IVCA Feature: The Best Quotes and Perspectives of 2015

IVCA Feature: The Best Quotes and Perspectives of 2015

January 6, 2016

Happy New Year to the membership of the IVCA. In the new year, the association will continue to feature the best news and outlook from the Venture Capital and Private Equity communities, and its innovators. This includes the Toolkit and Educational Luncheons that the IVCA and their industry partners sponsor throughout the year, plus the profiles and articles that spotlight the VC and PE-related personalities and issues in the bi-weekly IVCA newsletter. In one more look at 2015, here are the best quotes and perspectives from those various events and resources...
 
“1871 provides a great deal of brand equity for us, because 1871 has become a home for the Chicago tech community. There is a tremendous amount of public support, including from the mayor and governor, both the former and current one. In terms of the investment community, when they come into 1871, they can see the startup scene in Chicago flourishing. The network that 1871 has been able to build, we have been able to leverage. As of today, we have five different companies that have agreed to term sheets, and that has happened in part because of our association with 1871.”
 
~ Thomas Day, Senior Advisor for ‘The Bunker,’ a tech incubator that focuses on the skills of military veterans.
 
 
“Here are the stats. In 2014, we think there were 600 deals underwritten, which is up from 400 in 2013. It’s growing, because basically there are more converts, because it’s a successful product. By the end of last year, it was close to a 100 a month. It’s been interesting to see that when a seller puts their business out there, all the buyers go out and get policies. 90% of the deals last year were on the buy side. With Venture Capital, it’s more on the sell side. but Private Equity is driving this product. That’s a phenomenon we see continuing.”
 
~ Jeffrey Anderson, Senior VP of North American Mergers and Acquisitions at Allied World, on the trend of Representations and Warranties Insurance at the March 10th Educational Luncheon
 
 
“The type of mentorship we see requested over and over again is the mentor who has ‘seen it and done it.’ The person who has been in the trenches, built their own company and either sold it or continues to run it. There is a lot of camaraderie that comes from those conversations, and the mentors are there to provide the context regarding issues that the companies are concerned with – and most of the time it’s really just ‘don’t worry too much about it’ and ‘learn how to change.’ It’s very helpful, and those are the mentors I see having the best relationships.”
 
~ Thomas Bretz, CEO of Elmspring, an accelerator that focuses on tech for the real estate industry, on mentorship programs within his organization.
 
 
“Taxation and regulation remain the two key legal concerns for the Venture Capital and Private Equity industries. Prospects for any change in the tax laws – around the treatment of carried interest or otherwise – seem dim right now. But the looming presidential election may, at the very least, increase public discussion of tax issues which affect these industries and prime the pump for action in 2016, and beyond. 
 
Regulation continues to be big source of concern for Venture Capital and Private Equity firms, especially as the SEC and other regulatory bodies continue to focus on the acceptability of long-standing industry practices and key industry drivers of value, like the employment of operating partners.”
 
~ Matthew J. Richards, Partner, Ropes & Gray
 
 
“We have to be affirmation and positive regarding what we do. The way to do that is to explain who the beneficiary is, and how it expands outward over the whole economy. The real beneficiaries remain the endowments, the foundations and the public pensions like teacher, police officers and firefighters. That gives those groups a secure retirement, and we need that class of people speak up for the industry, because it changes the discussion. And we also need to push the companies that have benefitted from Private Equity and Venture investments, with new products and more jobs. We need to use our portfolio companies and investors as spokespersons for the industries, it’s part of playing offense. Let’s not deny the problem, let’s become part of the solution.”
 
~ Steve Judge of the Private Equity Growth Capital Council, on public relations strategies at the IVCA/NVCA Luncheon on May 19th
 
 
“I don’t see a fundamental difference in terms of where the Private Equity industry is going, other than probably a lot more retail investors and high net worth investors participating in Private Equity, either through defined contribution plans – that don’t really exist today – or directly through funds, and particularly in larger buy-out funds, that they can buy shares in. However, this asset class is not well suited to retail investors, unless it’s through a professionally managed portfolios. In the portfolios we put together, no client has even lost money with Adams Street Partners in our 43 year history, no matter how poor their starting point was – so we made it a very safe thing in a highly diversified way.”
 
~ Bon French, Partner and Chief Executive Officer of Adams Street Partners, during “A Conversation with Bon French” at the IVCA/NVCA Luncheon on May 19th
 
 
“What I’d like to tell your membership is to take a closer look at how education is changing, it’s a huge opportunity for investors in the future. We need our best and brightest to get involved in education, and it’s a favorable time to realize that in the next ten years there will be an overhaul in how school is structured, and the investor community should be a part of that drive toward innovation. Their investment can dramatically change the future of our country.”
 
~ Phyllis Lockett, Founder & CEO of LEAP Innovations, an accelerator focusing on the future of education techniques in the U.S.
 
 
“The U.S. no longer has the monopoly on innovative ideas and talent, and this is due to the technology advancements that the U.S. has led for decades. Now the entire world is a marketplace for ideas with much less expensive start-up costs in many geographies, and these start-ups – with the right process and necessary access to required level of funding – can bring their innovation to the U.S. market, benefiting the U.S. economy and its consumers.
 
It is important to develop emerging ecosystems and start-ups from international sources, so that they can be prepared to compete on a global scale. Our programs provide a robust planning and preparation for these start-ups, and Chicago provides the best launching pad for international start-ups with such aspirations.”
 
~ Serhat Cicekoglu, Founder & Managing Director of Sente International Business Accelerator
 
 
“The Internet of Things is the whole notion of connecting physical things together over the internet. The whole element of ‘machine to machine’ has been around for a long time, but since that point the whole idea of using the internet as the backbone for enabling information in the physical world has evolved.
 
And it has evolved to the point – that coupled with the reduction in price and increase on sophistication of  sensor technology, and the reduction of price for the increase of power in communications technology – that it has enabled the application of interaction with devices so we can understand the state of those devices or machines in ways that can inform us with a whole new set of applications. Basically, it’s the wiring of physical things into the internet so you can have much more information, and corresponding applications.”
 
~ Don DeLoach, President & CEO of Infobright, on the concept of the ‘Internet of Things’
 
 
“As the marketplace has matured, they have recognized that the value of a business is in the execution and not necessarily the idea. If you go back to the beginnings of the tech investment era in 1998 and 1999, the idea was king for Venture Capital, but now as we’ve gone through many market stages and have matured, the execution and type of entrepreneur has become more important.”
 
~ Troy Henikoff, Managing Director of Techstars in Chicago
 
 
“As an LP,  it’s about being transparent and honest. We spend a lot of time on feedback, as to how to be different in what is important. There have been cases in which we turn a fund down, but we do it in a constructive way. If you’re a co-investor, that helps, and if you can act quickly with early closings. Never underestimate as LPs the impact in coordinating with a GP at a first closing. There are risks at both ends, but its important to support a person who brought you there. Everybody always remembers behavior.”
 
~ Kelly M. Williams, President, GCM Grosvenor Private Markets, at the IVCA Luncheon “Private Equity GP/LP Relationship: Dynamics of the Future”
 
 
“I say to the younger people that work in the business now to make sure they work for somebody who is more interested in their career, more than even their own careers. It’s important not only to prepare the up and comers, but know when the time is right to turn the reins over and give them the opportunity to run the show. I found that if you have and nurture good people, give them the freedom to operate, and then expect great things from them, more often than not they will surprise you on the upside.”
 
~ Warren E. Holtsberg, Co-Head of Portfolio Management at MVC Capital, and the 2015 recipient of the Richard J. Daley Award
 
 
“I think Chicago has come a long way in developing an entrepreneurial ecosystem. – the ecosystem and the support infrastructure it implies are critical to sustainability.  What is going on at ‘1871’ – the new biotech incubator – and now ‘The Garage at Northwestern,’ are all examples of building an entrepreneurial community. There have been so many success stories coming out of Chicago in recent years that there remains no doubt that it is for real. Many, but not all, of the success stories are based on business model innovation rather than technology innovation.”
 
~ Peter Barris, Managing General Partner of New Enterprise Associates, and the 2015 recipient of the Stanley C. Golder Award
 
 
“I think we need to work harder to make sure that our governmental and legislative leadership understand what we do, how we do it and how important we are to our local, state and national economies, and to this capitalist system that we’re all dependent upon. We are capital providers, and capital is what makes the system work. If we do our job – in the way we all intend to do our jobs – we create new companies, make weak companies stronger, make small companies bigger, create the conditions for better products or services, and provide more and better jobs for many others.
 
We don’t need to be celebrated for this, but we do need to be better understood or risk being treated as a problem to be solved rather than as an important part of the solution. The IVCA is addressing this need to better inform government and legislative leadership. It’s important that our membership support this effort.”
 
~ Lee Mitchell, Managing Partner at Thoma Bravo, LLC, and the 2015 recipient of the Fellows Medal