Venture capital is a game of hits. That's part of the reason why the industry is so secretive — most startups fail, with the few successes paying back investors, if the're lucky. Sunshine, venture capitalists feel, would merely serve to highlight the awkward in-between stages. That's what's so curious about Advanced Equities, the Chicago-based VC firm which has sprung up out of the blue, and is now talking about going public. As Forbes amply documents, it's a rotten business.Founders Keith Daubenspeck and Dwight Badger have suspect pasts as stockbrokers. The start of their careers as VCs is equally inauspicious: They raised $28 million for Pixelon, an online-video startup later revealed to be a fraud run by a con artist. Advanced Equities has been involved in several lawsuits with clients, Forbes reports; has a poor track record of profitable exits; and a reputation for overpaying to get in deals. But what speaks most to Daubenspeck and Badger's bad business judgment is this talk of going public. In the last bubble, CMGI, an Internet holding company with a large venture-capital arm, posted overheated returns by flipping its startups for cash, and then crashed all the more quickly when the tech-IPO market seized up. With private equity abundant, why would Advanced Equities even want to tap the public markets? Especially with the scrutiny that would mean. If Forbes was able to find all this dirt with a little digging, imagine what the company would look like under the glare of analysts and short-sellers.
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