Thursday, February 26, 2009

$26 Million In, $3 Million Out

This is one of those deals all the VCs involved would probably rather forget: putting $26 million into Tizor Systems of Maynard ($8.3 million as recently as last February), and then selling it to Netezza for $3.1 million in cash. Tizor makes software for securing and auditing the information stored in data centers.

Who was involved in this one? Longworth, Navigator Technology Ventures, Common Angels, and Masthead Venture Partners locally, and Hummer Winblad on the West Coast, according to PEHub.

I wrote earlier this month about the rising number of these fire sales of struggling tech companies. And a while back, I wrote about firms like Masthead and Longworth trying to raise new funds. Neither has.

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Sunday, October 28, 2007

Today's Globe column: When VC Firms Go Back to the Well

Today's Globe column is about the fund-raising process that VCs have to go through every few years. It focuses on one new fund, DACE Ventures, and one older fund, Masthead Venture Partners, but also mentions a few others, including .406 Ventures, Kepha Partners, Longworth Venture Partners, and New Atlantic Ventures (formerly DFJ New England.)

Here's the opening:

    Entrepreneurs visiting a venture capitalist to ask for money sometimes feel like kids asking Dad for an allowance. Ordinarily, they're not in the power position.

    But every few years, Dad has to hit up Grandpa for a handout. When VCs spend through a given pool of money, they return to the investors who supply them with cash to manage the pension funds, university endowments, and wealthy individuals whom they refer to as "limiteds," or limited partners.

    Just as fund-raising for entrepreneurs is a pivot point at which businesses will get a jolt of juice or struggle to hang on - fund-raising is a moment of truth for venture capitalists, too. Some will keep on truckin', and some will run out of gas.

    "There's a tremendous amount of weeding out that takes place when younger firms go back and try to raise more money," says Josh Lerner, a professor at Harvard Business School.

Video is below -- and here are two paragraphs that got snipped from the end of the column in the edit process (happens all the time.)

    Longworth partner Peter Roberts says the firm hasn’t officially drafted the private placement memorandum that it’ll use to raise the next fund, but says he’s optimistic about the reception they’ll get. “We’ve had a pretty good run over the past 18 months or so,” he says.

    Lerner, from Harvard, and a collaborator at MIT, Antoinette Schoar, have been gathering data that shows that as VC firms get older, raising their sixth, seventh, or tenth funds, their financial performance improves markedly. But the challenge, he says, is surviving that long.

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