Dixon Doll, co-founder of DCM and next in line to serve as chairman of the National Venture Capital Association, lashed out at buyout pros at an East Coast conference in June. Doll pointed blame at the buyout titans for prompting lawmakers to propose taxing carried interest as ordinary income instead of as a capital gain.
The reason for the legislative scrutiny is “simply because of the unbelievable egos of the guys running the PE firms like Blackstone and KKR,” he said. “They put big targets on their back … calling attention to themselves in a nonflattering way.”
Doll also said that job creation is the antithesis to taking companies private. “It’s ‘Barbarians at the Gate’ all over again,” he said in reference to the book that detailed the contentious leveraged buyout of RJR Nabisco, which pitted CEO F. Ross Johnson against buyout pros Henry Kravis and George Roberts.
Doll conceded the VC industry has “our work cut out for us” to prevent any general overhaul of tax laws from invariably affecting VC firms and the nation’s budding entrepreneurs.
We couldn’t help but notice that the NVCA tapped Kate Mitchell of Scale Venture Partners to testify on the carried interest tax proposal before the Senate Finance Committee in July. We think Doll would have made for a—how should we put it?—livelier session.
No vroom for Lip-Bu
While some VCs may dream of owning a high-performance electric sports car, Lip-Bu Tan is excited about the promise of hydrogen automobiles. The only trouble he’s facing is finding one that works.
The Walden International chairman set out to test drive a Chevrolet Sequel concept car this summer at a General Motors facility in San Diego. The Sequel, which is about the size of a Cadillac SRX, travels up to 300 miles on its hydrogen supply, and accelerates to 60 mph in less than 10 seconds, according to GM.
In addition to running on a hydrogen fuel cell, Tan says, the car included such features as an internal wireless communications system and sensors to detect the proximity of other vehicles on the road.
Sounds perfect. But when Tan showed up for the drive, he was told the car wasn’t working. Tan says he hopes to reschedule another test drive down the road.
“I’m just intrigued by the potential,” he says.
Entrepreneurs strike back
Venture capitalists are used to keeping it real and giving stinging critiques to entrepreneurs. Now the tables have turned.
TheFunded.com, a website that was founded by an anonymous entrepreneur who allegedly endured “shockingly unusual experiences in [the] fund-raising process,” provides a forum for other company founders to vent. In the past three months, the site has collected more than 2,000 reviews, primarily from startup CEOs.
But not all the posts are from jilted entrepreneurs. One entrepreneur touts Chris Rust, a partner at U.S. Venture Partners as “the hardest working man on Sand Hill.”
However, another user, who was strongly negative, complains in an open letter to an unnamed VC: “When I called your office at 2:00 p.m. on Friday, having already worked the first 80 hours of my week and you have left the office for the weekend, I am not impressed.”
Members the site can rate funds on a 1 to 5 scale across five categories: track record, operating competence, pitching efficiency, favorable deal terms, and execution assistance. Firms with the highest average ratings across all categories, as of mid-July, included True Ventures, Leapfrong Ventures, and Union Square Ventures.
In response to requests from venture capitalists, TheFunded a few weeks ago began allowing VCs to publish their own profiles, including details such as closing time estimates and partner specialties. TheFunded, by the way, has not raised any venture capital.
Sequoia’s late fees
While we’re on the subject of entrepreneurs with hurt feelings, it has come to our attention that Sequoia Capital has started fining staffers $100—which they are supposed to give to a charity—when they are late to an entrepreneur meeting, even if it’s only by a minute. No word on which Sequoia partner has had been fined the most.
While we think the late penalty is a step in the right direction, but we encourage Sequoia to go after an even more agregious VC offense: typing on your Blackberry during a meeting.