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What Will Happen to Lehman Brothers’ Startup Orphans?

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Lehman Brothers in New York-4

Originally uploaded by jasonsmith

What Will Happen to Lehman’s Startup Orphans? (October 2, 2008 TechCrunch) 

As Lehman Brothers sells off its assets following its bankruptcy, there is still a big question as to what will happen to its venture arm and, more importantly, how any change in ownership will affect the companies in which Lehman Brothers Venture Partners holds a stake. Like many investment banks, Lehman got into venture investing in the mid-1990s to try to capture some of those venture returns. The investment management group that it was a part of was sold off to Bain Capital and Hellman & Friedman on Monday, but the venture arm was not part of that sale. Instead, Lehman Brothers Venture Partners is trying to spin itself off as a separate venture firm with about $800 million in assets.
But if it cannot do that, it will either go to hungry creditors or a financial buyer who may be more interested in liquidating the fund than in nurturing the startups in its portfolio. Those startups include Kayak, SearchMe, Jaxtr, Endeca, and about 80 more. (A partial list from CrunchBase is below. Other than comScore, most are still private). They could wake up tomorrow and find that they have a new shareholder who is even more impatient for a quick exit than its existing ones. It’s like being an orphan and wondering who your next foster parents will be. That can really mess with a startup’s development.

The failure of Lehman Brothers Holdings influences even startups.

How will it become in the future?

Does the venture section do the spin-off and do it become independent shape?

Or, is it sold to the enterprise somewhere, and is the venture company sold?

Though it doesn’t understand still how to become it, startups are facing the rough time.

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Written by weblibraryjpn

October 4, 2008 at 10:50 am

Posted in Bussiness

Tagged with , ,

One Response

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  1. Given the sale of Lehman’s portfolio and re-branding to Tenaya Capital, we wanted to share some insights on Lehman Brothers Venture Partners (LBVP) portfolio from our startup/investor information platform, ChubbyBrain (http://www.chubbybrain.com) that might be of interest. (Please note that our information on the composition of their portfolio may not be complete although it appears to be)

    – 48 portfolio companies on ChubbyBrain
    – The portfolio mix for these 48 companies breaks down as follows: 25.0% in Consumer Products & Services, 25.0% in Business Products & Services, 47.9% in Technology and 2.1% in Industrial
    – They’ve regularly co-invested alongside Benchmark Capital, Sequoia, DFJ, Intel Capital, Kleiner Perkins, Austin Ventures and Mayfield
    – The portfolio’s rating is just shy of 5-stars (based on only 3 reviews for TeleNav, MyShape and Kayak)

    LBVP’s full investor profile is visible here:
    http://www.chubbybrain.com/investors/lehmanbrothersventures

    Thanks,
    Anand

    Anand

    February 26, 2009 at 11:28 pm


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