Why M&A Will Lead the Way

There has been much discussion over the last several years lamenting the state of the IPO market and the trauma of taking a company public. The prevailing wisdom is that the cost of going public (SarbOx, etc) and the unattractiveness of the market are forcing companies to sell out. It is a sad story but only partially true.

Puttin’ on the Hits (Part 3): The Impact of Hit Centric Venture Capital on Tech Companies

Extending the argument I’ve made in previous posts on the same subject (Part 1 and Part 2), this post explores the impact of the hits model of venture investing on early and mid-stage tech companies

Puttin’ on the Hits (Part 2): The Implications of Hit Centric Investing for VC Fund Performance

In Part 1 of this post, I agreed with Jack Myers’ opinion that a hit-centric mentality continues to pervade the investment activities of many venture capitalists. This hit-centric view emphasizes the identification of a tiny number of blockbuster hits at the expense of underwriting large numbers of high-risk ventures that fail. It is a perspective that VC Peter Rip has referred to as “fund twenty, pray for two.” The view emerged gradually among a number of VCs during the bull markets of the Roaring Eighties, and became ingrained among many, if not most, early- and multi-stage VCs during the Long Boom of the 1990s. 

I believe that hit-centric venture capital is the largest elephant in the room when VCs, LPs and industry analysts ask the question: is the VC model broken?  

For Startup and Growth Company CEOs: Managing VC Expectations

I’ll be giving another online presentation for Reed Seminars today at 1:30pm EST/10:30am PST, this time on the topic of “How to Manage Expectations with Your Venture Capital Investors: Best Practices for Management Teams of VC-Funded Companies.”  As usual, details on signing up can be found at www.reedseminars.com.

A timely conversation about venture-backed IPOs— is the idea an oxymoron given the disconnect between the companies we’re growing and what the street is looking for?

This Friday, I’m speaking on a panel at the AlwaysOn Venture Summit East titled, “IPOs: A Recovery? How? When? Why?”

This panel could not be timelier (and I’m not just saying this because I’m on it).  This week, after a nine month dry spell, we’ll see two venture-backed IPOs—SolarWinds and OpenTable.

What ever happened to profits?

At last week’s NVCA Annual Meeting, there was a lot of talk about getting the exit market revved up again. The NVCA unveiled their Four Pillar strategy for getting the IPO markets back in action. I agree that regulatory relief would be helpful and it would be really great if we cultivated (once again) relationships with bankers, accountants and advisers whose livelihood is inextricably linked with our business. What was missing at the meeting, however, was a critical discussion of the underlying changes in the industry that are undermining our ability to create a viable crop of IPO candidates.

Venture Capital at the Crossroads – Again

One recent bit of event advertising for the NVCA Annual Meeting managed to catch my eye.  It was an email circulating under the tagline, “Venture Capital at the Crossroads,” an invocation, whether intentional or not, of Bygrave and Timmons’ 1992 book by the same name. 

Written during an early Nineties tech downturn so bad that leading analysts of the day declared it “game over” for venture capital, the book has a special resonance today, because it reminds readers that, by its very nature, venture capital is an investment activity marked by – arguably even defined by – cyclic booms and busts.