Private Equity
Paul Kedrosky, a senior economist with the Kauffman Foundation, is releasing a report on Wednesday titled “Right-Sizing the U.S. Venture Capital Industry." In it, he argues that to remain viable, the industry needs to shrink in line with the shrinking capital requirements and opportunities of the startups it funds. I talked tonight with Kedrosky about the paper (get it here) -- and why it’s relevant right now. Funds have long been accused of having grown too fat and dragging down returns as a result. Why write this paper now? Because we’ve finally reached a point when can happen. funds are at the end of their life span, 10-year returns are going to turn negative at the end of this year, and as they re-up, LPs have a choice to make.
3 min read · 10 June 2009
Cycle Capital Management of Canada has held an $80 million first close on its inaugural fund, which will focus on VC opportunities in the cleantech and renewable energy sectors. Limited partners include Investissement Québec, the Fonds de solidarité FTQ, Fondaction, the Caisse de dépôt et de placement du Québec, Brookfield Renewable Power Inc., Cascades Inc., the Fonds d’action québécois pour le développement durable (FAQDD) and the Centrale des syndicats du Québec (CSQ).
4 min read · 05 June 2009
1 min read · 02 June 2009
Much ink has been spilled over the "broken" venture capital model. Several years ago, Greg Warnock reached this same conclusion while at vSpring Capital, deciding venture capitalists weren't being adequately compensated for the risk of investing in pre-revenue deals. So he started a new firm to do the opposite of that. Warnock, alongside former MarketStar Corp. CEO Alan Hall, formed Mercato Partners to invest exclusively in revenue-producing startups with the goal of finding companies "grappling for their first foothold," and bolstering their sales forces from ten to 500. That strategy has performed well thus far. Two years and four investments into its life, the firm's IRR is in the low triple digits, while its portfolio company revenues grew 50% last year. I asked Warnock a few questions about Mercato's strategy and how it fits into today's VC market.
3 min read · 02 June 2009
Culled from regulatory filings, here are some recent private equity and venture fundraising updates, not reported elsewhere. Inventus Capital Partners, a new Menlo Park, Calif.-based VC firm has raised $51.25 million from 62 investors. The firm hasn't listed a fundraising goal, but in September peHUB reported the firm was seeking $125 million. That same report stated the firm had around $50 million in the hopper, so this new filing indicates the firm raised very little new capital in the last nine months. Firm Web site Lenox Equity Partners, an equity and mezzanine investment firm based in Atlanta, Ga., has raised $9.7 million toward a $30 million fundraising goal from 22 investors. The fund began raising commitments in 2007. Firm web site
2 min read · 01 June 2009
1 min read · 28 May 2009
3 min read · 19 May 2009
In January 2005, BusinessWeek wrote about the ouster of Carl Vogel, who had been CEO of cable TV provider Charter Communications. At the time, Vogel had just been pushed out the door by billionaire Paul Allen in an attempt to keep Allen’s controlling stake in Charter from falling further in value. Lance Conn, a member of Allen’s holding company Vulcan Capital, as well as a Charter board member, told investors immediately afterward that “the company's performance hasn't met your expectations or ours.” Fast-forward four years and Conn, who became Vulcan Capital’s president, is also losing his position of power within Allen's world.
3 min read · 15 May 2009
1 min read · 14 May 2009
Oak Investment Partners is confident it will close on $1.5 billion for its eighth thirteenth venture capital fund in the coming weeks, a source tells peHUB. At $1.5 billion, the fund would be a significant drop from its prior pool of capital, a $2.56 billion fund that closed in 2006. That even an established venture firm like Oak Investment Partners would lower its fund size during the current environment is no surprise. Recently, fellow venture capital giant NEA cut its fund target from $3.5 billion to $2.5 billion because of difficulties in the market. Moreover, Oak recently took a beating from VentureBeat, which said some of its investments looked “extremely risky, if not ridiculously so.” The article named HuffingtonPost, Babystyle, Visto
1 min read · 13 May 2009
