Question: Why would an LP invest in a venture capital fund, but demand that the firm not publicly discuss the fund?
Answer: It wouldn’t.
Sounds obvious, but I had a moment of doubt while reading the lead story in this morning’s VentureWire (published by Dow Jones). It was about how Mohr Davidow Ventures has been ramping up its life sciences practice, and led with a news hook about how MDV had raised $600 million for its latest fund.
That would make sense, except that MDV actually closed the fund in August 2007. VentureWire acknowledged the timing, but still justified its newsworthiness by claiming the following:
At the request of a limited partner, members of the firm have not discussed the fund until now.
Wow. Well, wow if it were true. Which it isn’t.
I recall discussing the fund over lunch with an MDV partner earlier this year, and a firm spokeswoman confirms that no LP made such a request. MDV simply opted not to issue a press release about the final close, figuring reporters would just pick it up from SEC filings or MoneyTree reports. The reason for the misunderstanding is unclear, although perhaps the reporter got confused when told that MDV hadn’t been able to discuss active fundraising prior to the final close, due to SEC restrictions. Still, those would have expired last August.
Too bad really, because I spent part of the morning trying to figure out why an LP would restrict MDV from talking about its new fund. Really hadn’t come up with anything…