Private Equity
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
1 min read · 29 June 2009
1 min read · 29 June 2009
San Francisco-based True Ventures emerged on the venture scene in 2005 and its way of doing business -- focusing on seed-stage startups that it can afford to back for the long haul -- quickly resonated with LPs. Not only did they give True $155 million back in 2006 but they came back for a second, $195 million, offering last fall. That True had already enjoyed two quick exits helped: In late 2006, it participated in the $850,000 seed round of Maya’s Mom, a social networking site for mothers that BabyCenter bought for an undisclosed amount less than a year later. True was also the first institutional money into blog search engine Sphere, which sold in April 2008 to America Online for $25 million after raising just $4.3 million. True's reputation among entrepreneurs is more notable, though. Whatever it's doing -- be it treating entrepreneurs like customers, as it likes to say, or operating out of a startup-like space (its open, sunny offices at the base of a pier feature little aside from cheap gray carpeting and an array of modest desks) -- has resonated with the digital media community, which seemingly now holds the firm in the same high regard as Union Square Ventures in New York, First Round Capital outside Philadelphia and prominent angel investors like Ron Conway. Yesterday, I visited the firm to find out what all the fuss is about; there, I talked with co-founder Jon Callaghan over the sound of squawking seagulls:
7 min read · 26 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
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
It's not unusual to see early executives of a big tech company join the VC ranks. For example, It seems like everyone on the staff of Bellevue, Wash.-based Ignition Partners has ties to Microsoft. But it's hard not to notice that many early Googlers are not just investing in startups as individuals, but are forming early stage firms. My colleague Constance Loizos reported yesterday how Merus Capital (whose founders have roots that go back to Microsoft and Google) are in the midst of trying to raise $125 million for its debut fund. And one half of the management team at Javelin Ventures is a former Google executive. I came across another firm that owes its wealth, and hopeful success, to Google. The firm, called XG Ventures derives its name from the fact that its four partners are ex-Googlers.
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
In November 2007, Salman Ullah, Sean Dempsey, and Peter Hsing came together to form Merus Capital, a venture capital firm that wanted to raise $125 million for its first fund. Given the founders’ backgrounds, it didn’t seem overly ambitious. Ullah had been Google’s VP of corporate development, where he worked with Dempsey, and Hsing was coming from Microsoft, where he had been a general manager of corporate strategy. But like many firms trying to pool capital in today’s inhospitable fundraising environment, Merus is assembling a much smaller fund -- and at a much slower rate -- than expected. Indeed, according to a May SEC filing that I stumbled across tonight, the Palo Alto-based has raised just $36 million so far and has amended its filing so that it might continue its fundraising indefinitely.
2 min read · 24 June 2009
