Jive, the Facebook for enterprises, has set the terms of its IPO.  According to its S-1/A filing with the SEC (link), it plans to offer 11.7 million shares (8.3 million from the company and 3.4 million from selling shareholders) at between $8.00 and $10.00 per share.  Jive is backed by Sequoia Capital and Kleiner Perkins Caufield & Byers.  Neither firm is selling in the IPO.

There's a recent article by Vivek Wadhwa posted on The Washington Post's website that highlights the continuing evolution of India's information technology sector that I found interesting.  In my view, the title of the article ("Why Silicon Valley should fear India) overstates the case, it does demonstrate that entrepreneurship and innovation are growing rapidly in India.  Here's the link:  http://www.washingtonpost.com/national/on-innovations/why-india-should-scare-silicon-valley/2011/09/14/gIQALjiolN_story.html

Dan Primack, a Senior Editor of Fortune, recently posted an article about how some people are crying out "the tech bubble has burst" with Groupon's stock price falling below its IPO price.  It's a good article and reminds us that a few data points may not be enough to signal a collapse of the tech industry.  Here's the link:  http://finance.fortune.cnn.com/2011/11/25/hold-your-horses-of-the-internet-apocalypse/

For those who sit on boards of directors of public (and private) companies, there is a very good article on the achievements and failings of Sarbanes-Oxley by Michael W. Perergrine (partner at MeDermott Will & Emery) and posted on NY Times Dealbook.  The title is "Another View: Sarbanes-Oxley and the Legacy of Enron."

Here's the link:  http://dealbook.nytimes.com/2011/11/25/another-view-sarbanes-oxley-and-the-legacy-of-enron/

Forbes recently posted an article on the venture capital secondary market and profiled secondary firm Industry Ventures.  This is an interesting article and a good overview of the secondary market.  Here's the link:  http://www.forbes.com/sites/nicoleperlroth/2011/11/22/venture-capitals-pawnbroker/

Happy Thanksgiving everyone!

Groupon (Nasdaq: GRPN) closed today at $16.96, below its IPO price of $20 per share.  Groupon priced its IPO on Nov. 3 and began trading on Nov. 4.  It hit a high of $31.14 in intraday trading on Nov. 4.  In my opinion, this should not affect the IPO plans of seasoned companies with proven business models.  Groupon is a young company with, in my view, a still unproven business model in a fiercely competitive market.  The IPO window should still be open to ompanies with proven, profitable business models.

Here are some links to articles discussing Groupon:

New York Times:  http://dealbook.nytimes.com/2011/11/23/as-investors-flee-groupon-outlook-for-i-p-o-s-darkens/

Bloomberg:  http://www.businessweek.com/news/2011-11-23/groupon-shares-plunge-below-ipo-price-3-weeks-after-offering.html

Mercury News:  http://www.mercurynews.com/financial-markets/ci_19401073

Start-ups focusing on the business-to-business space are attracting more venture capital, according to an article in the Wall Street Journal.  Here's the link:  http://online.wsj.com/article/SB10001424052970204517204577044460578249868.html?mod=WSJ_business_whatsNews&_nocache=1321969196814&mg=com-wsj

There's an interesting article at The Guardian's website discussing the emergence of a technology area in London called "Silicon Roundabout."  The article is "Watch out, Silicon Valley, Silicon Roundabout is the new kid in town," and is written by Dan Crow, the CTO for Songkick, a live music website located in the Silicon Roundabout area of London.  Here's a link to the story:  http://www.guardian.co.uk/technology/2011/nov/21/silicon-valley-silicon-roundabout

Jim Breyer is a partner at Accel Partners, President of Accel Management Company and serves on the board of directors for Wal-Mart, Dell and News Corp, to name a few.  Jim was interviewed by Erick Schonfeld of TechCrunch at Techonomy 2011 inTucson.  Jim is a very accomplished venture investor, and I found this video interview (in three parts) to be very interesting.

Here are the links to the video clips:

Interview Part One, focusing on media investing:  http://techcrunch.com/2011/11/19/jim-breyer-media/

Interview Part Two, focusing on IPOs:  http://techcrunch.com/2011/11/20/jim-breyer-ipos/

Interview Part Three, focusing on entrepreneurs, Brazil and competition for deals:   
http://techcrunch.com/2011/11/20/jim-breyer-best-time-to-be-entrepreneur/

Eliot Spitzer, when he was Attorney General of New York, negotiated a universal settlement with Wall Street banks that, among other things, prohibited equity research analysts from participating in underwriting activities.  The San Francisco Chronicle has an interview with Mr. Spitzer on the impacts of financial regulation.  The story can be found here:  http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/11/19/BUUA1M0II9.DTL

The New York Times has an interesting article on the thriving technology scene in New York.  Here's the link:  http://www.nytimes.com/2011/11/20/nyregion/on-the-move-in-new-yorks-thriving-tech-sector.html?_r=1&pagewanted=all

Angie's List Inc. (Nasdaq: ANGI), the subscription consumer review website, saw its shares surge in its first day of trading yesterday.  Angie's List priced its initial public offering at $13 per share, at the top of the indicated $11 - $13 price range.  BofA Merrill Lynch was the lead underwriter on the IPO.  The company sold 6.25 million shares and selling shareholders sold 2.54 million shares, for a total of nearly 8.8 million shares in the IPO.  Angie's List shares closed at $16.26 in its first day of trading.

Venture capital investors include BV Ventures and Battery Ventures.

Here's the link to the Company press release:  http://investor.angieslist.com/releasedetail.cfm?ReleaseID=624660

Link to the Company's Final Prospectus filed with the SEC:  http://www.sec.gov/Archives/edgar/data/1491778/000119312511314921/d222159d424b4.htm

Link to Bloomberg article about the IPO:  http://www.bloomberg.com/news/2011-11-16/angie-s-list-raises-114-million-pricing-ipo-at-top-of-range.html

Yelp! Inc. has filed its S-1 registration statement with the SEC, looking to raise up to $100 million in its initial public offering.  Goldman Sachs will be the lead bookrunning manager, Citigroup and Jefferies will be joint bookrunning managers, and Allen & Co. and Oppenheimer will be co-managers of the offering, according to the Company's press release.  Venture capital investors include Bessemer Venture Partners, Elevation Partners, Benchmark Capital and Duff Ackerman & Goodrich, according to Dow Jones VentureSource.

The registration statement indicates that there will be two classes of stock, Class A common stock, which is to be sold in the IPO, and Class B common stock, which has super-voting rights that will be held by insiders.

Link to the Company press release:  http://www.prnewswire.com/news-releases/yelp-files-registration-statement-for-proposed-initial-public-offering-134058533.html

Link to the S-1 registration statement:  http://www.sec.gov/Archives/edgar/data/1345016/000119312511315562/d245328ds1.htm

Link to Bloomberg story:  http://www.bloomberg.com/news/2011-11-17/yelp-files-to-raise-100m-in-ipo.html

Link to Forbes story:  http://www.forbes.com/sites/tomiogeron/2011/11/17/yelp-files-for-100-million-ipo/

There's a good posting on DealBook discussing how savvy entrepreneurs preserve equity in their companies.  Here's the link:  http://dealbook.nytimes.com/2011/11/15/the-wisest-entrepreneurs-know-how-to-preserve-equity/

Short article by All Things D on early stage investing, with thoughts by Sean Parker, co-founder of Napster and Facebook's founding President, and Jim Breyer, partner at Accel Partners and a member of the board of directors of Facebook.  Here's the link:  http://allthingsd.com/20111115/sean-parker-and-jim-breyer-slam-silicon-valley-angel-investing/

Bloomberg Businessweek reports that the world's largest university endowment is seeking to sell $1.5 billion in private equity funds.  Here's the link:  http://www.businessweek.com/news/2011-11-14/harvard-said-to-seek-sale-of-1-5-billion-in-private-equity.html

Harvard wanted to sell fund interests a few years back, but didn't, likely due to the large discounts to NAV buyers were demanding.  Secondary discounts are much narrower today, and so it looks like Harvard was wise not to sell back then.

There's an interesting article posted yesterday on the Fortune Term Sheet website by Lisa Suennen of the Psilos Group discussing the decline of healthcare venture capital investing in the US, and why she believes good investment opportunities still exist.  Here's the link:  http://finance.fortune.cnn.com/2011/11/14/hey-where-are-all-the-healthcare-investors-going/?iid=SF_TS_Lead


I agree with much of what Ms. Suennen says in her article.  One additional problem is the time frame for investing in US biotechnology deals has stretched out.  In my view, these factors suggest that early stage biotechnology investing doesn't fit will within a venture capital framework where funds have 10-12 year terms.  Smart VCs in this area are adapting to this new paradigm, but overall, healthcare venture investing is challenged.

Kohlberg Kravis Roberts (KKR) and TPG Capital may be looking to acquire minority stakes in Yahoo Inc. (Nasdaq: YHOO) with a view to eventually acquiring the entire company, according to a Bloomberg report.  Here's the link:  http://www.reuters.com/article/2011/11/11/us-yahoo-privateequity-f-newspro-idUSTRE7AA4N420111111

Interesting article from the Mercury News discussing some of the challenges companies face post-IPO.  Here's the link:  http://www.mercurynews.com/business/ci_19327698

Interesting article on innovation in India that recently appeared in the Atlantic:  "India: The World's Secret Silicon Valley."  Here's the link:  http://www.theatlantic.com/business/archive/2011/11/india-the-worlds-secret-silicon-valley/248341/

An opinion column by Dean Garfield and Dendy Young that appeared on today's US News website provides their insights on what would help keep innovation in the US strong and robust, helping to improve the US economy.  Here's the link:  http://www.usnews.com/opinion/articles/2011/11/11/encouraging-venture-capitalism-key-to-economic-growth.  Mr. Garfield is the president and CEO of the Information Technology Industry Council.  Mr. Young is the managing partner of McLean Capital, a private equity firm, and the former CEO of GTSI Corp.


In this piece, Mssrs. Garfield and Young list three items they feel will help the US maintain its innovation advangate:

• Resolving the US debt crisis;
  
• Continued government support for basic research and development;  and
• Modify the immigration rules to attract and retain foreign-born scientists and entrepreneurs.

I generally agree with the points made in this piece, but would add the following two items:

• Overhaul the patent system.  Our patent system is in disarray, leading to significant litigation that is stifling innovation.  This needs to be fixed.
• Streamline regulations for capital raising.  Many regulations that impact capital raising, such as Sarbanes-Oxley, are well-intended regulations that have had a negative impact on the capital raising process, especially for smaller firms looking to access the public markets.  These regulations must be streamlined to make the capital-raising process less cumbersome to companies.

 

The Wall Street Journal reports today that the SEC has approved new rules for "reverse merger" listings.  Reverse merger listings are a way for foreign companies to obtain a listing on a US exchange without going through the registration process with the SEC.  Foreign companies merge with publicly-traded shell companies to effect the reverse merger listing.  The problem is that the merger process has allowed foreign companies without strong accounting controls to become publicly traded in the US.  Here's the link to the WSJ story:  http://professional.wsj.com/article/SB10001424052970204358004577028381460208046.html


The new rules make it tougher for foreign companies to list via reverse mergers.  I applaud this move.

Yelp Inc. has selected Goldman Sachs and Citigroup to lead its initial public offering, according to The Wall Street Journal.  Here's the link:  http://online.wsj.com/article/SB10001424052970204190704577026140347386380.html?mod=WSJ_Tech_RightMostPopular

According the article, indications are that the IPO could value the company between $1 billion and $2 billion.  Investors in Yelp include Benchmark Capital, Bessemer Venture Partners, Duff Ackerman & Goodrich and Elevation Partners, according to Dow Jones VentureSource.

There's a bill working its way through Congress which will loosen the rules requiring private companies to publicly disclose their finances.  Currently, once a private company reaches 500 shareholders, the company must begin to publicly disclose its financial and operating information, similar to a public company.  This rule has been around for many years, but is now under scrutiny as companies like Google, Facebook and Zynga reach this threshold.  These companies grant employees stock options, and under the existing rule the employees receiving these stock options are considered to be shareholders.  Thus as a private company grows and grants options to its employees, it may run afoul of the 500 shareholder rule and be forced to become a public company.

The legislation currently being proposed raises the 500 shareholder limit to 2000 shareholders.  Accredited (wealthy) investors and employees receiving options will count against this limit.

Here are some links to this story:
The Atlantic Wire:  http://www.theatlanticwire.com/technology/2011/11/lawmakers-sponsoring-very-facebook-friendly-bill/44748/
Fortune Term Sheet:  
http://finance.fortune.cnn.com/2011/11/08/ending-the-500-shareholder-rule/


The original purpose of the 500 shareholder rule was to force a company with 500 or more shareholders to publicly disclose its financials in order to provide the shareholders with information that they otherwise wouldn't have.  The basic tenets of the securities laws are disclosure and protection.  Accredited investors are deemed to be sophisticated and in need of less protection.  But employees and investors who are not accredited investors deserve disclosure and protection, which in my view should be purpose of the 500 shareholder rule.   Therefore I would argue that the 500 shareholder limit should remain, but accredited investors should be exempt from the rule.