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Semaphore's 2022 Confidence Survey Results Are In!

“Remember in March/April of 2020 we thought every fund portfolio would crash? The joke is on others not smart enough to be in our biz - not even a global pandemic can kill us.”

That was the first comment entered in the 14th Annual Semaphore Confidence Survey. It might just be true, given the stratospheric amounts of capital committed and invested accompanied by the continuing rising incomes of those taking our survey.

Commentary continued to explode – hundreds of your colleagues penned opinions – many thoughtful and some cringing to read. You can decide for yourself. Click here for the survey results and a representative sampling of commentary on matters of race, carried interest, sexual harassment, breaking up Big Tech, COVID, and the Theranos/Holmes saga. Many comments are truly delicious – how come none of you are as pithy and entertaining on my Zoom calls?

COVID proved not as troubling as expected with only 34% reporting it hurt your business while 54% of you predicted that it would in 2022. Only a third of you think it will hurt in 2022.   It most certainly did not hurt your wallets as 77% earned more in 2021 than the prior year, and 65% expect to earn still more in 2022. Unsurprising, considering that 91% of you had full confidence in yourselves. Curiously, this confidence in self plummets to a 35% confidence rating in the US Economy and only 19% with a confident outlook of the international economy compared to 54% and 37% respectively expressing confidence last year.

The honeymoon for President Biden is evidently over. His confidence rating was cut in half from with 56% last year to 27% today. Could it be because many of our respondents fear a tax hike those in our industry doing so extraordinarily well? As one stated about eliminating Carried Interest “I benefit from it - but it is wrong,” balanced by some believing that “Tax breaks for (the) wealthiest citizens must be revisited.”

66% agree that sexual misconduct, harassment and gender bias remain a problem, down from 78% a year ago.   A majority of 54% believe inherent racism is a structural industry obstacle, down from 68%. The self-identified gender mix of respondents this year were 74% Male, 24% Female (up from 18% last year and 9% the year prior), and 2% choosing Gender X.

The top five survey taking states were 22% California, 20% New York, 19% Massachusetts, 7% Texas, and Connecticut. Washington DC, Pennsylvania, Florida, Colorado and Illinois came in at 2% each and no other state represented more than 1%.

Canada represented 17% of international respondents, 15% UK, 8% Germany, 7% China, 6% India and 3% France, Italy, Israel, and Singapore, 2% Brazil, Mexico and Australia. Respondents in descending order of submissions were from Japan, Taiwan, Sweden, Russia, Spain, Luxembourg, Philippines, Columbia, Viet Nam, Nigeria, with responses from 19 other nations.

Of the 579 participants this year 22% were from PE shops; 27% were VCs; 7% Hedge Funds; 9% LPs; 14% operating executives; 7% Investment Bankers; and 14% third party vendors/advisors to the industry (lawyers, accountants, etc.).

52% of survey takers believed the Theranos/Holmes saga was an outlier in our industry against 48% believing it more systemic. The most passionate of commentary was in response to this question including “Theranos is the tip of the iceberg - there are hundreds of VC funded startups that are illegitimate fake hacks,” and “Hubris is always in fashion.”   We’ll be sure to poll the scandal of the moment next year.

Here is hope your supreme self-confidence somehow rubs off on the world economy and we come out of these still parlous times safe, healthier, and by all accounts, richer in both wealth and fulfilment. Check out the complete results and engaging opinion by clicking here.

Mark DiSalvo is Founder and CEO of Sema4 Inc., dba Semaphore,, 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 eleven funds, is a New Markets Tax Credit provider, and advises Limited Partners around the world. Semaphore’s corporate offices are in Boston with principal offices in Barcelona, Dallas, London, Luxembourg, and New York.

Topics: Venture Capital, private equity funds, Semaphore, general partners, limited partners, investment, growth equity investments, private equity, Corporate Growth Planning, 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,, 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

No Sand Between Our Toes (2014)

Why our feet are not stuck in the mud.

I truly thought we might be skipping this 7th annual post – or have to retitle it “Feet Stuck in Mud”.  The cycle of summer seems to start only after the kids leave school and then return. My wife Tricia used to say “summer starts on the 4th of July and ends two weeks later,” and that sentiment brings near universal agreement –especially to those who have to pay attention to the back-to-school shopping rhythm and planning that truly does start in late July.     In truth, I was looking forward to an extended August respite because business was, well – just slow on the new biz development front.   No complaint, we are plenty busy and full of appreciation for clients and obligations we have right now. Our current collection of funds under management and associated portfolio companies are steaming along as we continue the work-a-day obligation of sustaining and growing value.   One of my favorites in the portfolio is going to crash through a $75 million run rate this year after plateauing near $25 million for the last few years.  Exciting stuff!  Our dozen plus Federal New Markets Tax Credit projects are either completed or in the ground, being particularly proud of the redevelopment of Liberty, Kentucky after its near total devastation by a tornado just two years ago.  We have even seen one of our completed University projects jump start an even more advantageous investment in a textbook demonstration of economic development leverage resulting in the creation of a fully privately funded nursing school. New jobs created, lives improved and strong emotional satisfaction from Florida to Oregon and San Antonio to New York City. 

So…what am I grumbling about?  In truth, we love the hunt for new fund and business opportunity.  We revel in the initial introduction to a vexing challenge.  It takes upwards of a year when we work with Limited Partners to help them understand the mitigation opportunities they have when they are involved with a troubled fund and/or recalcitrant General Partner.  All those months of free consulting – becoming intimate of the private troubles and competing interests, managing the diverse opinions and educating all parties about the complexities and opportunities of the intervention process  and the initial entry – is wonderfully exciting all by itself  (even if we don’t get paid for the effort).  I may be overselling that a bit but for those of you involved in biz dev I think you can more readily understand. 

We had at least two funds scheduled to come off the “contemplation and discovery” phase and move into “direct intervention” for the beginning of this summer.  However, for various reasons the engagements were put on pause until the fall.  We even demurred we step into one of those funds because we saw another path that would allow a repair of the GP/LP relationship twinned with some governance and oversight changes. Less income and work for us but it’s about doing the right thing for the client.  I will confess to missing the excitement of walking into a new challenge...alas. 

It was if we were planning to dig our feet firmly into the soft wet beach sand rather than trodding yet a few more airport terminals this August.  Then, just as the doldrums of summer were about to wash over us, BANG, a client crisis arrives.  Nothing is better than being able to stride into a maelstrom of doubt and fear that a challenging situation requires.  I can’t tell you about it just yet (on second thought, I’m likely to never tell you about it unless it becomes a heavily veiled business school case study) but I promise you we are enjoying the trials and pains of putting our clients at ease and reigning in the troubles caused by their badly-behaving GP. 

Maybe Tricia was right.  I did get the frantic initial Limited Partner call on July 20th. Summer did end two weeks after Independence Day.  Oh well, there is always Labor Day weekend.

Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore (, a leading global professional services provider of troubled Private Equity and Venture Capital funds under management. Semaphore currently holds fiduciary obligations as General Partner for six Private Equity and Venture Capital funds, is a New Markets Tax Credit lender 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, funds under management, general partners, limited partners, LP, portfolio company, venture funds, private equity

Results of 6th Annual Semaphore PE Industry Confidence Survey


Confidence at All Time High

Results of 6th Annual Semaphore PE Industry Confidence Survey


By Mark S. DiSalvo

Is irrational exuberance on the horizon?  Will the Merry-Go-Round ever stop? Can the Masters of the Universe continue to rule? Notwithstanding the recent February Dow swoon the 2014 Semaphore Confidence Survey suggests No, No and Yes.
Extraordinarily, 91% of our over 500 respondents were confident in their own businesses, fully 50% higher than a year ago. 94% were confident in themselves, an all-time high, growing from78% last year.  In contrast only 31% of respondents expressed confidence in the President with 49% stating a lack of confidence in him, significantly above last year’s 37% number. As miserable as that may be it is decidedly better than the leader of the other branch of government, Speaker John Boehner, who has an 11% favorable v 66% unfavorable rating. As dreadful a rating for sure but it is far better than Congress as an institution with 87% expressing no or little confidence in our elected officials and only 1% offering an expression of confidence in the House or Senate.
In contrast some 80%, nearly double last year’s 43%, remain confident in the PE/VC Industry, while 6% express confidence in the US economy and less than half at 22% enjoying confidence in the International economy. This is expressed in the near wild enthusiasm around expected deal number and size.  96% reported completing between 1 and 4 deals and a similar number expecting to do the same.  More surprisingly is that over a quarter of us completed more than six transactions and fully a third anticipate exceeding that plateau in 2014.  And the deal sizes are growing.  Across venture and PE the average initial investment size is expected to be 50% larger in 2014 than last year. 
So what will all this prospective deal effort be in? Health Care investing shot to top in expected activity, up from fourth. Enterprise Software got bumped to #2 and Energy oriented investing rocketed to third place and last year was not even in the top ten.  With Business Services ranked fourth in prospective deal making with Digital Media and Financial Services tied for 5th place. Agriculture investment broke the top ten for the first time and came in a close 6th.  Gaming was not only out of the money but also failed to make the top twenty. Social/Community Technology, On-line Consumer Retail and Food rounded out our top ten deal hopes.  
And where does all this enthusiasm and confident take us. 77% expect to earn more than they did in 2013 with only 6% expecting to earn less. This on top of the fact that 65% earned more last year than they did in 2012 and 23% reported earning less.
For the second year in a row my industry colleagues continue to see the prospect of more income, more deal flow and high confidence in themselves, their peers, and industry. This clear read comparing the raw highlight data from the 6th annual Semaphore Confidence Survey with last year’s results suggests that our industry remains on the rise.  Too much more enthusiasm and consequent riches and our seemingly hated colleagues in Congress might find it more politically palatable to eliminate capital gain rates on carry.
The distribution of respondents in the US remained nearly the same from past years - the top five were 29% California, 16% Massachusetts, 11% New York, 6% Connecticut and 5% Texas with only New Jersey dropping out of the mix (guess the GW Bridge traffic might have been too heavy to get our usual Garden State respondents to reply). DC 4% and Illinois came in at 3% and no other state represented more than 1%. Our US respondents had reasonable confidence in their state governments with 26% expressing confidence - at least in comparison to the US Congress.    
International responses were quite different.  We had our widest ever distribution of respondents with only the UK remaining on top with 37% of all international survey-takers with (10 points higher than last year) followed by  9% Canada, 7% China and 3% France rounding-out the top four just as they did the prior years. We received multiple respondents from Germany, the Philippines, Brazil, Russia, Japan, Ukraine, Viet Nam and single responses from14 other nations including our first ever from Bora Bora (must have been a PE partner on vacation!). International respondents had depressingly poor opinions of their governments with 5% expressing confidence in their countries leaders, down from 7% in 2013.   
The 563 of us who did reply this year, up from 470 last year, was over weighted by third party professional participants compared to past years.  The mix this year compared to the last year was VC (24% v 39% ), Buy-out pros (25% v 24%), Limited Partners (6% v 13%) operating executives (7% v 6%) and third party professional (38% v 18%). Hmmm…charting this back to the income responses, perhaps the continued increase in income levels is attributable to the transaction fees and expenses associated with our explosion of deal numbers and values.
Comments this year were more muted in tone than past years and can be viewed on the survey highlights link below. Perhaps the tight bandwidth contributed to the lack of wit expressed.   Here is one none-too-pleased respondent commenting on the survey itself:
            “Well done, like an overly charred steak forgotten on a summer BBQ grill. Terrible survey.”
I hate when that happens as I like my steak very rare.
Hope everyone’s expectations are indeed met in 2014.  See you next year.
To see the highlights of the results of the 2014 Semaphore Confidence Survey please click here.  If you want to do your own comparison, the 2013 Semaphore Confidence Survey results are here.
Mark S. DiSalvo is the President and CEO of Sema4 Inc., dba Semaphore (, a leading global professional services provider of troubled Private Equity and Venture Capital funds under management. Semaphore currently holds fiduciary obligations as General Partner for six Private Equity and Venture Capital funds, is a New Markets Tax Credit lender 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, funds under management, general partners, limited partners, turnaround, LP, technology, investment, market diligence, venture funds, private equity

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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