G4V Monthly VC Bulletin - January 2007

Published 31st January 2007

Monthly European Technology Venture Capital Bulletin

Page 1 of 10

�� January 2007

The Go4Venture Monthly Venture Capital Bulletin is a publication commenting on the latest results from our European Technology VC Headline Transactions Index®.

Go4Venture’s European Tech VC Headline Transactions Index is based on the number and value of transactions reported in professional publications. The Index is compiled on a monthly basis as an early indicator of the evolution of the market for venture capital funding for European information technology companies.

For more details please refer to the Methodology Note available at the bottom of this link:

www.go4venture.com/research/hti.htm


January 2007

About Go4Venture

Go4Venture is a London-based corporate finance advisory firm focused on providing European technology

entrepreneurs and their investors with impartial advice to help them develop and execute growth strategies.

Our services encompass:

• Strategic advisory and valuation• Financing strategies

• Buy and build strategies• Exit strategies (trade sale and IPO advisory)

We are particularly well-known for our international equity private placement services, where we have developed a reputation second to none in Europe among international VCs.



Page 2 of 10

�� January 2007

Headline Transactions IndexHeadline Transactions Index

January fund-raising reaches record HTI level

Fund-raising

surged this month by 61% versus January last year

Plastic Logic raises a whopping €75.7 million

• €233 million of fundings were announced in January driving the Headline Transaction

Index 61% above the same month in the previous year.

• The January figure, includes several fundings e.g. Truphone and Plastic Logic, to

name just two, which were only announced in early January, though they were closed in

2006.

• Plastic Logic is the biggest European Fundraising to date with €75.7 million.

0

50

100

150

200

250

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Valu

e o

f T

ran

sacti

on

s

(per

mo

nth

- €

mn

)

2004 2005 2006 2007

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Cu

mu

lati

ve T

ran

sacti

on

Valu

e (€ m

n)

2004 2005 2006 2007



Page 3 of 10

�� January 2007

Note: Bold indicates lead or co-lead investor(s) Source: Go4Venture

Steelpoint Capital Partners, Intel Capital, Quester

Secure content compliance solutions

17.5Series BEnterprise Software

Workshare (UK)

www.workshare.com

Wellington Partners, Eden Ventures, Independent News

and Media, Burda Digital

Ventures

Mobile VoIP network provider

18.0Series ASoftware, Telecom

Truphone (UK)

www.truphone.com

Amadeus Capital Partners,

Accel Partners, TVM Capital, Adara Venture Partners

Wireless fixed broadband

access equipment

18.7Late

Stage

Telecom

Hardware

Cambridge Broadband

Networks (UK)

www.cambridgebroadband.com

Individual InvestorsProvider of targeting

services for advertising,

content, and e-commerce

7.6Series AInternet

services

Wunderloop (Luxembourg)

www.wunderloop.com

Dansk Kapitalanlaeg,

InnovationsKapital AB, IVS A/S, Olicom, TVM Capital

Solutions for manufacturing

and packaging optical modules

9.0Late

Stage

Telecom

Hardware

Hymite (Denmark/Germany)

www.hymite.com

Qualis SCASearch engine software for B2C and B2B markets

12.0Series CEnterprise Software

Exalead (France)www.exalead.com

Arts Alliance, LongAcrePartners. Nordic Venture

Partners

Wireless entertainment content

7.4Series CMobile Content

Player X (UK)www.playerx.com

3i Group, Amadeus Capital,

Cambridge Angels, Cambridge

Capital Group, Cambridge

Gateway Fund

Power amplifier technology

for the wireless

communication industry

7.5Late

Stage

HardwareNujira (UK)

www.nujira.com

Technology CapitalRollable electronic displays21.0Spin-OffDisplay Technology

Polymer Vision (The Netherlands)

www.polymervision.com

Mitsui Private Equity, ACT

Venture Capital, Alta Berkeley,

Apax Partners, BlueRun Ventures, Cheyne Capital

Management, GLG Partners,

Plutus Capital Management

Company targeting fabless

semiconductor Digital Radio

and Digital TV

38.6Late

Stage

Semi-

conductors

Frontier Silicon (UK)

www.frontier-silicon.com

Oak Investment Partners,

Tudor Ventures, Amadeus

Capital Partners, Bank of

America, BASF Venture Capital,

Cambridge Display Technology, Cambridge Research &

Innovation, Intel Capital, Merifin

Capital, Morningside Group,

Nanotech Partners, PolyTechnos Venture-Partners,

Quest For Growth

Developer of manufacturing

technology to print

electronics on plastic

substrates

75.7Late

Stage

Semi-

conductors

Plastic Logic (UK)

www.plasticlogic.com

Stage Description ParticipantsSize

€mn

SegmentCompany

Top Headline VC TransactionsTop Headline VC Transactions

11 deals above our €7.5 million threshold



Page 4 of 10

�� January 2007

• Plastic Logic (UK), a fabless semiconductor company raised a record €75.7

million for a European start-up in its fourth round of financing. The current round

is led by Oak Investment Partners and Tudor Investment Corporation.

Amadeus, a seed investor in the company, participated in the round as well as the

other historic investors: Bank of America, BASF Venture Capital, Intel Capital,

Merifin Capital and Quest for Growth. The proceeds will be used to build a new

plant in Dresden, Germany, as well as for the commercialisation of the technology.

Plastic Logic’s technology will enable the creation of electronic books (where the

content may be downloaded wirelessly) and flexible, electronic newspapers.

Ultimately, Plastic Logic promises the shift from silicon based semiconductors

towards plastic based alternative semiconductors.

Plastic Logic is a great example of a European company being nurtured by a VC,

in this case Amadeus Capital partners, since 2000, i.e., over a period of seven

years. The current round is the largest ever VC round raised in Europe.

Oak Capital Partners is a multistage VC fund with a total of $8.4 billion. Tudor

Investment group is an alternative asset fund manager with $16.1 billion under

management. Another sign that we will see VCs more often in competition with

private equity houses and hedge funds. Merifin Capital is a family office with a

long tradition of investing in technology businesses, showing once again that

family offices are making a comeback to VC investments.

• Frontier Silicon (UK), a provider of fabless semiconductor and modular solutions

for multimedia products, raised €23.5 million in a late stage funding led by Mitsui

Private Equity with the participation of ACT Venture Capital, Alta Berkeley, Apax

Partners, BlueRun Ventures, Cheyne Capital Management, GLG Partners and

Plutus Capital Management. Frontier Silicon is a producer of integrated circuit

solutions for mobile television and digital audio applications. In mobile TV, it

differentiates itself with a multi-standard approach based on a flexible software-

defined radio architecture.

Mobile TV is obviously generating considerable interest, even if developments

outside Asia have been hampered by multiple competing standards. Another

prominent startup in the space is Paris-based Dibcom (which raised a €25 million

fourth round in August 2005 at a €45 million pre-money valuation).

Mitsui Private Equity is the European venture arm of the Mitsui Group which has

run successful VC operations in Japan and the US for many years. They focus on

later stage investments (revenues of at least £5 million) where they believe the

Mitsui Group can add value through its distribution network.

Top Headline VC TransactionsTop Headline VC Transactions



Page 5 of 10

�� January 2007

Top Headline VC Transactions (cont.)Top Headline VC Transactions (cont.)

• Polymer Vision (The Netherlands), has taken a €21 million investment from

Technology Capital in a first round of financing. Polymer Vision is a spin-out

from the Philips Technology Incubator and is focused on roll-able displays for

mobile devices. Technology Capital will become majority shareholder, while

Philips retains a 20% stake in the business. Polymer Vision ‘s rollable displays are

low-power, and are used to increase the screen sizes on mobile devices while at

the same time offering a clear enhancement by being readable under normal

sunlight.

The Phillips Technology Incubator is a 4 year old in-house effort of the Dutch

technology behemoth to create new businesses based on technologies developed

at its R&D facilities. It has a hands-on approach to transforming research into

businesses, joint ventures and where necessary to attract funding from VCs.

Other ventures nurtured by the Philips Technology Incubator includes Handshake

Solutions, a clockless IC design technology used in ePassports, and Philips 3D

Solutions, which develops a 3D technology which does not require special glasses.

Technology Finance Capital SA, is a Luxembourg-based hedge fund investor.

• Cambridge Broadband (UK), has raised an additional €18.7 million of late

stage funding, following a previous round of €7.5 million a year ago. Existing

investors of the company Amadeus Capital, Accel Partners and TVM Capital were

joined by Adara Venture Partners. Cambridge Broadband tries to capitalize on the

growth opportunity in the cellular backhaul market as well as in the broadband

access market where its flagship product is used to connect WiMAX and cellular

base stations to backbone networks. The company competes with Alvarion and

Aperto Networks.

Cambridge Broadband is another example (in the same month!) of a company

which has been nurtured through the downturn to the current upswing by

Amadeus Capital (together with Accel and TVM). The company has been through

a number of changes, with the appointment, in the last year, of a new CEO, CFO

and new VP Operations, culminating with a new Chairman in February 2007.

Since its inception Cambridge Broadband has collected more than €60 million,

which demonstrates that ultimately successful companies often need deep-

pocketed (and patient) investors.



Page 6 of 10

�� January 2007


• Truphone (UK), has raised €18 million in Series A from lead investor

Wellington Partners. In addition Eden Ventures, Burda Digital Ventures as well

as Independent News Media participated in the round. The company enables

mobile phones with WiFi capability to make free or low-cost calls over VoIP. The

funding will be used to further develop the technology, to extend the service

(which currently only supports Nokia mobile phones) and to provide for a push into

the mass market.

Truphone is another European attempt at disrupting the mobile telecoms space

following other well-known players such as Jajah, Nimbuzz, Rebtel, or Skype.

Truphone is different from the other companies in that it offers direct calls over

WiFi networks bypassing the existing mobile operators’ infrastructure, whereas

companies such as Jajah or Skype function more like call-back services. All these

companies (except Rebtel) support a limited, but steadily growing range of more

recent mobile phones and thus are dependent not only on the shift towards newer

generation handsets, but in the case of Truphone also on the growing ubiquity of

WiFi coverage. Hence perhaps the stated vision of becoming a “worldwide mobile

internet network operator”.

Although announced in January 2007, Truphone is in fact the largest Series A

round of 2006. Lead investor Wellington Partners has transformed itself from a

regional VC into a US-style pan-European investor, following the Index Ventures

formula. Interestingly Wellington are joined by two corporate venturers from the

media world: Burda Digital Ventures and Independent News Media.

• Workshare (UK), a provider of secure content compliance solutions, has raised

€17.5 million in a Series B round led by Steelpoint Capital Partners, with also

the participation of Intel Capital and existing investor Quester Capital Management.

The company was an early entrant in the compliance market and now has a

complete solution combining policy enforcement, content awareness tools and

user education. The company has over 5,500 clients, including 60% of the Fortune

1000 and a bookings annual run-rate greater than €20 million.

Workshare is a good example of a European company which has made a smooth

transition to a US headquarter and been able to grow its business there very

successfully. Moreover, this transition has been made on the back of an initially

fairly small financing (c. €5 million) from UK investor Quester. Which goes against

the traditional wisdom that going to the US is doomed to failure, and that you need

tens of millions to make it happen. As often is the case, skill (and dedication)

matters more than size.



Page 7 of 10

�� January 2007


Steelpoint Capital Partners is a US crossover fund which invests between $5 and

$30 million in mid market companies with growth prospects. Steelpoint was

formed in 2003 as a spin-out of Moore Capital Management, a US-based hedge

fund.

• Exalead (France), has raised €12 million in a Series B funding from its historic

backer Qualis. As a result Qualis becomes majority shareholder. Exalead claims

to have the only unified technological platform that gives users a simple way of

accessing any type of file, whether it is stored on the web, a PC or on a

company's servers. The new round of financing will be used to accelerate the

growth of Exalead and the continued development of its new web search engine

(re-launched in October 2006).

Founded in 2000 by some of the original Altavista team, Exalead is a European

search technology company that has developed a different approach to the

established search engines. Exalead uses “clustering, indexing and semantic

mapping” to help users redefine and discover what they are actually looking for.

Starting off to become an Altavista killer, then a Google killer, the company shifted

focus to serve the enterprise market, It is now making a comeback to the web. It is

worth noting that Exalead is involved in the France-led effort to build an alternative

to Google.

Qualis is a diversified industrial holding company whose main technology asset is

Exalead. As of the end of 2005, Qualis’ net asset value was €185 million.

• Hymite (Denmark/Germany), following a restart in 2006, has received a €9

million Series B financing. The funding came from a syndicate of European VCs

comprising TVM Capital (Germany), InnovationsKapital (Sweden) and Dansk

Kapitalanlæg, IVS and Vaekstfonden (Denmark). Hymite develops ultra compact

silicon-based wafer level packaging products for electronics, micromechanical and

optoelectronics components. The main markets addressed are high-brightness

LEDs, as well as MEMS components and RF devices for mobile phones.

Hymite is a survivor of the late 1990s. Funded essentially by TVM from Germany

and local Nordic investors, the company suffered when its complex technical

solutions didn’t find a relevant market. It seems that the company has finally found

its niche in the HB-LED market where demanding heat dissipation constraints

require an approach different from traditional packaging solutions. The bet from

investors of course is that miniaturization and integration capabilities using silicon

wafer level packaging will open new market avenues over time.



Page 8 of 10

�� January 2007


• Wunderloop (Luxembourg), has raised €7.6 million in a Series A funding from

Niklas Zenstrom, the Skype Co-founder; Klaus Hommels, “private investor of the

year 2005” and now venture partner with Benchmark Capital; the European

Founders Fund, the investment vehicle of Germany’s well-known Samwer

brothers of Alando and Jamba fame; and Howard Hartenbaum of Draper Richards,

the famous US early-stage VC joining existing investor Michael Keindl, founder of

European advertising company Adlink. Wunderloop is a behavioral advertising

company. Its technology claims to have boosted conversion rates by up to 500%

and their advertising efficiency by 792%.

The transaction is particularly noteworthy and it is in some ways unheard of in

European VC: it shows for the first time a group of high profile business angels

(and a US GP!) banding together for an ambitious Series A as an alternative to a

VC round. All these angels are successful entrepreneurs who have created

considerable wealth with their previous startups and therefore have the level of

wealth, connections (and confidence!) to go it alone without a professional VC

alongside them (at least for the time being). This also reflects the fact that the web

is bringing “value creation” opportunities which are not particularly capital

intensive, with a relatively rapid move to profitability possible.

As we all know smart entrepreneurs avoid VCs if they can: the VC money is the

most expensive (both in terms of dilution and the constraints it brings with it) and

therefore should be used with care.

• Nujira (UK), has raised approximately €7.5 million in a Series B internal round

co-led by existing investors 3i and Amadeus Capital. In addition Cambridge

Angels, the Cambridge Capital Group and Cambridge Gateway Fund participated

in the round. Nujira addresses the problem of high-power consumption of mobile

network base stations with its advanced high efficiency power amplifier (PA)

technology. Nujira allows OEMs to design smaller, cheaper and significantly more

power-efficient 3G/WiMAX base stations. The technology is currently evaluated by

more than half of the leading OEMs worldwide. The funding will be used to ramp

up the manufacture of Nujira’s PA modulators and to broaden the product range

for higher RF and voltage equipment.

Once again, it is Amadeus Capital (together with 3i this time) doing the running

with this internal round taking Nujira to the next step. Worthy of note, this is

Amadeus' third investment in January alone – even if all are follow-ons rather than

new investments!



Page 9 of 10

�� January 2007


Nujira’s technology is a good example of European excellence in technology with

the often encountered challenge of whether the company is addressing a large

enough market. Hence one of the objectives of the current funding is to broaden

the range of applications to address a wider market.

• Player X (UK), has received €7.6 million in a Series B financing from Nordic

Venture Partners, Long Acre Partners as well as its historic investor Arts Alliance.

The company specialises in games, video and TV for mobiles. It develops,

publishes and distributes mobile entertainment content and counts as its

customers operators, portals and handset manufacturers. The funding comes

weeks after the launch of its mobile TV channel geekTV which exceeded all

revenue expectations in what seems to be a move for aggressive growth.

Player X goes after the same mobile gaming space as two companies, which

previously featured prominently in our newsletter, In-Fusio and Digital Bridges. In-

Fusio received €22 million in the Summer of 2004 led by US VC Insight Venture

Partners, while Digital Bridges received €13.8 million in an internal third round in

November 2004 after having been financed to the tune of € 33 million in 2000 and

2001 by Apax Partners and Argo Global.

Player X’s Series B is noteworthy in that it was led by Scandinavian VC Nordic

Venture Partners (“a venture capital firm with a global perspective”) which once

again confirms our mantra that the world of venture capital is becoming global,

driven by sector specialization. Other NVP investments in the gaming area include

EssNet, a designer and operator of online gaming services, and Funcom, an

independent developer and publisher of computer and console games.

Another originality of this round of financing is Long Acre Partners (LAP)

participating. LAP is a corporate finance house focusing on the European mid-

market media sector. This is one example of investment banks returning to

technology investments.



Page 10 of 10

�� January 2007

For Info: Tech Private Equity TransactionsFor Info: Tech Private Equity Transactions

Note: Bold indicates lead or co-lead investor(s) Source: Go4Venture

Oak Investment Partners,

GebNx360, Knox Lawrence

International

International provider of

Business Process

Outsourcing (BPO) services

including contact center management, finance,

accounting and human

resources outsourcing

320AcquisitionIT ServicesVertex Data Sciences (UK)

www.vertex.co.uk

Type Description ParticipantsSize

€mn

SegmentCompany

Disclaimer

The contents of this publication are for general information and use only and are not intended to address the particular investment or other requirements of any recipient. In particular, the information provided does not constitute any form of advice, representation or recommendation regarding any investments and does not constitute an offer to buy or sell the securities of any company. This publication is not intended to be relied upon in making any specific investment or other decisions. Appropriate independent advice should be obtained before

making any such decision.

Copyright: 2007 Go4Venture. All rights reserved.

Go4Venture

1 Hay HillBerkeley SquareLondonW1J 6DH

+44 (0)20 7958 [email protected]

Documents

G4V Monthly VC Bulletin - January 2007