What happens when 500 VCs get together?

April 8, 2011, 12:21 AM UTC

The National Venture Capital Association just wrapped up its annual meeting in Boston, which was chock full of schmoozing, optimism and self-congratulation. I tried to attend most of it — including yesterday’s VC “birthday” celebration at MIT — and jotted down a bunch of notes (in no particular order):

* Ed Roberts of MIT asked if DST Group is this generation’s version of Softbank. Foundry Group’s Jason Mendelson, an ex-Softbanker, dissented. Jason argued that Softbank was looking to fund innovation that could be brought back to Japan, whereas DST has not yet demonstrated an interest in adapting Silicon Valley for the Russian market.

* Noubar Afeyan suggested that VCs need to stop settling for the “one hit in 10 investments” status quo. His example: 100 years ago, a surgeon would have been celebrated for drilling a hole into the head of 50 patients, and having one patient survive. Today, they’d be castigated and sued if even one of those patients died. In other words, benchmarks evolve… As a side-note, Harvard Biz School’s Bill Sahlman noted that Highland Capital Partners’ first fund had 21 “successes” out of 22 portfolio companies (Sahlman worked on the 22nd).

* Amazed that more cash-hungry entrepreneurs didn’t show up at yesterday’s VC65 event at MIT. How often do you get a couple hundred venture capitalists in the same room? At least one company, however, did choose to do a bit of guerrilla marketing: VCs were bussed over to MIT from the conference hotel, and were greeted by about 10 folks holding up signs promoting their endeavor. Unfortunately, it may not have worked too well. Lots of people remembered seeing the signs, but couldn’t remember what they said (I was in my car, and didn’t have a good angle).

* Smaller crowd this year than last year in Silicon Valley. Also smaller than the last Boston event. NVCA president Mark Heesen said that VC industry is “shrinking,” and he’s right that there has been some shakeout. At the same time, however, I’d argue that many of the best new entrants simply haven’t joined NVCA. Not sure if they think it’s irrelevant, or if they’re happy to let others do the grunt work. One exception is True Ventures, which joined this year and now has partner Jon Callaghan on the NVCA board of directors.

* It’s also an older crowd in relation to the overall VC market.

* Three panelists asked to predict VC returns over the next five years, on an ascending scale of 1-10:

  • Geoff Love, head of VC at The Wellcome Trust: 7.5
  • Paul Maeder, co-founding partner of Highland Capital Partners: 10
  • Brooks Zug, co-founder of fund-of-funds manager HarbourVest Partners: 9

* NVCA expects that the SEC will come out with its definition of “venture capital” sometime between tomorrow and June. This language is key, of course, because Dodd-Frank exempted venture capital funds from registration requirements (while punting on the actual definition).

* Lots of concern about VC firms not doing a good enough job policing themselves — or their portfolio companies — when it comes to personal purchases/sales on the secondary markets. NVCA plans to release a set of best practices within the next few weeks, and it also will host a related webinar on April 29.

* Andy Ory, CEO of Acme Packet (APKT): “”I still walk with a limp today from the hiring mistakes I made early on as a startup CEO.” He also personally interviews all of the company’s potential North American hires.

* Tim Healy, CEO of EnerNOC (ENOC) “I always felt that VCs were investing in our business, in us. Public investors just invest in our stock.”

* More Ory: While thinking about taking Acme Packet public, he met with every public company CEO on Route 128. Every one told him not to do it. Wish he, Healy and Netezza’s (NZ) Jim Baum had been asked if a viable secondary market would have altered their IPO decisions.

* Bill Sahlman, while discussing the relative puaicty of federal spending on basic research: “A common characteristic of the media is an inability to divide any two numbers.”

* Mick Mountz, founder of robotic warehouse automation company Kiva Systems, got the idea for his company while working at Webvan. He then apologized to any VCs in the room who invested in Webvan.

* Lots of clapping when outgoing NVCA chair suggested that the industry was “winning” the battle on carried interest taxation. Not sure if the applause was because the room has self-interest in preserving its loophole, or because they’re all Charlie Sheen fans.

* A venture capitalist sang. Tim Draper was on the agenda. But Tim Draper was not the troubadour. I know, blew my mind also…

* Next year in Santa Clara…