Byline: By richard siklos section: Section C; Column 5; Business/Financial Desk; Pg. 1 Length
URL: http://www.nytimes.com SUBJECT
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URL: http://www.nytimes.com SUBJECT: HEDGE FUNDS (93%); INVESTMENT MANAGEMENT (90%); CORPORATE GOVERNANCE (90%); BANKING & FINANCE REGULATION (90%); BUSINESS ETHICS (90%); SECURITIES LAW (90%); ETHICS (90%); BANKING & FINANCE (89%); BOARDS OF DIRECTORS (78%); BANKING & FINANCE AGENCIES (78%); MERGERS & ACQUISITIONS (77%); TRUST ARRANGEMENTS (70%); RESTAURANTS (56%); BONDS (77%) Stocks and Bonds; Hedge Funds COMPANY: BENNETT FUNDING GROUP INC (50%); APPLEBEE'S INTERNATIONAL INC (84%); GOLDMAN SACHS GROUP INC (90%) ORGANIZATION: Breeden Partners TICKER: GS (NYSE) (90%) INDUSTRY: NAICS722110 FULL-SERVICE RESTAURANTS (84%); SIC5812 EATING PLACES (84%); NAICS523930 INVESTMENT ADVICE (90%); NAICS523920 PORTFOLIO MANAGEMENT (90%); NAICS523110 INVESTMENT BANKING & SECURITIES DEALING (90%); SIC6289 SERVICES ALLIED WITH THE EXCHANGE OF SECURITIES OR COMMODITIES, NEC (90%); SIC6282 INVESTMENT ADVICE (90%); SIC6211 SECURITY BROKERS, DEALERS, & FLOTATION COMPANIES (90%) PERSON: Richard C Breeden; Lynnley Browning GEOGRAPHIC: UNITED STATES (93%) LOAD-DATE: January 19, 2007 LANGUAGE: ENGLISH CORRECTION-DATE: January 23, 2007 CORRECTION: An article on the Street Scene page of Business Day on Friday about Richard C. Breeden, the former top securities regulator who is started a hedge fund aimed at troubled companies, misstated his former position at the accounting firm Coopers & Lybrand. He was a co-chairman of the firm's international business; he did not run the firm. GRAPHIC: Photo: Richard Breeden hopes his expertise in securities laws and corporate governance will help him in his role as investor in troubled companies. (Photo by Chris Kleponis/Bloomberg News) PUBLICATION-TYPE: Newspaper Copyright 2007 The New York Times Company 1208 of 1258 DOCUMENTS The New York Times
Late Edition - Final A Light Bulb Goes On, and China Starts Thinking 'Alternative Energy' BYLINE: By MATT RICHTEL SECTION: Section C; Column 1; Business/Financial Desk; STREET SCENE: V.C. NATION; Pg. 7 LENGTH: 880 words ON the vanguard of venture capital, the buzzwords of late have been ''alternative energy'' and ''China.'' Are the two worlds about to collide? Seed investors are financing, or considering financing, start-ups in China that are developing equipment for wind and solar power, clean water and food alternatives and technology to promote energy efficiency. While this may seem to be an arbitrary combination of two of the hottest trends in venture capital -- sort of like the first person who mixed peanut butter and chocolate -- there is a growing number of investors who believe that the potential reward in China is worth the tremendous risk. China has voracious energy needs and ''the most serious environmental problem in the world,'' said Jerry Li, a consultant in Beijing who matches venture capitalists with entrepreneurs. ''There is a huge demand for investment'' in alternative solutions, he said. Mr. Li is the first director of Cleantech China, a joint venture beginning this month between Tsinghua University in Beijing and the Cleantech Venture Network, a blossoming North American trade and research group for venture capitalists investing in alternative energy technology. While independent hard data on alternative energy investments in China is hard to come by, Mr. Li's joint venture, aimed at marrying overseas investors and Chinese entrepreneurs, testifies to the emerging trend. From June 2005 to June 2006, American venture capitalists put $100 million into China-based start-ups focused on alternative energy, double the investment in the period a year earlier, Cleantech China said. But the challenges are immense. For one, China has a hard-driving, fossil-fuel-centered economy that has so far done little to diminish its reliance on those fuels. And venture capitalists have still not entirely figured out how to manage investments from such a distance, and across cultures, and, pointedly, how to get their money out once they've built the start-ups into viable companies. John Rockwell, a managing director at DFJ Element, a Silicon Valley venture firm, was not deterred. In March 2006, DFJ invested $2 million in Miartech, a 34-person Shanghai start-up that makes technology to send data over power lines, automate meter reading and make the distribution system more efficient. Mr. Rockwell liked the technology and, also, the cost of doing business: the company, thanks to lower payroll and other costs, uses less than $100,000 a month, a fifth of what Mr. Rockwell said it might in the United States. He has been to China twice since August and plans three trips this year, partly in hopes of finding new ventures that address the country's voracious need for energy. ''They're going to require a greater increase in electricity than anywhere else,'' Mr. Rockwell said. He said that China was already beginning to look more intensely at renewable sources, like wind, hydro and solar. ''It's going to create a lot of opportunities.'' John Denniston, a partner at Kleiner, Perkins, Caufield & Byers, said he heard a similar message when he met with a high-ranking official in the Ministry of Science and Technology. The deputy minister told him that ''one of their highest goals is to find alternative energy sources that decrease their dependence on oil,'' Mr. Denniston said. And he said that in conversations with other officials, entrepreneurs and scientists, ''everyone was on the same playbook.'' Mr. Denniston has not made any investments yet, but is interested in exploring opportunities. He said he was curious to see if China, because of its high demand for energy, could leapfrog some other countries and become a leader in alternative solutions, like being the first to mandate all-electric vehicles. Mr. Rockwell agrees that China has a chance to define itself early-on as promoting alternatives to oil: ''When you don't have an established grid, a lot of renewables look more attractive.'' A perhaps more basic issue that investors say is challenging China is the simple demand for enough potable water and clean food -- industries that fall under the loose and broad definition of ''cleantech.'' Mr. Li said that within six months, he expected to have a database of some 300 Chinese start-ups seeking investment partners. One of them will be a company called Ruikang, based in Jiangsu Province, near Shanghai, that handles organic tea, honey and Chinese traditional medicines. Another start-up that he said was seeking investors is Shenwu, based in Beijing, which makes equipment to capture heat from a heating unit and redirect it for other uses. Mr. Li said the big challenge facing American venture capitalists is not so much finding viable technology as it is finding capable managers. Chinese entrepreneurs can ''have a different speed and rhythm -- everything is different because of the cultural background.'' He insisted, though, that the situation is changing, thanks to exposure to international businesspeople and intensifying market demand. ''Things are changing, not just because the government is hungry for this,'' he said of the demand for alternative energy. ''The whole country is hungry for this.'' Whether the chocolate and peanut butter provided by venture capitalists can help remains to be seen.
Copyright 2007 The New York Times Company 1209 of 1258 DOCUMENTS The New York Times
Late Edition - Final The Route From Research to Start-Up BYLINE: By JAMES FLANIGAN. This column about small-business trends in California and the West appears on the third Thursday of every month. E-mail: jamesflanigan@nytimes.com SECTION: Section C; Column 4; Business/Financial Desk; SMALL BUSINESS: ENTREPRENEURIAL EDGE; Pg. 16 LENGTH: 1242 words HARTMUT NEVEN came from Germany to the University of Southern California a decade ago to lead research efforts in computerized face and object recognition. The aim was to create a tool for the military and law enforcement agencies to identify enemies and suspects as well as for airlines and other companies to check passengers and visitors. In three years, Mr. Neven, a physicist with a Ph.D. from Ruhr University, succeeded in developing software that could analyze facial features, skin tones and the iris of the eye to achieve such recognition. Then, with encouragement from the technology transfer program at U.S.C., he formed a company named Eyematic Inc. It later became Neven Vision, with the aid of $200,000 in seed money from William Woodward, managing director of Anthem Venture Partners, a Santa Monica firm, and some of Mr. Neven's own capital. Connections to the university did not end there. The Information Sciences Institute at the University of Southern California has continued research in computer recognition jointly with Ruhr University in Bochum, Germany, and with support from Neven Vision. They ''build on top of the basic technology,'' Mr. Neven said. Such collaboration among university research, start-up companies and financial backers is a long-term trend dating to the Bayh-Dole Act of 1980, which mandated that universities collaborate with commercial concerns to promote use of the inventions arising from federal funding. Many universities now have offices of technology transfer looking to turn research into commercial ventures at the same time that advances in information and biological science and the growth of Internet commerce has led to an explosion of entrepreneurial companies. ''We see it as transferring back to the public benefits of technology that in many cases has been developed with public money,'' said Krisztina Holly, vice provost of U.S.C. who is leading a major expansion of its technology transfer program. Defense Department research grants in the 1990s, for example, benefited the early facial recognition research behind Neven Vision. And those grants inspired continued development. Ultimately, the technology ''will allow you to point your camera phone at a movie poster or a restaurant and get an immediate review of the film or the fare on your cellphone, which will tap into databases,'' said Mr. Neven, who foresees one billion camera phones in use worldwide by 2010. That envisioned future may have been brought closer last year when Mr. Neven's company was acquired by Google for a price that financial experts estimate at more than $40 million. Technology transfer clearly has paid off for Mr. Neven and his company's financial backers. But what do the universities get out of it? The benefits to U.S.C. for backing the research include potential licensing fees from patents on the developing technology and the possibility of contributions to the university from successful entrepreneurs like Mr. Neven. Lawrence Gilbert, senior director of technology transfer for the California Institute of Technology, put it this way: ''Universities earn fees and royalties from licensing patents, but the real benefit comes from contributions to the endowment if the start-up company is successful.'' Caltech has spawned 80 new companies in the last decade, including Impinj Inc., which makes critical semiconductor-antenna chips that power radio frequency identification, or RFID, tags. Such microscopic tags make possible continuous tracking of products that enter American ports or sit on the shelves of Wal-Mart Stores or in medical vials in hospitals. Offering information that goes far beyond the familiar bar code, RFID is increasingly required by the Department of Homeland Security and used by major retailers and consumer product companies. Impinj, which is based in Seattle, originated in research done at Caltech by Carver Mead, a founder of modern electronics, and a student of his, Christopher Diorio, who is now professor of computer science at the University of Washington and chairman of Impinj. To start the company six years ago, ''Caltech took a small equity stake,'' said William Colleran, president and chief executive of Impinj. It was not investing in specific technology but in potential. ''Initially, we were working with a communications chip,'' Mr. Colleran said, ''but in 2003 when the government began to mandate RFID, we saw that our technology could be the perfect product.'' Impinj, which is private, has 150 employees and ''tens of millions'' in annual revenue, Mr. Colleran said. It also has $75 million in venture capital from nine major funds and looks to one day sell stock publicly, he said, ''which would provide a return for all those investors, including Caltech.'' The equity investment by Caltech was in lieu of fees for acquiring a patent -- usually about $20,000. Caltech also defers license fees until a company gets on its feet. ''Our aim is to help the entrepreneurs get started; they need to retain all the cash they can,'' said Frederic Farina, assistant vice president of Caltech's technology transfer office. Thanks to the success of generations of its scientists, Caltech holds 1,641 patents and has 395 pending. University policies differ on such matters. Publicly financed schools, like the University of California system, are not as liberal as private ones like U.S.C. and Caltech or as freewheeling as entrepreneurs often prefer. Public institutions collect the cost of acquiring patents upfront from faculty members who are forming companies. ''But our goal above all is to help make innovations and products available for the public good,'' said Jane Moores, interim director of technology transfer for the University of California, San Diego. The university, renowned for medical and biological technology, made 300 innovations public last year. A company formed in 2003 by three researchers there illustrates how a university environment can invent new technology. Tinnitus Otosound Products began with the research of Dr. Erik Viirre, a medical doctor, who found that tinnitus, or ringing in the ears, occurs not in the ears at all, but in the brain. ''As a person loses hearing, the auditory cortex of the brain seeks to compensate by generating more nerve activity, which causes the 'ringing,' just as a phantom limb can have pain after an amputation,'' Dr. Viirre said. To combat the affliction, an often debilitating ailment for more than 30 million Americans, Dr. Viirre consulted with two university colleagues, Jaime A. Pineda and F. Richard Moore, who were pursuing other research on auditory problems. They theorized that generating external sound in a machine to exactly match the frequency of the sound in the patient's brain could cause the original ringing to diminish or cease. They tested treatments on volunteer patients and came up with Customized Sound Therapy, which is able to mitigate tinnitus. The university acquired a patent in their names and that of the university. The company has operated on about $550,000 in grants, refining its technology and conducting trials for the Food and Drug Administration, so that the therapy can be classed as a medical treatment as opposed to only a mitigation device. If Tinnitus Otosound succeeds, the University of California, San Diego will receive a royalty of 5 percent of the company's revenue, which will go toward financing more research.
Copyright 2007 The New York Times Company 1210 of 1258 DOCUMENTS The New York Times
Late Edition - Final Operating Costs Are Imperiling Disaster Fund BYLINE: By RON NIXON and LESLIE EATON SECTION: Section A; Column 5; National Desk; Pg. 1 LENGTH: 1060 words The federal government's biggest program to help people rebuild after natural disasters is on the verge of running out of operating money because of budgeting problems at the agency that runs it, the Small Business Administration. If Congress does not intervene in the next month or so to cover the administrative costs of the program, it will have to shut down, according to an internal agency memorandum given to The New York Times by a critic of the agency. Agency officials say, and Congressional leaders agree, that the legislature will almost certainly act to keep the program running. ''It would be very surprising to us if they wouldn't address this,'' said Steven C. Preston, the administrator of the S.B.A. But even a temporary shutdown could delay aid to victims of the ice storms in the Midwest and other recent natural disasters, and would further hamper a program that was widely criticized for its slow response to the hurricanes that hit the Gulf Coast in 2005. The current money shortage is related to what agency officials concede was an unusual decision in early 2005 not to ask Congress for any money to pay for running the disaster program in the 2006 fiscal year, relying instead on money left over from previous disasters. The program also ran into financial trouble last year and required an emergency infusion of money in February. Longtime critics of the agency said the current problem highlighted a continuing pattern of mismanagement and poor planning at the S.B.A. ''We need to look at a comprehensive overhaul of the agency as well as the disaster loan program,'' said Representative Nydia M. Velazquez, Democrat of New York and the new chairwoman of the House Small Business Committee. ''Something has to change in the management of this agency.'' After the 2005 hurricanes, the agency did not have enough employees to handle the 423,000 loan applications it ultimately received from homeowners and businesses, and had switched to a troubled computer system that slowed its disaster response. The Government Accountability Office cited the agency's poor planning as a factor in ''significant delays and backlogs in processing loan applications.'' In the face of withering criticism from disaster victims, government officials and even agency employees, the director of the agency, Hector V. Barreto, resigned last April. His successor, Mr. Preston, has pledged to improve the disaster response. The small-business agency has now approved more than $8 billion in loans to homeowners trying to rebuild after the hurricanes, according to its own data, but has distributed less than half of that amount. Businesses have received loans of about $1.2 billion, although the agency has approved almost $2.6 billion in loans. In the Senate, Democrats have proposed major changes to the disaster assistance program, including allowing banks to make disaster loans, rather than funneling them all through the S.B.A.'s staff. ''The administration mismanaged the response to Katrina from Day 1,'' Senator John Kerry, Democrat of Massachusetts and the new chairman of the Committee on Small Business and Entrepreneurship, said in a statement yesterday. ''We need legislation to overhaul the program and make it work efficiently for every business owner and homeowner in the country.'' But Senator Olympia J. Snowe, Republican of Maine and the former head of the committee, blamed Congress for the current financial problem, saying it stemmed from lawmakers' failure to approve the agency's budget request for the fiscal year that began Oct. 1, which agency officials said included about $200 million to run the disaster program. ''It is unacceptable that at a time when we are all too aware of how valuable these programs are to American families whose lives have been turned upside down by disaster, we were unable to provide the S.B.A. with the funding it requested for this fiscal year,'' Ms. Snowe said in a statement yesterday. The Republican-led Congress passed 2 of 11 spending bills last year. The new Democratic leadership decided to keep most government agencies operating by extending their current budget levels and is expected to continue those spending levels until fall. The 2006 budget is the one that did not ask for money to operate the disaster program. According to the internal memorandum, which was prepared by the agency's chief financial officer, Jennifer Main, the agency needs $306 million for administrative costs in the current fiscal year but had only $157 million left as of Sept. 30. The short-term problem could be solved, as in the past, if Congress allows the agency to cover administrative costs by dipping into some of the money it has allocated for loans, said C. Edward Rowe III, the agency's chief liaison to Congress. But Ms. Velazquez said she would oppose such a measure. ''I am not willing to take money out of disaster money intended for victims to cover administrative costs,'' she said. The agency is also facing a shortfall of about $20 million in its regular budget, which has dropped by about 30 percent since 2001. According to the memorandum, the shortfall could require the agency to take drastic steps, including furloughing every one of its employees one day a month until the end of September. ''We don't really think Congress will forget to fund disaster assistance,'' said Joel Szabat, the agency's chief of staff. ''The real issue is the $20 million.'' Under the disaster loan program, homeowners can borrow up to $200,000 at low interest rates to repair houses; owners and renters can borrow up to $40,000 to replace damaged furnishings. Businesses of any size can borrow up to $1.5 million to cover physical losses, and some small businesses are eligible for loans to cover economic losses. Maximum interest rates range from 4 percent to 8 percent. The disaster loan program also serves as a screening mechanism for some grants from the Federal Emergency Management Agency, which referred 2.4 million people to the S.B.A after the hurricanes. Only after they are rejected by the S.B.A. do applicants become eligible for some FEMA grants. The homeowner loan program has come under fire in Louisiana and Mississippi because it is requiring people who receive federally financed recovery grants through state-run programs to use the money to repay S.B.A. loans. Directory: ~hesterj -> Entrepreneur Entrepreneur -> Byline: By armand limnande section: Section mm; Column 0; T: Men's Fashion Magazine; Pg. 76 Length Download 4.36 Mb. Share with your friends:
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