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Link: index: DevelopmentCorporate Link: start: Welcome Link: prev: Using Wisk to Clean Up Your Social Media Reputation Link: next: JDA & i2 Part Deux or The `New Normal' for Tech M&A Deals Link: canonical Link: shortlink [IMG] < Browse > Home / Financial Literacy, Management, Private Equity, Product Management, Venture Capital / Blog article: SaaS Company Valuation Trends | Mobile | RSS DevelopmentCorporate _____________________ [ Search ] * Home * About Us * John C. Mecke * Major Transactions * Presentations & eBooks * Financial Literacy * Links * M&A Series * Management * Private Equity * Product Management * Social Media * Uncategorized * Venture Capital SaaS Company Valuation Trends November 5th, 2009 | 1 Comment | Posted in Financial Literacy, Management, Private Equity, Product Management, Venture Capital How does the market value SaaS companies in comparison to other software companies? Out of 25 different categories of software companies, pure play SaaS companies are the third most valuable category. Not surprisingly, SaaS companies are faring well on exits as well. In this post we will take a look at SaaS valuation and exit trends as well as some interesting trends that potentially foretell a significant slowdown in SaaS company revenue growth and valuations. Before we get too far into this analysis I'd like to plug the team at Software Equity Group and their monthly, quarterly, and annual Software Industry Equity Reports. SEG is an investment bank and M&A advisory serving the software and technology sectors. They publish the some of the industry's most comprehensive analyses of software technology company valuations and M&A transaction forensics. I've liberally used information from their latest 3Q09 Software Equity Industry Report which you can access here. Before jumping into the details of SaaS company valuations, it is important to set some overall context. The following table describes the relative valuation performance of 24 different software categories. The categories are sorted based upon Q3 2009 Enterprise Value/Revenue multiples which appears to be the best metric these days for assessing the value of software companies. If you need to brush up on your understanding of Enterprise Value and EV/Revenue multiples check out this quick post. SVT 1 This table shows the changes in EV/Revenue and EV/EBITDA multiples for each of the 24 categories between Q3 2008 and Q3 2009. As the data indicates, Security and eCommerce, Software have the highest EV/Revenue multiples. The next tier are companies that have >2.0x EV/Revenue multiples - Healthcare, Financial Services, HR & Workforce Management, Enterprise Application Integration, Storage & Storage Systems Management, etc. On an overall basis the enterprise value of software companies has declined about 12% on a year over year basis. Surprisingly, 8 categories have shown valuation growth - those are the ones highlighted in italics. One of the more surprising pieces of information is that some categories have seen significant declines in EV/EBITDA multiples, but not much decline in the EV/Revenue multiple or valuation. In other words, even though profits were down, valuations did not decline in lockstep. This leads one to believe, for now, that revenue multiples are a better way of valuing these categories than EBITDA multiples. Another potential takeaway is that increasing profits during recessions does not necessarily lead to improvements in valuations. It is almost a Biblical fact that tech companies will cut costs and increase profits during recessions to build shareholder value. These numbers potentially indicate that profit growth at the expense of revenue growth may not be a solid strategy in today's market. I'm sure we'll explore this concept in another post some time. Now we've set an overall context on software company valuations, let's take a look at SaaS valuations. The Software Equity Group maintains a SaaS Index that is composed of 15 companies. The following table shows the relative valuation trends for these companies. The companies are sorted from the highest to lowest Enterprise Value. svt 2 As this table shows, the median 3Q09 EV/Revenue Multiple for these SaaS companies is 2.6x, which in comparison to all other software categories would be #3 behind Security and eCommerce. Median EV/Revenue for SaaS companies declined 14% YoY, slightly more than the median software category. SaaS companies that have achieved revenue scale (>$100 million) enjoy a significant valuation advantage over other software categories averaging a 3.6x vs 1.7x EV/Revenue multiple. When it comes to exit valuations, SaaS companies are performing significantly better than their software peers. As this chart indicates, software company EV/Revenue exit multiples have been slowly increasing over the past 4 quarters for traditional software companies: svt 3 SaaS companies are performing at almost twice the level of their software peers: svt 4 While these numbers are definitely trending down, they help to demonstrate the ongoing maturity of the SaaS space. Of the 15 companies in the SEG SaaS Index, 10 have more than $100 million in revenue. It is inevitable that as software companies grow past $100 million, their revenue growth rates will decline. Valuation metrics will eventually revert to the mean of other software companies. Another sign that SaaS companies may have hit a bump along the road to continuous growth is the apparent significant decline in a key metric:. Max Bleyleben, a VC with London-based Kennet Partners recently did entitled "Why SaaS sales productivity is collapsing." Max analyzes a post from Bessemer Venture Partners Philippe Botteri. Here's an excerpt from Max's post: Philippe Botteri has put together an interesting analysis of his 13-member index of public SaaS companies (see here for the full spreadsheet). Essentially he has applied the same sales productivity metrics we use to evaluate private SaaS companies to public companies and charted their evolution over time. The resulting graph provides a stark picture of the recession's impact on these companies: an 85% decline in the productivity ratio (incremental gross profit / sales & marketing cost), which is now running at 0.10 vs a target of 1.00. These companies are struggling to add new customer revenue and are surviving primarily on their existing recurring revenue base. The rate and scale of the productivity decline are telling, but the absolute ratios should be taken with a grain of salt. SVT 5 Leave a Reply 2898 views, 23 so far today | other stuff * No Related Post Follow Discussion One Response to "SaaS Company Valuation Trends" Trackbacks 1. Tweets that mention DevelopmentCorporate >> Blog Archive >> SaaS Company Valuation Trends -- Topsy.com November 5th, 2009 Leave a Reply _______________________ Name (required) _______________________ Mail (will not be published) (required) _______________________ Website _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ _________________________________________ [ Submit Comment ] 10 Lies Angel Investors Tell I came across a fun blog post the other day - Frank Peter's post on 10 Lies Angels Tell. Frank has been an angel investor for quite some time and an active member of Tech Coast Angels. I have taken the liberty to convert the post into a nice little slideshow. I hope you enjoy it. Read more 10 Lies Angel Investors Tell 10 Lies Angel Investors Tell Startup Riot 2010 - 50 Startups. 4 Slides & 3 Minutes. 400 Investors & Alliance Partners A lot of people have remarked that in today's tough economy there has never been a better time to launch a technology startup. A lot of highly talented people are un/underemployed, cloud infrastructures and open source tools make capital-light startups a reality. Sanjay Parekh's Startup Riot 2010 was recently held in Atlanta. 50 startups got 3 minutes and 4 slides to pitch their company to over 400 venture capitalists, angel investors, and potential strategic alliance partners. Think of it as speed dating for technology startups. Click through to read the whole post where I review the event, why my firm chose to be a sponsor, and profiles of three cool startups I liked: LessAccounting.com, social media monitoring startup Looxii, and the next generation business expense reporting solution nexpense. Read more Startup Riot 2010 - 50 Startups. 4 Slides & 3 Minutes. 400 Investors & Alliance Partners Startup Riot 2010 - 50 Startups. 4 Slides & 3 Minutes. 400 Investors & Alliance Partners Do You Like Tech Private Equity News . . . There's An App for That After the App Store hit three billion downloads in January I decided it was time to jump on the iPhone App bandwagon before I am permanently labeled a Late Majority/Laggard Technologist. This post talks about why I built my first iPhone App and my feelings about the mobile Internet app marketplace. The post also includes a great presentation from Chi-Hau Chien, a partner in Kleiner Perkins Caufield & Byers $100 million iFund, gave at iPhoneDevCamp 3 last year. Read more Do You Like Tech Private Equity News . . . There's An App for That Do You Like Tech Private Equity News . . . There's An App for That How Much Equity Do VCs Really Get? In challenging economic times like this many folk are tempted to break out of their personal economic straight jackets by launching a technology startup. `Capital-light' startups are the rage today, thanks to the extremely low costs of hosted services and the plethora of open source infrastructure software solutions. Many newbie entrepreneurs look to venture capital as the best way to finance the launch and development of their business. A common question raised by many of these entrepreneurs is `how much equity do VCs typically get?" Thanks to the folks at OwnYourVenture.com, entrepreneurs can now use a web based tool to model the impact of multiple rounds of venture capital funding. This post explores not only the math behind how founders' equity gets diluted by venture capital, but it also models what founders' ultimate payoffs can be in various exit scenarios. One pof the key takeaways is that you should worry more about how much VCs will own at the end of the fund raising process and what your exit will look like versus how much equity you give away in your Seed or Series A round. Read more How Much Equity Do VCs Really Get? How Much Equity Do VCs Really Get? Why I'd Prefer 1,500 Mid-Market Customers over 25 Fortune 1000 Customers As the reality of 2010 sales forecasts settle in, enterprise software firms are beginning their annual hunt for new revenues. Many of them are considering moving `down-market' into the mid-market space. This is a re-post of a piece I did last summer that talks about why I'd rather have 1,500 mid-market versus 25 Fortune 1000 customers. Read more Why I'd Prefer 1,500 Mid-Market Customers over 25 Fortune 1000 Customers Why I'd Prefer 1,500 Mid-Market Customers over 25 Fortune 1000 Customers SaaS Valuation Update January 2010 Interest in public company SaaS valuation trends continue to grow. This post presents an update on key valuation metrics for public SaaS companies as of January 2010. Includes metrics on Enterprise Value, EV/Revenue, EV/EBITDA, Gross Margins, EBITDA MArgins, Revenue Growth Rates, and YoY Stock Market Returns. Read more SaaS Valuation Update January 2010 SaaS Valuation Update January 2010 A Tempest in a Chinese Teapot. The Non-Merger of CDC Software & Chordiant It only took six days for CDC Software to launch and then exit an unsolicited offer for Chordiant Software. CDC's offer was spurned by Chordiant since it "significantly undervalues Chordiant and is not in the best interests of Chordiant's shareholders." Yesterday CDC Software announced their intention to sell the 1.3% stake of Chordiant they owned. CDC Software's offer may have been spurned, but a deeper look at the numbers show it was spot on for public companies in Chordiant's space CDC Software's prescription for Chordiant's ailments is probably spot on. Click through to read more details about this saga as well as three other enterprise software firms that decided to accept low, but viable offers for their businesses in the past week. Read more A Tempest in a Chinese Teapot. The Non-Merger of CDC Software & Chordiant A Tempest in a Chinese Teapot. The Non-Merger of CDC Software & Chordiant What the Proposed Carried Interest Tax Means for Private Equity Portfolio Companies Congress is looking to raise $24 billion over the next 10 years by changing how private equity firms are taxed on the profits of their investments. If you are a senior executive at a private equity backed portfolio company you need to understand how this tax change will impact your owners and their attitudes toward your business. As noted in a recent Wall Street Journal article there are very different opinions about the tax law change. "Private equity will endure, but the draconian tax hike, if enacted, will unquestionably slow the flow of capital to companies struggling to get back on their feet during this very fragile economic recovery," said Doug Lowenstein, president of the Private Equity Council, a trade group. "It's amazing to me that at the same time the U.K. is imposing a 50% excise tax on bankers' bonuses, the private-equity guys aren't even willing to pay the usual ordinary income rate," Mr. Fleischer said. "You would think they would recognize a fair deal when it's offered." Whether the tax is fair or not is not the major issue for portfolio company executives. The real issue is that private equity owners could push for the sale of your business in 2010, at significantly reduced prices, to maximize their yield on the investment in your firm. Click through to read the whole post and take a look at the math and its implications for your business. Read more What the Proposed Carried Interest Tax Means for Private Equity Portfolio Companies What the Proposed Carried Interest Tax Means for Private Equity Portfolio Companies Manufacturing Revenue 2010 If your company's products/services are in the middle to latter parts of the life cycle, it is harder to sell new customers. In 2010 a lot more companies will be looking to acquire social media analysis/monitoring platforms, hardware/software virtualization, and cloud computing services than those looking for ERP solutions, mainframe job scheduling, or electronic data interchange. This does not mean that there are not significant revenue opportunities for older technologies - it just means that you have to work a lot harder since most buyers do not wake up in the morning and say "I really need to buy some middle-aged technology today!" Manufacturing revenue is a harsh reality for most tech companies today. Over the next few days we are going to be exploring a few techniques you could leverage at the start of 2010 to get you closer to hitting your revenue numbers. The first approach is euphemistically entitled "The Bowling League Sales Program." This program focuses on building awareness of your brand and customers' successes via a geographically focused customer success blogging, social media broadcasting, and digital body language monitoring program. It's a lot of work but it enables you to effectively leverage some of the most active and effective marketing technologies in today's world to drive new revenues for your business. Read more Manufacturing Revenue 2010 Manufacturing Revenue 2010 Amend, Extend & Pretend 2009 saw a record number of PE-backed firms filing for Chapter 11 protection. 83 firms went bust in 2009, versus 46 in 2008 and just 2 in 2007. The numbers could have been significantly higher in 2009 if the infamous `amend, extend, & pretend' phenomenon didn't start kicking in after Q1 2009. Click through to the full post to see the detail behind the numbers. Read more Amend, Extend & Pretend Amend, Extend & Pretend Mary Meeker on Steroids Morgan Stanley's Mary Meeker, the "Queen of the Net", is famous for her in-depth analyses of technology markets. In 2009 Mary and her team have been heavily promoting mobile Internet as the next big wave in the technology market. Several copies of her 68 slide October "Economy & Internet Trends" presentation from the Web 2.0 Summit have circulated around the web. Recently Morgan Stanley released the 671 slide presentation, the Mobile Internet Key Themes Report, that underlies Mary and her team's research. Click through to the full post to review the entire presentation or to download it from Morgan Stanley. Read more Mary Meeker on Steroids Mary Meeker on Steroids 11 Random Year End Links Why Children's Clothes Makers Need to Get Into VoIP, Startup Visa Xenophobes, Taxing Private Equity Carried Interest, Why Don't Fortune 100 CEOs Care About Social Media, Disney's Magic M&A Machine, Why Obama Doesn't Realy Tweet, and Things VCs Never Say. Read more 11 Random Year End Links 11 Random Year End Links Suing Gartner Won't Solve Your Magic Quadrant Problems Part Deux The ZL Technology/Gartner litigation continues. After having their first case dismissed, ZL has filed an amended complaint charging Gartner with defamation and trade libel. Given the high standard of proof in American libel litigation it is unlikely that ZL will fare any better this time around than they did the first time. Perhaps ZL might consider the advice of Vivek Wadhwa, an entrepreneur turned academic. He is a Visiting Scholar at UC-Berkeley, Senior Research Associate at Harvard Law School and Director of Research at the Center for Entrepreneurship and Research Commercialization at Duke University. In a recent TechCrunch article Vivek describes how he turned his developers into the best enterprise sales people in his market. Vivek's experiences are interesting for not only startups, but mature companies as well. His strategies certainly have a much higher probability of success than ZL's quixotic litigation approach. See more details inside the post. Read more Suing Gartner Won't Solve Your Magic Quadrant Problems Part Deux Suing Gartner Won't Solve Your Magic Quadrant Problems Part Deux Supply Chain Management Exits Supply Chain Management is not the most glamorous or valuable software market. In Q309 public Supply Chain Management companies had media EV/Revenue metrics of 1.3x and EV/EBITDA metrics of 9.8x. According to the Software Equity Group Supply Chain Management ranks 19th out of the 24 software technology categories they track. Interestingly enough, there have six major exit/corporate development events in the past two months in this market space including a major dividend, two major acquisitions/mergers, a large secondary offering, and two IPO filings. If boring old Supply Chain Management can generate this much activity then perhaps the rest of the tech market can look forward to a happy new year as well. Read more Supply Chain Management Exits Supply Chain Management Exits Suing Gartner Doesn't Work After All Recently ZL Technologies Federal lawsuit against Gartner was dismissed by the Federal Court for the Northern District of California. ZL had sued Gartner over their placement in the email arching Magic Quadrant and Gartner's supposed bad acts that had cost ZL millions in sales. ZL will not be able to cash in on the $1.696 billion in damages they had claimed. This post explores the details behind the Court's ruling on the seven claims ZL made. We also provide some advice from a noted industry expert on how companies like ZL can actually use marketing, sales, and branding to positively influence their relative MQ positioning. Read more Suing Gartner Doesn't Work After All Suing Gartner Doesn't Work After All JDA & i2 Part Deux or The `New Normal' for Tech M&A Deals In late 2008 JDA attempted to acquire i2 by primarily funding the deal with new senior debt. As the credit markets melted down JDA was unable to close the financing and ended up walking away from the deal by paying i2 a $20 million termination fee. Barely 11 months later, JDA and i2 have struck a new deal at a higher price, but with a radically different transaction structure that is engineered to ensure certainty of closure for the i2 shareholders. This post explores the history of these two transactions and the creative structure that JDA is proposing. This new structure has the potential to become the blueprint for technology M&A transactions in the post-credit-crunch world. Read more JDA & i2 Part Deux or The `New Normal' for Tech M&A Deals JDA & i2 Part Deux or The `New Normal' for Tech M&A Deals SaaS Company Valuation Trends How does the market value SaaS companies in comparison to other software companies? Out of 25 different categories of software companies, pure play SaaS companies are the third most valuable category. Not surprisingly, SaaS companies are faring well on exits as well. In this post we will take a look at SaaS valuation and exit trends as well as some interesting trends that potentially foretell a significant slowdown in SaaS company revenue growth and valuations. Read more SaaS Company Valuation Trends SaaS Company Valuation Trends Using Wisk to Clean Up Your Social Media Reputation Earlier this week, the makers of Wisk (the `ring around the collar' folks) announced a Facebook application (Wisk-It) to help you remove pictures on Facebook that you really don't want the whole world to see. This post explores the social media reputation repair community, including the infamous Dr. Phil's recommendation for how to fix your social media faux pas. We also ponder what other well known brands (Ivory Soap, Clorox, Preparation H, etc.) could get into the social media reputation repair business. Read more Using Wisk to Clean Up Your Social Media Reputation Using Wisk to Clean Up Your Social Media Reputation Suing Gartner Won't Solve Your Magic Quadrant Problems On May 29th of this year ZL Technologies sued Gartner Inc. and one its analysts, Carolyn DiCenzo, for defamation, trade libel, false advertising and other charges over Gartner's placement of ZL Technologies in the 2009 Email Archiving Magic Quadrant. In their original complaint ZL asked for over $1.696 billion in general and punitive damages, plus attorney's fees and disgorgement of any of Gartner's profits from the unlawful acts claimed by ZL Technologies. While I can empathize with the challenges of being placed in the `Niche Quadrant', I also know from experience that strong execution can improve a firm's Gartner rating over time. This post explores the details of ZL Technologies' lawsuit as well as the grim reality of how their competitors have scaled their businesses to the point that ZL has little to no chance of ever achieving market leadership, except by suing Gartner. Read more Suing Gartner Won't Solve Your Magic Quadrant Problems Suing Gartner Won't Solve Your Magic Quadrant Problems Mary Meeker Internet Trends October 2009 Everyone is looking for the looking for the next big wave to ride in the tech marketplace. While social media has exploded in the past year it has not created a wave of hyper-valuable new companies aside from Facebook, MySpace, Twitter, and Zynga. Morgan Stanley's Mary Meeker thinks the next big wave will be Mobile Internet. Mary details her thinking in her Web 2.0 Summit presentation "Economy & Internet Trends" As TechCrunch's MG Siegler noted "She thinks the mobile web will be 10 times as big as the more traditional desktop Internet, and that it will grow much faster." The entire presentation is embedded in the post, along with a copy of the presentation she developed in March 2009 that described the background of the current recession along with her perception of the emerging Internet and Social Media opportunities. Read more Mary Meeker Internet Trends October 2009 Mary Meeker Internet Trends October 2009 Putting Recent IPO / M&A Hype in Perspective In the past two weeks there has been a huge buzz about how some recent IPOs and M&A deals signals a return to the good times of great technology company exits. Thanks to some decent stats from the National Venture Capital Association and Thomson Reuters, the reality of the situation is pretty grim. Most tech companies stand a better chance of winning the Lotto than getting a 10x return exit. This post takes a look at the numbers as well as examining how minority investments may be the best short term exit alternative for tech companies. Read more Putting Recent IPO / M&A Hype in Perspective Putting Recent IPO / M&A Hype in Perspective Will Twitter Dis-intermediate Investment Bankers? It was bound to happen sooner or later. Twitter is now being credited with playing an important role in two companies selling themselves. This post reviews the recent sales of Tinkoff Restaurants and JobVent, both of which marketed themselves for sale via Twitter. Read more Will Twitter Dis-intermediate Investment Bankers? Will Twitter Dis-intermediate Investment Bankers? Tuesday Morning Random Links VCs relying on gut feelings, User time on social networking sites triples in one year, VCs as scourge of the earth, The Soviet Doomsday Machine that still exists, Debunking the myth of the long tail, and why one serial entrepreneur went corporate instead of launching another startup. Read more Tuesday Morning Random Links Tuesday Morning Random Links How to Build an Exit Strategy Exit strategies for technology companies are like sex in high school - everyone talks about it but only a few are doing it right. The objective of this post is to layout a basic approach your company can use to achieve a successful exit. There are three major components to an exit strategy: 1) Understanding Exit Options, 2) Identifying Likely Exit Scenarios for Your Firm, and 3) Developing and Working a Specific Exit Plan. The post also includes a model you can use to estimate the value of a strategic acquisition, leveraged recap, sale to a minority investor, sale to a financial sponsor, or conversion of your business to a cash flow / lifestyle model. Read more How to Build an Exit Strategy How to Build an Exit Strategy Did Meetup Beat Facebook to Profitability? Both Facebook and Meetup achieved important milestones recently. Facebook became cash flow positive while Meetup actually had real profits. Facebook's news came via a blog post from Mark Zuckerberg, while Meetup's information came from shareholder documents leaked to TechCrunch. While this post doesn't get into the ethics of leaking, it does take a deep look at Meetup's numbers. In a nutshell, Meetup is a great example of how a SaaS startup can scale revenues and profits from nothing to probably over $8 million in three years. While it may not be as exciting as what Twitter's revenues could potentially be someday, Meetup is a great example of what a typical, successful startup can achieve. Read more Did Meetup Beat Facebook to Profitability? Did Meetup Beat Facebook to Profitability? So Private Equity Isn't Evil After All . . . . Private equity has been compared to `swarms of locusts" or "financial wolves" that fall on companies, devour all they can, and then move on. While such statements make good political theater it turns out that the reality of the situation is a bit different. As noted in the EY report "The most significant finding of our research is that, in aggregate, large businesses across Europe achieved impressive growth and performance improvement under PE ownership. Our findings show average per annum growth of 15% in profits, 5% in employment, and 9% in productivity from the time of acquisition to exit." This post reviews the background behind the infamous locusts and financial wolves myths associated with private equity and explores the key findings of the EY report. Read more So Private Equity Isn't Evil After All . . . . So Private Equity Isn't Evil After All . . . . How to Build an M&A Strategy This post presents a basic primer on how to develop an M&A strategy for your company. If your company is interested in leveraging mergers, acquisitions, or divestitures you should have a basic strategy that has been documented and reviewed/approved by key stakeholders such as the executive team, board of directors, key investors, and debt holders. [...] Read more How to Build an M&A Strategy How to Build an M&A Strategy Could Someone Please Get Robert Scoble to Pee in a in a Cup . . . Twitter can't be worth $5 billion Robert Scoble recently published a post where he estimates that "Twitter is actually worth five to 10 billion dollars." While that's a nice idea, the reality of Twitter's valuation is probably a wee bit different. Even if you were to believe Twitter management's alleged estimate of $140 million in revenues in 2010, Twitter would have to be six times more valuable than Google to get to a $5 billion valuation. This post explores some of Robert's thinking and takes a look at the valuation metrics of high flying tech companies that have revenues like Google, Cisco, Salesforce.com to come up with an estimate of what Twitter's valuation could be. Read more Could Someone Please Get Robert Scoble to Pee in a in a Cup . . . Twitter can't be worth $5 billion Could Someone Please Get Robert Scoble to Pee in a in a Cup . . . Twitter can't be worth $5 billion How Do Angel Investors Really Decide What to Invest In? A recently completed analysis of angel deals closed in the first half of 2009 showed some surprising results - the quality of a venture's management team was four times more influential in funding decisions than more traditional factors like the venture's economic model, deal structure, and projected revenue growth. Check out a detailed presentation from Venture360 on their analysis of angel investments that were analyzed using their new online platform. Read more How Do Angel Investors Really Decide What to Invest In? How Do Angel Investors Really Decide What to Invest In? Does Venture Capital Pose a Systemic Risk to the Financial System? Tim Geithner Thinks So . . . Evidently the $200 billion venture capital industry is a source of systemic risk to the financial system. As part of the financial system regulatory redesign, venture capital firms will be required to register as investment advisers with the SEC. This will impose a significantly higher compliance burden on VCs as well as requiring VCs to comply with anti-money laundering regulations imposed on financial institutions post 9-11. I wonder how long it will be before an enterprising VC funds a SaaS/Business Process Outsourcing company that will provide regulatory compliance services for small to medium sized VC firms? Read more Does Venture Capital Pose a Systemic Risk to the Financial System? Tim Geithner Thinks So . . . Does Venture Capital Pose a Systemic Risk to the Financial System? Tim Geithner Thinks So . . . About John Mecke John Mecke blogs on technology companies, mergers, acquisitions, divestitures, and strategic product management to achieve revenue and profit growth. He is currently responsible for product management at Stonebranch, a data center automation technology provider. Previously he has held executive roles in marketing, product management, client services, professional services, and corporate development for EasyLink, Inovis, Saba Software, & Sterling Software. Recent Post * 10 Lies Angel Investors Tell * 10 Marketing Lessons From @shitmydadsays Tweets * Startup Riot 2010 - 50 Startups. 4 Slides & 3 Minutes. 400 Investors & Alliance Partners * Do You Like Tech Private Equity News . . . There's An App for That * How Much Equity Do VCs Really Get? 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