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Archive for February, 2013

Gerbsman Partners has been involved with numerous national and international equity sponsors, senior/junior lenders, investment banks and equipment lessors in the restructuring or termination of various Balance Sheet issues for their technology, life science, medical device, solar and cleantech portfolio companies.
These companies were not necessarily in Crisis, had CASH (in some cases significant CASH) and/or investor groups that were about to provide additional funding. In order stabilize their go forward plan and maximize CASH resources for future growth, there was a specific need to address the Balance Sheet and Contingent Liability issues as soon as possible.

Some of the areas in which Gerbsman Partners has assisted these companies have been in the termination, restructuring and/or reduction of:

Prohibitive executory real estate leases, computer and hardware related leases and senior/sub-debt obligations – Gerbsman Partners was the “Innovator” in creating strategies to terminate or restructure prohibitive real estate leases, computer and hardware related leases and senior and sub-debt obligations. To date, Gerbsman Partners has terminated or restructured over $810 million of such obligations. These were a mixture of both public and private companies, and allowed the restructured company to return to a path of financial viability.

Accounts/Trade payable obligations – Companies in a crisis, turnaround or restructuring situation typically have accounts and trade payable obligations that become prohibitive for the viability of the company on a go forward basis. Gerbsman Partners has successfully negotiated mutually beneficial restructurings that allowed all parties to maximize enterprise value based on the reality and practicality of the situation.
Software and technology related licenses – As per the above, software and technology related licenses need to be restructured/terminated in order for additional capital to be invested in restructured companies. Gerbsman Partners has a significant track record in this area.

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 76 Technology, Life Science and Medical Device companies and their Intellectual Property,, through its proprietary “Date Certain M&A Process” and has restructured/terminated over $810 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A transactions.
Gerbsman Partners has offices and strategic alliances in Boston, New York, Washington, DC, San Francisco, Orange County, Europe and Israel. For additional information please visit www.gerbsmanpartners.com.

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Aydin Senkut taps early Google days for success at Felicis Ventures

Aydin Senkut

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Aydin Senkut founded Felicis Ventures in 2005 after leaving Google, where he was employee No. 30 and its first product manager.

Senior Technology Reporter- Silicon Valley Business Journal

Aydin Senkut is proud that the boutique venture firm he founded in 2005 was recently named the second most successful VC of 2012, behind only Intel Capital.

But his years as an early Google executive (he was employee No. 30) show through in his striving to find what he calls truly iconic companies for Felicis Ventures.

Senkut was Google’s first product manager and later ran strategic partner development in Asia for the Mountain View search giant.

Felicis’ biggest score came last year when Cisco Systems paid $1.2 billion for Meraki, the software-controlled networking company that Senkut backed early on.

Among other notable companies backed by Felicis have been Angry Birds’ developer Rovio, personal finance site Mint.com (bought by Intuit in 2009), Chomp (bought by Apple last year) and Karma (scooped up by Facebook just before its 2012 IPO).

Senkut talked with me last week about his investment philosophy and how he has applied what he learned at Google in a conversation that I have excerpted below.

Congratulations on being named the second most successful VC firm of 2012, behind only Intel Capital.

Thank you. We are really proud of the fact that we had a lot of exits. But we personally define success by how we have helped in our founders’ successes. We are proud that we could be part of that and that we could contribute to it. Sometimes it’s funding, sometimes its strategy, sometimes there is other stuff we do for them. It makes us really happy.

I think there are a lot of metrics to measure venture capital success, how many investments a company makes and all of that. But at the end of the day, you know, let’s be very concrete.

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Article from Fenwick and West Venture Capital Survey, by:

Barry Kramer
Michael Patrick

Background
We analyzed the terms of venture financings for 116 companies headquartered in Silicon Valley that reported raising
money in the fourth quarter of 2012.
Overview of Fenwick & West Results

  • Up rounds exceeded down rounds in 4Q12, 71% to 8%, with 21% of rounds flat.  This was an
  • improvement over 3Q12, when 61% of rounds were up, 17% were down and 22% flat, and was evidence
  • that those companies that are getting funded are receiving strong valuations.
  • The Fenwick & West Venture Capital Barometer™ showed an average price increase of 85% in 4Q12, a
  • slight increase from 78% in 3Q12.  Series B rounds continued to be the strongest rounds.
  • The median price increase of financings in 4Q12 was 41%, an increase over 23% in 3Q12.  There were four financings (three software, one hardware) that were up over 400% in 4Q12.
  • The results by industry are set forth below.  In general software, and to a lesser extent internet/ digital media, continued to be the strongest industries, with hardware solid and life science showing significant improvement, and cleantech lagging significantly.
  • The percentage of Series A rounds declined significantly, to 12% of all deals.
  • Further evidence of the strong valuation environment for those companies that are successful at raising
  • money is that the use of senior and multiple liquidation preferences have both declined significantly over the past year.

Overview of Other Industry Data

In 2012, we generally saw a weaker venture environment than 2011, especially during the last half of the year.
Venture investing and acquisitions of venture backed companies both declined compared to 2011, and while
IPOs and fundraising were both up, this was primarily a result of a strong first half of the year.  Some other
trends were:

  • Venture fundraising continues to trail venture investing, although the gap closed fairly significantly in
  • 2012.
  • The amount of money raised by venture funds continues to be concentrated in a relatively small number
  • of large funds.
  • Enterprise facing IT businesses appear to have attracted increased interest in 2012, while consumer
  • facing IT businesses (e.g., internet/digital media) appear to be a bit less attractive.
  • Cleantech and to a lesser extent life science continue to be weak, although they appear to be attracting
  • more corporate interest.trends in terms of venture financings in silicon valley—fourth quarter 2012 2
  • Accelerators and seed financings continue to be strong, but Series A (post seed) financings were often
    difficult to obtain.

Although venture capitalists believe that liquidity events will improve in 2013, they believe that
obtaining venture financing will be more difficult than in 2012, and that venture fundraising will
continue to be concentrated in fewer funds.

With Nasdaq up 16% in 2012 and continuing to increase in 2013, providing public companies more valuable
“currency” to make acquisitions, and with many corporations holding substantial cash reserves and public
company investors appearing to be more amenable to taking risk, there is good reason to believe that liquidity
options for venture backed companies will improve in 2013.

Venture Capital Investment.

Dow Jones VentureSource (“VentureSource”) reported that venture capitalists (including corporation
affiliated venture groups) invested $6.6 billion in 733 deals in the U.S. in 4Q12, a 4.6% decrease in dollars
and a 10.6% decrease in deals from the $6.9 billion invested in 820 deals in 3Q12 (as reported in October
2012).  For all of 2012 venture capitalists invested $29.7 billion in 3363 deals, a 9% decrease in dollars but
a 5% increase in deals compared to 2011, when venture capitalists invested $32.6 billion in 3209 deals (as
reported in January 2012).  In 4Q12 51% of U.S. venture investment went to companies based in California.
The PWC/NVCA MoneyTree™ Report based on data from Thomson Reuters (the “MoneyTree Report”)
reported similar results.  Venture investment in 4Q12 decreased 2% in dollars from 3Q12, with investment
of $6.4 billion in 968 deals compared to investment of $6.5 billion in 890 deals in 3Q12 (as reported in
October 2012).  For all of 2012 venture capitalists invested $26.5 billion in 3698 deals, a 7% decrease in
dollars from 2011, when $28.4 billion was invested in 3673 deals (as reported in January 2012).

The MoneyTree Report also reported that the strongest industry segment was software, where investment
increased by 10% in 2012 over 2011.  Life science was weak, with biotech investing down 15% and medical
device investing down 13%, and with life science first time financings at their lowest level since 1995.
Cleantech was down 28% and even internet investing was down 5% when compared to 2011, although
2012 was the second best year for internet investing since 2001.
Despite the weakness in life science generally, digital health investing is strong, with Rock Health reporting
a 45% increase from 2011 to 2012.

IPO Activity.

Dow Jones reported that 8 U.S. venture-backed companies went public in 4Q12 and raised $1.2 billion, a
decrease from the 10 IPOs in 3Q12, but an increase from the $0.8 billion raised in the 3Q12 IPOs.  In all of
2012, 50 U.S. venture-backed companies went public, a 10% increase from the 45 IPOs in 2011, thanks to a
strong first half of 2012.  The 2012 IPOs raised a total of $11.2 billion, the most since 2000, primarily due to
the $6.6 billion Facebook IPO, compared to $5.4 billion raised in 2011 IPOs.

Thomson/NVCA reported similar results for 4Q12 and 2012.  Five of the eight 4Q12 IPOs were in the IT
sector, and seven of the eight were based in the U.S., with the eighth from China.trends in terms of venture financings in silicon valley—fourth quarter 2012 3

Merger & Acquisition Activity.

Dow Jones reported that acquisitions (including buyouts) of U.S. venture-backed companies in 4Q12 totaled
$9.3 billion in 113 transactions, a 28% decline in dollars but a 14% increase in deals from the $13 billion
paid in 99 transactions in 3Q12 (as reported in October 2012).  For all of 2012 there were 433 acquisitions
for $40.3 billion, a 9% decrease in transactions and a 16% decrease in dollars from the 477 acquisitions for
$47.8 billion in 2011 (as reported in January 2012).

Thomson Reuters and the NVCA (“Thomson/NVCA”) reported 95 venture-backed acquisitions in 4Q12, a
1% decrease from the 96 reported in 3Q12, and 435 acquisitions in all of 2012, a 1% increase from the 429
reported in 2011 (as reported in January 2011).

Venture Capital Fundraising.

Dow Jones reported that 154 U.S. venture capital funds raised $20.3 billion in 2012, a 14% increase in funds
and a 25% increase in dollars from the 135 funds that raised $16.2 billion in 2011 (as reported in January
2012).  Eleven funds accounted for $11.3 billion of the $20.3 billion raised.  (Russ Garland, Venture Wire,
January 7, 2013)

Thomson/NVCA reported that 42 U.S. venture funds raised $3.3 billion in 4Q12, a 20% decrease in funds
and a 34% decrease in dollars from the 53 funds that raised $5.0 billion in 3Q12 (as reported in October
2012).  For all of 2012, 182 funds raised $20.6 billion, an 8% increase in funds and a 13% increase in
dollars from the 169 funds that raised $18.2 billion in 2011 (as reported in January 2012).
The number of members of the NVCA has declined from 470 in 2008 to 401 currently, a likely indication of
the shrinking number of venture firms.  (Russ Garland, VentureWire, January 28, 2013)

Corporate Investing.

As investments and fundraising by venture capitalists has had difficulties, corporate venture investing has
fared better.  According to the MoneyTree Report, the percentage of financings that included a corporate
investor increased to 15.2% in 2012, the third straight year of increase and the highest percentage since
the 2008 recession.

Notably, corporate investors tended to focus more on the industries that are currently least favored by
venture capitalists, participating in 20.5% of cleantech financings and 19.5% of biotech financings.
And corporate investors did not limit themselves to traditional venture investments.  For example, GE
(Healthymagination), Nike and Samsung have each announced the creation of, or other significant
involvement in, a start up accelerator, Rock Health has reported that Merck is a leading funder of digital
health startups and GlaxoSmithKline and Monsanto have each taken actions to increase their focus on
venture capital.

Angels and Accelerators.

There continues to be concern that the angel/accelerator environment has become frothy.  CB Insights
reported 1749 seed financing rounds in 2012, compared with just 472 in 2009, while Series A rounds grew
much more slowly, from 418 in 2009 to 692 in 2012, indicating that there will likely be a lot of seed funded trends in terms of venture financings in silicon valley—fourth quarter 2012 4 companies that won’t obtain Series A investment.  While this is not necessarily bad, as there is value to
making small bets on a lot of high risk opportunities, at some point the odds get too high.
Notably, Y Combinator announced in 4Q12 that the amount of money loaned to each of its companies
would be reduced from $150,000 to $80,000, and that the size of its class would also be reduced.  And
Polaris Venture Partners has indicated that it is significantly scaling back its “Dogpatch Labs” incubator.
However we do not see a trend yet here, as accelerators like TechStars and 500 Startups are not reducing
their size.  (Lizette Chapman, VentureWire, December 20, 2012).

Venture Capital Returns.

Cambridge Associates reported that the value of its venture capital index increased by 0.64% in 3Q12
(4Q12 information has not been publicly released) compared to a 6.17% increase for Nasdaq.  The venture
capital index substantially lagged Nasdaq for the 12-month period ended September 30, 2012, 7.69% to
29%, and for the ten-year period 6.07% to 10.27%.  The Cambridge Associates venture index is net of fees,
expenses and carried interest.  These type of results are, of course, a significant part of the reason why
venture fundraising has been difficult.

Venture Capital Sentiment.

The Silicon Valley Venture Capitalists Confidence Index® by Professor Mark Cannice at the University of
San Francisco reported that the confidence level of Silicon Valley venture capitalists was 3.63 on a 5 point
scale in 4Q12, a slight increase from the 3.53 reported for 3Q12.

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Dear Friends,

In my most recent update I mentioned that I would be making a special announcement.

It is with great pleasure I not only present of our latest, delightful App, Wubbzy’s Fire Engine Adventure, but also announce the start of our partnership with the National Fire Prevention Association (NFPA).
.
You may learn more about the App and to view the it’s trailer by visiting:
http://www.cupcakedigital.com/apps/wubbzys-fire-engine-adventure/

fir2

This partnership includes:
·      A paid sponsorship of the Wubbzy’s Fire Engine Adventure App itself during National Fire Prevention Week (Sunday, 10/6 – Saturday, 10/13); and,
·      A commission for Cupcake to produce an App dedicated to fire safety featuring Sparky the Fire Dog.

To read the first in a series of press releases about our partnership please visit:
http://www.cupcakedigital.com/blog/the-nfpa-and-sparky-the-fire-dog-partner-with-cupcake-digital/

To highlight this association, Wubbzy’s Fire Engine Adventure includes a special learning section providing children and caregivers with important fire safety information. It is a strong proof point of our belief in “the power of play” and its ability to drive awareness and educate children about very important causes such as fire prevention.

sparkyThis content is a further enhancement to our mission of incorporating educational opportunities and Common Core State Standards into all our Apps.

In the months to come we will be making other exciting partnership announcements regarding additional licenses we will be “on boarding” and cause-related sponsorships.

I would encourage you to download the application by visiting http://www.cupcakedigital.com/apps/wubbzys-fire-engine-adventure/
and click on the store icon of your choice (iTunes, Amazon, Google Play or Nook).

Give it a test drive, and write a review about it.

As this is a special partnership for us, please do take a moment to post or write about it on your social networks, blogs etc., and encourage your friends, family and loved ones to do the same.

Thank you again for your continued support.

Sincerely yours,

Brad Powers
Chairman

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Article from Silicon Valley Business Journal.

Institutional Venture Partners’ Steve Harrick sees a lot of opportunity in the enterprise and B2B startup space and has a $1 billion fund that was raised last year to work with.

His Menlo Park firm focuses on later-stage venture and growth equity investments, so it’s not the small fry they have their eyes on.

IVP is looking for startups that already have $20 million to $30 million in revenue and the potential to grow that by tenfold or more.

The firm had several big exits last year, including the $223 million IPO of CafePress and the $745 million sale of Buddy Media to Salesforce.

Harrick took some time to speak to me this week about the startups that are exciting him today and why IVP often remains an investor long after a startup has gone public.

Here are excerpts from that conversation:

There has been a lot said about a shift away from social and consumer-focused startups since Facebook’s IPO last year. What does that mean at Instiutional Venture Partners?

IVP has always invested in enterprise companies and we’ve been investing since 1980. We’re on our 14th fund, IVP-14. It’s a billion-dollar fund and we’re just beginning to invest that.

But enterprise has always been a mainstay of our investment effort. It ebbs and flows with budgets and where we see growth. But right now we’re seeing a lot of good activity in the enterprise space, a lot of innovation being brought to bear and the opportunity for new high-growth companies. So we’re actively investing there.

Can you tell me a little bit about the companies that are exciting to you right now from your portfolio?

There are a number of them. The most recent investment was AppDynamics. AppDynamics does application performance management. It’s really a very exciting area. The company allows anybody that’s creating an application to bug test it, to test it for security, to see if it can support high volume loads, all while they are designing the application.

The reason that this is such an interesting space is that every enterprise has applications that reach out to customers that they use internally and that they connect to partners with. It’s a real competitive edge for companies that do it correctly.

All the old stuff doesn’t support mobile. It doesn’t support the latest programming techniques. It’s long in the tooth. The market has been desperate for a more modern solution and AppDynamics really delivers that. We were really impressed with the growth the company has shown and just the massive demand for the product offering.

A lot of our portfolio companies were already using AppDynamics. That’s how we found out about the company and it’s a space that right now is at about $ 2 billion market size. It’s growing and it’s a very good management team. So we’re excited to be part of it.

Another one I understand you invested in last year is Aerohive.

Oh, yeah. David Flynn is the CEO over there. It’s a great company to watch in Sunnyvale. It’s a next generation Wi-Fi company. What Aerohive did very early on is it realized that a controller can be costly and also is a choke point for an enterprise deployment. If your controller goes down, you can’t change configurations. A lot of the old vendors had built a lot of cost around the controllers, which increased the cost of deployment for a customer.

Aerohive took that controller and put it in the cloud. You can manage your Wi-Fi deployments remotely from any computer. It doesn’t go down and their Wi-Fi deployments are enormously successful at scale. They’ve got a lot of enterprise and education and government customers. It’s a business that more than doubled last year and really one to watch going forward.

Are you finding a lot more company these days looking at the enterprise and B2B space than there were a couple of years ago?

Enterprise budgets have come back. People are recognizing that they have to refresh their technologies. They’ve got a lot of new demands in terms of supporting new trends in the enterprise.

Take another one of our companies for example, MobileIron. It is a software company that solves the bring-your-own-device problem for businesses. People are bringing iPhones and Android phones into the enterprise and they’re viewing enterprise information. They’re putting things in a Dropbox account and they’re leaving with it.

IT can’t control that and that is a big problem, particularly when you want to maintain rights and provisioning and state-of-the-art security and be able to track confidential information.

So MobileIron’s products allow you to do all that. It allows you to push out patches, security, rules and provisioning. It allows you to take control of a mobile environment in the enterprise.

Five, six, seven years ago, this wasn’t a problem. It just wasn’t happening. Now, it is and it is being driven by consumer behavior that has flown over to the enterprise.

So people are saying, I have a budget for this. I have to spend. We have to be on top of these issues or it’s going to be a big problem for us.

You know those kinds of trends are really unstoppable.

Are there other trends you are watching?

Another is Wi-Fi, which is being kind of taken for granted, how to be able to connect if I’m visiting your company or I’m in your auditorium or I’m having lunch in your corporate cafeteria. These are all things you need to have infrastructure for. You need to do it cost effectively. So these fund-smart entrepreneurs are seeing an opportunity and people are spending for it.

As a venture capitalist, we look for those tailwinds in terms of budget because that allows you to grow. It accelerates the sale cycle. It becomes less of a missionary sale and that’s how you have rapid growth in businesses. It is different from five or six years ago. There are a lot of people paying attention to it.

There is a lot said about the consumerization of IT, the trend where shifts in consumer technology is requiring IT departments and enterprises to change how they do things.

It’s a massive change in behavior. Enterprises are organizations that are comprised of employees that have jobs to do. Their behaviors change and the enterprises have to change with them.

There is also a lot of talks about what is being described as Network 2.0, involving things like software-controlled networking and flash storage. Are you guys involved in that at all?

On the network side, a lot of that is cloud computing and services around the data center. We are involved in that.

We invest in a company called Eucalyptus Systems, which is the leader in hybrid cloud deployment. They allow you to manage and test software on your own premises and switch seamlessly back and forth between Eucalyptus and the Amazon Cloud.

Cloud computing is still an area where people are trying to figure out exactly what their needs and specs are. It’s still early in the market. But there have been some large successes that have kind of changed behavior.

Salesforce is one of those. Salesforce is widely deployed. It really took customer relationship management and managing your sales force to the cloud. They’ve offered additional cloud applications and people have gotten used to paying by subscription.

That’s also a change from seven or eight years ago, when everything was license dominated. The old world was you paid for licensing and maintenance, 80-20. That was what you paid.

Those are perpetual licenses and they were often expensive. Sometimes, they were underutilized or never deployed and the world gradually shifted to paying on subscription.

Customers like it because they say, hey, if I’m not using it, I can turn it off. I don’t have to renew.

The vendors like it because it’s a more predictable revenue stream. You’re no longer biting your nails at the end of each quarter to figure out if you’re going to get those two or three deals that are going to make or break your quarter.

You get a lot of smaller deals that recognize revenue monthly and that provide a more predictable business and that have been a reward in the public markets. Networking and application functionality is being delivered that way now. The economics have changed and I think that is a very exciting trend. I think it leads to more sane management for software businesses.

How about the security? Are you into that at all?

We are. We were investors in ArcSight, which Hewlett-Packard bought. That was an example of a dashboard for enterprise security.

We’ve been involved with a number of other security companies. I think two to watch are Palo Alto Networks and FireEye. We aren’t investors in either of those, but they’re both very good companies. We’re looking at a lot of security companies currently.

The challenge with security is that it can often be a point solution and a small market. To be a standalone security company, you really have to have a differentiated broad horizontal functionality that could stand on its own.

You can’t have customers saying, I want that, but it’s a feature and should be delivered with a bunch of other things. A lot of small companies fall into that trap in security.

So we’re on the lookout for the broader security places that you know really can get the $50 million, $75 million or $100 million revenue.

Have there been any companies that you passed on that you wished maybe in retrospect you hadn’t? The ones that got away?

Yeah, you know, there always are. That would be the anti-portfolio. You run into those things and you try to see what you learn from it. Sometimes, they’re very hard to anticipate.

We passed on Fusion-io, the Salt Lake, Utah, flash drive memory company. They have done well, but I think they have fallen off recently in the public markets. That one would be in the anti-portfolio.

We also looked at Meraki. Cisco bought them for $1.2 billion, more than 10 times revenue. It’s hard to predict when somebody’s going to buy a company at that kind of multiple. We believe Aerohive is the superior company. That’s why we invested in Aerohive instead of Meraki. You can’t really invest in both. They’re competitors.

Then there was Yammer, which was acquired for $1.2 billion. That was also a company we were familiar with, good technology acquired for huge multiple of sales and it was hard to predict that happening, too. So I wish all those guys well. Sometimes you miss on big returns like thoses, but we like the investments that we have made.

What is it that you’re looking for at the top of your list when you’re considering a company that you might invest in?

Well, you know, the old adages in venture capital have some merit in them. But things change and you can’t rely too much on just pattern recognition. There’s always seismic shifts in technology where old assumptions have been disproven. You have to adapt to those.

But the adages that do hold are quality of management. We really look for companies and management teams that can take a company to $50 million to $500 million in revenue.

That’s a very mature skill set. They have to show the ability to hire, the ability to supplement the businesses, to attract great board members and to build a company that can be public.

There are a lot of demands on being public today. The industry is still dominated by mergers and acquisitions, as it always has been, for exits. Probably about 80 percent of the exits happen from M&A.

But we really look to exceptional management teams that we can be in business with for many, many years.

How does being a later stage investor change what you are looking for?

We have a long-time horizon for investment. We often hold after a company goes public and even invest in the company after it’s gone public. That’s in our charter.

So we really look for these management teams that are really exceptional and deep.

As a late stage investor, you can’t really invest in small market opportunities. The early stage can do that, and they can exit nicely. You know they can invest $10 million valuation, the company sells for $60 million and they do great.

When you’re investing at a later stage, you know looking for companies that have $20 million or $30 million of revenue so the valuation is higher and you have to get these companies to a higher exit value to get a great return.

So you have to able to identify large market opportunities and AppDynamics, Aerohive, MobileIron, Spiceworks, all have really large market opportunities. That’s why we’re excited about them.

Interviewer: Tell me a little bit more about the philosophy of holding on to companies after they’ve gone public.

Our perspective is that going public is a financing event. It’s also a branding event for a company. It raises awareness. It creates liquidity in the stock.

But valuations fluctuate with market conditions. We say this is just the beginning of growth. That valuation that it’s at now may not be the right place to exit .

If you look back historically, venture capitalism left a lot of money on the table by exiting companies prematurely. You know if you exited when Microsoft or Apple or Cisco went public, you probably left a 10X, 20X, or 50X return on the table by doing so.

Obviously, that requires a lot of judgment. Not every company is going to be an Apple or a Cisco.

So that’s a judgment call and when we make the judgment that there’s a lot of growth ahead and the current valuation doesn’t reflect that, we’re happy holders. We establish price targets for exit and when it reaches that price target, we make a new assessment.

We do have to exit eventually, but we raise 10-year funds and our holding period is typically 3 to 5 years and then oftentimes its 5, 7, 8 years.

Is there a specific example to illustrate this from your portfolio?

Sure. One would be HomeAway. HomeAway is a remarkable business. People list homes on the website. If you’re traveling with your two kids, you get a home for 800 bucks for the week and you would’ve paid 500 bucks a night for a hotel. It’s a great service. It’s public. We invested, my gosh, about five years ago and we’re still holding that stock.

Read more here.

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Article from GigaOm.

Not all venture firms are joining the cleantech exodus. Lux Capital, which invests in a lot of science-based, hardware and infrastructure innovations, has closed its third fund of $245 million, and Lux Capital partner Peter Hebert told me that the firm will continue its current model of investing about a third of its funds into energy tech, a third in information technology and a third in health and biotechnology.

A few of Lux’s portfolio companies appear to be doing pretty well. Kurion, a startup developing nuclear waste cleanup tech, scored a breakthrough deal to help clean waste water for Japan’s Fukushima nuclear meltdown. About a year ago I called them “the most successful greentech startup you haven’t heard of.” Portfolio company Shapeways has become synonymous with the emerging industry of 3D printing, and smart grid startup Gridco just launched to build a next-gen power grid using solid state transformers. Portfolio firms that have been acquired include skin company Magen Biosciences, LED tech company Crystal IS, and chip companies SiBeam and Silicon Clock.

“There’s definitely been negative sentiment towards cleantech in the market,” said Hebert, but it really “depends on the individual Limited Partners” (the groups that put money into venture firms). Our LPs still see substantial innovation ahead around energy and resources, said Hebert. Going forward in 2013 “we remain disciplined and selective,” said Hebert.

While Lux says it remains committed to energy tech investing, other firms have been unable to raise new cleantech funds, and some have dialed back or transformed their energy and cleantech focused divisions to make them more capital efficient. VantagePoint Capital Partners shut down its efforts to raise a $1.25 billion cleantech fund recently, and firms like Mohr Davidow and Draper Fisher Jurvetson have reduced their commitments and turned to backing IT-based cleantech, or cleanweb companies only. In 2012, venture capital firms put a third less money into cleantech companies compared to 2011.

Still some investors like Lux Capital still see the potential of energy and resources technology innovation. Canadian firm Chrysalix says its energy focused portfolio is doing well. NEA says its still committed to energy investing, though its scaled back a bit. Khosla Ventures still continues to make aggressive and many bets across sustainability from energy to agriculture to smart grid to biofuels.

Read more here.

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Article from GigaOm.

Snapchat, the hot startup that allows you to send and receive photos or videos that sort-of-maybe disappear afterward, has raised a $13.5 million Series A funding round led by Benchmark Capital’s Mitch Lasky, putting the company’s valuation at $60 million to $70 million. The company’s growth hasn’t exactly been controversy-free, but has demonstrated the intense interest right now surrounding messaging apps that transcend the basic SMS.

The funding news was first reported by The New York Times and TechCrunch and was confirmed to us by CEO Evan Spiegel on Friday evening. Om Malik reported in December that Snapchat was getting funded by Benchmark, the firm that was also one of the early backers of Instagram.

“People are looking to communicate in a real way,” Lasky told the New York Times on decision to invest.

The Times reported that Snapchat is now seeing 60 million photos or videos sent per day. Snapchat added video to its product in December, when it was seeing 50 million photos sent per day. Facebook has since rolled out Poke, its obvious competitor to the popular startup in December, but it’s unclear that Poke has really challenged Snapchat’s dominance in the disappearing content realm.

Update: On Saturday, Lasky published a blog post explaining that he’s joined the board of Snapchat and believes the company has real staying power among mobile users:

“We believe that Snapchat can become one of the most important mobile companies in the world, and Snapchat’s initial momentum — 60 million shared “snaps” per day, over 5 billion sent through the service to date — supports that belief. Snapchat’s ramp reminded us of another mobile app Benchmark had the good fortune to back at an early stage: Instagram.”

Read more here.

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