Recently, while taking Professor David Wessels’ excellent Venture Capital and the Finance of Innovation, I was reminded of one of the fund terms that often ended up being carefully scrutinized and negotiated by limited partners: the recycling provision. I’ve seen various forms of recycling provisions in practically every post-2008 vintage private equity, real estate, infrastructure, and venture capital fund that I have seen in the six years that I worked with Partners Group’s fund-of-funds arm; I would go as far as to call them pretty much ubiquitous in the industry.…

One of the most interesting—to me, at least—sessions at the 2015 EmTech MIT conference was a panel on energy, involving experts in solar, battery storage, and nuclear energy. Indeed, I would say this, coupled with the artificial intelligence and robotics panels, were the panels I enjoyed the most. Of them, again due to personal interest and background, the nuclear energy session led by Leslie Dewan of Transatomic Power was particularly interesting for the following reasons:…

I recently had the pleasure of listening to a panel sponsored by Wharton Fintech discussing investments in the fintech sector. Also, a friend asked me recently about what companies in the fintech sector I thought were particularly interesting. It seems apposite, therefore, to set out some of my thoughts in a more structured and public form.…

First, it is important to note that the liquidation preference is not just a tool of venture capitalists. It shows up in growth capital private equity as well. There are a number of good resources that have described the liquidation preference, including a blog post by Brad Feld, a post on Venture Beat, and a blog post by Ryan Roberts at Startup Lawyer.…

More pertinent, why should a fund sponsor care? The short answer, is “because prospective limited partners care”. A fund’s tax structuring is often the subject of fairly extensive due diligence and negotiation by prospective limited partners, and in extreme situations where the fund sponsor cannot accommodate a prospective investor’s tax structuring requirements can result in that investor declining to make an investment.…

In light of a few conversations that I have had with various people who are interested in this space, I thought it would be good to write a brief overview of the categories of investors that a fund sponsor will typically seek to be LPs in their fund. It will serve as a primer to some of the considerations—including some legal considerations arising from the Investment Advisers Act of 1940(the “AA”) and the Investment Company Act of 1940(the “ICA”)—that anyone involved in the industry ought to consider when dealing with fundraising for a PE/VCfund that is subject to U.…

I have learned a lot about thinking about the future through reading (and to a much lesser degree writing) science fiction. Science fiction, particularly “hard science fiction”, is principally about extrapolating the future from current scientific knowledge. It cultivates in its practitioners an awareness of potential avenues for future development. To write good hard science fiction one must be aware of the state of current science, and the ways in which such science could be expressed in technologies and how such technologies might affect individuals and societies.…

Now, I should emphasize that my familiarity with venture capital is somewhat less extensive than my familiarity with private equity, infrastructure and real estate. I have some familiarity with it, having followed the sector in the trade publications and by speaking with local venture capitalists, but it was not an…

First, let’s look at the private equity fundraising landscape in Asia. A number of well-known private equity firms raised successor funds, including CVC Capital Partners, The Carlyle Group, TPG Capital and Affinity Equity Partners. The success of these well-known sponsors follows the immense $6 billion Asian Fund II raised by Kolhberg, Kravis Roberts & Co.…

Valuing Contributions First, let’s look at valuing contributions to the startup. These can come in the form of cash, intellectual property, equipment, real estate, or past and future services to the startup. Cash is easy to value. It is the other contributions that are hard. Real estate, off-the-shelf equipment, and other tangible property are the next easiest to value, as the founders can find the market value by having it appraised by expert valuers or by finding the market value of equivalent equipment or property.…