In our descent though the rings of the alternative investment universe, we have found that hedge funds are zombies and David Swensen is a mythic superman. So what then to make of venture capital?
The Wizard of Oz revealed, perhaps. The WSJ spotted the latest report on VC returns from Cambridge Associates: Read more
Goldman Sachs has raised $600m from clients to make start-up investments in eight to 10 hedge funds, the WSJ says, citing people familiar with the matter. The new Goldman fund is targeting about $1bn and plans to invest between $75m and $150m in each hedge fund, and has already invested about $100m in a long-short equity fund called Palestra Capital Management. Investors that seed new hedge funds typically get 15 to 25 per cent of the funds’ 2-and-20 fees, says the Journal, and Goldman also stands to earn fees from the funds doing business with it.
The value of Twitter has jumped to $8bn, more than double the level accorded to the company as recently as late last year, according to the terms of a fresh $800m investment in the US internet messaging service that has just been completed, the FT says. The investment is the largest venture capital investment in history, according to The Drum, and was led by Russian venture firm DST Global. Like a growing number of investments in fast-growing Internet start-ups, the financing round will be partly used to buy out existing shareholders, said the person, the WSJ reports.
Airbnb, a three-year-old start-up that allows travellers to rent rooms in private homes all over the world, has raised $112m in new funding, valuing the company’s equity at $1.3bn, according to the FT. Venture capital of $60bm from Andreessen Horowitz. $40m from Digital Sky Technologies and $5m from General Catalyst comprised financing, in addition to private investors, TechCrunch says. Jeff Jordan, general partner at Andreessen Horowitz has said that Airbnb ‘reminds me more of eBay in its early days than any other business I have ever encountered.’ It’s a also a big bet that there isn’t another internet bubble brewing, notes the WSJ.
The WSJ on Friday reports that the SEC is looking to relax the regulations on share issuances by private companies. These attracted widespread attention following Goldman’s botched effort to set up a special purpose vehicle to purchase Facebook stock.
As FT Alphaville explained in a post in January, one of the main rules under the spotlight is in section 12(g) of the Securities Exchanges Act, which requires a firm to register securities with the SEC if it: Read more
Facebook – as you well know – has friended Goldman Sachs and seemingly poked the SEC into investigative action.
Whilst FT Alphaville was tagging holiday photos from awkward family gatherings, Facebook received a Christmas present from Goldman Sachs and DST Global in the form of a $500m investment via a private, secondary share market purchase. Read more
Secondary transactions — sales of private stock by company shareholders via private exchanges or placements — have received increased attention in the last few months.
And for good reason. NYPPEX numbers obtained by FT Alphaville claim that the secondary market for privately held companies is worth $9.6bn in 2010, up from $900m in 2005. Read more
Silicon Valley’s venture capital industry is coming to rely on Asia for the initial public offerings that have historically brought its biggest paydays, to judge by deals from Sequoia Capital, one of the Valley’s most prominent financiers, the FT says. Sequoia has backed seven Chinese internet IPOs in the past eighteen months, faced with a dearth of new US public tech companies. Sequoia backed Apple, Cisco Systems and Google in their start-up days. Elsewhere in Chinese tech dominance — the country has now stolen America’s crown as the owner of the world’s faster supercomputer, says the NYT. The WSJ is already worrying about a supercomputer gap. At least Nvidia supplied the chips, says Reuters.
The UK’s venture capital industry has “slumped” after the credit crunch, according to Nesta, an independent body funded by a UK Lottery endowment, reports the FT. Investment in start-ups specialising in new technology has fallen 40% in value over two years while overall fundraising by VC companies has dropped 50% to levels below those immediately after the 2000 dotcom crash.
HSBC has hatched a novel plan that would see monies from any industry-wide bank levy funneled into government-sponsored venture capital agencies, the FT reports. The move is seen as a rearguard action in the debate over bank regulation. HSBC has toured Europe seeking support for its ideas that include varying the capital buffers that banks are required to hold, depending on economic conditions.
Silicon Valley is on the verge of a new bout of Wall Street fever, as private technology companies rush to cash in on the first signs of stock market interest in initial public offerings for more than two years, according to venture capitalists. Financiers are talking of public stock sales by tech companies at a level not seen since the 1990s, the FT said.