This week NEA announced the close of their latest fund at $2.5 billion. That seems like a lot of money for one venture fund, although perhaps if the intention is to focus on (highly capital intensive) clean tech and/or biotech they will be able to deploy this amount effectively. Of course NEA, founded in 1978, has a long and successful track record, with I imagine many long-standing relationships with LPs and excellent ‘brand recognition’ within the universe of potential LPs, and so it is hardly surprising that they are able to raise such large funds. After all – especially with respect to institutional investors – the analog to the ‘nobody-ever-got-fired-for-buying-IBM” paradigm operates in their favor.
A couple years ago, when I first started thinking about what would become Nauiokas Park, a good friend told me that private equity was all about raising capital, not investing it. Of course I understood what he
…private equity is about raising money, not investing it.
was saying, but thought he was using hyperbole to make the point that raising capital was more important than just a means to an end (investing.)
Now I understand that however cynical it may sound, he wasn’t trying to be clever: the way the institutional marketplace for private equity (including venture capital) is structured is all about raising capital and only incidently about investing that capital.
For better or worse, the year-end is typically a time to step back and take stock, to reflect on the year that was and the year to come. And indeed I have been thinking about what we could have done better or differently last year and what we need to focus on in this new year. And the short answer is we need to spend less time thinking about the economic and industrial landscape, developing our investment framework, sourcing potential investments and nurturing our existing investments, and more time soliciting potential investors: pitching our skills, our approach and the opportunity we believe exists to people and institutions that will determine whether or not we can turn our vision into reality. And like any start-up, we are going to have to be hard-headed about how we approach this as the proverbial runway is running out. As they say, there is a fine line between tenacity and obstinacy. I want to try to stay on the right side of that line.
Of course, once the lightbulb goes on it becomes obvious that raising money would be the most important talent of any prospective private investment firm: your LP’s, shareholders, investors are your customers (and not your portfolio companies.) They are they ones that ‘pay the rent’. They consume your service which is to invest their capital. Ah but the better the service, the more customers you have and the more successful you will be, right?
Well not exactly. In investment management generally it is very hard to determine a priori the quality of service one is likely to receive, which is why so often prospective investors – be they retail or institutional – fall back on historical performance to make their judgements. This reliance on historical data is clearly imperfect. However, when considering (many types of) hedge fund or mutual fund, given the typical investment horizon and liquidity profile, a consumer of these services can at least adjust relatively dynamically if they make a mistake. The effect of this is to reduce the psychological barrier to ‘taking a risk’ on any particular investment manager in these asset classes. But given the long time horizons and relative illiquidity in private equity, investors cannot exit a decision easily and so are (even more) inclined to stick with well-established firms and are less open to considering newcomers.
Basically “track record” is the box that needs to be ticked. And is much more important than having a coherent, well-researched and plausible investment thesis. After all, if you have the money, the deals come to you. But a track record in private equity is hard to come by quickly. (And it needs to be the ‘right’ kind: the first time I was told (by a prospective investor) that having been a founding investor in two multi-billion dollar companies didn’t ‘count’ because I wasn’t “a professional investor” when I made the investments was frustrating and somewhat irritating I have to admit.)
A company active in a two-sided market provides it’s services to two distinct constituencies. Often times, they provide those services for free to one side of the market, in order to increase the value of the services they provide to the other side of the market. For example, Visa provides consumers a free payments service (and actually often pays consumers to use their service via loyalty programs, cash back, etc.); in so doing they can charge merchants to use their services which have value to the merchants because of the number of consumers who use their platform. In effect, Visa sells ‘access to consumers’ to merchants. In a different context but the same vein, Google sells access to consumers to advertisers.
Successful private equity and venture capital firms “sell” access to dealflow to their investors and limited partners. It is a two-sided market. And so it is natural that network effects apply and rational for investors to be pre-disposed to the biggest, most established players. It is reasonable to think that NEA (and KPCB, Index, etc.) or Blackstone (and KKR, Carlyle, etc.) will see a high proportion of the best deals. So far, so true. But unlike electronic payments or algorithmic online advertising, investing (in private companies) does not scale and so unlike these markets, the law of diminishing returns kicks in much, much earlier. The industry (well, much of it) admits as much: I suspect if you offered the GPs of NEA a $10 billion fund, they would probably demur. Indeed I suspect if you offered USV a $500mn fund, they would probably turn it down. The key point is that for any given private investment strategy (sector, stage, etc.) there is clearly a maximum optimal fund size. For a company like Visa or Google, this is not the case – more customers, more merchants, more searches, more advertisers – it’s all good.
Jeff Bussgang recently estimated that the (US?) population of active VC partners was approximately 1000. I don’t know how many mutual and hedge fund managers there are but I suspect it is at least an order of magnitude higher than this. This seems intuitively wrong: investing in a private company is more work and there are more of them. You have a thousand investors looking at a universe of tens of thousands (or more) of investable private companies and tens of thousands of investors looking at investing in a universe of thousands of public companies…
Paul Kedrosky (and others) have written extensively and intelligently on how the venture capital industry needs to shrink. How too much money, chasing too few opportunities has destroyed returns. The logic is compelling. However I would posit that the problem is not too much money per se, but too much money with too few and homogeneous investors.
Let’s look at these two constraints sequentially (although they are co-dependent to a large extent.) If you double the number of GPs but provide ten times more investment capital, on average the valuations of the investments they make will go up five times (thus significantly compromising their future returns.) Ah but this logic assumes a closed system – ie that both the number and types of investments are held constant, and so increasing the ‘money supply’ drives inflation (and lower real returns.)
Well in a world where the number of GPs is constrained, and most of them come from similar geographic, educational and professional backgrounds, this assumption is likely to be more right than wrong. Indeed it is embedded in the initial conditions above – ten times more capital allocated to the asset class does not result in ten times the number of GPs. And yet the number of investments any GP can effectively manage is by definition bounded (at a reasonably small number.)(Which is of course why firms like Apax eventually exited venture capital and ‘graduated’ to private equity.) Perhaps an even more important gating factor however is the number of potential investments a GP can seriously analyze and consider each year (dozens? a hundred or two?)
And we uncover the Achilles Heel of the (otherwise extremely successful) ‘Silicon Valley’ model: the relative homogeneity of the environment leads inevitably to a collective narrowing of the universe of potential investments that is considered and amongst these, an additional narrowing in the way they are evaluated and considered. ie Everyone sees the same deals and runs the same slide rule over them. And so more capital simply means valuation inflation and ultimately, lower returns.
But what if we were able to disrupt this state of affairs? Having spent the past two years intensively researching the markets we are interested in, I simply don’t accept that the ‘problem with venture capital’ is a bounded set of investment opportunities. I’m sure there is some limit to the number of good entrepreneurs, viable business models and attractive market opportunities but we are nowhere close to reaching it. In fact, it is so far away we can’t even see it yet.
No, the problem is a failure of market design. (The irony being of course if this market design failure were in any other industry, venture capitalists would be aggressively investing in companies and business models designed to correct and take advantage of this failure.) The problem simply stated is too small a number of too many similar venture capital and private equity investors. The solution is more, and more diversity. The question is how?
I’m sure you won’t be surprised to hear that I have a few ideas on the subject, and for my first (and only) New Year’s resolution, I will endeavor to articulate these in a multi-part series I will call ‘Saving Private Equity’. Some earlier thoughts on the subject can be found here.
The more cynical amongst you might accuse me of simply ‘talking my book.’ Perhaps. Probably. A more flattering way to look at it is that I am living my convictions. And the lesson I’ve learned is that we need to focus almost exclusively on fund raising for now even if that means disappointing some of our portfolio companies or missing out on a great investment opportunity in the short term. It’s not fun or particularly interesting but like almost any other startup, without capital the rest is just theory. Time to stop thinking and start pitching!
Corporate bonds to recover: didn’t get involved here as I didn’t have easy access to a leveraged play on this and was too busy/lazy to buy some iShares in my pension fund. Dumb miss, as market up 15-25% depending on the index from start of year.
Equity markets to go up and vol to drop:S&P is now c. 1020 (up from 890 at year end, c. 15%) but traded down to 666 first. I’ve kept my individual portfolio holdings throughout (AAPL, AIRV, RMG, EWZ) but was stopped out of a leveraged long on S&P at c. 800 and did not get the trade back on. Didn’t play on VIX which has come down to c. 25 from 40 at the end of last year.
Selective Emerging Markets will outperform (in particular Brazil, India and Sub-Saharan Africa): Brazil iShares (EWZ) has outperformed S&P by about 50%, I held my long position but didn’t add to it as my limit orders were a bit too greedy. As for India and Africa, my preference was for private plays but if public markets are a proxy, directionally these seem to have done well also, with India outperforming S&P by c. 30%, whereas Africa it’s less clear.
Buy long dated calls on Oil: really angry on this one, my size was too small so my broker didn’t want the hassle of doing the trade for me. Was looking at $65 to $75 Dec 2010 calls. Even with big brokerage costs these are up 5-6x… Note to self, get new broker.
GBP will stop going down: I am structurally very long GBP so my trade here was not to hedge. So far so good as GBP is up c. 10% against the major crosses so far this year, having been even a bit higher a few weeks ago.
So, where do we go from here? I know it’s not very exciting, but I suspect we go mainly sideways in most asset markets between now and year end. If you are holding the positions above, I would continue to run them but tighten stops and look to take profits if S&P approaches 1100, Oil gets above $85 and GBP re-tests it’s August highs vs USD or EUR. Would be more patient or less nervous with positions in corporate bonds and Brazil; although both would probably suffer in a generalized market sell-off, I’d be more inclined to add on dips. Generally, I think it’s not a bad time to be raising cash again and sitting on the sidelines waiting for a better opportunity to come in: choppy sideways – which is more or less what I expect – is a very dangerous market to trade unless you are doing it full time (in which case it can be profitable and fun.) My biggest regret? Not buying AMZN when it traded below $50 like I swore I would. Have raised to $60 but not too hopeful. Otherwise I’m pretty happy with how my portfolio weathered the financial hurricane of ‘08/09. Learning? Don’t overtrade: fastest way not only to lose money, but also your sanity.
(Self-)Report card: Predictions A, Trading C+, Overall B- Trading is always harder than predicting.
When speaking to start-up investors about their track record most of the time the conversation revolves entirely around the investments they have made in the past. The winners, the losers and why. More rarely do people talk about the investments they didn’t make. This is understandable for a number of reasons, one of the most important being there is usually no obvious record to fall back on and there is no way to short bad start-ups. So one relies on the investor keeping track of the investment opportunities they looked at and passed on, and further keeping tabs on how these companies did. Not many investors do this – at least not publicly, one (great) exception being Bessemer who with great humor points out their heroic misses – opportunities they declined that turned out to be home runs – in what they term their ‘anti-portfolio.’ But it would also be interesting to see a record of the deals an investor didn’t do that failed. But this is even harder (if one is to avoid noise) – even a small, relatively new investor like us sees hundreds of proposals and even this depends on what one considers as having ’seen’. Is it an email in passing saying XYZ is raising money, would you like to look? Is it spending a few hours going through an executive summary / pitch book / website finding out more? And it is also important (if this information is to be meaningful) to qualify why the investment wasn’t made. Is it because it didn’t fit a certain sectoral or geographic investment criterea? ie Good prospect but not for us. Is it because of a conflict with an existing portfolio company? ie Good idea but we like these guys better or they were first in the door and now we’re stuck. Is it because of apathy or lack of resources (time, money)? ie Good idea but just can’t focus and isn’t top of the list? Or is it because, well it’s just not a very good opportunity? ie Mediocre or downright bad idea.
In order to have the discussion, an investor needs to keep a record of all of this. How many do? We are trying to – or at least have plans to do so – but I’ll admit it’s harder than it sounds. It’s not something that generally gets anywhere near the top of a priority list, when the days are filled with making and managing the investments you do make. (And when you are trying to raise capital and/or keep existing investors happy or informed if you are a professional.) Don’t get me wrong, it’s not rocket science and I think it probably comes down to spending a bit of time and energy upfront to put a workflow in place to be able to capture and manage this information efficiently. And to be truly useful, this record needs to be ‘timestamped’ and auditable: we all suffer from hindsight bias. ie We definitely would have invested in Google given the chance, and obviously we passed on Webvan….
OK, fair enough, but why is this important? It’s because I think knowing which investments (and why) an investor didn’t make, and comparing these to the ones they did make, is a much better way to analyze their skills and approach. I think this is true in any asset class, only in most (all?) others it is practically impossible to do the kind of analysis I describe above if they are a long only investor (private equity perhaps being the exception.) Of course for long/short hedge funds this type of thinking is embedded in their performance.
Nauiokas Park is too new for this kind of analysis to be relevant but I was thinking about it in the context of my prior angel investing experience. I didn’t keep a complete record but there are a few deals that come to mind, two of which I was fortunate enough to blog about before the outcome was known, one after (discount appropriately) and so are public record. Hopefully you’ll trust me on the other two.
The first example is a company called SpiralFrog which is now the poster child for the second wave of bad ‘internet’ investments. I was approached in early 2006, through my Wall Street/City network to look at this, as people new I was interested/knowledgeable about “tech” start-ups and had had some success as an angel investor. When I saw the prospectus (and yes it was a prospectus) and looked at who else was involved as investors, I was immediately suspicious: this wasn’t a nimble start-up, it was packaged like a Wall Street deal – the scale and approach were way too heavy. Looking into the plan and the projected financials it just got worse. I passed and when they launched to considerable fanfare, I wrote this in September 2006 and followed up with this a year later.
The third is Powerset. What attracted me was the great team they pulled together and my conviction that semantic technologies were going to become increasingly important and valuable. I didn’t directly have the opportunity to invest but was one degree away and think I could have if I had agressively pursued.
Zopa is the fourth. I was approached by a friend when they were raising their initial outside round. I loved the idea but didn’t think it could get traction – at least not enough, fast enough to disrupt the market it was targeting, especially given how free and easy it was to get credit (something I new about…) I think I was right then. But I still love the concept and would be open to taking a closer look again in the future should the opportunity present itself. My focus would again be on understanding whether or not they can scale and whether or not the business model is optimal.
The final example is Skype. I didn’t directly have the chance to invest, but again at one degree of separation I could have tried. That said, I’m pretty sure had I been given the opportunity I would have passed: I didn’t see (until everyone had figured it out) how it could be a good investment despite loving the product. I’ve changed my mind and if I were running a big private equity fund, I’d definitely be trying to run my slide rule over them to see if I could make eBay a better offer than the public market.
Good investing is about managing your failures, your losing trades. The best way I know of doing this – whatever the asset class – is working hard to figure out what could go wrong before putting on the trade. (I guess it’s the bond trader in me…) There is always something that can go wrong. If it is big or likely enough you should pass. If not, by having a clear understanding and focus on these risk factors, you give yourself the chance to adapt and/or mitigate before its too late. This is especially true in venture investing as many risk factors in these companies tend to be endogenous; obviously if your basic premise turns out to be wrong that’s tough (but not impossible) to mitigate and sometimes it doesn’t work out. But by actively knowing what is going wrong and why at least you can avoid throwing good money after bad while also knowing when the odds are in your favor and you should double down.
The collapse of major businesses and the failure of governments to stem the tide of bad news around the economy has created an environment rich in opportunity for entrepreneurs, according to business leaders meeting held in London this week.
Speaking ahead of the event, keynote speaker Ed Wray, chairman of Betfair, said: “2009 is going to be a turbulent year but it will provide an opportunity for entrepreneurs to come forward and help take the UK out of recession and into the next period of economic growth.
“The US will be the first out of recession because it has an economy built around mass entrepreneurship – the UK now needs a large slice of that same kind of creativity, innovation and entrepreneurial flair.
“Every great business must be able to survive a downturn and successful businesses forged in the current conditions will be fundamentally far stronger by nature. The pressure cooker conditions of the current economic climate will undoubtedly create some new household names of tomorrow.”
In a nutshell, when we are talking to investors, our number one message is that these tough economic times are exactly the right times to invest in the next generation of businesses and business models. That in times of falling multiples, de-leveraging, uncertain cash-flows and/or discount rates in mature companies and markets, building new businesses is a fundamentally uncorrelated risk. Furthermore, the risks and challenges for new companies and new approaches is almost always on balance lower than it is when the economy is booming: first and foremost, talented people are more available – financially and psychologically – and since this is the most important ingredient for 99% of young companies, this is incredibly important. Secondly, inertia is much easier to overcome, you don’t have the ‘if it’s not broke, don’t fix it’ apathy that can be very difficult (and extremely frustrating) to overcome; if you have a better mouse-trap, people will actually notice and act. Finally, the prevailing sentiment of caution and skepticism means that – and of course this is a generalization but a valid one I believe – everyone, including entrepreneurs, investors, customers, employees – tends to be more focused and realistic. This means that fewer flimsy or “me-too” start-ups are floating around and innovation and disruption are considered in a more sober and analytical context. Less froth.
So I can hear you saying, Sean, c’mon…stop talking your book – really now, start-ups? (private) growth-stage companies? No risk? No way! Some – many? – of these businesses won’t end up working, even if they have clever ideas and people. You can lose most or all of your investment.
Well, of course you can and of course there is risk. There is always risk. I’m just not convinced that it is bigger or harder to navigate or understand than some of the alternatives. Large cap public stocks for instance…had you bought say shares in RBS, just two years ago you would have lost 96% of your money.* Barclays – 86%.HBOS – 94%.Citigroup – 94%. Not to mention the 100%-ers. Blue chips. Yes well, the poker analogy does seem to hold! (* all are approximate numbers, not including dividends, etc.) Equally, not even the most bullish of analyst or executive at any of these firms would have suggested that there was the remotest possibility of a 10x, or even 5x return over the next few years at the prices then prevailing…and understanding the dynamics of what will drive the returns is enormously (exceedingly?) complex. Of course to be fair, you could have changed your mind and sold your shares in any of these companies on any day which is something you are unlikely to be able to do in a small private company. So clearly you can’t have all your eggs in this (illiquid) basket but on the plus side, the illiquidity focuses the mind wonderfully and helps avoid getting caught up in market “noise”.
So how does one mitigate the risks in new, entrepreneurial ventures? Well there are a number of approaches that can work and like anything it’s generally a combination of experience, analysis and hard work. Not very enlightening I know. Our particular approach puts a lot of focus on using our domain knowledge and focusing on one – albeit vast – component of the economy: financial services and markets. Also, we have developed a series of investment themes, built on a number of what we believe to be fundamental medium to long term secular trends that will drive the growth and shape of the industry and the economy in the decade to come. Indeed, these trends and themes are the basis for much of the material here on my blog since I started publishing three years ago. We then look for ideas and companies within these themes that are instrinsically aligned with these trends. Where relevant, using our knowledge of the structure and business models of the mainstream participants, we also look for ideas, companies and technologies that have the potential to fundamentally disrupt an existing market or business model by providing the same product or service in a vastly cheaper and/or improved way. Easy.
Finally the event referred to in the opening quotes is a great new (to me) website / community – entrepreneurcountry.net – developed by Julie Meyer at Ariadne Capital; and for any prospective / budding entrepreneurs out there, here is a great 10 minute video with a few tips on raising capital from Julie herself:
Kind of a silly thing to do after the year we’ve just finished. If I’m right it’s dumb luck and if I’m wrong, well I’m wrong and don’t look too clever… And for those of you looking for specific numerical targets on liquid tradeable instruments, you don’t need to read further as I’m not sure these are useful at the best of times and I’m quite sure that I’m not going to put my name on what essentially are lottery ticket numbers… Besides any trader worth their salt knows that path-dependency and trading strategy is very often more important than actually predicting where something is going. And if I had forgotten this, 2008 served as a violent reminder as almost all my main macros calls turned out to be big winners and yet on my trading account I ended the year (in November when I essentially gave up pretending I had the time to properly manage any market risk or positions) more or less flat, and my best estimation of my overall net worth was approximately flat to down c. 10% in GBP – not too shabby but much less flattering when considered in EUR or USD… So what were these calls in 2008? In no particular order:
Short (UK/US) Banks, winner but…(too timid, took profits too soon – head faked by mid-year rally)
Short Oil / Long Gold (mid-year), winner but…(put position on too big, too quickly @ ratio of just over 7, stopped out just before giant move to current ratio of c. 21..)
Long Brazil (Bovespa), loser… (looked brilliant for a few months then didn’t react to change in Oil market sentiment and hedge fund deleveraging post-Lehman)
Short GBP, winner but… (too timid, too early, tried to be too clever…couldn’t figure out what to short it against – USD, EUR, CHF all looked like crappy alternatives, kept getting stopped out by ridiculous volatility, and was too busy with work to get much of the big December move)
So what do I think 2009 will bring? Here are a few ideas with a (short) summary of my thinking behind each.
A recovery in institutional credit markets – smart money will start the long and difficult process of separating the wheat from the chaff: ie the bonds that deserve to be priced at 10 cents will decay into default and those that are instrinsically worth par will start moving back in that direction. In fact this has already started to happen (you can see this by looking for instance at the performance of the iBoxx investment grade corporate bond indices(you need to register to drill down into data) which are mostly up 5-10% since hitting lows in mid-October) although to make really interesting returns means sifting through individual securities and names. So for the first time in the last 10 years a corporate fixed income investment manager will actually be able to create “alpha” (as opposed to just leveraged beta masquerading as alpha…)
Equity markets go up from here (for example S&P500 @ 890), and volatility drops… I think the late November low might hold, although we could possibly see one more down trade in 2009 to lower lows, I think this is unlikely and think the market will grind mostly higher through the year. I could bore you for an hour about why I’m thinking this way but boiling it down to three points will probably frame the foundation of this view. (1) Price action: market should have gotten killed on Madoff news. It didn’t. First time we’ve seen positive price action in more than a year… (2) Wall of money: in this world of instant gratification and the constant shrill drone of a CNBC inspired financial media, when the various central bank and government interventions didn’t miraculously fix everything instantly, the downward spiral continued and often accelerated; despite everyone knowing these things take weeks and months (sometimes years) to have an effect. This time will not be different. (3) More buyers than sellers. Cash was king in 2008 because it was a very scarce commodity. It isn’t so much anymore and real returns from holding cash in 2009 will be negative. Besides – even though they will be far fewer in number – many many people will still be paid to invest and holding 50% or more in cash is not what they are paid to do.
Selective Emerging Markets will outperform. Basically the ‘de-coupling’ thesis has some merits and the baby was thrown out with the bath water in the viciousness of the last 6 months bear market. I like Brazil (so I should probably buy more…), (sub-saharan) Africa and (selectively) India. Of these three the only one you can play via public markets is Brazil; for the other two the opportunities I like are venture capital / private equity plays so not easy to access.
Better to be long Oil rather than short. Haven’t had time to check pricing but best way to play this might be to buy long-dated deep OTM calls. Volatility is at record highs so this might look stupid to start, but I think the world is exactly at the marginal supply/demand fulcrum and will be for several years. Economics 101 tells me that the price will therefore be subject to massive, violent swings as demand moves up and down with the cycle. Basically, while 2008 might (we hope!) be an outlier in terms of volatility for many markets, I’m not so sure this will be true of Oil.
GBP will stop going down. Not because the government or the economy has improved, but simply because relative to the other major economies it isn’t actually that much worse off and the shorts will get too smug and the bargain hunters will come out. Only problem is I’m not sure what level it will bounce off of…are we there already or do we go to 1.25 vs USD and 1.10 vs EUR as has been suggested to me by a friend? I’ll admit to this view perhaps being wishful thinking (see above) but have tried to guard against that and after being an extremely vocal GBP bear a year ago, I can’t believe that I’m now finding myself in the bull camp. This discomfort actually makes me feel better about my view.
The next Microsoft/Google/JPMorgan*/General Electric*/Ford* (*the originals) will be founded in the next 1-3 years. The emperor has no clothes. The existing paradigm is not just bankrupt, but has been proven so. The massive barriers of inertia and incumbency have been breached and it is only a matter of time before smart, creative, energetic entrepreneurs and innovators take advantage. Of course I’m talking my book here as we’ve set up our new business to help find, finance and advise these entrepreneurs and Amy and I hope and expect to find one or two future Gates/Edisons/Morgans… Indeed I’m pretty confident this will come true even if (especially if?) all the above views turn out to be wrong.
In any event, I hope I’m right. Obviously it will be a nice boost to my ego and probably help pay the school fees, but mainly I think it will make the world a bit nicer place, especially for the vast majority of people who had no part in the (inevitable) excesses that led to this economic cleansing and yet are suffering its consequences. And if I’m right about the last point – we won’t know for a decade or so – the world will also be a better place. But that’s for another post, another day.
Happy New Year. All the best for a healthy, successful and fulfilling 2009.
This week NEA announced the close of their latest fund at $2.5 billion. That seems like a lot of money for one venture fund, although perhaps if the intention is to focus on (highly capital intensive) clean tech and/or biotech they will be able to deploy this amount effectively. Of course NEA, founded in 1978, has a long and successful track record, with I imagine many long-standing relationships with LPs and excellent ‘brand recognition’ within the universe of potential LPs, and so it is hardly surprising that they are able to raise such large funds. After all – especially with respect to institutional investors – the analog to the ‘nobody-ever-got-fired-for-buying-IBM” paradigm operates in their favor.
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