Kegonsa Seed Fund Sells Second Portfolio Company
May 30, 2012
Kegonsa Seed Fund I, L.P., the premier Wisconsin seed venture capital fund, has sold a second portfolio company, IBSI. The company was sold to QIAGEN, a large Life Sciences tools and reagent-manufacturing company in an all-cash transaction. For details about the acquisition from QIAGEN's perspective, please see the official announcement from QIAGEN.
IBSI is the second Kegonsa Seed Fund portfolio company to be sold. In 2007, Jellyfish.com was purchased by Microsoft in an all cash transaction. Kegonsa also sold fund-owned intellectual property and had a portfolio company exit via a stock redemption, since the fund was initiated in 2005.
"This sale was completed in a buyer's market, but provided Kegonsa investors with a roughly triple investment return," said Ken Johnson, Kegonsa Capital Partners managing director. "The Kegonsa investment period was less than 5 years."
According to Johnson, about 40 percent of growth-stage investments are successful with exits, typically in 4 years to 6 years with a return of 3- to 5-times the venture fund investment. "The return on IBSI is typical for this type of venture capital investment," Johnson said.
IBSI originally was founded in Wisconsin in 2002. By 2004, the company was negotiating a license to a novel method to analyze DNA from an Ivy League university; however, it was running out of cash. It was recapitalized in 2004 with a new CEO, who also was the lead investor in the company recapitalization and relocated IBSI to the New England area. Johnson, an original company founder, participated in the recapitalization.
In late 2007, Kegonsa invited the CEO to present to the Kegonsa Seed Fund Investment Committee. The result was an investment in IBSI by the Kegonsa Seed Fund, which was one of three venture capital firms to invest in IBSI. The other venture capital firms invested in IBSI were located in the Boston area.
IBSI began marketing its proprietary DNA analysis product in 2011. The company plans to introduce additional DNA analysis products early next year. It is headquartered in the New England area with 12 employees.