Private Equity
If I were a venture capitalist today, I’d just be shaking my head at the Tesla Motors IPO. No profits, declining quarter-over-quarter revenue, a bankrupt founder/CEO, proven manufacturing difficulties and all hopes resting on a $50k sedan that won’t begin production until 2012. “Don’t we have unsuccessful companies like that in our portfolio,” I’d ask. “We even have some government loans for our cleantech companies. Is all we’re missing a better marketing department?” I might also wonder why Elon Musk is doing television interviews about the company, whereas other CEOs clam up due to post-IPO "quiet periods." But not everyone agrees with me, as evidenced by the fact that Tesla is trading above its IPO price despite a dismal day on the broader market. Reader Jim sent over the following thoughts via email:
2 min read · 29 June 2010
SV Life Sciences today announced that it has closed its fifth fund with over $523 million in capital commitments, busting through its original $400 million target. Looks like the second-largest fundraise of 2010 from a healthcare-focused VC firm (OrbiMed raised $550m), so I spent a few minutes on the phone with SV chairman and managing partner Jim Garvey: peHUB: Many VC firms are having trouble closing on even half of their fund targets, but you were well oversubscribed. Here’s the softball: Why did LPs love you so much? Garvey: One reason is that we’ve been at this for 15 years and our first three funds have demonstrable track records. And I think when times turned tough and LPs were hit with liquidity crises, many of them used performance as the deciding factor on who they were going to keep following. Our strategy is probably a good fit in difficult times, because it’s very broad across healthcare. We’re investing across two continents, early-stage to late-stage and in biotech, pharma and healthcare IT.
3 min read · 29 June 2010
1 min read · 29 June 2010
Tesla priced its inexplicable IPO today, and parked some of its "product" outside of the Nasdaq in Times Square. Our ad sales star Beth Yannone took a few shots on her way into work. Get them after the jump:
1 min read · 29 June 2010
Law firm Proskauer Rose this morning sent out a client alert about new reporting requirements for private equity and hedge funds (VC funds are excluded). Read it here.
1 min read · 29 June 2010
No, this isn't about some sort of charity boxing match. It's about whether or not Washington State will begin charging income taxes on high-net-worth individuals. For the uninitiated, Washington is one of just seven states without an income tax. It also is one of 50 states in the midst of fiscal hardship. So Bill Sr. has spearheaded Initiative 1098, which would charge income taxes on those with annual income in excess of $200k. It also would cut state property taxes by 20% and eliminate the Business & Occupation tax for an estimated 375,000 small businesses. Venture capitalists, however, have launched a "No on 1098" campaign, arguing that the introduction of an income tax would harm the state's entrepreneurial ecosystem (maybe it even would help revive Portland, Oregon's moribund VC market). And, because they are VCs, they even have a Twitter account.
1 min read · 28 June 2010
The first half of 2010 is fast coming to a close, so it seems appropriate to rev up the old list-icle engine. This one is the 10 companies that have raised the most venture capital (so far) in 2010. There are a bunch of changes since we last did this, and the threshold to qualify is now $100 million. Overall, venture capitalists have invested around $8.6 billion into 1,123 U.S.-based companies in 2010 (36% increase over this time last year). Get the biggest raisers after the jump:
4 min read · 28 June 2010
Does the watered-down Volcker Rule prevent banks from providing leverage to transactions sponsored by their in-house private equity funds? That's my gut reaction to the following language, which can be found in Title VI of the financial reform bill released this morning: ‘‘(1) IN GENERAL.—No banking entity that serves, directly or indirectly, as the investment manager, investment adviser, or sponsor to a hedge fund or private equity fund, or that organizes and offers a hedge fund or private equity fund pursuant to paragraph (d)(1)(G), and no affiliate of such entity, may enter into a transaction with the fund, or with any other hedge fund or private equity fund that is controlled by such fund, that would be a covered transaction, as defined in section 23A of the Federal Reserve Act (12 U.S.C. 371c), with the hedge fund or private equity fund, as if such banking entity and the affiliate thereof were a member bank and the hedge fund or private equity fund were an affiliate thereof. Wall Street caught some big breaks in this bill, vis-a-vis private equity. Banks will still be allowed to sponsor in-house funds, so long as they: (1) Stay below capital commitment caps; (2) Do not use their "brand" to name the funds; and (3) Prevent employees from investing in the funds, unless the employees work directly on the funds. But this leverage restriction could trump all of that. In fact, it could be a backdoor that effectively forces banks to divest of their in-house PE funds (if they have to choose to participate in equity or debt, they'll choose debt). Unless I'm reading this wrong... Am I?
2 min read · 28 June 2010
The London Business School and HEC Paris this morning released a new study on private equity returns, with a particular focus on European buyout firms. They found that their sample -- provided by fund-of-funds manager Pantheon -- does indeed produce alpha, net of fees and carry. It is worth noting that the research was sponsored by an industry trade group (BVCA), although it was conducted independently. Download it here.
1 min read · 28 June 2010
Fuel cell maker Bloom Energy is seeking $50 million, in what it's telling prospective investors will be their last chance to buy in before an IPO. Existing shareholder Northgate Capital is somehow involved, although I'm not certain if it's as lead investor or as quasi-placement agent (or both). No word on if other insiders plan to return pro rata. Bloom is a fascinating company, because it is so remarkably divisive among cleantech investors. Proponents consider it to be the energy industry's Google, a revolutionary company that will become ubiquitous. They talk about $20 billion as a floor for the post-IPO valuation -- which I hear is slated for late next year -- with $40 billion being within the realm of possibility.
2 min read · 25 June 2010
