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A little bit about me

Hi. While this blog is a part of Seed Catalyst’s website, I realised over the initial few weeks that a lot of you are first introduced to the firm via the blog rather than our home page.

So to introduce myself - I’m a business consultant working with early stage technology firms to help streamline their strategy and go-to-market approach and support them for fund raising. 

With this blog, I aim to capture key market trends that I see in the industry, the ecosystem and cross-plays in some of the more interesting and upcoming sectors, as well as cover interesting companies that I meet. 

I will also be addressing vexing and interesting valuation and deal/term-sheet structures that would be of interest to technology start-ups at various stages of their growth.

So let’s get started...

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Harbourvest in sync with the German growth story PDF Print E-mail
Blog - New money
Tuesday, 11 January 2011 10:48

 

Most news articles these days are talking about the demise of the VC industry. From the entrepreneurs perspective, they are struggling to get seed and early stage funding for firms where there is still an element of risk because of in-process validation, growth of customer base etc. Talk has shifted to crowd-funding and bootstrapping. Intermittently of course there is talk of an early stage valuation bubble whenever the focus shifts to Facebook, Groupon and their ilk.


Looking at the world from the VC’s perspective brings us to the huge pipeline we see of VC funds which are out trying to raise new money. It’s taking longer, fund sizes are smaller, fees are lower – not a very pretty picture.


In this darkness, there was news this morning of a new €117 million fund raised by Holtzbrinck Ventures with investment from the parent Holtzbrinck and Harbourvest. Techcrunch, Twitter are all full of the news on how European venture capital is back.


And yet, if we delve just a little bit, it’s not exactly a fund being raised which will focus on new investments. It’s more of a secondaries transaction. We have seen quite a few of these over the past year and these are more a sign of the times than the raising of new money for new investments.


In detail, the parent Holtzbrinck has transferred their existing investments in new media to a new fund HV Ventures Fund IV. Harbourvest has invested money in the fund which will, along with the old investments, continue to be managed by the current Holtzbrinck team.


Typically an older fund may look at exiting their investments via secondaries when they need to return capital to their LPs, capital which is locked up in non-dilute investments. It could also be the option when further capital is required to maintain a relevant holding in existing investments but the fund doesn’t have the wherewithal any more.


In this case, I would tend towards the latter option.


In summary, the fund is new money and is testament to the successful investment record at Holtzbrinck. However entrepreneurs may want to take a look at the existing portfolio companies and their capital requirements in order to get an idea of how much of the new funds will actually be deployable for fresh investments.


I will have an eye out for further details on the structure of the transaction.

 


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