Private Equity Funds in China: Structures, Opportunities and Challenges

Private equity (PE) funds formed to make investments in the People’s Republic of China (PRC) come within three main types of structures. This post identifies and analyzes the characteristics, advantages and disadvantages of each structure, and highlights recent legal developments pertaining to how international investors can build or sponsor an onshore RMB funds.


PRC’s economic growth has created a steady flow of investment opportunities. Especially after the global financial crisis, more and more global PE funds seek to deploy capital in this region. The financial crisis turns out to be a starting point for PRC to usher in a completely new phase for its opening-up and become one of the favorite investment destinations. To date, PE industry enjoyed a steady growth as can be seen in the chart below.


Chart 1 Annual Fundraising Amount by PE Funds focusing on Greater China between 2002 and 2011 Source: Preqin as of 2012

PE funds could be formed in PRC in one of the three structures:

1) offshore US Dollar-denominated funds;

2) onshore domestic-invested RMB-denominated funds;

3) onshore foreign-invested RMB-denominated funds.

Offshore US Dollar-denominated Funds

Offshore US Dollar-denominated funds are formed in non-PRC jurisdictions, most commonly in the Cayman Islands or British Virgin Islands.


· As offshore funds are typically organized as limited partnership, investors enjoy two typical advantages of partnership compared to corporations: greater flexibility of commercial terms and the availability of pass-through tax treatment, i.e. it avoids dividend tax and double taxation because only owners or investors are taxed on the revenue.

· As offshore funds are organized under laws of Cayman Islands or British Virgin Islands, there are greater certainty and predictability pertaining to the legal enforceability of contracts and limited liability protection of limited partners than entities governed by PRC law.


Offshore funds are not governed by PRC law, but their investments made in PRC will be. As they are registered in non-PRC jurisdictions and funded by foreign investors, offshore funds are classified as foreign investors under PRC’s regulatory regime pertaining to foreign investment, and thus are subject to many special restrictions.

According to Foreign Investment Industrial Guidance Catalogue enacted by PRC’s State Council, many sectors and industries are closed to foreign investment. Even for accessible industries, every investment needs government approval. While not difficult to obtain, the great latitude of administrative authorities has generated huge space for rent-seeking. Moreover, the application process can be time-consuming since it involves extensive negotiations with various approval authorities. For example, a large factory may have serious land use or environmental issues. Thus, the exact time frame for approval is never certain. It depends on the type of project and the location. Foreign investors must be prepared for this uncertainty from the outset.
· Since offshore funds are denominated in USD yet invest in RMB, government approvals are also required for the conversion of USD into RMB and associated repatriation.

· As there are no PRC tax rules specifically ensuring pass-through tax treatment for offshore funds, investors must be very cautious to make sure that a “permanent establishment” is not created in PRC as the tax exposure of both general partners and limited partners could be adversely affected.

It should be noted that offshore funds used to be able to circumvent the restrictions stated above through “round-trip investment”: typically a PRC national established or controlled an offshore holding company to control a Chinese domestic company by captive contractual arrangement. The Chinese domestic company makes investment in China as a domestic investor while the international investors invest at the offshore level. However, the “round-trip investment” is no longer an easy shortcut as PRC had made significant policy changes in recent years to close related regulatory loopholes.

Since then, more and more PE funds prioritize setting up RMB funds. As can be seen in the graph below, most of the newly-raised funds are denominated in RMB.


Chart 2 PRC Private Equity Fundraising. USD Funds vs. RMB Funds, denominated in $US Billons Source: Preqin as of 2012

Onshore Domestic-Invested RMB-Denominated Funds

Onshore domestic-invested RMB-Denominated funds are registered in PRC, comprising exclusively of domestic source of capital. The vast increase in its popularity in recent years could be partially attributed to the corresponding growth of Chinese sources of capital available to onshore RMB funds, including, among others, 1) PRC’s National Social Security Foundation; 2) local government funds held by several provincial and municipal authorities, such as Beijing, Shanghai, Tianjin and Jiangsu; 3) an increasing number of wealthy Chinese entrepreneurs.

It is crucial to note that onshore domestic-invested RMB-Denominated funds are closed to foreign capital, but not to foreign investors. In other words, international investors could sponsor an onshore domestic-invested RMB-Denominated fund as its general partner. First, they should register a management entity in PRC to raise and manage the RMB fund as its general partner. Then, they would raise limited partner capital from domestic Chinese investors. Specific regulations pertaining to such type of transaction vary across provinces and municipalities, as there is not yet a unified set of rules governing investor solicitation and private offering on a national level.


· As onshore funds are typically organized as limited partnership under PRC’s Partnership Enterprise Law, investors enjoy two typical advantages of partnership compared to corporations: greater flexibility of commercial terms and the exemption from double taxation.

· As onshore funds are classified as “domestic investors” under PRC law, government approval for investment and currency conversion could be avoided, so as the associated lag-time and rent-seeking, resulting in greater efficiency and lower cost.

· As domestic investors, onshore funds can invest in industries restricted to foreigners like television stations and publishing, thus have access to more deals in a broader share of PRC’s economy.


· Onshore domestic-invested RMB-Denominated funds are by its nature inaccessible to foreign sources of capital, and thus very difficult to scale their business. As of now, most of them are relatively small in size, with whole funding below US$100 Million.

· Compared to Cayman Island and BritishVirginIsland, there are less certainty and predictability in PRC’s legal matrix, especially pertaining to enforcing contracts in PRC courts. PRC has a lot of capital, but not a large group of seasoned investors. It could be tricky when dispute arise between foreign sponsors and domestic investors, who are unfamiliar with private equity, regarding terms such as capital calls and years-long commitment.

Onshore Foreign-Invested RMB-Denominated Funds

Onshore foreign-invested RMB-Denominated funds are registered in PRC, comprising at least partially of foreign source of capital. They could be organized either as foreign-invested venture capital enterprises (FIVCEs) or foreign-invested limited partnerships (FILPs).

With respect to regulatory framework, of particular importance are the passage of Waishang Touzi Chuanye Touzi Qiye Guanli Guiding (外商投资创业投资企业管理规定) [Administrative Rules on Foreign-Invested Venture Capital Enterprises] (the “FIVCE Rules”) on March 1, 2003, [1] and the Waishang Touzi Hehuo Qiye Dengji Guanli Guiding (外商投资合伙企业登记管理规定) [Administrative Measures on Establishment of Partnership Enterprises by Foreign Enterprises or Individuals in China] (the “FILP Measures”) on March 1, 2010. [2]

According to FIVCE Rules, the scope of investment of FIVCEs is limited to high-tech or new-tech industries. Additionally, FIVCEs are forbidden to make investment by borrowed funds. Thus FIVCE can be a very ineffective model for making PE investment in PRC.

FILPs, as a new investment avenue opened in 2010, offers another promising option for international investors to engage in PE investments in the foreseeable future. The Carlyle-Fosun RMB fund, registered in March 3, 2010, is the first reported FILP. With initial investment of US$100 million, the co-branded fund is a 50/50 joint venture between Carlyle and Fosun, both of which are general partners [3]. Afterwards, Blackstone formed the Shanghai Blackstone Equity Investment Partnership, while TPG launched the TPG Shanghai RMB Fund and the TPG Western China Growth Partners I. Goldman Sachs and Morgan Stanley also reportedly have RMB funds in the pipeline.


· As onshore RMB funds are typically organized as limited partnership under PRC’s Partnership Enterprise Law, investors enjoy two typical advantages of partnership compared to corporations: greater flexibility of commercial terms and the exemption from double taxation.

· Capital contribution could be made in cash or in kind, subject to valuation and filing requirements.

· Previously, PE investments by foreign investments are subject to approval of Ministry of Commerce (MOFCOM), which could be very intrusive, paper-intensive and time-consuming. But according to FILP Measures, FILPs could be set up by registration with State Administration of Industry and Commerce only, thus bypassing the burdensome process of MOFCOM approval.

· It could use RMB to invest more easily in domestic companies in PRC, thus help take them public in PRC, on the Shanghai or Shenzhen stock markets. By contrast, offshore USD funds typically made investment into companies that were structured for a public listing outside PRC. Since IPO valuations are at least twice as high in PRC as they are in Hong Kong or USA, investment through RMB funds leading to a Chinese IPO can earn foreign investors a much higher return, likely over 300% higher, than otherwise.


· When organized as offshore funds governed by Cayman law, the general partner and the fund manager are typically exempted from taxation. But as the general partner and the fund manager of FILP are treated as PRC tax resident, the carried interest and management fee payments are taxed at the PRC corporate income tax rate at 25%.

· FILPs are still subject to the previously mentioned Foreign Investment Industry Guidance Catalogue, thus could not invest in industries restricted to foreigners like television stations and publishing.

· The local limited partners may not be as sophisticated as the international investors. Their lack of experience and unrealistic expectation of high yields may possibly damage the business cooperation.

Recent Regulatory Developments

In 2011, the four direct-controlled municipalities of PRC: Beijing [4], Shanghai[5] , Tianjin [6] and Chongqing [7], initiated significant pilot programs as to RMB funds organized as FILP. Under these programs, certain FILP could avoid more regulatory hurdles. For example, foreign capital contribution by foreign general partners and qualified limited partners may not be subject tot foreign currency conversion approval.

Indeed PRC is taking cautious steps to further open up its PE market. On November 23, 2011, PRC’s National Development and Reform Committee (NDRC) promulgated the first nationwide regulation of PE industry: Guojia Fazhan Gaigewei Bangongting Guanyu Cujin Guquan Touzi Qiye Guifan Fazhan De Tongzhi (国家发展改革委办公厅关于促进股权投资企业规范发展的通知) [The Notice on Promoting the Standardized Development of Equity Investment Enterprises]. [8] On one hand, it tightens regulation of PE funds by requiring that all the PE funds shall register with NDRC or its counterparts at provincial level. On the other hand, the notice further opens PRC’s PE market to international participation as it does not reverse or limit any of the pilot programs’ initiatives to circumvent the foreign current regulations. In other words, this state-level regulation’s “hands-off” approach implicitly encourages local authorities to offer new incentives to attract international capital, and implicitly encourages international investors to continue forum shopping among these competing programs.


To sum up, the PE industry in PRC is blessed, as nowhere else is, with abundant capital, stellar investment opportunities and favorable IPO markets. With respect to investment avenues, the advantages of onshore RMB funds are clear: they can make investment without foreign exchange controls, they face much less red tape and they can raise funds from PRC’s local sources. Carlyle, TPG and Blackstone, as the earliest market entrants in this regard, have each launched their own RMB funds in partnership with leading PRC private company, and point the way forward for many of its peers in US. As PRC authorities gradually opens up its PE market to foreign capital, an increasing number of PRC’s strong private enterprises will get growth capital from international PE investors with the know-how and pools of RMB to build great public companies.

*Chenhao Zhu received a JSM (Master of Science of Law) from Stanford University in 2011, where he was the recipient of Franklin Family Fellowship and an editor of Stanford Journal of International Law. He is now an associate in the Palo Alto office of K&L Gates LLP, focusing on US-China business transactions, especially venture capital and private equity investments.

[1] Promulgated by the Ministry of Commerce (formerly, Ministry of Foreign Trade and Economic Cooperation), Ministry of Science and Technology, State Administration of Industry and Commerce, State Administration of Taxation and State Administration of Foreign Exchange on Jan. 30, 2003, effective on Mar. 1, 2003.

[2] Promulgated by the State Administration of Industry and Commerce on Jan. 29, 2010, effective on Mar. 1, 2010.

[3] See Shanghai Approves Carlyle and Fosun Joint RMB Fund; First Business License Granted to Foreign-Funded Equity Investment Partnership Enterprise. (last visited Oct. 13, 2012)

[4] See Beijing Shi Guanyu Benshi Kaizhan Guquan Touzi Jijin Jiqi Guanli Qiye Zuohao Liyong Waizi Gongzuo Shidian De Zanxing Banfa (北京市关于本市开展股权投资基金及其管理企业做好利用外资工作试点的暂行办法) [Interim Measure on Pilot Program of Utilization of Foreign Capital By Equity Investment Fund and Its Management Entity of Beijing Municipality] (promulgated by Beijing Bureau of Finance, Beijing Commission of Commerce and Beijing Administration of Industry and Commerce on Feb. 28, 2011, effective on Feb. 28, 2011).

[5] See Shangha Shi Guanyu Benshi Kaizhan Waishang Touzi Guquan Touzi Qiye Shidian Glongzuo De Shishi Banfa (上海市关于本市开展外商投资股权投资企业试点工作的实施办法) [Implementation Measures for Foreign-Invested Equity Investment Enterprises Pilot Programs of Shanghai Municipality] (promulgated by Shanghai Financial Service Office, Shanghai Commission of Commerce and Shanghai Administration of Industry and Commerce on Dec. 24, 2010, effective on Jan. 23, 2011.

[6] See Tianjin Shi Guanyu Benshi Kaizhan Waishang Touzi Guquan Touzi Qiye Jiqi Guanli Jigou Shidian Gongzuo De Zanxing Banfa (天津市关于本市开展外商投资股权投资企业及其管理机构试点工作的暂行办法) [Interim Measure on Pilot Program of Foreign-Invested Equity Investment Enterprises and Its Management Entity of Tianjin Municipality] (jointly promulgated by Tianjin Development and Reform Committee, Tianjin Financial Service Office, Tianjin Commission of Commerce and Tianjin Administration of Industry and Commerce on Oct. 14, 2011, effectively on Dec. 13, 2011.

[7] See Chongqing Shi Guanyu Kaizhan Waishang Touzi Guquan Touzi Qiye Shidian Gongzuo De Yijian (重庆市关于开展外商投资股权投资企业试点工作的意见) [Implementation Measures for Foreign-Invested Equity Investment Enterprises Pilot Programs of Chongqing Municipality] (promulgated by Chongqing Administration of Industry and Commerce, Chongqing Foreign Economics and Trade Commission and Chongqing Office of Finance on Mar. 31, 2011, effectively on Mar. 31, 2011.

[8] Promulgated by the Office of Staff of National Development and Reform Commission on Nov. 23, 2011, effectively on Nov. 23, 2011.

Presidential Politics and Private Equity

This election season there has been a good deal of discussion over Mitt Romney’s time spent at Bain Capital. The Romney Campaign has sought to highlight that experience as a qualification to lead the country to a better economic future. The Obama Campaign and other groups affiliated with it have made the argument that Romney eliminated and outsourced jobs during his time at Bain Capital. [1]

Concerns exist that this election could bring increased public attention to the Private Equity industry, and give politicians extra incentive to regulate the industry. [2] In a recent survey of Tech Industry executives, where the Tech executives were questioned on the Presidential election, “78% say that the campaign’s focus on Romney’s roots in private equity have “damaged” the reputation of private equity and venture capital”; [3] and, “65% worry that there could be new regulation of private equity and venture capital investing”. [4] However, there is little reason to be concerned that the election will give politicians an impetus to further regulate the private equity industry.

There is evidence that political advertisements based on Romney’s Bain record have been effective; a Super PAC running political advertisements attacking Romney’s Bain record claim that their internal polling shows that “a decisive plurality of voters said Mitt Romney’s record as Bain CEO makes them less likely to vote for him.”[5] These advertisements highlight negative consequences of pursuing a strategy of profit maximization with a special focus on outsourcing, downsizing, and reducing employee benefits.[6]

However, the persuasive thrust of these advertisements could be effectively applied to all profit-maximizing business, particularly large businesses. In a recent PEW Research poll over 50% of respondents said businesses make too much profit. [7] In the same poll slightly less than 50% of respondents said that Wall Street hurts the economy more than it helps it. [8] And perhaps most significant, 67% of respondents claimed that Wall Street only cares about making money for themselves. [9]

It is a well-known fact that manufacturing companies pursue strategies of profit maximization as a rule of thumb. To maximize profits manufacturing companies have outsourced jobs, downsized workforces and when possible reduced employee benefits. However, manufacturing companies are not facing the same negative press as private equity firms. Consider for a moment that instead of working at Bain Capital Mitt Romney had become the CEO of General Motors. I suspect in this hypothetical world where Mr. Romney was CEO of General Motors – never having worked in private equity – we would see almost all of the same political advertisements currently on the air criticizing Mr. Romney’s Bain record, but with the word’s GM in place of Bain Capital.

In short, I posit that the public does not hold a special grudge for the private equity industry. That while the election may have certainly put private equity in the spotlight nothing of consequence will come from it because criticisms of the private equity industry are both general in nature and very similar to criticisms made of profit maximizing institutions in general. Consequently, concerns that new private equity or venture capital regulations may be coming as a result of the Presidential election are likely overblown.

[1] See , Michael Shear, A Final Push in Swing States, in a Bid to Break the Stalemate, N.Y. Times (Oct. 23, 2012) (describing Priorities USA plan to spend several million dollars on adds that tell the stories of people who lost their jobs after Bain Capital acquired the companies which employed them).

[2] Eric Savitz, Tech Execs Mostly Back Romney, But Expect Obama to Win, Forbes (Oct. 8, 2012, 8:04 PM)

[3] Id.

[4] Id .

[5] Alex Pappas, Democratic Super PAC to Revive Attacks on Romney’s Bain Record, The Daily Caller (Oct. 20, 2012, 9:41 AM)

[6] Shear, supra note 1.

[7] ‘Staunch Conservatives’ Are Warry of Wall Street , Pew Research Center (May 26, 2011)

[8] Id .

[9] Id .

Russia and the WTO: The Private Equity Outlook

Russia’s ascension into the World Trade Organization signaled an expected, but nonetheless major, opening of the Russian economy. Russian membership in the WTO will dramatically lower tariffs for both Russian exports and imports into Russia. These developments, coupled with Russia’s growing middle class, global engagement through the 2014 Winter Olympics and 2018 World Cup, and market reforms, seemingly transform Russia into a hotspot for private equity investment.[1] However, the actual picture is far from rosy. Despite ending its holdout as the last G20 nation not in the WTO, Russia will continue to challenge private equity investors through both structural and legal barriers.

Many forecast the effects of Russian membership to be similar to those of China’s. After joining in 2001, China’s exports rapidly grew and its economy adjusted to meet the rising global demand for cheap Chinese exports. But simply put, Russia is not China. Though Russia’s economy is also based on exports, these exports are often commodities rather than cheap products buoyed by low wage costs. Additionally, state ownership and interventionism remains the norm in the attractive commodity sectors, meaning that Russia will be slower to adapt new reforms to compensate for the opening of its markets. [2]

This is particularly significant for private equity companies aiming to invest in Russia. While barriers to foreign investment in the crown jewels of the Russian economy (oil and gas companies) are unlikely to be removed, more foreign investment could flow into Russia’s manufacturing sector. Between 2007 and 2011, the manufacturing sector accounted for 51% of investment projects and 92% of job creation. Other similar sectors, such as the industrial and food sectors, also attracted a high number of projects and significant foreign investors. With newfound access to European markets, these sectors should experience an influx of private equity investment in the near future. [3]

Despite Russia’s economic structural limitations, private equity investors remain confident in Russia’s future growth. [4] The main reason for this confidence is Russia’s growing domestic market. Due to rising wealth levels, about 25% of Russia’s population now calls itself middle class. [5] This is a stark contrast to the oligarch-driven wealth gap that typified Russian society in the 1990’s and early 2000’s. Russian companies, already experiencing a trade surplus, will look to capitalize on the growing middle class rather than exporting to new markets. However, the specter of European competition in Russia’s markets will necessitate expansion and an influx of both domestic and foreign private equity.

While economic forces have seemingly aligned to attract investors, Russia’s culture of bureaucratization and corruption continues to ward off private equity. Additionally, the politicization of Russia’s economy also creates a major barrier for American companies. Currently, the US and Russia do not have normal trade relations due to the Jackson-Vanik Amendment, thus the US is precluded from using WTO mechanism to challenge Russia’s higher tariffs on American goods. Strict government regulation of foreign investment and corruption at all administrative levels further complicates private equity investment in Russian companies. However, investors who have already successfully navigated these barriers remain confident in future growth. For new investors, the risks may be justified by the increasing rewards of Russian companies expanding inward to a robust domestic market.

[1] Positive Outlook for Russian Investment as it Joins WTO , Ernst & Young Emerging Markets Center (Sep. 7, 2012),

[2] Matthew Philips, Don’t Get Too Excited About Russia’s WTO Deal, Bloomberg Businessweek (Aug. 22, 2012),

[3] See note 1, supra.

[4] Lena Smirova, Russia Climbs Up Investment and Business Climate Rankings, The Moscow Times (October 25, 2012),

[5] See note 1, supra.

The Acqui-Hire: Success, Failure, or Just Plain Acquisition?

It’s got to be great news when Facebook, Google, or any of the other Silicon Valley giants is buying up one of the smaller companies or startups, right? What many are surprised to learn, however, is that these giants aren’t always looking to capitalize on an opportunity to control the product produced by these startups. But if they don’t want the product, what is it that these Silicon Valley giants are after?

The real end game of many startup purchases is to bring the engineering talent from that startup to the purchasing company; the so called “aqui-hire.” While it may cost millions of dollars to purchase the small startup whose product may be simply mothballed by the purchaser, the return on investment can still be astronomical. Even if Facebook gets only one high-quality engineer from each startup purchase, then it possibly sets itself up to continue on the path toward millions of dollars of reported profits each year. [1]

It’s simple economics and a little bit of sociology. Silicon Valley is arguably a seller’s market: there is high demand for highly-skilled engineers and there are very few of them to go around. That being the case, a well-established engineer, being courted by the wooing ways of Silicon Valley giants, can demand a pretty penny in exchange for leaving his current startup and working with the others at, say, Google(as if the free haircuts, ping pong tournaments, and snack times were not enough to convince you to head over to the Googleplex). [2] By purchasing a startup and thus acquiring its engineers, the giants don’t have to be on the weak side of the negotiation table. Instead, they use their money and reputation to buy the company, thereby bypassing the individual negotiations with the engineers—the real item of value.

The real genius of the acqui-hire is the feelings of success that all involved parties tend to get out of the sale and purchase of the startup. The giants get their engineer, the engineer gets to work for an exceptional company alongside other equally-talented engineers, and the CEOs get to tell all their friends at the bar that their company was bought out by Google. Everyone’s a winner!

Not everyone’s a winner, says Fred Wilson, the oft-quoted voice of the venture capital finance community. In fact, Wilson is cited in an article of The Observer saying that the CEOs of the companies that Google and Facebook-types buy for the sake of their engineers are “essentially failed entrepreneurs.“ [3] To be sure, not everyone sees these sales as failures. Matt Langer, a former lead web engineer for a company recently purchased by Facebook in an acqui-hire, responded to Wilson’s claim: “[W]hen the single most important company on the Web considers it worth their while to acquire the product you’re building and the people you’re working alongside, the absolute last word that comes to mind is ‘failure’.” [4]

[1] Facebook Inc, Google:Finance,

[2] Jonathan Strickland, How the Googleplex Works, How Stuff Works,

[3] Leyon Neyfakh, Don’t Blow It! New York Tech’s Top Investors Have Bubble Trouble on the Brain, The New York Observer,

[4] Id.

Impact Investing

Impact investing has become the new hot topic in the social impact world. Similar to social entrepreneurship and social enterprise, impact investing attempts to amalgamate social good and more traditional models of finance arrangements. Rather than dividing the world into the classic for-profit/non-profit dichotomy, impact investing is another example of the trend that attempts to build a new path.

Impact funds span a range of investment philosophies. Lok Capital, for example, puts a high value on base of the pyramid companies that “have clear alignment with [investors] in terms of profitability and growth.” [1] Acumen Fund, one of the earliest impact investing funds, puts a higher value on portfolio companies’ social impact, viewing their financing as supporting growth in a market that takes longer to show impact and return.[2]

Closer to home, the University of Michigan Ross School of Business Social Venture Fund approaches investments based on a nuanced balance of social and financial returns, with the exact details largely dependent on the focus of the investment. [3] These three funds represent only a small fraction of the variety in this sector. Additionally, the space consists of numerous organizations that help seed organizations, but view themselves more as incubators than as any type of investment vehicle.

Traditional private equity and venture capital funds have a relatively clear principle mission – provide support for and help create more value in companies in which the fund invests. This takes the form of financial investment and control through different ownership tools. Impact investment, however, is based on the thesis that the social impact of a company is as important to foster as the financial returns. While this is a wonderful vision, the reality of balancing financial and social returns can get very messy.

Just as traditional investment vehicles put a high value on thorough due diligence, impact funds attempt to apply tried metrics to understand the impact and potential return of a social company – one that is likely to move more slowly in terms of financial returns, but with potentially life-changing impact for customers and clients.

Many of these funds focus on base of the pyramid customers due to the sheer number of these customers and the clear lack of service that has been provided to this market segment in the past. Rather than viewing individuals making less than two dollars a day as customers, many governments and companies see this group as a massive charity case – give them more and their lives will be better.

Impact investors, and a multitude of international conglomerates and new start-ups, see these billion-plus individuals as potential consumers who can contribute to the local and the international economy and through this process, can be pulled out of the most extreme poverty. This thesis, that poverty can be eliminated and social problems can be solved through the market, is not new but it remains somewhat radical. The challenge many impact funds encounter is how to balance the breadth and depth of impact with the opportunity cost of not applying a good business model to new customers, who may not be quite as needy as those who were originally the target market.

Impact investing is continuing to evolve and have a range of success. As companies, governments, and non-profits see alternative forms of activities, this space will grow and the potential value of the base of the pyramid market, and viewing opportunities in a combination of social and financial returns will become increasingly important.

[1] Lok Capital Investment Thesis, (last visited Oct. 13, 2012).

[2] See David Bank, Acumen Fund’s Transparent Experiment, Impact (Oct. 13, 2012),

[3] See Social Venture Fund, (last visited Oct. 13, 2012); University of Michigan Social Venture Fund, YouTube (Oct. 13, 2012), (describing the Social Venture Fund’s investment philosophy).

A New Model for Female-Driven Start-ups

A recent study has shown successful start-ups with female officers have a greater likelihood of success. [1] However, this same study found that only 1.3% of privately held companies have a female founder, only 6.5% have a female CEO, and only 20% have one or more female C-level executives. [2] Furthermore, in 2011, fewer companies at the point of equity financing had female executives than in 2006. [3]

The study confirms that women in leadership roles at start-ups can have a material impact, yet that they are often underutilized. [4] While these numbers portray the current macro-level reality, there is a certain subset of products that have been conceived, produced, and brought to market by female entrepreneurs, all with resounding success. The early success of these companies founded by women are changing the market, providing return for their investors, and opening the door for more female entrepreneurs to seek financing for their projects.

Rent the Runway and Birchbox, both internet-based companies, were conceived when their founders recognized solutions for universal problems facing the modern woman. For Rent the Runway founders Jennifer Hyman and Jennifer Fleiss, it was how to solve the “closet full of clothes but nothing to wear” phenomenon. [5] Hyman and Fleiss developed a dress rental service best described as “Netflix” for dresses. [6] Renting a dress for a four-day period costs about 10 percent of the full retail price of the garment. [7] Their first funding was a $16 million investment by Bain Capital Ventures and Highland Capital in 2009. [8] In 2011, they received an addition $15 million from venture capital firm Kleiner Perkins Caufield & Byers. [9] By October 2012, Rent the Runway has close to 3 million members, the majority of whom are between 15 and 45 years old, and continue to grow. [10]

Birchbox was founded by Hayley Barna and Kaita Beauchamp in 2011. [11] They had observed a problem in brick and mortar beauty retail caused by a combination of a high volume of merchandise and limited customer guidance. For many, shopping for new products was overwhelming and inefficient. Further, when shopping online, it was even more difficult to experiment with new products because of the limitations product testing. [12] For a $10 per month subscription, Birchbox sends customers a curated mix of trial-size items to sample. Birchbox created a one-stop shop for subscribers: they can test, learn about, and ultimately purchase, products featured in the Birchbox through the online store and community. [13] This solution for consumers also manifested itself as a solution for beauty companies struggling to maximize the benefits of e-commerce. [14] Since their launch in 2011, Birchbox has been a darling for big beauty business and venture capitalists alike. [15] They were named a “Start-up to watch in 2012” by and so far have received financing from investors First Round and Accel Partners. [16] By October 2012, the subscriber list has reached almost 100,000 and they have launched a Birchbox Man subscription service. [17]

Birchbox and Rent the Runway are examples of start-ups that have created a unique service that solved a problem faced by many individuals. However, they were not the first companies with female founders to disrupt the market. The success of these companies can be attributed to the success of another female-founded company: Spanx.

Over the past ten years, Spanx has helped open the door for female entrepreneurs like Hyman, Fleiss, Barna, and Beauchamp. Sara Blakely created an entire new sector of women’s retail, shapewear, when she founded Spanx out of her apartment. The slimming undergarment was conceived in 1998 after Blakely struggled to find an undergarment that flattered white pants. Since its founding in 2000, Spanx has had an estimated 20% net on revenue (approximately $250 million), an international product reach, and enviable brand recognition (Spanx is to shapewear as Kleenex is to tissues). [18]

The company began with $5,000 of Blakely’s own money and no outside investment. [19] Spanx is now sold through 11,500 retailers and in 40 countries. [20] The company – and its sole owner – are now valued at $1 billion. [21]

Spanx demonstrated the immense buying power of women and their appetite for game-changing lifestyle products. Rent the Runway and Birchbox built on this model by tailoring their business to the Internet-centric lifestyle. This is accomplished by maximizing their social networking footprint to continue to engage with customers outside of the traditional consumer environment. This month, Rent the Runway launched “Our Runway”, a user-generated database of photos and reviews for all rental merchandise. [22] Customers can seek out similar styles or well-reviewed items from women with similar body types. [23] At Birchbox, as the company learns more about the customers’ tastes, future boxes are curated to fit these preferences. [24] Each company also writes a blog [25] and maintains active accounts on social networking sites like Facebook and Pinterest. [26] By expanding into online communities, the companies have created a dialogue between consumers and the company, increasing product exposure and strengthening brand loyalty.

Spanx’s runaway success has enabled other start-ups offering solutions to the modern lifestyle problems to be taken seriously in the predominantly male world of venture capital and financing. Companies like Rent the Runway and Birchbox capitalized on this opportunity and reaffirmed the bankability of this series of products. Venture capitalists should continue to take female entrepreneurs with an innovative product and strong business acumen seriously when deciding whether to invest in a seemingly frivolous lifestyle product.

It is estimated that women make approximately 85% of purchasing decisions in their households. [27] This number is growing as more women become primary wage earners in their households. [28] Furthermore, the median income of women without children, in their 20s, living in metropolitan areas, is greater than that of their male counterparts. In Atlanta, women make 121% of mens pay; in New York City, women earn 117% a man’s wages. [29]

These women are prime customers for women-focused startups. In the future, there will certainly be more female entrepreneurs creating novel yet game-changing products and services similar to Spanx, Rent the Runway, and Birchbox. As these types of companies grow in size and strength, hopefully it will help to balance the disparity between men and women in the executive halls in start-ups across industries.

[1] Michael Yglesias, Successful Startups Have More Women in Senior Positions, Moneybox, Slate (October 9, 2012, 10:45 AM), (defining the benchmark for a successful company as one that has held a public offering, has been acquired, or has begun to generate profit).

[2] Jessica Canning, Maryam Haque, Yimeng Wang, Women at the Wheel: Do Female Executives Drive Start-Up Success? 10 (2012).

[3] Id at 9.

[4] Yglesias, supra note 1.

[5] The Backstory , Rent the Runway (last visited Oct. 25, 2012).

[6] Jenna Wortham, A Netflix Model for Haute Couture, N.Y. Times, Nov. 9, 2009 at B1,

[7] Stephanie Clifford, High Fashion, No Airbrushing, N.Y. Times, Oct. 19, 2012 at B1, .

[8] Phil Wahba, Rent the Runway gets $15 million from KPCB, Reuters (May 23, 2011, 1:59 PM), .

[9] Id.

[10] Squawk on the Verge: How to Rent the Runway (CNBC television broadcast Oct. 22 2012).

[11] Start-ups to Watch in 2012 , Inc., (last visited Oct. 25, 2012).

[12] Allen Adamson, Birchbox, Like Apple and Amazon and Google, Is a Hit Because Its Founders Hit on the Right Question, Forbes (Sept. 12, 2012, 4:01 PM), .

[13] Id.

[14] Id.

[15] Olga Kharif, A Surprise in Every Birchbox, E-commerce, Bloomberg Business Week (Feb. 16, 2012), .

[16] Star-ups to Watch in 2012 , supra note 11.

[17] Caroline Waxer, Digital Style Start-ups Get Nimble at New York Fashion Week, On the Runway, N.Y. Times, (Sept. 4 2012, 7:17 PM), .

[18] Clare O’Connor, Undercover Billionaire: Sara Blakely Joins the Rich List Thanks to Spanx, Forbes, March 26, 2012, .

[19] Id.

[20] Id.

[21] Id.

[22] Clifford, supra note 7.

[23] Id.

[24] Kharif, supra note 14.

[25] RTR Insider,; Birchbox Blog,

[26] Rent the Runway , Facebook,; Birchbox, Pinterest,

[27] Belinda Luscombe, Woman Power: The Rise of the Sheconomy, Time Magazine, Nov. 22, 2010,,9171,2030913-1,00.html .

[28] Id . (citing a Bureau of Labor statistics study).

[29] Id. (citing research firm Reach Advisors analysis of the Census Bureau’s 2008 American Community Survey).

Intellectual Ventures

On September 24, “invention firm” Intellectual Ventures announced the first major legal settlements in firm history, resolving separate patent infringement litigation claims against memory chip companies SK hynix Inc. and Elpida Memory, Inc. for undisclosed sums. [1]

These events mark a rare public event for the secretive firm, which touts itself as the designer of the invention capital market. Founded by Microsoft executive alums Nathan Myhrvold and Edward Jung, Intellectual Ventures purports to be the first major player in the monetization of invention and in what its founders deem “Invention Capitalism”, a medium through which they hope to “make research something you can invest in.” CEO Myhrvold believes that creating this market for invention capital will radically alter the innovation landscape, “turbocharg[ing] technological progress, creat[ing] many more new businesses, and chang[ing] the world for the better.” [2] Such an undertaking would ostensibly require the firm to build a system where infringed-upon patent designers could connect with service providers (such as Intellectual Ventures) who would ensure that the inventors are being adequately compensated for their patent designs, subsequently incentivizing future inventors to continue their innovative pursuits.

Belying such lofty goals, though, is the firm’s business record to date, bringing to mind a much more mundane and nefarious notion than the firm’s stated mission—that Intellectual Ventures is simply the latest, and largest, in a long line of mega “patent trolls”. Though the firm has designed in-house some of the patents it holds in its portfolio, it is considered an NPE, or nonpracticing entity—a kind of entity that holds patents but does not manufacture corresponding products. The firm has not disclosed the size or content of its patent portfolio, but one study estimates that the firm has acquired from 30,000 to 60,000 patents through over 1,200 shell companies from individual inventors, corporations, governments, research laboratories, and universities (as of May 2011).[3] Such a total would place Intellectual Ventures among the 15 largest patent portfolio holders worldwide—a space previously dominated solely by tech juggernauts such as Microsoft and IBM.

Companies utilizing Intellectual Ventures’ services can receive access to the firm’s patent portfolio and license patent rights to quell infringement concerns when manufacturing their own technological products. The firm also markets a program called “IP for Defense”, through which Intellectual Ventures’ investors such as Verizon (who purchased an equity stake in the firm of $350 million) have utilized the firm’s patent portfolio as part of a litigation defense strategy. Faced with a pending infringement suit from TiVo, Verizon purchased a patent from Intellectual Ventures, subsequently utilizing the patent as the basis for a counterclaim in the TiVo suit. Despite the cries of Intellectual Ventures to the contrary, such practices are often considered an encumbrance to innovation rather than a vehicle for it, allowing non-inventors (such as Intellectual Ventures) to collect, or threaten to collect, a disproportionate return on patents while adding little value to the final commercial product. [4]

But regardless of the firm’s true effect on innovation or the patent market, it has accrued a sizeable following amongst investors, with over $5 billion of assets now under management,[5] funded from a disparate group including the likes of Amazon, American Express, Sony, and the University of Notre Dame. [6] Myhrvold notes that the firm has been structured in a form resembling traditional venture capital and private equity funds, allocating monies received into at least five different internal funds, and receiving approximately a 2% management fee in addition to 20% on the carried interest derived from the firm’s business operations. [7] With their current funding level, Intellectual Ventures will need to generate an unprecedented level of revenue from their patent portfolio to be a viable investment in the venture capital space. Stanford academics Robin Feldman and Tom Ewing estimate that, assuming a 10-year investment lifetime, the funds need to yield a lifetime revenue expectation of “roughly $40 billion to be considered a minimally successful investment.” [8]

Such daunting revenue expectations, though, have not prevented Intellectual Ventures nor budding market participants such as Acacia Research Corporation, Transpacific IP Ltd., RPX, and Round Rock Research, LLC from continuing to acquire more patents for their growing portfolios. Though the firm’s secrecy and usage of third parties to carry out the bulk of its litigation activities obfuscate what its vision towards long-term profitability and innovation truly entails, its recent settlements with SK hynix Inc. and Elpida Memory, Inc. and 2010 suits filed against two other technology companies suggest that perhaps they are finally ready to shed more light on how the company plans on building a robust invention market. [9]

[1] Intellectual Ventures Resolves Patent Disputes with SK hynix Inc. and Elpida Memory, Inc. , Intellectual Ventures (Sept. 24, 2012),

[2] Steve Lohr, Turning Patents Into “Inventional Capital”, N.Y. Times, Feb. 17, 2010, at B1.

[3] Tom Ewing and Robin Feldman, The Giants Among Us, 2012 STAN. TECH. L. REV. 1, 5 (2012).

[4] Id. at 1

[5] Intellectual Ventures Corporate Fact Sheet, Intellectual Ventures,

[6] Ewing and Feldman at 9

[7] Id.

[8] Id. at 12

[9] Id. at 14-15

Minority Shareholder Freeze Outs

Issues surrounding arbitration are now front and center in the business and legal worlds. In January 2012, news concerning Carlyle Group’s initial public offering surfaced when it proposed “the most shareholder-unfriendly corporate governance structure in modern history.” [1] In its proposal, Carlyle required that public shareholders arbitrate all claims against the company. Moreover, the arbitration must be confidential and precludes class-action lawsuits.[2] With the Supreme Court practically removing all barriers to arbitration in cases like AT&T Mobility v. Concepcion[3] orCompuCredit v. Greenwood, [4] Carlyle’s proposed governance structure seems poised to withstand legal challenge.

But Carlyle goes beyond merely requiring disputes to be arbitrated. Additionally, many Carlyle shareholders will have no ability to elect directors. If public shareholders hold less than ten percent of the company, Carlyle reserves the right to summarily repurchase all of those shares. [5] Perhaps most interestingly, Carlyle has supplanted fiduciary duties with a partnership agreement that grants the board to act in its sole discretion without good faith. A committee of independent directors appointed by Carlyle deals with conflicts of interest.

However, minority shareholder freeze out is not an entirely new concept in the private equity sphere. Other public private equity firms including Apollo Global Management, the Blackstone Group, and Kohlberg Kravis Roberts contain similar corporate governance structures. [6] Some commentators view these provisions as designed to “eliminate any ability of shareholders to sue the board for even the most egregious acts.” [7]

The first challenge the Carlyle Group will face is the approval from the Securities and Exchange Commission. The question will likely center on whether a public company can force arbitration in cases involving federal securities law. In support of its proposed corporate governance structure, Carlyle will find solace in recent Supreme Court decisions like AT&T Mobility and CompuCredit.

Arguments favoring the arbitration clause focus on the division between the company and shareholder interest. Some commentators believe that shareholder interests and incentives tend to be short term, while companies should be run by boards of directors who are incentivized to focus on the company’s long-term interests.[8] By limiting shareholder rights, the board of directors can avoid the pitfall of focusing on short-term profits.

Another advantage is that arbitration clauses reduce transaction costs. When private equity firms primarily operate through acquiring companies, shareholder litigation significantly increases the cost of doing business. According to a report released by Cornerstone Research in cooperation with Stanford Law School, 91% of acquisitions valued over $100 million in 2011 were subject to shareholder litigation. [9] According to the same study, the number of lawsuits per deal averaged 5.1. [10] Of the 565 legal challenges to acquisitions in 2010-2011, 27% were voluntarily dismissed, 4% were dismissed by the court with prejudice, and 69% settled. [11] With the cost of legal representation on the rise, the increase of lawsuits per deal becomes increasingly burdensome for publicly traded private equity firms.

While it is unclear whether firms can require arbitration for claims of federal security violations, the Supreme Court’s decision in CompuCredit seems to support the use of arbitration in any setting not directly prohibiting it. Further, the use of arbitration clauses may be necessary to support the central business model of publicly traded private equity firms. Finally, the market is the best place to regulate corporate governance structures: if investors are not satisfied with shareholder rights, they can simply choose not to invest. As long as adequate disclosure is provided to potential shareholders, arbitration provisions like that proposed by Carlyle Group should be held valid.

[1] Steven Davidoff, Carlyle Readies an Unfriendly I.P.O. for Shareholders, DealBook (Jan. 18, 2012),

[2] Id.

[3] AT&T Mobility LLC., v. Concepcion, 131 S.Ct. 1740 (2012) (Under Federal Arbitration Act, California must enforce mandatory arbitration clause that precludes class-action arbitration)

[4] Compucredit Co. v. Greenwood, 132 S.Ct. 665 (2012) (holding where federal statute is silent on arbitration, Federal Arbitration Act requires arbitration agreement to be enforced according to terms)

[5] Id.

[6] Id.

[7] Steven Davidoff, Carlyle Readies an Unfriendly I.P.O. for Shareholders, DealBook (Jan. 18, 2012),

[8] Id.

[9] John Gould, Developments in M&A Shareholder Litigation, Harvard Law School Forum on Corporate Governance and Financial Regulation (Mar. 4, 2012),

[10] Id.

[11] Id.

Growing Singapore’s Venture Capital Industry

What is the state of venture capital and entrepreneurship in Singapore? For six years in a row, the World Bank has named Singapore the friendliest country in which to conduct business.[1] Its business friendly laws, well educated population, and easy to absorb culture have combined to make Singapore one of Asia’s financial and commercial centers. [2] The amount of venture capital funding for small medium sized enterprises, however, lags behind that of other countries. Recently, Singapore has attempted to rectify the situation by encouraging technology startups and venture capital.

Is the problem the people, or a lack of financing? According to one survey, conducted by the Zoltan Acs of George Mason University and Erkko Autio of the Imperial College Business School, it is not necessarily the people; Singapore has a population with entrepreneurial spirit and aspirations, but lacks access to venture capital finance.[3] In 2011, there were less than twenty venture capital funds focused on investing in Singapore based businesses. [4]

Over the past year, the Singaporean government has attempted to bolster venture capital investment in Singapore. One way in which it is doing this is to increase the amount of funding available from the government itself. In 2011, the government had around $300 million of funding available to startups. Recently this year, Singapore’s National Research Foundation, a governmental department, announced that it would make approximately S$4 billion in additional funding available for startups.[5] It is, however, currently unclear exactly how, when and to whom the funds will be dispersed.

The Singapore government has also increased other resources available to startups. For example, the Singaporean government is providing startups with office facilities, training, and mentoring.[6] Additionally, the government has a tech incubator, and various incentive programs such as a three-year tax exemption and joint funding options. [7] Finally, the number of contracts between government research departments and entrepreneurs has tripled over the past year. [8]

There is one catch with these programs; in order to gain access to many of these government programs, a startup company must be at least partially owned by a Singaporean person or business entity.[9] Thus, foreigners looking to start companies in Singapore must either find a Singaporean cofounder, or give equity to Singaporean VCs or government funds. [10] Very new startups will also struggle to bring foreigners to Singapore, as the government’s visa program imposes minimum paid-in-capital and local hiring requirements. [11]

Investment activity is not entirely government driven, however. [12] Singapore is a large financial center and, in 2011, its private equity and venture capital sector has an estimated $26.5 billion in total assets under management. [13] Of that total, a 2011 PriceWaterhouseCoopers survey found that $500 million was invested in venture capital deals with startups inside Singapore. [14]

The private venture capital industry appears to be growing since that survey. The Singapore Venture Capital and Private Equity Association’s membership is increasing every year.[15] Recently, Facebook co-founder Eduardo Saverin gave up his American citizenship, and moved to Singapore to invest in startups. [16]

Singapore makes for an attractive destination for investors due to low corporate and personal tax rates, highly educated population, its business friendly government, and position as a regional hub for conducting business in other Southeast Asian countries. [17]

Despite these advantages, however, Singapore remains a small country of only five million people, limiting the growth opportunities for domestic companies, and making its domestic market unique in ways that may not translate easily to other places. [18] Overcoming the limitations of the domestic market for goods and services is one of the key challenges for startups seeking to attract capital; startups must be able to show how they will reach markets outside of Singapore.[19]

[1] Anthony Kuhn, Singapore’s Rising Tech Industry Draws Expat Innovators and Investors National Public Radio, (Sept. 17, 2012),


[3] Jo-Ann Huang, Venture Capital Industry Needs More Support, Channel News Asia (Mar. 23, 2011),

[4] Id.

[5] Singapore Offers $4bn Funding to Startups , PRWeb (Sept. 10, 2012),

[6] Eileen Elliott, Economist Reviews Asia’s Tech Start-Up Environments, International Venture Capital and Private Equity News (Sept. 28, 2012),

[7] Jacky Yap, A Taiwanese Opinion on Singapore for Foreign Startups, E27 (Oct. 3, 2012),

[8] Singapore Offers $4bn Funding to Startups , PRWeb (Sept. 10, 2012),

[9] Jacky Yap, A Taiwanese Opinion on Singapore for Foreign Startups, E27 (Oct. 3, 2012),

[10] Id.

[11] Id.

[12] Bernard Leong, A Map on Venture Capital in Singapore, SGE (Mar. 5, 2009),

[13] Nisha Ramchandani, S’Pore a Magnet for PE and VC Firms, AsiaOne (Oct. 1, 2012),

[14] Id.

[15] Singapore Offers $4bn Funding to Startups , PRWeb (Sept. 10, 2012),

[16] Anthony Kuhn, Singapore’s Rising Tech Industry Draws Expat Innovators and Investors National Public Radio, (Sept. 17, 2012),

[17] Id .

[18] Id., Jo-Ann Huang, Venture Capital Industry Needs More Support, Channel News Asia (Mar. 23, 2011),

[19] Id.

A Look Into the Growing Trend of Family Offices

Private equity firms were reluctant to make deals in the first half of 2012, as the number of deals dropped 15 percent from last year. [1] A lack of large deals could create negative repercussions going forward, as firms address the need to deploy the large amount of cash that they have built-up. Firms currently hold about $1 trillion in cash, $200 billion of which will be handed back to investors if firms are unable to find large deals within the next year. [2] The increased need to find large deals will lift multiples for the larger target companies, providing less upside potential going forward. [3] Although well priced deals may be harder to find for some of the major private equity firms, some wealthy investors are beginning to seek out alternative ways to invest their capital. A growing number of wealthy families are beginning to make direct investments in companies, rather than investing in large private equity firms. [4]

As wealthy individuals look for new ways to invest after experiencing a period of low returns, some wealthy families have begun to hire top Wall Street talent to manage their investments.[5] Between 2006 and 2010, the share of private equity investments in multifamily investment portfolios rose from 3.8% to 10%. [6] Moreover, the current environment is ripe for investors who want more control over their investments because of the pressure some of the major funds are facing. [7] Not only does the idea of being closer to their investments appeal to wealthy investors, but it opens the door to numerous investments that may not be readily available when investing in large private equity firms. Investing in a family office allows investors to make investments with longer time horizons. Managers within family offices have found success in making long-term investments in a few platform companies with the aim of growing the companies through smaller acquisitions. [8] This holding company approach is just one example of the ability of family offices to be flexible in the type of strategies they employ.

Although family offices usually do not have the same amount of resources at their disposal as some of the major private equity firms, the resources they do have are streamlined.[9] The number of individual investors in any given family office is relatively small, with some offices starting out with only one family. [10] At the same time, some managers are drawn by the opportunity to work closely with clients, while being relived of worrying about marketing or spending time doing client development and have left large investment houses to work with these family offices. [11]

Running a family office also has the advantage of flexibility when it comes to the type of investments that are available for managers to consider. [12] Simply put, the size of many of these family offices allows managers to consider a broad spectrum of investments that may not be as appealing to many of the large private equity firms. Many of the family offices are able to invest in young, promising startups because they are dealing with a smaller pool of money. [13] In fact, some family offices seem to focus mostly on young startup companies, almost acting as a venture capital fund. [14]

As the industry continues to face challenges, investors continue to adjust their actions to seek out better rates of return. For those who seek greater control and a more personal atmosphere, investing in a multifamily office is an attractive alternative to investing with a major firm. At the same time, managers in family offices will also benefit from the small amount of investors they will be communicating with and the greater flexibility in the investments that are available to them. With the advantages of size, flexibility, and greater control, it is easy to see why family offices have become a favored alternative for wealthy investors and managers alike.

[1] Mohammed Aly Sergie, Survey Says: PE Flat in First Half, Eyes Carve-Outs in Second, Wall St. J. Blog (July 2, 2012, 4:57 PM)

[2] Andrew Ross Sorkin, More Money Than They Know What to do With, N.Y. Times Dealbook (Oct. 1, 2012, 8:42 PM)

[3] Id.

[4] Azam Ahmed, Family Investment Funds Go Hunting for Wall St. Expertise, N.Y. Times DealBook (Apr. 4, 2012, 3:50 PM),

[5] Id.

[6] Steven R. Strahler, Families Jump Into the PE Pool, Crain’s Chicago Business (May 28, 2012)

[7] Id.

[8] Id.

[9] Ahmed, Supra note 3.

[10] Strahler, Supra note 6.

[11] Ahmed, Supra note 3.

[12] Id.

[13] Id.

[14] Id.