More than half of venture capitalists (52.9%) believe that their industry is “broken,” according to a survey conducted by executive search firm Polachi Inc. Moreover, nearly 60% said that they are less confident in the VC industry today than they were six months ago. Below are the survey results, or click here to download them: Polachi_VC_Survey
1 min read · 29 June 2009
Highland Capital Partners has pushed back the first close for its eighth venture fund from the end of June to mid-July, according to multiple LP sources. The Lexington, Mass.-based firm also has reduced the fund's carried interest from 25% to 20 percent. Highland began marketing in in early spring with a $400 million target, which was just half of the $800 million it raised for each of its prior two funds. I lauded the move, writing that Highland was one of the few VC firms willing to put common sense above fee-mongering. After all, the deflated fundraising and deal-making environment makes it the perfect time to raise less. If things pick up, you can always go back for more. Of course, I also assumed that Highland's lowered target would make fundraising a breeze. For example, it could lose half of its LPs, so long as the other half committed pro rata.
2 min read · 26 June 2009
The DEMO folks (Matt Marshall and Chris Shipley) will be in Boston on Monday night, to scout local companies and products for their September 21-23 conference in San Diego. And I’ll be there as well, since peHUB is co-hosting the evening with Xconomy. So if you’re a local entrepreneur or VC, it would be great to see you. We’ll all be at Vox Populi (755 Boylston Street) from 6pm to 8pm. Attendance is free, but registration is required here. The first 40 folks through the door will get their first beer or wine comped. Read more over at VentureBeat.
1 min read · 26 June 2009
Yesterday, we published fund-specific performance information from Pennsylvania SERS and the Washington State Investment Board. Today's we've got new data from the Massachusetts Pension Reserves Investment Management Board (MassPRIM), which had a $3.3 billion private equity portfolio through year-end 2008. The below document provides internal rates of return on 166 buyout and venture capital funds. PRIM only publishes performance data on funds that are five years-old and older, and provides it upon request (which I did earlier today). Enjoy: F O I A Report 12312008 Xls View more documents from danprimack.
1 min read · 26 June 2009
Coller Capital last week released a survey of limited partners, in which 65% of respondents said that they expect VC fund terms to become more LP-friendly over the next two years. This was portrayed by some as a sea change in the LP/GP power dynamic, although I suggested that “LPs would have more credibility if they began insisting on changes to funds that have already been raised.” My dissent was rooted in the memory of late 2001 and early 2002, when LPs fought back against the obesity of VC funds raised during the dotcom bubble. Sixteen U.S.-focused venture capital firms “volunteered” to cut their fund sizes by an aggregate of nearly $4.5 billion, including brand names like Accel Partners, Battery Ventures and Kleiner Perkins. The argument for such cuts – which were technically agreements not to call down a certain percentage of committed capital – was twofold: (a) Valuations and investment opportunities had fallen post-bubble, so less money was needed; and (b) VC firms tend to perform better when they focus on earlier (read: smaller) investments, so this was a return to successful knitting. LPs were happy with the resulting management fee reductions, and GPs were happy that their LPs were happy (butter ‘em up for the next fundraise). All hunky dory, except we’ve never actually looked to see if fund reductions produced better returns. So let’s do that now:
3 min read · 25 June 2009
Kohlberg Kravis Roberts & Co. today announced that it will not proceed with the IPO it filed for two years ago (which we already knew). It also scotched a revised NYSE listing scheme proposed last year, which would have included the absorbtion of an Amsterdam-listed affiliate called KKR Private Equity Investors (a plan I’ve been referring to as KKR’s un-IPO). Instead, KKR has come up with a third path to publichood: It wants to merge part of its management company with the Amsterdam-listed affiliate (KPE), but keep the combined entity trading Dutch for a little while longer. In other words, KKR would actually be going public (albeit on NYSE Euronext instead of NYSE proper). There have been some media reports that KKR is “dropping” or “abandoning” its Big Board listing ambitions (The FT is a major culprit), but it’s simply untrue. The new agreement would give KKR the option to float the combined entity in New York for the next 12 months, after which the option would be transferred to KPE. That deadline is really more a backstop than anything else, with KKR most likely to price in New York next spring (after IPOs for Dollar General and HCA, perhaps?).
2 min read · 24 June 2009
The Pennsylvania State Employees' Retirement System (SERS) today released its 2008 financial report, which includes cash-in/cash-out data 91 active private equity funds and 55 active venture capital funds. Overall, it's a $4.9 billion portfolio, representing a whopping 21.5% of SERS' total assets under management. I figured some of you might be interested, so here's a link to the report. The VC/PE section begins on page 47. Below that, I've also posted a recent PE/VC performance reports from The State of Washington Investment Board (which includes IRRs). State of Washington
1 min read · 24 June 2009
Bank of America has decided to discontinue the fund placement business it acquired via the Merrill Lynch merger. A source familiar with the situation tells me that the Merrill team is currently helping to raise between 15 and 20 funds, and will continue full-service through at least the beginning of Q4 (and probably through year-end). It will not take on any new clients, but will work to transition existing ones to other placement agents if needed. The group employs more than 30 professionals, including head of origination Loren Boston (who previously ran Citi’s placement biz). No word yet on if there will be some sort of independent spinout, or if most folks will go their separate ways. Bank of America’s decision effectively ends Wall Street’s oldest and most fertile fund placement business. The unit began back in 1981, and its veterans have spawned similar groups at banks like Credit Suisse/DLJ and Lazard.
2 min read · 24 June 2009
This time last year, Redlasso was seeking $15 million in new VC funding to build out its beta service, which allowed bloggers to embed clips from local and national television networks. It also was trying to work out licensing agreements with various broadcasters, including three that had already asked Redlasso to cease and desist. One month later, two of the three -- Hulu backers NBC and Fox -- filed suit, effectively shutting down both Redlasso's beta and its fundraising. Pretty big hits, but not a knockout. The Philly startup spent the subsequent year switching its CEO (Ken Hayward replaced in Q1 by Redlasso co-founder and COO Al McGowan), signing local news licensing agreements (Fox affiliates announced, other local deals to be disclosed in next few weeks) and quietly raising $2 million in new VC funding (it had previously raised $9.7 million).
2 min read · 23 June 2009
We’re in the midst of compiling our 2010-2011 PE/VC Partnership Terms & Conditions Study, and we’d like your participation. In exchange, we’ll send you a complimentary copy of the study when it is published. All you need to do is fill out a confidential survey on your latest fund’s terms and conditions, by going here. The deadline is June 30, so please act fast. For a signed promise of confidentiality, please email our research editor Eamon Beltran.
1 min read · 23 June 2009
