The PE Data Center Buzz

EDF Ventures - Harsh Deal Terms?

Posted by Justin Byers, Lead Business Intelligence Analyst on August 21, 2008

You have probably already seen in the press that EDF Ventures subpoenaed TheFunded.com, due to someone having left some not-so-nice comments about EDF Ventures at The Funded website. One of the comments mentioned “Very harsh deal terms…” The analyst team at VC Experts has taken a look at some the deals in our database that EDF Ventures has participated in to see if we could get a sample of "Very harsh deal terms…" What we found was that the deal terms were actually, overall fairly average. There was nothing too out of the ordinary or harsh.

EDF Ventures is a venture capital firm out of Ann Arbor, Michigan. The firm’s main focus is investing in early-stage healthcare companies. They have also supported several IT companies. EDF Ventures has been around since the mid 1980s, and there are approximately twenty-six companies in their portfolio.

Cost of Capital Benchmark

After reviewing some of the deals from our database, we plugged in the deal term data into our Cost of Capital Benchmark tool. From the results, we see that a couple of the portfolio companies’ deal terms are more in favor of the investor (EDF Ventures) than the company, but like we mentioned before, nothing too harsh. You can see below that there were some “company friendly” deal terms as well.

Keep in mind, the lower you are on the chart, the more company-friendly the money, the higher you go on the chart, the more investor-friendly the money. If you are a company raising money, you want be lower on the chart. This is a time when it is not best to be on top if you are the company raising money.

Arxan Technologies out of Maryland, develops anti-tampering software solutions. The company raised approximately $13 MM in their last Series C round. Of the deals that we reviewed for this report, this one was the most “investor friendly”.

Deal Terms:

ValenTx, Inc. is a medical device company based in southern California. The company had a Series A round that raised approximately $6 MM. This was the most “company friendly” deal that we reviewed in this report.

Deal Terms:

Xtera Communications, Inc. (formerly Bandwidth Communications) is headquartered in Texas. The company develops technologies for long-haul fiber optic communications systems. In late 2007, this company brought in approximately $52 MM in a later stage series B round. The deal terms were more on the “company friendly” side.

Deal Terms:

Biosurface Engineering Technologies, Inc. (also known as BioSET) is a provider of surface modification solutions for the medical industry. The company is headquartered in Maryland. The company had a Series C round in mid 2006 that had deal terms leaning more in favor of the investor.

Deal Terms:

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