Buzz Archive:
Venture Funds Take on Buyouts--Déjà Vu All Over Again

by Joseph W. Bartlett, Founder of VC Experts.com, 2/26/2008

The Wall Street Journal recently made the observation that venture capital funds, of a certain size, are also engaged in investing in buyouts. The reporter cites skepticism in circles 'whether venture investors who have largely focused on ferreting out start ups can handle bigger deals in a larger group of industries.' The skeptics ignore the fact that many venture funds, and we are talking about traditional venture funds, have moved well up the food chain from start up investing.

As Joe Bartlett, formerly Of Counsel at Sonnenschein Nath & Rosenthal LLP sees it, the term 'private equity' previously meant both venture and buyout investing; indeed, venture funds (pre-the early 1980s when a separation occurred), pursued both venture and buyout opportunities. Is the current phenomenon just history repeating itself? Will it be of long duration as an investment philosophy ... because it enables the managers to chase returns on either side of the aisle?