Scaling up

New York firm Millennium Technology Ventures has hired a new chief financial officer: Jonathan Glass, formerly vice president of finance and controller of Venrock Associates. Glass joined the firm in early May, replacing outgoing CFO Michael Minars.

Prior to Venrock, Glass was at Greenbriar Equity Group, and before that, served as a tax manager at Deloitte & Touche working with private equity and other financial institutions.

“I was interested in Millennium for several reasons,” he told PEI Manager. “One was the chance to join a small, entrepreneurial team. Whenever you go from a big firm to a smaller firm, you have the chance to get involved in a lot of business decisions. The track record of Millennium was also very impressive. And I think it was a great opportunity given the climate in the market, in confluence with Millennium's strategy.”

In addition to its venture fund, Millennium has a “value fund” that provides liquidity for individual investors and institutions, the latter including Goldman Sachs, Dell and UBS. In mid-2007, Millennium began noticing a growing need for liquidity among venture-backed companies, says managing partner and co-founder Sam Schwerin. That growing need has accelerated to a crisis point, Schwerin says, a view that is shared by the National Venture Capital Association.

“The average venture-backed business takes 8.5 years to exit via IPO, and those are companies that are successful,” Schwerin says. “Those that are not successful take 10 years or more. And we're finding the average in the last three or four years has been about nine years old. So what you find is a very acute need for liquidity in venture-backed businesses, across the board but particularly in today's time period.”

As a result, around June of last year Millennium began drawing up an expansion plan in order to better equip the firm to fill this liquidity gap. In addition to Glass, Millennium will add seven more senior and associate level employees by the first half of 2009, doubling the firm's staff. The firm has also just completed a move to a new location on Third Avenue in Manhattan, tripling its office space.

Making sure Millennium's operations and infrastructure evolve to handle the expansion is a key part of Glass's role. Schwerin and co-founder Dan Burstein both came out of The Blackstone Group, and Schwerin says Millennium inherited the Blackstone philosophy of “doing everything right and doing it once.”

“Coming from Venrock and having as strong a background as Jon does, he really allows us to expand the best of breed practice that we use every day in our investment activities, into the infrastructure and aggressive scaling of the Millennium franchise not only to that next level, but also really driving growth over the next 10 to 15 years,” Schwerin says.

NAPF explains PE to UK pensions
The National Association of Pension Funds (NAPF) has launched the latest in a series of guides aimed at making pensions investment easier to understand. The new guide, “Private Equity Made Simple,” is 24-pages long and details the main features of private equity as an investment for UK pension funds. SVG Capital sponsored the guide, and the Private Equity Investors Association and the British Private Equity and Venture Capital Association helped to produce the guide. “With 20 percent of pension funds investing in private equity, and with the UK now the largest market outside the United States, the guide for this increasingly popular investment vehicle is ideal for trustees, company executives, scheme secretaries, pensions managers and advisers and those involved or with an interest in the pensions sector,” NAPF said in a statement. The NAPF's other “Made Simple” guides include “Investing in Commercial Property Made Simple” and “Assessing Investment Consultants' Performance: Research Results and Assessment Tools.”

Blackstone: Blame FAS 157
The Blackstone Group's Stephen Schwarzman and Tony James say they believe FAS 157 is exacerbating turmoil in the financial markets. “From the CEOs I talk with, the rule is accentuating and amplifying potential losses,” Schwarzman recently told The New York Times. “It's a significant contributing factor.” James added that the rule was not only misleading, but “dangerous.” This isn't the first time Schwarzman has spoken out against the rule, which requires GPs to value assets at the price they would fetch if sold immediately. During Blackstone's first quarter earnings call in May, Schwarzman said that much of the firm's $58 million reported loss was due to the rule. For long-term, illiquid assets, the losses reported from marking-to-market may be completely theoretical, and the firm may have no trouble selling the assets in calmer times, critics say. “The concept of fair value accounting is correct and useful, but the application during periods of crisis is problematic,” Schwarzman told the Times. “It's another one of those unintended consequences of making a rule that's supposed to be good that turns out the other way.”

FPL study shows ‘somber’ real estate market
The remainder of 2008 will be characterized by a more somber approach to executive compensation relative to recent years, and new emphasis is being placed on corporate strategy and organizational refinement as companies work to maximize efficiencies in anticipation of the next positive cycle, according to a new study released by FPL Advisory Group. FPL, a recruitment and advisory firm for the real estate industry, surveyed members of the global real estate industry and published its findings in its mid-year report, the “Global Business Update.” The report also notes several other trends in recruitment and hiring, among them an increasing drive towards “organizational refinement targeting greater efficiencies;” strong demand for recruitment driven by the “heady real estate growth” of Asian, Eastern European, and Middle Eastern markets; and a premium on overseas, local talent with global experience, especially in construction and development.