Monday, November 12, 2012

Phi Scamma Jamma: Late Stage VC Investor Advanced Equities Shutting Down (Bloom; Fisker etc.)

That's a wrap.

These guys would do middle-of-the-alphabet rounds (H-round, N-round etc.) that the Sand Hill Road crowd owned at 1/20th the valuation. They invested private placement style for accrediteds, giving the original VC's a nice bump in valuation while the AE principals got to act like they were in with the in crowd.

We were dubious as far back as 2008.
After the principals were hit with attention-getting fines, the last straw came when they were ordered to make a recission offer to some of their Fisker investors.

Recissions are brutal for that type of operator, they are not ordered when investors are making money hand-over-fist and tend to be accepted rather quickly by the investor and/or their counsel.

From Fortune:
Exclusive: Advanced Equities shutting down 
The end of Advanced Equities?

FORTUNE -- Controversial Chicago-based investment firm Advanced Equities is shutting down broker-dealer operations, Fortune has learned.

Sources say that many Advanced Equities brokers were told on Friday that today would be their last day, and many have already begun searching for new employment. A staff meeting is scheduled for later this afternoon. It is currently unclear what will become of the parent company that holds the broker-dealer, or of several AE offerings that are currently in process.

Advanced Equities is best known for helping to raise large rounds of financing for private companies backed by well-known venture capital firms like Kleiner Perkins, Khosla Ventures and New Enterprise Associates.
In September, Advanced Equities was charged with misleading prospective investors on a pair of private placements for private fuel cell maker Bloom Energy. Among the lies were that the company had more than $2 billion in order backlogs (it only had $42 million) and that it had a $1 billion order from a national grocery store chain (it was only $2 million). AE settled the charges by, among other things, agreeing to pay a $1 million penalty....MORE
HT: Katie Fehrenbacher at GigaOm 


Aug 19, 2008 
Venture Capital: "Garbage In..."
From Forbes:

A late-stage venture funding outfit is foisting junky startups on investors--much to the benefit of the Sand Hill Road crowd.

It's just the sort of improbable success that Silicon Valley adores. Two young entrepreneurs have, in a mere five years, turned an obscure Chicago venture capital firm into a presence visible from Sand Hill Road. This year Keith Daubenspeck and Dwight Badger's Advanced Equities Financial is on track to raise $1 billion for startups previously backed by industry Brahmins like Kleiner Perkins Caufield & Byers, Benchmark Capital, New Enterprise Associates and Vinod Khosla....

May 21, 2010 
The Company you Keep: "Bloom, Fisker and Serious Materials Raising Cash from Advanced Equities"
...Kleiner is also an investor in Fisker. At the time of their $529 Mil. loan from the federales the Wall Street Journal headlined the story "Gore-Backed Car Firm Gets Large U.S. Loan"

It looks as if Advanced is making a deliberate attempt to crash the highest circles of political capitalism....
Mar. 13 2012 
Al Gore (and Kleiner) no Score? Advanced Equities Execs Under SEC Investigation for 2009 Private Placement

Many, many links in that last one.