Why Have a Biotech Venture Fund?...Paul Kedrosky says "I was playing with some CalPERS venture investing data today while on planes. I decided to split the data into pre-2004 vintage non-biotech and biotech funds. The results were as follows:"
Multiple | IRR | |
| Biotech | 0.33 | 1.9% |
| Non-bio | 0.58 | 3.0% |
Those are some crappy returns. A related post is by Don Dodge titled
Venture Capitalists and Angels invest $40 Billion per year but see only $18B in exits...
the gist of Dodge's commentary can be summarized as:
-VCs and Angels expect to wait an average of 5 years before they get their money back...
-No matter how you look at it VCs and Angels are not doing very well...
-The top quartile of VCs and mutual funds make most of the money. The rest under perform...sometimes badly....
FedEx Corp. said Wednesday a slowing economy, severe winter storms and lower fuel surcharges contributed to a 2 percent decline in the package shipper's third-quarter profit...that doesn't bode well for the next GDP figures...
Switzerland's banking system now..."Stodgy Swiss banks have to work harder for their fees. Nor is Swiss banking quite as secretive as it once was. Legendary banking secrecy laws date back to 1934 when Nazi Germany tried to seize assets that German Jews had hustled abroad. These laws have been loosened. A federal law passed in 1997 made money laundering, and abetting it, a criminal offense. "There has been no money arriving in suitcases for at least ten years," says a senior executive at one of the big banks. "We need to be seen to be cleaner than clean."...har, har
Thanks to Paul Kedrosky for this:
"You never ask board members what they think. You tell them what you're going to do."[From a Fortune interview with Seagate CEO Bill Watkins]...this kind of attitude is why there have been so many issues with corruption in executive management...rubber stamp boards are worthless for representing shareholders at large...
Yet another Paul Kedrosky gem: An Underreported $120m Hedge Fund Meltdown..."the story of GMM's meltdown is great reading. Absolutely remarkable how many people put money into a fund without audited performance results, as well as how no-one did a simple search to discover that the fund's managing partner and main trader had been fined/barred multiple times by securities agencies"...always do background research into the people you're giving money to...
Fitting data curves..."One of the problems with standard economics training is that the econometrics focuses on linear regression and tends to skip over non-linear functions. Most economists would never consider a curve may be, say, a Poisson distribution. Many sem to think adding a squared or cubed term to their model is the height of sophistication!"...since pretty much all economic phenomena have non-linear components this means that most economics research does not approximate reality very well...
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