debbiegage

At this morning's Churchill Club breakfast in Silicon Valley, two private equity pros, a venture capitalist and an angel investor were asked to peer into the future. In addition to the usual observations -- the VC industry will shrink by half next year, capital is still tight, exits are still tough, portfolios are full of troubled companies -- they had some fresh takes. Panel members were Rich Garnick of the ConJoin Group, Rich Lawson of Huntsman Gay Global Capital, Rajiv Batra from Mayfield and Rich Brenner from the Brenner Group (he's the angel).

On-Q-ity, which announced a $21 million Series A round today, is a combination of two other Mohr Davidow companies -- CELLective Diagnostics and The DNA Repair Company -- that would have languished and probably died had their investors and scientists not figured out a way to keep their technology alive, said Mohr Davidow's Sue Siegel. Both companies had the misfortune of looking for a Series B round in the summer of 2008 -- a slow season to begin with -- and then getting hit with the global financial collapse that followed. "They found themselves not able to raise a financing, not because of the merits of the technology, but because of the environment and the circumstances that existed," Siegel said. "Many companies didn't get financing, and you'll find a graveyard of companies where either the technology was shelved or it got delayed or they're subsisting on minimal dollars until they see another day."

In May, Dan reported that Mohr Davidow Ventures had sold its small stake in personal genomics company 23andMe -- famous partly because of its co-founder, Anne Wojcicki, who's married to Google co-founder Sergey Brin -- and invested in rival Navigenics. Both companies analyze your DNA and report if you are predisposed to certain genetic diseases. Mohr Davidow's Sue Siegel said today that although her firm's parting with 23andMe was amicable, the two did not see eye-to-eye on what role venture capitalists should play. Mohr Davidow's limited partners require the firm to take board seats with companies they invest in, she said, and 23andMe didn't want venture capitalists on the board. "We have a fiduciary duty to watch our investments, and when we commit we need to take board seats," Siegel said. "I think that's more of a norm than an exception."

In a comment on my post on Friday on why some entrepreneurs are wary of taking venture capital, Groundspeak added more reasons on why they haven't taken it so far. They point to a post on Seattle's TechFlash blog by another entrepreneur, Hillel Cooperman, on why he hasn't taken any venture money either. Cooperman co-founded Jackson Fish Market, a software company that creates "beautiful destinations on the Web." No one -- neither an entrepreneur nor an investor -- can reliably pick which companies and ideas are going to win, Cooperman argues, so entrepreneurs had better focus on the thing they can control: how many ideas they can get off the ground, or how many times they can be "at bat." Venture capitalists won't let you do this, Cooperman says, because they can't.

Here's one metric from Peter Bell at Highland Capital, who says he's invested in 200 companies over the last 21 years. He specializes in technology. Founders should personally meet candidates for the first 200 positions. "I tell people who are looking at small companies, if you're not meeting the CEO don't go there," he says. "It's not like GE. For the first couple hundred people, you want to know what's important to the CEO" -- and the CEO has to put his or her touch on the company.

Intel invested in the company -- called Enjoyor Technology Group -- just a little over eight months ago and did not expect it to go public so soon, if at all, said Arvind Sodhani, Intel Capital's president. But Enjoyor went out today on the new Chinese Growth Enterprise Market at 20 Renminbi per share and closed at 36.40, an increase of 81%. Intel had invested 20 million Renminbi at 4 Renminbi per share and made a paper profit of 162 million Renminbi or $23.7 million -- over an 8X return. The IPO would not have been possible in the U.S. or Europe or even Hong Kong,

I've talked to people at three companies lately who said they either avoided or feared outside investors, although one CEO -- 20-year-old Seth Priebatsch of Scvngr, a mobile game company -- did end up taking around $1 million from Highland Capital and says he's glad he did, because the connections and advice provided by Highland have been invaluable. Another of the companies -- a game design company in San Francisco -- was just incorporated, and its team is just starting to think about outside funding, but the third -- Groundspeak in Seattle, whose geocaching sport has between 2 million and 3 million players, around the world -- is about 10 years old and growing and has repeatedly turned away outside investment.

Gurley's long, thoughtful essay on the state of venture capital, in which he described an industry that could shrink by half as Limited Partners -- hit by a declining stock market and poor returns from their investments in bloated VC funds -- pull back, was read and discussed for weeks, at peHUB and elsewhere, after he posted it on his blog last August. Everything that's happened since then convinces him he was right, Gurley told me today, and it's easy to find evidence to support his claims. Endowments are cutting back on their commitments to private equity, for instance, as Alex pointed out yesterday, and Stanford is trying to sell some of its commitments on the secondary market. But Gurley sees bright spots too.

AltaRock received another $26.5 million in grants from the Department of Energy today for two new geothermal drilling projects -- despite claims that its drilling project in the California Geysers could cause earthquakes. The New York Times ran a story in June comparing Altarock's California project to a 2006 project in Basel, Switzerland, where an earthquake damaged buildings and frightened residents with a loud roaring noise. Aftershocks followed for several months. AltaRock -- which has raised over $30 million from Khosla Ventures, Kleiner Perkins, GreatPoint Ventures, Google.org and others to provide clean energy by extracting heat from rocks -- wasn't behind the Basel project and disputed the Times' claims. But the story prompted a review by the Department of Energy and the Bureau of Land Management, which said that although AltaRock could keep drilling, it couldn't fracture any rock in California until the agencies decided it was safe.

ZeroIPO released exhaustive data today on third quarter venture capital and private equity activity in China. The results? Venture fundraising is down slightly from second quarter and venture investing rose, although neither are back to where they were at the end of last year. But IPOs for Chinese companies on both the Chinese and foreign stock exchanges surged. "The facts that Chinese economy took the lead to stabilize, IPOs on the main board market resumed and 28 enterprises received approval to launch IPOs on the GEM [Growth Enterprises Market] all points to an upcoming spring for the exit of VC institutions in China," the report said. Get the data after the jump.