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This morning I listened to a slightly dated VentureCast (2/21/07) titled "But Seriously..." with David Hornik and Craig Syverson. At times the content is a little light but they are entertaining. The title of this session makes it a good listen for those interested in learning more about how the venture, private equity and hedge fund communities really work.

They referenced and answered a basic question that is often terribly muddled in the eyes of entrepreneurs and non-business people, which is the same question posed on "Ask the VC" a week or so ago: What Is The Difference Between "Venture Capital" and "Private Equity?" David has a slightly different take on the issue but does get into a nice flow about the VC world and the different approaches that different players in the capital structure take to deal flow. David also make a very interesting point about late stage investing and the valuation metrics applied to deals. While his comments may be viewed as somewhat self serving his point is that higher valuations in later stage companies can set an unrealistic expectation and in fact muddle a companies best exit alternative. He refers to a recent post money valuation on Linked-In of $250 million, which is an indication that they are most likely headed towards an IPO exit at some multiple amount of the post money round. In other words, high valuations lead to high expectations, which may not be the best alternative for the company and/or its founding shareholders who might be content to exit at $350 million rather than chase the big bang.

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Posted by Brett Suchor at 07:27 PM | Permalink | Comments (0) | TrackBacks (0)