| Keynote
Address:
2020 Vision: Insights from New Capital -
What Investors Are Looking For
Panelists:
Mike Bunker, Early Stage Partners
Steve Haynes, Glengary Ventures
Chuck Hallberg, Medical Growth Fund
Rich Langdale, NCT Ventures
John Zak, Portal Capital
Moderator:
Chris Seper, MedCity News
Emerging ventures in Northeast Ohio should focus on more modest
goals rather than grandiose dreams such as curing cancer. Hot
technologies and industry sectors always emerge more slowly than
first assumed. Cash is king, and startups that take the easiest,
quickest paths to commercialization will draw the most interest
from funders.
Those were among the themes and messages that came out of a
panel discussion of VCs—representing both newer and more
established funds—at the November OVA luncheon.
The consensus was that with the region's and state's venture
capital ecosystem receiving so much attention and resources of
late, the deal flow has improved considerably in recent years. As
Glengary Venture's Steve Haynes put it: "In northeast Ohio, the
deal flow has become more qualified...We're getting into companies
at an earlier stage, qualifying those deals." He added that "we
like to take execution risk over product risk. We don't take
financial risk." Added Portal Capital's John Zak: "The acumen of
the entrepreneur has been raised to a new level, in part due to
all the support in the region."
Zak noted that his fund prefers to invest in deals that employ
contract manufacturing and piggyback on established sales
channels. "Our motto is—let's not reinvent the wheel. Let's take
the easy road." Other panelists could be seen nodding in
agreement.
Cash is king in the current environment, and exits will happen
on their own schedule—meaning of course more slowly than in the
past. "You need to understand that when you invest in a company,
the only thing that buys you is the right to invest again," said
Early Stage Partners' Mike Bunker.
There was considerable discussion about how each of the funds
attempts to distinguish itself by focusing on different stages of
the venture continuum. Chuck Hallberg of Medical Growth Fund
explained that "because the fund is new, we're focusing on smaller
pieces right now—$250,000. Our target is...revenue-generating
companies, or companies that are revenue-ready—they've got their
product and the management team is established." John Zak said
Portal considers itself "early stage gap investors. We are looking
at opportunities earlier than some of my colleagues up here."
NCT Ventures' Rich Langdale noted that his fund, based in
central-Ohio and comprised entirely of former entrepreneurs, likes
to focus on such areas as homeland security and "freakish
attraction to pets." They have invested in some early stage
companies when it's a good fit, but "about one in three of those
go on to be early growth companies, and that's where we put the
vast majority of our money and our time." The fund has made
investments in the early growth stage that have ranged from
$57,000 to $12 million.
But when it comes to predictions about the future, ESP's Mike
Bunker urged caution. "When you look out ten years, you always
think you'll achieve things quicker than you (actually) do." He
noted that he previously worked for medical devices giant
Medtronic, and recalled that a decade ago, there was much
discussion about how minimally invasive surgery would be the
widely adopted norm within ten years. It hasn't yet come to pass.
Webcasts from the Meeting:
Click on the image below to view the entire presentation as
video.
Webcast produced by Mike Sutyak, The Entrepreneurial Learning Initiative. |
