Ravi Madhavan's A&D Blog

2011 Wharton Private Equity Report

Here. Bottom line: the industry is making a gradual comeback from the meltdown.

VC globalization

Globalization in the venture capital is intimately tied up with people networks, as I have demonstrated in some of my empirical research - abstracts of journal articles here and here, and a brief video explanation here. Headline: Human networks are the "carrier wave" of globalization in the VC industry. This story, about European VC firm Index opening a Silicon Valley office is a case in point. Excerpt:

Two of Index Ventures’ high-profile partners–Danny Rimer and Mike Volpi–are opening a new Silicon Valley office for the Europe-based venture firm in September.

The move is actually more of a return home for both men, now located in London, who had lived and worked at tech epicenter for much of their careers.

Among other things, before their stints at Index, Rimer was an Internet analyst at Hambrecht & Quist and also at the now-defunct Barksdale Group, while Volpi was an exec at Cisco.

It should be noted that Mike Volpi was, at one point, Cisco's Chief Strategy Officer responsible for M&A. 

Atlas Venture pulls back on globalization

Globalization in the venture capital industry is an interesting phenomenon. While there has been a significant expansion in cross-border venture capital flows, most VC firms tend to be focused on local operations and local investments. This NYT Deal Book story reports that Atlas Venture is pulling its London-based operations back to Boston because they would like to have all their partners around a table.

Thursday: Mint.com case study - NYT

Here is an example of the aspirational story of the young entrepreneur making good and exiting through a strategic sale - in this case, mint.com and Intuit (NYT).

Azure Capital's exit strategy guide

With the IPO market sluggish, being acquired is the preferred option now for many startups and their VC investors. Here, from NYT Deal Book, is advice from Azure Capital's partners, who have successfully sold eight companies in the recent past.

GE's $250m foray into venture capital

GE has launched a $250m venture capital fund to invest in companies globally in three broad areas: diagnostics, healthcare IT, and life sciences. See GE's press release here. 

GE, always a source of interesting management lessons, has been doing some pretty interesting stuff of late. The October 2009 issue of Harvard Business Review has an article, co-authored by CEO Jeff Immelt, on the concept of reverse innovation, wherein innovations developed in GE's China and India markets are being leveraged in developed markets in the West. Here are some details on the concept as practiced in GE. At a conference that I was at earlier in the month (the Strategic Management Society conference, Washington DC), Dartmouth Professor Vijay Govindarajan and GE executive Beth Comstock described GE's innovation journey in some detail. From among hundreds of ideas generated by the business units, Jeff Immelt and a small team have selected about 25 initiatives to devote considerable resources to; this venture capital investment is part of a broader "Healthymagination" initiative. 

A golden age for venture capital?

Here is some much-needed optimism about venture capital - writing in the NYT Deal Book, venture capitalist Cameron Lester says it is time for smart venture capitalists to invest and for entrepreneurs to go for VC dollars. 

Does the VC industry need to shrink?

“I personally believe and I think the evidence proves that the venture industry has gotten too big, the funds have gotten too big,” said Alan Patricof, an investor for 40 years who backed America Online and Apple, at a recent venture investing conference in San Francisco. “Our biggest challenge today for venture capital is to think smaller.”

Mr. Patricof is part of a growing chorus of voices calling for the amount of money in venture funds to shrink drastically to levels last seen two decades ago. His firm, Greycroft Partners, is taking a retro approach with a $75 million fund that makes smaller investments.

The above extract captures the spirit of a rather interesting article that appeared in the New York Times a couple of weeks ago. While the comments in the article focus on too much money chasing too few deals, there's a parallel argument that I've heard being made: the professionalization of the industry (think analytically trained MBAs working in large firms as against old timers operating on the basis of privileged information networks) has changed the character of the venture capital industry and perhaps affected its future prospects. An interesting transition for an intriguing industry.