Tough to deny Romney's role as a true VC
It might not be a campaign of revisionist history, but today’s peHUB report about the VC industry allegedly trying to keep its distance from Republican Presidential candidate Mitt Romney is worth reflecting on:
When staffers at the National Venture Capital Association see a report that refers to U.S. presidential candidate Mitt Romney’s investments as venture capital, they grimace — and then contact the author to explain politely why it’s wrong.
The Republican White House hopeful was head of Bain Capital LLC, which does the bulk of its work in private equity and not venture capital, the NVCA would clarify. Venture capital backs companies from their earliest days, and some go on to create thousands of jobs; private equity typically comes in at later stages to turn around underperforming companies, sometimes via job cuts and other unpopular cost-savings moves.
The piece got me thinking: hasn’t Bain’s success as a venture capital firm and job creator been a recent element of the NVCA’s efforts to convince Washington of the many positive things that flow from a healthy venture capital industry? I was sure I’d even seen a document not that long ago where some of Bain’s early “venture capital” investments were featured by the NVCA as examples of the industry’s success.
Indeed, the 2011 NVCA / IHS Global Insight Venture Impact Study (6th edition), highlights Staples in the “Venture Capital 101” section of the 16 page report. As I understand it, Bain invested $4.5 million in Staples in 1986 to help get the first store started; there are over 1,000 storefronts today.
Interestingly, the NVCA / IHS 2011 study also trumpets Home Depot, Starbucks, Outback SteakHouse, Costco and FedEx as “companies founded with venture capital”; not your traditional idea of tech, biotech, lifescience or clean tech investing, are they?
According to Wiki, Bain also invested $1 million in medical equipment maker Calumet Coach in 1986, which eventually returned $34 million to the fund. Another deal was technology research provider Gartner Group (a 16 bagger for Bain).
The initial $37 million Bain fund put money into 20 companies; the 2nd Bain fund deployed $106 million across 13 investments.
Not to pick sides in the debate, but that sounds like venture capital to me.
Today’s Bain takes up 11 floors of an office tower in Boston, 10 of which are occupied by folks pursuing investing strategies beyond traditional venture capital. But the Bain of old, when Mr. Romney was around, was definitely doing VC deals.
MRM
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