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Money roundtable

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Is VC back? M&A will involve younger companies in the next 12 months, because big tech needs the new stuff, not the old. Electronic Arts buying Playfish for over $400 million, Google’s $750 million purchase of Admob and Intuit buying Mint for $170 million are three recent examples. This should be another good thing for VCs. Much like the health of the IPO window, the coming M&A Tsunami creates liquidity to the venture business, which will restore confidence in the logic behind the venture capital model. Though admittedly venture takes time, GPs at the “ground level” are seeing this now and acting rationally to deploy capital into this period. http://www.trueventures.com/2009/12/02/venture-is-back-baby/

Series A is back to normal with 17% of rounds (from 8% in Q2) Liquidation Preferences are used in half the rounds done, with multiple liquidation preferences still uses in 21% of cases (mostly 1.5 to 2X), a marked decrease from Q1 (28%). There was a Participation feature to the Liquidation Preference in 53% of cases CA Venture terms starting to recover - Fred Destin http://www.freddestin.com/blog/2009/11/ca-venture-terms-starting-to-recover.html

http://www.avc.com/a_vc/2009/04/the-venture-capital-math-problem.html VC Maths problem First, the money needs to generate 2.5x net of fees and carry to the investors to deliver a decent return. Fees and carry bump that number to 3x gross returns. So $25bn needs to turn into $75bn per year in proceeds to the venture funds. Then you need to figure out how much of the companies the VCs normally own.

The "money stat" from the paper is that in the 1980's there were just 12 venture funds above $250M. Today there are over 408 - and 30 over $1B. And most of this fund-size growth took place in the last 10 years. The chart is below: What is refreshing about the Industry Little Hawk white paper, however, is that they don't just advocate reducing the capital allocated to venture. http://redeye.firstround.com/2009/10/vc-back-to-the-future.html Back to the roots?

The decline of VC http://cdixon.org/2009/09/25/the-twitter-investment-and-the-decline-of-venture-capital/ What this means is that there are lots of VCs out there with huge funds and very little chance of getting “carry” (performance fees), since most will have negative returns (and they know it). So instead they are collecting management fees (typically, 2% of the fund for 10 years, so 20% of the total fund). They need to justify collecting these fees, which is why if you hang out with VCs you’ll often hear them talk about needing to “put more money to work.” I would bet that the new investors were the ones arguing for Twitter to raise more and more money, even if it meant a higher valuation. I’ve seen it happen many times. Mr.

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Instant updates from your friends, industry experts, favorite celebrities, and what’s happening around the world. http://twitter.com/#!/francis_dierick/statuses/6526099525 Francis Dierick: #leweb Money Round Table: ...

# leweb money2 Round Table: a good exist is anything I make money on Francis Dierick: #leweb money2 Round Table: ... https://twitter.com/#!/francis_dierick/statuses/6526205244

http://twitter.com/francis_dierick/statuses/6526185957 Francis Dierick: #leweb Money Round Table: ... # leweb Money Round Table: the big success in venture business has not been in acquisitions, quotes Skype as example

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