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March 2011

The Monday Meeting with Matt Witheiler

Monday, 28 March 2011

Welcome to the last Monday of March!  Today we have a chance to talk to Matt Witheiler of Flybridge Capital Partners in Boston, Massachusetts.  Matt's investment interests and experience broadly cover companies and technologies across the information technology sector including financial technology, digital media, semiconductors.  He currently represents Flybridge Capital Partners on the board of Convoke Systems and serves as an observer on the boards of DataXu,  Ready Financial, Sand 9 and a portfolio company working in stealth.  He also sits on the board of The Capital Network and is a Founding Executive Committee Member of FirstGrowth Venture Network, a network of venture and angel investors supporting first and second time entrepreneurs building exciting companies in the New York area.  Mattt joined the Flybridge as a Senior Associate in July 2008 after completing his MBA at Harvard School of Business (HBS).  Prior to HBS, Matt spent seven years in various roles in the high technology industry including tree years at ATI Technologies, a $4B 3D-graphics silicon provider where he focused on the integration of 3D graphics and digital video and was responsible for the TV on the PC integrated circuit product line.

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Matt Witheiler, Principal, Flybridge Capital Partners

Q. From which industry sector do you think we will see the most innovation in the next 2 years?

A. Financial technology. The financial world was rocked from 2008- 2010 across the spectrum, impacting both consumers (subprime mortgage crisis, CARD Act, etc) and enterprises (The Great Recession, Dodd-Frank Act, etc).  Be on the lookout for innovative companies playing across this spectrum, from consumer facing financial services products to back office technology companies.

Q.  2011 is the year of the ...

A. ... IPO.  With an equities market in a more favorable place than in years past, look for more and more IPOs to come out and provide much needed liquidity into the venture industry.

Q.  The biggest threat to the US venture capital industry is ...

A. ...lack of liquidity.  The industry has been hampered by a lack of capital coming out of the system  in the past 4 years given a weak IPO market and a somewhat lackluster M&A market.  Thankfully, there are some bright spots so far in 2011 in the form of a more robust IPO market and an increased appetite for secondary transactions.

Q.  What is your favorite book of the last year?

A.  Mastering the VC Game.  Although it’s somewhat self-serving being it was written by my colleague Jeff Bussgang, it’s a great learning tool for entrepreneurs and VCs alike and honestly one of my favorites from last year. 

Q.  Name a venture-backed company you are not invested in but wish you were. 

A.  Square.  Disruptive product, great team, huge market: there’s not much to dislike.

Q.  Name a practicing VC from another firm who you admire and why?

A.  Eric Paley at Founder Collective.  I had a chance to get to know Eric in his transition from co-founder of a Flybridge backed company to venture capitalist.  What  makes Eric great is how much he genuinely cares about the entrepreneurs he meets with.  He goes out of his way to be helpful no matter the person or the stage and he is universally respected by the entrepreneurial community as a result.  I try to approach each and every meeting I do in a similar manner.

NVCA Chair Mitchell Talks VC-Backed IPOs at Treasury

Tuesday, 22 March 2011

Today NVCA Chair Kate Mitchell joined leaders from the venture capital and start-up ecosystems at the U.S. Treasury Department’s Access to Capital Conference:  Fostering Growth and Innovation for Small Companies.  The purpose of the conference, which was attended by Secretary Geithner and other leaders in the administration, was to explore ways in which government can improve access to capital for small emerging growth companies.  In his official statement Secretary Geithner remarked: 

We’re here because the ability of entrepreneurs to access financing is essential to building a more competitive economy.  Today, we want to explore how we can help make that happen.  What are the barriers to accessing capital?  Where can the government do more or help eliminate barriers and where should we stay out of the way?  What can the private sector and the public sector both do to help small companies get access to the capital that they need to grow?

Kate sat on a panel that was moderated by StartUp America CEO Scott Case and included Chuck Newhall, Co-Founder of NEA, Paul Deninger, Partner at Evercore, Seth Goldman, Founder of Honest Tea, and Bob McCooey, Senior VP of NASDAQ.  The group discussed the unintended consequences of recent regulations and the friction that those regulations have caused within the IPO market, specifically for small cap companies. They also offered suggestions to reduce this friction and to encourage longer holding periods of small cap IPOs.  Among other suggestions Kate proposed the formation of a task force which would present formal recommendations to Treasury to address the current challenges, a concept that was well received by the panel and audience.

Kate’s panel, as well as the preceding panel, presented a strong platform for issues and solutions that the NVCA has been discussing for some time:  Venture-backed companies are the job creators and innovators of the U.S. economy and we must do all that we can to support their formation and their growth, particularly as it relates to bringing them to the public markets.  We hope this is the beginning of renewed energy focused on these issues, and look forward to working with the Administration to address them head on.

A copy of the slides which details the data points and concepts which Kate referred to her in her remarks can be found here.  For a playback of the panels, we recommend checking the Treasury webcast site once the conference concludes at the end of the day.

Attention VCs: Come Celebrate in Boston!

Monday, 21 March 2011

The 2011 NVCA Annual Meeting kicks off in just 16 days in Boston!  This post serves as an invitation for all venture capitalists to join us for what is always an exciting and vaulable time together.  For those VCs who haven't yet registered, here are three reasons why you should take care of this today:

1.  It's a celebration!  This year marks the 65th Anniversary of the formation of the first modern venture capital firm, American Research and Development, and the 150th Anniversary of the Massachusetts Institute of Technology. Both milestones have had a profound impact on innovation and we are planning to celebrate the collaboration between leading research institutions, entrepreneurs, cutting edge technology and venture investors.  Join NVCA along with Xconomy and the MIT Museum on the afternoon of April 6th for an opportunity to reflect on all that has been created -- and all that will be -- thanks to venture capital and entrepreneurship.

2.  It's just for investors.  Attendance at our meeting is limited to venture investors, select conference sponsors and invited press. Every year, attendees return to the NVCA Annual Meeting because it is a unique chance to connect and share ideas with peers that have similar challenges and objectives. 

3.  Fascinating speakers talking both big picture and important nuances. With industry track sessions on the morning of April 6th followed by big picture perspectives from many of the most well known investors, academics and political players in the country, the NVCA Annual Meeting will cover the most important issues faced by venture capitalists..  Our keynote speakers include serial entrepreneur, Desh Deshpande, and MIT President, Susan Hockfield.  They will be joined by luminaries such as HBS professor Bill Sahlman, Robotics expert Rodney Brooks, MIT’s Dr. Ernie Moniz, CMS’ Drs. Richard Gilfillan and Louis Jacques, and DOE’s Dr. Steven Koonin.  Check out the agenda here.

If you are a venture capitalist, we hope you will join the hundreds of VCs already registered and sign up today. 

I look forward to seeing you in Boston on April 6 & 7.

 

 

The Monday Meeting with Micah Myers

Monday, 21 March 2011

Today's Monday meeting is with Micah Myers of Claremont Creek Ventures. Micah joined Claremont Creek Ventures in 2009. Prior to joining Claremont Creek Ventures, Micah worked as an Analyst with the energy team at Passport Capital where he focused on both public and private investments in the renewable energy sector and as a Product Manager at Clean Power Finance, a residential solar finance start up. He has been in operational roles for over 15 years, and has experience in renewable energy, software and finance. Micah served more than eleven years active duty in the United States Marine Corps as a fighter pilot flying the F/A-18 Hornet and continues to serve as a reserve officer in the select reserves.  HIs investment protfolio includes Alphabet Energy, Inc.and Clean Power Finance, Inc.

Micah_Myers_Claremont_Creek-1

Micah Myers, Principal, Claremont Creek Ventures

Q. From which industry sector do you think we will see the most innovation in the next 2 years?

A.  Competition over global resources is becoming more readily noticeable everyday, and it's creating an imperative for innovation across several sectors that have traditionally been sleepy and quiet. Simultaneous advancements in material science along with innovative applications of information and wireless communications technologies have made disruption possible. Economic pressures are quickly amassing to make it feasible. Sectors to watch:

Utilities:  Electric Utilities and Water Utilities

Consumer Goods:  Automotive

Industrial Goods:  Building Materials, Pollution & Treatment Controls, Waste Management

Q. 2011 is the year of ...

A.  ...WATER.

Q.  The biggest threat to the US venture capital industry is

A.  Anti-business legislation, tax, and regulation that hamstrings U.S. industry and thwarts our ability to be competitive on a global stageLack of [political] commitment to develop consistent, predictable policy that promotes investment and long term value creation in energy and resource technologies.

Q.  What is your favorite book of the last year?  

A.  ELECTRIC POWER SYSTEMS – Alexandra von Meier -  A technical overview of the complexities of our electrical grid infrastructure written for non-EE-PhD's.

Q.  Name a venture-backed company you are not invested in but wish you were. 

A. OPOWER

Q.  Name a practicing VC from another firm who you admire and why?

A.  Dan Oros (KPCB Greentech Team) is rising star who rolls up his sleeves and contributes to real value creation and operational success in the portfolio companies with whom he works. He brings perspective from a hedge fund background and has investment experience in some of the early, pioneering renewable energy technologies and developments. He's one to watch.

NVCA Member Testifies At Senate Energy Hearing

Friday, 18 March 2011

Yesterday, the Senate Energy and Natural Resources Committee held a hearing to examine the current global investment trends in clean energy technologies and the impact of domestic policies on that investment.  NVCA member, Will Coleman of Mohr Davidow Ventures, was invited to be a witness at the hearing.  A copy of his written testimony is available here. Also testifying were Neil Auerbach of Hudson Clean Energy Partners; Kelly Sims Gallagher, Director, Energy, Climate, and Innovation Program and Associate Professor of Energy and Environmental Policy, The Fletcher School, Tufts University; and Ethan Zindler, Head of Policy Analysis, Bloomberg New Energy Finance.

Senator Bingaman has stated his commitment to passing an energy bill with this Congress.  His recent announcement that he will not run for re-election in 2012 places some urgency on getting that legislation signed into law.  This hearing was to prepare for the development of a comprehensive energy bill that will protect the U.S. from falling behind in the growing global energy market.

At the hearing, there was a great deal of discussion about China.  Specific focus was on their significant levels of investment in energy ($ billions) and their luring of US companies to locate there by offering significant tax incentives, streamlined permitting processes, and a promise to purchase a company’s product or service. It was agreed that while we can’t compete with the Chinese dollar-for-dollar, we can compete against them and win with our innovation.  And if we get a national energy policy in place that will create the demand and certainty that companies need, we will lead in this sector. 

Senators are keenly interested in learning what can be done legislatively to help keep innovation here in the US and ensure that we don’t lose out in the race to manufacture and advance new energy technologies.  Still, they cautioned that there will be little appetite to spend additional monies on these initiatives.  Instead, we will look to make improvements to programs like Section 48C of the Advanced Energy Manufacturing Credit, which was a popular program but which was difficult for small, VC-backed companies to access due to the fact that they lacked the balance sheet to take advantage of this credit.  ARPA-E was roundly praised for the important role it plays in the innovation ecosystem and for how well the nascent program has been run.

The austere budget environment does not bode well for the creation of a CEDA, but several Senators and some of the witnesses did agree that some funding mechanism was necessary to bridge the gap for the deployment of large scale, innovative novel technologies.  

One new idea that was discussed at the hearing is the creation of a reverse-auction that uses a market-based approach to incentivize renewable development at the lowest cost and would promote the development of a national REC market, transitioning the industry away from federal support.  We will be working with those in the industry who are pushing for the reverse auction and with the Senators on this new idea.

An archive video of the hearing is available in the Energy and Natural Resources Committee website.   

Jean Deleage: 1940 - 2011

Thursday, 17 March 2011
The venture capital and biotechnology industries lost a great man this week.  Yesterday Jean Deleage, co-founder of three venture capital firms -- Sofinnova Ventures in 1971; Burr, Egan, Deleage in 1979 and Alta Partners in 1996 - passed away from complications from cancer, leaving a legacy of life saving innovations that have made our world a better place. His investments in companies such as Genentech, Chiron and Cephalon benefited millions of patients who suffered from diseases such as epilepsy, cancer and multiple sclerosis. 
 
In addition to being well known as an investor, Jean was also highly regarded as a mentor to young venture capitalists.  One such young VC was Terry McGuire, Co-Founder of Polaris Venture Partners who upon entering the venture industry worked under Jean's guidance.  As NVCA chairman, Terry honored Jean with the NVCA Lifetime Achievement award in 2009.   In toasting him alongside of other life sciences pioneers and friends - Brook Byers, Grant Heidrich, Jim Blair and Tony Evnin -- Terry shared the following words:
 
Jean, you came to the United states to be a pioneer. You came to venture capital to be a builder. You came to biotechnology to make a difference during an important revolution.  Without question you will leave a legacy as a pioneer, a builder and a revolutionary....Known to your peers as a courageous, loyal, patient and instinctive investor, we recognize you today for your contributions...  When beginning his career...(Jean) could have chosen from many paths to pursue.  I, for one, feel extremely fortunate that (he) chose venture capital.
 
On behalf of the entire venture capital industry, we feel the same way too. 

To continue Jean’s life work in life science research and innovation, donations in his memory can be made for Oncology Research at UCSF Medical Center.  To make a donation on-line please follow this link and select the “other” designation and insert “Fund #B0831 IN MEMORY OF JEAN DELEAGE”

 

NVCA Joins FDA in Medical Device Innovation Initiative Event

Thursday, 17 March 2011

This past Tuesday, several NVCA members were invited by the Food and Drug Administration (FDA) to participate in a day-long workshop to discuss the implementation of the recently proposed Medical Device Innovation Initiative (MDII).  As you may recall, this initiative is aimed at improving the regulatory review process for novel technologies.  The NVCA long advocated for such a program and we were pleased to be asked to join the conversation regarding its implementation.

Representing NVCA and the venture industry were members Jack Lasersohn from the Vertical Group; Ross Jaffe from Versant Ventures; Jonathan Leff from Warburg Pincus and Lou Bock from Scale Venture Partners.

The day was a very positive step forward in terms of the level of collaboration regarding how best to implement this new initiative most effectively.  In addition to the venture industry, many other stakeholders were represented including patient groups, large and small companies and the academic community.  All were committed to the program’s success and shared ways in which that success could be attained.  While some panelists raised concerns that the MDII would be limited to very few applications and will take precious resources away from other parts of the device center, we believe FDA is well positioned to leverage the positive lessons learned with this initiative across other areas.  Having access to senior FDA officials as we explore new regulatory paths will give us a “laboratory” for testing new processes which can then be expanded beyond the novel technology initiative. 

For our part, the NVCA focused on areas specific to bringing the investor risk-reward equation back into equilibrium.  For example, we shared with the group the need for transparency with device sponsors, allowing companies to play a role in selecting the experts who review their products.   As the devices that participate in the new program are, by definition, extremely cutting edge, there are few individual qualified to adequately assess their efficacy and safety.  Often the company participating is best suited to identify these experts. We believe it is critical that the sponsor be involved in all such interactions to avoid misunderstandings or mistakes regarding the review process early on.

The program has only just begun and the FDA is committed to making the necessary adjustments to ensure that it succeeds in its intention which is to improve the approval process for groundbreaking technologies.  If this program is successful, we believe it will have a positive impact on the entire FDA approval process as there is much to learn by this inaugural effort.  Ultimately the success of the program will be measured by the number of companies that apply.  The NVCA looks forward to working with the FDA to ensure that number is meaningful.

 

 

Senate Introduces StartUp Visa Act

Wednesday, 16 March 2011

NVCA is pleased to report that a new bi-partisan bill has been introduced in the Senate that is aimed at bringing and keeping the best and brightest entrepreneurs from around the world here in the United States.  Introduced by Senators John Kerry (D-MA), Richard Lugar (R-IN) and Mark Udall (D-CO), the StartUp Visa Act of 2011 will permit entrepreneurs to come to the U.S. or to remain here after completing university studies if they meet certain criteria, including receiving investment in their businesses from a qualified U.S. investor.  This would include venture capital dollars.  

Several NVCA members helped craft this legislation and we will work to gain co-sponsors for the bill in the Senate.  Two supporting pieces of legislation are expected to be introduced in the House in the coming weeks.  The first is a companion bill to the Kerry-Lugar legislation which is scheduled to be introduced by Representative Carolyn Maloney (R-NY); the second is a separate bill expected by Representatives Zoe Lofgren (D-CA) and Jared Polis (D-CO).  NVCA has been working with Lofgren and Polis on their bill and we will see if these two bills can be merged together to best serve the interests of the start-up and entrepreneurial communities.   In the coming weeks and months, if the Administration and Congressional leadership attempt to move immigration legislation we will reach out to the NVCA membership to help drive support for these initiatives.

Additional information about the Senate StartUp Visa bill is available here.


The Monday Meeting with Carter Caldwell

Sunday, 13 March 2011

Today we caught up with Carter Caldwell who is a principal at Cross Atlantic Capital Partners headquartered in Radnor, Pennsylvania. Prior to joining Cross Atlantic, Carter founded and served as COO of Quazant Technology, Inc, the developer of the Transaction Accelerator, a high-speed transaction processing database.  Prior to Quazant, Carter helped start Acorn Systems, Inc. and was integral in taking that company from pre-revenue to profitability.  He currently serves as a Steering Committee Member for the Mid-Atlantic Capital Alliance, and a judge for the nationally-recognized Ernst & Young Entrepreneur of the Year Competition, Wharton Business Plan Competition, Wharton Sustainable VC Investment Competition, and the Pitching Across America Competition.

Carter_Caldwell

Carter Caldwell, Principal, Cross Atlantic Capital Partners

Q.  From which industry sector do you think we will see the most innovation in the next 2 years? 

A.  Cloud-based applications and infrastructure 

Q.  2011 is the year of the...

A.  ...careful expansion.

QThe biggest threat to the US venture capital industry i...

A.   ... carried interest legislation.

Q.  What is your favorite book of the last year?

A.  Good to Great: Why Some Companies Make the Leap... and Others Don't

Q.  Name a venture-backed company you are not invested in but wish you were. 

A.  The Receivables Exchange which is an online marketplace where businesses sell their accounts receivable to accredited investors in real-time auctions.

Q.   Name a practicing VC from another firm who you admire and why? 

A.  Tim Draper of Draper Fisher Jurvetson because of his enduring energy and continual ability to think several steps ahead of others.  This has been shown by the list of investments he has endorsed throughout his career.  Similarly, his ability to assess key problems needing solving outside the United States led him to create the DFJ Global Network that provided a global reach for venture investing while offering portfolio companies a local presence. Finally, I respect his charitable commitment of teaching children about entrepreneurship and business - a topic which he is clearly a proven expert.

 

The Monday Meeting with Jimmy Rosen

Monday, 07 March 2011

We are kicking off March Monday Meetings with Jimmy Rosen, life sciences partner at Intersouth Partners in Durham, North Carolina.    Jimmy joined Intersouth in 2005 after spending 15 years in clinical, research and financial positions in the health care and biotechnology sectors.

Jimmy worked on a Robert Wood Johnson Foundation sponsored program at the UNC Lineberger Comprehensive Cancer Center. He was also an equity research analyst at Brean Murray & Co. for three years, covering biopharmaceuticals, genomics, generics, drug delivery and medical device companies. He has worked in clinical research roles at Duke University Medical Center’s Comprehensive Cancer Center and completed projects for the National Cancer Institute.  At the beginning of his career in health care, Jimmy spent five years in Emergency Medical Services as a mountain search rescue and ambulance medic.

His current portfolio includes ABT Molecular Imaging, Applied Genetic Technologies Corporation, Aresenal Medical, Cempra Pharmaceuticals, and Viamet Pharmaceuticals.   He currently serves on the Acceleration Advisory Committee for the UNC Gillings School of Global Public Health.

james-rosen

Jimmy Rosen, Partner, Intersouth Parters

Q. From which industry sector do you think we will see the most innovation in the next 2 years?

A. Medical imaging: non-invasive diagnosis and staging of disease that can inform real-time intervention.

Q.  2011 is the year of the .....

A.  .....patient (as in enduring).

Q.  The biggest threat to the US venture capital industry is ...

A.  ... the U.S. FDA’s lack of understanding of its role in the cycle of innovation.

Q.  What is your favorite book of the last year?

The Other Side of Innovation, Solving the Execution Challengeby Govindarajan & Trimble

Q.  Name a venture-backed company you are are not invested in but wish you were. 

A.  Clarus Therapeutics

Q.  Name a practicing VC from another firm who you admire and why?

A.  Terry McGuire at Polaris. He’s as smart as they come, a clear thinker, excellent communicator, mentor and respected leader in our industry. I learn something from him every time we interact, whether it’s an email or a board meeting.

Patent Reform is Live Again in Congress

Friday, 04 March 2011

Patent reform has once again become a live issue on Capitol Hill this week with the Senate debating S. 23 The Patent Reform Act of 2011.  All indications are that S. 23 will surely pass when it is brought for a vote early next week.

The NVCA was involved in the patent reform process during the last Congress when we supported S. 515, The Patent Reform Act of 2010, because of a carefully crafted compromise which balanced two critical issues around damages and the post grant review process.  Unfortunately S. 515 never made it out of the Senate and parts of this compromise were stripped out of S. 23 during the recent Senate floor debate, leaving NVCA unable to support the new bill. 

Specifically, S. 23 lacks the damages language which we believe would signal Congressional intent for stronger penalties for infringement.  We are also concerned that the post grant review compromise reached with S. 515 could be weakened by the potential of several amendments being filed to S. 23.  In summary, the bill as currently written would negatively impact small innovative companies from infringement by larger corporations.

Yesterday, the NVCA delivered a letter to Judiciary Committee Chairman Leahy and Ranking Member Grassley, expressing our concerns with S. 23 and indicating our lack of support for the bill in its current form.

The House Judiciary Committee Chairman, Rep. Lamar Smith is currently drafting a new bill that will move through the legislative process over the next few months.  NVCA is working with Chairman Smith to educate him on our key priorities and goals to achieve a patent process that will advance U.S. innovation for early stage companies and promote U.S. job growth. 

Please stay tuned here at NVCAccess for updates.

Southeast is Quietly, Optimistically Investing

Thursday, 03 March 2011
As the debate about whether Boston or New York is a "better" region for venture-backed start-ups rages across the blogosphere and on Twitter, venture capitalists in the Southeast are quietly investing, out of the spotlight, across multiple industry sectors from North Carolina to Florida.  For the last two days I have been at the Southeast Venture Conference in Atlanta, GA where the mood was optimistic about economic recovery and the venture investment landscape in general.  I was pleased to see so many venture capitalists in attendance.  While the Southeast reion (based on the MoneyTree data) includes Alabama, Florida, Georgia, Mississippi, Tennessee, South Carolina, and North Carolina, this conference brought attendees from Virginia, Maryland and D.C. and investors from all over the country.    Last year, venture capitalists invested more than $1 billion dollars into the Southeast region.  Here is how it broke out in 2010:
  • North Carolina and Georgia captured the majority of the dollars at 44 and 31 percent respectively, followed by Florida (17 percent) and Tennessee (5 percent).  South Carolina and Alabama rounded out the last 3 percent.
  • The most-funded industry sectors in the Southeast were software (26 percent of the dollars) followed by medical devices (16 percent), biotechnology (12 percent)  and IT services (8 percent).  In terms of the number of deals completed last year, software captured 32 percent of the deal volume followed by IT services (11 percent of the deals), medical devices (10 percent) and biotechnology (9 percent).
  • Of the firms investing in the Southeast region in 2010, 84 percent were from other regions of the United States.
  • Thirty seven percent of the 2010 venture deals in the Southeast were for expansion stage, followed by 31 percent for later stage, 27 percent for early stage and 5 percent for seed stage deals.
Both these statistics and my visit to Atlanta were encouraging in the sense that venture investment continues to flow outside the major start-up hubs into industries and regions that clearly benefit from the capital deployed.  The Southeast appears to be mirroring the national landscape as a whole, showing signs of moderate recovery after the financial crisis and focusing again on IT as a promising area of investment.  I was further encouraged by the number of out-of-town VCs who were in Atlanta these last few days.  It is critical that areas where there are not large number of indigenous venture firms have a regular traffic flow of investors to help fund these promising companies throughout their life cycles.  All signs suggest that the Southeast is providing good reasons for venture investors to pay a visit.
 
 
 
 

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