Lawrence Aragon

Online restaurant reservation service OpenTable has set the terms for its IPO—and they don’t look wonderful for its venture backers (see table after the jump). As a group, VCs invested a total of close to $69 million in the company, but at $13 each their shares would be worth a combined $162 million following the IPO. That means the VCs would have collectively earned a return of just 2.36x on their investment (were they to cash out at the IPO price). The only VC that stands to earn a decent return is Benchmark Capital. It invested an estimated $12.7 million over two rounds (according to data from peHUB publisher Thomson Reuters). With 5.3 million shares that would be valued at $68.8 million, Benchmark is looking at a potential multiple of 5.4x. Still, that’s not great for nine years of work.

New York State Comptroller Thomas DiNapoli today released a detailed list of placement agents that were involved with investments made by NY Common Retiremenrt Fund under former Comptroller Alan Hevesi. You'll recall that two of Hevesi's top aides - David Loglisci and Hank Morris - were recently indicted on charges they took kickbacks to steer billions of dollars of state pension dollars to certain private equity funds. Morris and Loglisci, who face 123 charges, have pled not guilty. Late last month, New York banned the use of placement agents. Here's the list: New York Placement List Publish at Scribd or explore others: Brochures & Catalogs How-to-Guides & Manu fantasy Games

Everyone knows the fund-raising market has gotten more difficult, but a table I put together for a webinar I’m hosting tomorrow shows just how bad it is. Take a look below. Just skimming through a couple of months of coverage in Venture Capital Journal and PE Week, I was able to identify at least 16 firms that came up short of their goals. In one case, a firm abandoned fund-raising altogether and in another the firm postponed it till the market improves. I don’t think we’re going to see any improvement any time soon—for GPs, anyway. In fact, Private Equity Insider just reported today that Draper Fisher Jurvetson has cut the target of its 10th fund from $600 million to $400 million and it’s offering better terms for LPs, including carried interest that starts at 20% instead of 25% and is based on performance benchmarks.

UPDATE: Just heard back from Battery and was told that Tom Crotty will in fact continue as the firm's "managing GP" in its ninth fund, and that he will start to step back with fund X -- not fund IX, as we previously reported. The firm declined to say when it would start raising fund IX or give an approximate time line for when fund X would get raised. ORIGINAL POST: Longtime Battery Ventures General Partner Tom Crotty won’t be a GP in the firm’s 10th ninth fund, according to my colleague David Toll, who spoke to Crotty at the NVCA annual meeting. Crotty also said that Battery’s next fund will likely be the same size as its current fund—a $750 million core fund and a $250 million sidecar, Toll reports.

Most of us swore we’d never fall under the dot-com spell again after the bubble burst, but the irrational exuberance has returned for a number of Internet startups, not the least of which is Twitter. Now Nielsen Online research analyst David Martin has taken a hard look at the company and his conclusions should have Twitter’s VC backers worried. “Currently, more than 60 percent of U.S. Twitter users fail to return the following month, or in other words, Twitter’s audience retention rate, or the percentage of a given month’s users who come back the following month, is currently about 40 percent,” Martin writes in his report. “For most of the past 12 months, pre-Oprah, Twitter has languished below 30 percent retention.”

The NVCA came out with its “four pillar” strategy to revive the liquidity market (read IPO market) for venture-backed companies today (see Dan's post). Whether you agree with the recommendations or not, I think there is no room for debate about whether the lack of VC-backed IPOs is a systemic problem vs. a recessionary one. With just six VC-backed IPOs last year, Venture Capital Journal asked a Ph.D. economist last November to look at the hard IPO data to determine what a “normal” year would have looked like. The number she came up with: 50.

We’ve got a great cover story in this month’s Venture Capital Journal. Written by Lee Bruno, who was covering cleantech before it was known as cleantech, the story is full of practical advice about how VCs can help their portfolio companies access government stimulus dollars. Lee is going to moderate a panel on that very topic at VCJ’s “Financing the Cleantech Vision” event in Palo Alto on June 25. Speakers include Steve Westly, former California Controller, Chuck McDermott of RockPort Capital, Mark Nydam of PCG Asset Management, Anup Jacob of Virgin Green Fund and lots more. I’ve got a special bonus for you if you are one of the next 10 people who register for the event: I will shoot you a PDF of Lee’s cover story and send you a hard copy of the magazine. Click here for all the details.

When Q1 deal data are finalized later this month, they are sure to show a significant slowdown. But that doesn’t tell the whole story. I met this morning with VC Richard Yen, who told me that his firm, Saban Capital Group, has offered three term sheets so far this year only to be outbid on all three of them. “There’s been a flight to quality,” says Yen, a director in the digital media group of Saban, a Los Angeles-based firm backed by billionaire media mogul Haim Saban. “There are only a few things we’ve gotten excited about, but when we have there have been a lot of people sniffing around,” Yen says. Saban offered term sheets for a Series A round for a mobile company run by a successful repeat entrepreneur who was seeded by a Sand Hill Road firm; a Series A round for a direct response marketing company (a la Cash4Gold) run by an entrepreneur with 20 years in the direct response business; and a seed round for an entertainment website run by a “high-profile personality.”

Because of the problems caused by AIG, the government is correctly considering regulating previously unregulated institutions that have the potential of becoming too big to fail. In testimony before the House Financial Services Committee today, Treasury Secretary Timothy Geithner suggested that venture capital and private equity firms may be required to register with the SEC. Bill Gurley of Benchmark is concerned about Geithner’s remarks, but I just don’t see this as an issue for VCs to get worked up over. Geithner said he wants to regulate financial and non-financial entities that “collectively pose a threat to financial stability.” The entire U.S. VC industry manages roughly $250 billion, according to the NVCA, and those venture investments are essentially illiquid. Unlike AIG, there is nothing that a single venture firm (or even the industry as a whole) could do to imperil the U.S. financial system.

If you’re looking for what’s cool in Series A deals, check out the Small Business page on Reuters.com’s Business & Finance Channel every Monday. Joanna Glasner and Alex Haislip, writers for for peHUB sister publication Private Equity Week, drill down into a cool startup every week. This week’s feature is about NKT Therapeutics, which just raised $8 million to develop asthma treatments. Past features by Joanna include a look at a stem cell startup called Stemgent and a company called Simulmedia that’s trying to create TV advertisements that are targeted at specific viewers. If you know of any particularly cool startups raising Series A financing, feel free to pitch me at lawrence.aragon@thomsonreuters.com.