Tech. Vet Plans To Use VC Insight In New P.E. Fund

Oct 31 2006 | 11:50am ET

Bill Burnham once worked as a sell-side analyst in the famous, or should we say infamous, technology group headed by Frank Quattrone at Credit Suisse First Boston. Now he hopes to capitalize on some of the regulatory consequences resulting from those dark days.

Burnham’s new private equity shop, Inductive Capital, launched on Oct. 1. According to Burnham, he plans to use what he learned in six years as a venture capitalist in Silicon Valley to invest in public companies.

“When I came to the venture capital industry from Wall Street, one of the things that struck me was the connection in the technology market between the private and the public world. In fact, a lot of private companies operate in the same markets, have the same customers and experience the same trends as the public companies do.”

Burnham left CSFB in 1999, before the bubble burst and Quattrone’s troubles with the law began – “I picked a good time to leave,” he says. But he argues that one of the new regulatory regime’s unintended consequences “has been the evaporation of sell-side research coverage in the small- to mid-cap tech space.”

Along with a decline in the amount of disclosure among publicly-traded technology firms, Burnham says there’s an opening for a fund which approaches public firms with an understanding of the trends affecting private technology companies.

“It’s actually increased the importance of understanding what’s going on the private space relative to the public space. A lot of high-tech money is still run out of New York and Boston,” says the Menlo Park, Calif.-based Burnham. “That frankly doesn’t make a whole lot of sense to me.”

For now, the fund, which has less than $100 million in assets, has a fairly homogenous group of investors: Silicon Valley VCs like Burnham himself, technology CEOs and other “high-tech types.” Burnham says he will evaluate at a later date whether to accept more investors.


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