During this season of political debate with questions swirling about whether the US will re-elect the ‘we need an all-serving, ever growing government, wary of business perspective’ held by President Barrack Obama or the ‘government which governs least governs best, business friendly, anti-regulation perspective’ held by former private equity professional Mitt Romney, there will be a great debate over the role private equity plays in capitalism. Questions such as whether the private equity industry is positive, negative or somewhere in between for most Americans and what should government’s role be if any in private equity.
I myself am a huge fan of private equity having studied the subject at the University of California, Berkeley and during my MBA studies in Entrepreneurship at The University of Arizona McGuire Center for Entrepreneurship. Plus, having started and grown two companies from the resources provided by the private equity industry, I have seen and experienced the benefits directly.
First, let me explain that there are many parts of private equity. The parts of private equity I have focused my career on thus far is the early-stage, high-potential, high risk, growth start-up phases of companies. This stage of private equity is often referred to as Venture Capital. The other parts of private equity are commonly referred to as leveraged buyouts, distressed investments and mezzanine capital. These phases are equally necessary based on the teachings of well-known economist Joseph Schumpeter (click here to read my post on Creative Destruction and Joseph Schumpeter).
During my venture capital studies, I had the honor to meet David Hornik of August Capital. David is one of the most well known and celebrated venture capitalist in modern times. I first met David during my time at Berkeley and again at the The University Private Equity Summit in 2010 (click here to read my post on the 2010 The University Private Equity Summit).
When David Hornik speaks, I listen. During the Private Equity Summit in 2010, I grabbed my mobile phone and taped his commentary on venture capital knowing it was going to be something I would want to share. I believe strongly in the vision of venture capital David paints for the audience and I hope you enjoy hearing his well informed and powerful perspective.
