The ultimate sign of professionalism is when a corporate venturer can invest again in a portfolio company that has just signed up one of your biggest rivals in a partnership.
Last month’s investment by the $250m Peacock Equity Fund as part of a $14m series C round in Healthline Networks followed the portfolio company’s rapid growth in signing up partners, including one of the fund’s backer’s major rivals including a major rival to one of the fund’s backers, US television network company ABC.
With GE Capital’s media communications and enter- tainment business in the joint venture, NBC Universal had started the Peacock fund in 2007 and, according to the San Francisco Business Times, invested $2.5m as part of Healthline’s series C that closed in April.
The majority of the C round came from Investor Growth Capital, the $1bn venture arm of Sweden’s Wallenberg family-backed listed investment vehicle, which provided $10.5m, according to the San Francisco newspaper.
The remainder of the money came from Reed Elsevier Ventures, the 2000-vintage venture arm of its two parents, UK-listed Reed Elsevier plc and Netherlands-listed Reed Elsevier NV, the paper added.
The Peacock fund managed by Tom Byrne had previously led Healthline’s $21m series B round in July 2007, a year after its $14m series A round. Peacock’s backing was made with support from Reed Elsevier Ventures and media company peer US News & World Report, a weekly national news magazine founded in 1933; healthcare corporate venturers Aetna Ventures and Kaiser Permanente Ventures; and venture capital firms Vantage Point Venture Partners, JHK Investments and Mitsui.
The B round was one of the Peacock fund’s first investments and NBC Universal’s iVillage Total Health immediately signed a partnership with Healthline to power part of its services. Corporate venturing, therefore, gave NBC a two-year head start over ABC, which in March said it had signed a collaboration with Healthline to boost its abcnews.com/ health site.
West Shell III, executive chairman at Healthline, said the early backers had benefited from the growth in the company that offers a proprietary search engine for US healthcare providers and whose software now powers services for more than 40 websites and portals serving more than 100 million consumers each month.
Shell, who had previously built and sold or floated three companies, said having a mix of strategic investors and venture capital firms had been a benefit to Healthline but had been harder work getting the mix than “just doing the Sand Hill Road shuffle” – a reference to the place where most California VC firms are based.
He said: “It is clear having strategic investors was a better way to go for Healthline as they can also strike partnership deals and keep interests aligned but as we are an enabler of each company’s unique corporate mission we can customise our core search and advertising model to each partner to use their proprietary information and assets.
“It has been enormously valuable for the corporate venturing units to be part of the healthweb ecosystem and see what problems Healthline has been trying to solve. The company can also get tremendous leverage from seeing our technology for a $5m to $10m invest- ment and applying it within their company’s existing business for a 10% lift; this is something they would neither do or get access to without the corporate venturing unit.”
This growth has meant the company has doubled turnover in the past year and is just starting to make a profit, which could allow it to float within 24 to 36 months, if not sooner, according to Shell.