Gawson Liter

Given the situation in the Pawson Foundation case, answer the following question:

Should Pawson Foundation invest in Mayfield XII?

Your answer is expected to be 3-5 pages in length, or approximately 1000 words. It will be assessed based on the following criteria:

1. Identification of meaningful issues

2. Substantiation / illustration with relevant facts

3. Integration of concepts and insights from the course (i.e. from lectures and class discussion, as well as from any additional reading you may have done)

4. Structure and style

Study questions:

1. What characteristics differentiate Mayfield from other venture capital firms?

2. Why has Mayfield proposed the fee-for-clawback exchange?

3. What are the financial implications of the Mayfield proposal? How does it affect the returns to the limited and general partners? Make the calculations using the assumptions that Martin is making at the end of the case.

4. What are the financial implications of the new fee structure for Mayfield XII? How does it affect the returns to the limited partners? Compare with the alternative, budget-based fee.

5. Should Pawson Foundation invest in Mayfield XII?

Principals vs. cash

Your mission is to deliver returns. How do you explain to the board that you would like to follow principles? The Mayfairfund has in the past provided substantial returns on your investments.

Link between Yale and Mayfair. Larger funds, lower standards and higher fee’s.

2. Out of the norm vs. long term relationship

3. React vs. Long-term

Budget based vs. fixed base

Track record:

Old, established. Top Tier: 10 Funds, 150 IPO (39%) high ratio

Top tier LP’s (7 left9)

Context: 2005-2006

1995 - Fund Vlll

1996

1997- Fund IX

1998

1999 - Fund X

2000 - NASTAQ peaked at 5000. .com crash. Any fund raised here

2001 -

2002 -

2003

2004

2005

2006 - when the funds start to harvest (failure to meet expectations)

We need re-calculate, estimate...