..and that's the problem Mitt Romney's got right now.  You can argue that it's hard to feel too sorry for private equity types: they certainly tend to live up to their name, keeping their name and doings out of the limelight (unless they're going public this year, and have to reveal that their top 3 execs made $402 million).  It's that privacy that's hurting Romney now.

The mystery of private equity is something I confront each spring as I being my Life Cycle of the Corporation course.  As the title suggests, it covers a corporation's life, from founding through venture financing, going public, and being public (and M&A and bankruptcy, time permitting).

Fully a third of the substantive classes focus on venture financing.  That because it takes a while for the students to grasp what venture capitalists do.  We watch a movie.  We discuss term sheets and Series A financing documents.  We have a negotiation exercise, pitting company counsel against investor counsel.  By the end of the unit, they really do get it.  But it takes three weeks.

Most of America hasn't done this.  So maybe when they hear, as the Journal reported yesterday, that of the 77 companies Bain invested in during its tenure, 22% filed for bankruptcy or stopped operations by year 8, or that "most of the 50-80% of annual gains" Bain produced came from "a relatively small number of deals, and some of these winning companies later ended up filing for bankruptcy protection", that sounds scandalous.  To me, it sounds like Bain hit it out of the park.  But I know the odds are against a successful exit, even for a venture-backed corporation.  I know it's normal for a few "home-runs" in a fund to make up for a lot of ho-hum investments and some real stinkers.  Most Americans don't know that.

Like Gordon, I think Perry's "vulture capitalist" label is unfair and misplaced.  But there aren't really any venture capitalist household names--Gordon Gekko is one popular image of private equity, and he plays a villain.  Steve Jobs may be an entrepreneur-hero, but the public doesn't lionize the VC funds that got Apple off the ground. 

Gordon says this issue "should be a winner for Mitt, if he can make the connection to average voters."  The question for me, is whether  Romney is going to try to explain venture capital and private equity to the average American in soundbites.  My experience tells me that might be a tall order. 

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