible sale, after being approached by unnamed private equity firms. EMS shares
rose 17% on the news, giving it a market cap of approximately $1.91 billion. www.emsc.net
Fondations Capital, a French private equity firm, is in discussions to acquire local restaurant chain
Courtepaille, according to La Tribune. Courtepaille currently is owned by ING Parcom and company
management.
PineBridge Investments has acquired a 50% stake in Promedica24, a Polish provider of household
services and care for the elderly, medical recruitment and rehabilitation services. No financial terms were
disclosed. www.pinebridge.com
The Pritzker Group has acquired Clinical Innovations, a Murray, Utah-based maker of medical devices
for women and infants. No financial terms were disclosed. www.clinicalinnovations.com
Specialty Therapeutic Care, a Houston-based specialty pharmacy for patients suffering from chronic
bleeding disorders, has raised an undisclosed amount of private equity funding from Enhanced Equity
Fund.
Trivest Partners has recapitalized AM Conservation Group Inc., a Charleston, S.C.based designer,
importer and supplier of energy and water conservation products. No financial terms were disclosed.
www.amconservationgroup.com
Unitas Capital has agreed to acquire Dutch pump-maker Hyva from 3i Group. No financial terms were
disclosed, although prior reports put the price-tag at approximately $830 million. Other suitors had included
Bain Capital, Carlyle Group and Permira. www.3i.com
Zale Corp. is considering a sale of its Piercing Pagoda kiosk business, according to Bloomberg. Possible
suitors include Apollo Management. www.zales.com

PE-backed IPOs
FleetCor Technologies Inc., a Norcross, Ga.-based provider of branded fuel cards, raised approximately
$291 million in its IPO. The company priced nearly 12.68 million being at $23 per share ($23-$26 range),
for an initial market cap of around $1.81 billion. FleetCor will trade on the NYSE, while J.P. Morgan and
Goldman Sachs served as co-lead underwriters. Shareholders include Summit Partners (37.4% pre-IPO
stake), Bain Capital (18.4%), Advent International (6.6%), Advantage Capital (3.1%), Performance Equity
Management (1.7%), HarbourVest Partners (1.1%) and Nautic Capital. www.fleetcor.com
Freescale Semiconductor Inc. is planning to go public in 2011, according to a Reuters interview with
company CEO Rich Beyer. Freescale was taken private in 2006 for $17.6 billion by The Blackstone Group,
The Carlyle Group, Permira and TPG Capital. www.freescale.com

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Exits
Clarion Capital Partners has completed its sale of Crowe Paradis Services Corp., a North Reading,
Mass.-based provider of claims analysis and compliance solutions to the property and casualty insurance
industry, to Verisk Analytics. The deal was valued at approximately $90 million, which Clarion says
represents a 25x return on investment. www.cpscmsa.com

Other Deals
Icahn Enterprises has agreed to acquire power producer Dynegy Inc. (NYSE: DYN) for $665 million in
cash. The $5.50 per share deal tops a prior $5 per share offer from The Blackstone Group, which
eventually withdrew the bid after opposition from Icahn and other activist shareholders. Icahn currently
holds a 9.9% stake in Dynegy. www.dynegy.com
Novartis (NYSE: NVS) said that it has struck a deal to buy the remaining 23% of eye-care company Alcon
(NYSE: ACL) that it does not already own, for $168 per share. The purchase would be valued just shy of
$13 billion. www.novartis.com

Firms & Funds

Dogpatch Labs, an incubator program sponsored by Polaris Venture Partners, is opening a location in
Dublin, Ireland. This is its fourth location, following San Francisco, New York and Cambridge, Mass.

Moving In, Up and On

Justin Breen has joined law firm Proskauer as a New York-based partner, with a focus on high-yield and
general corporate finance transactions. He previously was with Cahill Gordon & Reindel.
www.proskauer.com
Frank Cicero has joined Jefferies & Co. as global head of financial institutions investment banking. He
previously was with Barclays Capital. www.jefferies.com
Draper Fisher Jurvetson has promoted Josh Raffaelli from associate to principal. He joined the firm in
2004, and sits on the boards of portfolio companies PowerAssure, Renewable Funding, and Scientific
Conservation. www.dfj.com
Morten Simonsen has joined PineBridge Investments as head of institutional sales for the Nordic region.
He previously served in a similar role with Alfred Berg.

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