Hank Heyming › Comments

"Yum ... meatloaf." - Hank Heyming

"Crazy -- design through meatloaf. But doesn't this verify my basic theory that design is everywhere?" - Hank Heyming

"Crazy -- design through meatloaf. But doesn't this verify my basic theory that design is everywhere?" - Hank Heyming

"Crazy -- design through meatloaf. But doesn't this verify my basic theory that design is everywhere?" - Hank Heyming

"This is a great first post. I really like it a lot." - Hank Heyming

"This is a great first post. I really like it a lot." - Hank Heyming

"This is a great first post. I really like it a lot." - Hank Heyming

I personally don't like doing a discount on conversion -- it has a negative effect on liquidation events as the angels would be entitled to take more money off of the table than the VCs. Better to use warrants which can be designed to have same net effect without the issue. - Hank Heyming

"Looks like a useful thing." - Hank Heyming

"Looks like a useful thing." - Hank Heyming

"Droughts are just acts of God, about which nothing can be done, right? Wrong. Scientists might be able to provide a partial solution — if only federal policymakers and local regulations permitted it." - Hank Heyming

The venture capital game has changed, yet many VCs are still using an old, outdated playbook - Hank Heyming

Privately held biotech companies worry about losing negotiating leverage with bigger partners if it's perceived that they're running short on cash. Duncan Higgons of Archemix suggested that many big pharma companies have created their own lists of distressed little biotech companies, and are planning to do some "bottom-feeding" in this environment, buying them (or certain assets) at a discount. - Hank Heyming

"However, there has been concern that nano-scale silver particles may get into the water supply and potentially disrupt benign bacteria at water treatment plants." - Hank Heyming

A nice glimpse into the egalitarian beginnings of the internet. - Hank Heyming

A good look at the Newspaper debate - no answers (I'm reposting to FF to check if the twitter feed is working) - Hank Heyming

"VCs fantasize about the day a vibrant small and mid-cap tech IPO market will once again exist. Let's hope this fantasy becomes a reality. In the mean time, I expect more and more people - especially if they've read Nicholas Taleb's Fooled By Randomness and The Black Swan - will realize that making early stage VC investment decisions based on complex forecasting exercises is - well - foolish." - Hank Heyming

"The invention of the Internet was a reverse Black Swan—unexpected, extreme impact, and inevitable in retrospect. More generally, the positive Black Swans are the technological innovations which could not have been anticipated ahead of time, and which work so well that we have experienced 200 years of rising living standards, despite the downward Malthusian pressure." - Hank Heyming

"Typically, for venture capital and private equity funds, the fund itself is organized as a limited partnership (an LP). Each investor in the fund is a limited partner. The manager of the fund (i.e. the general partner) is typically organized as an LLC. Occasionally, a smaller PE/VC/Angel fund will organize itself as an LLC, but this is uncommon because certain types of investors prefer the LP form for tax reasons (ex. pension funds, foreigners). Almost all larger funds want these types of investors and so they use the LP form. One other quick note, the LLP form is entirely different from the LP form. LLPs are legally reserved for professionals, such as accountants, lawyers, architects. So you shouldn't see them used by anyone else. Quite a confusing alphabet soup!" - Hank Heyming

Mark Reiboldt continues Fred Wilson's discussion re. VC returns and the maturity of the technology sector. Discusses relative value of VC as an asset class - Hank Heyming

"Typically, for venture capital and private equity funds, the fund itself is organized as a limited partnership (an LP). Each investor in the fund is a limited partner. The manager of the fund (i.e. the general partner) is typically organized as an LLC. Occasionally, a smaller PE/VC/Angel fund will organize itself as an LLC, but this is uncommon because certain types of investors prefer the LP form for tax reasons (ex. pension funds, foreigners). Almost all larger funds want these types of investors and so they use the LP form. One other quick note, the LLP form is entirely different from the LP form. LLPs are legally reserved for professionals, such as accountants, lawyers, architects. So you shouldn't see them used by anyone else. Quite a confusing alphabet soup!" - Hank Heyming

"Typically, for venture capital and private equity funds, the fund itself is organized as a limited partnership (an LP). Each investor in the fund is a limited partner. The manager of the fund (i.e. the general partner) is typically organized as an LLC. Occasionally, a smaller PE/VC/Angel fund will organize itself as an LLC, but this is uncommon because certain types of investors prefer the LP form for tax reasons (ex. pension funds, foreigners). Almost all larger funds want these types of investors and so they use the LP form. One other quick note, the LLP form is entirely different from the LP form. LLPs are legally reserved for professionals, such as accountants, lawyers, architects. So you shouldn't see them used by anyone else. Quite a confusing alphabet soup!" - Hank Heyming

Newsroom cultures need to change? You don't say! - Justin

Where there is not vision, the people perish. It is really unfortunate. - Hank Heyming

"Jennifer -- I appreciate your questions. You are exactly right that there is no federal or SRO prohibition on doing an initial public offering as an LLC. You are also correct in noting that some LLCs are publicly traded, OchZiff is another. However, LLCs are creatures of state laws and there are multiple states that do not allow free exchange of LLC interests which would make an IPO impossible without first converting to a different entity/state. Even if you formed your LLC in a state that has an IPO friendly set of statutes, in my experience you would still have a practical near impossibility because of the underwriters. It is hard enough to get underwriters interested in a start-up IPO, it would take an extraordinarily exceptional circumstance to convince them to underwrite anything non-standard, e.g. an LLC. I guess my final thought is, why ratchet up your level of difficulty as a start-up? If you know you are creating a company that will need VC and that hopes someday to IPO, why..." - Hank Heyming

"Perhaps the relatively lower VC returns being seen in the IT sector are emblematic of a maturing industry? On the one hand, web/IT startups need a lot less capital to get going (giving rise to the micro VC niche), on the other hand, the funds have gotten so big they can't put enough capital to work in the really disruptive corners. Plus too much competition among the mega-funds drives down returns. I think you are right that there will always be room for the talented VCs in this sector, but the shakeout seems to already be under way. Plus, there are simply too good of returns that can potentially be realized in other less mature sectors (cleantech/biotech/nanotech) and other less mature geographies." - Hank Heyming

One of the worst kept secrets in private equity. LPs are simply not willing/able to meet capital calls right now. - Hank Heyming

"Perhaps the relatively lower VC returns being seen in the IT sector are emblematic of a maturing industry? On the one hand, web/IT startups need a lot less capital to get going (giving rise to the micro VC niche), on the other hand, the funds have gotten so big they can't put enough capital to work in the really disruptive corners. Plus too much competition among the mega-funds drives down returns. I think you are right that there will always be room for the talented VCs in this sector, but the shakeout seems to already be under way. Plus, there are simply too good of returns that can potentially be realized in other less mature sectors (cleantech/biotech/nanotech) and other less mature geographies." - Hank Heyming

"Perhaps the relatively lower VC returns being seen in the IT sector are emblematic of a maturing industry? On the one hand, web/IT startups need a lot less capital to get going (giving rise to the micro VC niche), on the other hand, the funds have gotten so big they can't put enough capital to work in the really disruptive corners. Plus too much competition among the mega-funds drives down returns. I think you are right that there will always be room for the talented VCs in this sector, but the shakeout seems to already be under way. Plus, there are simply too good of returns that can potentially be realized in other less mature sectors (cleantech/biotech/nanotech) and other less mature geographies." - Hank Heyming

"In my experience -- the key to this question is whether the start-up expects/wants to raise VC. To make a VC investment in an LLC requires an entirely new set of forms developed from scratch. The classic rights, preferences and privileges of a VC preferred stock investment do not translate easily or comfortably into the LLC format (although, admittedly it can be done). Developing these scratch documents is a costly endeavor (and obtaining venture capital is not cheap anyway) -- it is unlikely at best that a VC will want to bear these additional costs. Also, an LLC is not able to issue stock options to its employees with the same tax advantages as a corporation. And the manners of obtaining liquidity in an LLC (through distributions or liquidation) do not translate easily into the VC world and have potentially different tax treatment. For example, the flow-through tax treatment of an LLC could potentially cause problems for the limited partners of the VC. Finally, and perhaps most..." - Hank Heyming

Allegis Capital and a handful of boutique firms are eyeing new investments amid a crisis of confidence among Silicon Valley VCs - Hank Heyming