Politicians, recently briefed on private equity by their advisers, have already started using it as a political football. Last week, following sustained media attacks on buyout funds, Tony Blair came out in unequivocal support of the industry. Two days later, Ed Balls, widely tipped to be the next Chancellor of the Exchequer, was less supportive. “I think there is a general view ... that they do need greater transparency,” Mr Balls told newspapers. “Some of their approach to valuation has not been as clear as it could be.”
These divergent views may represent genuine policy differences. On the other hand, a cynical observer might regard Mr Blair’s comments as being informed by his rumoured desire to join the industry when he leaves office.
Either way, there is more to this mild spat than meets the eye. Consider Mr Blair’s choice of words: “Some of those who are private equity people or venture capitalists perform an important function in our economy, so we need to be careful.”
Apart from being a little short on facts, Mr Blair makes no distinction between private equity (for which read: buyout) and venture capitalism, despite the whole row centring on buyouts and their contribution or otherwise to the broader economy.
Mr Blair is not the only culprit. Few commentators in the mainstream media or in economic or political life appear to appreciate the difference either.
Does this matter? Very probably. Public perception is important in any industry, so while Mr Blair was trying to be helpful, putting VC in the same frame as buyouts was an unhappy consequence. Consider that in some European countries – Germany, Denmark and Sweden, for example – dealing with a buyout fund attracts considerable public opprobrium to the company concerned. For venture-backed companies to suffer the same stigma would be senseless and damaging.
Other potential harmful effects include the attitude of governments when creating law and setting tax rates. They are notoriously indifferent to the wishes of minority groups so if stringent laws and taxes were applied to buyout funds, VCs could well bear the brunt too.
Given the potential annoyances and dangers, VCs and their representatives, such as the EVCA and BVCA, should be fighting hard for independent visibility. But there is little evidence of this happening. Official communiqués from the BVCA and EVCA habitually merge headline figures on VC and buyout funds. Although breakdowns can be found within the figures, the headline numbers, which are heavily skewed by buyouts, are all many people look at. What does that teach them about the VC segment?
Perhaps it is time for change. The launch of a new body to represent the interests of the VC industry alone is not far away. Founders include Doug Richard, chairman of Library House; Simon Cook, chief executive of Esprit Capital Partners and Isabel Fox, a partner at media consultancy Ballard Associates.
It will be interesting to see if and how the BVCA/EVCA reacts to this proposed new grouping. Let us know your thoughts and if you would like to be involved.
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The Week's Deals
Twenty-three companies gained venture funding this week, five were of undisclosed value. The deals raised a total of €70.6m, which is €3.9m on average.
Mapflow, the Ireland-based provider of location intelligent products, has raised additional funding from
SOS Ventures. The investment totals $5.1m (€3.9m), with a further $6.6m (€5m) being triggered if the company achieves future milestones. The money will primarily be used to fund additional R&D activities. The deal also sees founder Simon Dick, investor
Trinity Venture Capital and chairman Stephen Cloonan sell shares and step down from the board.
MATE, the Israel-based video surveillance technology developer, has raised $6m (€4.5m) from
China Singapore Venture Capital,
Infinity Venture Capital and
Peleg Group. MATE has developed a number of video surveillance technologies that include behavior tracking and people-counting. Also announced was an agreement in which one of China's ‘leading’ IT providers will license Mate's technology and adapt it for the Chinese market. Infinity Venture Capital plans to invest $3m in the undisclosed Chinese company.
Uniservity, the UK-based provider of web-based learning products, has raised £2.4m (€3.56m) from
Quester Capital Management. The company focuses on the not-for-profit sector and has more than 500 clients worldwide. It currently works with one in ten secondary schools in the UK.
FixYa, the Israel-based consumer support website, has raised $4m (€3m) from
Mayfield Fund and
Pitango Venture Capital. The idea behind FixYa is to aggregate all support information that is scattered throughout the internet in a single location. In addition, it has a knowledgebase that is updated by a live community of users who share their experiences of technical problems and solutions.
Elsewhere,
Acal Energy, the UK-based fuel cell technology developer, has raised £1.6m (€2.38m) from
RisingStars Growth Fund,
NStar,
Synergis Technologies and
The Carbon Trust;
Yedda, the Israel-based online question and answer service, has received $2.5m (€1.89m) from
Genesis Partners and private investors; and
MycoTeQ, the Denmark-based drug discovery company, has raised an undisclosed amount from
SEED Capital Denmark.
See below for a complete list of deal headlines.
Did we miss anything? If you think we have missed a deal or know of a deal that is about to close then send us your
deal news.
The Week's Exits
OPi, the France-based biopharmaceutical company, has been acquired by US-based
EUSA Pharma. EUSA raised $175m to fund the takeover, led by
Essex Woodlands and
3i. EUSA’s strategy is to build a portfolio of products in oncology, pain and critical care, and to create a balanced company in the EU and USA
Genpoint, the Norway-based biotechnology company, has been acquired by NorDiag. Genpoint specialises in automated sample preparation of DNA/RNA from bacteria, viruses, parasites and human cells in difficult biological samples such as urine, sputum, and faeces.
Transchip, the Israel-based fabless semiconductor company for the camera-phone market, is reportedly in negotiations to be acquired by Samsung for more than $100m.
BigBand Networks, the Israel-based developer of multimedia communications servers, has set the price for its Nasdaq IPO, valuing the company at more than $570m.
Elsewhere
Metalline, the UK-based designer and manufacturer of portable airfield lighting systems for civil and military clients, is to shut down at the end of the month.
People Moves
Operax, the Sweden-based provider of software to telecommunications operators, has appointed Richard Lowe as its new chief executive. Mr Lowe, who has more than 25 years’ general management experience in the technology industry, succeeds Anders Lindén who led Operax for more than four years from pre-commercial development to several rounds of venture funding.
Nordic Vaccine, the Denmark-based biopharmaceutical company has appointed Steen Klysner as chief executive. Mr Klysner will assist the company in the continued development of its vaccine drugs as well as its next round of funding.
Hubert Zimmermann has left
UDCast, the France-based provider of mobile IPTV services. A replacement has yet to be announced.
Valista, the Ireland-based provider of products and services to the telecommunications industry, has appointed Arlene Adams as its new chief executive. Mrs Adams has been appointed to leverage Valista’s commerce platform to take advantage of new growth opportunities in the games, IPTV, media and entertainment markets. Valista’s current chief executive, Raomal Perera, who founded Valista in 1999, will become executive chairman of the company.
It has also been revealed that Hans-Jürgen Schmitz has joined
Life Optics as chief executive, replacing Maria Lehrl, who left the company at the end of February. Austria-based Life Optics develops and manufactures head-mounted vision systems.
Most Accessed Companies
HelioDynamics, the UK-based solar energy company, has attracted a lot of attention this week. HelioDynamics’ techology utilises groups of rotating mirrors which reflect and focus sunlight onto a receiver. The light is absorbed by photovoltaic cells in the receiver, which convert the light into electricity. Water, circulating through the receiver, delivers the heat collected by these solar cells and can be used to provide hot water, heating and/or air conditioning for buildings. The company’s backers include the
Low Carbon Initiative.
Plazes, the Switzerland-based web service for geo-social navigation, has also received a lot of attention recently. Plazes allows community members to publish and share their location with others, creating a collection of their favourite day-to-day locations in a database. Members of the Plazes community can then actively locate one another, connecting their digital and real-world identities. Recent backer of the company
Doughty Hanson Technology Ventures believes that in future people’s physical locations will be an important addition to their online identity.
Other companies generating interest recently include
immatics biotechnologies,
Stratophase, and
Cambridge Semiconductor.
There are now 9,690 companies in the database and 7,249 investors, comprising 3,605 institutional, 3,016 corporate, 490 individual and 138 other. Of the database's 32,894 contacts, there are 18,715 executive, 7,516 CEOs, 2,511 chair, 1,444 non-executive and 2,708 other.
