Bay Partner (A)

Bay Partner (A)

Order Description

Appraise the Bay Partner (A) case study, with particular focus on the growth and expansion of the firm. Consider the various internal challenges that could inhibit the firms continued growth. Suggest risk mitigation strategies that could be instituted at Bay Partners.
? See attached case study
Word count of 1000 words
? Students are encouraged to use theoretical concepts to justify they assertions and
narrative

At his monthly high-stakes poker game, Salil Deshpande looked with disguised disappointment
at his marginal hand. He had likely been suckered into a big pot that he had little chance of winning.
Although he had three options—to “fold” and forfeit the money he had put in, “raise” and add more
money, or “call” and match what others had put in—he knew that “calling” was probably the worst
option. Not only would he have to add to the pot, but the other players would likely know he had a
weak hand. As Deshpande contemplated his move, thoughts of his recent resignation from Bay
Partners intruded.
It was early April 2010, and Deshpande had just resigned from Palo Alto, California-based Bay
Partners (Bay), a venture capital (VC) firm founded in 1976. After a lucrative career as a serial
entrepreneur, Deshpande joined Bay in early 2006 as the firm was investing its 11th fund, Bay XI, and
had risen quickly to become a general partner (GP) by early 2008. Deshpande was a prolific investor,
making 19 investments in his four years at Bay. In addition, three of his investments were the fund’s
only successful exits to date, and several others looked promising. Although Deshpande had been
building a successful track record at Bay, he resigned with two other Bay GPs as disagreements about
internal economics and governance continued among the firm’s six-member management team. This
triggered the “key man” clause in Bay XI’s limited partnership agreement (LPA), which threw the
firm and the fund’s futures into doubt.
The more than two dozen limited partners (LPs) that provided Bay XI’s capital were reviewing
their options. Many had been unhappy with Bay’s performance for several years, including the firm’s
lack of transparency, uneven returns, and internal strife. Bay XI was 65% invested, and it looked
unlikely that its returns would cover invested capital. With enough votes, the LPs could reconstitute
the partnership and elect a new GP.
While the LPs were thinking through their options, Deshpande was considering his. The
remaining Bay GPs had contacted Deshpande immediately after his resignation, asking him to return.
Some of the LPs had also reached out to Deshpande to gauge his interest in rejoining Bay if the LPs
were able to reconstitute the partnership. Deshpande knew that other options existed, especially
given his short but promising track record as a VC. As he noticed an impatient glance from an
opposing player, Deshpande forced his thoughts to return to his next move in the poker game.
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Background on Salil Deshpande
Deshpande was born in India and lived in Mumbai. When he was 12, his family moved to the
Washington, D.C. area, where his father worked for the World Bank. He attended Cornell University,
graduating with a B.S. in electrical engineering. After earning an M.S. in electrical engineering at
Stanford University, Deshpande founded and sold three software companies by the time he was 35.
With annual revenues of between $5 million and $15 million, each was acquired by a public
company. Deshpande observed, “The multiple on revenues was decent, so those were good, lucrative
exits because I didn’t raise money for any of them.”
In 2004 he decided to take some time off to be with his two children, ages 3 and 5 at the time. “I’m
a workaholic, and I’m constantly thinking about things. I can have trouble focusing on the moment
and just enjoying the people I care about,” Deshpande explained. The time off also afforded him a
fresh look at how he could spend his professional time. He thought it would be “cool to hang out at a
venture firm to learn more about what went on in the VC brain.”
A couple of Bay partners had reached out to Deshpande. He recalled, “They told me, ‘We can do
this loosey-goosey thing—you show up, we’ll pay you, no commitment. Let’s see what happens—just
promise to say some smart things once in a while.’” Deshpande agreed, joining the firm in March
2006 as an entrepreneur-in-residence (EIR). Shortly thereafter, Peter Fenton, a VC Deshpande knew
from his days as an entrepreneur, moved from Accel Partners to Benchmark Capital and made
Deshpande a similar offer. “I had already committed to Bay, so I stayed with Bay,” Deshpande
explained.
Overview of U.S. Venture Capital in 2010
In early 2010, there was little debate that the U.S. venture capital industry had played a large,
vital, and successful role in entrepreneurial finance over the past several decades. A large percentage
of initial public offerings (IPOs), including those of Apple, Cisco, Genentech, Microsoft, and
Starbucks, were for companies that were venture-backed.1 However, by 2010 considerable debate
existed as to whether the U.S. VC model was “broken.” The last decade had been a challenging one
for the industry, and for the first time in recorded history, there had been no venture-backed IPOs in
two consecutive quarters (Q4 2008 and Q1 2009).2 There had been only six venture-backed IPOs in all
of 2008 and 12 in 2009, down from 86 in 2007.3 A small 2009 survey of 139 venture capitalists showed
that a majority of them (53%) believed that the VC industry was “broken,” and the vast majority
(92%) worried about uncertain exit markets,4 especially the low IPO activity levels. One venture
capitalist summarized, “Venture capital funds, as a whole, basically made no money the entire
decade [2001–2010].”5
Further, funds raised by U.S. venture capital firms in 2009 totaled $15.2 billion, a 47% decline in
committed capital versus 2008 and the lowest amount since 2003.6 By number of funds (120), 2009
marked the slowest annual period since 19937 (see Exhibit 1). “There are a lot of firms that have
dropped off,” one venture capitalist noted. “We’ll see a continued shakeout as a lot of firms that
aren’t the top firms won’t be around.”8 The firms that were not in the top tier had less access to the
good deals, which was reflected in their track records and made fundraising a challenge.9 In
response, some VC firms decreased their fund sizes or lowered their fund fees as they pursued new
funds, while others searched for better returns overseas or in other asset classes.10 One industry
analyst argued that the VC asset class had to shrink even more substantially (up to an additional
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50%) to generate consistently competitive returns.11 However, an industry shakeout would take time
given the LPs’ long-term, binding commitments (roughly 10 years) to their VC funds.12
There were some signs of life in venture-backed exit activity by the first quarter of 2010.13 Both
venture-backed IPO and M&A (merger and acquisition) exits in the first quarter of 2010 were up
significantly versus the same quarter in 2009 (see Exhibit 2). Historical analyses of capital
commitments to VC partnerships, VC investment activity, and venture returns in the U.S. supported
the view that the industry was in a normal down-cycle.14 In fact, some industry analysts forecasted
relatively strong returns to the 2009 and 2010 vintage-year funds because of the historical relationship
between VC commitments and performance (i.e., periods with lower fundraising levels led to
increased venture returns, which in turn attracted greater amounts of committed capital that put
downward pressure on returns).15
Background on Bay Partners
John Freidenrich had founded Bay Partners in 1976 after a career as a lawyer. Bay catered to the
financing needs of Silicon Valley’s emerging technology community.
The Freidenrich Years 1976–1999
Freidenrich presided as managing partner over Bay for the next quarter-century as the firm raised
and invested nine funds. (See Exhibit 3 for fund names, vintage years, sizes, and returns.) The LPs in
the first five funds, raised in the 1970s and 1980s, were primarily wealthy families and individuals
from California’s Bay Area. Fund sizes ranged from less than $200,000 for the initial fund to more
than $40 million by the fifth.
Freidenrich was well respected, known more for being a good partner than a company builder.
Although it was not in the legal documents, he and his firm would not take carry until the LPs
received the return of their capital. Freidenrich had an easygoing management style and brought in
many partners over the years. They were mostly entrepreneurs rather than investors, and the firm
experienced a fair amount of turnover.
In 1989, Neal Dempsey joined Bay and quickly became its most active investor. Dempsey formerly
held positions as the CEO of Qubix Graphic Systems, Inc., and Envision Technology. CEOs related to
him well because he could understand their problems. Dempsey quickly garnered a reputation for
being a good person to bring into a B round. By the mid-1990s, Freidenrich was contemplating
retirement, and Dempsey became the obvious successor. A transition plan was put in place in 1995
that would unfold over the next six years.
Also in 1995, Bay raised its sixth fund, Bay Partners SBIC, which was a combination of equity
capital mostly from existing LPs and a long-term loan from the U.S. Small Business Administration
(SBA).a Two more SBIC funds followed in 1998 and 1999. After its third SBIC fund, Bay had a
sufficiently large capital base of institutional investors that it stopped using SBA funding. Bay’s ninth
fund, called Bay III with a fund size of almost $200 million from institutional investors, was also
formed in 1999.
a The U.S. Congress created the SBIC (Small Business Investment Company) program in 1958, which had been revised
extensively over the years. SBICs were privately managed investment firms that raised money from private investors and
received long-term debt from the SBA. The SBA matched LPs contributions two-to-one, effectively tripling the dollars the
firms raised. In return, the SBA received its investment back and a preferred return before the LPs’ capital was repaid.
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Bay’s results during the 1990s under Freidenrich and Dempsey were “top tier” as the firm
returned more than $1 billion to investors. Dempsey was particularly astute dealing with
management changes in the portfolio companies. One investment, Brocade Communications
Systems, Inc., went public in 1999, returning $350 million to Bay Partners SBIC II on a $3 million
investment. Like many 1999 vintage-year funds, Bay III did not do as well as its predecessors because
of the difficult macro environment that created and deflated the dot-com bubble.
Bay Partners X
In 2001, Bay raised its 10th fund, Bay X, with a $400 million target. Dempsey was promoted to
managing general partner, and the six fund GPs were Freidenrich, Dempsey, Bob Williams (who
joined the firm in 1997), Loring Knoblauch and Chris Noble (who both joined in 1998), and Dino
Vendetti (who joined in 2001). The fund was oversubscribed and closed at $475 million, including a
small side fund for entrepreneurs from Bay’s portfolio companies. Within 18 months, Bay—like many
of its peers around this time—reduced the fund size (to $385 million) and extended the investment
period (to 2005) as the economy recovered more slowly than expected from the dot-com bubble.
Over the next few years as Bay was getting organized for Bay XI, the firm was in an enviable
place: it had a long operating history, was one of the top-30 best-performing venture firms in Silicon
Valley, and its leaders—Freidenrich and Dempsey—had extensive networks. Freidenrich decided to
retire in 2004. As for Dempsey, he was in his sixties and had many outside interests and hobbies. As
Dempsey sought to step back from Bay’s day-to-day management, he hired three junior partners in
2005: Atul Kapadia, Eric Chin (venture partner), and Neil Sadaranganey (EIR). Sandesh Patnam also
joined the Bay team as a principal.
Bay Partners XI
In April 2005, Bay raised Bay XI, which was a $285 million fund. The fund’s GPs were Dempsey,
Kapadia, Noble, Vendetti, and Williams, with Dempsey the managing general partner. Its primary
LPs included Paul Capital’s Top Tier Investments III LP, Horsley Bridge VII LP, and the British
Petroleum Pension Fund.16 Its lead investor, Top Tier Capital Partners (TTCP), had spun out of Paul
Capital. Funds contributed by TTCP, Phil Paul (Paul Capital’s founder), and Paul Capital, plus capital
contributed by other LPs based on Paul’s recommendations, comprised 25% of Bay XI’s capital.
Within the fund’s first year, Vendetti departed Bay, followed soon after by Williams.
Unexpectedly, Noble announced that he too planned to depart. The Bay XI LPA’s “key man”
provision would trigger if three GPs or Dempsey and one other GP left during the fund’s
“commitment period.” (See Exhibit 4 for a sample “key man” provision.b) If the “key man” triggered,
it would create a “suspension event” that would stop new investment activity. As was typical in
many venture firms, compensation and control over the investment process were not shared equally
among Bay partners, which could create tension and conflict. The challenging VC environment added
to the instability. Deshpande, who had just joined Bay at the time, recounted: “I expected the
economics and control to be weighted. I was just focused on doing my job well—generating deals
and developing a good track record.”
b Large and well-known VC firms might not have “key man” provisions in their fund documents because they had reached a
point where one particular partner was no longer critical for the firm’s (and therefore the fund’s) success. “Key man”
provisions typically gave LPs the option to terminate the fund’s investment period early, placing the fund in “maintenance”
mode.
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Upon joining Bay, Deshpande had quickly added value. He was an expert in the sector where he
had been a practitioner—software infrastructure, open-source, and middleware. Deshpande saw
most of the best deals not only because he had credibility, but also because his sector was out of
favor. The Bay team trusted his expertise, and he had their support. He explained, “Every week,
I was bringing in a couple of deals that were really good. The ‘really good’ was subjective, but I could
benchmark it by which other venture firm invested in it and at what terms, after we passed on the
deal or couldn’t close it.”
Deshpande also tried to formalize the deal process. “When I came to Bay, I was surprised at how
unstructured the deal process was. Deals got done by the person who could convince a couple of the
senior partners. But it was hard to systematize something when there were six people with very
different personalities and backgrounds.” However, Deshpande was able to convince the Bay team to
create a seed program, a fast-track process to make smaller investments. He explained:
By 2010, everyone had realized it, but in 2006, it seemed like I was one of the first to realize
that companies needed a lot less money to get started. With $250,000, a company could test its
market or build a product. I put together a presentation that argued that we should have a fasttrack
process to do seed deals, not to use the $250,000 to move the needle for a $300 million
fund, but to use it as a relationship starter so we could capture bold out-of-the-box ideas and
get to know their entrepreneurs. Instead of doing two $2.5 million Series A rounds, we could
do twenty $250,000 seed deals. It’s hard to predict which two guys in a garage will create a
billion dollar company because success is based on numerous non-linear factors. I felt I could
be a good venture investor, but my worry was that I wouldn’t get enough at-bats. The seed
program gave me the at-bats.
After a lot of debate, the partners agreed to Deshpande’s recommendation: any partner could
originate a seed deal, but two of the six needed to approve a $250,000 deal, three a $500,000 deal, and
four a $750,000 deal. Bay set aside $15 million for Deshpande’s seed program, which was announced
at one of its 2006 quarterly LP meetings.
Avoiding the 2006 “Key Man” Breach
When it looked as though Vendetti, Williams, and Noble would depart Bay, members of Bay XI’s
LPAC (limited partner advisory committee, which collectively represented 67% of Bay XI’s capital)
stepped in. They convinced Noble to remain in Bay XI until a new general partner agreement and
management company were created in the fall of 2006, which stopped Bay XI’s “key man” provision
from formally triggering.
Under the new agreement and structure, Dempsey and Kapadia became co-managing partners;
Chin, Sadaranganey, and Patnam were promoted to general partners; and Deshpande joined the
investment team as a principal. The new carried-interest structure was flatter, although still weighted
toward the managing partners. Williams and Noble agreed to transition into part-times roles as
venture partners to help manage the Bay X portfolio companies. A revised “key man” clause in the
Bay XI LPA stipulated that a “key man” breach occurred if either co-managing partner left or any two
of the GPs left. These helped the LPs get comfortable with the management transition at Bay.
Bay’s restructured management team also made commitments about its investment strategies and
operations that would professionalize and systematize the firm. Bay appeared to be heading in the
right direction with a team that had the motivation, skills, and dedication to make the firm a topdecile
venture group again. Although the LPs remained concerned that the “key man” clause had
almost triggered, they were hopeful that the new structure would work. There were many incentives
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for the LPs to keep the status quo: Fund XI was only 30% drawn, and Fund X needed Bay to manage
its investments.
Heading Towards a “No Fault” Dissolution
In October 2007, the Bay team released its quarterly LPAC update, citing good progress and
performance. By this time, Deshpande was a junior partner with a larger salary and more carry. In
early 2008 he was promoted to GP, although he was not added to the “key man” clause.
Against the backdrop of the 2008 financial crisis, disagreements among the Bay GPs on internal
economics and governance continued, despite the 2006 restructuring. After months of meetings
between the Bay GPs and the Bay XI LPAC to resolve the disagreements, the LPAC considered a
“no fault” dissolution that would terminate the fund’s investment period and any new investment
activity. Under the Bay XI LPA, LPs representing 80% of the fund commitments could initiate a
“no fault” dissolution, and there appeared to be enough votes. Within 90 days of a successful “no
fault” vote, a majority of the LP interests could elect to select a replacement GP. (See Exhibit 5 for a
sample “no fault” dissolution provision.) A vote was never taken. For a while in 2008, the Bay GPs
seemed to realize that they had to put their differences aside to save their firm. Once again, the LPs
opted for the status quo and made the decision not to shut the fund down.
The Departure
Ongoing internal disagreements coupled with the tough economic environment exacerbated the
interpersonal issues at Bay. After a particularly rocky few months, Chin, Patnam, and Deshpande
resigned on March 23, 2010, from their roles as members and employees of the various Bay entities.
Chin and Patnam were relieved of their board seats, but at his suggestion, Deshpande continued on
his boards for no compensation. “It was a tough decision to resign because I was doing well at the
firm. My track record was good; I already had three exits, and Dempsey and Kapadia were telling me
I was very valuable. They even told me I might be our best investor,” Deshpande added. “I knew my
career would be okay if I stayed. I was also in the middle of a follow-on financing for one of my
companies, which would be delayed and jeopardized.”
Deshpande continued:
Chin, Patnam, and I agonized over the decision to resign for months—a year. It was such a
drastic thing to do. Because once you do it, no other firm would want you. You were the guy
who blew up that firm, so how could any other group ever trust you? But we didn’t see a lot of
options other than giving our LPs administrative authority over the fund. There wasn’t one big
blowup that led to this, but death by a thousand cuts.
Chin and Patnam wanted to resign. I was more conflicted. I never had any issues with
economics or anything like that because I didn’t need money to live on, and my first priority
was to demonstrate that I was worthy of investing other people’s money. I mostly stayed out
of the conflict, although I could see it was happening. As long as I could invest money, do
deals, and build a track record, I convinced myself I was okay.
I called a friend at another venture firm. He was stunned and told me to resign immediately
because with every day that I worked there, I was saying that I thought it was okay. I also got
some advice from a co-investor at one of my portfolio companies. His was more complicated.
He echoed what my friend had said but wanted me to take one for the team and stay at Bay so
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Bay Partners (A) 213-102
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I could continue to serve on our mutual board. He feared the uncertainty of dealing with the
partners who would remain. And he said, “I know it’s a lot to ask, but I’m asking it.” In the
end, I resigned with a lot of hesitation. I hoped and wanted to come back—to continue serving
on my boards to safeguard my track record—if a couple of problems—mostly having to do
with the roles, power, and investment processes—were fixed.
The Aftermath
The 2010 departures of Chin, Patnam, and Deshpande had different implications for the Bay X
and XI funds. Under Bay XI’s LPA, their departures triggered the “key man” clause, constituting a
“suspension event.” Bay was required to send a “suspension notice” to the fund’s LPs. The notice,
sent on April 5, 2010, initiated a 60-day “cooling off” period.c During this period, LP interests
representing two-thirds of Bay XI’s committed capital could elect to begin a “suspension period,”
which limited the LPs’ obligation to contribute any additional capital and reduced Bay’s management
fee. A “suspension period” could be terminated at any time with another two-thirds vote. By April
2010, Bay XI’s capital was 65% called, and its commitment period ended January 2012. In contrast,
Bay X was fully invested, and its commitment period had expired, so its suspension provisions no
longer applied. After receiving the “suspension notice,” the Bay XI LPAC retained legal counsel to
review the notice and help the LPs understand their options.
As of April 2010, all indications were that Bay X and Bay XI would not fully return their LPs’
capital. Deshpande explained, “Write-offs usually come early. In Bay XI, there had been a few
sizeable write-offs and bad exits, none from me. The only positive exits were from me. There were
also a few small positive exits from the seeds. A few other investments looked promising.” (See
Exhibit 6 for Bay X and XI’s performances as of March 30, 2010.)
Under Bay XI’s LPA, its LPs could not remove the GP with or without cause. However, the Bay XI
LPs (with 80% of committed capital electing) still had the option to pursue a “no fault” dissolution to
suspend and dissolve the fund. Within 90 days of a successful “no fault” vote, a majority of the LP
interests could elect to continue the partnership and select a replacement GP. If a replacement GP was
not appointed, the fund would be liquidated. In general, a “no fault” dissolution was not a very
satisfactory method of removing GPs because the investments were left unmanaged.
Bay X’s LPA also did not allow the LPs to remove the fund’s GP for any reason. Further, the LPA
did not allow its LPs to pursue a “no fault” dissolution and replace the GP. The LPs could fire the GP,
but that would terminate the partnership, and the LPs would receive shares of illiquid, private stock
in the portfolio companies. There was also overlap in the Bay X and Bay XI LPACs, and Bay had
always run both partnerships as one entity. Many Bay X LPs were part of the old Bay legacy. They
appreciated the returns the firm had made them over the years and wanted to give Bay the benefit of
the doubt. Many of Bay XI LPs did not feel the same loyalty and were dissatisfied with Bay’s
performance, particularly the lack of transparency, uneven returns, and internal strife.
c “Cooling off” periods gave GPs time to finish existing investment activity, such as closing a deal, before the investment
period was stopped. Likewise, the LPs also had time to fix something without having to halt the fund or commit capital for
new investments.
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What Next?
As the Bay X and XI LPs thought through their options, they wondered what they should do. The
easiest option was to let the two funds dissolve, and the GPs and LPs could go their separate ways.
The LPs could net maybe 20 cents on the dollar by selling their interests to a firm such as Coller
Capital, a large investor in the private equity secondary market. Any other option required
considerable coordination, cooperation, and resources, and many questions remained.
?? Most importantly, was there enough unrealized value in the funds to warrant an investment
in time and money?
?? If so, what GP management structure would optimize the values?
?? Should Bay XI’s LPs replace the fund’s GP, and were there enough votes to start the required
“suspension period”?
?? Was there a way to remove the Bay X GP without terminating the partnership?
?? Should the two funds’ LPs join forces or act separately?
As the LPs worked through their options, Deshpande was considering his. Soon after he resigned,
the remaining Bay GPs urged him to “un-resign and come back.” He knew they would likely agree to
some changes in order to get him back, and he wanted to help his portfolio companies realize their
potentials. However, joining another VC firm that was more established and stable was also enticing;
a half-dozen other firms had reached out to him after the news of his resignation. He now had a small
but successful track record to show for his efforts at Bay, but his optimism was tempered by his fear
that other VCs might be reluctant to hire a partner who contributed to his prior firm’s misfortunes.
Deshpande knew a third option existed: some of the fund’s LPs were contemplating whether to
dissolve and reconstitute Bay XI with a new GP. Deshpande could wait it out on the off-chance they
could pull it off and would select him as one of its new managing partners.
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Bay Partners (A) 213-102
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Exhibit 1 Fundraising by Venture Funds, 2004–2009
Source: http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=538&Itemid=93,
accessed October 2012.
Exhibit 2 Venture-Backed Liquidity Events by Year/Quarter 2004–Q1 2010
Source: http://www.nvca.org/index.php?option=com_docman&task=doc_download&gid=571&Itemid=93,
accessed October 2012.
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213-102 Bay Partners (A)
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Exhibit 3 Bay Partners Funds Historical Data
Fund Name Vintage Year Fund Size
Distribution Value to
Paid-in Capital (DVPI)
Bay Partners 1976 $144,000 62.94
Bay Investment Partners 1980 $3,150,000 3.59
Bay Partners II, LP 1981 $18,872,000 2.59
Bay Partners III, LP 1983 $39,000,000 2.27
Bay Partners IV, LP 1986 $40,404,000 2.84
Bay Partners SBIC, LP 1995 $69,484,848 22.09
Bay Partners SBIC II, LP 1998 $90,481,818 3.26
Bay Partners LS Fund, LP (SBIC) 1999 $86,943,030 0.07
Bay III, LP 1999 $199,515,231 0.03
Source: Company data.
Exhibit 4 A Sample “Key Man” Provision
Suspension.
If, at any time during the Commitment Period, either (a) [Managing Director X] or [Managing
Director Y] is not devoting such amount of time to the Partnership and related entities as is required
pursuant to Section [____], whether by reason of retirement, expulsion, withdrawal, removal, death,
bankruptcy, incompetency or otherwise, or (b) any two of [Managing Director A], [Managing
Director B] and [Managing Director C] [are] not devoting such amount of time to the Partnership and
related entities as is required pursuant to Section [____], whether by reason of retirement, expulsion,
withdrawal, removal, death, bankruptcy, incompetency or otherwise, then a “Suspension Period”
shall commence.
Source: Company.
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Exhibit 5 A Sample “No Fault” Dissolution Provision
Dissolution
a) The Partnership Term shall end prior to the Termination Date upon the first to occur of the
following (if any):
i) Ninety (90) days after the affirmative vote of Eighty Percent (80%) in Interest of the
Limited Partners.
ii) Upon the Bankruptcy or dissolution and winding up of the affairs of the General
Partner.
b) If, following the occurrence of any of the events set forth in subsection (a), above, a Majority in
Interest of the Limited Partners vote to continue the Partnership and elect a new General
Partner, the Partnership shall not be dissolved, but shall continue in existence as though no
such decision or event had occurred, except that a new general partner shall be substituted for
the former General Partner. From and after the date that the General Partner is replaced by a
new general partner, the interest of the former General Partner shall continue as a Limited
Partner of the Partnership.
Source: Company.
Exhibit 6 Bay X and Bay XI Fund Performance as of March 30, 2010
Bay X Bay XI
Fund Size (in $ millions) $364 $285
Capital Called (in $ millions) $364 $184
Current Portfolio Fair Market Value (in $ millions) $190 $119
Realized Value Distributed (in $ millions) $28 $15
Total Distributed and Unrealized Value (in $ millions) $208 $134
DVPI (Distribution Value to Paid-In) 0.08 0.08
TVPI (Total Value to Paid-In) 0.57 0.47
nIRR -4.7% -10.8%
Source: Company data.
For the exclusive use of Z. ABDULLAYEVA, 2015.
This document is authorized for use only by ZUMRUD ABDULLAYEVA in Directed Study: Managing the Growing Business at Hult International Business School2015.
213-102 Bay Partners (A)

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