Is the venture capital market starting to heat up again? It’s sure starting to look like it. For several years, hedge funds — led by Chase Coleman’s Tiger Global Management — have taken private stakes in start-ups and more seasoned private companies, many of them in India and China. Over the past four quarters, however, this market has all but dried up, as we have chronicled.
This week, though, there have been some signs of life. Coincidentally or not, at least four hedge fund firms made separate investments in private companies.
For example, Andreas Halvorsen’s Viking Global Investors participated in the $2.2 million seed investment in Biome Makers, a biotechnology company that claims to apply advances in genomic analysis to winemaking. This is at least the sixth private investment made by the Greenwich, Connecticut hedge fund firm this year.
Remember, the firm manages three funds, including Viking Global Opportunities, a hybrid fund that devotes some of its assets to private companies. That fund returned 4 percent in the third quarter, but it is down 1.5 percent for the year.
In another deal this week, Joe Edelman’s Perceptive Advisors participated in the $45 million, Series D financing of True North Therapeutics, a clinical-stage biotechnology company targeting rare diseases. Edelman founded Perceptive, which specializes in health care companies, in 1999. It mostly invests in publicly traded companies in biotechnology, pharmaceuticals, medical device, diagnostics and health services companies. Last year the firm’s main hedge fund, Perceptive Life Sciences Fund, gained 51.8 percent, driven in part by a private investment in Dutch biotech company Acerta Pharma.
Elsewhere, Valiant Capital Partners participated in the $34 million financing of FirstCry.com, an Indian e-commerce company that specializes in baby and maternity-related items. This is at least Valiant’s fourth investment in the company, according to crunchbase.com, which tracks investments in private companies. In February Valiant participated in the $26 million Series D funding round for FirstCry.com. The latest financing took place at the same time that BrainBees Solutions, which operates FirstCry, shelled out $54 million to acquire the franchise division of Mahindra Retail, which owns BabyOye, a similar business to FirstCry. Private investments account for more than one-quarter of Valiant’s roughly $2 billion in assets held in its hedge funds, Valiant Capital Partners, and a similar offshore version.
Finally, Magnetar Capital participated in a $5 million Series A funding round announced earlier this week fir Vertical Mass, a data management marketplace geared toward the music, entertainment and sports industries. This is Magnetar’s second private investment this year.
Let’s see if this trend continues.
