SAN FRANCISCO/NEW YORK (Reuters) – Silicon Valley isn’t quite ready to dump Morgan Stanley over the Facebook IPO fiasco.

It could be said that playing a role in botching the world’s biggest tech initial public offering would be enough to kick its lead banker out of the club, or at least to the curb, but a tarnished image hasn’t necessarily dented Morgan Stanley’s position as a go-to underwriter for Silicon Valley, according to bankers, venture capitalists and start-ups.

The reasons run from the unusual size of the Facebook deal – a $16 billion offering – to blaming the Nasdaq, to the strong relationships Morgan Stanley’s lead tech banker Michael Grimes and his team have crafted over the years with deep-pocketed venture capitalist firms and executives in the San Francisco Bay Area.

A week after the Facebook fallout, Morgan Stanley is – according to Silicon Valley sources – counting on these strengths to trump investor anger and lawsuits related to the move by its analyst to cut his forecasts for Facebook’s revenue and earnings just days ahead of the IPO and then only tell the firm’s major clients rather than publish those revisions widely.

“It’s still going to be the rare occasion when somebody who has the chance to have them, leaves them out,” said Scott Sandell, a venture capitalist at NEA, speaking about Morgan Stanley and its main rival in the Valley, Goldman Sachs.

Morgan Stanley was the No. 1 bookrunner for U.S. technology IPOs last year, advising on 16 of the 37 new issues, according to data from Thomson Reuters. So far this year, it has held on to that top spot.

There are at least half a dozen high-profile technology companies with pending IPOs that have already selected Morgan Stanley as a lead bookrunner, including Palo Alto Networks and ServiceNow. And those are not expected to be derailed, or delayed, said sources close to the matter. A spokesperson for Palo Alto Networks declined to comment. ServiceNow was not available for comment.

May 22 (Reuters) – Kleiner Perkins Caufield & Byers partner Ellen Pao is suing the venture capital firm for sexual harassment and discrimination, according to a lawsuit filed earlier this month in California Superior Court.

Pao, who joined the firm in 2005, alleges that former Kleiner partner Ajit Nazre made sexual advances to her and worked to harm her career once she rebuffed him. Nazre didn’t return a call requesting comment.

She also alleges that the firm engaged in systematic discrimination against women, for example, allowing female junior partners fewer board seats and investment sponsorships compared to male junior partners, and allocating women a smaller percentage of profits.

“The firm regrets that the situation is being litigated publicly and had hoped the two parties could have reached resolution, particularly given Pao’s seven-year history with the firm,” said Kleiner spokeswoman Christina Lee.

“Following a thorough independent investigation of the facts, the firm believes the lawsuit is without merit and intends to vigorously defend the matter.”

TechCrunch first reported the lawsuit.

Venture capital is a clubby, male-dominated world, but sexual harassment lawsuits are rare.

SAN FRANCISCO, May 21 (Reuters) – Facebook’s lackluster initial public offering performance is a black eye for many on Wall Street and could have ramifications for similar upcoming deals such as an offering by Twitter, but venture capitalists in Silicon Valley are keen to shrug off Facebook’s stumble – at least for now.

Any social networking companies planning IPOs might now be thinking twice, although the biggest companies currently aiming to tap public markets are enterprise-focused rather than consumer-focused, such as online-security company Palo Alto Networks, which has had IPO documents on file with the Securities and Exchange Commission since April.

“Whether (Facebook) is worth $95 billion or $100 billion, it’s immaterial,” said Jeremy Liew of Lightspeed Venture Partners, who has backed daily-deal company LivingSocial and others. Either way, he said, it is a lot of cash.

“I personally don’t think it’s going to hurt the tech IPO market hardly at all,” said Dixon Doll of DCM.

It would not be the first time that Silicon Valley has played down setbacks. During the dotcom bust of 2000, some investors insisted for months that poor market conditions were temporary, even though they dragged on for years.

The biggest impact of an IPO that does not meet expectations, venture capitalists say, would normally be on valuations of similar companies, which would have less hope of going public. In this case, the private market value of fast-growing social-media companies, an area in which many people believe a bubble is emerging, would appear to be an area of concern.

However, many emerging players in social networking have raised money very recently. Online bulletin board site Pinterest raised money last week at a $1.5 billion valuation; question-and-answer site Quora raised $50 million recently.

SAN FRANCISCO, May 17 (Reuters) – Kleiner Perkins Caufield & Byers said it had raised a $525 million fund, less than its previous comparable fund of $650 million, reflecting a school of thought in Silicon Valley that smaller venture-capital funds often outperform large ones.

The fund also has a majority of partners, known as managing members, who focus on technology rather than green investments and the environment, marking a shift away from an investment area that Kleiner had tried to carve out as its own.

KPCB XV, as the fund is called, lists technology-focused partners such as Mike Abbott, Chi-Hua Chien and Bing Gordon as managing members.

While green-investments champion John Doerr is also on the list, managing partner Ray Lane, known for investments in companies such as clean-automaker Fisker and solar company Ausra, is not.

A smaller emphasis on clean tech, as investments in fields such as solar energy and electric automobiles are known, could help trim the firm’s investment bills. Straight-up technology companies, especially Internet-focused ones, typically require less money to grow than do clean-tech companies, especially at the early stages, where this fund is focused.

There are also public relations reasons to cut the size, with many big funds coming under fire for lacking the nimbleness needed to invest in smaller, growing companies.

A recent report from the Kauffman Foundation, an organization that studies and promotes entrepreneurship, said that of the funds in its own investment portfolio that raised more than $500 million, none returned more than twice its invested capital after fees.

SAN FRANCISCO (Reuters) – For the handful of venture capitalists who backed Facebook (FB.O: Quote, Profile, Research, Stock Buzz) in its early days, a huge financial payoff is not the only thing they may be celebrating when the company goes public later this week.

In a business in which the best investment opportunities flow to a small number of firms with big reputations, the prestige boost that Accel Partners, Greylock Partners and Meritech Capital have gained from their Facebook investments dating back to 2005 and 2006 could pay dividends for years to come.

“The person, often the firm too, gets that patina,” said Lisa Edgar, who tracks a range of venture investors in her work evaluating venture-capital firms for fund-of-funds firm Top Tier Capital Partners. “It perpetuates. There’s this deal-flow and network effect.”

The dynamic is straightforward, but powerful. Entrepreneurs see a firm, or an individual partner, that not only made a great call but now has a special relationship with a company that could help their nascent business. That means that the venture capital firm gets first dibs on some of the most promising deals, which vastly increases their odds of success.

And their link to Facebook means in some cases an easy introduction, or even a deal down the road, for the venture capitalists’ portfolio firms. Take Facebook’s $1 billion acquisition last month of photo-sharing service Instagram – just after Greylock funded it.

Other venture capitalists also start paying more attention to what the successful firm is doing, and although they would be loath to admit it, they may become more inclined to back those same companies at richer valuations in later rounds of financing.

The limited partners who provide the funding for venture capitalists in turn see both the big financial return from the initial investment and the fringe benefits to other portfolio companies, and become more inclined to support the successful venture capital firm in the future.

SAN FRANCISCO (Reuters) – Facebook Inc co-founder Eduardo Saverin has renounced his U.S. citizenship, according to an Internal Revenue Service report, days before the company’s initial public offering.

The news, first published by Bloomberg on Friday, was based on an IRS notice late in April that named people “who have chosen to expatriate.”

Facebook plans to raise as much as $10.6 billion in an IPO that is expected to value the company at as much as $96 billion.

The offering could leave Saverin, who once owned 5 percent of the company, with a hefty capital-gains tax bill.

Saverin has sold enough of his Facebook stake that he does not appear in IPO filing documents that list shareholders who own 5 percent or more of the company, though his holdings are still believed to be substantial.

A spokesman for Saverin did not reply to several requests for comment on why Saverin had renounced his citizenship.

ISLAND NATION

By Sarah McBride

(Reuters) – The average time spent accessing Facebook via smartphone in the United States was 441 minutes in March, compared with 391 minutes via computer, according to comScore, underscoring the increasingly high-profile role of mobile in social networking.

comScore’s new Mobile Metrix 2.0 report showed U.S. smartphone users spent 441 minutes per month, or 7 hours and 21 minutes, on Facebook in March. That compares with 391 minutes, or 6 hours and 31 minutes, for people who tapped into Facebook via a computer.

In filing documents for its initial public offering, Facebook highlighted the importance of mobile while noting it does not generate meaningful revenue from mobile users.

“If users increasingly access mobile products as a substitute for access through personal computers and if we are unable to successfully implement monetization strategies for our mobile users,” the company writes in its filing documents, “our financial performance and ability to grow revenue would be negatively affected.”

Beefing up its mobile strategy was part of the reason Facebook in April agreed to spend $1 billion to buy Instagram, a photo-sharing mobile app, analysts say.

Historically, Facebook hasn’t shown ads to mobile users, although in March 2012 it started including “sponsored stories” in users’ mobile new feeds.

SAN FRANCISCO, May 7 (Reuters) – Gumroad, a start-up payments company run by 19-year-old entrepreneur Sahil Lavingia, has raised $7 million in a funding round led by Kleiner Perkins Caufield & Byers, Lavingia said in a blog post. [gumroad.com/next-steps ]

Lavingia represents the increasingly youthful face of Silicon Valley, where entrepreneurs in the consumer-Internet sector are quickly building companies with relatively little experience.

Last month, twenty-somethings Kevin Systrom and Mike Krieger sold their photo-sharing company Instagram to social-network Facebook for $1 billion.

His company is taking on others such as eBay’s PayPal in trying to make it easy for small-scale entrepreneurs to earn money. Gumroad’s twist is in using link-based payments, requiring fewer steps for the consumer.

The funding round marks the first investment for Mike Abbott since he joined Kleiner late last year. Previously, Abbott ran engineering at Google and briefly worked as an entrepreneur-in-residence at Benchmark Capital.

Lavingia dropped out of the University of Southern California to work for Pinterest, the online bulletin-board company that has attracted more than 19 million users and raised $37.5 million in funding from firms such as Andreessen Horowitz.

He founded Gumroad late last year.

SAN FRANCISCO, May 7 (Reuters) – San Francisco startup Loyal3, the creator of the Customer Stock Ownership Plan, is betting it can encourage more Americans to buy stock — right from Facebook — by allowing them to spend as little as $10 for a portion of a share, with no fees.

By piggybacking on Facebook and its network of more than 900 million users, Loyal3 said it customers will be able to skip brokerage fees — which some say is stirring up anxiety among the discount-brokerage industry that caters to small-time investors.

In a variation on direct stock-purchase plans used by companies like AT&T, where customers buy shares directly from the company, Loyal3 offers only a $10 minimum investment allowing people to buy stocks in lower dollar amounts and increments, including fractional shares.

Loyal3 has set up a website as well as a Facebook application through which would-be investors can select stock in participating companies. Loyal3 said it was in advanced negotiations with several but could not comment on the status for regulatory reasons. It plans to launch as early as later this quarter.

Going one step further, anyone buying stock on Facebook will have the chance to click on a button and alert their friends to what they have just picked up.

“We’re able to remove the friction, the barriers to entry to tens of millions of Americans,” Loyal3 Chief Executive Barry Schneider said.

Despite a proliferation of discount brokerages, the percentage of U.S. households that own stock has stubbornly hovered around 20 percent for years, according to Federal Reserve data, in part because people are reluctant to spend large sums.