Woodside Fund Chairs 17th Annual
Early Stage Venture Capital Alliance (ESVCA) Conference
Early Stage Investors Confirm Healthy Investment
Pace, Discuss Increasing Competition
and the Challenges and Opportunities of Outsourcing and Offshoring
July 21, 2005 Redwood Shores, CA: The Early Stage Venture
Capital Alliance (ESVCA) convened on July 12th to discuss new investment
trends, competition, valuations, and venture capital globalization at
the 17th Annual ESVCA Conference, held at the Palo Alto Hills Golf &
Country Club. The Alliance is a community of more than 150 leading early
stage venture capitalists across the country that convenes annually to
share common challenges and practices and share information on critical
aspects of the venture capital business. The group maintains a strictly
confidential atmosphere which allows venture capital managing directors
to exchange ideas without restraint and share frank observations and insights
on topics currently facing the venture capital industry. The ESVCA chairman
for the past 16 years, Vincent M. Occhipinti, co-founder and managing
director of Redwood Shores-based Woodside Fund, commented, “The
ESVCA is an important forum for venture capital peers to gather in a non-competitive
and candid environment, to discuss openly what is and isn’t working
in our industry, and to learn from shared experiences.”
The 2005 ESVCA Conference XVII Findings
During the course of the day-long roundtable, several trends emerged from
the discussion of common experiences and included:
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Investment Trends and Focus: Compared to two to three years ago, ESVCA members observed that there is significant deal flow activity which has exponentially increased from the lows of 2001-2002.
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Competition: The market is becoming crowded and very competitive, especially at later stages of investing. It was noted that later stage companies are now getting bid up more than in the recent past. In seed and early stage investments, a common competitive strategy is securing deals with a convertible bridge loan that guarantees a firm’s lead role in setting the terms and composition of a company’s Series A round of funding.
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Emerging Sectors: One response to increased competition has been growing interest in sectors such as clean tech, which is emerging as an important sector to watch. In addition, venture firms are more willing to look at companies based in less competitive geographies, including the Pacific Northwest, the Midwest, and the East Coast.
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International Markets: Offshoring and outsourcing strategies are becoming a critical aspect of early stage investing. In addition to efforts in China and India, which receive a lion’s share of the media coverage, several funds discussed their success in other regions, including Canada, Russia, and Eastern Europe. High attrition and decreasing salary differentials are focusing overseas efforts on factors beyond simple cost-savings, including availability of specialized talent pools and access to local markets.
Vivek Mehra, a partner at August Capital and conference attendee, passionately
discussed the importance of relationship-building with both fellow investors
and talented entrepreneurs. “Each and every one of us here at the
ESVCA share the same priority in cultivating relationships and ultimately
selecting and backing the entrepreneurs that have the ideas and capabilities
to pioneer new markets and build great companies.”
“The atmosphere at the 17th Annual ESVCA Conference was open and
positive,” said Pete Moran, from DCM-Doll Capital Management, another
conference attendee. “The ESVCA conference consistently provides
a unique forum for investors to exchange perspectives on the challenges
of the current investment environment and explore alternatives for driving
optimal investment results.”
The 2005 guest speaker was Mark Leslie, the founder and former Chairman and CEO of Veritas Software. Leslie’s presentation, entitled “The Enterprise Sales Learning Curve,” discussed the challenges of getting a start-up to profitability. The presentation highlights the dependency between how long it takes for a start-up to achieve cash flow breakeven and how well and how quickly the entire organization learns what it takes to perfect the product, marketing and selling processes while incorporating customer feedback into the product. This finding indicates that hiring a large initial sales staff does not speed up the time to breakeven, but simply consumes cash more quickly.
Speakers in the past have included:
Paul Crisci, Managing Director, Broadview International
William Wilson, Senior Economist, Ernst & Young
William Meehan III, Director, McKinsey & Co.
Steven Milunovich, Technology Strategist, Merrill Lynch
Jon Ekoniak, Senior Research Analyst, US Bancorp Piper Jaffray
Raimundo Archibold, Analyst, JP Morgan
Steven R. Horen, Analyst, NationsBanc Montgomery Securities
John Taylor, Director of Research, National Venture Capital Association
About Woodside Fund
Woodside Fund is a leading venture capital firm that excels in developing
early-stage technology companies. Founded in 1983, Woodside Fund attributes
its long record of success to the high value it places on building productive
partnerships with entrepreneurs, other investors and service providers.
Typically a lead investor, Woodside Fund invests from $5 million to $10
million in early-stage software, fabless semiconductor and network infrastructure
companies located primarily on the West Coast. Woodside Fund has more
than $330 million in capital under active management. For more information,
go to www.woodsidefund.com.
About the Early Stage Venture Capital Alliance (ESVCA)
Founded in 1988, ESVCA is a community of more than 150 early stage venture capitalists who gather together to share common challenges, practices and information on their ever-evolving business environment. While the venture community had plenty of CEO forums and conferences, none existed for early stage venture capitalists. The original idea of ESVCA was to create an exclusive atmosphere where managing partners of early stage venture capital firms could exchange candid observations and information on the most sensitive topics facing the industry. Today the ESVCA strictly maintains the same atmosphere that fosters effective communication among its members and is committed to promoting shared and secure information between the most critical resources to today's sophisticated early stage ventures.
ESVCA Contact :
Carole Sinclair
925.818.1038
caroles@woodsidefund.com