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Leveraging Relationships Between Bulge Bracket Banks & Startups

The Wharton Entrepreneurs Workshop, developed jointly by Wharton | San Francisco and Wilson Sonsini Goodrich & Rosati, features Gary Johnson, Vice President at Credit Suisse, discussing the current and projected state of the U.S. public equity markets, the financial and business attributes of a startup that are essential for a successful IPO or acquisition, and investment areas that are attracting the most attention in the technology sector.

Johnson also outlines what startups can expect to gain by establishing early relationships with traditional investment banks and how those relationships evolve.

Mirror Trading: Trade based on experts’ ideas

Online trading has been around for awhile. Traditional online trading institutions represent the likes of Scottrade, Etrade and Ameritrade, brokerage houses that let you use their platform and charge a flat fee per transaction. Self-research would dictate the trades executed. 

Social media has negated the need for self-reliance. Decision making has trickled in not only consumer habits, but trade habits as well. Using the backbone of individual’s lack of confidence in their investing habits pre and during the recent recession, multiple startups such as Roboinvest, Stocktwits and Covestor have been born, letting users trade based on the investment profiles and ideas of other users. This is definitely the next frontier in online trading. It also represents a way to derive expertise from our so called experts of trade, making not only their ideas, but performance transparent as well. 

What is an IPO?

With hot tech firms going public, not every decision is smart. Groupon’s performance has been dismal and LinkedIn has not fared so well. Everyone is looking to Facebook to be the next big IPO in 2012. It is important to be cognizant about the factors to consider during an IPO. For example, did you know it takes 6 - 9 months to list on an exchange? Or that it costs a company $160,000 a year to be listed on the NASDAQ? This video provides a nice introductory view into the considerations, hurdles and potential outcomes.

Warren Buffett: The Oracle of Omaha | Infographic

Everyone knows the name Warren Buffett. Everyone knows he consistently makes the list of the top 5 richest people in the world every year. Some know he has pledged most of his wealth in 2006, along with other like-minded wealthy philanthropists such as Bill Gates and Mark Zuckerberg. 

What about his outlook on gold? Did you know that Warren Buffett plays Bridge and the Ukulele? Our infographic provides a nice first look at Warren Buffett, the man and investor. 

VC Q1 2012 Performance: $5.8 Billion across 758 deals

I had recently blogged about how the NYC VC performance this quarter was dismal. Well the trend seems to be carried across the board, with the overall quarter on quarter numbers dropping by 19% and 15% in terms of dollar value and number of deals respectively. The overall Q4 2011 VC performance showed an investment of $7.1 Billion across 889 deals.

This disparity seems to be a sector specific phenomenon with a drop in deal activity in clean tech and lifesciences while seeing a boost in telecommunications and consumer products and services. The difference between the VC deals in NYC and the overall VC performance nationally is that NYC had more early stage investment versus nationally which has seen a growth of 11% in Q1 2012 in late stage investments. 

Web 2.0 seemed to have the most deals, both in number and dollar terms, across all sectors. The overall numbers for web2.0, however, slipped by 18% on a quarter-on-quarter basis. The higher than other sector numbers in web 2.0, on a general basis, stem from the lack of barriers to entry in terms of expertise, initial investment and the perceived gold rush due to the initial 2 reasons. The recent pullback maybe due to the overall stock market going through a correction and people being extra precautious, perceiving a bust in the bubble.

Cleantech’s slump maybe due to the sector wide dollar consolidation and contraction in spending. However, it continues to remain an attractive sector, with the industry speculated to rise to $325 Billion by 2018.

Karl Smith, Assistant Professor of Public Economics at UNC, has voiced the possibility of a resurgence of the housing bubble. Fannie and Freddie are considering cutting bulked foreclosure sales, deficit cutting seems to be the Fed’s next move and lack of rental provisions is a constant worry as it may force families to borrow, forcing banks to expand credit. 

However, the flipside of this dilemma, is that expanding credit will lead to soaking up the excess housing inventory, which will lead to a surge in prices. This will ramp up new housing development, causing a boost in household demand, immigration and property appreciation. So while there is the potential to repeat history, it can be remedied with regulated lending requirements, collateralized default plans, scrutinized ratings requirements and regulated interest rates. We can control the boom before it turns into a bubble. 

The Dallas Fed has recently called for the immediate breakup of large banks. The recent recession has enlightened us that we are doomed to repeat history unless we ensure that no single corporation/ major bank has too much power. The unionization of banks has unduely given the banks a colossal amount of leverage where main street will continue to cater to the whims of wall street. Just review the infographic below and judge for yourself.

Anand Sanwal, chief executive officer of CB Insights, talks about the outlook for venture capital and angel investing funds in the U.S.

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