* Roger Ehrenberg: Will laid-off Wall Streeters spark an entrepreneurial boom? * A Houston Chronicle expose of Allen Stanford. From July 2000!!! * Jonathan Weil: Bank books finally start seeping some truth. * Morning Call: U.S. futures point to mixed open, European shares down on concerns over pharma profits, the Nikkei rises 1.5% and Hong Kong shares slide. * Self-Promotion Alert: I'll be on CNBC this morning at 10:30am, to discuss if private equity is about to become the next political pinanta. * Earnings alert: Blackstone Group holds its analyst call at 11:30, but the media call comes at 9:30. Erin will be live-blogging it. * Paul Starr believes that newspaper death will lead to a new era of corruption. Mike Masnick demurs.
1 min read · 27 February 2009
Bessemer Venture Partners this morning announced "the closing of a $350 million supplement to its current fund." But that's not really true. At least not in the traditional sense. The fund in question is Bessemer Venture Partners VII, which closed in June 2007 with approximately $1.1 billion in capital commitments. It was the first BVP fund open to institutions other than family office Bessemer Securities, although BS still took a very large stake. Too large a stake, perhaps, as the new "supplement" is mostly a transfer of unfunded capital from Bessemer Securities to other limited partners.
2 min read · 26 February 2009
As expected (by peHUB at least), President Obama's proposed fiscal 2010 budget includes a provision to reclassify the tax treatment of carried interest, from capital gains to ordinary income. This would dramatically increase the taxes paid on profits by buyout firms, venture capital firms, hedge funds and any other investment partnership (real estate, timber, oil, etc.). The basic math is that this change would raise a PE firm's taxes on investment profit from 15% (current cap gains rate) to around 35% (ordinary income level for top brackets). That's a big jump, although it's worth noting that capital gains rates themselves are universally expected to rise to at least 20 percent. As I've written ad nauseum, this is a change I support. Carried interest is, at its heart, a fee for services. A buyout pro or VC should not receive capital gains treatment on take-home generated by investing someone else's money. The limited partner is the person or institution that took the capital risk, so it's the one deserving of the capital gains rate (and would continue to receive it under Obama's plan). If a buyout pro or VC contributed
2 min read · 26 February 2009
* Newsweek: The reeducation of Larry Summers. * Todd Harrison: The reverse industrial revolution. * Roger Lowenstein: Hoover revisited. * Morning Call: U.S. futures point higher, European shares rise in early trading, the Nikkei erases gains to close flat and Hong Kong drops despite HSBC outperformance. * Howard Lindzon forms a VC fund for social apps. * Treasury's "stress tests" are intentionally using two different near-term economic scenarios.
1 min read · 26 February 2009
1 min read · 25 February 2009
Should private equity-backed pizza chain Sbarro get a federal bailout? That was the question on Stephen Colbert's mind last night, given that the company's debt was recently downgraded amid concerns that it could not honor certain loan covenants. You might think the answer is an obvious "no," given that Sbarro owner MidOcean Partners could pony up the dough if it finds Sbarro worthy enough, but Colbert notes that the "mall staple" has something extra going for it: "Everyone knows the finest cheese is aged, and no cheese slice sits out longer than the ones at Sbarro." So where does Colbert come down on a bailout for Sbarro? Or how about Abry Partners-backed Muzak? Check out the video after the jump...
1 min read · 25 February 2009
There has been lots of back-and-forth this week about how venture capitalists are "paralyzed," or at least how seed-stage companies are starving for dollars (more than usual, that is). Some of this has played out in the NYT and WSJ editorial pages, some has played out in the VC blogosphere and some has played out in my inbox. So I figured it was worth uploading some MoneyTree data runs, in order that we may all argue with a common set of numbers. Each run includes the years 1995-2008, and only relates to investments in U.S.-based companies. For context, Yahoo was first funded in 1995, eBay and SalesForce.com in 1997, Google in 1999, EqualLogic in 2001 and Facebook in 2005. The spreadsheets can be found below, as can three quick (and surprising) takeaways...
1 min read · 24 February 2009
Mid-market lender Freeport Financial has laid off most of its 23 employees, peHUB has learned. The Chicago-based firm's remaining professionals will help manage the existing portfolio, which currently has just over 60 loans (Freeport is lead agent on around half of them). Freeport was formed around five years ago, with the backing of hedge fund manager Stark Investments. A source says that Stark is not interested in selling off the existing Freeport credits – either piecemeal or altogether – believing that it has a better chance to recoup its money by winding down the portfolio over time.
2 min read · 24 February 2009
1 min read · 24 February 2009
The morning after Barack Obama was elected president, I wrote that the debate over carried interest taxation was effectively over. Obama had promised on the campaign trail to change the treatment of carried interest from capital gains to ordinary income -- which in most cases would raise the rate from 15% to 35 percent – and I saw little chance that he’d go back on that word. I also assumed that most people agreed with me, until the following exchange with NVCA chief Mark Heesen, during a 5 Questions here at peHUB: Dan: One of your big issues over the past two years has been tax treatment of carried interest. Is that still a big priority? Mark: I think it continues to be an issue, but you were dead wrong when, the day after the election, you basically said that a change to the carried interest tax was fait accompli. We got lots of calls after that column, saying “Oh my God.” We knew it wasn’t going to happen at that point. You’ll see it brought up again, but in this environment it’s very unlikely you’ll see Congress working on issues that are not huge revenue-raisers. They will not be out there trying to slap the wrists of people they shouldn’t be slapping the wrists of, because there are more important issues to work on at this point. Well, today's Wall Street Journal reports that Obama will indeed include the carried interest tax change as part of the budget blueprint being unveiled later this week.
2 min read · 23 February 2009
