With July 4th approaching, the unofficial summer is about to begin. In almost every board meeting with portfolio companies and other entrepreneurs who are raising money, I’m hearing the same refrain: “My VCs are about to shut down for the summer.” Phone calls and emails won’t get returned, partners meetings won’t be held, and you might as well put your head down and build your company as best you can and then show up after Labor Day rather than wasting time knocking on VC doors.

I admit this is only my 7th summer as a VC, so I’m still new to this thing, but I just don’t get it. I still work during the summer. My partners work all summer. My co-investors and their firms seem to be working all summer. And even when I’m on vacation at ...

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The debate is heating up about the impending regulations from the government applied to Private Equity (PE) and its sub-class Venture Capital (VC), fought by the National Venture Capital Association (NVCA) and reluctantly supported by the Private Equity Council (PEC). The latter stating that private equity does not represent a systemic risk. Perhaps not, if the council excludes VC from its membership, but VC as Private Equity poses a systemic risk as the gatekeeper to innovation.

Why the government is forced to step in
The government has decided to step in and we, as participants in the ecosystem should present our government with the facts (good and bad) so it can make informed decisions going forward. If we give the government self-serving information, rather than the fac...

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I was disheartened to read the following in a recent trade column: “Fundraising is fast becoming a modified version of Cloak and Dagger, pitting GPs vs. LPs.” The phrase “cloak and dagger” conjures images of spies, deception and assassins. How did relationships founded in the concept of trust fall into such language of distrust?

As fundraising has become more challenging, more of our clients have elected to create or enhance their focus on improving relationships with their existing and prospective LPs. The demand for Investor Relations professionals has been growing dramatically and we have been developing these roles with many clients concerned about their short- and long-term fundraising success. Not too long ago, I attended a panel discussion on How to Improve LP/GP Relationships. At the time, I wondered how this panel discussion could possibly last longer than a couple of minutes. In my mind the answer was, “Be nice to the people who give you money” and “Be nice to the people who make you money.” It seemed like an easy open-and-shut kind of session.

To paraphrase the opening lines from the movie Casino, Robert DeNiro says; "When you trust someone, there is no other way. You give them the keys to everything that's yours, otherwise what's the point.” For me, those words sum up a lifetime of relationships for the very essence of any relationship is quite simply, trust.

Having been helpful to a number of private equity and venture capital firms in staffing their existing or newly formed Investor Relations teams, here are seven tips for how to improve those relationships.

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There has been a great deal of recent press regarding the gulf between buyers and sellers of private equity interests. The disconnect is usually attributed to some analytic model—the vagaries of FAS 157, a lack of information, uncertain outlooks, etc.

As a buyer of private equity interests, I believe that there is validity to many of the commonly-cited explanations. Nevertheless, focusing on the financial metrics alone imagines a world in which price is the only driving force in markets. It is important to remember that institutions never sell private equity. People within institutions sell private equity. Many of the individuals tasked with managing private equity portfolios have recently suffered through traumatic professional experiences. Buyers of private equity need have patience and understand the personal nature of private equity partnerships.

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VCs lamented the dead IPO market 'round the clock at the AlwaysOn Venture Summit two weeks ago, where the theme of conference was the search for liquidity. Yours truly participated on one of three panels dedicated to raising the four horsemen from the dead. The NVCA has published a position paper on the national IPO crisis, recognizing the need for a viable underwriting ecosystem -- and even calling for government intervention. So we are to understand that VCs, in their infinite wisdom, altruism and patriotism recognize that a sound IPO market is critical for the economy. So critical, in fact, that they are ready to champion government involvement to fix the machine.

I completely agree that our IPO market needs fixing. But the venture community needs to get out of its Aeron chair and pitch in before calling the “Obama Phone.”

Benchmark, Integral and Impact threw another shovel of dirt on the IPO market with OpenTable, when they paid 70% of the deal fees to Merrill Lynch – a firm that is too big to care about small cap IPO’s. Does anyone with half a brain think that the OpenTable deal fees will have any effect on Merrill’s allocation of resources? Big banks like Merrill, Goldman, JP Morgan, Morgan Stanley can not afford to focus on the small-cap IPO market. You don’t need a calculator to do this math!


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San Francisco-based True Ventures emerged on the venture scene in 2005 and its way of doing business -- focusing on seed-stage startups that it can afford to back for the long haul -- quickly resonated with LPs. Not only did they give True $155 million back in 2006 but they came back for a second, $195 million, offering last fall.

That True had already enjoyed two quick exits helped: In late 2006, it participated in the $850,000 seed round of Maya’s Mom, a social networking site for mothers that BabyCenter bought for an undisclosed amount less than a year later. True was also the first institutional money into blog search engine Sphere, which sold in April 2008 to America Online for $25 million after raising just $4.3 million.

True's reputation among entrepreneurs is more notable, though. Whatever it's doing -- be it treating entrepreneurs like customers, as it likes to say, or operating out of a startup-like space (its open, sunny offices at the base of a pier feature little aside from cheap gray carpeting and an array of modest desks) -- has resonated with the digital media community, which seemingly now holds the firm in the same high regard as Union Square Ventures in New York, First Round Capital outside Philadelphia and prominent angel investors like Ron Conway.

Yesterday, I visited the firm to find out what all the fuss is about; there, I talked with co-founder Jon Callaghan over the sound of squawking seagulls:

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Highland Capital Partners has pushed back the first close for its eighth venture fund from the end of June to mid-July, according to multiple LP sources. The Lexington, Mass.-based firm also has reduced the fund's carried interest from 25% to 20 percent.

Highland began marketing in in early spring with a $400 million target, which was just half of the $800 million it raised for each of its prior two funds. I lauded the move, writing that Highland was one of the few VC firms willing to put common sense above fee-mongering. After all, the deflated fundraising and deal-making environment makes it the perfect time to raise less. If things pick up, you can always go back for more.

Of course, I also assumed that Highland's lowered target would make fundraising a breeze. For example, it could lose half of its LPs, so long as the other half committed pro rata.

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Yesterday, we published fund-specific performance information from Pennsylvania SERS and the Washington State Investment Board. Today's we've got new data from the Massachusetts Pension Reserves Investment Management Board (MassPRIM), which had a $3.3 billion private equity portfolio through year-end 2008.

The below document provides internal rates of return on 166 buyout and venture capital funds. PRIM only publishes performance data on funds that are five years-old and older, and provides it upon request (which I did earlier today). Enjoy:


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* The death of PPIP may have been greatly exaggerated. CNBC is reporting that it will be unveiled tomorrow, with participants to include WL Ross and a joint venture between GE Capital and Angelo Gordon.

* Jason Mendelson reacts to the Polachi study: Apparently 52.9% of VCs are deluded.

* Morning Call: U.S. futures point higher, London opens flat, European shares target best quarterly gain since 1999, the Nikkei closes its best quarter since 1995 and Hong Kong is on holiday.

* Q&A with Benchmark Capital's Bill Gurley, including the deals he shouldn't have passed on.

* Roger Altman: We'll need to raise taxes soon.

* Business has not been good to ex-basketball star Christian Laettner.

* Sign of the Apocalypse: Vin Deisel makes his first appearance in this space (and on the same day as Christian Laettner...)

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Global private equity deal volume for the first half of 2009 was $32.9 billion, according to data being released later today by Thomson Reuters. It represents the lowest opening six months for any year since 1997.

Second quarter volume was just $15.1 billion, compared to $17.8 billion in Q1. Overall, financial sponsors accounted for just 3.5% of announced transactions in the first half, which is the lowest such percentage since the first half of 2000.

Update: Get all the data after the jump.

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