Term Sheet

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Breaking down the $135 million Sonos deal

June 19, 2012: 11:07 AM ET

Going beyond the noise.

FORTUNE -- Sonos, a maker of wireless home audio systems, has raised $135 million in a growth equity round led by Kohlberg Kravis Roberts (KKR). Elevation Partners and Redpoint Ventures also participated, while existing company shareholders include Index Ventures and BV Capital.

Three notes:

1. According to All Things D, only about $45 million of the round is primary capital. The remainder is founder/early shareholder liquidity. Unclear if BV is retaining a stake, given partner Andreas Von Blottnitz  is leaving the Sonos board (KKR's David Kerko and Elevation's Fred Anderson are joining).

2. Sources tell me that Elevation Partners isn't investing out of a fund, because the investment period is long expired on its 2006 debut vehicle (and its fabled second fund has yet to materialize). Instead, the Elevation investment is actually coming from Elevation's general partners.

3. I can't recall any other time that KKR has participated in a pre-IPO funding round for a venture-backed company. I know it looked at late rounds for companies like Groupon, but passed because such transactions don't really fit the firm's private equity investment model (namely the lack of control). Maybe it got more comfortable with Sonos because it's high-end hardware, but I'm interested in learning if a deeper strategy shift is at play.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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