The Inquisitr » Lehman Brothers

Silicon Valley’s exposure to Lehman Brothers

Duncan Riley — Wed, 17 Sep 2008 00:26:42 +0000

You’d have to be living in a cave to have not at least heard some of the news coming out of Wall Street at the moment. Lehman Brothers has filed for bankruptcy, AIG is teetering on the edge, and Merrill Lynch has been sold to Bank of America. Billions of dollars are being pumped into financial markets globally in an effort to stave off total collapse, and Wall Street has taken its biggest plunge since 9/11.

Across the country, Silicon Valley may seem far removed from the mess. The startups in Palo Alto go on, and on Sandhill Road, the VC’s are still turning up to work. Although we may not see the links to Wall Street on the surface, they are strong, and Silicon Valley is not immune to the crisis. Here’s what we can find on Silicon Valley’s exposure to Lehman Brothers

Lehman Brothers as an investor

Lehman Brothers may not immediately be top of your list as an investor in Web 2.0 companies, but the company is a major player in the Valley. Lehman Brothers Venture Partners has raised $1 billion for investment in technology, with its last round in October 2007 raising $365 million. A full list of their investments can be found here. Companies you may be familiar with include Comscore, Kayak, Searchme, Zappos and Kontera.

Lehman Brothers Venture Partners is not included in the Lehman Brothers bankruptcy filing, however as part of Lehman Brothers Investment Management, it’s currently on the market. There’s no reason to think that it won’t sell, however one of the biggest investors in the fund is Lehman Brothers itself

Investors in Lehman Brothers Venture Capitals’ funds include Lehman Brothers, Lehman Brothers’ employees, and institutional and individual third-party investors.

Naturally the ties to other areas of Lehman Brothers is strong as well

As an integrated component of the overall Lehman Brothers platform, Lehman Brothers Venture Partners can call on the extensive global resources of Lehman Brothers to assist in evaluating and enhancing the value of portfolio companies. At the same time, the integrity of the investment and portfolio decision process is reinforced by dedicated investment professionals and the substantial capital commitments made by Lehman Brothers and its employees.

The fund may go on, but with the relationships in place it has to take a hit on several fronts, and you’d presume that it will slow or cease new investments until the mess is sorted out.

Secondary financial hit: one less partner for existing firms

Most of the deals I could dig up for Lehman Brothers Venture Partners where not stand alone investments, but done alongside other Valley firms. Here’s a few in the mix via QBase

Kontera
07/2006 Series A 7M Lehman Brothers, Sequoia Capital
08/2007 Series B 10.3M Carmel Ventures, Lehman Brothers, Sequoia Capital

Power Reviews
09/2007 Series B 15M Draper Richards, Lehman Brothers, Menlo Ventures

SearchMe
10/2007 Series D 15M Lehman Brothers, DAG Ventures, Sequoia Capital
05/2008 Series E 12.6M Lachlan Murdoch, Randy Adams, Thomas Banahan, Sequoia Capital, DAG Ventures, Deepfork Capital, Lehman Brothers Venture Partners, Mark Kvamme

I’m not saying that these deals wouldn’t have happened without Lehman Brothers, but an investor with a $1 billion fund does make a nice partner, and any short term or long term absence will be missed.

Lehman Brothers as advisers

I’m unable to find a complete list of tech/ web 2.0 deals Lehman Brothers were involved in, but their name regularly pops up as advisers on big deals. Lehman Brothers managed to the sale of Photobucket and 24/7 Real Media and were advisers to Yahoo on the Microsoft/ Yahoo deal.

There is always alternatives in the market, but with the turmoil at the top among the firms left, Lehman Brothers leaves a hole that may see the costs of advice increasing.

Two boys decide that Lehman Brothers report needs some tongue

Duncan Riley — Tue, 16 Sep 2008 04:45:14 +0000

ICYMI – CNN – 2 Guys making-out in front of Lehman Bros. during Live Broadcast @ Yahoo! Video

This clip from CNN covering the collapse of Lehman Brothers shows that despite the doom and gloom on Wall Street, some people can still have a laugh.

Track/ watch Black Monday live online

Duncan Riley — Mon, 15 Sep 2008 07:13:11 +0000

The grim news from Wall Street is that the Federal Reserve has decided to stop bailing out merchant banks from the public purse, and as a consequence Lehman Brothers, one of the biggest and most prestigious firms on Wall Street, will be filing for Chapter 11 bankruptcy protection.

The Fed, never one to sit back and not try and save the market from itself, has announced an offer where banks will be able swap their unsaleable mortgage backed securities for Treasury bonds, but as we write this post, whether that will be enough to prevent the biggest black Monday of all time is yet to be seen.

Nouriel Roubini, quoted in Crikey, says

“What we are facing now is the beginning of the unravelling and collapse of the entire shadow financial system…The step by step, ad hoc and non-holistic approach of Fed and Treasury to crisis management has been a failure so far as plugging and filling one hole at the time is useless when the entire system of levies is collapsing in the perfect financial storm of the century.”

My FSRA License expired a few years ago, so under Australian law I can no longer provide financial advice, but others are saying: you should be afraid.

Whether the market takes the blow and handles the news, or whether it takes a massive dive, you can track/ watch Black Monday live online.

Stock prices

Google Finance now offers live market prices from major stock exchanges as does Yahoo Finance. Both include coverage of the European markets, which may be the first indicators of how big the hit will be following the Lehman Brothers news. The main stock exchanges directly: NYSE, NASDAQ, AMEX.

Blogs

Silicon Alley Insider is one of the better bets among the tech blogs, Henry Blodget is a former trader, and understands the market. AOL’s BloggingStocks will have lots of coverage, and at worst case, hit The Inquisitr logo on this post (or the link), we’ll also be covering some of it as well, particularly any tech angles.

Live video

Livestation once again offers the best live video coverage of all sites. Along with their partner sites, you can also watch Bloomberg live as well, which will offer you non-stop coverage.

Station websites will also offer coverage. CNN is always a good bet.

Other

Look to Twitter and FriendFeed for information, users of both will be providing filtered links of the things you need to know. Reddit will as always offer a unique take. Google News is another outlet you can use. For the blogging reaction, try Technorati.

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