Comments on: Oregon startups and venture capital: It’s complicated http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/ Covering the blossoming startup industry in Portland, Oregon, and the Silicon Forest Wed, 08 Feb 2012 21:25:25 +0000 hourly 1 http://wordpress.org/?v= By: Venture Funds portland – Venture Funds | Venture Investment » Blog Archive http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/comment-page-1/#comment-44313 Venture Funds portland – Venture Funds | Venture Investment » Blog Archive Thu, 19 Jan 2012 15:20:06 +0000 http://siliconflorist.com/?p=1959#comment-44313 [...] manager by summer’s end …Wash. venture funds rain down on Portland firms AppFog, CedexisOregon startups and venture capital: It’s complicated « Silicon FloristOregon University Venture Development Fund – Portland State …Oregon Investment Fund [...] [...] manager by summer’s end …Wash. venture funds rain down on Portland firms AppFog, CedexisOregon startups and venture capital: It’s complicated « Silicon FloristOregon University Venture Development Fund – Portland State …Oregon Investment Fund [...]

]]> By: Gerry Langeler http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/comment-page-1/#comment-7774 Gerry Langeler Sat, 30 May 2009 19:45:36 +0000 http://siliconflorist.com/?p=1959#comment-7774 VC capital CAN be seed money. Example: We (OVP) put $1M into Stuart Cohen's company, Collaborative Software Initiative in Portland when it was just him, and a fairly general PowerPoint pitch - no product, no customers, no team. So, why did we do that and not all the others we turned down? 1) He had a great track record in the domain he was designing his company to serve, including leading a high-powered team 2) He had great contacts in the customer base he was planning to serve 3) His approach was disruptive in a very large space. So if it worked, he might grow a very meaningful sized-company. 4) The business model made sense. It was not hope or a nice-to-have, it was ROI based for the customer. Most start-ups we see are lacking in at least one of these attributes. Many lack more than one. I know this doesn't make me popular with the Oregon entrepreneurial community sometimes - but while we VCs can be wrong more often than we are right (in fact, we ARE wrong more often than right!) - if you try to get VC money and get turned down, it is much more likely to be a problem with your team, your technology, your market, and your business model than it is that we are somehow "conservative" or "clueless". OK, maybe clueless - but definitely not conservative. Or that money somehow "isn't available" here. Last year (not a great VC year, right?) we invested in 9 new companies - more than we ever have in our 26 year history. We've already done 2 in 2009, with more pending. Sadly, not one was in Oregon (yet) - but it wasn't for lack of interest. Personally, I'd much rather drive than fly to board meetings. These days, I'm on 8 boards in 4 states - with just 3 of those here locally. So, Oregon deals will always get the benefit of the doubt. But, in the end, we are here to make money for our investors and so will choose the best we see regardless of state boundaries. Oregon entrepreneurs simply have to measure up to national standards to get funded. Some do every year. We wish there were more, and await them eagerly. VC capital CAN be seed money. Example: We (OVP) put $1M into Stuart Cohen’s company, Collaborative Software Initiative in Portland when it was just him, and a fairly general PowerPoint pitch – no product, no customers, no team.

So, why did we do that and not all the others we turned down?
1) He had a great track record in the domain he was designing his company to serve, including leading a high-powered team
2) He had great contacts in the customer base he was planning to serve
3) His approach was disruptive in a very large space. So if it worked, he might grow a very meaningful sized-company.
4) The business model made sense. It was not hope or a nice-to-have, it was ROI based for the customer.

Most start-ups we see are lacking in at least one of these attributes. Many lack more than one.

I know this doesn’t make me popular with the Oregon entrepreneurial community sometimes – but while we VCs can be wrong more often than we are right (in fact, we ARE wrong more often than right!) – if you try to get VC money and get turned down, it is much more likely to be a problem with your team, your technology, your market, and your business model than it is that we are somehow “conservative” or “clueless”. OK, maybe clueless – but definitely not conservative. Or that money somehow “isn’t available” here.

Last year (not a great VC year, right?) we invested in 9 new companies – more than we ever have in our 26 year history. We’ve already done 2 in 2009, with more pending. Sadly, not one was in Oregon (yet) – but it wasn’t for lack of interest.

Personally, I’d much rather drive than fly to board meetings. These days, I’m on 8 boards in 4 states – with just 3 of those here locally. So, Oregon deals will always get the benefit of the doubt. But, in the end, we are here to make money for our investors and so will choose the best we see regardless of state boundaries.

Oregon entrepreneurs simply have to measure up to national standards to get funded. Some do every year. We wish there were more, and await them eagerly.

]]> By: Ken Westin http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/comment-page-1/#comment-7746 Ken Westin Thu, 28 May 2009 07:57:37 +0000 http://siliconflorist.com/?p=1959#comment-7746 Lack of funding can have its benefits. It can force you to look at your business and question if what you have developed is simply a good idea, or a good business idea. There is a difference. Bootstrapping forces you to make good ( and sometimes extreme) decisions to build a quality product that people will purchase and serves a real need, focus on a niche and establish growth in phases vs. spending years developing a product that is not tested in the market and may be obsolete when actually launched. Feeding your family and paying your mortgage are also prime motivators, a big and scary-as-hell step when you think about taking your side-project into a full-time gig. But then again if you are not willing to take the risk to put everything you have into your business, then why should an investor? Investment like a mortgage should not be easy money, maybe we are learning a lesson here. Lack of funding can have its benefits. It can force you to look at your business and question if what you have developed is simply a good idea, or a good business idea. There is a difference. Bootstrapping forces you to make good ( and sometimes extreme) decisions to build a quality product that people will purchase and serves a real need, focus on a niche and establish growth in phases vs. spending years developing a product that is not tested in the market and may be obsolete when actually launched.

Feeding your family and paying your mortgage are also prime motivators, a big and scary-as-hell step when you think about taking your side-project into a full-time gig. But then again if you are not willing to take the risk to put everything you have into your business, then why should an investor? Investment like a mortgage should not be easy money, maybe we are learning a lesson here.

]]> By: Rick Turoczy http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/comment-page-1/#comment-7742 Rick Turoczy Wed, 27 May 2009 18:21:11 +0000 http://siliconflorist.com/?p=1959#comment-7742 Agree. I think there's also an underlying issue of "friends and family." I see a lot of bootstrapping, personally, and then looking to jump to Angel or VC. Seems there's a step missing there. Or maybe we just need to have some more "friends" in the area who are able to invest. Agree. I think there’s also an underlying issue of “friends and family.” I see a lot of bootstrapping, personally, and then looking to jump to Angel or VC. Seems there’s a step missing there. Or maybe we just need to have some more “friends” in the area who are able to invest.

]]> By: Jmartens http://siliconflorist.com/2009/05/27/portland-oregon-startups-venture-capital-complicated/comment-page-1/#comment-7741 Jmartens Wed, 27 May 2009 18:14:39 +0000 http://siliconflorist.com/?p=1959#comment-7741 I think we really need to shift the conversation to one about seed capital, not VC money. Jive didn't take VC until they were an established company with strong sales and a good number of employee's. AboutUs benefited from a founder that could financially carry the company until a modest first round of funding came in before they took traditional VC. Most projects and startups in Portland are no where near the VC stage. We need to get these companies generating revenues and supporting at least 1 full time employee (but preferably more) before we even start talking about VC investments. I think we really need to shift the conversation to one about seed capital, not VC money. Jive didn’t take VC until they were an established company with strong sales and a good number of employee’s. AboutUs benefited from a founder that could financially carry the company until a modest first round of funding came in before they took traditional VC.

Most projects and startups in Portland are no where near the VC stage. We need to get these companies generating revenues and supporting at least 1 full time employee (but preferably more) before we even start talking about VC investments.

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