DealZone

from Entrepreneurial:

VC fundraising still in the doldrums

peHUB reports:

Forty U.S.-based venture capital firms raised just $4.3 billion in the first quarter of 2009, according to data released this morning by Thomson Reuters and the National Venture Capital Association. The downside is that this represents the lowest number of funds to raise capital since Q3 2003. The upside is that the actual amount of capital raised was higher than the $3.5 billion raised in Q4 2008 (slight solace, but solace nonetheless).

Just three of the funds were first-timers, while the largest raiser was August Capital ($650m for Fund V).

In a prepared statement, NVCA president Mark Heesen said: “First, the majority of venture firms are not actively fundraising at this time because they have either recently raised a fund and are investing those dollars or are waiting until market conditions improve. Second, despite the recession, venture firms with solid track records continue to be able to secure sizable commitments from limited partners as there remains a great deal of promise for future returns from the venture capital asset class.”

The full release is below.

VENTURE CAPITAL FUNDRAISING ACTIVITY SLOWS CONSIDERABLY IN THE FIRST QUARTER OF 2009

from MediaFile:

Cisco flipped for Pure Digital, but did VCs flip out?

Cisco's $590 million all-stock purchase of Flip video camera maker Pure Digital last week may sound like a nice price for the venture capital-backed company, especially given the non-existent exit market right now.

But Venture Capital Journal editor Larry Aragon writes in a PEHub blog post that the $590 million number doesn't sound that meaty when you calculate the return on investment for Pure Digital's venture capital backers. And that's especially true because some top-notch VC firms like Benchmark Capital and Sequoia Capital have invested in Pure Digital. (Venture Capital Journal and PEHub are part of Thomson Reuters.)

Aragon calculates that if Pure Digital's VC investors put in about $95 million, and assuming that they own about half the company (since it's a stock deal), "that's a return of just over 3x their money."

Comeback kid?

federaltrust1.jpegJay Sidhu is back.

The former chief of Sovereign Bancorp has a tentative deal to invest $30 million in Federal Trust Corp and take control of the small Florida-based savings and loan. Federal Trust Bank operates 11 full-service offices and had total assets of $639.8 million as of June 30.

About two decades ago, Sidhu started down a similar path, when he took over as chief executive of Sovereign. By the time he left had transformed a $400 million Pennsylvania thrift into a regional bank with some $89 billion in assets and 800 branches, stretching from Maryland to Boston. Under Sindhu, Sovereign acquired more than two dozen banks and branch networks divested by bigger banks.

But Sidhu, who stepped down from the bank in 2006, was also a magnet for criticism. Disgruntled investors complained about Sovereign’s stagnant share price, and his agreement to sell a minority stake to Spain’s Santander and simultaneously buy Brooklyn, New York’s Independence Community Bank Corp.

PE Hub interview with Saban Capital’s Craig Cooper

power-rangerse-2.jpgPE Hub‘s Connie Loizos has an interview with Craig Cooper, who recently joined the VC firm founded by Israeli billionaire and media mogul Haim Saban:

Saban Capital quietly entered the business of venture capital a few months ago, adding an early-stage digital media practice to his seven-year-old, L.A.-based investment company, Saban Capital Group. For the uninitiated, Saban is a former television producer whose Saban Entertainment company gave the world, for better or worse, “Mighty Morphin Power Rangers” in the ‘90s [Editor's note: Saban also wrote the "Inspector Gadget" theme song].

Cooper hasn’t pulled the trigger on any investments yet. But in a short phone conversation, we talked a bit about Richard Yen, who joined Cooper in June from Blueprint Ventures; we discussed his focus on digital media and consumer wireless startups; and he explained why he’s cut back on his daily dose of TechCrunch.First, how did you meet Haim Saban?

“The Undertaker” of venture capital

skull.jpgPE Hub’s Connie Loizos has an interview with Martin Pichinson, co-founder of Sherwood Partners, known to VC industry veterans as “the undertaker” for its speciality in shutting down failed companies. As one might imagine, Sherwood’s business is booming:

In January of 2007, the firm was being asked to take on three new clients a month. Fast forward to today and it’s taking on three to four newly imploding companies every week. Most of them are Web 2.0 startups backed by Valley VCs, but Sherwood also counts Google and Microsoft as clients.

I reached Pichinson — an extroverted 62-year-old who once managed musical acts and tends to pepper his speech with words like “caca” — yesterday, after he returned from a three-week trip to Poland. Here’s part of that conversation:

from Summit Notebook:

PequotVentures exec trumpets Big Apple advantage

lenihan.jpgPequotVentures, the venture capital arm of hedge fund Pequot Capital Management, has shut down its Silicon Valley office and now operates only out of New York. Managing general partner Lawrence Lenihan said the contrarian move made sense because the plethora of venture capital operators in Silicon Valley forced PequotVentures to compete on price.

That's not so true in New York, where there's less competition on the fund side but lots of promising media and finance businesses, he told the Reuters Hedge Fund and Private Equity Summit on Tuesday.

New York is also looking like increasingly fertile ground relative to Boston's once booming Route 128 corridor. Lenihan, who admits that as a New Yorker he may carry a certain bias, said that shuttle flights which once were packed with New York investors going to Boston to check out companies are now carrying many more Boston investors in the opposite direction.