What’s happening to all that money?

There have been many accounts recently about the implosion and explosion of the private equity, venture capital and hedge fund markets.

image Given that there are few high-profile hedge funds and private equity funds that have imploded in a big way -including a few of those which were playing in mortgage backed securities.  Many are viewing this as a necessary correction, and just desserts for funds that are not playing by the rules (wasn’t the whole idea behind hedge funds to be "hedged" in down markets?). But there are a large number of hedge funds that have not only survived the downturn of the market in the last quarter, but have generated positive returns.

By and large the amount of capital in the market is growing, but the distribution of the money is the big open question.

Venture capitalists raised 34.7 billion in funds in 2007, the highest amount raised since 2001 which was 38.8 billion according to Thomson financial and the National Venture Capital Association (NVCA).

So is all of that money going?  As of last year, not a whole lot found its way into the pockets of entrepreneurs!

According to the Los Angeles Times, the VC investment into local companies fell to $689 million in the fourth quarter of 2007 compared to the $921 million during the same period in 2006. However the number of deals actually went up indicating that investors might be making smaller bets and waiting for the market to shakeout.

The New York Post (Private Equity Is Exploding) reports that the private equity boom in 2006 - 2007 is continuing through the early part of 2008.  Despite a few spectacular flameouts, PE firms are continuing to raise tens of billions of dollars.  Even with pension funds scaling back their investments, money has continued to flow in from foreign wealth funds.

image For now much of the money in alternative investment funds seems to be sitting in the sidelines waiting out the crazy market dance.

As the gurus of Wall Street would say — "staying in cash is a perfectly acceptable market strategy".  So the current wait-and-see-attitude where funds are not deploying all of their capital, might simply be a legitimate defensive position, and not the doom and gloom scenario that it is  sometimes made out to be.



Rubber band Model of Universe : Winner of 2008 Stanford Innovation Tournament.

Last week, I wrote about the Stanford Innovation Tournament . Every year, Stanford sponsors a tournament where the participants are asked to “add value” to a common, everyday item. This year, the item chosen was a rubber band.

I had my simple and complex ways of adding value to a rubber band. But despite my involvement in the “Talk Like a Physicist” campaign, I did not think about using a rubber band to demonstrate a physics concept! :-(
One of the winning entries is by Michael Fisher, demonstrating a rubber band model of the Einstein’s Theory of special relativity. As a true business school major and a marketer, he titled it as ” a model of the Universe”, let’s not quibble about that.

My favorite entry was the Artweb 2.0

 

However, the most educational and enlightening example was that of “failure”.

 

Which taught them “Fail early - fail fast!” and just because you build it, people won’t necessarily come.



BIL - the un-conference : Answer to TED

Let me start out by saying that this un-conference thing is not for me. I didn’t like the couple of these things I have attended, I don’t like the idea of it, I don’t like how they are executed and I don’t like the outcome.

Here is BIL un-conference.

bil_conference

BIL is…

an open, self-organizing, emergent, and anarchic science and technology conference.

Nobody is in charge.
If you want to come, just show up.
If you have an idea to spread, start talking.
If someone is saying something interesting, stop and listen.

What do you need to bring to the un-conference?

Things to bring…
A camp chair. Who knows where you’ll end up having a session. Bring your own folding chair, like this one.
A laptop.
A cell phone.
A camcorder (if you have one).
A power strip.

Funny thing is that I might actually attend the Bil2009 conference. Why? because despite its inefficiency and despite its unfocused organization, it has potential and it offers a soapbox that is interesting. Moreover, I keep thinking that a couple of un-conferences that I attended did not have a “critical mass” of people, so Bil2009 might be a part of the continued experience of exploring the un-conference format.

I don’t like un-conferences very much but I dislike regular rigid conferences even more! So see you at BIL2009. TED and BIL are coordinated so BIL happens just after the TED.



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