2008 9
What would I do if I was Danny Rimer or Mike Moritz?
Published by MartinVarsavsky.net in General with No Comments
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Both Danny Rimer of Index Ventures and Mike Moritz of Sequoia are my partners in Fon. At the same time I am an investor in Danny Rimer´s fund. What I would do if I was a top tech VC? (I consider Mike Moritz the top tech VC in USA and Danny Rimer the top tech VC in Europe). I would buy stocks of the listed companies who tend to buy the companies I invest in. If that requires consent from my investors I would try to get it. Why? Because Cisco, Nokia, Google, Yahoo, Apple, are all down over 50% and frankly I see a much better opportunity for Danny, Mike and all other VCs to make money in the next 18 months buying shares in these companies than investing in the next start up. Plus these companies need somebody who wants to invest with them now! I would put half of the remaining funds in the top tech stocks and the other half in start ups further rounds. As far as new start ups, I would get out of that business altogether for a while. We know what happened to Bush we chose to go into Iraq before succeeding in Afghanistan. Overstreching is bad.
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Jonathan on October 9, 2008 ·
Unfortunately VC funds -as any closed blind fund- have a specific mandate and more likely than not their LPs will not allow them to do so. LPs could argue that on they can do that on their own without having to share the upside (carry).
Gustavo L on October 10, 2008 ·
There is a set of investors that does just this. They are the private equity groups. They acquire large stakes in publicly traded companies NOT venture capitalists. The PE guys will be making a ton of money in the next couple of years.
great article to read about the YoY funds raised for PE.:
http://blogs.wsj.com/deals/2008/10/07/pe-fund-raising-still-going-strong-buyout-shops-not-so-much/
Why not return all the cash on FON’s balance sheet to the investors?
Jeff on October 10, 2008 ·
Hi Martin,
Wouldn’t it be better for Danny Rimmer and Mike Mortiz to shutdown their money losing portfolio companies who are not going anywhere even after B & C rounds, and invest that money in new & more startups?
This in fact will increase ROI potential, right? Wouldn’t you do the same if you were Danny Rimmer or Mike Mortiz?
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Julien on October 9, 2008 ·
Good point!
Plus, the bonus is that if, as a VC you end up having a significant share in a big co -or, even better, a seat at the board, you have probably find a nice way to “guarantee” exits for the startups you invested in!
Of course, there would be a huge conflict of interest here, so VC will never do that -not they’ve never done it!…-. … oh well!