Venture capital firm Elevation Partners will invest $325 million into Palm, Inc. giving them a 25% equity stake in Palm. The deal has been approved by the stockholders.  Palm CEO Ed Colligans said, “We appreciate our stockholders' strong support of these proposals and look forward to an era of renewed innovation and focused execution at Palm.”

As part of the deal Palm is appointing Jon Rubinstein as Executive Chairman of the Board of Directors. In addition, Roger McNamee and Fred Anderson from Elevation Partners will also join the Palm Board of Directors. Jon Rubinstein is best known for leading the effort and teams within Apple, Inc. that created the first iPod.

The addition of Rubinstein could be key in turning around Palm, a company that still has a great name in the marketplace, but has had difficulty in breaking out beyond the Treo smart phone. Rubinstein’s experience in the development of both the iMac and iPod will at the very least bring some much needed new ideas to the table, which could in turn leave to Palm building something new that goes beyond what they have been able to achieve with the Treo.

After killing the Foleo product last week, Palm needs to quickly come up with something that is able to capture the attention of the market.  Palm is in serious danger of getting pushed out of the smart phone market space by Blackberry, as well as a variety of Windows CE phone devices. Elevation Partners must see something in Palm for them to come in and invest this type of money.

With all of the floundering in both OS and product development, a return to a focused perspective coupled with some creative innovation will be necessary if Palm wants to return the company back to its former glory and to recapture some of the lost market share.