The value of Bono

Raising Elevation Partners’ debut fund involved helping LPs get comfortable with a rock star.

Raising a debut private equity fund is always a unique experience, and Elevation Partners’ time on the fundraising trail was no exception. The firm is comprised of several partners who mostly have not invested together in the past. The strategy is cutting-edge and untried. These two attributes typically mean limited partners are initially very skeptical, and justifiably so.

Elevation Partners’ strategy focuses primarily on building new businesses around intellectual property. The firm is the brainchild of Roger McNamee, who co-founded tech buyout pioneer Silver Lake Partners. The Elevation Partners fund – which closed in August on $1.9 billion (€1.6 billion) – had an additional, elephant-in-the-living-room-size feature that limited partners had to confront- one of the firm’s general partners is Bono, the lead singer of U2.

How do sophisticated LPs respond when asked by a rock star to commit to a fund? With tough questions and exhaustive due diligence? With gushing fandom? As a source close to the fundraising recounts, a little of both, actually.

Menlo Park, California-based Elevation employed Bono in the fundraising effort as efficiently as possible. The rock-star-cum-GP held numerous back-to-back meetings with prospective LPs in New York and other locations (one LP
says it was the first time he recalled seeing a GP wear purple sunglasses in a marketing meeting).

Bono, nee Paul Hewson, is listed in the Elevation PPM as bringing “media and entertainment domain knowledge and relationships” to the table. A source close to the fundraising said some LPs were worried that Bono’s involvement in the fund would draw too much media attention. Others questioned how much time the singer would actually spend working for Elevation – in addition to touring and recording with U2, Bono spends enormous energies with world leaders on the subject of Third World debt forgiveness.

In meetings, Bono won the respect of investors in holding forth on the subject he knows best – the impact of technology on the entertainment industry. “Movie studios and record labels are not adapting to [new technologies]
in constructive ways,” says the fundraising source. “Once he started to get into that with people, they got more comfortable with him.”

Some got more comfortable than others. Says the source: “One person came to the meeting and got down and dirty with Bono, asking him how much time he’d be spending [with the fund].At the end, he whipped out an old Time magazine that was in an hermetically sealed slip case. Bono was on the cover. It was obvious this guy had been saving it for 20 years. He asked Bono to sign it.”