New Venture Capital

Market View

John D. Sanders, Ph.D.,

Founding Publisher, Technology Business

"New Venture Capital "

This past week I participated in a "Venture Capital Fair" that brought over 100 companies seeking venture financing together with more than 500 attendees representing organized venture capital firms. For me, it was an exciting two day period. I’ve been involved in raising (and spending) venture capital for more than 30 years and have worked directly with more than 100 companies as an equity investor, board member and/or promoter.

I have to admit though: never have I seen the amounts of capital available or the excitement of entrepreneurs in discussing the futures of their companies. We’re in one of those cyclical periods where the stock market has produced substantial new profits that are attempting to reinvest in newer products and services. This same part of the cycle also produces entrepreneurs who realize that capital is available and financing can be obtained to move forward on fulfilling their ambitions. If you’ve been around this type of activity as long as I have, you would realize that there are periods of time where there is little available capital for entrepreneurial companies, and correspondingly the entrepreneurs don’t come forward with as much excitement and desire.

In this Mid-Atlantic region of the United States, there is a growing infrastructure of internet-related government agencies and telecommunications companies such that the critical mass of trained people and market opportunities is driving the types of businesses that lead the growth patterns. It’s the Internet, smarty (not stupid)!

But it’s not just the Internet. Every good idea that has a solid plan with highly qualified management can receive an audience with sources of capital. Do you know why? It’s my opinion that there is much more capital available then there are really good places to invest it. That’s not just true in the bidding up of the stocks listed on the New York Stock Exchange. It is also true for the new capital that has resulted from those stock market profits. The capital is coming from retirement funds, entrepreneurs who have "cashed out", wealthy families, larger corporations, and individuals who have participated in this fabulous economic period of growth. It’s being invested through professional money managers, corporate officers, investment banking firms and individuals.

However, I must emphasize a strong word of caution for entrepreneurs or promoters of technology solutions who are seeking this new wave of capital. Good ideas are still not worth much by themselves. Without a solid plan, current performance or believable management the chances for obtaining significant funding are still small. And each sector of the economy generally has more interest in the particular types of business. But if there was ever a time to strike out on a new venture or to promote the small company with exciting opportunities-- it’s now.

I would appreciate comments; contact me at Technology Business magazine: phone: 703-610-8787; e-mail: john@johnsanders.com; internet: www.johnsanders.com.

prepared for the December, 1997 Issue of the FLC NewsLink