MARIA: WELCOME BACK.
MY NEXT GUEST IS ONE OF THE
PIONEERS IN THE VENTURE
CAPITALIST FIELD.
IN 1977 ECHO FOUND APAX PARTNERS
WHICH IS ONE OF THE WORLD'S
LARGEST PRIVATE EQUITY FIRMS.
IN 2004 PATRICOF STEPPED BACK
FROM THE DAILY DUTIES OF APAX
AND FOUND GREYCROFT PARTNERS.
THE FIRM WITH ABOUT A BILLION
DOLLARS UNDER MANAGEMENT.
THANK YOU SO MUCH FOR JOINING
US.
YOU ARE THE PERFECT PERSON TO
TALK ABOUT WHAT THE HECK IS
GOING ON.
THIS WEEK TECHNOLOGY WAS SO
STRONG.
A NUMBER OF THE SO-CALLED
FANNING STOCKS HIT CAN
FANNING STOCKS HITTIAN
FANNING STOCKS HITTING ALL-TIME
HIGHS.
>> THE PRIVATE SECTOR IS AS
STRONG AS I HAVE SEEN IT IN ALL
THE YEARS I HAVE BEEN IN THIS
BUSINESS.
THE MARKET -- ARE WE SEEING
IRRATIONAL EXUBERANCE OR
OVERHEATED MARKET?
I CAN'T TELL YOU.
IF YOU ARE YOUNG WITH A GOOD
TEAM AND LOOK FOR EXPANSION
CAPITAL.
TOUGH A GOOD CONCEPT MONEY WILL
NOT BE YOUR RESTRICTING ELEMENT.
THERE IS A LOT OF MONEY IN THE
FUNDS THAT WANT TO INVEST.
THE IPO MARKET OPENED UP THE
LAST TWO MONTHS.
THE LAST FOUR OR FIVE DEALS, UP
TO 500% PREMIUMS.
THE COMPANIES GET SOLD IN THE
PRIVATE MARKET.
MARIA: I GETS MAKES IT HARDER TO
COMPETE BECAUSE A LOT OF PEOPLE
ARE WILLING TO FUND THESE EARLY
COMPANIES.
>> THE REASON I RAN A BILLION
INSTEAD OF 41 BILLION, I WENT
BACK TO MY ROOTS, BACK TO THE
FUTURE.
I WANTED TO MAKE SURE WE WOULD
STAY A VENTURE FIRM SO WE
CONTROLLED OUR FUND AT NOT BEING
MORE THAN A COUPLE HUNDRED
MILLION.
IT AFFECTS HOW YOU INVEST AND
WHAT YOUR REASONABLE
EXPECTATIONS FOR EXIT ARE.
FOR STARTUP THERE IS A LOT OF
MONEY.
BUT THERE IS A LOT OF PEOPLE
WITH MONEY IN FUND THEY HAVE TO
INVEST.
THERE IS EXUBERANCE IN TERMS OF
PRICING AND PEOPLE PUTTING
PERHAPS MORE MONEY INTO
TRANSACTIONS THAN NEEDED.
ONE OF THE THINGS THAT CONCERNS
ME MORE THAN ANYTHING ELSE.
YOU ARE SEEING YOUNG COMPANIES
BECAUSE THEY CAN'T SATISFY THE
DEMAND OF BIG FUNDS TO PUT MONEY
TO WORK, A COMPANY ONE YEAR OR
TWO YEARS OLD, THE FOUNDERS ARE
CASHING OUT TO SATISFY DEMAND
FOR THEIR STOCK.
IT'S NOT ALL GOOD.
MARIA: DOES IT CONCERN YOU THERE
IS SO MUCH MONEY SLOSHING AROUND
THE WORLD MAYBE WE ARE GETTING
TOO EXUBERANT?
>> SO FAR WE HAVEN'T SEEN A
DRAMATIC FALLOFF.
EVERYONE SAYS WE HAVE HAD 8-9
YEARS OF CONSISTENT GROWTH.
WE HAD ABOUT THE SAME IN THE
VENTURE BUSINESS.
I TIMED IT VERY WELL STARTING IN
2006 AGAIN.
AND SO FAR EVERYTHING LOOKS
GOOD.
AND DEFINITELY I WOULD NOT SEE
THE SAME CONDITIONS WE SAW IN
2000 AND 2001 WHICH WERE ROUGH
TIMES.
COMPANIES TODAY SEEM TO HAVE
BETTER THOUGHT OUT PLANS,
MANAGEMENT TEAMS THAT ARE
MORNING EXPERIENCES AND TELLINGS
ADVANCED.
IT'S A MIXED BAG.
MARIA: YOU HAVE BEEN FOCUSED ON
A COUPLE BARRIERS, MEET YEAH,
DIRECTOR CONSUMER AND SPORTS
TECHNOLOGY.
TELL US WHERE YOU SEE THE GROWTH
IN THOSE AREAS OR ANY OTHER
AREAS.
WHERE IS THE GROWTH IN VENTURE
CAPITAL?
>> EVERY ONE IS INTERESTED IN
CYBER WARFARE, CYBER CONTROL,
AND WE MAKE INVESTMENTS IN THAT
AREA POLICE THE DARK WEB,
PROTECTING EQUIPMENT SO IT
DOESN'T GET PENETRATED.
AND IT'S A VERY GOOD AREA.
IT'S HOT, BUT IT'S ALSO A GOOD
THING BECAUSE A WHOLE NEW WORLD
OPENED UP AS A RESULT OF ALL THE
INTRUSIONS AND HACKING WE HAVE
SEEN OBVIOUSLY IN THE POLITICAL
AREA TO START WITH.
MARIA: HOW LONG BEFORE YOU LOOK
FOR AN EXIT STRATEGY.
IS IT ALWAYS THAT THESE
COMPANIES GO PUBLIC OR DO YOU
HOLD AND INVEST FOR A LONG TIME?
>> THAT'S A GOOD QUESTION TO
ASK.
I THINK PEOPLE ARE CONFUSED
ABOUT THAT.
VENTURE CAPITAL IN MY OPINION IS
A MUCH LONGER-RANGE BUSINESS
THAN PEOPLE THOUGHT.
BACK -- I HATE TO GO BACK, BUT
IN THE 70s OR 80s YOU COULD
INVEST IN A COMPANY AND TWO
YEARS LATER THEY COULD GO PUBLIC
WITH NO REVENUES AND NO PROFITS.
TODAY THERE IS A MUCH MORE
DISCERNING I.P.O. MARKET.
YOU HAVE TO BE AT A CERTAIN
LEVEL OF REVENUE.
WE BELIEVE COMPANIES SHOULD BE
CAPITALIZED.
WE DON'T WANT CAPITAL INTENSIVE
COMPANIES.
WE WANT COMPANIES THAT
CAN MAKE IT WITH A REASONABLE
AMOUNT OF CAPITAL RAISED.
EVERY ONE OF OUR COMPANIES THAT
HAS BEEN SOLD HAS BEEN SOLD IN A
PRIVATE TRANSACTION.
WE HAVE HAD GOOD ACQUISITIONS UP
IN THE HIGH HUNDREDS OF
MILLIONS.
BUT CERTAINLY APPROACHING THAT