Being that they are people who have spent their careers scrutinizing people, you can be sure that when the members of the newly formed National Venture Capital Association human capital network get together, they name names and separate the zeros from the heroes.
At a debut meeting in Cambridge, Massachusetts, the assembled human capital experts, all of whom lead executive searches for venture capital and private equity firms, were eager to share best practices and market intelligence, including which search firms to avoid.
?We had a good discussion about search firms, which firms are good for different types of needs and industries, which firms to stay away from,? says Janice Mawson, the membership director for the NVCA and director of the human capital network. Mawson declined to reveal which search firms made the ?naughty?list.
The NVCA's human capital group was founded in the wake of the creation of a similar group for marketing and communications professionals within venture capital and private equity firms. According to Emily Mendell, director of public affairs for the NVCA, when an in-house search professional at an NVCAmember firm learned of the so-called ?Marcom? group, he called Mendell to insist that a human capital group would make sense, as well.
Mendell and Mawson have identified 26 people whose job descriptions match thatof an in-house human capital specialist. The group plans on meeting at least twice per year – once on each coast – as well as staying in touch through conference calls.
At the initial meeting in September, attendees agreed that compensation was a topic about which they needed more information. Those gathered also explored the creation of a template agreement for working with third-party headhunters.
A meeting last month in Cambridge involved training in best practices for hiring from consultant ghSmart. A conference call scheduled for December will discuss compensation issues.
Investments are made or broken by the quality of management teams, and increasingly, private equity firms are getting very serious about how they source this talent. Says Mawson:?I was somewhat surprised to find that in some of these searches, the firms spend between $80,000 and $100,000 a pop to find the right person. Everyone agreed that they want to make sure those dollars are well spent.?
SBIR bill drafted by US Senator
US Senator Kit Bond, a Republican from Missouri, has sponsored a new bill, SB 1263, that will seek a clarification of eligibility requirements for Small Business Innovative Research (SBIR) grants. Under current requirements, young companies that are more than 51 percent owned by venture capitalists are not eligible for these grants. In a statement supporting the bill, National Venture Capital Association president Mark Heesen said,?There is a critical misconception out there that small companies that receive venture capital funding have hit the jackpot and are not in need of SBIR grants. In reality, SBIR dollars and venture capital dollars are targeted at different purposes within a company.?
IntraLinks preps $42m IPO
IntraLinks, a major provider of private equity reporting systems, is planning to raise up to $42.7 million through an initial public offering. The IPO is reportedly IntraLinks' second attempt to go public. It filed to list in 1999 but then withdrew as the market soured. The company also provides data services to loan syndication companies. For the nine months ended September 30, IntraLinks reported a net loss of $3.4 million on revenue of $38.1 million, compared with a loss of $1.2 million on revenue of $26.4 million one year earlier. The company will list on the Nasdaq under the ticker symbol ILNX.
EVCA lists public affairs priorities
The European Private Equity and Venture Capital Association's chairman, Sir David Cooksey, has written to members with an update of his recent activities and priorities. In September, he met with Members of the European Parliament to raise awareness among them of Europe's private equity industry. Among the issues facing the industry is the need for pan-European stock exchange for high growth companies. The issue ?has been one of the main issues on EVCA's public affairs agenda and one of my priorities as Chairman,?Cooksey wrote. The EVCA has heartened in this quest by an announcement in October from the London Stock Exchange that it plans to expand its Alternative Investment Market to become a pan-European exchange. Further progress will require support from Europe's financial community, wrote Cooksey.
Study:Background checks crucial in emerging markets
According to a study from Deloitte Financial Advisory Services, 70 percentof deals in emerging markets are cancelled following background checks of management. The survey gathered information from 303 executives responsible for foreign investment decisions at private equity firms, investment firms and corporations. One third of respondents had assets and revenues of more than $1 billion. The survey also found that 93 percentof respondents ?always or frequently? conduct background checks in emerging markets. Asia was the most popular emerging region in which survey participants invest, with Eastern Europe well behind. China was the top destination.
Two media investors in post-closing dispute
New York media specialist private equity firm ABRY Partners has levied a lawsuit against Providence Equity Partners, saying the Rhode Island-based group misled it in its $500 million purchase of F&W Publications. The lawsuit is reminiscent of the recent battle between Brynwood Partners and Willis Stein & Partners, which filed a $23 million suit against Brynwood last year regarding a price dispute. ABRY claims thatProvidence inflated F&W's profits through ?stuffing?- booking profits on books sent to distributors before the books are sold. Frequently, books are returned to the publisher and recorded as losses. ABRY is asking that the purchase agreement be rescinded, and that the firm be reimbursed costs and attorneys' fees. A Providence statement said the firm is ?very disappointed? at the suit and that the firm ?categorically denies any wrongdoing.?