Tim Draper on Seizing the Economic Bull

Tim Draper, founder and Managing Director of Draper Fisher Jurvetson, in a talk that all graduating business school students should watch.

Fenwick & West’s Trends in Terms of Venture Financings Q4 2008

Here’s the latest installment of Fenwick & West’s Venture Capital Barometer™, i.e. as goes Silicon Valley VC, so goes the world’s. Fenwick analyzed the terms of venture financings for 128 companies headquartered in the San Francisco Bay Area that reported raising money in the fourth quarter of 2008. 

A couple of interesting points include an average price increase of 25% for companies receiving venture capital in Q4 2008 compared to such companies’ prior financing round, a significant decline from the 55% reported in the previous quarter, and the lowest quarterly total since the first quarter of 2005.  If Web 2.0/digital media financings are factored out, the Venture Capital Barometer would have been flat (0%). 

Here it is:

• The Fenwick & West Venture Capital Barometer™ Q4 2008 – February 2009

Crash Course in Venture Capital

From Jason Mendelson, Co-Founder of Foundry Group, and co-author of AsktheVC, here’s a crash course in venture capital done in 13 slides:

European Private Equity to Get Regional Code of Conduct

The European Commission Conference on Private Equity and Hedge Funds met today (Private Equity was the focus today, hedge funds tomorrow.  It’s a least a step in the right direction that Internal Market Commissioner Charlie McCreevy got the commission to recognize that the two industries are in fact unique and separate…although I’m sure there are still quite a few socialists in denial about that bit of reality).

The EVCA is offering to accept an oversight and enforcement regime for a regional code of conduct as the industry has apparently recognized the need to move to a “supervisory model” from a system of self-regulation.  

The EVCA also submitted a report that found that private equity and venture capital can help overcome the current funding crisis and contribute to the recovery of European economies (amen! There’s been much talk concerning this in the US, see any of the recent debate about Thomas Friedman’s editorial from this past weekend just for starters, and yet Europe has been slow to see the situation in the same light. Am I surprised by this? No. But come on Europe, it’s time to wake up) that the industry is already highly regulated at national and EU level and does not pose systemic risks, and that private equity is a distinct type of investment and is markedly different from other investment strategies, particularly hedge funds. 

The submission concluded that the regulatory framework should consist of unified professional standards and an effective enforcement regime with oversight by the appropriate EU or national supervisory bodies. 

Many national Private Equity associations have adopted guidelines of their own, however the problem has been, as with much else in Europe, a resulting effect of 27 different approaches with varying degrees of success. And given the bewildering level of attention that a certain Scandinavian leftist member of the European Parliament wishes to attract on this subject, this is an issue that’s far from over!

Private Equity and Venture Capital in the European Economy

Here’s the report that the EVCA submitted as the industry’s response to the European Parliament and the European Commission hearings today:

• Private Equity and Venture Capital in the European Economy: An Industry Response to the European Parliament and the European Commission - 25 February 2009

Distressed Investors Predict 200 Bank Failures This Year

Fourteen banks failed in the US over the course of the first seven weeks of this year, which would put the pace at 100 for the year.  However, distressed investors think the pace is going to pick up with 200 banks failing over the next twelve month, and total bank takeovers ultimately exceeding 1,000.  With Option ARM loans set to come due, things are just getting started!

I’ll try and get some numbers for Europe, but the failure rate should be lower if previous trends hold up.

Banker’s Ball Compensation Report

The guys over at Banker’s Ball have put together their first ever compensation report for banking and Private Equity (obviously we’re only concerned with the later numbers which appear on pages 11 through 13 of the report).  The numbers are the results of a survey from their site. The title almost brings about a teary-eyed nostalgia to the bottles and models days of yesteryear…almost.

• Figures From a Bygone Era:  BankersBall Investment Banking & Private Equity  2007-2008 Compensation Report – February 2009 

PE Clueless About Bankruptcy and Distressed Investing

Here’s Crystal Capital’s Edward Siskin and The Heico Companies’ Michael Heisley saying that 90% of private equity fund managers are “clueless” as to how to implement turnaround plans in distressed investments, and how many of these same managers are also not familiar with bankruptcy codes:

 

And they’re right! Too many firms recruited number crunchers and analysts, and not enough people with operational and strategic backgrounds. Competency in financial engineering won’t cut it these days.

BBC Special on Sir Ronald Cohen

The following three videos comprise the episode of BBC 4’s Gerry Robinson and the Money Makers featuring Sir Ronald Cohen, co-founder of Apax Partners:

Quick Guide to Private Equity Recruiting

Given the dire state of the job market, a little refresher on the recruiting process in Private Equity may be helpful. For all those who are either finishing, or have recently finished their studies, here’s “Private Equity Recruiting in 2,550 Words” from Mergers & Inquisitions (I add the caveat that it’s written from a pronounced North American perspective). Good luck job hunting!