CED in the News, 2002

Is Florida a Hotter Place for Investing Than North Carolina? Local VCs Flock South To Find Out

By Matthew Burns, Special To LTW

Reprinted with permission from LocalTechWire

RALEIGH - When psiloQuest officials put on their dog-and-pony show for potential investors at the Florida Venture Capital Conference last week, Scott Albert of Aurora Funds was in the wings, making sure the sales pitch went off without a hitch.

Aurora has already put money in the Orlando, Fla.-based semiconductor equipment company, and Albert wants new investors to join the Durham venture capital firm in a new round of funding.

But Albert wasn't the only VC player from the Triangle in attendance at the Jan. 30-31 conference at the Doral Golf Resort & Spa in Miami.

John Glushik of Intersouth Partners, Dan Egger of Eno River Capital and Andy Ricco of Silicon Valley Bank were there, as was Council for Entrepreneurial Development President Monica Doss. Noro-Moseley Partners, River Cities Capital and Draper Atlantic, also regular players in the North Carolina venture market, had representatives at the event as well.

While the large Tar Heel contingent soaked up Florida's sunshine and tech scene, many start-ups back home continue to clamor for money in what some observers have described as a "freeze" on venture investing. But the local VCs say they have no intention on abandoning their roots and note there continue to be good investment opportunities in North Carolina.

"The Research Triangle is still are focus," Glushik says. "This remains very fertile ground for entrepreneurial activity, and our opportunities here are very good long term."

Seeking new investments

Still, Intersouth is interested in investing in Florida to help deploy the rest of the cash from its most recent fund, he says. About two-thirds of the $183 million has been invested to date. He says he was most attracted to a few semiconductor and telecommunications firms that presented at the conference.

Also, the Durham-based firm wants to lay the groundwork to attract new investors to its next venture fund. "We're always looking to expand the net," Glushik says.

Eno River also wants to expand into the Sunshine State, Egger says, but it plans to do so in a very focused way: The VC firm is considering opening a satellite office in Florida to handle investments there while he and his partners in Durham continue to concentrate on the Triangle, where it administers the $26 million N.C. Bioscience Investment Fund.

"There's a lot of good stuff going on down there," Egger says. "It reminds me a lot of the RTP area when we first set up shop here in 1993. There aren't a lot of institutional investors, and most of the interest is in later-stage companies."

Albert says the current chilly economic climate forces VC firms to search long and hard for the best potential deals for their investors, and there's no such thing as a home-field advantage for Triangle companies with area venture capitalists.

"Our investment strategy covers the Southeastern U.S.," he says. "There are no positives or negatives to being in North Carolina as far as I'm concerned."

Positive mood for 2002

The VCs said the atmosphere at the Florida conference was upbeat, as investors and entrepreneurs try to put the dark days of 2001 behind them and look forward more deals closing in the coming year.

"The mood was subdued but not as bleak as a year ago," Egger says. "Things are improving, but it's not the heady atmosphere of a few years ago."

And what was Doss' reason for heading to Florida?

CED spokeswoman Anne Hutchison says her boss wanted to scope out a competing event to see if there were any tips she could pick up to improve Venture 2002, the organization's annual conference and among the largest venture events in the Southeast. Hutchison didn't know if anything was gleaned from the trip south, so area entrepreneurs and VCs will have to wait until the end of April, when CED's conference will take place, to find out.