TouchTunes Interactive Networks, a digital jukebox maker, has completed a $45 million Series E funding round that gives the company a pre-money valuation of $300 million, TouchTunes CEO Charles Goldstruck told peHUB.
3i, the UK-based PE firm, is investing $40 million in the company, while VantagePoint Capital Partners, which owns a majority of TouchTunes, is putting in another $5 million, Goldstruck says.
This is TouchTunes’ fifth round of funding, says Goldstruck, who declined to reveal the total amount of capital the company has raised to date. Caisse de Depot, the Quebec pension fund, owned a stake, but the Quebec pension fund transferred its interest to VantagePoint in 2006. (Caisse de Depot is still an investor, Goldstruck says.) TouchTunes was a public company in Canada from 2002 to 2005. In 2006, the company went private when VantagePoint became a majority investor and took over Caisse de Depot’s position. 3i is TouchTunes first outside investor since 2006, Goldstruck says.
The $45 million deal closed yesterday, Goldstruck says. VantagePoint owns the biggest chunk of the company (a controlling stake), followed by 3i, which has a minority stake. Goldstruck himself also owns part of TouchTunes. “I’m very happy,” he says. “When you get the capital you need with the right partner that is a good place to be.”
New York-based TouchTunes calls itself a digital, interactive out-of-home entertainment network. TouchTunes’ jukeboxes can be found in 50,000 restaurants and bars in North America, including Hooters, TGIF and Buffalo Wild Wings. Goldstruck wouldn’t disclose revenue for TouchTunes.
In February, TouchTunes began looking for a strategic investor and tapped GCA Savvian to run the process. A number of parties were interested, including growth investors, buyout firms and some strategics. TouchTunes plans to use the $45 million funding to expand globally (Europe and Asia), for M&A and for product development, Goldstruck says. “We chose 3i because of their global footprint,” he says.
3i has offices in 13 countries including Brazil, China, France, Germany and India. The firm invested in TouchTunes because of its attractive profitability and growth characteristics, says Andrew Olinick, a 3i principal. “They have been gaining locations for a long period of time,” says Olinick. “They have a good business, good growth and good management.”
Most of 3i’s deals are for controlling stakes, but the PE firm is no stranger to taking minority stakes. 3i even has a pool, its Growth Capital Fund, of which a “substantial chunk” goes into making minority investments, says Olinick. The Growth Capital Fund raised $1.7 billion in March 2010.
With the fund, 3i targets later stage companies that are established and profitable, he says. 3i typically invests $40 million to $200 million per deal in sectors including TMT (technology, media and telecom), business services and industrial growth.
When asked if 3i planned to increase its investment in TouchTunes to a majority, Olinick said: “In the recent past, we have just done minority. We haven’t done minority to control.”
3i did not use an outside investment bank. GCA Savvian team members Richard Jasen, John Lambros, Jimmy Orozco, Cliff Platt and Yuji Maruyama provided financial advice to TouchTunes.