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"Dan Primack"


Dan Primack

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Term Sheet -- Friday, December 3


03-12-2010 14:40:55

Fortune Finance Street Sweep Term Sheet Economics Tech Wall Street Washington

The Term Sheet by Dan Primack

Friday -- December 3, 2010
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Random Ramblings
Back in January, I reported that Roger Ehrenberg was raising a small fund to invest in big data startups. It
was the first institutional venture effort for New York-based Ehrenberg, a onetime quant trader who since
has gone on to become a prolific angel investor and blogger on startup issues.
At the time, Ehrenberg was seeking around $25 million, without plans to tap "traditional" VC fund investors
like foundations or pension funds. He also was expecting a final close by the end of March.
Fast forward ten months, and some things have changed. Ehrenberg did raise money by March, securing a
first close of approximately $30 million from prop trading firms, hedge funds, other venture capitalists and a
media empire (Thomson Reuters). But he also could ignore inbound interest from the usual LP suspects,
so he decided to open things up a bit.
Earlier this week, Ehrenberg held a final close on the fund with $50 million in capital commitments (more
than the original target, but less than the $80 million or so in requested subscriptions).
"We brought in three institutions plus an endowment," Ehrenberg says of the new support, which included
commitments from Cendana Capital, TIFF and Horsley Bridge. "Going to $50 million doesn't change our
strategy of seed and early-stage investing in big data, but it does provide us additional capital to "pursue a
life-cycle approach to supporting our companies."



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What that means is that IA Ventures is following a fairly traditional model of VC investing -- creating a
concentrated portfolio and remaining involved until its companies either go public or are sold. This stands in
contrast to many of Ehrenberg's super-angel brethren, whose investment strategies have been derisively
referred to as "spray and pray."
IA Ventures also is sticking hard to its focus on big data, which it describes as "the belief that managing
and extracting value from massive, occasionally unstructured, often real-time data sets is a competitive
advantage." So far it has 15 disclosed portfolio companies, including The Trade Desk (real-time bidding for
online ads), Recorded Future (extracts time and event information from the web) and MetaMarkets (supplyside price discovery and predictive analytics platform for media industry).
"The space Roger and his team are targeting is really burgeoning," says one of IA Ventures' institutional
investors. "A wave is starting to build, and I think that big data in a couple of years will be where things like
mobile are today. I'm hearing some other VCs begin to talk about it, but these guys seem to understand it
better than almost anyone else."
In addition to Ehrenberg, the IA Ventures team includes Brad Gillespie (ex-Microsoft, Lockheed Martin),
Ben Siscovick (Allen & Co.) and Justin Singer (shared with Kinetic Trading, an IA portfoflio company).
*** New York Life Insurance Co. yesterday announced that it has acquired a majority stake in Private
Advisors, a Richmond, Va.-based manager of private equity, venture capital, hedge and arbitrage funds-offunds. The initial deal is for a 60% stake, but it will expand to 100% over the next seven years.
Fortune has obtained a letter sent by Portfolio Advisors to its clients, and has posted it here.
*** Much to my surprise, Groupon co-founder and CEO Andrew Mason emailed me yesterday to engage
in the miniature dollhouse discussion. He asked me to send over a set of questions, which I did. Very much
looking forward to his reply. And, no, I dont care if its farce.
*** Have a great weekend!

6 things to read

Pre-Marketing, including royalty financing for tech startups, why active portfolio management
doesn't lead to positive alpha, JPMorgan's Madoff problem, Steve Schwarzman's European
vacation and what WikiLeaks might know about Bank of America.
Andy Serwer: Barry Diller explains why he stepped down as CEO of IAC
Colin Barr: Four questions for China skeptic John Magnus
Scott Woolley: Blame local TV, not your mobile carrier, for dropped calls
Shelly DuBois: Why going unconventional is BP's best bet
Dan Primack: Subprime shorter Greg Lippman takes the stage

The Big Deal

LivingSocial, a Washington, D.C.-based online deals site, has secured a $175 million investment from It also raised $7 million in new funding from existing shareholder Lightspeed Venture
Partners. Prior to these infusions, LivingSocial had raised over $30 million from Lightspeed, U.S. Venture
Partners, Grotech Ventures and Revolution LLC.
This is a big deal for a variety of reasons. First, the dollar amount is absolutely enormous. For context, rival



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Groupons total VC funding falls short of Amazons investment in LivingSocial. Second, it is entirely
possible that this deal could have an impact on the final Google-Groupon acquisition price, as LivingSocial
now looks poised to make a real competitive run. Third, the Google-Groupon deal ultimately could make
this investment look like Bezos folly, since LivingSocial could have a tough time getting visibility on the
worlds largest search site.
Finally, its been a long time since Ive seen so much investor hyperactivity in an online vertical. Not just
LivingSocial and Groupon, but also new funding rounds (see below) for Lashou and WhaleShark Media.
Hey tail, stop wagging that dog

VC Deals, a Chinese group buying website, has raised $50 million in second-round funding. Backers
include Tenaya Capital, Norwest Venture, the Rebate Network and return backer GSR Partners.
10gen, developer of the MongoDB on-relational database, has raised $6.5 million in new VC funding.
Sequoia Capital led the round, and was joined by return backers Flybridge Capital Partners and Union
Square Ventures.
WhaleShark Media, an Austin, Texas-based online coupon and deals marketplace, has acquired, a website that lists and ranks online retail, grocery and printable coupons and shopping
tips. No financial terms were disclosed. No pricing terms were disclosed, except that the deal was financed
by venture capital firms Austin Ventures, Norwest Venture Partners and Adams Street Partners.
Regenesance BV, a Dutch drug developer focused on treating treat acute and chronic nerve disorders,
has raised an undisclosed amount of seed funding Life Sciences Fund Amsterdam.

Private Equity Deals

Apollo Management is in talks to acquire hair salon chain Regis Corp. (NYSE: RGS), according to the NY
Post. The company announced back in August that it was seeking a buyer. Since then, its value has risen
more than 34% to around $1.19 billion.
The Blackstone Group is in talks to invest around $100 million in Indian power producer Visa Power Inc.,
according to Livemint.
Bridgepoint Capital has acquired BAS, a UK-based provider of building energy management systems. Bo
financial terms were disclosed. BAS was formed in 2006, via a spinout from Siemens.
The Carlyle Group and Clessidra are interested in acquiring Dada, a listed Italian mobile phone and
Internet company, according to Reuters. RCS MediaGroup currently holds a 50.7% stake in Dada, which is
valued at nearly 90 million.
Edmond de Rothschild Capital Partners has acquired a majority stake in Baba, a French maker of
baby products. No financial terms were disclosed.
Encompass Digital Media, a portfolio company of Tennenbaum Capital Partners, has acquired the
content distribution business of Ascent Media Cop. (Nasdaq: ASCMA). The deal was valued at $113



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Friedman Fleischer & Lowe has agreed to acquire Transtar Holding Co., a Cleveland-based automotive
transmission distribution company, from Linsalata Capital Partners. The deal was disclosed in an S&P
notice, which disclosed $425 million in leveraged financing. No equity information was disclosed, although
earlier press reports suggested around a $700 million asking price for Transtar.
Inflexion Private Equity has acquired Asperity Employee Benefits, a UK-based provider of flexible
employee benefit programs, for 25.5 million.
Levine Leichtman Capital Partners has acquired Luminator Technology Group, a Plano, Texas-based
provider of LED displays and lighting products for applications in metropolitan and commercial
transportation systems. The seller was Mark IV LLC. No financial terms were disclosed.
Sterling Infosystems Inc., a New York-based provider of employment and background screening
services, has raised an undisclosed amount of private equity funding from Calera Capital.
PBF Holding Co., a portfolio company of The Blackstone Group and First Reserve Corp., has acquired to
acquire a 170,000 barrel-per-day refinery in Toledo, Ohio from Sunoco Inc. The deal could be valued at
upwards of $525 million, plus the facilitys existing hydrocarbon inventory.

PE-backed IPOs
Fortegra Financial Corp., a Jacksonville, Fla.-based insurance services company, has set its IPO terms to
7.7 million common shares being offered at between $14 and $16 per share. It would have an initial market
cap of approximately $325 million, were it to price at the high end of its range. The company plans to trade
on the NYSE under ticker symbol FRF, with Piper Jaffray and SunTrust Robinson Humphrey serving as colead underwriters. Summit Partners holds an 87.3% pre-IPO stake, and plans to sell just over 3 million
shares in the IPO.
FXCM Inc., a New York-based online provider of foreign exchange trading and related services, raised just
over $210 million in its IPO. The company priced 15.06 million shares at $14 per share ($13-$15 range),
and is now trading on the NYSE under ticker symbol FXCM. Credit Suisse, JPMorgan and Citigroup served
as co-lead underwriters. Shareholders include Five Elms Capital and Lehman Brothers.

Green Dot Corp. (NYSE: GDOT), a Monrovia, Calif.-based seller of prepaid debit cards, has filed for a
secondary public offering of nearly 4.3 million shares. The company raised $164.1 million in an IPO earlier
this year at $36 per share, and finished trading Monday at $59.65 per share. Green Dot investors Sequoia
Capital and Technology Crossover Ventures are not listed as selling shareholders on this offering.
Pacific Equity Partners in in talks with potential bidders for The Hoyts Group, an Australian cinema
chain. PEP also may choose to float Hoyts.

Other Deals
Walter Energy (NYSE: WLT) has agreed to acquire Western Coal Corp. (TSX: WTN) for



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C$3.3 billion.

Firms & Funds

Religare Enterprises Ltd. confirmed earlier reports that it will acquire a 55% stake in Landmark Partners,
a Connecticut-based manager of private equity funds-of-funds, for $171.5 million.
Morgan Stanley has partnered with the Chinese city of Hangzhou to launch yuan-denominated private
equity funds. According to Reuters, the initial goal is to raise 1.5 billion yuan ($225m).
Salient Partners, a $16 billion asset and wealth management firm, has agreed to acquire RDG Capital, a
Houston, Texas-based wealth advisory and MLP asset manager with approximately $1 billion in assets
under management.

Moving In, Up and On

Robert Cummings Jr. has agreed to join J.P. Morgan Chase as vice chairman of investment banking. He
previously spent 27 years at Goldman Sachs, before retiring in 2001.
Scale Venture Partners has promoted Stacey Curry Bishop and Andy Vitus from principal to partner.
The firm also has hired Rishi Taparia and Osman Ahmed as analysts.

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