Recent Buzzes - VC Experts, Inc.

Interview with Glenn Yago, Director of Capital Studies at the Milken Institute

Wed, 01 Jul 2009 00:00:00 -0700

This week we are joined by Glenn Yago, Director of Capital Studies at the Milken Institute and a leading authority on financial innovations, capital markets, emerging markets and environmental finance.? Glenn's research and projects have contributed to policy innovations fostering the democratization of capital to traditionally underserved markets and entrepreneurs in the United States and around the world.? He is a visiting professor at the Hebrew University of Jerusalem.? His opinions appear regularly in The Los Angeles Times and The Wall Street Journal.

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Investor Abilities and Financial Contracting - Evidence from Venture Capital

Tue, 30 Jun 2009 00:00:00 -0700

In the paper, "Investor Abilities and Financial Contracting: Evidence from Venture Capital," Berk Sensoy and Ola Bengtsson study how the use of contractual provisions in VC contracts varies with characteristics of VCs. Data for the report came from VC Experts Private Equity Data Center, and their sample includes more than 1,200 unique U.S. venture-backed companies. The statistical analysis they provide shows that older, more experienced, more successful and better networked VCs use contracts that have fewer investor-friendly provisions (e.g. cumulative dividends, participating preferred, anti-dilution, redemption rights) attached to their preferred stock. They use various techniques to rule out the explanation that this pattern is explained only by more reputable VCs choosing the best companies.

The interpretation of their findings is that more reputable VCs rely less on incentives implied by "harsh" contracts because these investors have other ways to control their portfolio companies. More reputable VCs may be better at monitoring entrepreneurs or can exercise control by threatening to withdraw value-adding support and to not participate in future financing rounds.

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Interview with David Weild and Edward Kim, Senior Advisors to Grant Thornton (Part 2 of 2)

Wed, 24 Jun 2009 00:00:00 -0700

This week, we welcome back David Weild and Edward Kim of Grant Thornton. We are continuing our two-part discussion and debate on their paper entitled,?"Why are IPOs in the ICU?"

Read Part 1 of the inteview here.

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What Kills Startups?

Tue, 23 Jun 2009 00:00:00 -0700

We have good news to share with entrepreneurs mired in the bleak survival rate statistics for startups. Akira Hirai, Founder and Managing Director of Cayenne Consulting, reveals some very valuable risk management insight in the following buzz entitled "What Kills Startups?"

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Interview with David Weild and Edward Kim, Senior Advisors to Grant Thornton (Part 1 of 2)

Wed, 17 Jun 2009 00:00:00 -0700

We welcome David Weild and Edward Kim, co-authors of the recent Grant Thornton study, "Why are IPOs in the ICU?"? David and Edward will offer their candid and provocative views on the IPO market in this first segment of a two-part series.

David is a Senior Advisor to Grant Thornton, a Global Six Firm.?He is the former vice-chairman and executive vice-president overseeing the more than 4,000 listed companies of The NASDAQ Stock Market.? David spent 14 years in a variety of senior investment banking and equity capital markets roles at Prudential Securities.?He was recently invited to participate in NYSE's and National Venture Capital Association's Blue Ribbon Regional Task Force to explore ways to help restore a vibrant IPO market and keep innovation flourishing in the United States. ?

Edward Kim is a Senior Advisor to Grant Thornton in Capital Markets. He was head of product development at The NASDAQ Stock Market and has worked in equity research at Robertson Stephens, equity trading at Lehman Brothers and investment banking at Prudential Securities.

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SEC Guidance on Company Web Sites

Tue, 16 Jun 2009 00:00:00 -0700

"Information Mesh" was one of the names that Tim Berners-Lee, a physicist for CERN in Switzerland, considered for his 1989 creation before settling on the "World Wide Web." While info.cern.ch was the address of the world's first web site, it is estimated that there are now over 182 million web sites on the internet.

Today, as many use the computer for searching the Web more than for computing, the SEC issued Release No. 34-58288 in 2008 to provide guidance regarding the use of company web sites under the Exchange Act and the antifraud provisions of the federal securities laws. In this week's buzz, Eric D. Schoenborn and Lori Buchanan Goldman of Stradley Ronon LLP provide us with a helpful overview in "SEC Guidance on Company Web Sites."

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Interview with Simon Walker, Chief Executive Officer of the BVCA

Wed, 10 Jun 2009 00:00:00 -0700

The European Commission (EC) recently proposed a Directive on Alternative Investment Fund Managers (AIFMs) with the objective to create a comprehensive and effective regulatory and supervisory framework for AIFMs at the European level. ?Representatives of many private equity firms and hedge funds have criticized the proposals and feel the EU is directing unnecessary and unfair regulation on these sectors.

This week we welcome Simon Walker, Chief Executive Officer of the BVCA.? The BVCA is the industry body and public policy advocate for the private equity and venture capital industry in the UK. Prior to joining the BVCA, Simon served as both head of corporate communications and director of marketing at Reuters.? He previously worked for HM The Queen and was special advisor in the Prime Minister's Policy Unit.?

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Private Equity Alert - Unregistered Finders - The Last Chapter?

Tue, 09 Jun 2009 00:00:00 -0700

The old adage, "finders keepers," may no longer apply to the thousands of individuals and firms across the country that perform functions as finders and help arrange placements in order to earn success fees. As a result of a combination of a tighter enforcement of the previously broadly interpreted language in Section 3(a)(4)(A) of the Securities Act Exchange Act of 1934 as well as a push for transparency at all costs, we may be extinguishing a segment of the business community that we really need right now. To learn the latest surrounding the legal issues of unregistered finders, read this week's buzz article by Joseph W. Bartlett, Of Counsel, Sullivan & Worcester LLP and Founder of VC Experts.com.

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Interview with Michael Patrick, Partner at Fenwick & West.

Wed, 03 Jun 2009 00:00:00 -0700

Yesterday's Buzz article featured the results of the survey by Fenwick & West entitled "Trends in Terms of Venture Financings In Silicon Valley (First Quarter 2009)" by Barry Kramer and Michael Patrick. Today we are pleased to be joined by Michael Patrick, Partner at Fenwick & West. Along with co-authoring his firm's quarterly survey, Michael focuses on venture capital financings representing both companies and venture capital firms, mergers and acquisitions and general corporate representation for a broad array of high technology companies in the information technology, life science and medical device industries. To view the entire Fenwick & West survey, or to sign up to receive the survey on a quarterly basis when published, please go to www.fenwick.com/vctrends.htm.

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Venture Capital Survey - Silicon Valley First Quarter 2009

Tue, 02 Jun 2009 00:00:00 -0700

Fenwick & West LLP., a national law firm that provides comprehensive legal services to technology and life sciences clients of national and international prominence, has analyzed the terms of the venture financings in the Bay Area for the first quarter of 2009. In this week's Buzz article you will be able to take a closer look at the results of the Fenwick & West survey by Barry J. Kramer and Michael J. Patrick which found down rounds exceeded up rounds 46% vs. 25%, with 29% flat. This was the first time since 4Q03 that down rounds exceeded up rounds and the largest amount by which down rounds exceeded up rounds since 1Q03.

To view the entire Fenwick & West survey, or to sign up to receive the survey on a quarterly basis when published, please go to www.fenwick.com/vctrends.htm.

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Interview with Dennis (Den) White, Vice Chairman of the board of directors of ACG

Wed, 27 May 2009 00:00:00 -0700

The Association for Corporate Growth (ACG) is an international organization with over 12,000 members, including senior executives, private equity firm principals, investment bankers and others in the dealmaking community. ACG and Thomson Reuters conduct a biannual survey of ACG members and Thomson Reuters customers. Their recently released Mid-Year 2009 DealMakers Survey Results reflects the opinions of 703 respondents globally.

Dennis (Den) White, Vice Chairman of the board of directors of ACG is here to discuss with us today how the survey results reveal that there are both obstacles and opportunities for mergers & acquisitions and private equity investing. Den serves as senior transactional counsel?in the Boston office of McDermott Will & Emery LLP. Den graduated from Harvard Law School and is ranked as a leading lawyer in the 2008 edition of Chambers USA for Corporate and M&A. Den is a frequent writer and speaker on a variety of corporate and transactional topics and has appeared on CNBC.

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Painless Avoidance by Limited Partners of Future Capital Commitments

Tue, 26 May 2009 00:00:00 -0700

As we all know, defaults on Limited Partner capital commitments increased in late 2008. However, Joseph W. Bartlett, Of Counsel, Sullivan & Worcester and Founder of VC Experts.com shows us that the process of rescinding future commitments and advising GP's doesn't necessarily have to be an excruciating one.

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Interview with Kurt Schacht, Managing Director of the Centre for Financial Market Integrity

Wed, 20 May 2009 00:00:00 -0700

On April 2, 2009 the Financial Accounting Standards Board (FASB) gave in to pressure from lawmakers and financial companies and voted to relax fair-value accounting rules. These changes to mark-to-market accounting allow companies to use considerable judgment in determining prices of some investments on their books. Mark-to-market accounting requires that banks mark illiquid assets to their market values which can lead to large write-downs. Banks have argued that this is unfair because they may not be planning on selling the assets in the short term, and the decreased market value may only be temporary. Supporters of mark-to-market accounting claim that the rule is important for transparency and that banks should not have freedom to value their illiquid assets.

This week we are joined by Kurt Schacht, the Managing Director of the CFA Institute Centre for Financial Market Integrity. Kurt is responsible for all aspects of the Centre's efforts to develop, promulgate and maintain the highest ethical standards for the investment community. Kurt has an extensive background in securities law and regulation, alternative investments, hedge funds, financial reporting and corporate governance matters.

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Proposal To Regulate Private Funds And Their Advisers Introduced In U.S. Senate

Tue, 19 May 2009 00:00:00 -0700

"Disclosure"; certainly the buzz word of 2009. With numerous regulatory measures being discussed to help shed light on how investments and the investment vehicles are being structured, change is inevitable. How far do some want to take it?

Read more about just one of these potential regulatory changes in this week's buzz, "Proposal To Regulate Private Funds And Their Advisers Introduced In U.S. Senate" by Elizabeth Shea Fries, Byron Pavano, Jon Axelrad, Satish Kini, Sean O'Malley of Goodwin Procter.

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Interview with Richard Bendis, Board Member of NASVF and Jim Jaffe, President of NASVF

Wed, 13 May 2009 00:00:00 -0700

In a recent press release, The National Association of Seed and Ventures Funds (NASVF) announced it is working with a national innovation intermediary, Innovation America, to create a new National Innovation Seed Fund of Funds (NISF) to help remedy the lack of funding for young entrepreneurial companies and to get knowledge-based job growth going again. NASVF claims to be in discussions with the Obama administration about providing $2 billion to the NISF.

NASVF is a 12-year-old not-for-profit association that represents innovation capital leaders including private, public and nonprofit organizations that are committed to building their local economies by investing in local entrepreneurs. Innovation America has been developed by Richard Bendis, a recognized national leader in innovation based economic development. He was the first chairman and later CEO of the Kansas Technology Enterprise Corporation, the founder of Innovation Philadelphia and was a founding board member of both NASVF and the State Science and Technology Institute.

We are joined today by Richard Bendis as well as Jim Jaffe, President of NASVF.

Model Questionnaire for Public Company Managers to Complete When a Director is Nominated

Tue, 12 May 2009 00:00:00 -0700

On a fateful day in 1935, two Army pilots were at the controls of a Boeing Model 299 as the final phase of aircraft evaluations under U.S. Army specifications were about to begin. The aircraft made a normal taxi and takeoff and began a smooth climb but then suddenly stalled. The aircraft turned on one wing and fell, bursting into flames upon impact, according to Federal Aviation Administration instructor, John Schamel. The investigation found "Pilot Error" as the cause. One of the pilots, unfamiliar with the aircraft, had neglected to release the elevator lock prior to takeoff. After this avoidable accident, it was decided that what was needed was some way of making sure that everything was done and nothing overlooked prior to takeoff. What resulted was the invention of a pilot's checklist.

One cannot underestimate the importance of preparation. In this week's Buzz article, Joseph W. Bartlett, Of Counsel, Sullivan & Worcester and Founder of VC Experts.com, provides a very important "Model Questionnaire for Public Company Managers to Complete When a Director is Nominated." Completing this questionnaire might not only serve as a valuable checklist for new directors but also provide them with a lifesaving parachute in the event of a crisis.

China's New Growth Enterprise Market - A Welcome Alternative to Emerging Companies in China

Tue, 05 May 2009 00:00:00 -0700

Perhaps it is just a part of the yin and yang cycle, but it has been said that we are living in a time when China produces and America consumes. While the People's Republic of China has the second largest economy in the world after that of the U. S., China's growth has suffered from the collapse in U. S. and global spending that began in 2008. Zhou Xiaochuan, Governor of the People's Bank of China, stated last month, "The Chinese economy has shown signs of recovery on the whole, but we are still in a tough fight with the global financial crisis."

Just this past week, some exciting changes began in China. For the first time in 60 years, Chinese institutional investors will now be allowed to invest in money markets in Taiwan. Also, China just established a stock market for growth enterprises, a NASDAQ-like growth enterprise board to help small start-ups, especially high-growth and high-tech firms, raise funds.

In this week's Buzz article, "China's New Growth Enterprise Market - A Welcome Alternative to Emerging Companies in China," Michael Chin, David Huang and Dane Johansen of Dorsey & Whitney LLP discuss this new market and its main listing requirements.