Rough waters for Bono's funding firm

Elevation Partners was firing on all cylinders, but now two founders are embroiled in a public battle.

By Kim Peterson Jan 28, 2011 4:50PM
Credit: (© Virginia Mayo/AP)
Caption: BonoBono hasn't had the best go as a technology investor. His private-equity firm, Elevation Partners, lost some geek cred after plowing $460 million into failed device maker Palm.

But Elevation was on a serious high in 2010, mostly due to its reported $210 million investment in Facebook. That stake may have quadrupled, reports say.

Such is the rocky life of a big-risk, big-reward private equity firm. But the U2 frontman's company may face its toughest hurdle yet, now that a co-founder has decided to leave. Fortune reports that Marc Bodnick is resigning as co-founding partner at Elevation for a position at Quora, an online question-and-answer site valued last year at $86 million.

His departure is damaging enough for Elevation. But today brings word that Bodnick is also fighting with the firm's leader, Roger McNamee, over the firm's profits. The feud was simmering in private, The Daily Beast reports, but has gone public after the news of Bodnick's departure emerged.

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The battle is ruining Elevation's chances at launching a second investment round, writes Dan Lyons. No one wants to put millions of dollars with a firm whose leaders are embroiled in a nasty fight over money.

If Elevation can't get more money, it will probably wither and die, one source tells The Daily Best.

That would bring an inglorious end to one of the most well-known investment firms in Silicon Valley. Bono created the firm along with Bodnick, McNamee and a fourth partner who later jumped to Electronic Arts (ERTS).

In 2007, all three partners made personal investments in Facebook by buying large chunks of stock from employees, The San Jose Mercury-News reports. Bodnick's sister-in-law went on to become Facebook's chief operating officer. The company also invested $100 million in online review site Yelp. And it eventually recovered all of its Palm investment -- and even made 5%.

That was enough to keep Elevation hot. Will it survive its current crisis?

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