VCs exit German software distribution company

3i, Earlybird and IKB have realised their investment in element 5 AG, an electronic software distribution supplier in Europe and Asia, via a $120 million trade sale to Digital River Inc.

Digital River, a US electronic software distribution company, has acquired element 5, a venture-backed competitor, in a deal worth $120 million (€101 million).

The company was sold by a trio of European venture capitalists led by 3i, the UK-based venture capital and buyout firm. Earlybird, a European venture capital fund with offices in Hamburg, Munich and Palo Alto, and IKB Private Equity, the German-based subsidiary of IKB Deutsche Industriebank, were also shareholders.

3i and Earlybird invested initially in the first stage finance round in December 1999, taking 23 percent and ten percent of the equity respectively. They were joined in the second round by IKB, who acquired an 11.5 percent equity stake in December 2001. The remaining equity was retained by management.

The venture firms did not disclose their respective returns on investment.

element 5 offers e-commerce solutions and marketing services to software publishers. According to a press release, the firm's focus is on Europe and Asia, complementing Digital River’s US market position.

Hendrik Brandis, managing partner at Earlybird and the investors’ representative on the board of element 5, said in the statement: “This transaction adds value to the company’s international growth and combines them with an international market leader for future success”.