| PE Week Wire - Friday, October 17|
I don’t think I say this enough (or perhaps ever), but: Thank you Henry Kravis.
Speaking at the Super Return Conference in Dubai on Wednesday, the KKR chief said:
“All of us need to accept responsibility for the damage done to the free-market system… We’ve moved too slowly to replace management in some situations…. We wait too long hoping they’ll improve but they never do… You have to focus on all the stakeholders. It’s a new thing for us and something we’re really hammering. Long term value is only achieved if growth benefits all stakeholders in a company, from owners to employees, communities and even governments. We are also conscious we are fiduciaries to millions of hard-working men and women and university endowments…Trust must be earned over the long haul and maintained constantly. We have not always adequately explained what we do to the man on the street. Even some of our investors, although happy with the returns we deliver, don’t fully understand what we do and why they should invest with us.”
Words can be cheap, but admitting you have a problem (not a circumstance) is the first step toward recovery.
I remember being a cub reporter in early 2001, when Daddy Thomson (then single) hosted a VC conference in Boston. During Q&A, I asked a group of VC panelists to explain what responsibility they bore for the recent dotcom bubble burst. My hope was that someone would talk about taking immature companies public, or funding an excess of me-too companies (such as all the Pets.com clones). Instead, I got a quintet of blank stares, followed by a mild bit of righteous indignation.
"The private market follows the public market," one of them scolded. "Not the other way around." It was a tired line, and one that no longer held true in the symbiotic capital markets. More importantly, though, it was a lack of self-reflection that probably helps explain why he is no longer a VC. After all, how can you learn from past mistakes if you don’t acknowledge them in the first place?
Here’s to hoping that Kravis is paying more than lip-service, and that others follow his lead.
*** Oh, and for completely different reasons: Thank you J.D. Drew.
*** Things are bleak in limited partner world right now, and expected to get bleaker as FAS 157-compliant annuals roll in. The only bright spot I’ve heard about is a theory that 2009/2010 vintage funds should be strong performers, because they’ll be investing at depressed valuations.
I buy the argument for buyout funds, so long as credit becomes available. For VC funds, however, it may not wash.
Just take a look at Thomson Reuters fund performance data for funds raised in 2002 and 2003. The median IRR for a 2002-vintage buyout fund is 8.2%, while the median IRR for a 2003-vintage buyout fund is 11.9 percent. The median IRR for a 2002-vintage VC fund, on the other hand, is -1.2%, while the median IRR for a 2003-vintage VC fund is 0.9 percent.
My question for VCs is simple: What will be different this time around? Will you view companies as trade sales from the get-go, instead of as IPO candidates? If so, what does that practically mean? If not, how will you do better this time around. Real question, not a rhetorical one…
*** Q3 VC deals data will be published at peHUB first thing tomorrow morning. Also, next week I'll unveil the next set of peHUB Shindigs. Perhaps it should be called the Blood & Tears Tour... Have a great weekend.
New at peHUB
* First Read, including six degrees of sandwiches.
* Second Opinion, including credit crunch comic strips.
* Kind of a Big Deal: Accel-KKR keeps on buying.
* Kind of a Small Deal: OpenGate Capital buys TV Guide for $1 (no, that's not missing a million).
* Shanghai eyes tax breaks for PE firms.
* China wants even more Blackstone?
* Benchmark Capital is looking at PIPE deals, for the first time in its history.
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GTCR has committed up to $200 million in equity capital for the creation of ExcelusHR, a St. Peterserg, Fla.-based acquisition platform focused on the HR information and services industry. The company will be led by John Long, former CEO of First Advantage Corp. (Nasdaq: FADV). Read more…
T2 Biosystems Inc., a Cambridge, Mass.-based developer of portable medical diagnostic products that combine nanotech and miniaturized magnetic resonance technology, has raised $10.8 million in Series B funding. Partners Healthcare and In-Q-Tel were joined by return backers Flagship Ventures, Polaris Venture Partners and Flybridge Capital Partners. Read more…
Marc Faucher and Matt Golden have joined The BlackBerry Partners Fund, a $150 million VC vehicle focused on applications and services for the BlackBerry platform. Faucher previously was with Summerhill Venture Partners, while Golden has part of the founding team at Tira wireless. Read more…
THE ROAD AHEAD - YALE SOM PRIVATE EQUITY CONFERENCE
Friday, November 14 2008 - Greenwich, Connecticut
Join keynote speakers Scott Schoen (Thomas H. Lee), Phillip Yea (3i Group), and other leaders from the top private equity firms across the street, at the premier business school PE event of the year. Specific topics of discussion include: (a) Global Sourcing and Deployment of Capital; (b) Infrastructure Opportunities; (c) The Operational Improvement Imperative; (d) Opportunities in Cleantech; (e) The Limited Partner Perspective; (f) Hedge Funds in Private Equity; and (g) Legal Guidelines.
Register now at: http://pe.som.yale.edu/
Cohera Medical Inc., a Pittsburgh–based developer of wound management products and surgical adhesives, has raised $16.1 million in Series B funding. Bradford Capital Partners led the round, and was joined by return backer Kern Whelan Capital. Read more…
CeNeRx BioPharma Inc.
, a Cary, N.C.-based developer of CNS drugs, has raised $15 million in Series B funding. Return backers include Aisling Capital, L Capital Partners and Pappas Ventures. Read more…
WideOrbit Inc., a San Francisco-based provider of sales, traffic and billing software for the global media market, has called down $9.5 million of a $10.32 million Series D round, according to a regulatory filing. Mayfield led the round, and was joined by return backers Khosla Ventures, Greycroft Partners and Hearst Ventures. The company had previously raised around $30 million. www.wideorbit.com
V.i. Laboratories Inc., a Waltham, Mass.-based provider of software protection solutions for securing high-value and mission-critical applications, has raised $4 million in third-round funding. Return backers include Ascent Venture Partners and Core Capital Partners. Read more…
Ray Flame Entertainment Inc., a Cypress, Calif.-based MMO gaming startup, has raised $800,000 in Series A funding led by InnoBridge Ventures, according to a regulatory filing. http://lord.webmmo.com
2008 Midwest ACG Capital Connection |
October 21 - McCormick Place, Chicago
It’s All About Deal Flow!
The McLaughlin Group launches the event. Then a great day of dealmaking and networking. Join Us!
- Over 140 Private Equity exhibitors Hundreds of Investment Bankers Over $150 Billion investment capital looking for deals Early to late stage, manufacturing to high tech and more
- Building on 1400 dealmakers last year
For more info, firms participating & registration, www.ACGChicago.com
Corinthian Capital Group has acquired Precision Motors Transport Group, an Okemos, Mich.-based provider of transport services for European luxury cars throughout the United States. No financial terms were disclosed. Allegiance Capital Corp. advised PMTG on the sale. Read more…
The Riverside Co. has acquired UV-Vis Metrolab SA, an Argentina-based maker of automated clinical chemistry analyzers for the human medical market. No financial terms were disclosed. Read more…
Behrman Capital has sold ACS Communications to Black Box Corp. (Nasdaq: BBOX), for an undisclosed amount. ACS is an Austin, Texas-based provider of technology deployments, data center support services, managed staffing and dispatch services. It was acquired by Behrman in 1999. Read more...
Cortec Group has completed its sale of Cortland Cos. to Actuant Corp. (NYSE: ATU) for approximately $230 million. Cortland is a Cortland, N.Y.-based maker of electro-mechanical cables and umbilicals, synthetic ropes and steel cable and assemblies. Harris Williams advised Cortland on the deal, while Morgan Stanley advised Actuant. Read more...
HealthCare.com, a Miami-based provider of an online directory of healthcare providers, has acquired BrokersWeb, a provider of online advertising solutions for health insurance brokers and lead aggregators. No financial terms were disclosed. HealthCare.com has raised VC funding from firms like Monster Venture Partners. Read more…
Lewis-Goetz Inc., a portfolio company of Audax Group, has acquired G&H Pumps and Compressors Inc., a Bossier City, La.-based provider of pump repair and hydraulic services for onshore oil and gas drillers. No financial terms were disclosed. www.lewis-goetz.com
National Interest Security Co. LLC, a portfolio company of DC Capital Partners, has acquired Multi-Threaded Inc., a Herndon, Va.-based provider of tech services and solutions to the intelligence community and U.S. Department of Defense. No financial terms were disclosed. Read more…
Webmedx Inc., an Atlanta-based provider of medical documentation services, has acquired Medical Transcription Education Center Inc., a Fairlawn, Ohio-based provider of distance learning and education programs for the medical transcription market. No financial terms were disclosed. Webmedx has raised nearly $40 million in total VC funding, with current shareholders including firms like Ferrer Freeman & Co. Read more…
Jefferies Capital Partners is targeting $800 million for its fifth fund, according to LBO Wire. www.jefcap.com
Private Equity Investors Inc. is raising up to $250 million for its fifth secondaries fund, according to a regulatory filing. So far, it has secured over $112 million in capital commitments. www.peifunds.com
Colin Grant has joined UK-based Braveheart Investment Group as chief financial officer. He previously was CFO of Digital Bridges Ltd. Read more…
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