Speaking at the
Argyle Executive Forum's 2007 Leadership in Venture Capital Conference, Sanford Miller, a general partner at Institutional Venture Partners spoke on late-stage venture capital investing and what exits will look like in the second half of 2007.
The private equity credit crunch
Miller said that while venture firms have been fairly isolated from the fallout of the pull-back in easy credit for LBO deals, its effects have been felt indirectly. Among its most immediate results has been that the private equity shops awash in cash that had been moving into late-stage VC investing have lost interest. Additionally, when credit was easy, late-stage companies had been getting pretty good terms on venture debt, so they had started to move away from equity; that trend is reversing.
The exit environment
- Miller feels that there is now a sense of balance when it comes to exits from portfolio companies, as IPOs are again a viable alternative to M&A.
- In the first half of the year, the market showed its willingness to absorb a number of unprofitable companies that have great promise, which worries him because the discipline of having profits is good for VC-backed IPOs overall.
- There's clearly a sense of caution now considering the recent market turmoil, but the stock market is still open to mature, seasoned companies.
Miller finished with the prediction that the M&A will continue to look strong for the second half of 2007 and on an on-gong basis. —
George White
See The Deal's May 17 story on IVP's $600 million fundTags: vc, venture+capital
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