Having recently commented in this space about the maturation of “new” media, and the implications of this phenomenon on geographical destinations that may begin to show an increasingly northeastern pattern, towards New York in particular, it was nice to see this morning’s rumor about Insight Venture Partners assuming lead investor duties in Twitter’s latest financing round. Based in New York and with $3 billion under management, Insight is not known for early-stage deals, but is rather a “growth oriented… investor… in expansion and late-stage… businesses.” This profile is not atypical for New York private equity, and we could expect to see more of this sort, (i.e., New York equity finance activity in emerging media), in months ahead and as the “new” media sector continues to mature.
But there was another news item that caught my attention, pertaining to Marc Andreessen’s appointment as board member at Hewlett Packard. Not to keep linking my own blog, but I probably should, for a variety of reasons, one of which is that I have recently also commented on the importance of disaggregation, for lack of a better term, between the sources of different capital forms. In the referenced article, I was specifically discussing the issues associated with “seed” vs. slightly later VC finance in this context. But the news about Hewlett Packard’s board activity leads me to wonder if I went far enough. If, with respect to seed capital, the notion of independence and non-conflicted investor interests is critical, as I believe it is, could similar issues not also arise at higher levels and later stages?
To use the illustration at hand, Marc Andreessen is, among other things, a name partner of Andreessen Horowitz, a venture capital fund that, among other activities, expects to also be involved in seed finance: conflict one, as described in my earlier article. Conflict two: Andreessen Horowitz will very likely invest in businesses that could be attractive to Hewlett Packard at some point, or could be made attractive. With the addition of this board position, is there a risk to all parties involved that a financial investor will also be strategic buyer? To use a popular business cliche, is there an issue here that one individual is “wearing too many different hats”?
There has been much talk in the past decade about the value of “independence” – independent advice, independent thought, independent investors, independent board members, independent audits – and when an industry is young and growing rapidly every day and changing all the time, perhaps some things are overlooked. Indeed, in a young industry, powerful figures benefit its interest. But when the industry stops being young, I wonder if mature issues should be elevated to a higher order of business. We recently saw the resignation of Google CEO, George Schmidt, from Apple’s board. Perhaps we will see other similar resignations in the time ahead… but if we don’t, perhaps we should.
