Opening – 2005 Minnesota Venture Finance Conference
Given that I grew up in Minneapolis and that I began my venture
career 15 years ago with the industry pioneers Bob Zicarelli and
Dan Haggerty, it truly is an honor to be standing before you today.
As President of the Minnesota Venture Capital Association, and on
behalf of our 100 members, I want to welcome you to the 2005
Minnesota Venture Finance Conference. This is the 19th year that
our organization has proudly co-hosted the State’s leading venture
capital event along with The Collaborative. Once again, we look
forward to showcasing some of Minnesota’s most promising young
companies, providing value-add workshops, panels, and offering
outstanding networking opportunities.
In a few minutes it will be my pleasure to introduce our next
speaker, Mark Heeson, the President of the National Venture
Capital Association. Given that Mark will be telling us about the
current state of the venture capital industry, I thought we’d take a
look at how things have changed since the Minnesota Venture
Finance Conference was launched in 1987.
19 years ago, Michael Douglas won an Academy Award for Best
Actor in "Wall Street" – remember the line greed is good? A few
months later, in August, the stock market crashed and experienced
the largest one day percentage loss in history. On the venture
capital front, investments totaled some $4 billion that year and
they’ve grown 5 times since them.
Fast forward to 1995, when Netscape went public and kicked off
the Internet revolution. Yahoo raised its first $2 million and
Amazon went live with Jeff Bezos driving his first orders to the
post office in his 1987 Chevy Blazer. Amazingly, only 45% of
Americans had even heard of the World Wide Web. While all this
was going on, the venture industry invested about $8 billion and
now is about 2.5 times that amount.
How will things look 10 years from now, in 2015? Maybe Cassatt
will be leading a multi-billion dollar on-demand computing
market, maybe Aveso’s paper-thin micro displays will be on the
majority of the world’s credit cards, smart cards and gift cards, or
maybe BioE’s proprietary MLPC stem cells will the stem cell of
choice for the industry.
We screened nearly 150 companies to select the 20 main presenters
you’ll see today. In doing so, I noticed the wide range of venture
firms that had invested in those companies. In particular, note that
about 60 of these venture firms are from outside of Minnesota,
including some of the largest and most respected firms in the world
such as NEA, Menlo Ventures and Warburg Pincus.
Well entrepreneurs how are you going to get your name on that
list?
With relatively small amounts of early-stage capital available in
today’s market, you’ll need a disruptive technology, an outstanding
team and you’ll address a sizeable market. You’ll also have that
“underlying magic” that Guy Kawasaki talks about in the Art of
the Start.
So if you have all those, then what?
Focus on finding and developing a relationship with the right
venture capitalist, the one who specializes in your kind of deal and
sees your magic. As you’re doing this, keep in mind that every
venture capitalist is looking for the next big thing - that’s what gets
them out of bed each day. Even the goofy Vince Vaughn and
Owen Wilson, playing venture capitalists in Wedding Crashers,
knew what kind of companies they were looking for.
Along the way you’ll hear from plenty of nay sayers, they’ll tell
you that you can’t, that it won’t happen or that it’s too much of this
or that it’s too little of that. Your job is to say CAN rather than
can’t. Never, ever, ever, ever give up. Perseverance is a key to
being successful.
It was said at this conference a couple of years ago that a CEO
spent 100% of his time raising money, and the other 100% of his
time running the business. As an early-stage executive, your job is
to raise money. Whether it is on your own or with help, you need
to keep fundraising as a top priority because if you can’t raise the
money then you’ll never find out if you can change the world.
If I’m challenging you entrepreneurs never to give up, I’d also like
to say a word to the investment community and public policy
makers here today.
Just last month a joint working group between the U.S. Department
of Commerce and the European Commission gave their final report
on the state of venture capital. Their findings were that the venture
capital market is turning to more mature companies and declining
to invest in early-stage startups, and in the words of this report, this
represents a “fundamental market failure.”
So I challenge you, venture capitalists, corporate investors, angel
investors and investment bankers alike to renew your interest in
early-stage investing. Get out of your offices and meet the
entrepreneurs, spend the time to really learn their stories and take a
chance on someone who has that magic.
And to our public policy makers, I challenge you to support
investing in early-stage companies through vehicles such as
investment tax credits and to reinvest a reasonable amount of the
State’s managed funds with investment groups that will in turn,
invest in local early-stage companies.
Why should a healthy venture capital environment be important to
you?
Because venture capital in a key economic driver to our system.
Did you know that there are an estimated 300,000 jobs at venturefunded companies in Minnesota? Additionally, there is a very
strong correlation between venture capital investments and annual
state wages as well as gross state product. In fact, the average cash
compensation at a venture backed company is about $75,000,
significantly higher than the average national salary of $32,000.
While you literally may need to be a rocket scientist to figure out a
few of the companies presenting today, you don’t have to be one to
know that creating high-paying jobs is a good thing.
So with that, I welcome you to the 19th annual Minnesota Venture
Finance Conference. I sincerely look forward to meeting with you
over the next two days, as do my fellow MVCA members and
venture colleagues from around the country.
It is now my pleasure to introduce you to Mark Heeson, President
of the National Venture Capital Association. Mark will provide us
with background on the current state of the venture industry and
get us caught up on all the latest trends. Mark is responsible for all
association activities, developing policies and strategies and
directing the NVCA’s national legislative and regulatory efforts.
In addition, he oversees the NVCA’s affiliate organization,
American Entrepreneurs for Economic Growth, which now
represents 14,000 emerging growth companies. Mark is uniquely
qualified to give us the national venture capital perspective and as
such, it is an honor to welcome back to Minnesota, the President of
the National Venture Capital Association, Mark Heeson.