风险投资公司的不同形态解析课件.ppt

1、Private Equity and Venture CapitalLecture 2:different types of VC firmsVC firms and other investors There are a total of 7 different types of VC firms in additional to angel investors:private independent venture capital partnerships private small business investment companies public venture capital

2、companies venture capital subsidiaries of large corporations state venture capital funds university related incubators&private sector incubators investment banking firmsPrivate independent VC partnership Limited partnership:tax benefits 10 years life,2 year extension Two types of PIP:wealthy familie

3、s-venrock associates,institutional investors-KPCB,two types of funds:usually$2-5 million traditional vc funds-investing in seed,or startups turnaround or LBOsVC firms and VC fundsVC FirmVC fundVCfundVCfundVCfundVCfundVC limited partnership 风 险 投 资 的 运 营limited partnerinvst 99%profit 75-80%general pa

4、rtnerinvst 1%profit 20-25%VC limited partnershipthe VC fundLPGPGeneral Partners:How their Income structured Angel investors:managing and investing their own money Venture Capitalists-GPs:managing and investing others money GP income:management fees:1.5-2.5%of the money they managed,offices,telephone

5、s,computers,other costs Carriage:carriers-20/80.Now,its higher:25/75 common.Even 30/70VC firms and VC fundsVC FirmVCfundVCfundVCfundPC-2PC-3PC-4Pc-1PC-5The agreement of PE partnership-1 Fund sizes,investment maximum and minimum.Number of investors,GP contributions takedown schedule:both GP and LP do

6、 not like to pay the committed capital immediately first amount to be disbursed at closing:10-33%,the dates of the subsequent payments may be set in the agreement.The agreement of PE partnership-2 The control of LP:if 51%+LP agree can replace a GP GP cannot invest in area beyond their expertise no f

7、ault divorce the control of GP:if LP pay late,a late fee is charged condition on LPs share transfersThe agreement of PE partnership-3 Management of the fund size on any one investment,prevent GP from attempting to salvage a poorly managed investment GP cannot have any share before LP get back their

8、original capital,GP share as a call option percentage of the fund can be invested in one deal limit GPs attempt to leverage the fund,limit the debt to a percentage limit GP to coinvest between funds.GPs attempt to salvage the troubled investment limit GP to re invest profitsThe agreement of PE partn

9、ership-4 GP activities-5 restrictions 1.Restrict GP to invest personal fund into the firm,may pay more attention,may not like to pull out if necessary 2.Restrict on GP to sell their shares of the fund to others,reduce the incentive of the GP to monitor 3.Restrict on future fundraising until a%of fun

10、d invested:additional fund require additional attention of the GP 4.Restrict on GP for their other activities 5.Restrict on hiring new GP with less experiencesThe agreement of PE partnership-5 Types of investment limited size in any given investment class cannot invest into public securities cannot

11、invest into other PE funds cannot invest into areas with little expertise restrictions on foreign investment restrictions on LBOSBICs Created in 1958,licensed and regulated by SBA invested companies,ie.Apple,federal express,intel,cray research,etc.because of SBA,investment from SBIC is more restrict

12、ive than other VC some of the SBIC invest as equity,others as debt government provides loans three times of SBICs paid in capital four times of it if they are MESBIC-minority enterprise small business investment companiesPublic venture capital companies Public vs private companies-different concepts

13、 Some Big public vc firms called BDC-business development companies some are SBICs because of they are public companies;different tax treatment than other VC have to concern their stock prices publicly available informationBenefits to corp VC subsidiary-1 Characteristics:only One LP!Derive attractiv

14、e financial returns develop technology licensees,manufacturing rights,supplier agreements control supplier uncertainty identify flourishing industries spin off businesses generate new products learn the dynamics of a particular marketplace gain exposure to new markets and technologiesBenefits to the

15、 corp vc subsidiary2 Product marketing rights:small firms are often happy to have larger corp sell their products.Acquisition candidates:GE wanted to acquire a CAD/CAM co,but bit low,later,it acquired a similar co.a window on technology the most notable benefit that large corp invest in small firm i

16、s the window to gain new technological development the last decade,the biggest 10 AUS electronics corp did this.Benefits to the corp vc subsidiary3 Motorola focus on looking for technologies that are going to have a major impact on our core businesses.Just as Cisco tends to acquire entire products,w

17、e tend to look at technology suppliers.These startups feel that the VCs dont understand their technology.High tech companies,on the other hand,may be able to understand the genius of what the entrepreneurs are doing.These companies have their own engineers who are experts in the field.Benefits of co

18、rp vc to investee co An established customer base credibility with customers and suppliers credibility with bankers and other financial sources general assistance in managing the business a merger partner additional capital a flexible financing package investing in its employees to start their own c

19、o.sign a collaborative research contractProblems in corp vc subsidiary Contradictory inv goals of the vc and the present corp unwillingness on the part of the vc to invest in 7-10 yrs.Conflicts of interest and legal problems inconsistent goals of the corp and the entrepreneur of the new co.limited i

20、nvestment opportunities the difficulty of acquiring the funded company complication involved in obtaining tech from the funded company differences between organizational requirement for the corp and the investment portfolio.State venture capital funds Originally from Massachusetts,(such as CDFC-comm

21、unity development financial corporation)Connecticut,later other states state funded to promote high tech,startups,and other socially beneficial projects state government promote the programs by private sources will get tax benefits state money promotionsUniversity related incubators Incubators:provi

22、de low cost laboratory and office space,state-of-the-art technical expertise and equipment,administrative supports,computer and library facilities.Contacts with the vc,bankers,government officials.Sharing ideas and contact among entrepreneurs 1984,40 incubators in the states,now about 400,especially

23、 in PA,IL,NY.I.e.University city science center in Philadelphia.Affiliated with 28 universities and colleges in PA.To house 100 small co in its I million squ ft space.Investment banks and boutiques Investment banks usually invest in large amounts boutiques in a smaller scales:$1-10 million commonly

24、used arrangement in equity transactions is the so-called lehman formula-5-4-3-2-1:5%for the first million dollars of capital raised,4%of the next,and so on.Ex.The fees for a$3 million deal would equal to$120,000FVP:background The existence of intermediaries b/w GP,LP Angels investing$20-30 billion V

25、enture Capital Partnerships why families would like this idea:tax benefits:39%income tax,but 28%capital gain tax,14%if invested into small business and long term federal inheritance taxes,50%on individuals$18 million assets.Gifts to children$1 million 1992,3%of the families with$1million net assets

26、control 44%of US household financial assets Fox venture Partners A$100 million fund:fund of fund concept sources of fund:wealthy families have to commit at least$2 million why vc like this idea:1.The LPs may be valuable information source 2.Avoiding vc dependent too heavily on institutional investor

27、s 3.Less restrictive terms from families 4.Want to involve in subsequent round of investmentsFox Venture Partners FVP intended to invest$5 MM each in 20 funds 35%well known funds 40%specified by region or industry 20%new funds 5%international funds this is different from buyout funds($20 MM in minim

28、um)1994,100.4 billion in PE,$32 billion in VC,the rest:5%mezzanine,2%distressed debt purchase 362 fund in PE,among them,194 VCFVP:history of fund of fund Gatekeepers managed$18 billion of PE funds,about 18%of the total they provide advisory services to some clients they serve as linkage between the

29、VCs and the startups providing the first screening for the venture capital firms,charge a service feesThe Concept of Fund of FundVC FirmVCfundVCfundVCfundVC-2VC-3VC-4VC-1VC-5Fox Venture Partners The resistance from the wealthy families:1.Information asymmetries,the one who need the service may not a

30、ppreciate it.2.Agency problems,family financial managers 3.Lack of resources,not using a lead investor,limited resource to market the idea.4.Ineffective marketing.Not show their track records 5.The structure of the proposed incentive scheme.The size of the proposed compensation.Fox Venture Partners

31、The challenges that FVP faces:the educational role:the FVP will teach the families about the funds potential competitors are lots:on the concept of funds of funds since families now hired their financial managers,the similar agency problems in the institutional investors appeared as wellYale Univers

32、ity endowment origin Yale was established in 1701 by 10 Connecticut clergymen.The endowment started 1818,divinity school to offer theological instruction,several alumni made large gifts.Yale use the money on land and building,and to invest in corp,railroad bond,equities by 1899,the endowment reached

33、$5millionYale U.endowment history 1930,yale endow held 42%in equity,other U had only 11%later 1930,then treasurer,Tighe decided to reduce equity%but stock market booming in 1950-60,end of 1960,the trustee wanted to increase the equity portion and to contract out the portfolio management to an outsid

34、e advisor by bear market:1969-1979,yales endowment declined by 46%Yale investments office-1997 David swensen:15 employee office investment philosophy:different from other U.David likes Keynes maxim:worldly wisdom teaches us that it is better for reputation to fail conventionally then to succeed unco

35、nventionally.But he is willing to take the risk of being different.Not following the crowd.David Swensen s philosophy-1 Strongly believed in equity:whether public or private equities are real stream of income,bands are a contractual sequence of nominal cash flow$1 invested in end of 1925 in corp sto

36、cks worth$1371 by end of 1996,but only$34 in T bonds,$14 in T bills hold a diversified portfolio,risk can be reduced by diversification rather than time the marketDavid Swensen s philosophy-2 Increasingly seek opportunities in less efficient markets:why?The difference b/w 25 and 75th percentiles:fix

37、ed income fund mg:minimal common stock mg:3%per annum private equity mg:15%per annum to utilize outside managers for all but most routine or indexed investment the managers have the max autonomy but the selection process is long and careful incentives:not by the size of the management but by the performance