Private Equity
It's not a surprise -- Stanford University president John Hennessy warned in April that the university's endowment would probably drop 30% this year due to the world economic crisis -- but a 25.9% plunge in Stanford's primary investment pool for 2008-09 is still daunting, even if the S&P 500 Index did drop a little more. (Stanford is comparing the 12 months ending June 30). As a result, Stanford has cut the payout on individual endowment funds by 10% for this fiscal year and another 15% for next year, making everybody take a two-year hit. ("Five years of reductions would be harmful to morale, especially after the external economy recovers," its 2010 budget plan notes. "A series of small cuts does not encourage strategic decisions.") The school also raised $1 billion in a bond offering last April in case of a "true emergency," Hennessy said.
2 min read · 25 September 2009
Per Dan's post this morning on entrepreneurs' anger at venture capitalists, here's a paper from a couple of professors who analyzed entrepreneurs' comments on TheFunded, a VC-rating site. Their findings -- entrepreneurs value independent VCs more than they do corporate or government VCs, but they don't value better track records or more experience. They do give higher ratings to VCs who give them money. Authors are Ola Bengtsson at the University of Illinois Urbana-Champaign and Frederick Wang at Cornell.
1 min read · 25 September 2009
But won't say how much. "It's in the mid-single-digit millions," according to Goby CEO Mark Watkins -- split equally between Flybridge Capital Partners and Kepha Partners -- but "we don't want to help our competitors." It's not clear which competitors Watkins is worried about. Goby has a travel search engine that lets you find places you might want to go based on filling in any two out of three boxes -- what, where and when. Its pretty interface is backed by some hefty database technology developed by Mike Stonebraker, now an adjunct professor at MIT. Stonebraker developed the Ingres and Postgres relational database systems while he was a professor at Berkeley and has been involved in eight other database companies. "Goby is a search engine for the structure of data rather than the text," Watkins said. "Instead of crawling the Web looking at random Web pages, we look for databases of information -- is there a form, how is the browse tree configured? It tells us what the pages are about."
2 min read · 25 September 2009
Dr. John Paglia of Pepperdine University is in Silicon Valley today talking up his new project on private capital markets. He's trying to figure out the real cost of capital to businesses, especially mid-market businesses, where data is most scarce. (Paglia also runs a business appraisal practice). He thinks business owners routinely under-estimate the cost of their capital, but in doing his survey, he's turned up some interesting data on investors too. One thing that struck him was how many venture capitalists claim they invest by "gut feel" --
1 min read · 24 September 2009
Both Twitter and LinkedIn are said to be valued at around $1 billion by their venture capitalists. The Twitter figure originates in a recent TechCrunch report, while LinkedIn was priced by former CEO Dan Nye last year. Note that Nye's valuation came before he left the company in a shakeup that had LinkedIn founder Reid Hoffman seizing control again and bringing in an interim president from Greylock, one of LinkedIn's investors. Yes, Twitter and LinkedIn are both social networks, but the similarities end there. Nye last year claimed LinkedIn has been profitable since 2006, while Twitter doesn't make money. (One source said Twitter co-founder Biz Stone had no clue how Twitter was going to make money when he started the company, and that was part of Twitter's charm for investors -- Stone seemed so excited just by the idea of Twitter).
2 min read · 24 September 2009
The alternative was a trial, but the California Court of Appeal said Friday that it won't review the trial court's order to compel arbitration in this case until after the arbitration is finished. Translated, that means Exigen and its founder Greg Shenkman have dodged a bullet, at least for now.
2 min read · 22 September 2009
Two Georgia Tech professors -- Dan Breznitz and Mollie Taylor -- examine why 40 percent of Atlanta's high-tech start-ups flee for other states within three years of being founded, despite the area's top universities, educated workforce and other natural advantages. Read it here.
1 min read · 22 September 2009
Clean tech is in the news today, with Obama calling for a global treaty on climate change, A123 raising its IPO price range, new funding for a couple of startups that make buildings more energy efficient, and a clean tech acquisition. Serious Materials -- which makes windows, commercial glass and drywall -- raised $60 million in a Series C round led by Mesirow Financial Capital and including seven other venture firms, bringing total funding to $120 million. One of the funders, Foundation Capital, incorporated some of Serious Materials' products last year into its new Menlo Park headquarters, an older building that it renovated so it could show clean tech startups it was serious about being green.
2 min read · 22 September 2009
Scribd was sued Friday in federal court by Elaine Scott, who describes herself as a "successful children's book author" and the author of Stocks and Bonds, Profits and Losses: A Quick Look at Financial Markets. The book is 25 years old and is available on Amazon for 39 cents -- or on Scribd, apparently, for free, where Scott claims it's been downloaded more than 100 times. Scribd does have a copyright management system, and a potentially lucrative deal with Simon & Schuster to sell 5,000 of their titles electronically. But Scott complains that authors who use Scribd's system have to agree not to hold Scribd liable, even if the system fails. Not that Scott has ever used it -- Stocks and Bonds wasn't licensed to anybody, she says. Her complaint (uploaded onto Scribd) after the jump:
1 min read · 22 September 2009
Venture capitalists and clean tech executives will no doubt watch closely this week to see how A123's IPO goes -- if it happens and it does well, other clean tech companies may be bold enough to follow -- but as taxpayers, you and I have more at stake. A123 has raised a whopping $600 million in government grants and loans for its rechargeable lithium ion batteries -- over half of it this year. There's a $249 million Department of Energy grant courtesy of the 2009 American Recovery and Reinvestment Act, and $100 million in refundable tax credits from the Michigan Economic Development Corporation. Both hinge on A123's plans to create jobs by moving some manufacturing to the U.S. Private investors, meanwhile, including GE and Conoco Phillips, have kicked in about half that amount -- $352 million. Financial backers are going to have to trust that A123 executives can sustain a strategy that has changed radically in just the last couple of years.
3 min read · 21 September 2009
