Venture Capital News

Venture Capitalists Turning Green

Venture capitalists are seeing green in clean technologies.

The amount of North American venture capital invested in environmentally friendly technologies jumped 35 percent last year to more than $1.6 billion, according to a report to be released Wednesday by the Cleantech Venture Network.

"Cleantech" investments by venture capital firms rose to a record $502 million during the fourth quarter of 2005 -- 18 percent more than the previous quarter and 60 percent more than the same period a year earlier.

"We saw consistent upward growth in the amount of investment, the number of investors and the range of things invested in," said Nicholas Parker, chairman and co-founder of the Ann Arbor, Mich.-based Cleantech Capital Group.

The cleantech sector encompasses a wide range of technologies related to water purification, air quality nanotechnology, alternative fuels, manufacturing, recycling and renewable energy such as solar, wind and hydrogen.

In last year's fourth quarter, cleantech companies attracted 10 percent of all North American venture capital, making it the fifth most popular sector behind biotechnology, software, medical technology and telecommunications, the report said.

Energy-related ventures focused on efficiency, generation, infrastructure and storage accounted for 34 of the 73 deals last quarter, attracting $179 million in venture investment.

In the fourth quarter, companies in the Northeast attracted $164 million, followed by the West Coast at $123 million and the Southwest at $64 million, the report said.

Parker predicted that venture capital investment in technologies that conserve resources or contribute to a cleaner environment could reach $2.5 billion to $3 billion in each of the next three years.

Parker attributed the growing interest in clean technology to the rising cost of fuel and other natural resources, driven largely by rapidly expanding economies in Asia.

"Being much more efficient with natural resources is now an economic imperative," Parker said. "The rise of China and India and other emerging market economies is forcing up prices of natural resources of all kinds."

Investors are also seeing better prospects for returns as technologies advance, more seasoned managers and entrepreneurs enter the field and cleantech companies book higher sales.

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2 Private Equity Deals in School Sector

Private equity firms headed into the educational services sector Monday, announcing deals to buy Education Management Corp. and a stake in privately held Learning Annex.

The $3.4-billion agreement by Providence Equity Partners and the investment arm of Goldman Sachs Group Inc. to buy Education Management is the largest deal on record in the for-profit education sector, according to market data firm Dealogic.

It would also be the first major acquisition of a public company in the sector by a private equity firm, said Alexander Paris, an analyst for Chicago-based Barrington Research, an investment research firm.

Before the announcements, the last deal in the sector above $1 billion was Berkshire Hathaway Inc.'s 1996 purchase of FlightSafety International Inc., an operator of pilot training centers, for $1.5 billion.

Further deals may be in the offing as some companies have had difficulty because of regulatory and legal investigations, Paris said. Companies that have seen their names raised as targets or as acquirers include Santa Ana-based Corinthian Colleges Inc.; Career Education Corp. based in Hoffman Estates, Ill.; and Concorde Career Colleges Inc. in Mission, Kan. The stocks of all three of those companies rose Monday.

Terms of the Learning Annex deal, in which Apax Partners agreed to buy a significant minority interest in the adult education company, were not disclosed. Learning Annex started in New York in 1980 and has since expanded to Chicago and Los Angeles. Education Management has 72 primary campus locations in 24 states and Canada that offer programs in such areas as design, fashion, culinary arts, health sciences and legal studies.

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Coremetrics Secures $31 Million in Series D Funding

Representatives of Coremetrics™, the leading provider of hosted web analytics and precision marketing solutions, announced Wednesday that the company obtained $31 million in series D financing. Investors include FTVentures and previous Coremetrics investors Accel Partners and Highland Capital Partners. Coremetrics will leverage the additional capital to accelerate the build-out of its precision marketing application suite and expand its offerings into new areas of digital marketing. The funding will also be used to roll out Coremetrics' expansion strategy both in the US and internationally.

Additionally, Eric S. Byunn of FTVentures will join Coremetrics' board of directors. Byunn has been a principal at FTVentures since 2002 and also serves on the boards of Cloudmark, Global Market Insite (GMI), and ProfitLine. Prior to joining FTVentures, Eric held management roles at myCFO, America Online, Netscape, Microsoft, and McKinsey & Company.

Coremetrics achieved record growth in 2005. The company added more than 100 new clients across the retail, financial services, and travel industries. Coremetrics nearly doubled its client base with companies such as Alliance & Leicester, Buy Domains, CDW, Circuit City, Comet Group plc, Cool Savings, Fila Online, Inc., Fuji Film, James Villa Holiday, Lamps Plus, Last Minute Travel, Northern Tool UK, and Office Max. Coremetrics continues to maintain outstanding client retention rates, exceeding 95% in 2005.

Additional 2005 Coremetrics highlights include:

• Extended precision marketing application suite: Coremetrics launched Coremetrics Search Marketing Services and Coremetrics Search the industry's first integrated solution for creating, managing, and optimizing keyword advertisements across multiple search engines based on a comprehensive profile of online visitor behavior. Coremetrics Search Services is a full-service strategic management program for the creation, placement and optimization of pay per click marketing campaigns. Coremetrics Search, a closed-loop solution, helps marketers create, manage and optimize pay per click marketing campaigns across multiple search engines.
• Launch of the Coremetrics LIVEmark Index: The industry's most comprehensive benchmark for eBusiness performance, the LIVEmark Index provides critical comparison data for site-wide key performance indicators across more than 175 leading retail brands. LIVEmark participants gain a clear understanding of business performance relative to peers and competitors so they can effectively allocate marketing spend, anticipate industry threats and trends, and make strategic decisions about site, marketing and merchandising efforts.
• Expansion of its global partner network: Coremetrics added 14 new strategic partners, including Doubleclick, e-Dialog, EmailLabs, ExactTarget, Instant Service, Linkshare, and Yahoo! Search. In addition, Coremetrics has extended partnerships with European counterparts including Commission Junction, Responsys and Scene7, as well as signed new partners such as Aboavista, Intelligent Commerce Enterprises, Logan Tod and XXI Servicios Estrategicos.
• Named a market leader in the Forrester Wave™ Report: For the third year in a row, Coremetrics was named a market leader in the Forrester Wave™ Report that ranked web analytics vendors based on their ability to serve both B2C and customer service web sites. Coremetrics was identified as a leader among the top 14 Web analytics vendors based on the company's solid technology, emerging suite strategy and superb customer service.
  -New executive appointments: Coremetrics announced the appointment of key executives including Hamid Bahadori as Vice President of Engineering, Heather Brunner as Vice President of Client Services, and Steve Cox as Vice President of Operations.

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Bag Borrow or Steal Raises $8 Million Venture Capital

Bag Borrow or Steal, the leading online service for fashion-savvy consumers who wish to borrow rather than buy, today announced that it has raised $8.25 million in a Series B round of funding. The financing was led by Madrona Venture Group, with existing investors Impact Venture Partners and Valence Capital Management also participating in the round. Bag Borrow or Steal plans to use the new funds to expand its portfolio of designer products and accelerate growth in the market for luxury borrowing.

Concurrent with the funding, Paul Goodrich, managing director at Madrona Venture Group, joined the company's board of directors.
Founded in 2004, Bag Borrow or Steal built the first online membership service that allows any consumer to carry a designer handbag without actually purchasing it. Today the company ships handbags to thousands of members each month from a collection of more than 120 world-renowned designers, and that number continues to grow.

In November the company unveiled its most exclusive offering to date, The Couture Collection. Available to Diva members for a supplemental monthly fee, this collection of elegant, fun and fashionable bags includes more than 185 unique styles from top designer brands including Balenciaga, Botkier, Chanel, Christian Dior, Chloe, Fendi, Louis Vuitton, Marc Jacobs and more.

A selection of women's fine jewelry and watches was also previewed on the website recently, with the company announcing plans to launch a full collection of accessories this Spring. This new accessory line represents the first of many new product categories that Bag Borrow or Steal plans to add to its service in the coming year.

Growth within the organization remained a key objective for Bag Borrow or Steal in  2005. Throughout the year, a solid leadership team of veterans from the retail, Internet and technology industries was assembled, and in October, the corporate headquarters were relocated from Florida to Seattle. To expedite shipping throughout the U.S., and facilitate future expansion, the company moved into a larger, state-of-the-art distribution center outside Chicago.