North America: April 2001


    Insight and Geocapital return funds, Hummer Winblad apologises, IPOs stagnant...

    Insight returns cash to investors and spins off its European arm
    New-York-based Insight Capital Partners has offered its limited partners in the Insight Capital Partners Europe I fund the opportunity to reclaim any capital that it hasn’t yet drawn down. The move comes after the firm decided to shift the fund’s focus away from European software and into European telecoms, especially mobile technology and internet infrastructure. And, in a related move, Insight has announced that it is to spin off its European operation, based in Amsterdam. The new independent firm is aiming to develop its own network of industry expertise.
    The Private Equity Analyst April 2001

    And Geocapital returns funds, too
    US firm Geocapital Partners has joined the growing number of venture capitalists forced to return cash to their investors. It had raised $200m for its latest Geocapital IV, but said that the mountain of existing venture capital funding, together with the unpromising economic outlook for small companies meant had influenced its decision. Its target had been $500m. The firm said it would concentrate on its existing investments.
    Venturedome 16.4.01

    Stock slide takes its toll on US funds
    US venture capital funds in the last quarter of 2000 posted their first loss since 1998, according to Venture Economics. They recorded an average deficit of 6.3 per cent – a sharp contrast to the average of 64.8 per cent returns over the last three years. The news doesn’t come as much of a surprise – Nasdaq has slumped 61 per cent over the past year, and a typical VC fund relies on the stock market to provide an exit option and generate profits from start-up investments. The bad news is that this could be just the beginning. It could take 12 to18 months for the private equity industry to feel the full effects of the stock market slowdown. Industry experts have said that the whole of this year could see negative returns.
    The Wall Street Journal 11.04.01

    New managing director at the Carlyle Group
    Carlyle’s recruitment drive of prominent people continues with the appointment of William E Kennard, former chairman of the US Federal Communications Group. He will serve as MD for media and telecommunications, confirming Carlyle’s intention to boost its involvement in the telecoms industry.
    eFinancial News 03.05.01

    Hummer Winblad says sorry
    Hummer Winblad has apologised for to its investors for its poor performance. In a letter to investors, one of the firm’s founding partners John Hummer, wrote: ‘We had some exposure to the business-to-consumer category and we have paid dearly for it…it is an understatement to say how bad we feel about this.’

    After spending a decade building up a reputation as a top financier of high-tech companies, a series of badly timed investments in internet companies has left Hummer Winblad’s portfolio with a collection of high profile dot.bombs. was shut down, Gazoonite and were forced to file for bankruptcy and Rival Networks recently it was to cease operations after failing to find a buyer for the company, resulting in the biggest losses the firm had ever absorbed. One of the most visible remaining investments is in Napster – and, after the recent court ruling against it, it doesn’t look set to be one of the firm’s most successful choices.
    The Wall Street Journal 19.04.01

    Market for IPOs remains stagnant
    Q1 2001 was one of the most abysmal quarters in recent history for IPOs and the stock market. Only 25 deals were completed; 120 were completed in the same period last year. In addition, 79 companies pulled their expected IPOs as a result of adverse conditions, according to Thomson Financial. Even the IPOs of recognised companies, such as the Lucent Technologies spin-off Agere Systems and the spin-off of KPMG Consulting, weren’t immune to the downturn. In light of the slowing economy, investors are reluctant to invest in established stocks, let alone purchase new ones.
    Financial Times 03.04.01

    JP Morgan Partners finally hits profit
    Following a loss of $92m in the fourth quarter of 2000, JP Morgan Partners moved into the black with gains of $132m in the first quarter of this year. This is still significantly down from profits of $654m in the same quarter last year and the private equity firm continues to write off unrealised investment losses – this time to the tune of $280m. The firm is currently raising the largest ever private equity fund, at $13bn. 20.04.01