Posts tagged as:

Venture Capital

Facebook Now Looking For Money At $5-6B Valuation

by Jason Wilk on April 30, 2009

According to the New York Post, Facebook has just held informal exploratory meetings with Providence Equity Partners, General Atlantic, Bain Capital, Kohlberg Kravis Roberts and others. The article cites Facebook to be looking for fresh capital at a $5 to $6 billion valuation, however no one is willing to shell out for more than a $2 billion to $3 billion range. (Wauters, TC)

People familiar with the matter, are claiming Facebook’s attempt to raise additional capital is creating quite a stir among existing investors, which includes Accel Partners, Greylock Partners, Meritech Capital Partners, Microsoft and Peter Thiel. Microsoft feeling it the most, jumping in at a $15B valuation with a quarter million dollar investment, that in this state may have earned them about 8% of the company. People like Thiel say it’s time to start making money off of the user base, which at this point is causing the company harm it’s so large (200+ million now)

Facebook may not have a lot of choice when it comes to what valuation they will take money. The company is burning through at leat $20 million a month in cash and cannot stop their unbelievably quick (but unmonetizable) growth internationally. If things keep going the way they are, Facebook could be out of money by 2011. Time to start charging?

Looking For A Job Or Need To Hire? Join The Thousands On TinyComb’s Job Board

{ 7 comments }

Google’s New Venture Capital Fund

by Jason Wilk on March 31, 2009

{ 0 comments }

The State Of Venture Capital With Farhad Mohit

by Jason Wilk on February 2, 2009

A couple days ago, I wrote on the state of the venture capital ecosystem in regards to Kleiner Perkins Caufield & Byers, one of Silicon Valley’s most prominent venture funds, raising annex funds for its eleventh (2004) and twelfth funds (2006). The round was in order to have cash on hand in case it needs additional follow-on capital. My thoughts were that this news potentially shows that limited partners and VC’s may see an end to the crisis in the near future and that times weren’t really as tough as they seemed until LPs started asking for their money back. Farhad Mohit, BizRate and Shopzilla founder had this to say to me on the issue:

Remember that VCs make their money from a ~2% management fee (for the whole fund under management) and a percentage of profits generated. So, they are loathe to return any money under management because it is “sure income” for them. However, if the “Good Times” are truly at an end, as some VCs have speculated, then what are they telling their Limited Partners (investors) as the reason for holding onto their money and charging a management fee?

So, asking VCs whether the good times are over, just gets you the biased perspective of “buyers” telling you what they think the market looks like. Note, they have every incentive to tell you (entrepreneurs) that times are tough, valuations should be lowered and that you should take whatever offer then give you.

However, until I see money being returned to the LPs for lack of investment opps, my guess is that they’re telling their investors a different story…

More like: Times are tough, but with our BS “Fearmongering” presentations we’ve scared entreps into lowering their valuations to a point where we are seeing incredible investment opportunities, blah blah blah (where blah blah blah basically = “so let us keep investing your money and earning our 2% fee).

In retrospect, I have to agree with Farhad, but will a VC give the money back? Consider this; A VC who loses confidence or interest in a company can choose to cease new investments in that company and get diluted, or give the money back. But why would they? An LP who loses confidence in a VC fund technically still faces a legal obligation to continue meeting their capital calls. At best, they face losing all their capital. At worst, they have no choice but to throw good money after (perceived) bad. (EarlyStageVC). So as VC’s continue to live off of fumes (the average return is lower than a government bond, with a much higher magnitude of risk), will they continue to raise new funds, continue to take their 2% (and 20-30% of profits) in the belief that the good times are around the bend, or will they concede? With the overcrowded market, it seems that the life of the VC cannot live on as they once have before. It has been 11 years since the venture industry has returned more cash than it has plowed into investments, according to the National Venture Capital Association. The industry is now managing $257 billion, up from $64 billion in 1997. The general sentiment in the market since it has crashed is to avoid putting money into an industry than hasn’t turned a profit in that amount of time. So, the question now may be less of when will they give it back, as when will the VC’s run out of money, starting the long awaited industry shakedown? If there was any year to have it happen, 2009 seems appropriate. Look out.

(Image Via Forbes)

{ 0 comments }

Obama Is In. What’s First For Green Tech?

by Jason Wilk on November 5, 2008

Obama has the potential to bring significant federal support of clean technologies, a unified international fight against climate change and a necessary buildout of U.S. energy infrastructure.
The clear favorite for green tech investors (6 to 1 over McCain), Obama pledged to invest $150B over the next ten years in alternative energy, reduction of U.S. greenhouse gas emissions to 80 percent below 1990 levels by 2050 and a new cap-and-trade system to manage carbon emissions.
It’s a perfect time to begin investing in renewable energies with the amount of jobs it will create and the potential it has to thrust America forward in the lead on saving the environment. (after all, we are the leader in emissions)
What will be the first big push for green when he reaches the White House?

E2T

{ 2 comments }