I have a strong interest in the microfinance industry and social investing, hoping to one day make the transition into this realm. Lately I have been reading a bunch of microfinance industry reports and doing research on the different players in the industry, hoping to soon create a layout similar to this cloud computing mindmap. My microfinance map is still in definite draft form, but I am posting it in case a fellow reader can provide insight.
If any of you readers have information to include, please do so as this map is begging for further information. =) I believe you can edit directly, but if not, leave any thoughts in the comments. This layout will continue to change and I will post the final version when finished.
Back in 2007 I created a list of private equity investors in Utah. Over the past couple years this list has shifted, making an updated list necessary.
Angels
Angel investors provide the initial capital to a start-up, investing amounts usually up to $1m in exchange for common stock.
Venture Capital
Venture capitalists provide early-stage and growth capital, typically investing in industries such as information technology, clean technology, and life sciences.
Private Equity
The term private equity can be used for any investor that invests in non-public companies, but usually is in reference to investors that focus on non-public companies with revenues. Below are the late stage and buy-out firms in Utah. The late stage firms finance companies that are already cash flow positive and need financing for expansion or an additional round before a liquidation. The buy-out firms actually buy a company, finding a new management team (or personally managing the company themselves) to turn the business towards profitability.
Venture Lenders
Venture lenders provide a financing option that extends the capital between equity rounds. It is a debt plus warrant structure, preserving the equity of the company but providing potential upside for the lender.
Am I missing any investors? If so, please comment or email me.
I worked with the University Venture Fund for two years during my undergraduate studies, being one of my most invaluable work experiences. Now that I am wrapping up my part time contract with my firm and I have completed my travel, I thought I would volunteer with this old internship, trying to give back to an opportunity that played a big role in my life.
The University Venture Fund is a student ran venture capital firm that has raised $18m from outside limited partners and has a current portfolio of 17 investments. The organization has partnered with numerous private equity partners, providing free due diligence in return for the real life due diligence experience. In return, the private equity firms often carve out an investment piece, allowing UVF to piggyback if interested. All investments are decided by the students, but must be approved by their investment committee, compromised of local private equity investors.
My volunteer work with UVF consists of document review, ensuring that all research points are considered during the due diligence process, and providing additional insight into the role of a VC analyst.
If you are a student at the University of Utah, BYU, or Utah State University, and are interested in venture capital (no matter your field of study) I would urge you to get involved with this organization.
The June 22, 2009 edition of Time magazine was a fabulous edition with excellent coverage and editorials filling its pages. The best article was the Postcard page highlighting a volunteer at Japan’s Tojinbo Cliffs, a story I later found out was previously covered by the BBC in October 2008.
Japan has one of the highest suicide rates in the world, with one out of 5 men and women seriously considering taking his/her life. In the past, economic recessions have increased this count, a result being seen again in today’s economic environment.
“Shige says he’s talked more than 180 people down from the cliffs.” Harumi Ozawa / AFP / Getty
Yukio Shige, a retired policeman, has spent the last 5 years patrolling the Tojinbo cliffs, a place where many desperate folks come to commit suicide by jumping the 82 feet into the Sea of Japan. Since 2004 he has roamed the cliffs 2 or 3 times a day in hopes of finding these people in need, trying to dissuade them from the act. When successful, he takes them back to his counseling office, offers them tea, listens to their troubles, and then proceeds to help them resolve the issues including personally going with them to confront people. He has been funding his work through donations and his retirement funds, saving over 180 lives to date.
Inspirational!
What can we do to help others in these rough economic waters? Many of us obviously do not have the time or money to make an impact like Shige, but we definitely can do smaller acts. How about freely opening up the rolodex to make an introduction for a job seeking friend? Perhaps take time to visit with someone over lunch? Volunteer to help those in greater need? Try to better understand the depression others could be feeling and the best ways to respond? Inquire how you can be of assistance?
What are your thoughts?
The week of June 8th I spent some time volunteering with KCPW, a local public radio station. (Note, the week prior was spent at The Climber’s Ranch in Grand Tetons National Park. I wrote up my entry on the CragBaby site since the work was climbing related.) My volunteer work with KCPW was helping them move boxes and organize items in preparation for their first Rummage sale.
To be honest, it ended up being a weird volunteer experience for personal reasons irrelevant to this blog. However, I still wanted to briefly highlight KCPW as I truly enjoy their news coverage, have volunteered with them numerous times, and donated many times in the past.
KCPW, acquired by Wasatch Media last year, is a public radio station serving the Salt Lake Metropolitan and is supported mainly by donations. They provide an excellent line-up of programs, with my top favorites being the BBC, Morning Edition, and (of course) Wait, Wait Don’t Tell Me. =)
They have a website, handful of blogs, twitter presence, and radio coverage at the frequencies of 88.3 and 105.3. If interested in volunteering, fill out this form and they will get in touch with upcoming activities.
With the current state of the economy, I am often asked by friends and acquaintances about the state of the venture capital environment. My response will usually address one of the topics below.
- Lack of Liquidity – One of the biggest issues is the current lack of liquidity. The venture capitalists’ job is to create a hopefully good return for their investors, with returns coming through such liquidation events as a merger, acquisition, or an initial public offering. For over the past year the public markets have essentially been frozen with the National Venture Capital Association actually proclaiming a “Capital Market Crisis“. As a result, there has been mention of an emerging secondary market for private stock. Thankfully, though, within this last quarter a handful of companies have gone public (I am not sure the total since the data is not yet out, but I want to say at least 2 or 3 companies with Open Table being the first).
- Difficult Fundraising Environment – Limited Partners have halted or stepped back from venture due to huge hits on their public investments, sometimes resulting in their portfolios experiencing the denominator effect. The combination of lack of liquidity and LPs holding their money close while the market stabilizes has resulted in fundraising being extremely difficult for anyone except top tier funds.
- Smaller Fund Sizes - Venture firms have reacted to this rigid environment by raising smaller funds.
- Some Changes in the Venture Players - There have been some VCs who have closed shop, but there are also new entrants (i.e. Javelin and Founder Collective).
- Innovators Continue to Innovate – The innovators keep creating, as they should. There are positives to this economic environment (for example lack of competition) as long as start-ups realize that funding is still out there, though perhaps a bit harder to find. If anything, this type of environment creates entrepreneurs that are wise and efficient with the capital raised.
While reading the private equity news the other day, I saw a link to an interview with Steve Jurvetson and Tim Draper. Nothing about the interview was too profound, but I enjoyed seeing these VC titans talking about the same trends I was seeing. I must admit that my favorite part was when Tim and Steve were continually questioned about different “important” financial and numbers, none of which relevant to the venture capital realm or these two investors.
Unfortunately I could not embed the video directly, but the above image is linked to the video feed.
After Q1 2009 ended, Fred Wilson posted a piece on his blog addressing a deeper dive into the VC numbers with the released data of the PriceWaterHouse Money Tree report. The essence of his post was to point out the headlines of sharp decline don’t always tell the whole truth as a deeper look into the numbers shows that certain regions are definitely affected more than others.
When he wrote that post I was intrigued to look further in the Southwest region, the main investment region for EPIC Ventures. I had looked out of personal interest right after Q1, but had not taken the time to post up on my blog. But with Q2 near completion, I thought I would post this information and follow up with Q2 analysis when the numbers were released later this month.
I used the same data as Fred and also annualized Q1 of 2009, creating similar charts but with the addition of the SouthWest region. (Note that MoneyTree Report defines the Southwest as Utah, New Mexico, Arizona and Nevada. EPIC does invest out of this region but our offices are located in Utah and New Mexico and we do like to invest close to home.)
My percentage change in capital investment did quibble slightly with Fred’s data in the sense that I found the percentage drops to be a bit larger in each area. I believe the difference in our data is due to Fred using more estimations and I using exact calculations. (And if anyone is incorrect, it would be me.=)) I show that there were some fairly significant drops in each region: 57% in Silicon Valley, 54% in New England and 31% in New York. But interestingly, the biggest drop (out of the four charted above) was in the Southwest. Though it looks minimal on the chart, investments dropped from $471m in 2008 to an $160m estimate in 2009, creating a 66% decrease.
The deal flow saw a decrease, but not as significant as the capital invested. For instance looking at the decline of 2009 by the average number (not the 2008 only number which was used for the above capital percentage change), NY Metro was down by 13%. A notable drop, but not nearly as much as capital invested. Still the SouthWest region saw the largest decrease out of the four charted groups.
With Q2 numbers due in the near future, I am going to wait to opine on reasonings for this significant regional decline. However, feel free to post any thoughts or opinions in the mean time.
My all time favorite volunteer experience is donating 
