The year was 2009 and Lehman Brothers had just recently crumbled. Barclays had purchased most of its North American operations. Bain Capital and Hellman & Friedman had scooped up Lehman’s investment management group. But the fate of one division—Lehman’s venture capital arm, Lehman Brothers Venture Partners—was still up in the air.
The unit, run by an investor named Tom Banahan, dated back to the 1990s when Lehman decided to start taking a stake in startups to help drive its IPO underwriting business. By 2009, when Lehman was no more, the investment bank’s venture arm had some $750 million in capital and was invested in 47 companies from the likes of travel search engine Kayak and shoe company Zappos to visual search engine company SearchMe and travel engine SideStep. Its portfolio held real value, so there were options. Its funds could be sold off, then the investments pillaged off on the secondary market. Or, perhaps, Lehman Brothers Venture Partners could spin off on its own.
