March 31, 2009
In a new study by the Latin American Venture Capital Association (LAVCA) and The Wharton School, over 100 private equity and venture capital firms reported making 184 investments in Latin America in 2008, totaling over $4.4 billion. Five countries (Brazil, Mexico, Colombia, Peru and Chile), all of which have achieved or neared investment grade status in recent years, dominated the regional private equity landscape by being the home to almost 80% of the companies that received Private Equity investments in 2008.
Fundraising in the region for the year totaled $6.4 billion, with 45 private equity and venture capital firms reporting new capital commitments. The majority of capital raised for Latin America went to regional funds (21%) and to fund managers based in the two largest markets; Brazil captured 48% of funds raised, and Mexico 15%. Peru and Colombia were also represented, with three new funds raised in each of those two markets and several managers aiming to close on commitments in the first half of 2008.
Additionally, there were 54 reported exits by Private Equity firms in Latin America for 2008.
March 30, 2009
A new report from the University of New Hampshire’s Center for Venture Research details the give and take for Angel Investors in the U.S. for 2008. Emphasis was placed on “give and take” because the Angel market saw considerable contraction in total investment dollars from the previous year, but exhibited little overall change in the number of investments made. 2008 Angel investments were valued at $19.2 billion, a drop of 26.2% compared to 2007. A possible silver lining to the situation is that a total of 55,480 entrepreneurial ventures received angel funding in 2008, a modest 2.9% decline from ’07. These numbers combined to see average deal sizes shrink by 24% for the year.
All this means is that in a severely slumping economy, Angels are being more cautious in how and where they invest their money (further backed up from the lack of people fleeing the Angel world. The number of active investors in 2008 was 260,500 individuals, virtually unchanged from 2007). This is important to note because Angels have, in large part, taken over the investment niche that Venture Capitalists held twenty years ago before VC became more-or-less institutionalized and moved farther along the investment cycle into later stage ventures, thus avoiding the increased levels of risk associated with seed investing and helping to allow their LPs to sleep a little better at night.
A sector breakdown of the investments shows Healthcare Services/Medical Devices and Equipment accounted for the largest share with 16% of total U.S. Angel investments in 2008, followed by Software at 13%, Retail with 12% and Biotechat 11%. Industrial/Energy accounted for 8% of investments (reflecting a continued appetite for green technologies), and Media with 7% of Angel investments rounds out the top six investment sectors.
Annual returns for Angel’s exits (mergers and acquisitions and IPOs) were 22%, however, these returns were quite variable. Exits were broken down into mergers and acquisitions at 70%, IPOs at 4% and bankruptcies accounting for the remainding 26%. Angel investors invested in 10% of the opportunities they were presented.
March 28, 2009
Here’s a video of a very good recent roundtable organized by the Churchill Club concerning trends and strategies in Venture Capital for 2009. Moderated by Geoffrey Yang, Founding Partner, Redpoint Ventures; the panel features Jay Hoag, Co-founder, Technology Crossover Ventures; Reid Hoffman, Chairman and CEO, LinkedIn; and Matt Murphy, Partner, Kleiner Perkins Caufield & Byers:
March 27, 2009
Stan from South Park takes us though the current financial crisis in eight minutes. Not bad!.
March 25, 2009
Frédéric Lemoine (HEC.1986), non-executive chairman of French nuclear group Areva and a senior adviser at McKinsey, was appointed on Wednesday night by the board of Wendel Investissement to replace Jean-Bernard Lafonta as CEO, putting an end to more than a year of family in-fighting over leadership and investment strategy. Much of the controversy stemmed from the questionable decision to take a 21.5% stake in staid French manufacturer Saint-Gobain. Best of luck Frédéric!
March 24, 2009
From earlier this month, here is a talk at the Japan Society in New York hosted by Jeffrey Shafer, Vice Chairman, Global Banking and Senior Asia Pacific Representative in New York for Citi, with Stephen Schwarzman, Chairman & Chief Executive Officer, The Blackstone Group. Schwarzman offers his view of the marked changes private equity has undergone in the current turmoil and shares his thoughts on where opportunities lie for his investors.
In the following segment, Steve takes a rare break from bemoaning FAS 157, to demonize his second greatest foe, the dreaded rating agencies:
The full video can be found here: The Japan Society presents the ‘Global Impact of the Financial Crisis’
March 23, 2009
Here’s a good post by A VC, Fred Wilson, of Union Square Ventures on what constitutes a good VC return. For all the aspiring VCs pondering the question he says:
our target batting average is “1/3, 1/3, 1/3” which means that we expect to lose our entire investment on 1/3 of our investments, we expect to get our money back (or maybe make a small return) on 1/3 of our investments, and we expect to generate the bulk of our returns on 1/3 of our investments.
If you do the math with that batting average, and assume the return is 1.5x on the middle third, then you need to average 7.5x on the 1/3 of the investments that make the bulk of the returns.