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Semaphore's 2024 Confidence Results Revealed

Discover the latest insights from Semaphore's 2024 Confidence Survey

"I’ve got to admit it; it‘s getting better, a little better all the time (can't get much worse).”

With apologies to the Beatles that their music could belie our industry, this lyric came in a comment to our 16th Annual Semaphore Confidence Survey and seemed to summarize the entirety of the record responses received. Our respondents, while recognizing challenges, were decidedly optimistic about themselves, the state of the industry, their ability to deal with inherent problems, and rather certain that incomes would continue to climb.

Four overriding observations deserve note. First, women respondents more than doubled to 25%. Total participation exceeded 1400 responses, double last year and the largest number we have ever experienced. Artificial Intelligence is anticipated to capture the largest investment market share in 2024, far and away the hottest industry sector. Lastly, despite dismal lack of confidence in the Biden administration, over the three weeks the survey remained open, the expectation of whether the President would be reelected grew from 30% in the initial week to 46% at the end - mirroring recent political polls. Someone else with a higher pay grade than me can analyze whether and how all these connect.

The commentary remained enlightening and entertaining. Please conduct your own review and analysis of our audience opinion and whether you abide by them. Click here for the survey results and a representative sampling of commentary on matters of the industry, race, carried interest, sexual harassment, breaking up Big Tech, and whether Sam Altman should be running Open AI – 78% say yes with comments ranging from “He’s a genius” to “He’s a fraud”.

Results intrigued as usual with definitive confidence in yourselves (82%) and a 4X increase in the economy just twelve months ago (40% have confidence today in the US and 12% International), with a single digit 1% confidence in the US Congress. President Biden confidence rating held steady at just 24% with 58% expressing a lack of no confidence in US national tax and spending policies.

For the first time, less than a majority, 47% of you, earned more in 2023 than the prior year, while 58% expect to do so this year. This is a bounce back in confidence as last year we reported the lowest numbers of increased income expectation ever recorded.

Surprisingly, 56% do not support elimination of carried interest rates compared to 70% last year, with 44% apparently agreeing with one commenter that “Greed is not good”.

Our respondents don’t wish to have Big Tech broken up (72%), believe that sexual misconduct, harassment, and gender bias remains a problem (68%), both virtually the same numbers as last year. 51%, a slightly smaller majority than last year at 55%, believe inherent racism is a structural industry obstacle.

Respondents were from 25 states with California, Massachusetts and New York making up 59% of the US response. 38 other countries were represented with 37% of international respondents from Canada, UK and Germany (36% last year).

Males represented 74%, 25% Females and, 1% self-reported Gender X of those participating this year. 9% of you were from PE shops (way down from 24% last year); 34% were VCs; 3% Hedge Funds; 13% LPs; 10% operating executives; 9% Investment Bankers; and 22% third party vendors/advisors to the industry (lawyers, accountants, etc.) – the last two categories were double last year’s proportion.

Back to the Beatles – the song noted is “Getting Better” on the Sgt. Pepper’s album. The initial idea for the song's title came from a phrase often spoken by Jimmie Nicol, the group's stand-in drummer for the Australian leg of their 1964 world tour when he replaced Ringo who was ill. Take a listen https://www.youtube.com/watch?v=EGlo9LzmOME – here’s hoping things do get better all the time.

Check out the complete results and engaging opinion by clicking here.

Mark DiSalvo is Founder and CEO of Sema4 Inc., dba Semaphore, www.sema4usa.com, a leading global professional services provider to troubled Private Equity, Venture Capital and Hedge funds under management. Semaphore currently holds fiduciary obligations as General Partner for fourteen funds, is a New Markets Tax Credit provider, and advises Limited Partners around the world. Semaphore’s corporate offices are in Boston with offices in Barcelona, Dallas, London, Luxembourg, New York, and Washington DC.

 

Topics: Venture Capital, equity, private equity funds, Semaphore, limited partners, turnaround, technology, diligence, small businesses, growth equity investments, market, analysis, venture funds, private equity, ethics, ethical standards, business, Survey

No Sand Between Our Toes (2016)

Why being at the bar won’t get you a drink but will make your dermatologist smile.

I’ve been spending my summer with lawyers.  It’s not a sentence for misbehavior or because I’ve committed some wrong.  It’s not been at BBQ’s or quaffing beers with my friends at the bar (groan) telling enhanced memory college war stories while listening to the surf above the clatter of conversation. We have not even been competing at Rio inspired beach volleyball pretending each slam - if we could actually jump high enough to make one over a regulation net - was for the gold medal winning point.

Nope.  It’s been nose to the grindstone reviews of complaints and counter complaints, pleadings, filings, hearings, motions, and depositions.  And it’s been fun! Now, not the fun of an exhilarating boat ride against a swift current or being elbow deep into a great steamed lobster fest.  Rather it’s been the joy of winning a tactical position, discovering confirmation of an adversary’s transgression,  laboring under the responsibility of being fully prepared to argue your belief against some very smart colleagues, enjoying the emotional fulfillment of knowing that you are right and having someone in a black robe affirm your belief. Yeah…that may seem like a poor substitute for being at the beach but as far as alternatives go it is certainly better than, say,  Disney World in August.

This year I have relished the privilege of a deep dive in litigation esoterica and SEC regulation, welcomed as a real-world contributor to strategy, even appreciated the more than occasional 2 o’clock in the morning email exchanges, and learned that being a “good” client working with open-minded and keenly intelligent lawyers makes for more than good results.  In our troubled fund practice over the last 15 years we often spurn law firm “help” – particularly at the crisis stage of an intervention as few law firms truly understand the practitioner level consequence of the standard legal playbook on a VC or PE practice that is more medieval than modern.  The vexing engagements we have been working this year required intimate assistance and leadership of a group of attorneys who, in concert with our replacement General Partner practice team, helped secure rights lost, arrested loss of value and fixed governance of particularly dynamically challenging circumstances.  The collective efforts of the Team have given our common Limited Partner clients progress and conclusions that any one of us independently would not have been able to gain.  So here’s a toast, to my friends at the bar who, while keeping me off the beach, have kept me engaged, stirred intellectually and appreciating the fire-power a well-crafted legal and operational strategy can have when dealing with wayward General Partners and the mess they leave behind.  

Here’s hoping next year we are all scrunching sand with beer in hand telling war stories about the terribly active summer of 2016.  Meanwhile our summer labor is not over. I think my lawyer friends spent less time than I did on whatever their version of a holiday may be.  Instead we are all seemingly locked in steel and glass towers under the glow of fluorescent lights rather than risk sunburn. Other than our clients, maybe only our dermatologists applaud the consequence of our busy summer this year!

Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore, www.sema4usa.com, a leading global professional services provider of troubled Private Equity, Venture Capital and Hedge funds under management. Semaphore currently holds fiduciary obligations as General Partner for eight funds, is a New Markets Tax Credit provider and advises General and Limited Partners as well as corporations around the world. Semaphore’s corporate offices are in Boston with principal offices in New York, London and Dallas.

Topics: Venture Capital, troubled funds, equity, private equity funds, Semaphore, general partners, LP, business advisory, VC, venture funds, private equity, ethics, business

Teaching Ethics


Stop the Merry-Go-Round:

It’s Time to Get Serious and Teach Ethics to Help End the Games

By Mark DiSalvo and Mark Connolly

The media are filled with the seemingly never-ending games of financial fraud and scandal. We continue to witness a basic lack of ethical standards, the end result of which translates into higher consumer costs, economic ruin, cynicism, and most assuredly a lack of confidence in our business sector, government and society generally. And despite all of this, nothing is being done to train citizens and future business leaders concerning the simple task of proper behavior. This is playground stuff – learn to play by the rules and, where rules don’t exist, act appropriately. These are easy guidelines every kid running around an elementary school playground understands.  Why is it so hard for those of us in business suits to remember what our schoolmates and playground monitors taught us?
In 2002, the New Hampshire Securities Bureau reached a $5 million agreement with Tyco Corporation concerning its alleged corporate malfeasance. At that time, that settlement was one of the largest securities settlements in the nation’s history. The funds have since been dedicated to establishing programs within higher education in the state for the advancement of ethical standards in both the private and public sectors. 
Just days ago it was announced JP Morgan will be ponying up $13 billion to state and federal regulators to address its mortgage dealings failures. It has been estimated the remaining level of legal exposure by the largest US financial institutions could result in the settlement total for alleged mortgage fraud in the United States to be in excess of $100 billion.  It is now evident 2013 will likely mark the high-water mark toward addressing the responsibility of the financial-crisis era of the first decade of this century, a period resulting in two major economic slowdowns—all because of ethical lapses in our financial markets. Both periods resulted in Congressional action to address regulatory shortcomings (Sarbanes-Oxley in 2002 and Dodd-Frank in 2010).
Unfortunately, as yet, no action has been taken to address the ethical behavior break-down in our country and how such behavior not only diminishes society but damages our economy as well our very way of life.  No national effort has been crafted to teach that “greed is not good.” Now is the time to take stock on why ethics matters.  We need to get America’s future business and community leaders thinking about ethical behavior and what it means in terms of responsibility and accountability.  
American entrepreneurialism and government support for it has created the most dynamic country in world history. This dynamism has also produced unparalleled growth and economic opportunity. However, the recent past also shows that unlawful and unethical behavior left unchecked can result in moral break-down and economic self-destruction. We must instill a sense of citizenship and personal responsibility across society.  
Financial fraud settlement funds are not government budgeted monies per se or even tax payer dollars but instead are used to fund further government fraud mitigation programs as well as benefit the general treasury of government. However, none of the national financial fraud funds has been targeted to address the importance of personal responsibility and ethical conduct.
We propose the Congress direct a small portion of settlement funds to a dedicated national educational ethics program. We come to this notion as a former securities regulator and private equity manager of troubled and fraudulent funds. Such a program can be guided and administered by the recently-established Consumer Financial Protection Bureau (CFPB) so as to promote ethics and ethical curricula within post-secondary education institutions, including professional graduate schools, as well as teaching the importance of ethical obligations in primary and secondary education.
Our proposal offers the following guidelines for consideration: (1) a non-partisan panel of educational, financial, consumer and business experts be established to propose how best to implement such a program; (2) any program is to be free of all ideological or political bias; (3) the panel’s work to be funded by an appropriation from financial fraud settlement funds; and (4) the award of any funds for the teaching of ethics in curricula is to be on a voluntary basis.
Funds could also be used in concert to leverage the few already established ethics education programs in the nation. The basic premise of our proposal is a correlation between the fact that fraudulent behavior causes the literal diminution of the world economy and a modest part of the financial fraud settlement funds be utilized to address the root cause of the matter.
Doing nothing will  mean no real change—consider that the settlement funds derived during 2002-2003 for financial fraud did nothing to affect the course or impact of the much more severe 2007-2010 financial crisis. It is time to act now and teach future generations that ethics matter – if only to diminish future economic blowups.
Business can be rough at times but it will be a better playground if we stop the endless games. Extending the lessons on how to play fair will be a boon to us all.
Mark Connolly is the former Director of Securities Regulation for the State of New Hampshire and Principal of New Castle Investment Advisors, and Mark DiSalvo is CEO of Semaphore, a leading global provider of Private Equity funds-under-management.

Topics: troubled funds, private equity, ethics, ethical standards, business

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