Reflections from the NSS CEO Workshop- Sept 21, 2010

The workshop was sponsored by NSS and hosted by WilmerHale Venture Group. The NSS CEO Workshop Series is intended for CEOs of revenue producing companies.

The board room was chuck full at the WilmerHale Venture Group office in Waltham. The invited speakers were Joan McArdle of Mass Resource Capital, Jane Braun of Silicon Valley Bank, Robin Lockwood of Flybridge Venture Partners and Christopher Mirabile of RacePoint Capital LLC.  The panel discussion was led by Lee Schindler of WilmerHale.

The focus was around changes in the funding arena and how that has affected each group.  We then opened it up to a dialogue with the CEOs.

Here are some interesting facets of this discussion (loosely defined by NSS):

  • Significant changes in activity around Angel Groups, almost a flip side between VC and Angel funding.
  • More syndications between Angels and VCs.  Angels are valuation centric.
  • Huge migration in the VC world and closing of funds from 800-900 down to 600-700 VC funds
  • Because of high multiples among some VCs,  Angels are filling some of that gap
  • With uncertainties in economy it has been hard for companies to commit to expansions
  • Lots of Re-Capitalizations are happening.  Good timing.  With lower interest rates it is advisable to reconsider a re-cap with the layers of debt and the different view from lenders a company may have.  Mass Capital Resources provides this type of re-cap with a 2-3yr interest only financing.  Mass Capital is currently doing deals in the $1M to $5M range and at an interest rate typically between 10% and 12%.
  • Companies are starting to invest again.  All agreed that they are seeing an uptick in business activities.
  • There is a huge Global push
  • More VCs give smaller checks
  • VC’s today are investing in companies that are capital efficient or not at all.
  • It’s more difficult to get investment in a product or services business than it is in a software business.
  • How do you get a highly leveraged company to an exit in today’s market?  Not really any differently.
  • How can an entrepreneur know how much money to raise?  Determine what the life of an investment is and then try to match it with the right investor.  For example, an investment of $500K to $2.5M over the life of the investment probably won’t be appealing to a typical VC.  Putting in $30M over the life of the investment would be more appealing.
  • How often do Angels and VC participate in similar events?  There are some forums when a mixture of investors is present.
  • How about grants as a way to get some funding?  That may be a good thing (it’s non-dilutive) as long as it fits your business strategy.  Do not lose focus.
  • Whether or not an angel or VC invests in the company depends in large part on how good the entrepreneur is.  “Can he/she do it?”
  • Best thing to do if you’re raising money – Don’t go around town asking for money.  Instead, spend your time building relationships with investment community, asking questions like “what would you do if you were me?”
  • M&A activity is picking up and deal flow is up

Our next CEO Workshop will be Tuesday, November 9 from 7:30am-9:30am and the topic will be around “Merger & Acquisitions”.  Save the date!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s