A new fund is being shopped to invest in distressed and liquidating VC portfolio companies, peHUB has learned. The proposed principals are Marty Pichinson (Sherwood Partners), George Hoyem (Blueprint Ventures) and Colin Savage (formerly of Worldview Technology Partners). Doesn’t seem to have gotten much traction yet, but it sounds like an interesting idea on paper. My vote for the firm's name would be ABCapital... Pichinson is an obvious choice for this sort of thing, since he’s Silicon Valley’s official gravedigger. Hoyem is a bit more surprising, but makes sense when you consider that Blueprint has repositioned itself as an investor in corporate orphans (i.e., spinouts/carveouts). Savage certainly understands what a wind-down entails -- given that Worldview decided several years ago not to raise another fund.
2 min read · 10 March 2009
We hear a lot of complaints from venture capitalists about the lack of an IPO market, but isn’t this a far bigger problem for mega-buyout firms? After all, isn’t an IPO the only viable exit option for a market leader that was taken private (Clear Channel, SunGard, HCA, etc.)? The only way to get a trade sale would be to run the company into the ground (buy the best company, make it second-best), while sponsor-to-sponsor deals are unlikely due to both high leverage loads on the original deal and the likelihood of an original consortium (i.e., fewer firms left to sell to). At least VCs still have trade sale opportunities for most of their revenue-generating companies, or could sell to provide equity. What’s Plan B for the mega-funds? Not a rhetorical question -- I'm really asking...
1 min read · 10 March 2009
What follows are six VC deals culled from recent Regulation D filings with the SEC. They have not been otherwise disclosed: PicoChip, a Bath, England-based provider of signal processing products for wireless communications, is raising $25 million in Series E funding, according to a regulatory filing. It already has secured around $15 million, including $5 million via the cancellation of existing promissory notes. Backers include Highland Capital PartnersScottish Equity Partners and Atlas Venture. It had previously raised over $64 million. www.picochip.com Cornerstone OnDemand Inc., a Santa Monica, Calif.-based provider of talent management software and services, has raised around $9 million in Series E funding
2 min read · 09 March 2009
Element Partners, a cleantech-focused venture capital firm with offices in Pennsylvania and Silicon Valley, tomorrow will announce that it has closed its second fund with $486 million in capital commitments. So we've got 5 Questions for David Lincoln, the firm's managing partner: 1. Element Partners originally focused on both early-stage and later-stage investing, but this fund will drop the early-stage component. Why? Lincoln: We'd always had a mixed-stage focus, but the initial impression was that we were primarily early-stage, because of our association with Draper Fisher Jurvetson. In fact, we continue to get a ton of early-stage dealflow, but not as much in the growth or expansion-stages -- even though that's the area where we focused 80% of our attention. So we thought it was good to formalize and emphasize our growth-stage and expansion-stage strategy with this fund and fund announcement. Also, for this moment in the economy, we think there are better cleantech opportunities later.
3 min read · 09 March 2009
1 min read · 06 March 2009
2 min read · 06 March 2009
Nearly two years ago, I moderated a debate of sorts between Kevin Conway, managing partner of Clayton Dubilier & Rice, and Andrew Ross Sorkin, ubiquitous M&A reporter for the NY Times. It was mostly about the behavior of private equity firms, with lots of talk about CD&R's involvement with car rental company Hertz. Specifically, Sorkin and others had essentially accused Hertz's private equity owners of doing little more than a quick flip ($15b acquisition to IPO in a year). Them's fighting words in LBO land, where most investors fancy themselves operational savants -- able to add value to a company with a touch of their finger (and then, and only then, profit from the improvements). Conway bristled at the overall criticism, in part because CD&R and Hertz's other PE backers still owned most of Hertz, post-IPO. This was an important point emphasized over and over again. In fact, the PE firms still control Hertz today, with 55% of the company's outstanding stock. Well, I'm now thinking that a quick flip might not have been such a terrible idea.
2 min read · 05 March 2009
* Bethany McLean: "The five hotshots who took Fortress Investment Group public were worth billions at first. Today they look like arrogant showboats." * Venture capital's ancestral relationship to gambling. * Morning Call: U.S. futures drop on GM comments, European stocks extend losses, the Nikkei rises 2% and Hong Kong shares drop a percent. * Why golf is sacred to Wall Streeters. * Seth Levine's blog from VC in the Rockies.
1 min read · 05 March 2009
When people put private equity and bankruptcy in the same sentence, they're usually talking about PE-backed portfolio companies going bust. But the next formulation may involve private equity professionals themselves going under. I'm not talking about the head honchos here, since most of them pull in multi-million dollar annual salaries and have plenty more sitting in Switzerland or the Caymans (past success breeding current position). Instead, I'm taking about the junior investment pros, who over-leveraged themselves in order to participate in co-investment programs. Many of these folks are just a few years out of business school, and don't have much in the way of financial backstops. Sources tell me that personal bankruptcies could become epidemic at certain firms. Moreover, the situation could be exacerbated by firm-wide compensation cuts, which certain shops
1 min read · 04 March 2009
* Will the next big bailout go to public pension funds? * Charlie Gasparino: Sandy Weill fumes. * Morning Call: U.S. futures point to higher open, London up early, European shares rise, the Nikkei jumps 0.9% while Hong Kong closes up 2.5% on Chinese policy pledge. * Carlyle Group writes down Fund 4 in Q4, but not by as much as many of its peers. * Poor Deuce McAllister. First he gets cut by the Saints. Now an auto dealership bearing his name files for Chapter 11 (and he personally owes nearly $7m). * Loyalty to pets trumps the recession.
1 min read · 04 March 2009
