Adam

You represent an Asian family office. You have invested $10m into ACM Fund II. ACM has just presented to you their plan to raise ACM Fund IV- $500m Fund to invest in IT, Semiconductor, Networking and Life Sciences in Dec 2005. What would you take into consideration? Would you invest? Explain your rationale and terms/conditions if any. (10m)

Fund 3: market first strategy, sought to take advantage of discontinuities within the 3 industries. More significant ownership approach

Build a collection of very good company to reduce the volatility of VC market

Have already fun well for fund 1, fund 2, fund 3

Going from taking smaller position in small companies to

A conflict in fundamental value the VC hold

“focus on investment in the markets that the partner already know well and has already identified as attractive “

“Did not possess any life science expertise , indeed skills in growing & managing young companies”

“Non-correlated with technology”

Time consuming to pick up the insight, info and knowledge from the new sectors

Exhibit 9, 2 medical companies have been out of business → not a good sign

Recommendation

Focus on current portfolio and roll out the new fund. However, keep the new fund in the same scope, do not introduce the new life science

CONCENTRATED VS DIVERSIFIED → WHY ENTER LIFE SCIENCES?

CONCENTRATE ON FEW BUSINESSES? Companies vs industry per GP?

More control to make major decision making → while you have no experience → time to being immersed in the industry or dependent on another external party or recruit new partners?

Life science ~ technology? IT , communication?