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venture capital

The Story on Richmond’s Entrepreneurs

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Entrepreneurship is alive and well in Richmond, VA – you’d know that already if you were at the Venture Forum’s Entrepeneur Fair today @ Capital One Town Center. Rich Reinecke, President of the Forum and founder of Career Quest, led the charge on making the Fair a really stellar event.

Of course there were sponsors – we all owe a debt of deep thanks to the Better Business Bureau, The Greater Richmond Partnership, the VA Council of CEOs, RichmondBizSense.com, CBS6/WTVR Digital Media, BluTiger, Cherry Bekaert Holland, FranNet, LeClairRyan, Mitchell Wiggins & Co., Strategy by Design, and the VA Biosciences Development Center, because without their support, and that of Capital One, the event wouldn’t have been nearly as successful (and it was luxurious, too).

Where the action really was, though, was in the great speed networking session facilitated by Ignite Speed Networking‘s Mike Ogilvie, and the buffet of breakout sessions where budding, and established, business owners could learn from entrepreneurs who’ve been there, done that, and have the t-shirt (and hard lessons learned) to prove it.

Advice was available on:

  • buying a business
  • pitching your idea
  • how to transition from the corporate world to entrepreneurship
  • why entrepreneurship makes sense (you can control your destiny!)
  • what pitfalls to avoid

The Fair wrapped up with a panel of successful entrepreneurs, led by Steve Kimball of Tuscan Advisors. He made a very powerful statement that resonated with everyone in the room, and bears repeating here: Entrepreneurs are America’s competitive advantage.

How true – and cool – is that?

This is why I tell the  job-seekers I talk to that they want to consider realigning their thinking: don’t think J-O-B, think B-I-Z.

If you’ve got an idea, there’s no time like the present. A down economy can be a great time to bring that idea to market – just ask the folks who started Cisco back in ’87, on the heels of an epic market crash.

Think of your startup idea as a personal stimulus package.

That’s my story and I’m stickin’ to it….

Today’s Story on Venture Capital (It’ll Still Be True Tomorrow, Too)

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My friend Tom Lawrence of The Equity Companies offered this answer to the question "Are investors fleeing traditional investments and looking for alternative places to stick their cash (like T-bills that pay nothing, but aren't going anywhere) and might they pour cash into VC funding? Or are they hoarding cash and not investing in any funds?":

Equity Capital Corp. provides growth capital to existing businesses. We call this Venture Capital. Some people believe Venture Capital is a description only of that capital used to start new enterprises.

Venture Capital is placed using a variety of instruments, common stock, warrants, debt, leases, supply chain financing, revenue financing, bonds, preferred stock, convertible bonds and stock, and a host of others too numerous and esoteric to mention.

Our firm has been providing this type of capital, regardless of the instrument or name, for nearly three decades. Markets have reacted to similar financial crises with some degree of consistency over this period.

There is always plenty of money for a really good deal in a capitalist society. There are just not as many good deals. The difference in many instances is the status of the economic climate.

There are exceptions. A car that runs on water would be great even though the economy is down. A car no one can afford that runs on water would not do well in such (or any) economy.

People invest to satisfy two primary psychological goals: (1) greed and
(2) fear. That is why markets work. For every trade these two elements take a side.

Most venture investors know that preservation of capital is more important than profits because it takes a lot of profits to pay back lost capital.  T-bills are the safest investment going. And, while they pay little, they don't lose your capital. Plus, even if all banks fail, the government won't because it can print money. T-bills are the safest preservation-of-capital play.

While this is true for most venture capitalists, there are notable exceptions and one is Warren Buffett's position in Goldman Sachs and GE. They had to sell equity positions cheap to get capital to satisfy regulators. The fear of being shut down by law was greater than the cost of diluting their stockholders' value.

Buffett is willing to take the risk that his investments will make money even though the economy is bad. He is buying an interest in the best companies in America. If he goes down, everyone goes down so in a sense he is betting on being profitable in any level of economy – or not being around. This business is not for the faint of heart.

So to answer your question about eschewing T-bills for something more risky to invest in, the answer is no we are not. We are investing money in businesses with a sound proposition that will make it in the economy of tomorrow as well as the one of today.

I think that's as good a description as you'll get about where the smart money is, and always will be. It's about risk management, not spreading the risk around. There's always money for a great idea that has real-world market value. Following a fulminating trend might get you a warehouse full of tulips.

That's my story, and I'm stickin' to it…

What Recession?

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I found myself listening to a pretty powerful group of people talk yesterday about the economic trends in my hometown, Richmond VA.  Jim Bacon, Jeff Cooke, Michael Sesnowitz, and Greg Wingfield all sat around – well, on stage – and talked about whether or not events like the Wachovia Securities move from RVA to St. Louis would cause an economic tremor in River City.

When I heard about the WachSec/AG Edwards merger, my reaction was "Opportunity!" – for new businesses, for watching some real-time change management, and for writing a new chapter in the Story of River City.  Turns out I’m with the smart set on this one, since that was the consensus of the experts.

The presence ofVCU – and the engagement between VCU and the region’s business community – is a prime example of how the practical application of knowledge can be the storied tide that lifts all boats.  A university that’s plugged into business trends provides learning – and a workforce – that’s relevant to need AND that drives innovation.  The very model of win/win.

The interplay and collaboration between education and business would really make an impact in primary education, too – wouldn’t it be great if kids were taught early to find a need and fill it, rather than to get-good-grades-and-a-job?  The primary/secondary public education system seems stuck in a 19th century model.  Some concrete input from the business community on early education might address that – who’s up for pitching that to the Board of Ed…?