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REV: JULY 15, 2013
MATTHEW RHODES-KROPF
JOSH LERNER
ANN LEAMON
Iris Running Crane: December 2009
Iris Running Crane, HBS Class of 2010, shook the rain and soggy snow off her umbrella as she entered the lobby of Soldiers Field Park on a dark December night in 2009. “Oh the weather outside is frightful,” she whistled as she took the elevator to her apartment.
Back home on the Blackfeet reservation in East Glacier, Montana, the wind would be howling down from Canada, driving temperatures well below zero. Tonight, though, Iris had more important things to think about than comparative climatology. Through a combination of preparation, experience, hard work, and, she admitted, sheer
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While LBO returns had outpaced those to venture capital during the 1980s, the pattern reversed itself in the ‘90s, only to change again in 2000 and in
2007.
Starting in the early 2000s, LBO firms had enjoyed ready access to low-priced debt and had generated average returns of 15.6% between 2003 and 2006, compared to 9.9% for the Standard &
Poor’s index and single digits for VC.3 Accordingly, LPs flocked to invest in LBOs, which raised $344 billion in 2008, while VC funds raised only $63 billion.4 Records fell for largest LBO deal (the acquisition of Texas utility TXU by Texas Pacific Group, Kohlberg Kravis Roberts, and Goldman
Sachs for $45 billion)5 and largest fund raised (Blackstone’s $21 billion Corporate Private Equity Fund
V). In fact, the co-founder of the Carlyle Group lamented, “We should have done every single deal everywhere in the world [in 2005 and 2006]. Every deal worked.”6
VC firms, which had spent the first few years of the 2000s recovering from the telecom and
Internet bubbles, had little to crow about despite such high-profile successes as Google’s 2004 initial public offering (IPO). Fundraising recovered from 2002’s nadir of $12 billion, but comparisons to the anomalous activity of 1999 and 2000 made for a sobering return to reality.
Figures for LBO activity in 2008 indicated the peak of a cycle, and the bust followed shortly thereafter, as the global financial crisis shut off the supply of cheap debt for LBO deals. Such loans
that
3-17. How many times has the company been sold? When and by whom to whom?
billion USD (2). In 2016 September, they are passed by JP Morgan and went down to second
The beginning of the crisis: From the early to the mid-2000’s, high-risk mortgages became available from lenders who funded mortgages by repackaging them into pools that were sold to investors. New financial products were used to apportion these risks, with private-label mortgage-backed securities providing most of the funding of subprime mortgages. The less
Before now, only entrepreneurs in a few select areas with the right connections could be funded, and only then if their vision matched a VC or Angel Investors criteria or schedule. Consequently, only a few thousand VCs in the world could decide which entrepreneurial
Furthermore, those banks who invested in collateral debt obligations, a lot of whom before 2007 (particularly investment banks) sold off senior CDOs but kept junior ones for profit (8). However, the values of these CDOS plummeted and as a result banks with large amount of junior CDOS were in a bad position therefore many investment banks were in
Goldentree Asset Management, Avenue Capital Group and Goldman Sachs 6,000 (full and part-time) (2011) [1] [1]
Goldentree Asset Management, Avenue Capital Group and Goldman Sachs 6,000 (full and part-time) (2011) [1] [1]
This document does not constitute buying advice or offer and should not be relied upon in connection with any contract, purchasing, or investment decision. The information contained in this document is privileged and confidential, intended for use during personal pre-ICO stage, for the eyes of friendly investors
Moss Services, over a billion in assets, and Jo Inc. with two and a half million in
Near-term liquidity at an attractive price, without the dilution of further financings and an IPO
The first event that changed the landscape in the venture capital business took place in 1970. During this year the Department of Labor changed the rules and allowed pension funds to invest their money in venture capital funds. The second event took place in 1978, when a new law was passed in Congress that allowed for capital gains to be taxed at a lower rate than regular income. These two events helped to take the venture capital business from the hands of a few wealthy families in the United States to large institutional investors, thus releasing large amounts of risk capital ready to be poured into startup companies. Additionally, a lower tax rate for capital gains motivated all kinds of investors to try their hand at entrepreneurship, thus increasing the cash flow into small startup companies. Moreover, a large percentage of the risk capital available during the 1970’s
gave LinkedIn a market capitalization of $8.9 billion: 37.5 times its 2010 revenue and 592 times its
Finally, the results showed that high asymmetric information companies use more short-term debt than long-term debt to finance fixed asset investments. Further, companies with high potential debt agency costs used more equity and less long-term debt for fixed asset investment financing. The study results
To put it in perspective, that is about 4.4 times as much as Microsoft raised in its IPO. There are other cases of ICOs raising a significant amount in an astonishingly short period of time, such as Bancor Protocol raising $153 million in under three hours or former Mozilla CEO Brendan Eich raising $35 million from an ICO in 30 seconds.
billion (Exhibit 1 provides a summary of financial information). After a decade of rapid growth,