Wednesday, January 26, 2011



With the exception of the 10 and 15-year returns which declined slightly, venture capital performance improved across most time horizons as of the end of the third quarter of 2010, according to the Cambridge Associates U.S. Venture Capital Index®, the performance benchmark of the National Venture Capital Association. While the shifts were mild in both directions, the overall performance numbers indicated the first signs of recovery since the financial crisis of 2008. Venture capital performance also surpassed the public market indices for the 3-, 5-, 15- and 20-year time horizons.

Full report

“The third quarter of 2010 brought a change of direction to a performance trend that has been pointed downwards for several quarters,” said Mark Heesen, president of the NVCA. “An improved exit market helped boost the one year returns to positive territory while applying the brakes to the negative slide in the 3-, 5-, and 10-year horizons. Based on the current market dynamics, we would expect this positive reversal of fortune to continue into 2011 and bring the venture capital industry back into positive territory.”

Theresa Sorrentino Hajer, research consultant at Cambridge Associates said: "Conditions in the venture capital industry have improved, reaching a more favorable risk-return balance. M&A activity was up over the prior year, and post-IPO performance has been relatively strong, in line with the steadily improving public markets. One would expect that the improved exit markets, reduced fundraising and moderated pre-money valuations and investment levels will bolster the long-term viability of the VC industry."

Monday, January 24, 2011

Venture Investors Put $26.2 Billion Into U.S. Companies in 2010, Up 11% From 2009

Business and Consumer Services Spur Investment Growth; VCs Pursue Growth Strategies for Maturing Web Companies

In 2010, growth in venture capital investment was driven by capital commitments outside of the Information Technology (IT) and Healthcare industries, which are traditionally venture capitalists' comfort zones. Throughout the year, 2,799 venture deals raised $26.2 billion, a 6% increase in deals and an 11% increase in capital invested over 2009, when 2,636 deals raised $23.6 billion, according to Dow Jones VentureSource.

In the fourth quarter of 2010, 735 deals raised $7.6 billion. This represents a 6% decrease in deals completed but a 6% increase in capital invested from the particularly strong fourth quarter of 2009, which tracked 782 deals completed and $7.2 billion invested.

"The Healthcare and IT industries accounted for more than half of venture investment in 2010 but are not currently driving the growth," said Jessica Canning, global research director, Dow Jones VentureSource. "Investment in business technologies, consumer solutions and energy companies gained the most traction in the last year."

The median deal size for 2010 was $4.4 million, down from the $5 million median in 2009.

Healthcare Investment Drops, IT Up Slightly

Venture investment in Healthcare companies fell 7% in 2010 to $7.4 billion for 702 deals. As usual, Biopharmaceuticals companies claimed the largest proportion of investment in the Healthcare industry, with 317 deals raising $3.4 billion. The industry's smallest sector, Healthcare Services, saw the strongest growth. Fifty-four Healthcare Services companies raised $1.2 billion, a 29% increase in deal activity and more than triple the capital raised in 2009.

IT companies garnered $7.2 billion for 889 deals in 2010, up from the $6.7 billion put into 858 deals in 2009. Software was the only IT sector to see an increase in both deal activity and capital invested as 608 deals raised $3.8 billion. The Communications and Networking sector was the hardest hit as it collected $1.2 billion for 90 deals, a 27% drop in deal activity and 21% drop in capital invested from the previous year.

Business and Consumer Services Spur Investment Growth

The Consumer Services industry garnered $4.4 billion for 483 deals in 2010, a 67% spike in capital invested and a 23% jump in deal activity over 2009. The industry, which is driven by investment in the Web-heavy Consumer Information Services sector, benefited from increased investor interest as well as sizable cash infusions for maturing Web companies.

"Venture capitalists are pursuing strategies more akin to growth equity investing than traditional venture capital with some of their maturing Web companies," said Scott Austin, editor of Dow Jones VentureWire. "Companies like Groupon, Zynga and Facebook are generating hundreds of millions of dollars in revenue so VCs don't need to exit quickly. Instead, they are growing these companies through acquisitions of technology and talent as well as business development, which can require sizable cash infusions."

In 2010, both investment and deal activity in the Business and Financial Services industry jumped 8% as 447 deals raised $3.3 billion. The largest proportion of investment in the industry went to the Business Support Services sector, which raised $2.5 billion for 337 deals and was largely driven by investment in advertising and marketing technologies and services.

Renewed Interest in Renewables

After the Energy and Utilities industry saw deal activity drop 16% and investment halved from 2008 to 2009, investors returned to the industry in 2010. Last year, 113 Energy and Utilities deals collected $2.5 billion, a 19% increase in deal activity and 39% increase in investment over 2009. The industry continued to be driven by the Renewable Energy sector, which collected $2 billion for 94 deals, a 35% increase in capital invested and a 25% increase in deal activity over the year earlier.

VCs Continue to Focus on Later-Stage Deals

Later-stage deals accounted for 40% of the year's deals and 61% of total capital raised in 2010, a slight change from 2009 when later-stage deals accounted for 38% of deals and 55% of capital raised. Seed- and first-rounds accounted for 36% of deals and 18% of capital invested during 2010, nearly unchanged from 2009 when early-stage rounds claimed 35% of deal activity and 19% of capital raised.

Cleantech Sectors of Solar, Wind and Smart Grid All Up in Venture Capital (VC) Investments in 2010


Smart Grid Has its Best Year; Solar Slightly Up from 2009

Mercom Capital Group, llc, a global clean energy market intelligence, consulting and communications firm, today released 2010 merger and acquisition (M&A) and funding activity for the cleantech sectors of solar, smart grid and wind.

To download a copy of funding reports for all sectors, visit:

Download charts and graphs: Solar 2010, Smart Grid 2010, Wind 2010.

“Considering 2009 was a recession year, solar was only slightly up in 2010. After a good second quarter, VC investments trended down in Q3 and Q4,” commented Raj Prabhu, Managing Partner at Mercom Capital Group. 2010 VC activity came in at $1.67 billion in 65 transactions, up 18 percent over 2009 ($1.4 billion). There was increased activity in large-scale solar project funding as well as debt and other funding types, pointing to an ease in the availability of credit after a challenging 2009. A total of 148 different investors participated in VC funding rounds in 2010. Credit facilities provided to Chinese companies by Chinese banks came in at an eye popping $34 billion, dwarfing all other transactions in solar in 2010.

Solar M&A transactions in 2010 totaled $2 billion in 44 deals. Solar project M&A activity amounted to another $450 million in 18 deals out of which only four were disclosed.

Large-scale project funding came in at $4.1 billion in 2010, while debt and other funding types logged in $36 billion of which $34 billion were in the form of credit facilities provided by Chinese Government Banks to Chinese companies, which included LDK Solar, Yingli Solar, JA Solar, Suntech and Trina Solar.

“It was a banner year for Smart Grid in terms of VC funding and M&A activity, with VC funding almost doubling compared to 2009. 87 different investors participated in VC rounds in 2010,” further commented Raj Prabhu. VC funding in the Smart Grid sector was at its highest compared to the previous two years with $769 million in 51 deals, an 88 percent increase over 2009 ($410 million). M&A activity was also robust for the Smart Grid sector in 2010 with 40 transactions. Only four were disclosed for a total of $1.3 billion, of which $1 billion was the acquisition of Ventyx by ABB.

The Wind sector also saw a 40 percent increase in VC and PE activity in 2010 with $277 million invested compared to $198 million in 2009. Large offshore wind projects boosted project funding activity to over $9 billion in 2010. M&A transactions in the Wind sector came to $1.3 billion in 23 deals, with the $860 million acquisition of John Deere Renewables by Exelon making up the bulk of it.

Download a copy of the complete annual report for all sectors.

Download charts and graphs: Solar 2010, Smart Grid 2010, Wind 2010.


Notable VC transactions for the Solar sector in 2010 included BrightSource Energy VC raise of $176 million, followed closely by Solyndra’s raise of $175 million and Amonix, which secured a series B raise of $129.4 million. Project funding transactions worth noting included, Torresol Energy (Valle 1 and Valle 2 CSP plants) for $760 million, Abengoa Solar and JGC Corporation (CSP Plant) for $451 million, SunPower (California Valley Solar Ranch Project) for $450 million and Abengoa Solar and ITOCHU Corporation (CSP Plant) for $448 million. 2010 top five investors in solar included Good Energies, New Enterprise Associates, Applied Ventures, Draper Fisher Jurvetson and Polaris Venture Partners. Project funding investments for 2010 were led by Mizuho Corporate Bank, Natixis, Unicredit Group, BNP Paribas and Centrobanca.

Among the top M&A transactions for Solar this year, the acquisition of Etimex Solar by Solutia for $326 million followed by Recurrent Energy by Sharp Corp for $305 million lead the list closely followed by NextLight Renewable Power by First Solar for $285 million and SunRay by SunPower for $277 million.

Solar Q4

Total VC funding for the Solar sector in Q4 came in at $238 million for 16 transactions out of which 14 were disclosed compared to $169 million for 11 disclosed transactions in Q3. Project funding came in at $2.32B in 14 disclosed deals out of a total of 15 deals. Noteworthy project funding transactions included $450 million for SunPower followed closely by $448 million for Abengoa Solar and ITOCHU Corporation. Significant VC investments included $110 million for Abound Solar, $26 million for 1366 Technologies and $25 million for SolarEdge Technologies.

At $669 million, there was a surge in M&A activity during Q4 compared to $586 million in Q3. Out of 27 M&A transactions in Q4, eight were disclosed, which was the same in Q3. Significant M&A transactions in the Solar sector included the acquisition of Glory Silicon Technology Investments (Hong Kong Limited) by Suntech Power Holdings for $127 million and the acquisition of Sino Light Investments by Solargiga Energy Holdings for $108 million.

Smart Grid

Top Smart Grid VC transactions included the $165 million raise by Landis+Gyr, the $106 million raise by Trilliant and the $52 million raise by OpenPeak. The acquisition of Ventyx by ABB for more than $1 billion remained the largest M&A transaction for the year. Other significant Smart Grid transactions included Maxim Integrated Products’ acquisition of Teridian Semiconductor for $315 million and NXP Semiconductors’ acquisition of Jennic for $20 million. Top five investors in Smart Grid in 2010 included GE Energy Financial Services, Emerald Technology Ventures, Kleiner Perkins Caufield & Byers, Foundation Capital and RockPort Capital Partners.

Smart Grid Q4

Funding activity in the Smart Grid sector during Q4 remained flat compared to Q3. Total disclosed investments in Smart Grid was $188 million for 18 transactions out of which 17 were disclosed compared to $187.25 million for nine transactions out of which seven were disclosed in Q3. Significant VC funding transactions in the sector included a $50 million raise by OPower, a $24 million Series B raise by AlertMe and a $24 million Series C raise by Ice Energy. Debt and other funding for the quarter totaled $15 million for one transaction. Out of 15 Smart Grid M&A transactions, none were disclosed.


VC transactions for 2010 increased to $277 million for 11 transactions out of which 10 were disclosed compared to $198 million for 20 transactions in 2009. Significant VC transactions in 2010 included eGen’s raise of $79 million followed by Champlin Windpower and Nordic Windpower’s raise of $50 million and $38 million (Series C) respectively. Top VC investors for the sector included Kleiner Perkins Caufield & Byers, Khosla Ventures and MissionPoint Capital Partners.

Among significant large-scale project funding transactions, C-Power raised $1.7 billion, followed by Terra-Gen Power which raised $1.2 billion. Rabobank, European Investment Bank, and Manulife Financial Corporation (Manulife) were some of the investors who topped the list for Wind project funding this year. Other debt transactions included China Windpower, which raised a $732 million credit line and Pattern Energy Group, which raised $400 million in equity financing.

M&A transactions for the wind sector including projects in 2010 came in at $2.37 billion in 49 deals. The acquisition of John Deere Renewables by Exelon Corporation for $860 million, Seajacks International by Riverstone Holdings for $207 million, and Clipper Windpower by United Technologies Corp for $112 million is the major M&A activities for the year.

Wind Q4

In the fourth quarter, the Wind sector VC investments came in at $59 million for three deals compared to the third quarter which came in at $102 million for the same number of deals. Project and other funding investments increased to $4.9B for 24 transactions out of which 23 were disclosed. Notable VC transactions included a $50 million raise by Champlin Windpower, a $5.8 million raise by Greengate Power Corporation, and a $3.14 million raise by NGenTec. Significant project funding transactions included C-Power for $1.7B, Trianel for $919 million and Brookfield Renewable Power for $350 million.

Out of nine M&A transactions in Q4, three were disclosed for a total of $707 million compared to Q3 which had a total of nine deals out of which three were disclosed for $922 million. Significant transactions in the sector included the acquisition of Clipper Windpower by United Technologies for $112 million, followed by Mengdong Xiehe New Energy by Jilin Power Share for $27.5 million. The most notable project acquisition was Brookfield Renewable Power’s Comber Wind Project acquisition by Brookfield Renewable Power Fund for $567 million.

According to the Department of Energy, $2.5 billion was spent in the fourth quarter of 2010 compared to $3.04 billion in Q3. DOE has spent a total of $10.39 billion to date out of the $32 billion funding commitments from the Recovery Act.

To download all funding transactions for Q4.


2010 funding and merger and acquisition (M&A) activity for the healthcare IT sector.


Mercom Capital Group, llc, a global market intelligence, consulting and communications firm, today released 2010 funding and merger and acquisition (M&A) activity for the healthcare IT sector.

The Healthcare IT sector had $211 million in venture capital (VC) funding in 2010 in 22 deals. Sixty-two different investors participated in these funding rounds. $629 million was raised by Healthcare IT companies outside of VC funding, through various forms of debt and credit facilities, which is a positive sign for the sector. Significant VC transactions included a $60 million Series C raise by Castlight Health, a $30 million raise by PatientSafe Solutions and a $20 million Series D raise by Phreesia. The top five investors in the sector for 2010 included VantagePoint Venture Partners, Long River Ventures, Morgenthaler Ventures, OpenView Venture Partners and Osage Partners.

M&A activity was robust in the Healthcare IT sector totaling almost $4 billion in 85 different deals. Only 21 deals were disclosed, indicating a much larger M&A activity number. Notable transactions included the $1.3 billion merger of Allscripts and Eclipsys, the acquisition of Phase Forward by Oracle for $685 million and the acquisition of Medicity by Aetna for $500 million. “Consolidation and strategic acquisitions among Healthcare IT companies helped fuel this surge in M&A activity,” commented Raj Prabhu, Managing Partner at Mercom Capital Group.

Healthcare IT – Fourth Quarter

VC funding activity decreased in Q4 coming in at $11 million in five transactions out of which three were disclosed, compared to $62 million for seven transactions during Q3. Notable VC transactions included a Series A raise of $7.5 million by DICOM Grid and a $2.6 million raise by Halfpenny Technologies. Debt and other funding activity amounted to $567 million in two disclosed transactions, Agfa’s $130 million loan by the European Investment Bank and the $394 million loan provided to CompuGroup Medical underwritten by SEB.

M&A activity for the sector saw a surge in the number of deals compared to Q3. Out of 30 M&A transactions, seven were disclosed for a total of $860 million compared to the third quarter that had a total of 19 deals of which three were disclosed for $326 million. The $500 million acquisition of Medicity by Aetna and the $250 million acquisition of PHNS by The ConJoin Group were the notable transactions that took place in Q4.

Mr. Prabhu continued, “Healthcare IT funding steadily dropped in Q4, while the number of M&A transactions almost doubled, indicating that we might be seeing some consolidation in the industry.”

Download healthcare IT funding reports.

Download charts and graphs.

Friday, January 21, 2011


Nearly All Industry Sectors Show Double-Digit Gains in 2010

Venture capitalists invested $21.8 billion in 3,277 deals in 2010, an increase of 19 percent in dollars and a 12 percent rise in deals over the prior year, according to the MoneyTree Report by PricewaterhouseCoopers LLP and the National Venture Capital Association (NVCA), based on data from Thomson Reuters. The rise in venture investments in 2010 represents the first time the annual investment level has increased since 2007. Investments in the fourth quarter of 2010 totaled $5.0 billion in 765 deals, a 2 percent increase in dollars but a 3 percent decrease in deals from the third quarter of 2010 when $4.9 billion went into 789 deals.

Double-digit increases in investments in 2010 were spread across almost every industry, including the Clean Technology and Internet-Specific sectors. Investment dollars also increased across every stage of development category, with the exception of a 2 percent decrease in Seed Stage investments. First-time financings rose in 2010 compared to the prior year, however, fourth quarter investing did show a decline in both first-time dollars and deals when compared to Q3 2010.

National data including breakouts by industry, stage and first rounds

Regional and state data

Top 10 deal list for Q4 2010

Top 10 deal list for Full Year 2010

Sector and Industry Analysis

The Software industry recaptured its status as the single largest investment sector for the year, rising 20 percent over 2009 to $4.0 billion in 2010, which was invested into 835 deals, a 21 percent rise over the prior year. Software investing also increased in the fourth quarter of 2010 to the highest quarterly dollar level since Q3 2007 with $1.1 billion going into 218 deals. Software was also the number one sector for dollars invested and total number of deals in Q4 and was the only industry sector to receive more than $1 billion in the fourth quarter.

Biotechnology investing increased modestly in 2010 by 3 percent in dollars and 8 percent in deals, with $3.7 billion going into 460 deals, dropping it to the second largest investment sector for the year in terms of dollars and deals. For the fourth quarter, Biotechnology investing declined 24 percent in dollars and fell 15 percent in the number of deals from the third quarter with $685 million going into 94 rounds.

The Medical Device industry fell 9 percent in dollars and was flat in terms of deals in 2010, finishing the year as the fourth largest sector with $2.3 billion going into 324 deals. For the fourth quarter, Medical Devices saw a drop of 31 percent in dollars and 15 percent in deals from Q3 2010 with $400 million going into 71 deals. The Life Sciences sector (Biotech and Medical Devices combined) accounted for 28 percent of all venture capital dollars invested in 2010 compared to 33 percent in 2009.

The Clean Technology sector experienced a significant increase in 2010 with $3.7 billion invested in 267 deals. This investment level represents a 76 percent increase in dollars and a 37 percent increase in deal volume from 2009 when $2.1 billion went into 195 deals. These investment levels remained below 2008 levels of $4.0 billion into 277 deals, which was an all-time high. Clean Technology investing accounted for 17 percent of all venture capital dollars in 2010 compared to 11 percent in 2009. In the fourth quarter, venture capitalists invested $765 million into 57 Clean Tech deals. For the full year 2010, five of the top ten deals were in the Clean Tech category; four of the top 10 deals in Q4 fell into the Clean Tech category as well. Clean Technology crosses traditional MoneyTree industries and comprises alternative energy, pollution and recycling, power supplies and conservation.

Internet-specific companies also saw an increase in investing in 2010. The $3.78 billion going into 729 deals represented a 28 percent increase in dollars and 14 percent in deals from 2009 when $2.9 billion went into 638 deals. For the fourth quarter, Internet-specific investment increased 65 percent in dollars and 19 percent in deals with $1.2 billion going into 190 deals compared to $745 million going into 160 deals in the third quarter of 2010. ‘Internet-specific’ is a discrete classification assigned to a company whose business model is fundamentally dependent on the Internet, regardless of the company’s primary industry category. These companies accounted for 17 percent of all venture capital dollars in 2010, up from 16 percent in 2009.

With the exception of the Life Sciences and the Networking and Equipment industries, every industry category had double digit increases for the year. Industry sectors experiencing some of the biggest dollar increases in 2010 included: IT Services (44 percent); Telecommunications (77 percent); and Media & Entertainment (18 percent).

Stage of Development

Investments into Seed Stage companies decreased 2 percent in terms of dollars but increased 4 percent in terms of deals with $1.7 billion going into 363 companies in 2010. For the fourth quarter, venture capitalists invested $243 million into 80 seed stage companies, a 14 percent decrease in dollars and a 7 percent decline in deals compared to the third quarter of the year. Seed Stage companies attracted 8 percent of dollars and 11 percent of deals in 2010 compared to 10 percent of dollars and 12 percent of deals in 2009.

Early Stage investments experienced double-digit increases, rising 15 percent in terms of dollars and 25 percent in terms of deals in 2010 to $5.3 billion in 1,147 deals. For the fourth quarter, Early Stage deals increased, with $1.4 billion going into 285 deals, a 7 percent increase in dollars and 4 percent increase in deals from Q3. Early Stage companies attracted 24 percent of dollars and 35 percent of deals in 2010 compared to 25 percent of dollars and 31 percent of deals in 2009.

Expansion Stage investments increased in 2010 by 47 percent in dollars and 21 percent in deals with $8.5 billion going into 1,021 deals. Expansion funding rose in the fourth quarter, increasing 32 percent from the prior quarter to $2.2 billion. The number of deals also increased during the quarter, improving 7 percent to 245. Expansion Stage companies attracted 39 percent of dollars and 31 percent of deals in 2010 compared to 32 percent of dollars and 29 percent of deals in 2009.

In 2010, $6.3 billion was invested into 746 Later Stage deals, a 3 percent increase in dollars and a 9 percent decrease in deals for the year. For the fourth quarter, $1.2 billion went into 155 deals, which represents a 29 percent decrease in terms of dollars and a 22 percent decline in terms of deals from the third quarter of 2010. Later Stage companies attracted 29 percent of dollars and 23 percent of deals in 2010 compared to 34 percent of dollars and 28 percent of deals in 2009.

First-Time Financings

First-time financings jumped 29 percent both in terms of dollars and deals from the prior year, rising to $4.3 billion going into 999 companies. However, the dollar level and number of companies receiving venture capital for the first time decreased in the fourth quarter by 32 and 8 percent, respectively, over the third quarter, dropping to $836 million into 235 companies. The fourth quarter of 2010 was the first time since the third quarter of 2007 in which first-time financings did not exceed one billion dollars.

Industries receiving the most dollars in first-time financings in 2010 were Software, Biotechnology, and Industrial/Energy. Industries with the most first-time deals in 2010 were Software, Biotechnology, and Media/Entertainment.

Fifty-one percent of first-time deals in 2010 were in the Early Stage of development followed by the Seed Stage of development at 24 percent, Expansion Stage companies at 17 percent and Later Stage companies at 8 percent.

MoneyTree Report results are available online at

Thursday, January 13, 2011

Venture Firms Raised $2.4 Billion in 4Q, Bringing 2010 Total to $11.6 Billion

U.S. Venture Capital Fund-Raising Continues Decline in 2010, Hits Seven-Year Low


Late-Stage Funds Saw a Substantial Jump

Recent improvement in the exit markets has not enticed limited partners (LPs), still haunted by the industry’s lackluster returns over the last decade, back to venture funds. In 2010, U.S. Venture Capital fund-raising fell to a seven-year low as firms raised $11.6 billion across 119 funds, a 14% drop from the $13.5 billion collected by 133 funds in 2009, according to figures from Dow Jones LP Source. In the fourth quarter, 15 funds raised $2.4 billion, a 48% drop from the same period last year.

Across the U.S. private-equity spectrum, which includes venture funds, 336 funds raised $86 billion in 2010, down 16% from 2009. (See detailed PE breakout.)

“Only the best fund managers are raising capital, and even some of those firms are forced to downsize in line with a smaller exit expectations,” Scott Austin, editor of Dow Jones VentureWire, said. “As a result, we expect to see a continued shakeout in the venture industry.”

Dow Jones LP Source classifies multiple fund closings (first, interim, final) separately, based on the year of the closing, to provide an accurate view of the annual fund-raising environment.

Late-Stage Funds See Increase

Both early-stage and multi-stage funds continued to decline in 2010; however, late-stage funds saw an increase. Eight late-stage funds raised $1.5 billion in 2010, a 68% jump from the $887 million raised by nine funds in 2009. In the fourth quarter, late-stage funds raised $390 million, nearly tripling the amount raised during the same period last year.

Multi-stage funds accounted for the majority of venture funds raised, as 38 funds collected $5.4 billion, down 26% from last year. It has become apparent that LPs are growing more selective, both with the funds they invest in and the amount of capital they invest in the asset class. In response, many firms are downsizing their funds. For example, Menlo Ventures closed on $400 million for its eleventh fund, one–third the size of its 2005–vintage predecessor.

Seventy-three early-stage funds collected $4.8 billion, a 12% drop from last year’s total. Some of this early-stage capital was raised by super angels turned venture capitalists. In the fourth quarter, Andreessen Horowitz, a firm founded by Marc Andreessen and Ben Horowitz, raised a $650 million fund, its second fund in two years. Former Google executive Aydin Senkut founded Felicis Ventures, which raised a $40 million fund last year.

Wednesday, January 5, 2011

More on proposed investment adviser SEC registration exemptions


The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) repealed the exemption from registration under the Investment Advisers Act of 1940 (Advisers Act) that was frequently utilized by advisers to private equity funds, hedge funds and venture capital funds: the so-called “15 client” exemption. The Dodd-Frank Act also provided a much narrower registration exemption under the Advisers Act for such advisers and authorized the Securities and Exchange Commission (the Commission) to prepare implementing regulations for the new limited exemptions. Recently proposed regulations reflect the Commission’s effort to further define the exemptions applicable to: (i) advisers solely to venture capital funds, without regard to the number of such funds advised by the advisor or the size of such funds; (ii) advisers solely to “private funds” with less than $150 million in assets under management in the United States, without regard to the number or type of private funds advised; and (iii) non-U.S. advisers with less than $25 million in aggregate assets under management from U.S. clients and private fund investors and fewer than fifteen such clients and investors.

Venture Capital Fund Advisers

Proposed regulation 203(1)-(1) defines the terms “venture capital fund” and “pre-existing venture capital fund.” A venture capital fund is a “private fund” that:

* invests in equity securities of private companies in order to provide operating and business expansion capital and at least 80 percent of each such company’s securities owned by the fund must be acquired directly from the company;
* directly, or through its investment advisers, offers or provides significant managerial assistance to, or controls, each portfolio company;
* does not borrow or otherwise incur leverage;
* does not regularly offer its investors redemption or other similar liquidity rights;
* represents itself as a venture capital fund to investors; and
* is not registered under the Investment Company Act and has not elected to be treated as a business development company.

In addition to exempting from federal registration all advisers providing advice solely to venture capital funds fitting the definition above, the proposed regulations also grandfather advisers to certain pre-existing venture capital funds (a term also defined in the proposed regulations).

Monday, January 3, 2011

[x+1] Raises $10 Million in Funding Round Led By Intel Capital


Online targeting platform leader [x+1] announced today it has closed a $10 million Series B funding round led by Intel Capital, the global investment organization of Intel Corp. Existing investors Advanced Technology Ventures, Blue Chip Venture Company and Hudson Venture Partners also participated. The funding will be used to support [x+1]’s growth initiatives centered on its digital marketing hub, which empowers multi-channel audience targeting at scale.

“[x+1] has set the standard for excellence in end-to-end digital media targeting technology,” said Lisa Lambert, Vice President of Intel Capital. “We are excited to work with [x+1] to accelerate the adoption of their media software services and to expand their international reach.”

“Intel Capital’s investment reflects our ability to continually expand our client base among marketers and agencies and to develop new breakthrough solutions that deliver measurable results,” said John Nardone, [x+1]'s chairman and CEO. “We are now in a great position to expand our growth initiatives. 2011 will be a big year for us, and for our major Fortune 500 clients to improve the scale, performance and cost-effectiveness of their online marketing initiatives.”

Recent significant enhancements to [x+1]’s leading digital marketing hub empower customer contact strategies by synchronizing their messages anywhere people are accessing the internet, including websites, landing pages, email, video and mobile.

About [x+1]

[x+1], the online targeting platform leader, maximizes the return on marketing investment ROI) of websites and digital media using its patented targeting technology. Providing the first end-to-end Digital Marketing Hub for advertisers and agencies, it optimizes engagement rates and lift conversion in both media and on websites. Its predictive marketing solutions enable automated, real-time decision making and personalization so the right advertisement and content is delivered to the right person at the right time. Top companies in financial services, telecommunications, online services and travel have significantly increased the performance of their digital marketing using the services of [x+1]. The company is headquartered in New York City. For more information, visit;

Intel Capital, Intel’s global investment organization, makes equity investments in innovative technology start-ups and companies worldwide. Intel Capital invests in a broad range of companies offering hardware, software and services targeting enterprise, home, mobility, health, consumer Internet, semiconductor manufacturing and cleantech. Since 1991, Intel Capital has invested more than US$9.7 billion in over 1,100 companies in 48 countries. In that timeframe, 189 portfolio companies have gone public on various exchanges around the world and 258 were acquired or participated in a merger. In 2009, Intel Capital invested US$327 million in 107 investments with approximately 50 percent of funds invested outside the U.S. and Canada. For more information on Intel Capital and its differentiated advantages, visit




Venture-backed company exit activity was driven by a record-breaking M&A market and the biggest quarter for IPOs since the third quarter of 2000, according to the Exit Poll report by Thomson Reuters and the National Venture Capital Association (NVCA). The fourth quarter ended with 32 venture-backed IPOs, more than double the number of IPOs seen during the third quarter of 2010 The quarterly volume was driven by 17 Chinese companies funded by U.S. venture capital funds that went public on US exchanges. For full-year 2010, there were 72 venture-backed IPOs, the biggest year for activity since 2004. Over 400 acquisitions were completed during full year 2010, the biggest year, by number of deals, for venture-backed M&A exits since records began in 1985.

“In 2010 we moved from "abysmal to viable" in the venture-backed IPO market,” said Mark Heesen, president of the NVCA. “The number of offerings has improved in large part due to Chinese venture-backed companies going public on U.S. exchanges. We would like to see U.S. company IPOs grow at this pace in the coming year.”

“The record acquisition level illustrates a recognition by larger corporations that there is considerable innovation within these venture-backed companies, while VCs and founders are acknowledging the acquisition as the smoother exit,” continued Heesen. “However, volume is not the only important measure of the health of the venture exit market. We are pleased to see improvements in IPO performance and acquisition prices at the end of 2010 as well. We believe this momentum will continue in 2011 and look forward to better returns.”

IPO Activity Overview

There were 32 venture-backed IPOs valued at $3.6 billion in the fourth quarter of 2010, almost three times the number of IPOs seen during full year of 2009. Seventeen of the fourth quarter offerings were Chinese based venture-backed companies. The offerings spanned a diverse set of industries.

Half of the 32 IPO exits for the quarter were outside of Information Technology and Life Sciences, accounting for a total of $1.7 billion. Beijing, China-based SinoTech Energy, Ltd. (CTE), a provider of enhanced oil recovery services, was the largest offering outside of technology and life sciences, raising $167.8 million on NASDAQ.

FleetCor Technologies (FLT), a provider of credit card processing solutions for the business fleet marketplace based in Norcross, Georgia, began trading on December 15th and raised $291.5 million, marking the largest venture-backed IPO of the quarter.

For the full year 2010, 26 number of companies listed on the New York Stock Exchange (NYSE) and 46 listed on the NASDAQ stock exchange.
Of the 32 IPOs in the fourth quarter, 20 were trading at or above their offering prices as of 12/31/2010. 42 venture-backed companies are currently filed for an initial public offering with the SEC.

Mergers and Acquisitions Overview

As of December 31, 2010, 88 venture-backed M&A deals were reported for the fourth quarter, 36 which had an aggregate deal value of $5.7 billion. The average disclosed deal value was $157.7 million up 18 percent from Q3 2010. Fourth quarter volume marks a 21 percent decrease from the third quarter of 2010, but brings the total number of venture-backed M&A exits to 420 – the largest full year for M&A exits since records began in 1985. The previous record was set in 2007, when 380 venture-backed companies were sold.

The information technology sector led the venture-backed M&A landscape, with 72 deals and a disclosed total dollar value of $2.8 billion. Within this sector, internet specific and computer software companies accounted for the bulk of the targets with 32 and 21 transactions, respectively, across these sector subsets.

In the biggest venture-backed deal of the quarter, HealthSpring Inc acquired Bravo Health, Inc, a Baltimore, Maryland-based provider of healthcare services, for $545.0 million.

Deals bringing in the top returns, those with disclosed values greater than four times the venture investment, accounted for 45 percent of the total during full year 2010. Venture-backed M&A deals returning less than the amount invested accounted for 22 percent of the annual total.

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