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Explores issues around the portfolio management and partnership behavior in a venture capital setting.

A top-tier venture capital firm has encountered challenging conditions for its recent funds, which have raised "clawback" liabilities. In response, it is charging its investors the difference between the lower budget-based fee that it used and the maximum that the investors might have had to pay. A vice-president of a foundation invested with this firm must decide whether to reinvest in the firm's newest fund.

A venture capitalist must decide among three highly qualified candidates to be CEO of a start-up software company. Each has unique strengths and weaknesses and will take the company in very different directions. Whom should he recommend to the board?

A venture capitalist must decide how to respond to an e-mail from his long-time troubleshooter now installed as interim CEO at a struggling contract manufacturing exchange for the custom car business. The investors have been seeking a full-time CEO but have made little progress. Does the investor switch search firms, push for the company to be acquired, or continue as they've been doing? Each strategy imposes its own set of costs, whether in time, reduced return on investment, or increased compensation to the interim CEO and continued floundering at the company, in addition to possible strains in investor relations.

The senior managing partner of Actis, a leading private equity investor in emerging markets, must decide whether to go into the market to raise money. Actis was spun out of CDC, a 50-year-old division of the U.K.'s Department for International Development, and is guaranteed a substantial flow of capital under the terms of the demerger agreement. Actis management has to decide whether to focus on developing relationships with its chief limited partner and honing its internal processes or to go out into the market to raise funds.

Depicts the options facing Mohammed Ibrahim, founder and chairman of Celtel International, the largest pan African wireless telecommunications provider, as he tries to position his company for further growth. Should the firm, which has reached $1 billion in revenues in six years, strive for an IPO, trade a sale, or continue as an independent for a few more years? Outlines the company's success and challenges thus far, the benefits and disadvantages of each option, and future funding possibilities.

Supplements the (A) case. A rewritten version of an earlier case.

The Softbank Asia Infrastructure Fund (SAIF) team has just learned that the price at which its portfolio company, the Chinese gaming firm Shanda, was planning to go public must be reduced. As a result, the partners think through the entire genesis of the deal and the differences between doing venture capital in China and in the United States. Illustrates the intricacies of strategic venture investing.

The general partners of Gobi Partners, a venture fund located in Shanghai, are trying to decide the best way to raise money for their first fund. Their strategy of investing in early-stage digital media companies in China was well-received by strategic investors--IBM and NTT DoCoMo are cornerstone investors in the fund--but classic institutional investors are wary of such a targeted approach, despite the team's successful track record with different private equity groups. Over a year after their first closing at $30 million, the limited partners are urging Gobi to raise the balance of its $100 million fund. But how, without either abandoning the strategy that has won them a measure of success in such a short time or bringing on more strategic investors with goals that might conflict with those currently in the fund?

Mo Ibrahim, chairman of Celtel International, the largest provider of cellular services in sub-Saharan Africa, must decide on his company's future. After an amazing six years that took it from minority positions in three countries to nearly $1 billion in revenues and 14 operations in 13 countries, the company has three options: to attempt an IPO, to find a merger partner, or to continue as an independent entity. Ibrahim must consider the company's track record, its current situation, and the implications of each option.

Describes investment decision-making processes, based on interviews with 56% of the top 38 venture capital firms in the country. Discusses some implications for the future growth of the industry.

A venture capitalist faces a situation in which a struggling portfolio company has found a promising vice president of sales through a recruitment agency. The candidate would be an excellent fit for another one of the investor's companies--one that is doing much better. Yet, that firm has not embarked on a formal search.

Supplements the (A) case.

In 2002, Apax Partners had to decide whether to accept a less-than-perfect offer for one of its portfolio companies or to refinance it. This company, a maker of paper industry consumables with a global presence, had been purchased in 1999 and performed extremely well since then. Despite being a solid, cash-generative operation, it didn't excite a lot of interest in the market. An early exit at a good multiple would be helpful for Apax's current fund and future fund-raising efforts, whereas refinancing would allow Apax to take some money off the table and share in future upsides. Which is the better choice?

The Central Intelligence Agency establishes a venture-enabled fund, In-Q-Tel, to allow it to access cutting-edge technologies. Fund managers face a variety of difficulties, some similar to those facing other institutionally affiliated venture funds and some unique.

Describes the dilemma facing Chris Masterson, the head of HSBC's private equity division, in negotiating this team's buyout of its organization from HSBC, its corporate parent since 1992. Discusses the pros and cons of being a captive fund and the delicate balance among many interests--limited partners, team members, the parent, and the investee companies--that must be maintained.

David Fischer is trying to raise $200 million for a first-time venture debt fund that will be affiliated with Silicon Valley Bank, a major technology lender. Despite his lengthy experience in venture lending, the process is proving difficult. He and his partners are considering whether to continue trying to raise the full amount or to close a smaller sum that is readily available and prove the model before trying to raise a larger fund. In making their decision, the partners must consider the structure of the fund and the value added by their links to the bank as well as how to counter conflict of interest concerns raised by the potential limited partners.

Grove Street Advisors, a manager of customized private equity investment products, has been very successful in its first five years. To grow, the group must decide whether to target smaller organizations, revive its coinvestment efforts, or enter the highly competitive fund-of-funds market.

Paul Fletcher, CEO of CDC Capital Partners, a private equity group investing in the world's poorest countries, is wrestling with questions raised by the imminent reorganization of the firm. Previously an arm of the United Kingdom's international aid agency, CDC is becoming a public-private partnership, which requires that it refocus its efforts and rearrange its widespread portfolio into a form that outside investors will recognize. The proposed organization, separating government money from fund management, appears to solve a number of the problems from a strategic perspective, yet a host remain. Given the generally poor risk/return ratio of emerging market investing over the past decade, Fletcher and his executives must decide how they can position their organization to compete with other investment vehicles and still remain true to the mission of mobilizing capital to invest in poor countries.

Brian Larcombe, CEO of 3i Group, one of the world's largest private equity firms and one of the few publicly listed ones, is deciding how best to use his firm's international network to deliver superior returns to shareholders. This case presents 3i's history and international strategy.