Comments on: The VC Industry Is Too Fat and the Exits Are Too Thin

By: The Tech IPO Market Is Back — For Brand Names Only

The Tech IPO Market Is Back — For Brand Names Only — Mon, 09 Aug 2010 16:08:49 +0000

[...] is there for non-brand name offerings, nor do I think Skype’s IPO has the potential to help sop up years of over-investment by venture [...]

By: 手数料を請求するVCはニセモノ, 平気で払う起業家の多いヨーロッパは無知が支配する未開の地

手数料を請求するVCはニセモノ, 平気で払う起業家の多いヨーロッパは無知が支配する未開の地 — Tue, 29 Sep 2009 23:05:23 +0000

[...] この薄汚い慣行が絶えない理由の一つは、小さなVCがこのところ増えているためだろう。しかしこの半年から1年ぐらいは、投資のパフォーマンスからのリターン以外の手数料などで肥え太るVCたちと、巨額な手数料を求めて投資額を際限なくつり上げるVCによって、VC業界は破綻の瀬戸際にあるという議論がわき起こっている。いくつかそういう議論の例を挙げると、これやこれ、これ、これ、そしてこれだ。便利なリストもある！。 [...]

By: Guest post: The madness stops here – don’t pay a VC any fees

Guest post: The madness stops here – don’t pay a VC any fees — Tue, 29 Sep 2009 08:20:48 +0000

[...] simply raise larger and larger funds. Some examples of this discussion and ranting is here, here, here, here and here plus a nice aggregated listing here [...]

By: VC Funding Heading Back to Pre-Bubble Levels

VC Funding Heading Back to Pre-Bubble Levels — Tue, 21 Jul 2009 05:27:32 +0000

[...] decrease in fundings during the first half of the year are a sign of a dismal exit environment and the economic malaise, and may also represent a permanent shrinking of the industry that several [...]

By: John G

John G — Tue, 30 Jun 2009 04:36:14 +0000

Here is a piece from BusinessWeek which responds to the vultures: http://www.businessweek.com/technology/content/jun2009/tc20090626_424922.htm

By: Could Facebook and Twitter Go Public?

Could Facebook and Twitter Go Public? — Fri, 19 Jun 2009 00:58:49 +0000

[...] Today’s topic was “The Future of IPO/Liquidity Events for Technology Companies.” Stacey had very colorfully summed up Silicon Valley’s problems in a post earlier this spring when she wrote: One group says the [...]

By: Don’t Blame Venture Woes on the Economy; It’s the VCs’ Fault

Don’t Blame Venture Woes on the Economy; It’s the VCs’ Fault — Wed, 10 Jun 2009 04:02:57 +0000

[...] the venture investing would return to a level of normal that preceded the bubble. And they’re willing to ask the government to help make it happen. They latched onto clean technology as an industry that would require access to their large capital [...]

By: Valto

Valto — Fri, 01 May 2009 10:54:49 +0000

This is starting to look like the Newspaper industry. IE.

“old ways” -> the bigger the better, with limited pipes of distribution, where limited group of people decides
“what is news”. -> and then those news are distributed to public audience.

“new way” more channels to choose from, (blogs), more people deciding “whats news” and public selecting the channels they like to follow.

Now. Please tell me what works better for you?

Trust me when I say, that all models that are structured on top of limited channels/pipes, limited transparency and choices made by small group of people to cater to masses, will eventually disappear.

It’s just time for VC industry to wake up and face it, something fundamentally different is needed… and that’s what we are doing at http://www.growvc.com

By: /mr

/mr — Thu, 30 Apr 2009 16:09:37 +0000

Actually, the costs of SOX compliance have dropped dramatically, as various vendors have entered the fray to help smaller businesses with the compliance piece. Far more problematic are the economics of the sell side investment banking model, which have been radically changed. The compression of regular way commission business and the proliferation of alternative trading venues for the buy side have rendered the traditional cash equities model obsolete. Since the commissions generated by large buy side clients flipping out of intentionally under priced IPOs and the ongoing flow of buy side commissions can no longer support the sell side research analysts/cheerleaders, the boutiques can no longer offer a credible underwriting option. At the same time, the larger banks cannot justify the relatively tiny fees that they receive on sub $100m IPOs.

By: TD Klein

TD Klein — Thu, 30 Apr 2009 15:35:00 +0000

Regarding the eco-system,the genie is out of the bottle. It’s very hard to justify bringing companies to market sooner when you consider the post IPO bubble carnage. The venture capital model, with 10 year partnerships that lock both investors and managers into relationships that are out of synch with how long it takes to build an outstanding company will need to change. More thoughts here: http://wildrumpus.typepad.com/

By: Quickthink » Blog Archive » Thursday Tidbits

Quickthink » Blog Archive » Thursday Tidbits — Thu, 30 Apr 2009 11:09:26 +0000

[...] some interesting math and concludes that there is too much money chasing too few opportunities. Stacey Higginbotham thinks about the options for shrinking down the [...]

By: Paul

Paul — Thu, 30 Apr 2009 02:26:14 +0000

Yes, this coverage threshold should only increase as financial institutions cut analysts. There is some Indian company trying to commoditize analyst coverage, starting with corporate bond analysis. If they can do what they say, and find a sustainable business model, they’ll have a huge market opportunity as more and more equity issues go uncovered.

By: Paul

Paul — Thu, 30 Apr 2009 02:23:36 +0000

How about both options?

Longer lock-ins will only enable more abuse, as VCs will gin up mini-IPOs to unload dogs, then calculate their carry while distributing doomed, locked equity. By the time LPs liquidate, share values will have crashed, helping to speed the industry toward Option 2.

Option 2 is inevitable anyway, as pension funds and endowments realize that it is stupid to give money to Joe’s House of Venture Capital and Tire Sales just to meet some theoretical asset allocation target, and as all investors raise their illiquidity premium. Unlike with other asset classes, it’s not worth investing with any but the top 25 or so funds, and the top funds tend to stay at the top of the pack. So probably half of all VCs will wink out after their current funds expire.

By: Stacey Higginbotham

Stacey Higginbotham — Thu, 30 Apr 2009 02:13:08 +0000

SOX is the biggest culprit behind the death of the sub-$50M IPO, but it’s not the only one. There’s also less coverage of small companies, which makes them less visible to potential buyers. Small public comapnies may also be too small to attract institutional fund buyers. A couple of years after SOX the idea seemed to be that you had to achieve a $100M market cap to be public and now it seems to be around $300M.

By: primate

primate — Wed, 29 Apr 2009 19:58:05 +0000

Aren’t the accounting costs of SOX compliance too high to allow for $50mm IPO companies? Maybe we pay our accounting firms too much, but I thought that the minimum yearly revenue for a public company should be >$50mm in order to absorb SOX… Also, perhaps I’m just working in an industry where the profit margins aren’t high enough…