IVCA Feature: The Best Quotes and Perspectives of 2017

December 20, 2017

Happy Holidays and a Grand 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 2017, here are the best quotes and perspectives from those various events and resources...
 
“In 2017, we expect to see tax reform. We’re not sure yet as to the scope of this tax reform, but we hope within the new code we maintain full interest deductibility. This is not just a private equity issue, it's for companies of all types and sizes – it's simply a cost of doing business. We also feel that carried interest, as it relates to private equity, venture capital, real estate and other long term investments, is appropriately categorized as a long term capital gain, and we want to see that maintained as tax reform takes place. And finally, we hope to see no adverse policies put into place that would be harmful to the tax burden of pass-through businesses.”
 
~ James Maloney, American Investment Council
 
 
‘Five years ago I attended the national Venture Capital/Private Equity IT group conference and a poll was taken on how many member firms used Cloud technologies.  At the time only 5% of the firms were using these services. Fast forward to the 2016 conference where the same group was polled, and the results were flipped...only 5% of member firms were not using Cloud technologies. It has been a dramatic shift in how companies operate their IT.”
 
~ Bernie Barbaric, VP Data Services, 7 Layers Solutions Inc.
 
 
“At GE, we like to call ourselves the ‘124-year old startup.’ We realize that we can’t innovate alone, and that partnerships can help us accelerate innovation and drive better outcomes. We are looking for companies that will grow, thrive and win through innovative products or services that solve real customer needs – in large and growing markets – led by energetic and passionate leaders.  As Thomas Edison said, ‘I find out what the world needs, then I proceed to invent.’ That remains a core part of what we do.”
 
~ Kristen Schwarz, GE Ventures
 
 
“One the things that we try to do, is not to walk into any legislator’s office and start with Carried Interest. You usually see the staff fold up there books, and give a look like ‘it’s one of those meetings.’ So we go in and talk about what the tax code should to do to encourage new company formation. We talk about Qualified Small Business Stock [QSBS 1202]. We talk about the research and development [R&D] tax credit, as that most of the start-up funds in a new business is going toward R&D. With no profits, R&D does nothing for most startups. In Canada, for example, they have fully refundable R&D tax credits, no matter if that startup is profitable or not.
 
There are not legions of lobbyists representing startups, but many of the laws, rules and regulations inadvertently hit them. We go in and talk about how the tax code laws should encourage new company formation. So we hit that hard, and only at the very end are we asked about Carried Interest.”
 
~ Bobby Franklin, the President and CEO of the National Venture Capital Association, at the IVCA/NVCA Luncheon, ‘Will Carried Interest Get Carried Away?’
 
 
“Stan Golder was my first mentor, and I was very fortunate to work with him, because as I mentioned he built a firm through values. In the early 1980s, there was a deal that Stan was looking at, and brought it back to us. We were skeptical with feedback, but Stan stood tall with his integrity. ‘Guys,’ he said, ‘I shook hands on the deal.’ And immediately everyone around the table said, ‘Then we’re in.’
 
And that’s the type of firm that Stan built, and that integrity we learned has served us well over the years. Sometimes you pay for that integrity, but that is what tells people that you actually have that integrity.”
 
~ Bryan Cressey to David Golder, The Son of ‘G’ Interviews the ‘C’, at the IVCA/NVCA Luncheon
 
 
“I believe that Chicago tech has evolved and grown. There was a massive effort to develop our local ecosystem, and focus on building community. I believe the infrastructure exists today, and that the best thing for an established tech community is big companies. There will be many small optimizations through the lens of our new stated mission, which is to make Techstars Chicago the most intensely founder-focused accelerator in the world.”

~ Logan LaHive, New Managing Director of Techstars Chicago
 
 
“Our investments have to reflect Catholic social teachings. In our research into companies, we have a whole process associated with the U.S. bishop’s guidelines on social responsibility. The core of it is restriction, but that has been in place before I was even CIO. We have a restrictive list we give our managers, but we also asked ourselves, ‘how are we going to expand and maintain our compliance with those policies?’ The companies we restrict are not in the Private Equity space. We can get a ‘mop out’ in all of our funds for each individual deal. PE has been the easiest to comply with, we’ve had only one violation in 30 years – and that was 20 years ago – and we carved ourselves out of that deal.”
 
~ Scott Malpass, Chief Investment Officer and Vice President at the University of Notre Dame
 
 
“Hopefully I will still be an active partner at Wynnchurch 20 years from now and will help shape what our firm looks like in 2037. Suffice it to say, greater amounts of capital will continue to enter the space and markets will continue to become more efficient. Technology will drive this change at an even faster clip than it does today, and it will remain a challenge to find great leaders. Further, I expect the PE market will become more institutionalized, and many PE firms will be owned, or partially owned, by these larger institutions. Family offices will play a bigger role due to the enormity of wealth being created, and it will be more difficult for first time funds. I hope I am around to witness the changes, whatever they may be.”
 
~ John Hatherly, Founder and Managing Partner of Wynnchurch Capital, Recipient of the 2017 IVCA Stanley C. Golder Award
 
 
“I think that the Chicago investment community – which I am extremely excited and optimistic about – has really come into its own in the last decade. If there is one distinguishing feature that is descriptive of the community, and also uniquely a part of the character of our great city as well, it is the amazing extent to which we see various investor groups working together and collaboratively here, rather than purely as adversaries and competitors. I’ve seen more instances of cooperation where three or four firms will all participate in a given deal. I think that is a healthy way to make more resources and connections, far beyond mere cash available, to both startups and growth businesses, and to also grow the pool of investment and funding opportunities for everyone here.”
 
~ Howard Tullman, CEO Start-Up Incubator ‘1871’, Recipient of the 2017 IVCA Richard J. Daley Award