Private Equity
A few weeks ago, Fred Wilson posted a presentation he delivered on What Makes the NYC StartUp Scene Special. I was inspired to deliver a similar presentation today to a group of Harvard Business School students who are interested in entrepreneurship in Boston. There's been alot of chatter in the community about a startup renaissance in Boston. Don Dodge of Microsoft had a great post listing out all the amazing startup resources in the Boston community that's worth reviewing as well. I'll post the video as well in the coming days so folks can hear the voice over. Yahoo's ex-president (and fellow HBS EIR) Susan Decker was there to serve as a good foil for my Boston vs. Silicon Valley quips. Slideshow after the jump...
1 min read · 04 November 2009
As the Obama administration starts to talk about propping up small businesses with the next phase of the bailout, I’ve begun hearing noise from some venture capitalists and angel investors that the government should provide financial support to startups, early-stage venture capitalists and angel investors. All I can say to this is “vomit.”
2 min read · 26 October 2009
3 min read · 16 October 2009
Much has been written recently about whether venture capital and/or private equity funds should be regulated. The general idea behind proposed regulation is that any entity that could pose a risk to the nation’s financial network should be regulated to try to ensure that we avoid the messes that got us into this current recession. So the question then is, “Who presents a possible threat?” The arguments coming out of the VC world are essentially “Not us for a bunch of reasons.” Congress seems to agree. The proposed regulations have new language that would exempt venture capitalists. It says:
3 min read · 08 October 2009
3 min read · 06 October 2009
There seems to be a disconnect between compensation anxieties and reality -- especially for those who are employed.
6 min read · 04 October 2009
4 min read · 30 September 2009
I have been fielding these same questions from my GP, LP and other industry colleagues: “What do you think about the ILPA Principles?” (soft voice) “How do you think it will affect my business?” (worried voice) “They don’t matter – we go through this every ten years when LPs try to get the upper hand.” (with bravado) Others are either more certain in their opinion or not so sanguine and believe that this effort will have a long term (and dependent on your perspective) positive or deleterious impact on the industry. A few LPs, smaller ones and non-ILPA members are even cowed by the impact feeling that the “big dogs” are dictating their ability to enter into funding opportunities. I’ve been most surprised by the few on the record comments by industry members and in particular the lack of specific statements by GPs. It’s pretty hard to disagree with common sense. I see nothing offensively troubling in the document. In fact, it has offered a kind of first hand self-review opportunity for the industry. I know. I know. We GPs are supposed to rebel instinctively against any proposal by an LP that governs or restricts our ability to do business. Bull! We appeal to Pension Funds, endowments, banks and other institutions for fund capital and want as few restrictions as possible. After all, this is capitalism, no? Atlas will not shrug his great burden but rather heave the world as we know it if these socalled Principles become ubiquitous. Hardly.
5 min read · 25 September 2009
It’s been a long hot summer of debate and, dare we say it, discontent. Over the past six months, Americans have watched with anticipation and increased trepidation as healthcare reform details slowly emerge. President Obama has appropriately led the charge to alert Americans about the crisis and the need for change. At this point we all know our current healthcare “system” does not work and we have all seen plenty of evidence detailing the symptoms and root causes of healthcare’s failure. It’s now time to develop a *realistic* plan for change. We need to understand that we are attempting to fix an extraordinarily complex problem and it will require the best of all parties to accomplish that. Creativity and quality ideas are the essence to build a lasting solution. Reckless expedience, in this case, may serve a political purpose but is unlikely to serve the public interest. Thoughtful deliberations do not mean we do not move forward, but rather, that we move forward with good ideas on a reasonable and achievable time schedule.
10 min read · 24 September 2009
In a recent DealBook column by Andrew Ross Sorkin, Guy Hands of buyout firm Terra Firma provides an unvarnished appraisal of the buyout industry’s bubble-era mistakes and its post-bubble outlook. It will surprise no one if the large majority of buyout deals completed during the credit bubble of 2006 to 2008 turn out to be bad deals. If that was the only issue facing buyout funds, everyone could just take their lumps and move on in a couple of years. The core problem is much more fundamental. The buyout industry has sized itself based on management fees drawn not only on the record amount of capital invested during the bubble years, but also on the record amount of committed capital for investments yet to be made. The pressure to maintain high management fees and the large amount of undrawn capital commitments conspire to create an environment in which even the deals that get completed after the credit bubble (i.e. from 2009 to 2012) are also likely to produce poor returns in the aggregate. Unless the industry reforms itself, the net returns for vintage year 2006 to 2010 buyout funds are likely to be worse than even Mr. Hands predicts.
4 min read · 24 September 2009
