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Kabbage co-founder Kathryn Petralia and BlueRun Ventures Partner Jonathan Ebinger discuss the explosive growth of Kabbage and where online lending is heading at Thomson Reuters' Venture Alpha East 2014 conference in New York. Alastair Goldfisher, editor of Venture Capital Journal, moderates. . Video date: March 26, 2014

Countering years of gloom and doom about the venture industry, Pathway Capital Management Director Cheryl L. Maliwanag offered up a decidedly sunnier outlook on the business at Thomson Reuters' Venture Alpha 2012 conference on Oct. 18, 2012. . “It’s no secret that venture funds have received limited love over the past decade, yet I stand here telling you that we are pretty excited about the opportunity,” Maliwanag told the audience. . Maliwanag heads up due diligence and monitors existing investments in the California office of Pathway, which manages $25 billion in assets through its funds of funds. Her data-intensive presentation was entitled, “Venture Capital: We Weathered the Storm, Here Comes the Sun.” . In particular, Maliwanag addressed the controversial Kauffmann Foundation study. That 51-page report, released in May, analyzed the investments Kauffman made in nearly 100 VC funds over 20 years and concluded that “the limited partner investment model is broken,” because LPs “invest too much capital in underperforming venture capital funds on frequently mis-aligned terms.” The result, at least for Kauffman, is that 62 out of the 100 venture funds it backed “failed to exceed returns available from the public markets, after fees and carry were paid.” . Maliwanag praised Kauffman for releasing the report, but noted that Pathway’s analysis of its own portfolio of venture funds reached different conclusions in some cases. “It really is incumbent on every investor to assess their specific portfolio and their organization’s resources and not accept some of the conclusions of the Kauffman report out of hand or accept blindly anything they read in the headlines,” Maliwang told the audience. . For example, while Kauffman found that its larger funds under-performed its smaller funds, Pathway looked at a portfolio of funds similar to Kauffman’s and “couldn’t find any evidence of that,” she said. “We believe fund performance isn’t related to fund size. It’s really determined by the quality of the manager.” . Pathway, established in 1991, is one of the world’s largest private equity fund of funds managers, with about $25 billion under management. The firm maintains a database of 8,000 funds raised over the past 30 years, which Pathway says gives it “a unique perspective on the asset class.”

Four LPs talk about why they're bullish about venture funds and what they're looking for at Thomson Reuters' Venture Alpha East 2014 conference in New York. The panelists are Mark Regal, Managing Director of Mililu Inc., Hunter Somerville, Senior Associate at Greenspring, Federico Schiffrin, Senior Vice President at Unigestion (US) Ltd and Roland Reynolds, Managing Director of Industry Ventures LLC. . The panel is moderated by Joanna Glasner, Senior Editor for Venture Capital Journal. . Video date: March 27, 2014

New Enterprise Associates charges unusually low fees by venture industry standards but takes a higher-than-typical share of carried interest from returns on successful investments, Managing Director Peter Barris told attendees at Thomson Reuters’ PartnerConnect East 2013 conference in Boston in April 2013.   While emerging venture managers often make concessions on fees and carried interest, established players have a history of writing their own rules. Some charge fees above the industry-standard 2 percent. Others seek a share of carried interest greater than the industry norm of 20 percent. A few do both.   For New Enterprise Associates, known for raising some of the largest funds in the venture industry, it’s all about carry. For some time, the firm has made a practice of charging unusually low fees by venture industry standards and taking a higher-than-typical share of carried interest from returns on successful investments, Barris said.   Barris says the practice is meant to align interests of general and limited partners in the fund, with the message to LPs being that GPs won’t make big returns unless they do, too. Additionally, Barris says, NEA makes an effort, where feasible, to pay back fees, which it essentially sees as a loan.   That said, Barris did not recommend dipping below the 2% management fee or upping general partners’ share of carry as advisable for the venture industry at large. For smaller funds in particular, he said, the fee is necessary to cover the operational costs of running the firm. “When you’re an early stage firm, there’s a direct correlation between fees and the cost of operating the fund,” he says. Once you’ve been around longer, however, there’s more of a disconnect.   Overall, Barris says NEA’s long-term strategy has been to take an institutionalized approach to venture investing. While many firms build their reputation around high-profile partners and their compensation strategy around rewarding top performers, NEA pays its general partners the same amount. The idea, Barris says, is to create a culture in which “if I’m a GP, I care about someone else’s deal as much as I care about my own.”   The other notion behind the strategy is to establish NEA as a firm that can outlast the comings and goings of individual partners and operate on a large scale. The thinking there, Barris says, is that NEA’s partners have long believed the venture business is likely to go the way of other industries like banking, in which there are very large, full-service establishments and smaller boutique firms. Venture fundraising data from the last couple of years seems to support that idea, with a concentration of capital in the hands of a few large, established firms.   Another way the firm tries to institutionalize its operations, says Barris, is through its advisory board, which is made up of many of its largest LPs, as well as some independent advisors. The board functions much like one at a venture-backed company, he says. Every fall, for instance, the firm presents its budget to the board, outlining plans for spending on salaries, travel and other expenses.   While Barris didn’t point to any recent major changes in fund terms or firm processes, he did indicate a shift could be in the works if carried interest becomes taxed as income, as the federal government has long been considering. The current tax treatment of carried interest as capital gains, he said, definitely affects how fund terms are structured.   By Joanna Glasner   Note: This story first appeared on peHUB on April 8, 2013

Founded in 2009, Google Ventures has already become a notable force in early-stage venture investing. With an annual fund allotment of $300 million, the team invests in startups from a variety of sectors. Google recently made investments in music service TuneIn, recommendations site Luvocracy and aircraft technology provider Airware. . Karim Faris, general partner of Google Ventures, leads the firm’s investments in enterprise software, big data and security. . Faris sat down for a video interview with Venture Capital Journal in May 2013, in which he talked more about his investment strategies. . Faris's portfolio companies include ClearStory Data, RetailMeNot and DocuSign. Faris, who used to be on Google’s M&A team, is not focused on finding companies that could be bought someday. Instead, Faris says Google Ventures enters an investment with “the mindset that we’re building a self-sustaining standalone company that has prospects of being a public company one day.” Faris says that strategy increases the odds of providing better returns for the investors and entrepreneurs. . Going forward, Faris says he is enthusiastic about enterprise software, an industry which has seen many successful IPOs as of late. Faris says enterprise software is “making things more accessible more usable and cheaper,” adding that the sector is “ripe for disruption.” . However, regardless of the investment, Faris, like other venture investors, says it ultimately comes down to backing the right team. When deciding whether an investment is worth it, he asks, “Is the problem that they’re solving an aspirin or a vitamin?” You’ll have to watch the video to find out what he means. . By Katie Roof, contributor, Venture Capital Journal . This story first appeared in Venture Capital Journal in June 2013

Madison Dearborn Partners plans to begin fundraising for its next fund later this year, probably in the second half, said Chairman John Canning. . Chicago-based Madison Dearborn will seek no more than $4 billion for its seventh fund, said Canning, who spoke [on June 24] at the Buyouts Midwest conference being held in Chicago. “We will definitely be in the market shortly,” Canning said. . The $4 billion is roughly the same amount as that raised by Madison Dearborn’s last pool, Fund VI, which collected $4.1 billion in 2010. Fund VI is generating a net IRR of 19.1 percent as of Sept. 30, according to the Regents of the University of California. . Fund VI, which is 80 percent committed, is more indicative than its predecessor of how Madison Dearborn is doing now and what the firm hopes to do with its seventh pool, a source added. . “Our investors know we are about to raise a fund,” Canning told peHUB on the sidelines of the conference. . Madison Dearborn got away from its roots of investing in mid-market companies, Canning said during the conference. The firm has returning to its “knitting” and will seek to invest $100 million to $400 million equity per deal, Canning said. The average investment will be $300 million, he said. Fundraising for the seventh pool will likely begin in the second half, he said. . The buyout shop has scored some notable exits recently. In March, Madison Dearborn agreed to sell Fieldglass, a provider of technology for procuring and managing contingent labor and services, to the big software company SAP. Madison Dearborn made 5x its money with the sale of Fieldglass, a Fund VI investment, Canning said. TIAA-CREF also inked a $6.25 billion buy of Nuveen Investments in April. The sale is expected to close by year end. . Madison Dearborn has been criticized for Fund V, which collected $6.5 billion in 2006. Fund V took part in several large transactions during the buyout boom, including the $7.3 billion buy of technology retailer CDW Corp in 2007, the $5.75 billion buy of Nuveen that same year and the $4.1 billion buy of Asurion, an insurer of tech devices, also in 2007. MDP’s fifth pool also invested in the $13.7 billion club buy of Univision Communications in 2006 and the $3.8 billion buy of VWR International LLC, a distributor of laboratory equipment, in 2007 for about $3.8 billion. . “We’ve owned up for the mistakes made with Fund V,” Canning said. He estimated that three deals—CDW, Nuveen and VWR—made up almost 45 percent of the pool. Fund V is generating a 6.79 percent net IRR as of Sept. 30, according to the Washington State Investment Board. . Madison Dearborn has been slowly exiting many of Fund V’s deals. CDW went public last year. The firm continues to own a stake but is selling shares. In May, CDW announced a secondary offering of 15 million shares. About half is coming from Madison Dearborn, which will have a roughly 25 percent stake after the sale and greenshoe overallocation option, according to regulatory filings. Univision is also reportedly in talks to be sold. . One deal Madison Dearborn isn’t interested in? Portillo’s Hot Dogs. Canning said he “likes” Portillos but is not interested in the Oak Brook, Illinois-based company. . Well known throughout Chicago for its hot dogs and Italian Beefs, Portillo’s Restaurant Group reportedly went up for sale earlier this year. The company has hired Jefferies to advise on the sale, press reports said. . News of Madison Dearborn’s fundraising was previously reported by Bloomberg News. . By Luisa Beltran, peHUB . This story first appeared on peHUB on June 24, 2014

Paul Carbone of Pritzker Group threw a bit of cold water on enthusiasm for co-investments in private equity, arguing that direct investments offer a better fit outside conventional fund structures, at least for family offices. . Family offices “like the asset class” but have run up against limited access to the best funds and other issues, said Carbone, managing partner at Chicago-based Pritzker Group Private Capital, at the PartnerConnect Midwest 2014 conference in June. . Citing a study by advisory firm Altius Associates released in March, Carbone said co-investments may contain a substantial risk of poor returns, even with a reasonably sized portfolio. While co-investments do avoid the conventional “2 and 20” fee structures of private equity funds, investors face “adverse selection” because they do not necessarily get access to the best deals. Their investment portfolios also become concentrated in too few investments, he said. . Direct investing is a superior strategy because it outperforms fund investments and significantly outperforms co-investments, he said. More than half of family offices with private equity holdings are taking part in direct investing and “more are interested,” he said. . --By Steve Gelsi, Senior Editor, Buyouts . A longer version of this story first appeared in Buyouts magazine. Subscribers can read the original version here. Not a subscriber? Click here to subscribe.

Sharing wisdom gleaned as a senior executive at HGGC after his years as a Super Bowl-winning quarterback for the San Francisco 49ers, Steve Young told private equity pros to huddle, embrace change and find out how good they could be at the PartnerConnect West conference Oct. 7, 2014.

Technology startups are enjoying a heyday in fundraising, but a scarcity of talent is driving a bidding war for superstars in Silicon Valley, according to a panel of venture capital experts. . Video date: March 19, 2011

In a world teaming with self promoters, Bijan Sabet comes across as a humble guy. . The Spark Capital general partner could certainly toot his own horn, but he lets his track record speak for itself. He led Spark’s investments in Twitter (valued at a reported $9.9 billion), Tumblr (valued at a reported $800 million), Stack Exchange, RunKeeper, Foursquare, Boxee, OMGPOP (acquired by Zynga last year for $180 million), and thePlatform (bought by Comcast in 2006 for a reported $80 million). . All that and he’s still just 44 years old. . In this video of his keynote at Thomson Reuters’ Venture Alpha East 2013 conference in Boston, Sabet explains why he remains bullish on consumer Internet deals, what he learned from serving on Twitter’s board, why Spark decided to go significantly bigger with its fourth fund, and the attributes that have led to success for young VC firms such as Spark, First Round Capital and Union Square Ventures. . Video date: April 4, 2013