Report: More Pre-Money Valuations Topped $100M in 2010, as Q4 Up Rounds Spiked. Deal terms and valuations shifted in favor of entrepreneurs last year as onerous term sheets became less common and money flowed more freely. These were the findings of a study by the law firm Cooley released this week. (The data come from transactions in which Cooley served as counsel.) The trend is hardly a surprise as the rebound from the recession in 2009 has been evident for six quarters or so. But the extent of the shift is interesting, nonetheless.
For instance, while up rounds rose unevenly through the year, they spiked noticeably in the fourth quarter, when 72% of financings were marked higher (see Cooley chart above). Also of note was the increase in rounds getting pre-money valuations of more than $100 million. Here are details from the report: *Last year saw a sharp increase in up rounds from 2009. *The year saw an increase in pre-money valuations across all deal stages. *Terms also eased. Alex Taussig: WTF? Do we even HAVE a mai... Michelle Trachtenberg Nabs the Lead in CBS Workplace Comedy Pilot. Just-Eat raises $48 million for online food. ICAP Launches Specialized Financial Technology Seed Fund And Accelerator. ICAP, the U.K. -based money broker, said Wednesday it has launched a seed fund and accelerator program for startups developing specialized financial technology, such as post trade risk management systems.
The new fund, Euclid Opportunities, will seek to support and commercialize promising under-funded technologies, the firm said. It did not say how large a seed fund Euclid would invest. “The rate of regulatory reform is global financial markets is driving unprecedented demand for new approaches, methods and practices,” says Mark Beeston, chief executive of ICAP’s portfolio risk services. ICAP is among the largest inter-dealer brokers. Wednesday’s announcement comes as regulators in Washington and Brussels are rewriting the rules for financial markets, particularly those applying to derivatives. Summit Partners Raising $900M In Two New Funds. Summit Partners is raising $3.45 billion in investment capital in two news funds, according to documents filed with the Securities and Exchange Commission. (Correction: the original version of this story misstated the size of the funds and failed to point out that one was growth equity.)
The Boston firm with offices in London and Palo Alto already has more than $11 billion under management and investments in more than 320 companies. The firm most recently raised a $1.64 billion European fund last year and a pair of subordinated debt funds totaling $841 million in 2009, according to Thomson Reuters, publisher of this blog. The two new funds are the Growth Equity Fund VIII at $3 billion and the $450 million Venture Capital Fund III, the documents state. The firm has assigned the same venture partners to each.
Summit did not respond to a request for comment. In the past, Summit investments have favored computer software, Internet companies, communications and health care companies. Former D.E. Shaw, Goldman Partners Form China Fund. Two former partners with D.E. Shaw and Goldman Sachs have teamed up to raise a $500 million China-focused private equity fund, Reuters reported. Meng Liang, a partner and Greater China CEO for hedge fund D.E. Shaw, recently resigned from the firm to join with Kevin Zhang, a former Goldman Sachs partner and co-head of its Asian Special Situations Group. (Reuters) – A former partner of D.E. Shaw and an ex-Goldman Sachs (GS.N) partner are setting up a new firm to raise about $500 million for a China-focused private equity fund to join the growing competition for deals in the world’s No.2 economy, sources told Reuters on Wednesday.
Meng Liang, a partner and Greater China CEO for D.E. Shaw, one of the world’s largest hedge funds, has resigned from the firm to join hands with Kevin Zhang, a former Goldman Sachs partner who was co-head of its Asian Special Situations Group from 2005 to 2009, to launch their own investment firm, said the sources with knowledge of the matter. By George Chen.
Corporates To Increase Venture Investing. Consider this. Venture investors put $21.8 billion into 3,277 deals last year. But money going into new funds came to just $12.3 billion, down from $31.2 billion in 2007. Unsustainable on the face of it. So who has the money, and is that money interested in venture? The answer is corporations. I had a useful conversation yesterday with Robert Ackerman, managing director at Allegis Capital and a keynote speaker at last week’s Annual Corporate Venturing & Innovation Partnering Conference.
Ackerman says strategic, or corporate, investors put $1.9 billion into startups last year, adding up to 8.7% of overall investments. More importantly, it is likely to increase again in each of the next two years, predicts Ackerman. Corporates normally account for between 5% and 10% of venture dollars, tossing aside bubble years like 2000, when it spurted to about 15% and companies burned their fingers in the aftermath. Let’s hope not. Highland, Charles River, Others Back New Incubator In Bold Move To Stay Relevant. Incubators such as Y Combinator, TechStars and 500 Startups Accelerator are reshaping the seed company landscape. VCs know they need to respond. But they aren’t sure how. On Monday, five top firms including Charles River Ventures and Highland Capital Partners took a step at becoming more relevant in seed investing.
They came together to form CriticalMass, an incubator that will exist inside the Cambridge Innovation Center incubator in Boston. The costs of starting Internet companies are lower than ever before, thanks to distribution and customer acquisition costs that have fallen through the floor thanks to platforms like Facebook and Twitter. This is how seed funds and incubators are stealing the Internet thunder from traditional VCs, who might in the past have incubated one or a small handful of companies in preparation for a $3 million or so Series A round.
CriticalMass appears to want to respond. In this changing world, joint efforts are a smart move. Silver Lake to Start Clean Energy Fund with George Soros. Private equity firm Silver Lake, which focuses on the technology sector, said it is teaming up with billionaire financier George Soros to start a new fund to invest in clean energy businesses. Silver Lake, which manages $14 billion, will launch Silver Lake Kraftwerk, with offices in Silicon Valley and China, to provide growth capital to companies in energy and resource sectors. The fund will invest in companies that “leverage technology and business model innovation to improve energy efficiency, reduce waste and emissions, harness renewable energy, and more efficiently use natural resources, among other applications.” Soros Fund Management will join Silver Lake as a strategic partner in the fund. Silver Lake Kraftwerk will be led by Adam Grosser, who spent 10 years as a general partner at venture capital firm Foundation Capital.
(Reporting by Paritosh Bansal; editing by John Wallace) Osage University Partners Closes First Fund at $100 mln. Osage University Partners said Thursday that it has closed its first fund, Osage University Partners I, at $100 million. The VC fund is affiliated with universities to make direct investments in startup companies. Osage University Partners announces the final closing of Osage University Partners I, achieving its target fund size of $100 million. The novel venture capital fund has affiliated with leading universities to make direct investments in their most promising startup companies. Osage University Partners has created a unique model through which it manages the coinvestment rights held by its affiliated universities. These coinvestment rights provide Osage with contractual access to invest in the future financings of some of the most promising startup companies that have licensed technology from these universities.
Affiliate universities then share in Osage’s profit and can use their proceeds to stimulate further educational, research and commercialization initiatives. 22nd Annual Venture Capital Investing Conference at 2050 University Avenue, East Palo Alto, California - Conference on Plancast. Upcoming Tech & Media Events with massive discounts. We’re on the move guys! We’ve updated the list with new hot tech and media events we think you should be attending. Of course we have arranged some great discounts for you. Make sure you visit the TNW Events more often, because in the not so distant future we’ll be adding a few interesting twists.
You won’t want to miss out on it. Think your friends need some discounts too? So do make sure you check TNW Events before buying your tickets in future. For newcomers: This list is, created by entrepreneurs for entrepreneurs, and is laser-focused on tech & media events. This post is supported by PressDoc for Events LAUNCH Conference, February 23-24, San Francisco Fifty cutting edge, and never-before seen, technology companies will debut at the LAUNCH Conference. TNW readers get 10% off here by using discount code “tnwrocks” Social media strategies for travel, March 2-3, San Francisco TNW readers get $100 discount by using discount code ‘TNW100′ here Code PaLOUsa, March 4-5, Louisville, KY Design. Sequoia Capital India In Turmoil. Several reports out of India suggest a shakeup at Sequoia Capital India, where four managing directors have left to run their own fund. K P Balaraj, Sumir Chadha, Sandeep Singhal and S K Jain hope to close a public companies fund by the end of the year and are to exit gradually from their roles at Sequoia.
Chadha told the Mint that the four will remain on the boards of 20 Sequoia portfolio companies until liquidity exits. Chadha and Balraj founded WestBridge Capital Partners in 2000 and the firm was acquired by Sequoia in 2006. WestBridge had raised two funds and was managing close to $350 million. Sequoia manages about $1.8 billion in India, with a 2008 fund of $750 million. Its portfolio includes Café Coffee Day, Comviva, FirstSource and GVK Biosciences. And The Winner Is: Omaha School Employees Has Top Alternative Assets Return. One hundred and fifty public pension funds from North America, Europe and the United Kingdom were examined. Alternative asset investments were the focus.
And the winner for the best 5-year portfolio return is: Omaha School Employees’ Retirement System with a 5.6% payback. This is according to Preqin Ltd., which released a report Friday comparing returns and naming the five most popular private equity fund managers. Second on the list for best returns was El Paso Firemen & Policemen’s Pension, with a 4.95% payback and third was the State of Delaware Board Of Pension Trustees, with 4.3%. (The remaining contestants are listed in the accompanying chart from Preqin.) What’s particularly interesting is the board range of private equity portfolio allocations. So who are the top fund managers? Alternative investments favored by the big pension orgs including real estate, hedge funds and infrastructure funds.
Morris Gets Jail Term For “Pay-to-Play” Scandal, while Hevesi To Be Sentenced March 10. Henry “Hank” Morris, who was called the mastermind behind the pay-to-play pension fund scandal, is going to prison. Today, New York Attorney General Eric T. Schneiderman sentenced Morris to the maximum term of 1 1/3 to 4 years in state prison. Morris is the former adviser to ex-New York Comptroller Alan Hevesi. In November, he pleaded guilty to a single felony in the state’s long running corruption investigation.
As part of a plea agreement, Morris has been permanently banned from the securities industry in New York state and also forfeited $19 million. “Today, justice was served on Hank Morris, who will be appropriately punished for his role in one of the largest pay-to-play schemes in New York State history,” Schneiderman said in a statement. The New York AG’s office, under Andrew Cuomo (who is now governor), investigated the “pay to play” practices at the New York Common Retirement Fund for the past three years. Moriss’ jail term is the latest but it isn’t the most interesting.
Maryland Tries To Ramp Up Venture Capital. There is a bit of a spectacle going on in Maryland. What it says about the nation’s appreciation of venture capital is revealing. Newly re-elected Governor Martin O’Malley wants to use venture capital to create jobs. It’s a nice idea. Unfortunately, he and other officials are thinking short term about what is a long-term proposition. The Maryland plan is an interesting attempt by a state to inject itself into economic development – a laudable goal as the innovation gap closes and nations in Asia and elsewhere taking aim at America’s lead.
(O’Malley is of course a Democrat.) He wants to raise $100 million of venture money by auctioning off up to $142 million in tax breaks to insurance companies over six years. The $100 million would be invested in startups trying to commercialize research, such as those working on products stemming from the medical research conducted at Johns Hopkins University. Yesterday, the governor was quizzed by a skeptical legislature. Report: Westly Group Raising $175M Third Fund.
Interview with Mike Napoli, Tech Coast Angels. Story by Benjamin F. Kuo Since the Tech Coast Angels (www.techcoastangels.com), the largest angel investment group in Southern California, is holding one of its several Fast Pitch competitions next week in Los Angeles (www.pitchtheangels.com), we thought it might be a good time to catch up with Mike Napoli, incoming President of the Tech Coast Angels, to hear the his thoughts on the angel investing environment in Southern California from the angels' perspective.
Interestingly enough--despite what seems like a frothy environment in Silicon Valley-- Mike tells us that the deal environment his group is seeing is not nearly as robust. (Photo courtesy Frank Peters) In your opinion, are your angels more or less active this year? Mike Napoli: It's quality versus quantity. Interestnig. Mike Napoli: Obviously, it's still tough. So you don't see as many people looking for funding now? Mike Napoli: Actually, we are seeing entrepreneurs. How are you handling all those applications nowadays?
Thanks! Javelin Venture Partners raises $105M fund. Javelin Venture Partners, a three-year-old early-stage VC based in San Francisco, is expected to announce Wednesday morning that it's raised $105 million for its Javelin Venture Partners II fund. The Javelin team expects to invest between $500,000 and $3 million in roughly 20 startups, with some capital reserved for follow-on rounds. This new capital is on top of the $75 million initially raised by the partners Jed Katz and Noah Doyle, when the venture firm was founded in May 2008. "The fund size allows us to make the type of investments we want to make in capital-efficient companies," said Jed. "And, it allows the entrepreneurs some flexibility in their eventual outcomes. "We don't always have to shoot for a billion-dollar exits, like the larger funds do. According to Jed, the Javelin Venture Partners II will focus on the same areas it has always focused on: digital media, Internet commerce, advertisig platforms, cloud computing, mobile and healthcare.