Tag: venture capital

Strange Love Live: Portland, startups, entrepreneurs, venture capital, and the Silicon Florist

Last Friday, I was honored to be the guest on Strange Love Live—the best tech podcast in Portland, if not the world—to celebrate the second birthday of this little blog here.

For those of you unfamiliar with the Strange Love format, there’s generally a serious “tech” segment followed by a less serious “afterhours” segment. But you know me. Given the opportunity, I can’t help but continue blabbing about the Portland tech scene. Blah blah blah.

So if you’ve got a few minutes, take some time to listen in on the tech episode where we chat about Silicon Florist and whatnot. Read More

Wish more Oregon venture capital firms blogged? OVP grants your wish

One of the primary gaps in the Portland startup scene is the gap between those attempting to build businesses and those attempting to fund businesses, the entrepreneurs and the venture capitalists. Introducing the OVP blog.

One of the primary gaps in the Portland startup scene is the gap between those attempting to build businesses and those attempting to fund businesses, the entrepreneurs and the venture capitalists. There are any number of issues contributing to this gap from pure ignorance to cultural mores.

But the key to closing that gap? That’s right. Communication. And a new bastion of communication from the VC side of the fence just launched here in Portland. Introducing the OVP blog. Read More

Oregon startups and venture capital: It’s complicated

For every Oregon company that has had success attracting capital for their pursuits—Jive and AboutUs come to mind—there are hundreds who struggle with where to begin and how to engage the Angel or VC community.

It’s a difficult issue. And no one seems to put his or her finger exactly on the problems or how to solve them. Some say buck up and play the game. Others say the game needs to change. People talk about staying in Portland and figuring out how to bootstrap. People talk about leaving Portland in order to get funding.

Start talking to entrepreneurs and side project startups in Portland—or throughout the Silicon Forest in Oregon—and the conversation will inevitably turn to one topic: venture capital or the lack thereof.

For every Oregon company that has had success attracting capital for their pursuits—Jive and AboutUs come to mind—there are hundreds who struggle with where to begin and how to engage the Angel or VC community.

It’s a difficult issue. And no one seems to put his or her finger exactly on the problems or how to solve them. Some say “buck up and play the game.” Others say “the game needs to change.” People talk about staying in Portland and figuring out how to bootstrap. People talk about leaving Portland in order to get funding.

What’s the answer? Read More

Portland venture capital: Capybara, DFJ Frontier open a Portland office for early stage investments

Seems like we’re going to need to change our tune about venture capital firms not being interested in Portland, Oregon, and the Silicon Forest.

Mike Rogoway over at The Oregonian reveals that DFJ Frontier in partnership with Capybara Ventures has opened another office for early stage venture capital—right here in Portland, Oregon. Read More

Chatting with CreditSuisse about the Oregon Investment Fund, Big Idea Bash

Oregon Investment FundAs I’ve mentioned previously, I recently got the chance to sit down with CreditSuisse to discuss the Oregon Investment Fund.

I’m the first to admit that I went into the conversation with my usual blooming buzzing confusion coupled with a heaping spoonful of blissful ignorance of the true nature of the Oregon Investment Fund.

I like to tell myself that that is part of my charm.

But honestly, I thought—rather than enter with pre-conceived notions—it would be better to get the story straight from David Almodovar of CreditSuisse.

Still, I have to be honest, I did walk into the meeting expecting one of two things to happen. Either I was going to find Dave perched atop a giant treasure chest overflowing with gold coins and jewels, cackling as he screeched in a Dr. Evil-esque manner “Here’s one hundred meeeellion dollars that you’ll never see.” Or I was going to find him wide-eyed and rapt with attention, hanging on my every word about the startup community in the Silicon Forest, until he finally gathered his wits and managed to utter, “Let me grab my checkbook. Would $50 million do?”

In reality—shockingly enough—neither of those things happened. I didn’t find a maniacal villain or babe-in-the-woods filled with naivete. Instead, I found a guy simply doing the job he was supposed to do: trying to attract investors for Oregon companies.

And as I walked through the questions I had—and the questions you were kind enough to ask—what became increasingly clear was this: the OIF can’t solve the problem we’re experiencing (and by “we,” I mean you entrepreneurs who are actually brave enough to start your own thing; not me, who sits here pontificating on your activities) because they weren’t designed to do so.

But I digress. Suffice it to say, the bulk of the problem at hand is not one that the OIF is designed to solve. You see, the OIF isn’t meant to be an investor. It’s meant to be bait or mistletoe or whatever.

That is, while they do happen to engage in some co-investment from time to time, they don’t lead on investments. In fact, the OIF is actually a fund of funds.

The Oregon Investment Fund (OIF) is a fund to other funds. OIF is designed to encourage, to build and to invest in growing, innovative enterprises creating risk-adjusted returns for the Oregon Public Employees Retirement Fund (OPERF).

So while OIF has money, that money is meant to serve as a means of attracting larger sums of money. By enticing venture capitalists to Oregon. And by encouraging—nay requiring—them to spend time here, chatting with entrepreneurs and growing companies alike.

Our financial strategy is to spread our risk across several types of funds, ranging from buyouts that invest in more mature and established businesses, to venture capital, and to early/seed stage funds that invest in young, fast growing companies. As of November 2008, we’ve invested in 10 funds in the Pacific Northwest region and in turn, we encourage these funds to invest in the growing local and regional market.

To support our strategy and encourage business growth in the Pacific Northwest, we actively build relationships between our funds and local entrepreneurs.

And they’ve been very successful in that regard, attracting approximately $233 million of investment for 20 companies, resulting in more than 900 jobs for Oregonians.

As part of that effort the OIF has managed to attract investment for some smaller startup organization in our area—and in the tech realm which I tend to cover here on Silicon Florist.

Kryptiq is one example of a company which has benefitted from the assistance of the OIF. AboutUs is another. OIF helped both of these organizations by attracting a venture capital firm that was looking for opportunities. In both of these cases, Voyager wound up being the firm that took advantage of the investment opportunities.

“Voyager invested in our Series A and they are the most active VC in tech startups in the Portland area,” said Ray King, CEO of AboutUs. “I think OIF has done a better job of attracting VCs to invest in Oregon than some other pursuits.”

And that starts to get to the crux of this square-peg-in-a-round-hole disconnect between many of the ventures in the Silicon Forest and the capitalists who are seeking to fund them: side projects and garage projects don’t always make good targets for VCs looking to invest large sums of money.

“We have a definite interest in building the entrepreneurial community here in Portland,” said Dave. “But we have a very institutional mindset. We’re not pursuing incubator-level investments.”

That said, there are investors that have been attracted by the OIF—Voyager for one and DFJ Frontier for another—who are interested in participating in much earlier rounds.

The OIF, it seems, is actually doing their job. It just so happens that that job doesn’t exactly line-up with the areas where our startup community needs assistance.

And that’s not really a “problem” per se. It’s just the way things are.

By way of analogy, it’s like having a hammer and needing to drive a screw. Looking at the two, it seems like it should work. But in practice, the two are fairly incompatible.

So, it’s very interesting to have the OIF out there, attracting VCs. And they’re very open in talking to any entrepreneurs and providing advice and guidance. Whether you’re interested in pursuing major funding or not. But when it comes right down to it, there is no knight in shining armor patiently waiting to fund very early stage companies in our startup environment.

But that knight is ready and waiting when companies—like Kryptiq and AboutUs—reach a point where the OIF can lend a hand.

So despite all my years of watching Geraldo Rivera and John Stossel, this little piece of investigative journalism fell a wee bit short. No big boogeyman. No bad guy. Just a series of seemingly complementary situations that, in fact, were not complementary.

Come to think of it, it was a bit like Geraldo’s whole Al Capone’s Vault thing. But didn’t we all learn something there, too? What’s that? Oh, I see.

Long story short, there’s still a funding problem or a “how we work on these projects and still manage to eat” problem. And we’re still searching for a solution. Currently, OIF isn’t the organization designed to solve it. In fact, there may be no existing organization designed to solve it.

Why? I like to think of the Portland startup scene as an untapped natural resource. But it’s not obvious how to use it. And we can’t take the current method of running in and depleting that resource. Because that either won’t work or it will kill it completely. We have to find a new way to work with those resources in a sustainable manner. And I think that calls for a new method of funding.

I could go on and on. But that’s an argument for another time, you special snowflake you.

So where do we go from here? Maybe the Big Idea Bash

So that’s that.

Next up? Beginning conversations with the politicians, entities, and investors who hold an interest in very early stage investments and maybe, just maybe, incubation. In other words, we need to find the solutions that are designed to solve the problems. Solutions like the Startup Now Oregon pursuit.

As Chris Logan writes:

Small businesses drive employment. Venture models have demonstrated the potential return of small growth companies. We have the opportunity to spawn high growth businesses that will deliver additional employment and high return on capital. These businesses will succeed because the crisis we face will economically reward new businesses the deliver solutions to our problems.

And if those solutions don’t exist? We may need to find a new way to make it work. But let’s at least start the conversations first.

And lo and behold, it just so happens a great place to start some of those conversations may, in fact, be an event hosted by the Oregon Treasurer Ben Westlund that the OIF is helping organize: the Big Idea Bash on April 29.

The Big Idea Bash is a social gathering created to connect entrepreneurs to the organizations that can help them flourish. This year the event will feature a speed pitching session, creating a unique opportunity to present new company ideas to a select group of Venture Capitalists who are funding emerging companies in Oregon.

I’m going to try to make it. And I would encourage you to try to attend, as well. Or don’t. I mean, it would be great to have you there, but you can also be sure that I’m likely to blather on about the event here afterwards.

But I must say, it would be great to have a contingent of entrepreneurs like you in the audience. So try to make it, won’t you?

One thing is for sure. Recent activity has clearly shown that I need more—arguably much, much more—education on what solutions currently exist and what they have been designed to do. And we’ve still got a long way to go in helping people understand the startup environment in which we find ourselves.

We’ve all got a lot to learn. But we’re already making strides that may resolve some of these issues. And we’ve proven, time and time again, that we can come up with creative ways of solving problems about which we’re passionate.

In any case, I’m looking forward to digging into this more and figuring out the ways to get you entrepreneurial types the kinds of help that will enable you to make your products a reality—and that will, in turn, make the Silicon Forest a success.

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Silicon Forest claims two of the largest Web 2.0 investments in 2007

Earlier this week, I tried to shoot a hole in news that the “Web 2.0 sky is falling” by highlighting that Web 2.0 investments may be down in the Silicon Valley and Texas—but Web 2.0 venture amounts are up practically everywhere else, including the Silicon Forest.

Today, TechCrunch continued to take a look at the slowing:

In 2007, the median deal size was $5 million, up 22 percent. And the median pre-money valuation was $10 million, up 66 percent (from $6 million in 2006). Both deal size and valuation for Web 2.0 companies remained below the average VC deal across all industries ($7.6 million and $16 million, respectively)

But again, there’s a silver lining to this Silicon-Valley cloud. For us, at least.

Take a look at where the top investments landed. Lo and behold, there are two Silicon Forest companies on the list. Corvallis-based MyStrands appears on the list twice with nearly $50 million combined investment, and Portland-based Jive Software appears courtesy of their $15 million round, last year.

This is the kind of news that begins to put Portland and the entire Silicon Forest on the map. It’s news that, hopefully, makes the venture capital community take notice. And maybe, just maybe, the type of news that motivates those investors to take a second look at the Rose City technology scene.

I can’t wait to see what 2008 holds for our local companies. But the bar has been set. And I hope to see more than two of our companies on the list, next year.

(Hat tip Jeff the Great)

Confidence in Web 2.0 isn’t waning, but confidence in the Valley may be

There’s a great deal of Chicken Little reporting occurring today about how the Web 2.0 sky is falling. Why? Because apparently, according the Dow Jones, the investments in Web 2.0 technology in the Silicon Valley are down, year over year.

Silicon Valley remains the hotbed of Web 2.0 activity, but the hipness of start-ups with goofy names is starting to cool in the face of economic reality.

Not shocking news, I realize. But I think they buried the lead.

Even the venerable Wall Street Journal puts the news in the very last sentence of their piece:

“It’s clear that the real growth in the Web 2.0 sector is happening outside of the (San Francisco) Bay Area,” says Jessica Canning, director of global research for Dow Jones VentureSource.

And there’s the real story. That’s the real news. Not that the investments in the Valley are down, but rather, that the investments elsewhere are up. In some cases, way up.

In our own Pacific Northwest, for example, the number of Web 2.0 oriented deals more than doubled. And the amount of the investment? It’s up 400% from $35 million in 2006 to $140 million in 2007.

That’s about as opposite of “waning” as I can come up with.

And we’re not alone.

Investment amounts in New England doubled, Southern California nearly tripled, New York metro nearly tripled, Southeast doubled, Mountain more than quadrupled, and North Carolina, alone, tripled.

In fact, the only area besides the Valley that went down was Texas.

So has Web 2.0 peaked? I honestly don’t know.

From what I’ve seen, it’s going pretty strong here in the Silicon Forest. And it’s clearly picking up speed in other sectors.

Maybe the better question is: Has Silicon Valley peaked?

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