European News Briefs, May 2011

MUNICH

Doughty Backs MegaZebra to Earn its Stripes

Doughty Hanson Technology Ventures has joined the herd stampeding towards social gaming, after the firm led a multi-million-euro round in Munich-based MegaZebra.

London-based Doughty was joined in the Series B round by German firm Kizoo Technology Ventures, an existing shareholder in MegaZebra, which develops social games for Facebook.

MegaZebra, founded in 2008, will use the funding to hire more staff and accelerate games development.

It becomes the second German company to join Doughty’s Internet software portfolio after SoundCloud, a Berlin-based audio distribution platform, raised €2.5 million ($3.6 million) from the firm in 2009.

In February 2011 Doughty was granted a second one-year extension on its 2000-vintage Technology Fund I, which totals $237 million. The firm closed its second technology fund in 2010 at €60 million ($87 million).

PARIS

French Venture Investment Hits 10-Year High

French venture capital firms invested €1.05 billion ($1.49 billion) in 2010, their highest annual total since 2000. Total investment in 2009 was €910 million.

In the second half of last year, according to an index published by corporate finance advisor Chausson Finance, VC firms invested €532 million ($779 million) in 401 companies.

The health sector accounted for a quarter of that sum, followed by Internet (20%) and cleantech (12%) companies.

Follow-on and late stage investments—such as boipharma company Cerenis Therapeutics, which raised a €50 million ($72 million) Series C round—outweighed seed commitments.

France’s most active venture firms in 2010 were Cape, Idinvest Partners, OTC Asset Management, Sofinnova Partners and Truffle Capital, which invested about €150 million ($220 million) combined.

MOSS, NORWAY

BaltCap Sees Runway Take Off

Baltic investor BaltCap has bought a minority share in Runway, a customer services provider, from Norwegian company Dasha.

The purchase price for BaltCap’s 41% stake was not disclosed, but it was probably less than the €3 million ($3.4 million) the firm typically invests in buyout deals.

Sales at Runway reportedly rose 50% in 2010, up to €8 million ($11.3 million), and BaltCap wants to further expand Runway’s client base in Scandinavia and Western Europe.

The company is also considering widening its service centre network to former CIS countries; it already has an office in Ukraine.

Though based in Norway, Runway’s operations—which allow companies to outsource back-office functions such as accounting and IT support—are currently housed in Lithuania, Estonia and Latvia.

MUNSTER, GERMANY

Frog Springs Speedy Biogas Exit

Little more than a year after committing €3 million to agri.capital, Europe’s largest biogas producer, London-based Frog Capital, has sold its minority stake in biogas energy producer agri.capital to Alinda Capital Partners.

Financial details were not disclosed, but Frog said the deal marked its third profitable exit since mid-2010, after the sales of recycler SiC Processing and online retailer BuyVIP.

Other agri.capital shareholders also sold to Alinda, which took a majority stake and agreed to invest €300 million ($426 million) in the company over the next three years.

The new equity will support growth at agri.capital, which currently has about 60 biogas plants operating or under construction, and is eyeing further development in Germany and Italy.

Frog’s investment was part of a €60 million ($86 million) Series F round led by TCW Group in 2009.

LONDON

Advent Downs Tools at Foundry

After pumping the bellows for almost two years at The Foundry Visionmongers, Advent Venture Partners has sold its stake to U.S.-based The Carlyle Group.

Advent backed a management buyout led by Foundry CEO Bob Collis in mid-2009, and has since overseen a more than 2X increase in sales and headcount at the special effects software developer.

Carlyle paid an undisclosed amount to Advent and other shareholders for a significant majority stake in Foundry, whose products have been used in the post-production of such films as “Avatar,” “Alice In Wonderland” and “Black Swan.”

The company, worth more than £75 million ($122 million) according to the Financial Times, reported sales just short of £15 million ($24 million) in 2010.

Carlyle said its investment would allow Foundry to broaden its product offering, expand into new markets and explore different applications for its software.

The majority stake was acquired by Carlyle’s European technology team.

LONDON

DFJ Maintains Exit Pace with TLC Sale

London-based DFJ Esprit has rung up a 5X return on call center operator The Listening Centre (TLC), following the company’s sale to Serco.

Listed services group Serco acquired TLC for £42.1 million ($68.7 million), with another £13.8 million ($22.5 million) payable to DFJ if TLC meets performance targets over the next two years.

“We have begun the year with a bang,” said DFJ Esprit CEO Simon Cook, who says that an uptick in North American venture exits is being reflected in Europe.

Following sales of The Cloud, Lovefilm and an unnamed company, TLC marks the fourth exit of 2011 for DFJ Esprit.

DFJ Esprit would not disclose how long it had held TLC, which posted an operating profit of £4.4 million ($7.2 million) on sales of £82 million ($134 million) in the year ended Oct. 31, 2010.

PARIS

Intel Sinks Cash into Total Immersion

Augmented reality provider Total Immersion (TI) will add an extra dimension to its international operations, following a $5.5 million funding round led by Intel Capital.

Existing investors Elaia Partners, iSource and Partech International joined the funding round, which will be used to drive sales in Asia and the United States and continue development of TI’s D’Fusion software product.

D’Fusion allows computer, tablet and smart phone users to meld digital 3D imaging with live video. One of its applications allows shoppers to virtually try on products, such as watches or glasses, using a webcam and a digital representation of the product. The Paris-based company was founded in 1999.

Elaia and iSource are French tech-focused venture investors, while Partech, an Internet and IT investor, has offices in San Francisco and Paris.

LONDON

Nanotech out of the Pond

Pond Ventures, the Silicon Valley investor that specializes in European technology companies, and Irish firm Atlantic Bridge, have sold Nanotech Semiconductor to Canada’s Gennum Corp. for $34 million.

Nanotech raised about $15 million in funding from investors.

It marks Pond’s fourth exit in six months and the firm’s second collaboration with Gary Steele, founder and CEO of Nanotech. Steel previously was at Microcosm Communications, which Pond exited in 2000.

Pond’s other exits since the start of Q4 2010 were Broadway Networks, 4Home and Gigle Networks. The San Jose, Calif.-based firm, which has about $200 million under management, also maintains offices in London and Israel.

LONDON

Control Risks Tempts Investors

NVM Private Equity will hope that Control Risks proves aptly named after buying a minority stake in the consulting company from 3i.

Private equity group 3i made a full exit from Control after Newcastle-based NVM invested £6 million ($9.6 million) through its venture capital trusts and Northern Investors Co.

A syndicate of co-investors led by NVM funded the balance of the transaction.

Control Risks provides political, corporate and personal risk consultancy across five continents and reported revenue of £137 million ($224 million) in the 2009-10 financial year.

GLASGOW

Maven Adds to Offshore Account

Maven Capital Partners has continued to invest in oil and gas support services, leading an £8.5 million ($13.6 million) purchase of Scottish manufacturers Roberts Pipeline Machining and Wellclad.

Glasgow-based Maven and investment partner Simmons Parallel Energy will combine the two companies, which provide machining and anti-corrosion equipment for offshore rigs, under a new brand called Glacier Energy Services.

The partnership with Simmons follows the two companies’ investment of £5.5 million in oil and gas riser business Flexlife in late 2010. In the most recent deal, Maven invested £5 million.

Maven predicts that Glacier will double sales and profit in the next three years as it focuses on growth in the U.K. market.

In the last year, Maven has invested in four companies servicing the oil and gas sector.