(Revised since Saturday)
I attended the VentureOne “Exchange” venture capital conference in Boston on September 30 and October 1, 2003. The attendees were mostly venture-backed technology companies and venture capital investors, with a sprinkling of “service providers” who offer services to technology companies and investors, and a very few “journalists” (myself included). The conference was oriented towards “professional” venture capital firms, not so-called “angel” investors. The overall concept is that one group of companies is looking for new investors and the other is looking to make new investments. And the remaining people are looking to profit from offering services.
The conference covered both information technology and life sciences. The “sectors” covered included biopharmaceuticals, medical devices, semiconductors, communications, wireless, enterprise software, and business services. For the most part, companies and investors were from the east coast and especially the northeast. There was usually one session which was a panel discussion of the “outlook” for the sector and then a separate session of several company “presentations”, followed by one-on-one discussions with the companies.
Investors were mostly the traditional venture capital firms plus a few of the remaining corporate venture investment arms.
There were also over a dozen workshop sessions on various topics of interest to both venture-backed companies and venture capital investors.
There was also a keynote opening address and opening panel discussion and luncheon speakers on both days.
Of course, all the really interesting discussions occurred informally, during breakfast, lunch, and the cocktail reception.
The overall tone was that the venture capital sector seems to finally have hit bottom and is now slowly starting to show some actual improvement.
Some other observations:
· Venture deals are in fact happening, but at dramatically reduced valuations and with expectations that the money will have to last longer and that the return will be lower and longer in coming. For example, a company that might have raised $40 million in 2000 would now consider itself lucky to raise $10 million. The mantra repeated many times during the conference was “capital efficiency”.
· There is new interest in “partnering” with existing corporations to reduce venture funding requirements.
· There is still a significant ‘overhang’ of new companies funded within the last couple of years that have not yet achieved break-even and need additional funding. There has already been a significant amount of merging of these businesses, causing many investors to accept partial and sometimes complete losses. There have been a lot of so-called “down rounds” where new investors pay less of shares than earlier investors.
· It could still be another 18 months before the telecom sector becomes healthy again, and that’s an optimistic view. People were a little more optimistic for the rest of the information technology sector.
· Attendance was about the same as last year.
· The overall mood was definitely a little brighter than last year.
· Life sciences is clearly the hottest sector, with strong demand and lots of ventures being funded.
· Within information technology, wireless remains ‘hot’.
· Outsourcing is a popular option for keeping employee costs down at new ventures.
· Offshore development is gaining a little popularity, but is still somewhat problematic for innovative ventures. There is concern about ownership and protection of intellectual property.
· Last year there was lots of talk about venture capital firms feeling the need to return uninvested money to the limited partners, but this year there was little mention of the topic.
I took the bus from New York City for $50 roundtrip, including a movie on the return trip. I used Priceline.com to get a $110 rate at the “new” Hyatt Regency Boston Financial District (changed from Swissotel in June and the Hotel Lafayette before that) conveniently located in downtown Boston – that’s a 52% savings off the standard $230 rate for a really nice deluxe hotel room.
Jack Krupansky -- The Unrepentant Optimist (Click here for Jack's Bio)
Updated: February 05, 2006 08:00:55 PM -0500
Copyright © 2003 John W. Krupansky d/b/a Base Technology