Venture
Update Vol VI, #8, December, 2002
Done
Deals
Raleigh-TogetherSoft Corporation (www.togethersoft.com),
a customized software firm, signed a definitive
agreement to be acquired by California-based
Borland Software Corporation (Nasdaq: BORL)
for $82.5 million in cash and 9 million
shares of Borland stock. The transaction is
expected to close in the fourth quarter of 2002 or
the first quarter of 2003. Contact Kristi Lee
(919.865.0571).
Greensboro-RF Micro Devices (Nasdaq: RFMD, www.rfmd.com), a publicly-traded provider of radio frequency integrated circuits (RFICs) for wireless communications applications, agreed to purchase Resonext Communications, a San Jose-based provider of integrated two-chip CMOS applications for 5GHz and dual band wireless LAN platforms, in a stock deal worth $133 million. Contact David Norbury (336.664.1233).
Raleigh-Trainersoft (www.trainersoft.com), a ten-year veteran in the e-learning industry, signed a definitive agreement to merge with OutStart (www.outstart.com), headquartered in Boston and provider of the leading content-centric learning platform. Trainersoft is a provider of authoring tools for e-learning content. OutStart will integrate Trainersoft's capabilities with its current offerings to provide a product family geared towards the needs of developers, workgroups, and the enterprise. The merged company will operate under the name OutStart. Contact Martin Renkis (919.754.0000).
Charlotte-Elogex, Inc. (www.elogex.com), a leading provider of collaborative logistics solutions, received $17 million of new growth capital from an investor group led by New York-based Fenway Partners. The additional capital will enable Elogex to pursue its next phase of development and expand its customer support infrastructure. Including this fourth funding round, Elogex has raised $34 million to date. Contact Jennifer Bonk (704.227.1982).
Durham-BioVista Partners (www.catalysta.com), a new RTP-based venture capital firm, has received an investment commitment of $30 million from the Golden LEAF foundation. Through its investment in BioVista, the Golden LEAF is looking to build on North Carolina's biotechnology industry by establishing a fund to provide capital to later stage biotech companies. In addition to Golden LEAF, Catalysta Ventures, a consulting firm for venture-backed companies, was instrumental in BioVista Partners' formation.
As a North Carolina-based fund, BioVista will leverage its relationships with the state's centers of excellence in clinical trials management, pharmaceutical and biopharmaceutical manufacturing, sales and marketing, and academic medicine to benefit portfolio companies and the fund. BioVista plans to invest in medical device, biopharmaceutical, and drug delivery companies with products in the later stages of clinical development. BioVista is expected to raise an additional $90 million. Contact Malcolm Kendall (919.593.3654).
Durham-The Aurora Funds (www.aurorafunds.com), a venture capital firm focusing on biotech and information technology investments, closed on approximately three-fourths of its planned $75 million fourth venture capital fund. Golden LEAF is among the investors in this announced closing.
The Rocky Mount-based group gave Aurora $10 million as part of a $42 million commitment to invest in biotechnology and bio-manufacturing companies across North Carolina. The company will provide a full list of investors when it wraps up the fund early next year. Duke Management Co., which handles the Duke University endowment funds, is the lead investor in Aurora IV. Other investors already named include Wachovia, Silicon Valley Bank, the North Carolina Biotechnology Center, SHV Holdings, and Alexandria Real Estate Equities. Contact Doug Gooding (919.484.0400).
Durham-Trimeris (www.trimeris.com), announced that its secondary stock offering made public on Sept. 27th raised $102.4 million, through the sale of 2.4 million common shares at a price of $45.25. The company said net proceeds are planned to fund the clinical development and commercialization of Trimeris's drug candidates, Fuzeon™ (enfuvirtide, formerly known as T-20) and T-1249, for research and development, to provide working capital, and for general corporate purposes. Contact Robin Fastenau (919.408.5072).
RTP-YellowBrick Solutions, Inc. (www.yellowbricksolutions.com), an innovator in marketing automation solutions, completed a $3.9 million round of funding. YellowBrick's current major shareholders Artal Services and p3 Technology Partners, funded the round. Contact Sylvia Zhuang (919 653.2409).
Charlotte-Waveguide Solutions (www.waveguidesolutions.com), a leader in the development of lightwave materials, applications for solid-state lighting, and solutions for the optoelectronics industry, closed an initial undisclosed sum on its latest round of venture financing. The round was lead by Morrisville's Southeast Interactive Technology Funds and Academy Venture Funds of RTP and Charlotte. Proceeds will be used to support continued validation efforts with current optoelectronic customers and to continue to build the management and operations team. Contact Scott Faris (704.599.1720).
RTP-FullSeven Technologies (www.fullseven.com), completed a round of funding for an undisclosed amount of venture cash. Led by Raleigh's Southern Capitol Ventures, the additional funding is projected to take the company to profitability in mid to late 2003. Said FullSeven CEO Ken Arneson, "With this funding in place, we can continue to execute on our business strategy and focus on the ever increasing customer and partner interest in our LetterMark technology." Contact Don Rua (919.316.1112).
VC Profile
Dennis Dougherty
Founding General Partner
Intersouth Partners - Durham, NC
How did you become a VC?
In 1984, I was a partner with Touche Ross (now
Deloitte & Touche) and was responsible for small
business consulting in NC. We had a number of clients
seeking VC, with very little available then in the
Southeast. Duke University and KLM Airlines Pension
Fund agreed to back Intersouth to raise the first VC
fund in the Triangle. It took fifteen months to raise
Fund I.
Number of companies invested in:
Over the last eighteen years, Intersouth has
invested in about seventy companies, and I guess I
was directly responsible for about half.
Kinds of companies you invest in:
Startup life science and technology companies - in
life science, we invest in drug discovery, devices,
diagnostics, and the tools and processes used to turn
discovery into products.
Kinds of companies you avoid:
Services companies, or very early companies located
outside our region. We like companies with reasonable
total capital requirements because a modest outcome
is more likely than a homerun.
Stage usually invest in:
Intersouth's "sweet spot" is to lead the first
institutional venture round, usually the "A" round.
We still do a few seed rounds where the company comes
into existence with our investment. Occasionally, we
lead the "B" rounds of good deals, where other good
VCs have previously invested a modest amount.
What's your best deal? Why?
Who knows how to measure the best deal? Would it be
the most dollars returned, the highest IRR, or the
one that returned from the dead? My most exhilarating
deal was with Integrated Silicon Systems, which was
my first big public offering, and a terrific deal. We
made twenty times our original investment, but it
took eight years to get to an IPO. This deal had so
many great entrepreneurial moments, real
heart-stoppers, that it made me a true believer in
the power of persistence, positive thinking, and
entrepreneurial determination.
What's your worst deal? Why?
We have backed a number of companies over the years
that have not been successful. It's the nature of the
business that a certain number of companies won't
make it, for both internal and external reasons. This
economy is especially punishing in that otherwise
very good companies won't make it because of the
extreme slowdown in private equity investing.
However, those that do survive will have buyers for
their technologies and less competition.
My worst deal, though, was one where the founders were dishonest. This is really rare in the entrepreneurial and private equity world, where trust is paramount to the process working. We give relative strangers millions of dollars, and entrepreneurs, in turn, give us (also relative strangers) significant control in their companies.
What company do you wish you had invested
in?
We have been successful at Intersouth and I have no
regrets for the ones that got away. The trick is to
be in a lot of the good deals and not so many of the
bad ones.
What kinds of deals are you looking for right
now?
We have received high marks by our investors for our
consistency of focus. We stayed in life sciences in
1999 when technology companies were raining cash. We
will stay with technology companies today, although
the life science companies are in favor. We still
want to invest early. For us, a bigger fund means
that we can be a meaningful investor in the early
rounds, and also have the reserves to invest in the
later rounds of our portfolio companies.
Contact:
Dennis Dougherty
3211 Shannon Road, Suite 610
Durham, NC 27707
919.493.6640
Email: dennis@intersouth.com
New
Developments
Chapel Hill-Pozen Inc. (www.pozen.com), a
pharmaceutical development company with a portfolio
of product candidates for the treatment of migraines,
has received patent number 6,479,551 from the United
States Patent and Trademark Office.
This new patent provides expanded protection for MT 100, the company's oral product candidate designed for first-line migraine therapy, through claims relating to additional pharmaceutical compositions and treatment methods. Pozen now owns two patents in the U.S. and one patent in Australia for MT 100. Patent applications for MT 100 are pending in Canada, Europe, and Japan. Pozen has completed all planned Phase III trials for MT 100. Contact Dr. Peter Wise (919.913.1030).
Chapel Hill-UNC-Chapel Hill The University of N.C. at Chapel Hill (www.unc.edu) selected a veteran life sciences investor to lead a new venture capital fund being formed by the university. J. Michael Schafer, formerly a partner with Tullis-Dickerson & Co., has been named fund manager for Carolina Ventures, an expected $20 million fund focused on investing in start-ups spun out of the university's Office of Technology Development.
Schafer headed the Southwest regional office of Tullis-Dickerson, a Greenwich, CT-based venture firm founded in 1986 and specializing in funding biotechnology, bioinformatics, and medical devices startups. Operating out of Santa Fe, NM, Shafer coordinated deals on the West Coast and in Colorado, Utah, and Texas. Contact the Endowment Office (919.962.2002).
Money & Markets 2003
February 7, 2003
Sheraton Imperial
RTP, NC
www.cednc.org/mm/2003/
Venture 2003
April 22-23, 2003
The Friday Center
Chapel Hill, NC
www.cednc.org/venture/2003/
For more information about these events or to register, visit the CED Web site at www.cednc.org or call 919.549.7500.
Venture Update is published by the
Council for Entrepreneurial Development (CED) an
entrepreneurial support organization located in RTP,
N.C.
Lisa Rowe-Ralls, editor
P.O. Box 13353, RTP, NC 27709
Phone: 919-549-7500
FAX: 919-549-7405
Email: news@cednc.org