Alumni Share Experiences on Venture Capital, Private Equity
Three Providence College alumni discussed their experience in the private equity and venture capital industry as part of the School of Business Advisory Council Speaker Series.
The presentation, “Got Private Equity? Could Venture Capital or Private Equity Be a Career Path for You?” was sponsored by the Providence College School of Business (PCSB), the PCSB Advisory Council, the Office of Alumni Relations, and the Office of Career Services.
Rob Reilly ’86, a member of the PCSB Business Council and an executive director of UBS Bank, served as moderator for the discussion with Dave Gwozdz ’86, Jay Corscadden ’87, and Christopher J. Walker ’86. Each represents an important piece in the private equity investing cycle — an entrepreneur, a general partner that makes investment in private companies, and an institutional provider of capital to general partners.
Gwozdz, as a founder or part of the founding team of six digital startups, including the Internet advertising company DoubleClick and Hot Link Media, an early online ad network, has used venture capital to fund his business. He is CEO at Mojiva, Inc., a company that provides advertising technology to help marketers reach consumers via their mobile devices, including smartphones and tablets. Mojiva's Mocean Mobile advertising platform is used by companies such as Microsoft, Skype, Time, Inc., TV Guide, and RIM.
Corscadden is co-founder and managing general partner of Clarkston Merchant Partners, where he makes and manages the firm’s principal investments. Corscadden, who earned an MBA from Duke University, also co-founded and managed Adams, Harkness Ventures, a technology-focused venture capital fund.
Walker, a principal at HarbourVest Partners, LLC, a global private equity investment firm, started the event with an overview of private equity and venture capital and the role each plays in the market. He was a United States Navy pilot for 11 years, flying the P-3 Orion aircraft and achieving the rank of lieutenant commander, before he earned a master’s degree in finance from Boston College in 1998.
Overview of the industry
Private equity is a multi-billion dollar alternative asset class that offers long-term returns through investments in privately held companies, he said. Because there’s not a lot of publicly filed information about these businesses, “it’s an asset class you hear about, but probably don’t know too much about,” Walker said.
With a stock or a mutual fund, investors wait for the shares to appreciate in value and then sell to get liquidity. By contrast, with this asset class, “what you’re waiting for are liquidity events, such as a sale or IPO of a private company,” Walker said.
People invest in private equity because of the outsized returns, he said, but these can be riskier investments. The potential rewards are highest with companies in the seed stage, but “half of those companies may not make it, so diversification is important,” he said.
The firms make money by providing capital in areas that are overlooked, or have disruptive technologies, the three said.
“Today we have a business that invests in special situations and opportunities that sort of fall in the cracks of the well-defined areas that Chris just defined,” Corscadden said. “We look for areas that others aren’t looking at.”
Since the 1970s, institutional investors such as pension plans have invested in private equity funds , Walker said. They would have access to the same information they would expect from other asset classes such as formal financial statements, accounting, and governance.
“If you are an investor in the asset class you know what your value of your stakes are worth in these companies, down to the penny,” Walker said.
However, these can be illiquid investments, meant to be held for a number of years in order to appreciate in value and scale.
“This isn’t like investing in stock or mutual funds where you call up your broker and say, “I don’t really like where this is going,’” Walker said. “Once you commit to this asset class you’re in for the long haul.”
Corscadden said that he divides his work time essentially three ways.
“I split my time 25 percent in the marketing role, out looking for companies, and 25 percent of time with portfolio companies I’m invested in, trying to pursue strategies, and another half of my time raising capital for the next opportunity that we have,” Corscadden said.
As an entrepreneur, Gwozdz often meets with private equity firms to raise funds for his projects. However, “you don’t just raise money in my position. You raise money at a cost — exchange for equity,” he said. At the same time, to bring in financing to grow business, “you have to decide tradeoffs.”
The three alumni also offered career advice. Corscadden encouraged students to market themselves.
“Much like a great entrepreneur has to find a crack in the marketplace and sell around it, go sell your product or service,” he said. “You have to create that same story about yourselves and go find your market and pursue it.”
For those considering a future in venture capital, Gwozdz suggested they work in a business first.
“There’s nothing worse than, from where I sit, talking to a venture capitalist that thinks they know it all and has never been an integral part of growing a company,” he said.
— Liz F. Kay