ROHNERT PARK – Expectations ran high among a group of 10 early-stage companies as they presented their business ideas and funding needs at the first North Bay Investors Summit at the Sonoma Mountain Village Event Center on June 10. The summit, organized by the Sonoma Mountain Business Cluster in partnership with the Keiretsu Forum and the North Bay Angels, attracted 80 members of the Bay Area angel capital community.
“The time-honored ways emerging companies have obtained financing are changing dramatically,” said Michael Newell, executive director of the Sonoma Mountain Business Cluster. “There are fewer funding sources today compared with just a year or two ago, and angel funding is at a 15-year low. Our hope is that this event will mark the beginning of a larger North Bay investor community.” Dr. Newell, along with co-chairs Bill Vick of The Vick/Cho Group with MorganStanley SmithBarney and Steve Weiss, chairman emeritus of the North Bay Angels, led the NBIS team that organized this event.
The half-day summit began with a keynote address by Adeo Ressi, founding member of TheFund.com, an online community of entrepreneurs who research, rate and review funding sources worldwide. His topic was “Re-inventing the Funding Eco-System.”
“Sources of capital continue to evolve. Besides traditional mechanisms, we are seeing employer and customer funding, angel-supported incubators and large online networks that make millionaires of some employees who then spawn a family of other entities,” Mr. Ressi said. Globally, many venture capital firms and angel investors are exiting the market. Based on TheFund.com projections, worldwide downshifting means that of the 3,900 VCs and angel groups identified in 2007, only 500 are expected to survive by 2010, or 13 percent of the 2007 total. During this period, the total number of investors is also estimated to drop from 18,900 to 5,000, or only 26 percent of the 2007 figure.
At the same time, his firm estimates that overall global startup investment will decline by 67 percent from $60 billion per year in 2007 to just $20 billion by 2010. He also sees mergers and acquisition and initial public offering activities decreasing from 373 per year in 2007 to 250 per year in 2010. He urged investors to get back into the market now if they wish to see results two years or so down the road.
Mr. Ressi said that many full-time employment positions are going away. “The company 2.0 of the future will use an ‘E-lance’ [freelance or contractor] model, characterized by a more flexible work force in which prospective workers bid on projects.”
He also said the short-term ROI mentality, where VCs have wanted to get their money back in three to five years, needs to change. Mr. Ressi supports a new angel funding strategy that would extend this period to between 10 and 15 years to ensure that companies have sufficient time to succeed.
Presenters included eight North Bay companies plus a firm from Seattle, Wash., and one from Lafayette. Two of the presenting companies are tenants at the Sonoma Mountain Business Cluster. They included:
Webvanta – A firm developing a software-as-a-service database-supported turnkey back-end solution for web designers
Liftopia – Creators of a consumer-facing Web site that allows partners to sell more ski lift tickets, lodging and skiing-related services in advance