Year in Review: Time Line

JANUARYLip-Bu Tan, founder of Walden International, agrees to become CEO of Cadence Design Systems. He remains Walden’s chairman.

Venture capitalist Julius Genachowski of Rock Creek Ventures is tapped to be chairman of the Federal Communications Commission.

Kleiner Perkins Caufield & Byers begins raising multiple annex funds.

Washington Mutual agrees to sell its LP interests in three VC funds managed by FT Ventures to Industry Ventures. A wave of distressed LP sales is expected, but doesn’t materialize.

Trio of former Aldus Equity executives forms new Dallas-based firm, including co-founder Marcellus Taylor. Eventually, firm leader Saul Meyer will plead guilty for participating in a pay-to-play scheme, and Aldus will go out of business.

CalPERS names Joe Dear as its new CIO.

Medidata Solutions files for year’s first VC-backed IPO. It prices in June.

Atlas Venture closes eighth fund well shy of target, lays off staff.

FEBRUARYThe Carlyle Group sues Neil Shen, a founding partner of Sequoia Capital China, for allegedly wrecking Carlyle’s planned investment in a Chinese medical research firm.

Senate bill is introduced that would require hedge, private equity and venture capital funds to register with SEC.

Tony Sun announces plans to leave Venrock in mid-2010, after more than 20 years at the firm.

UTIMCO Chairman Robert Rowling quits in middle of state legislative hearing, after being criticized for paying bonuses based on 2008 performance.

Twitter raises $35 million in Series D funding. It’s considered a lot of money, until Twitter raises $100 million in September.

Tom Friedman writes in favor of a VC bailout, gets criticized by VCs.

Réal Desrochers steps down as head of alternative investments for CalSTRS.

President Obama includes a change in carried interest tax treatment, as part of a budget blueprint. At year-end, the switch is still being debated.

Marc Andreessen and Ben Horowitz launch new venture fund, Andreessen Horowitz, and ultimately raise $250 million.

MARCH

After 27 years with Sequoia Capital, Partner Pierre Lamond leaves to join cleantech investor Khosla Ventures. Asked about the departure, a Sequoia spokesman says: “No comment.”

VC business gets more transparent, as change goes into effect requiring all Form D filings to be submitted electronically.

Ford Foundation promotes Eric W. Doppstadt to chief investment officer, who succeeds retiring Linda B. Strumpf.

PeHUB site crashes after it publishes a list of VC Walking Dead—firms that can no longer make new investments.

Pay-to-play scandal erupts in New York, with Andrew Cuomo charging NY Common Retirement Fund CIO David Logisci and “placement agent” Hank Morris with taking kickbacks from PE firms in exchange for fund commitments.

Eric Upin leaves Sequoia Capital, where he was leading the launch of an asset management platform. A new leader is named later in the year, although the program remains under wraps.

Jon Miller leaves Velocity Investment Group to be CEO of News Corp.’s Digital Media Group.

Google forms $100 million venture capital fund.

Capital Dynamics agrees to take over management of troubled fund-of-funds manager HRJ Capital. Football great Ronnie Lott, who co-founded HRJ when it was known as Champion Ventures, stays on with Capital Dynamics, but leaves eight months later.

The former CEO and CFO of VC-backed CRM company Entellium are sent to prison for wire fraud and lying about revenue to their investors, including Ignition Partners and Intel Capital. Former CEO Paul Johnston gets three years and former CFO Parrish Jones is sent away for two.

Q1 deal making plummets. U.S. VCs invest $3.33 billion in 618 companies in the first quarter, down from $7.68 billion invested in 1,018 companies in the same period a year earlier, according to the MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters (publisher of VCJ).

Contraction of venture industry becomes apparent as just 51 U.S.-based funds raise $4.87 billion in Q1, down from 74 funds that raised $7.23 billion in the first quarter of 2008, according to Thomson Reuters.

APRILKaren Gordon Mills, founding partner of VC firm Solera Capital, is sworn in as the 23rd administrator of the U.S. Small Business Administration.

Kleiner Perkins

-backed Terralliance runs into trouble due to alleged fraud by its CEO. Company later gets new funding, and remains in operation.

Highland Capital Partners begins raising $400 million for a new fund, half the amount it raised for its prior fund.

Goldman Sachs raises $5.5 billion for the largest-ever secondaries fund.

EBay sells online recommendation service StumbleUpon back to its founders, who received VC backing.

Bridgepoint Education prices year’s first VC-backed IPO. It’s a huge windfall for Warburg Pincus, which owns 34.6 million shares worth $565 million by December.

ECast founder Mouli Cohen is accused of $18 million fraud.

Julio Ramirez leaves Park Hill Group. He later pleads guilty in Cuomo’s pay-for-play investigation related to work done while with Weatherly Capital.

MAY

May is the biggest month for VC-backed IPOs, with successful offerings from Digital Globe, OpenTable and SolarWinds. SolarWinds goes on to be the best-performing VC-backed IPO of the year, gaining nearly 68% from its $12.50 offering price by the second week of December.

Constellation Ventures, former affiliate of Bear Stearns Asset Management, becomes part of Highbridge Capital Management.

New York City institutes a ban on placement agents soliciting capital from public pension funds.

Clovis Oncology completes the year’s largest venture deal, raising $146 million in Series A funding from Aberdare Ventures, Abingworth Management, Domain Associates, Frazier Healthcare and Technology Ventures, New Enterprise Associates, ProQuest Investments and Versant Ventures.

Prism VentureWorks suspends efforts to raise new fund.

Greylock formally moves headquarters from East Coast to West Coast.

Terry McGuire of Polaris Venture Partners is named chairman of the National Venture Capital Association.

Digital Sky Technologies invests $200 million in Facebook, representing a 1.96% equity stake at a $10 billion valuation.

Concert Pharmaceuticals signs strategic partnership with GSK that could be worth $1 billion.

JUNE

CalPERS

increases its PE allocation from 12% to 14%, largely reflecting current exposure realities.

Eric Hippeau leaves Softbank Capital to become CEO of portfolio company HuffingtonPost.

National Association of Realtors forms VC fund.

Harvard Business School research finds Boston, New York and San Francisco VCs make more money on investments outside of their local geographies than on investments close to home.

Verified Identity Pass (aka Clear) shuts down after raising more than $40 million.

Medidata Solutions completes the fifth VC-backed IPO of the year.

Bank of America discontinues fund placement team acquired through purchase of Merrill Lynch.

VCs continue to hold onto their money in Q2. They invest $3.7 billion in 612 companies, down from $7.55 billion in 1,048 companies in the second quarter of 2008, according to the MoneyTree Report.

Fund-raising nightmare continues, as just 27 U.S.-based funds raise $1.96 billion in Q2, down from 82 funds that raised $9.28 billion in the second quarter of 2008, according to Thomson Reuters.

JULY

Former Joost CEO Mike Volpi joins Index Ventures. Move later leads to Index being removed from a consortium that buys Skype from eBay, after Skype’s founders complain Volpi had access to confidential info from Joost’s dealings with eBay and Skype.

SEC proposes federal ban on placement agents pitching funds to public pensions.

LogMeIn becomes the sixth VC-backed company to go public in 2009.

VC-backed Novafora collapses, just months after paying $255 million to buy publicly listed Transmeta Corp.Joe Zhou, who quit KPCB China in March 2008 to launch his own firm, holds a final close on $200 million for his new firm: Keytone Ventures. He also poaches Stella Jin and Peng Jin from IDG-Accel’s China Growth Fund to be Keytone partners.

Amazon.com agrees to buy online shoe retailer Zappos.com for $930 million in the year’s largest VC-backed M&A exit. Zappos had raised $49 million from Draper Richards, Millennium Technology Ventures, Sequoia Capital and Venture Frogs.

AUGUST

A123 Systems is awarded $249 million in government grants.

Domain Associates raises $500 million for ninth fund.

Tennessee Consolidated Retirement System makes first-ever VC commitments.

Benchmark Capital’s Bill Gurley writes that the VC industry is going to shrink substantially over the next several years, as large LPs reduce exposure to the asset class.

VC-backed Cumberland Pharmaceuticals succeeds in going public, but its shares later falter in the aftermarket. It is the seventh VC-backed IPO of the year.

Mohr Davidow Ventures files documents with the SEC indicating that it plans to raise annex funds for its seventh, eighth and ninth core funds.

SEPTEMBER

EBay

agrees to sell a 65% stake in Internet calling company Skype to a group of private investors. The deal will close in November, but not with the exact same buyers.

Jeffrey Barnes resigns from Oxford Bioscience Partners, after the firm accuses him of not complying with policies governing personal securities trading.

Khosla Ventures closes two new funds with more than $1 billion in combined capital commitments.

The pay-to-play nexus shifts to California, as CalPERS comes under scrutiny.

The Institutional Limited Partners Association releases a set of “best practices” to improve LP/GP alignment of interests.

Twitter raises another $100 million at a $1 billion valuation.

Giving hope to cleantech investors, lithium-ion battery maker A123 Systems prices its IPO at $13.50 a share, and its stock shoots up past $20 by the end of the day. It is the eighth VC-backed IPO for the year.

Venture investment increases from Q2 to Q3, but is down year over year. VCs invest $5.07 billion in 662 companies in the third quarter, down from $7.10 billion in 987 companies in Q3 2008, according to the MoneyTree Report.

Fund-raising drought continues, as 23 U.S.-based funds raise $2.09 billion in Q3, down from 63 funds that raised $8.50 billion in the third quarter of 2008.

OCTOBER

In the biggest payday of the year for VCs, Cisco agrees to buy publicly traded Starent Networks for $2.9 billion. Altogether, the three VC firms that remained Starent shareholders after its 2007 IPO—Highland Capital Partners, Matrix Partners and North Bridge Venture Partners—get $780 million for their shares. North Bridge is the biggest winner, with a 15% stake worth $369 million.October brings the year’s ninth and 10th VC-backed IPOs—Echo Global Logistics and Omeros—but both are trading below their offering prices by early December.

Saul Meyer of Aldus Equity pleads guilty to felony securities fraud.

Sequoia Capital plans to abandon geography- and stage-specific funds, for a singular fund model, sources say.

Jason Calacanis publicly scolds angel groups that charge companies to present elevator pitches.

The Ontario Municipal Employees Retirement System, aka OMERS, says it will no longer invest in private equity funds, instead preferring direct deals. This includes a direct VC effort.

Diapers.com raises $30 million, proving that ecommerce companies can still get big money.

Stanford Management Co. plans $1 billion secondary sale of VC/PE fund stakes, but abandons the plan in December.

NOVEMBER

Fraud scandal breaks at Canopy Financial, which has more than $88 million in venture backing. PeHUB reports that sources claim the company created false financial statements to raise money. Canopy subsequently files for Chapter 11 bankruptcy and the SEC files a civil suit against the company and former President Jeremy Blackburn.

The 11th VC-backed company goes public: Fortinet. The network protection company prices at $12.50 (above its range) and surges 36% by the end of the month.

EBay sells 70% stake in Skype to group that includes Silver Lake Partners, Andreessen Horowitz, the Canada Pension Plan Investment Board and Joltid Ltd., which was formed by Skype’s previous owners: Niklas Zennstrom and Janus Friis. Transaction is valued at about $2.75 billion.

As promised, Jason Calacanis launches an angel group called Open Angel Forum and promises not to charge startups to pitch at its meetings.

Logitech International buys LifeSize Communications for $405 million. It is the third portfolio exit of the year for Redpoint Ventures.

Greylock Partners raises $575 million for its 13th fund and adds LinkedIn founder Reid Hoffman as a partner.

Accel Partners has a $1 billion day, as two of its portfolio companies get snapped up. Google agrees to buy mobile advertising startup Admob for $750 million and Electronic Arts agrees to buy Playfish, a maker of games for social networks, for $300 million plus another $100 million if certain milestones are met.

Serial VC firm CFO Chen Tang is charged with insider trading.

Jonathan Silver, co-founder of Core Capital Partners, is named executive director of the Department of Energy’s loan program.

Norwest Venture Partners closes its eleventh fund with $1.2 billion in capital commitments from sole LP Wells Fargo.

DECEMBER

U.S. Attorney

charges Canopy Financial co-founder and former President Jeremy Blackburn with wire fraud, which carries a maximum penalty of 20 years in prison. Feds claim Canopy faked audited financials to secure a $60 million investment from Spectrum Equity Investors.

Mohr Davidow Ventures wraps up fund-raising for the three annex funds for its seventh, eighth and ninth core funds. It raises a combined $127 million, most of it ($72 million) for the annex fund for its vintage 2007 ninth fund.

Mark Pincus, CEO of hot social gaming company Zynga Game Network, says he would have liked to have bought Playfish. Also says Zynga has no near-term plans to sell out or go public.

The House of Representatives passes The Tax Extenders Act of 2009, riling the NVCA, which says it will result in VCs being charged twice as much in taxes on any carried interest.

Fund-raising finally shows signs of improvement, with 20 U.S.-based funds raising $5.03 billion as of Dec. 11, up from 48 funds that raised $3.56 billion in Q4 of 2008, according to Thomson Reuters.

Eleven venture-backed companies have gone public in 2009 as of mid-December, raising $1.6 billion, up from six venture-backed companies that raised $471 million in 2008, according to Thomson Reuters. The top performing IPO is SolarWinds, a maker of network management solutions, which gains 67% from its IPO price as of Dec. 11. The worst performer is Omeros, a maker of drugs to treat inflammation and CNS disorders, which sees its stock price decline 29% from its IPO price as of Dec. 11.

Annual venture-backed M&A is on track to fall short of 2008. As of Dec. 11, 243 VC-backed companies have been acquired, with 73 deals with disclosed valuations totaling $9.9 billion, according to Thomson Reuters. That compares to 350 deals in 2008, including 121 with disclosed valuations totaling $14 billion in 2008.

Stanford Management Co. gives up on its plan to sell $1 billion worth of VC and PE fund stakes on the secondary market.

Compiled by Dan Primack with additional reporting by Lawrence Aragon and Alastair Goldfisher