I was reading the daily Venture Wire blurb last Friday. Usually these are "quick reads" and sort of a mix between a story in the LA Times and Food and Wine, but the content in this one was particularly fascinating and alarming at the same time.
The last IPO this year was on March 19th. It was CardioNet , which is a great company Jim Sweeney started/runs down in San Diego (and participated in OCTANe's CA Medical Device Forum in 2006) at the intersection of health care and wireless data. (Congrats, Jim). However, that was MARCH 19th and it's June now!! There have been hundreds of venture-backed investments since March 19th, but none of the existing investments have gone IPO?
Sure many have been bought or "monetized" by VCs, but what is going on? The total number of IPOs is six for 2008 per the article and no "tech ones" since Valentine's Day? How much love is that? The trend is alarmingly getting worse as detailed below. Some points to ponder....
1. Is this tied to the subprime mess? Does a "spooked" capital market in one asset class bring down the whole capital chain as far as investment capital realization and availability?
2. Is an IPO not a real relevant option for VCs anymore and companies are being "built to be sold; not built to prosper?"
3. Will global, non-US markets with less regulations, be the choice going forward for IPOs?
4. Are we producing just "incremental innovation companies" instead of TRUE disruptive innovative companies? (Everyone these days talks innovation and brands it, but where is it?)
5. Or is it just one heck of a St. Patty's Day hangover....
Well 12 companies are filed and ready to go and let's wish them well as risk taking venture capital needs liquidity options to prosper; staying private usually does not pay the bills.
Interesting factoid ... last time there was this IPO lull was 2003, oil was about $25-$30 a barrel. Here in 2008 it is around $130. So while we lament our VC-backed IPO drought, we also get to regret not buying the oil futures index 5 years ago.
Thoughts?
Showing posts with label venture. Show all posts
Showing posts with label venture. Show all posts
Tuesday, June 3, 2008
Monday, April 21, 2008
VC fundings down...tied to economic recession?
Was having pleasant cup of joe reading the paper (yes once in awhile I still like the "print dinosaur") when I read the article on slowing VC fundings in 1q 2008. Both PWC and E&Y do a great job covering the field.
On the same page or close to it, was an article on recession and unemployment rising. So is there a link? Who is the tail and who is the dog? (I will skip the easy analogy of an ass). Is there correlation between the two and what is the lag effect, if any?
My 2 cents...a recession, oil at a gazillion dollars a barrel and gas at $4 a gallon does not make people feel good. Quick poll, who has gone over $100 on an SUV fill-up? Let me start the list, but I digress.
If you were a VC, why would you deploy risk capital - particularly early stage - in a time of upcoming economic uncertainty? For the most part, the answer is - you wouldn't. You'd cherry pick your opportunities and be conservative and ride out the storm. I think this is much truer in the IT world than in biomedical, as biomedical sectors are influenced more by reimbursement, government, legal and market issues than consumer spending. (Note: Botox has passed milk in the family home and happy hours in the single home on the list of “critical needs,” so that isn’t really a discretionary spend).
Hence as VCs take a breather and raise more money/new funds as many are now doing, entrepreneurs should keep plugging away, increase business value and be realistic that although there is a lot of money out there, it might stay “out there” for awhile. Focus on capital efficiency and position for a stronger 2009.
Thoughts?
On the same page or close to it, was an article on recession and unemployment rising. So is there a link? Who is the tail and who is the dog? (I will skip the easy analogy of an ass). Is there correlation between the two and what is the lag effect, if any?
My 2 cents...a recession, oil at a gazillion dollars a barrel and gas at $4 a gallon does not make people feel good. Quick poll, who has gone over $100 on an SUV fill-up? Let me start the list, but I digress.
If you were a VC, why would you deploy risk capital - particularly early stage - in a time of upcoming economic uncertainty? For the most part, the answer is - you wouldn't. You'd cherry pick your opportunities and be conservative and ride out the storm. I think this is much truer in the IT world than in biomedical, as biomedical sectors are influenced more by reimbursement, government, legal and market issues than consumer spending. (Note: Botox has passed milk in the family home and happy hours in the single home on the list of “critical needs,” so that isn’t really a discretionary spend).
Hence as VCs take a breather and raise more money/new funds as many are now doing, entrepreneurs should keep plugging away, increase business value and be realistic that although there is a lot of money out there, it might stay “out there” for awhile. Focus on capital efficiency and position for a stronger 2009.
Thoughts?
Wednesday, March 19, 2008
What's tougher...An Entrepreneur getting funded in OC/So Cal or Portland State winning the NCAA Basketball Tournament?
I was filling out my winning March Madness Basketball brackets .. oops .. I mean while I was thinking about a hypothetical (and used to be harmless) NCAA basketball contest that doesn't exist to the best of my knowledge ... and I got to wondering, what is easier: an entrepereneur getting venture capital in OC/So Cal (or really anywhere not Sand Hill Road) or a "no-name" team winning the NCAA college basketball championship?
The answer? It depends.
Probability Scenario #1 - The "Duke, North Carolina, UCLA's of the world" - if they were entrepreneurs, they would have good chance to get funded. Have "been there, done that", get great talent, have a powerful network, are serial winners ... they are kind of like the prom queen/king(s); usually they get a date. Venture capital and angels sort of find them rather than vice versa.
Probability Scenario #2 - The "Portland State, Siena, Texas Arlington's of the world" - if they were entrepreneurs, well, the movie Rudy comes to mind ... HUGE underdogs. Probably a combination of "first time tryouts", talent, network and/or even if they had a good idea, it would need some/a lot of "work" and also lack of localized seed capital would hurt it even more. This does not say that entrepreneurs should quit or it can't become a "nice little business", but it is a tough road sometimes; just know what you are getting into.
Probability Scenario #3 - The "Wisconsin, USC, Clemson's, #5 seeds of the world" - this is the interesting group of entrepreneurs. Passionate and talented people that have "something" but are still "not quite there" .. THIS is the critical piece that we need to focus on. If these entrepreneurs can continue to work hard, got some momentum, build a talent pipeline (patents/people/network), they can develop in the top tier. I will contend this group is the key for regions to focus on and develop. How do we increase/help this group? "Minds and Money" is the answer.
We need to help grow more innovative businesses and provide a platform; a mix of online and offline resources to nurture and advance this group. A serial entrepreneur network, a relevant and ACTIVE angel investor, a university advisor, a "mentor mindset VC", a "kind" lawyer etc... this is what will move the needle and get more entrepreneurs and in the words of Dick Vitale "to the dance, babeeeeeeey!!!!!!
The answer? It depends.
Probability Scenario #1 - The "Duke, North Carolina, UCLA's of the world" - if they were entrepreneurs, they would have good chance to get funded. Have "been there, done that", get great talent, have a powerful network, are serial winners ... they are kind of like the prom queen/king(s); usually they get a date. Venture capital and angels sort of find them rather than vice versa.
Probability Scenario #2 - The "Portland State, Siena, Texas Arlington's of the world" - if they were entrepreneurs, well, the movie Rudy comes to mind ... HUGE underdogs. Probably a combination of "first time tryouts", talent, network and/or even if they had a good idea, it would need some/a lot of "work" and also lack of localized seed capital would hurt it even more. This does not say that entrepreneurs should quit or it can't become a "nice little business", but it is a tough road sometimes; just know what you are getting into.
Probability Scenario #3 - The "Wisconsin, USC, Clemson's, #5 seeds of the world" - this is the interesting group of entrepreneurs. Passionate and talented people that have "something" but are still "not quite there" .. THIS is the critical piece that we need to focus on. If these entrepreneurs can continue to work hard, got some momentum, build a talent pipeline (patents/people/network), they can develop in the top tier. I will contend this group is the key for regions to focus on and develop. How do we increase/help this group? "Minds and Money" is the answer.
We need to help grow more innovative businesses and provide a platform; a mix of online and offline resources to nurture and advance this group. A serial entrepreneur network, a relevant and ACTIVE angel investor, a university advisor, a "mentor mindset VC", a "kind" lawyer etc... this is what will move the needle and get more entrepreneurs and in the words of Dick Vitale "to the dance, babeeeeeeey!!!!!!
Tuesday, March 11, 2008
The Maiden Voyage
And it begins...volume 1, chapter 1, section 1, edition 1 etc. Welcome to my blog. My maiden voyage down the Digital Media Communication Highway … or should we say universe.
Why do this? .. because blogs and other digital communication mediums are FASTLY becoming THE platform for communicating your thoughts, beliefs, knowledge, ideas, and opinions (good and not so good) to a targeted community (social and business networks are just starting folks and it is in the first inning) AND the added benefit of being able to reach out and interact with complete strangers who just happened to “Stumble Upon It”.
I run a company called OCTANe in “a near nirvana neverland” called Orange County, CA. We are driven to help create, grow, support, staff and fund more biomedical and hi-tech companies. More companies created. More jobs. More people connected. More square feet leased. More R&D leveraged. More money deployed to science/tech businesses. Our belief is that innovative, IP driven businesses are our future; both here and long-term, anywhere in the US. “Minds and Money” sitting on a bed of capitalism, freedom and entrepreneurial spirit IS our future. Why we don’t invest more in our future businesses instead of trying to save “the dinosaurs” is beyond me, but I digress.
My goal is to write this blog weekly. As I say, goal. Three kids 6 and under and 2 dogs will make the over/under about 40 a year; as it should be, as family and health are first priorities ahead of business.
What will I write about? Well it will MOSTLY be about various issues related to entrepreneurship, capital, university, medical devices, digital technology, finance, clean and green tech, innovation, communications and similar science/tech/money topics and people. These unique, high value added companies and sectors produce the highest paying jobs, careers and economic impact; not to mention great wealth for “founders and funders” which SHOULD work its way back into society through philanthropy. The need for this futuristic “venture philanthropy” is critical to solve our real problems; which is not if a valuation is 4.23X revenue or 4.22X revenue but how we are so woefully failing our youth in math and science in schools; but I digress.
What this blog will not be? Boring. Long. Academic. Sarcastic (yeah right). Not the “King’s best English” or “By the book”; not even sure there is a book in this new medium; if so it’s already out of date. It will be straight forward, topical and thought provoking. It will not be politically focused but I will talk about the political process including the current election; which I find fascinating in the diversity of candidates as well as how the internet and social networks are SIGNIFICANTLY impacting the election; but I digress.
So that’s the intro blog. Hope you enjoy it even though I feel like I just signed a 78 year ARM mortgage with weekly payments.
I look forward to interacting with 100,000’s of my closest friends real soon.
Why do this? .. because blogs and other digital communication mediums are FASTLY becoming THE platform for communicating your thoughts, beliefs, knowledge, ideas, and opinions (good and not so good) to a targeted community (social and business networks are just starting folks and it is in the first inning) AND the added benefit of being able to reach out and interact with complete strangers who just happened to “Stumble Upon It”.
I run a company called OCTANe in “a near nirvana neverland” called Orange County, CA. We are driven to help create, grow, support, staff and fund more biomedical and hi-tech companies. More companies created. More jobs. More people connected. More square feet leased. More R&D leveraged. More money deployed to science/tech businesses. Our belief is that innovative, IP driven businesses are our future; both here and long-term, anywhere in the US. “Minds and Money” sitting on a bed of capitalism, freedom and entrepreneurial spirit IS our future. Why we don’t invest more in our future businesses instead of trying to save “the dinosaurs” is beyond me, but I digress.
My goal is to write this blog weekly. As I say, goal. Three kids 6 and under and 2 dogs will make the over/under about 40 a year; as it should be, as family and health are first priorities ahead of business.
What will I write about? Well it will MOSTLY be about various issues related to entrepreneurship, capital, university, medical devices, digital technology, finance, clean and green tech, innovation, communications and similar science/tech/money topics and people. These unique, high value added companies and sectors produce the highest paying jobs, careers and economic impact; not to mention great wealth for “founders and funders” which SHOULD work its way back into society through philanthropy. The need for this futuristic “venture philanthropy” is critical to solve our real problems; which is not if a valuation is 4.23X revenue or 4.22X revenue but how we are so woefully failing our youth in math and science in schools; but I digress.
What this blog will not be? Boring. Long. Academic. Sarcastic (yeah right). Not the “King’s best English” or “By the book”; not even sure there is a book in this new medium; if so it’s already out of date. It will be straight forward, topical and thought provoking. It will not be politically focused but I will talk about the political process including the current election; which I find fascinating in the diversity of candidates as well as how the internet and social networks are SIGNIFICANTLY impacting the election; but I digress.
So that’s the intro blog. Hope you enjoy it even though I feel like I just signed a 78 year ARM mortgage with weekly payments.
I look forward to interacting with 100,000’s of my closest friends real soon.
Subscribe to:
Posts (Atom)
