I am pleased to welcome secondaries giant Coller Capital as a sponsor of The LP Congress, which is taking place on June 9 at Bond Street in New York City. Looks like a good group so far, with registrants from public pensions, funds-of-funds, private foundations, family offices, etc. We're also adding some top-notch moderators for the working groups -- in addition to myself and Erin -- and I'll have details on that shortly. Remember, it's invite-only, but you can request an invite by emailing me with your name, place of work and job title.
1 min read · 14 April 2009
It's been a busy day for venture capital firm Accel Partners. First, partner Jim Breyer agreed to join Dell's board of directors. Just a few hours later, Accel was identified as one of the investors helping StumbleUpon's founders to repurchase the company from eBay. So I spent a few moments on the phone with Breyer, and here's an edited transcript: Why join the Dell board of directors? Breyer: We are very big believers at Accel in founders becoming more and more important over time -- not just at the inception of the business. The very best companies are led by founders for a long period of time, and Michael Dell has obviously done so many of the right things in the right that that he is a model for entrepreneurial founders that are building their businesses. Michael and I spent time together at the World Economic Forum in Davos this past January, and had a series of conversations. I went back and spoke to many of our entrepreneurs and my partners. The feeling was unaninous that working with Michael and Dell would be very valuable for the portfolio companies. We strongly believe that there are still enormous opportunities in some of the platforms being created today, like social networks and cloud computing and storage. Dell, in many ways, sits at the intersection of those things.
2 min read · 14 April 2009
Goldman Sachs today announced that it had raised $5.5 billion for its fifth secondaries fund, making it the largest such vehicle of all time. What Goldman didn't announce, however, was that it's already marked down the fund's portfolio by up to 12 percent. According to an investor letter obtained by peHUB, Goldman had called down 17% of the fund through the end of 2008 (although not all $5.5b was raised yet). This came via two calls: One last August and a slightly larger one last November. By December 31, however, Goldman was receiving guidance from GPs that the portfolio would be marked down between 5% and 9 percent. Once fees and expenses were factored in, the markdown deepened to between 7% and 12 percent.
2 min read · 13 April 2009
After seven years as a contract physical innovation center, Inventables Inc. is trying to transform itself into an online B2B marketplace. The Chicago-based company also has raised $2 million in its first round of VC funding, led by True Ventures. “We’ve been talking to Zach Kaplan for almost a year,” says Phil Black, a True Ventures partner who has joined the Inventables board. “This round of funding really does allow the company to make a clean break with the past. The B2B marketplace strategy is a lot more risky than what they’ve been doing, but it’s also got the potential to be much more rewarding.”
2 min read · 13 April 2009
Forty U.S.-based venture capital firms raised just $4.3 billion in the first quarter of 2009, according to data released this morning by Thomson Reuters and the National Venture Capital Association. The downside is that this represents the lowest number of funds to raise capital since Q3 2003. The upside is that the actual amount of capital raised was higher than the $3.5 billion raised in Q4 2008 (slight solace, but solace nonetheless). Just three of the funds were first-timers, while the largest raiser was August Capital ($650m for Fund V). In a prepared statement, NVCA president Mark Heesen said: "First, the majority of venture firms are not actively fundraising at this time because they have either recently raised a fund
1 min read · 13 April 2009
Earlier this year, Tom Friedman got knocked around for suggesting that some of the stimulus cash be redirected to venture capital firms. Now, a version of that idea might actually be gaining some traction. Innovation America, a nonprofit public/private partnership, and The National Association of Seed and Venture Funds (NASVF) are lobbying for a $2 billion fund-of-funds that would be used to shore up state investment programs and angel groups. Richard Bendis of Innovation America says that the groups had initial talks with the Obama transition team back in December, at which point the proposed program stood at just $1 billion. Bendis says that the government reps requested additional information, at which point Innovation America and NAVSF conducted a survey to demonstrate the difficulty young companies face in raising venture capital. Even though the survey was unscientific, the feds responded that $2 billion sounded like a more appropriate figure (insert jaded sadness here). Bendis says that the first $1 billion would come out of the stimulus package, perhaps from an organization like the Small Business Administration. It would then be allocated to various groups under the auspices of Innovation America, with third-party investors being asked to match the federal contributions on a dollar for dollar basis (bring us to the $2b figure). Kind of like PPIP for the entrepreneurial set.
4 min read · 13 April 2009
Tiger Global has offered to cut the size of its fifth private equity fund by up to 25%, according to one of the firm's limited partners. Figures that a PE fund with hedge roots is more prone to doing the right thing than are most PE funds with PE roots... For those unfamiliar with Tiger Global, it's one of the cubs spawned by Julien Robertson's Tiger Management hedge funds. It mostly seems to make direct investments in emerging markets, with a focus on the technology sector. There's no website, so additional background is a bit tough to come by. The fund in question is Tiger Global Private Investment Partners V, which closed on approximately $1.24 billion in early 2008 (according to a regulatory filing). According to our source, the firm is offering to cut LP commitments back by up to 25%, in 5% increments. Chances are that not all LPs will take full advantage of the offer but, if they did, that would reduce the fund size down to around $930 million.
1 min read · 09 April 2009
Bertram Capital has pushed back marketing for its second fund until this summer, as first reported by VentureWire. I spoke this morning with Bertram’s Jeff Drazen, who said the move was caused by smaller deal sizes: “Everything we’re buying right now is substantially under 5x EBITDA, but we originally forecasted paying 8x EBITDA or more. Trafford is a good example. It’s a $10 million business we’re buying for a couple hundred thousand… I just don’t feel we can go out until Fund I is 75% committed, and we’re just not there yet.”
1 min read · 09 April 2009
A few readers have asked why I’ve paid so much attention to the NY Common kickback scandal, and virtually none to a semi-similar situation in Illinois. My answer is basically mea culpa, although the local Illinois press did a much better job covering their backyard mess than the NY press has done covering theirs. But it is worth noting that Jon Bauman yesterday stepped down as head of the Illinois Teachers’ Retirement System. The move wasn’t terribly surprising, given that the post-Blago governor had already passed legislation to have Bauman fired on July 1 (and you thought the AIG bonus tax was selective). Still no allegations that Bauman was corrupt, just that he should have recognized ongoing corruption and reported it to the authorities. Instead, it seems that he waited until the authorities came to him (at which point he provided lots of valuable info).
1 min read · 09 April 2009
Highland Capital Partners has begun raising its eighth venture fund, with a target of around $400 million. That’s pretty large for a typical VC fund, but small for a firm whose past two vehicles came in at around $800 million (it also raised $300m for a consumer-focused fund). So, what gives? The basic answer seems to be that Highland might be putting common sense above fee-mongering. I know, they might get kicked out of the club (at which point they can just retreat to Wyc’s Lexus Club in the Boston Garden). Here’s what I mean: Both fund-raising and deal-making volumes are deflated right now, due to things like LP liquidity constraints and decreased valuations. So Highland will raise less now and, if the environment improves, go back out for a larger fund sooner than it normally would. If times stay tough, then it’s sized appropriately for a normal investment cycle.
1 min read · 09 April 2009
