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Of Snipers and Virgins
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I wonder how long the Middle East War analogy can carry me into the PEHUB universe. BTW, how do you pronounce peHUB? PEE-HUB? PEE-WEE-HUB? Judging from the responses to my virgin steps onto the blogosphere, I think that’s probably pretty close. I’ve been tracking recent military developments in Iraq to learn that, in addition to the virgin-seeking suicide bombers I referenced in my first posting, a relatively new opponent has surfaced by way of judicious snipers cornering American troups as they advance into urban areas of Iraq. That’s how i felt when my glorious first-day-in-the-blogosphere was assailed by a couple of peHUB snipers. Like in Iraq, their identity was concealed so even a well-armed and trained infantryman couldn’t easily see the source of well aimed fireshots. I was particularly amused by the sniper whose identity was listed only as “Poor Taste” an ID presumably fabricated only for this response unless the assailant plans of moving forward in the shadows with this moniker in future. I’m hoping for both his sake and the future of PEHUB that the ID will change, if only to help increase the “registered user” count on the site. Soon Dan will need to count *unique* users in his daily body count. Holding the high ground, I thought mostly about the reader whose suggestion that a lack of concrete counter-evidence to the poor market conditions cited by what I described as venture capital suicide bombers would better qualify me for service in the Bush White House than in making VC prognostications. To this I say: “That is a fair point!” In the service of bringing some hard data to the discussion, I collected the following list of acquisitions of venture-backed companies made by Cisco over the last approximately 3 years. The list follows. After the name of each lucky aquiree is the amount of the transaction as disclosed in industry sources. Perfigo, $74M; Protego Networks, $65M; NetSift, $30M; Okena, $154M; Airespace, $450M; Metreos, $28M; Audium, $4M; Latitude Comm., $80M; Topspin, $250M; Arroyo Video, $92M; Actona Technologies, $82M; FineGround Networks, $70M; P-Cube, $200M; Roverhead Networks, $39M; Sheer Networks, $97M; Sheer Networks, $97M; Orative, $31M; DynamicSoft, $55M; Parc Technologies, $9M; Procket Networks, $89M I offer this list as a mere sampling of the post-bubble M&A environment for venture-backed deals and posit that making money is in fact possible once expectations (and cap tables) are adjusted to the new market reality. One can repeat this exercise with a dozen other buyers without even getting to Google, the acquirer du jour. We can lament the end of the (IPO) world as we know it but we shouldn’t. BTW, anyone care to guess in what order these Cisco deals are listed?
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November 10th, 2006 at 10:26 am
My goodness! One comment highlighting (correctly) the tastelessness of your blog entry, and this is what you come back with…
I can only say that your sense of humor is pretty base, and that the analogies that you have used are in the most extraordinarily bad taste. I can only hope and pray that no-one you love is ever subject to vicious acts of random terrorism, or has to be deployed in a war zone. In addition, I cannot believe you then go one to claim you hold the ‘high ground’.
November 10th, 2006 at 12:13 pm
A listing of acquisitions by the most prolific acquiror since the money changers were thrown out of the temple (got to keep the religous theme going) is not exactly a proof statement.
But it is not Bart’s fault. Even the NVCA analyzes the industry by reporting 1) Capital raised from LPs 2) Capital invested in companies 3) and then goes all squishy by reporting IPO and M&A stats for venture backed industries. Any first year business student could point out the intellectual bankruptcy of trying to ascertain the health of the industry by those metrics.
Why not just report the amount of money returned to LPs every year? Because it would scare the LPs to death….
November 10th, 2006 at 2:44 pm
Poor Taste:
Why don’t you have the guts to identify yourself? Could it be that if you did so, someone could look up your track record? It’s fine to disagree with Bart, but to make an anonymous personal attack that tells only part of the story is cowardly. Without going to a database, I can name one deal Bart and his firm were in that paid off big time: LanDesk. I can also tell you that unlike so many VC firms that continue to pursue strategies born in the 1990s, at least Bart and Blueprint have made a thoughtful decision to try a somewhat unique strategy of focusing on early stage corporate IP spinouts (like LanDesk). It’s certainly not the easiest strategy to pursue, but I think Bart and Blueprint are courageous for at least trying something new. The same can’t be said for Sevin Rosen, which essentially blamed the venture business for its own failings.
November 10th, 2006 at 2:55 pm
Gents (Bart and Poor Taste),
Maybe you guys need to go to your corners and have a cold draft to chill out a little………Bart, perhaps you’d consider going a little easier on the live fire metaphors as for those who’ve ever been in a forward area, they are likely distracting and painful……that said, your point is substantive and there is sufficient data available to demonstrate that, as ever, there will be a top quartile of firms that generate solid returns in any era including the tough exit environment we’re in……..the interesting thing is that the membership list in that top quartile is likely to be pretty fluid in the coming years……..I think most folks that know the SR situation would agree with Alexis that some firms are just really struggling to evolve and that 25 years of entrenched history may be just too difficult for them to overcome………..
Poor Taste, you make fair fact driven points but to be honest, it sounds a little personal for you so either you’ve been shot at before in a forward area and are understandably testy about Bart’s contextual use of the war in Iraq or you’re overworked and underpaid…….either way, give some thought to going a little easier as this PE Blog bit could be useful and no sense making the “environment” hostile………………..
Have a good weekend guys………….
November 11th, 2006 at 6:26 pm
Larry (and Bart):
In re-reading my prior comment I have to admit it was also in Poor Taste, and apologize for the tone. Not intended to be personal against Bart, but I guess I got carried away after being called one of the “judicious snipers cornering American troups (sic) as they advance into urban areas of Iraq.”.
I do think that if you are going to attack a firm such as Sevin Rosen and essentially call them ‘terrorists’ blowing up a suicide bomb in the early-stage VC market, that you should be well prepared for a harsh rebuke. I still feel the initial post was ill conceived, but as I have now contributed one of my own, who am I to throw stones?
November 12th, 2006 at 12:29 am
I agree the metaphors being used are in poor taste. Of course the field of VC investing has tended to be a toxic atrocity except for a few notable outliers.
The typical return on VC investments is not good, and with a weak market for speculative IPO’s, the returns are only going to get worse.
Sevin Rosen is right that the VC community needs to think long and hard about the existing model and future models. VC’s who complain about Rosen are going to lose LP investments to VC’s who take his concerns to heart.
November 13th, 2006 at 2:08 pm
Market Participant:
Why do VCs need to “think long and hard about the existing model and future models” when they are under no real pressure from LPs to do so? We continue to see funds with weak or no track records raising follow-on funds without any trouble. I don’t mean to pick on Valhalla Partners (Arthur Marks is a really nice guy), but they come immediately to mind because they just closed on a new fund. The firm, based in the Mid-Atlantic region, was able to raise a second fund that was larger than its first AND in a much shorter amount of time AND with no exits to date. PE Week subscribers can read the full story here: http://www.pewnews.com/story.asp?sectioncode=36&storycode=40818
November 15th, 2006 at 6:45 am
What can I say, I found it amusing. Lighten up…
March 5th, 2010 at 4:19 pm
Im sixteen am I able to use this product safely?