Private Equity
Subprime venture capital, as I described in an earlier post, is easily recognizable Here are some of my metrics. Run for the hills whenever an investor...: 1. Seems more interested in how it is built rather than what the disruptive business proposition is. Innovation becomes successful when it marries macro-economic value with micro-economic (technology) execution. Technology risk is the least of our worries in Silicon Valley, yet fundamental disruption is crucial and should take up the majority of the discussion. 2. Seems more worried about cost of development than cost of greenfield customer acquisition. Capital efficiency is a buzz-word investors love to throw around. In most cases they want you to be as cheap as possible. But capital efficiency is relative to the cost and value of customer acquisition. Not all venture capital deals start with a seed round below $250K -- more disruptive innovation usually
4 min read · 08 January 2009
3 min read · 08 January 2009
Erin Griffith lists 49 PE deals that went Chapter 11 in 2008, up from just two in 2007. Wow! But, not one technology deal made the list. (Wow again?) Leveraged buyouts in the technology sector are not new, as firms like Welsh Carson, TA Associates, GA and Warburg Pincus have been at it for over 25 years. But when the tech bubble burst and the IPO market became terminally ill back in 2000, these old-line firms were joined by a rush of overfed VCs (Battery, NorthBridge, Insight), generalist buyout shops and several new tech-focused PE firms – all of whom went on a remarkable fund-raising and shopping spree. The new breed of tech-focused PE firms were lead by names like Silver Lake, Francisco, Golden Gate, Vista and Vector. Many of these firms were built on tech banking talent that spent the 1990’s taking companies public. With the public markets dominated by hedge funds, day traders and regulators – these PE firms focused taking their old banking clients private. Like all LBO activity – the velocity and amplitude to tech buyout deals were dramatically enhanced by free credit and peaked in Q2 of 2007, when Kronos was taken private by Hellman and JMI for $1.8b, or 17x EBITDA.
3 min read · 06 January 2009
2 min read · 04 January 2009
4 min read · 31 December 2008
6 min read · 19 December 2008
4 min read · 16 December 2008
3 min read · 15 December 2008
3 min read · 09 December 2008
I am a big fan of The Daily Show, particularly of the segments that question WTF is going on (I will save you the #*% spelling that gets used). I have up close and personal experience with that, as I lost my job last week. Yikes, 35 years in the business and involuntary departure for the first time. The economy stinks, but it's difficult to grasp unless it hits close. Now the 35 years of networking starts to pay off a bit differently. The thing is, uncertainty is part of life, and change can be exciting. But, a lot of uncertainty and the accompanying changes, like we have going on right now, can be a bit disorienting. Why? For one thing, we are facing a new administration, which depending on your view is going to be better or worse than what we have had for the last eight years. My first observation is that we all are impacted, whether we know it or not, by global relationships. We collectively cannot continue to operate
3 min read · 09 December 2008
