Hedge fund giant bails on venture capital
September 30, 2010: 10:09 AM ET
Lots of market chatter this week about layoffs at hedge fund giant D.E. Shaw, with around 10% of the 1,500-person workforce being handed walking papers.
What hasn't been reported yet, however, is that the cuts included most of the firm's venture capital group, which has invested in such companies as Offerpal Media, WiQuest Communications, DesiHits and Adam Aircraft (big oops on that last one).
The issue, of course, is liquidity. D.E. Shaw managed around $39 billion in the middle of 2008, but has since been redeemed down to just $21 billion. A decision was made, therefore, to halt all future investments in venture capital, due to its long-term investment horizons.
One might also assume that D.E. Shaw is looking to sell its existing portfolio on the secondary market, but you know what they say about those who assume …
Instead, the firm has retained three senior staffers -- including group head Alex Wong-- to manage the portfolio and make follow-on investments when necessary. The trio also is on the hunt for new funding sources, although it's unclear if D.E. Shaw would participate out of a future capital pool.
Wong was unavailable for comment.
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