First Intel Capital Company Goes Public In China

How High-Touch Should Founders Be?

Laundry Room Chronicles: VC Performance Problems

20-Year Investment Cycles?

7th Annual Internship Rodeo: A Call for Positions

The Mega-Deals Look Like Crap. Tell Us Something We Don’t Know

Two More U.S.-Backed IPOs In China

Insider Trading Allegations Hit Private Equity

Alleged Insider Trader Working for VC Firm (Still!)

Update: 5AM Ventures Terminates Cheng Tan

Tech Coast Angels Creates Endowment to Honor Villalobos

If You Want to Invest in VC, Where Exactly Should You Put Your Money?

Frazier Tech Hears the Blues A-Callin’

5 Questions for Len Jordan, Frazier Technology Ventures

Combining Portfolio Companies To Save Them

How Many VCs Besides Frazier Tech Are Winding Down

Live-Blogging Blackstone Media Call

5 Skype Questions for Marc Andreessen

This Week in Portfolio Company Debt

Damn Kids To Blame for KKR’s Bad Deal

5 Questions for Will Honeybourne

Midweek M&A Madness

Allied Senior Exec Pops Up At Ares

Greylock Raises Fund, Hires Reid Hoffman

Avoiding Venture Capital, Part 2

23andMe Hits Some Bumps

Mohr Davidow Combines Portfolio Companies To Fight Cancer

New PE Fund Alert: Gotham Private Equity Partners

Sankaty DIP Fund Beats Target

Can Al Gore Be A Profiteer Without Profits?

While We’re On The Subject Of Al Gore’s Credibility…

CalStar Raising Series C Brick-by-Brick

Silver Lake Wants More Deals Like Skype

What Makes Boston’s Start-Up Scene Special?

KPS Does Right By Its Non-Investor

Which Most-Hated CEOs are Private-Equity Backed? (Surprisingly Few)

Economy May Not Recover Until 2012

Laundry Room Chronicles: Insider Trading & Private Equity

Top Deals of 2009 Exclude Private Equity

More Details on the Roundy’s Dividend

ShareThis

Where are Harvard Grads Going? “About 11 percent went to private equity or leveraged buyout jobs, and 2 percent took positions in the venture capital industry, compared with 17 percent and 4 percent last year, respectively.” (Dealbook)

A Brutal Wakeup Call for Part-Time B-Schools: The economic crisis has hit executive MBA and non-degree programs hard, but the savviest are adapting to the new market. (BusinessWeek)

The Dark Side of the Productivity Surge: The third-quarter productivity numbers show that business is squeezing more work out of employees in hard times. (BusinessWeek)

And Now that You’re Overworked More Productive: Businesses aren’t going to hire new people to give you a break.  (WSJ)

Deals… FROM HELL! Is Landry’s the new Frankenstein? (Deal Professor)

Good News for IPOs: STR, Sold by Credit Suisse DLJ Fund, Rises After IPO and Hyatt, Ancestry.com pull off upbeat market debuts.

Random: The 25 laziest cities in America. (Clusterstock)

What do insider traders where to court? Track suits. Classy. (Intel)

White Paper: Kirkland Ellis pontificates on minority investments. (Kirkland Ellis)

ShareThis

The wines are so valuable that one firm (which I won’t name) almost came to fisticuffs with an overzealous waiter over a few open, full bottles. As the event wound down, the head waiter insisted that the PE pro hand the wine over to him so he could dispose of it. The PE pro was appalled, shouting, “We brought this! This is ours!” The argument escalated when the waiter made a grab for the wine bottles. I half expected the PE pro to smash one on the side of the table and use it as a weapon, but I guess that would have defeated the purpose of saving the wine. The whole scuffle ended when the PE pro strong-armed the bottles out of the waiter’s hands and engaged in some serious boxing out while he stowed the wine. I think I may have heard a fellow waiter saying “Don’t be a hero man, it’s not worth it,” to the overzealous waiter as he retreated.

So that happened, but otherwise it was a pretty predictable event. It was certainly well-attended, but I was told that prior years had drawn shoulder-to-shoulder crowds. One PE pro explained, “It’s hard to go to LPs and say ‘times are so tough out there’ when you’re out drinking wine and hosting tables at parties.”

Sadly, I can’t even report which firm had the best wine, as I’m no oenophile. I mostly hid my wine ignorance by avoiding any conversation resembling “finishing notes of oaky tobacco-berry.”

ShareThis

U.S. exchanges are losing ground to exchanges in China, London, Italy, Tokyo, Toronto, Australia and Germany, where listings continue to increase. In the U.S., meanwhile, there are not enough new IPOs to replace the number of companies that are being delisted.

Grant Thornton estimates a possible loss of 22 million U.S. jobs because of this situation and points to a “wholesale erosion” of the infrastructure that supports IPOs — sell-side research, brokers, capital commitments by exchanges.

U.S. stock markets now favor “computer-driven trading interests at the expense of long-term investors and the U.S. taxpayer,” the report said.

The report’s authors, David Weild and Edward Kim, are also calling for hearings by Congress and the SEC and offer several suggestions for fixing U.S. exchanges, including an alternative public market that would be opt-in and require research, minimum commissions and brokers. Automated computer trading would be banned.

The full study is below. Grant Thornton is planning a press conference on Monday.

GT Wake-Up Call for America Final 110609

ShareThis

Why aren’t willing sellers on the block? One reason is that some bankers and shareholders just want a company’s manager to focus on carrying the company through the recession without the distraction of an auction, said Robert Berry, Head of M&A at mid-market investment bank Raymond James. Further, they don’t want the company to be “tainted” by a failed auction process, as so many have been pulled from the auction block. “They could blemish the reputation of a company if its shopped widely and then taken off the market,” he said.

Even so, shareholders are more willing to have conversations about a sale than they were six months ago, he said.

There’s a new set of targets creeping closer to the market, Berry said. He’s seen some cases of family-owned companies considering liquidity events to get lenders off their backs. The companies had some debt but weren’t highly levered before the recession. They are still healthy, but their revenues and Ebitda have dropped, causing their leverage ratios to skyrocket. This leads to tripped covenants and a barrage of harassment from bankers. “Modifying covenants is expensive and they are just fatigued by dealing with the banks,” he said. These kinds of companies are interested in minority recaps, where private equity firms can inject more capital.

ShareThis

Four VCs — Sharon Wienbar at ScaleVP, Sandy Miller at Institutional Venture, Brian Jacobs at Emergence and Courtney McCrea at Weathergage (a fund of funds) — appeared earlier this week on a panel at Dow Jones LP Summit and were asked to predict the future.

They all see a big pickup in VC-backed exits –  thousands of companies that are five to 10 years old that will be ready to go out by next summer.

But they also aired what have become usual complaints about the harms of going public for small-cap companies: the short-term trading (”Young companies need to be bought and held to grow and flourish,” Jacobs said), the lack of research to educate prospective buyers on these companies once the IPO is over, the $3 million a year in costs of complying with Sarbanes-Oxley.

“It used to be a badge of honor for a CEO to go public in Silicon Valley, but that’s changed,” Miller said. “Some of the very best CEOs, like Mark Zuckerberg at Facebook, are waiting — they don’t want the scrutiny and the regulation. Some of the most attractive companies are opting out.”

These VCs also aren’t sure that secondary exchanges — like SecondMarket, which brings together buyers and sellers of private company securities and limited partnership interests and which recently acquired a competitor, Inside Venture — are a viable solution for venture-backed companies that can’t or won’t go public. They’ve been tried before and they haven’t worked well so far.

“Good companies are found by lots of people,” Wienbar said. “They are finding companies without needing an exchange.”

What kinds of companies do these VCs find promising? Software-As-A-Service, cloud computing, healthcare, Internet, wireless, mobile.

But not all attractive markets are accessible to startups, Wienbar said — new drugs and new digital semiconductor products, for example, are too expensive to enter.

ShareThis

There were just three ratings actions, one of which is a withdrawal on an already-bankrupt company. That company is Accuride, a company which Sun Capital took a stake in through its Sun Capital Securities hedge fund earlier this year. The company underwent a debt-for-equity swap as Sun Capital Securities transitioned out of its debt investment strategy to actively managed equity investments.

Company: Rafaella Apparel
Sponsor: Cerberus Capital Management LP
Downgrade: Moody’s downgraded the company’s corporate family and probability of default ratings to Caa3 from Caa1, and the rating on its 11.25% second lien notes to Ca from Caa2.
Highlights: “Rafaella’s liquidity is weak given its significant longer term debt maturities. However, balance sheet cash along with the expectation for modest free cash flow and revolver availability appear sufficient to cover cash needs over the next year.”

Company: Arrowhead General Insurance Agency Inc.
Sponsor: Spectrum Equity Investors, JMI Equity
Downgrade: S&P assigned its ‘B-’ counterparty credit rating and negative outlook to the company and ‘B-’ ratings to the company’s first-lien facilities and a ‘CCC’ rating to its second-lien debt.
Highlights: “The ratings on Arrowhead reflect its strained cash flow and diluted capital quality following the leveraged majority investment in Arrowhead by California-based Spectrum Equity Investors in 2006,” said Standard & Poor’s credit analyst Jieqiu Fan.

Company: Sun Capital Partners
Sponsor: Accuride Corp.
Downgrade: S&P withdrew its ratings on the company.
Highlights: The corporate credit rating and subordinated debt rating the company were lowered to ‘D’ (default) on Aug. 6, 2009, after the company missed making an interest payment on its subordinated notes. The senior secured debt ratings were lowered to ‘D’ on Oct. 8, 2009, after the company filed for Chapter 11 bankruptcy protection.

View Past Downgrade and Upgrade Lists Here

ShareThis

So we’ve got 5 questions for Marc Andreessen, the eBay board member who is half of Andreessen Horowitz’s eponymous founding duo:

1. You told TechCrunch this morning that the money for this deal was in escrow, and would have gotten done even without a settlement with the founders. Why would you have gone forward with all of those troubles hanging over your head?

Because there was another route to take, and a whole other side to this in terms of legal arguments we could have pursued. We were following those routes simultaneous to talking with the founders, and as it turns out we never had to file any lawsuits.

These were known issues going into the deal. One reason Skype was even available was because of these issues. Our view was that a settlement would be the preferred outcome, and we’re very happy with how it turned out. We were pretty sure this is what was going to happen, because it made the most sense.

2. I recently spoke to a strategic buyer who looked at Skype, but who said his company’s lawyers didn’t put their chance of winning the tech-related suits at better than 50/50, due to the vagaries of European patent law. Did you feel your odds were better?

We felt we had a great case. As you might imagine, this is a more complex situation than has been portrayed in the press, which has only shown one side.

The other thing is that there just aren’t many other companies that have this type of opportunity, or have grown this fast or gotten this competitive. The future is so big for Skype that we felt it was worth fighting through these issues.

3. Index Ventures is no longer part of the buying group. What do you, collectively, lose by Index’s absence?

I don’t really know if I have a specific answer. Everybody contributes in their own way. From Ben [Horiwitz] and my standpoint, our relationship with Danny [Rimer] and Mike [Volpi] continues to be very strong. In fact, I’m talking to them today on two other deals. I would have been great to have them involved, but the company is still going to do great.

4. How about your relationship with Niklas and Janus?

We have not been in business with them before, so we don’t have any baggage at all. Our view is that they’re two super-creative founders. We’ve known lots of legendary founders, and they are all different and have things that make them unique. We include ourselves in that from past experiences. We view ourselves as a prof-founder firm, so we like the idea of founders being involved. It’s a net positive.

5. This is your largest deal to date, and you’re most public. What has LP reaction been like, and how much have you communicated with them?

It’s also one of our first deals. We’ve talked to the LPs a lot during this process, including our advisory board. We’ve explained why we’re enthusiastic about it, and why it made sense to go through some of the drama.

One of the big pieces of input we got when raising the fund was to be responsible, but not conservative. We want to calibrate risks against big opportunities, and we think [Skype] is a very big opportunity.

ShareThis

ShareThis

* Justin Fox: Are finance professors to blame for the financial crisis?

* Floyd Norris says goodbye to SarBox reforms. Now what will VCs blame their lack of portfolio company IPOs on?

* Morning Call: U.S. futures mixed ahead of payroll figures, London rises early, European shares gain, the Nikkei edges higher and Shanghai jumps 5.6% for the week.

* PEW Research says that U.S. college enrollment has hit an all-time high

* View from TechStars: How Boston, Boulder and Seattle match up as tech innovation hubs

* Kenichi Kiso, a former partner with Japanese private equity firm Unison Capital, has died after it became known that he was being investigated for insider trading (sub req). Unison dismissed Kiso when it learned of the investigation, and he died the following day of what are still unknown causes.

* Live-blog of yesterday’s twofer earnings call for Ares Capital and Allied Capital

* Rhode Island bans indoor prostitution. Now is that any way to deal with a 12.3% unemployment rate?

* Vator.tv says that this year’s VC-backed IPOs are a bit long in the tooth

* RLJ Western Asset Management, a partnership between RLJ Cos. and Western Asset Management, has raised enough capital to participate in the PPIP

* Latest on the Offerpal Media saga, where recently-dismissed founder/CEO Anu Shukla has been sued for allegedly cheating another co-founder out of his rightful ownership share. The company itself is not named, nor are its VC investors.

* Venture Capital for a 5th Grader, by Mark Davis of DFJ Gotham Ventures:

ShareThis