thestreet.com
Ironically, there's a lot of dry powder at the incubators and venture funds that raised capital when things were hot, didn't have a chance to spend it all, and lately have seen their stock prices fall below the value of their remaining cash. If these guys play it right, they have a chance not just to survive, but to invest the rest of their capital at prices that will look dirt cheap, when the market turns back up. Or (wishful thinking, I know), they could liquidate and pay out their cash to stockholders for an instant, risk-free windfall.
Three to watch are:
MeVC Draper Fisher Jurvetson Fund I (MVC:NYSE - news), a closed-end venture capital fund that raised $330 million in March, and had time to deploy only a little over a third of it before the bottom fell out of emerging tech. So here it sits, with $11 a share in cash, a price of $10, and stakes in 18 small, private companies thrown in as icing on the cake.
Fees are higher here than for the average mutual fund. Management takes 2.5% of assets annually, plus 20% of whatever profits the fund generates going forward. But since that's 20% of future profits, and the stock price is already below the value of cash on hand, there's clearly a lot of upside here. |
