Ohio Venture - OVA Review Newsletter
News from the Ohio Venture Association meeting on November 12, 2010

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Keynote Address:

Sam Gerace
CEO, Veritix

Veritix was launched in 2006 as a real-time market for ticketing in the sports and entertainment industries. Owned by Cleveland Cavaliers owner and Quicken Loans founder Dan Gilbert, the service now facilitates 13 percent of NBA ticketing, and recently landed the ticketing business for all 93 NCAA finals. Veritix CEO Sam Gerace told OVA members at their November luncheon that much of the opening for Veritix in the sports and entertainment ticketing industry is created by the fact that industry-leader Ticketmaster has essentially operated as a monopoly for many years, and monopolies tend to discourage innovation.

Gerace is a serial entrepreneur. Before joining Veritix, he founded Be Free, an internet marketing company that executed $2 billion in e-commerce business for clients. It was later merged into ValueClick, a NASDAQ company. Before that, he founded and managed consulting and information services companies.

While he talked a little about his own company and its growing momentum, Gerace's larger message was about the new paradigm in value creation in the IT sector, and its wide implications for venture capital. The basic model which VC has imposed on growth companies since 1946 will now have to be rethought in the IT space, he argued.

He described a recent test in which the company accomplished a massive computing task—offering a worldwide sale—by harnessing the "cloud" computing power of Amazon.com, rather than relying on its own data centers. It cost Veritix just $24. Given these trends, he said, "we all know capital needs (for IT startups) are less. But they're not just less, they're miniscule, at least during the most important value-creation phase" of the business.

Moreover, subject-matter experts now connect in a global fashion, adding intellectual and financial value to early-stage ventures, often entirely bypassing the machinery of the traditional VC model. "Kevin Bacon's six degrees of separation is now irrelevant. I don't need anyone else to connect with someone in the Netherlands on Skype. It means I don't need an organization—I can self-organize. Value creation can happen through global collaboration. It does not take a traditional organization anymore," he said.

The implications for VCs? Rather than picking a few winners, in whom they choose to invest, they should be investing in and taking an active part in an entire ecosystem. "Ecosystem investing is the wave of the future...and you have to have a global stable of subject matter experts to draw on." He counseled VC and private equity players to "invest in various places throughout the ecosystem, so you can see what's happening, and where the real value is aggregating."

More information:

Upcoming Meetings:

December 10, 2010
Frank Douglas
The BioInnovations Institute Akron
Time: 11:30am
  

February 11, 2011
Venture Capital Summit VI

January 14, 2011
Ram Ramakrishnan
Eaton Corporation
Time: 11:30am
March 11, 2011
Mike Burke
Imalux
Time: 11:30am

See complete details and registration for these events.
 

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New Officers & Trustees

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