I’ve been toying with the idea of holding regular “office hours” at a set time and place to meet with folks in the community — be they entrepreneurs, service providers, or others — in lieu of some of the traditional networking events and thought I’d throw the thought out to all of you to see whether this is something you would be interested in.  I have ~ 150 subscribers (via email or RSS) and a thousand more readers so I can only assume that some of you are local.  Anyway, let me know your thoughts here.

A friend had to “remind” me that I haven’t blogged in awhile…so that just tells you how busy I’ve been of late.  Fortunately, despite the economic woes the past month or so, all the things I’ve been busy with have been generally good.  I thought I’d take a break to post some thoughts on volunteers.  I volunteer my time on a couple of non-profit boards and am continuously amazed at the passion and commitments that my fellow volunteers have to their organizations.  I’m also on the board of a few for-profit boards and have recently been blown away at the help these companies have received by their advisory boards.  To be sure, this latter category of volunteers are granted stock options in the underlying companies on whose advisory boards they serve, but they are not monetarily compensated in the traditional sense in that they are not paid — they are granted options (essentially a right to buy stock in the underlying company at a future date at, ideally, a cost far below the value).  So, is it just the promise of potential future gain that makes these advisors tick?  I don’t think so.  The advisors that I’ve worked with are very knowledgeable and passionate about the industry in which the companies’ whose advisory boards they serve on operate and seem to genuinely enjoy giving advice and making introductions on behalf of the companies.  So, where am I going with all this?  Well, it seems to me that there will be a number of such qualified folks with more time on their hands in the months to come and start-ups would do well to identify and attract them to their endeavors.  It truly can be a low-cost way to help your companies if you choose wisely.  Until next time, happy venturing.

Lunch 2.0 is coming to The OC on October 24th.  To view the logistical details and register to attend, pleas click here.  For the uninitiated, Lunch 2.0 is a casual network gathering of Web 2.0 type folks that include entrepreneurs, investors, and others involved in consumer internet.  While Orange County is not necessarily known for consumer internet companies, we do have a few here and I’m sure there are many more waiting to be launched out of the dorm rooms of UC Irvine, Chapman University, and Cal State Fullerton in the years to come.

If you haven’t already registered for VC in the OC, get to it as tickets have been going fast and we’re on track to sell out (again) this year.  For details, and to register, visit VC in the OC.  Like last year, I will be moderating a panel and will take any questions thereof in advance.  The most common questions will be asked as well as a few “zingers” that I come up with real-time.  Please submit your questions to me via email.  Unlike last year, we’ve turned our program on its proverbial head and are featuring a panel of successful, local entrepreneurs (i.e., those that have done “it” before) rather than our standard panel of “VC talking heads”.  We are also very pleased to welcome back Mark Heesen from the NVCA who will once again provide an illuminating keynote on the state of venture worldwide…nationwide…statewide…and, of course, here in our own backyard.

Special Request — I will be wearing two hats come VC in the OC: 1) President of the Orange County Venture Group; and 2) Guest “VC Blogger” Moderator…so please do yourself a favor and don’t pitch me on any companies until after the event.  I’m easy enough to reach so you really shouldn’t feel the need to pitch me at the event.  Simply send me an email and we can go from there.

A friend of mine recently asked where I’ve been hiding out and what I’ve been up to lately so this post is in response to his question.  The answer to his question, in a word, is: diapers.  You see, my life is full of diapers these days with several start-ups in my portfolio and a couple of “start-ups” at home.  So, for all the diapers I have changed, all the diapers I have yet to change, and all the diapers I will never change, and all you personal and professional diaper-changers out there, this ode is for you.

Changing diapers just isn’t fun to do.

Some are “just” wet… but some are filled with poo.

I’ve learned to check often, in the absence of ques,

for if you forget to check them, then you’ll ultimately lose.

There are frequently signs; so, look, listen, and smell.

With enough practice, one can always tell.

Some may seem daunting while others appear unsoiled.

But remember the golden rule:

Never judge a diaper by its cover, lest you be foiled.

While having three hands would relieve,

delegation and maturation are the only reprieve.

Some diapers are easy and can be changed in my sleep.

Some diapers are horrific and cause me to weep.

I’ve joked about wearing goggles and sunglasses in a pinch.

I’ve changed so many the past three years they’re becoming a cinch.

An English major I’m not so I won’t drone on much longer

And I’ll leave you with one final thought:

Changing diapers won’t kill us, it will only make us stronger.

So, with all the aforementioned in mind, happy changing to all you personal and professional diaper-changers out there.

I’m clearly biased here, but thought I’d share a recent press release from one of my portfolio companies:

 RF Nano Corp., a Newport Beach, Calif.-based developer of carbon nanotube analog electronics, has raised $8 million in Series B funding. Oxantium Ventures led the round, and was joined by return backer Okapi Ventures.

PRESS RELEASE

RF Nano Corporation, the leader in carbon nanotube analog electronics announces that it has raised $8 Million in Series B venture capital to accelerate the development of its breakthrough technology. Washington D.C. based Oxantium Ventures lead the round and Oxantium founder Dr. Richard Wirt will join the RF Nano Board of Directors. Okapi Ventures, RF Nano’s series A lead investor, also participated in this round.

“Building on the outstanding work of Professor Peter Burke at UCI, RF Nano has developed low cost manufacturing processes and extended its leadership position in the application of carbon nanotubes to high performance analog electronics,” said Steffen McKernan, Chief Executive Officer and co-founder of RF Nano. “”We are very pleased that Dr. Richard Wirt and Oxantium are joining RF Nano. Even before closing this financing, the Oxantium team has added significant value to our business. Their deepening engagement will accelerate delivery of our products and help us drive the creation of a future of analog and mixed-signal systems uniquely enabled by RF Nano’s technology.”

“Oxantium is pleased to be the lead investor for this round of investment in RF Nano,” said Oxantium’s Richard Wirt. “RF Nano’s technology will enable a new generation of robust, high bandwidth wireless devices. As RF Nano harnesses the fundamental promise of carbon nanotubes, the semiconductor world will be forever changed.”

“We continue to be enthusiastic investors in RF Nano. They have built a strong team with deep industry experience focused on delivering against the tremendous potential for utilizing carbon nanotubes in RF applications,” said Marc Averitt of Okapi Venture Capital. “Initial feedback from major players in the RF marketplace confirms our belief in the game changing nature of

RF Nano’s product pipeline.”

About RF Nano RF Nano Corporation is the leader in developing a CMOS compatible suite of discrete, wafer and integrated circuit products based on the outstanding analog electronic properties of carbon nanotubes. With power densities 100 times silicon and 20 times greater than gallium arsenide, intrinsic cutoff frequencies in the Terahertz, inexpensive growth, and the ability to integrate with standard CMOS processes, RF Nano’s extremely robust carbon nanotubes devices will revolutionize the $60 billion analog and mixed signal semiconductor markets. Founded in 2005 and based in Orange County, CA, the company is privately held and backed by Oxantium and Okapi. For more information, please visit www.RFNano.com.

About Oxantium Ventures Oxantium Ventures is a premiere technology investment group supporting companies at seed, early, and growth stage by providing capital, insight, and years of experience in research, industry, and government. Headquartered in Washington, DC with a global investment strategy Oxantium’s team invests to shape tomorrow by empowering passionate and talented entrepreneurs from imagination to innovation to commercialization. Its technology focus areas include emerging computing, wireless everywhere, collaboration, and enabling technologies. To learn more about Oxantium, visit www.oxantiumventures.com.

About Okapi Ventures.  Okapi Ventures is a seed and early stage venture capital fund headquartered in Laguna Beach, California. Okapi, with approximately $30 Million under management in its initial fund, is focused on information technology, digital media and life science opportunities in Southern California with a particular emphasis on Orange County. For more information about Okapi, visit www.okapivc.com.

I thought I’d give a big shout out to Stuart, Mark, and the rest of the DATAllegro team and congratulate them on their recently announced acquisition by Microsoft.  I love to see local start-ups succeed!!!  You can see the details below.  To give a shameless plug for our upcoming VC in the OC on September 17th, I’d like to point out that I met Stuart Frost (CEO, DATAllegro) at the 2004 VC in the OC (when I was still at Intel) and began a dialogue that resulted Intel investing in their Series B and a great relationship between DATAllegro and Intel.  See, good things can happen by attending such events

Press Release

Microsoft to Acquire DATAllegro

Leaders in Data Warehousing Team to Provide Large
Scale Business Intelligence Solutions

Aliso Viejo, Calif. and Redmond, Wash. — Jul. 24, 2008 — Microsoft today announced that it intends to acquire DATAllegro, provider of breakthrough data warehouse appliances. The acquisition will extend the capabilities of Microsoft’s mission-critical data platform, making it easier and more cost effective for customers of all sizes to manage and glean insight from the ever expanding amount of data generated by and for businesses, employees and consumers.

“DATAllegro is a tremendously innovative company that has started to redefine the data warehouse market,” said Ted Kummert, corporate vice president of the Data and Storage Platform Division at Microsoft. “Microsoft SQL Server 2008 delivers enterprise-class capabilities in business intelligence and data warehousing and the addition of the DATAllegro team and their technology will take our data platform to the highest scale of data warehousing.”

Read full press release

_______________________________________________________

Blog Posting by Stuart Frost, CEO DATAllegro

DW Market Consolidation begins - with DATAllegro!

By the time you read this blog, Microsoft will have announced the acquisition of DATAllegro at their financial analyst meeting in Seattle. Read press release here

On a personal level, this marks the successful end of a twenty year journey building start-up companies. My first startup went through a very successful IPO, but didn’t end well for me emotionally or financially. After taking a bit of time off to lick my wounds, I found myself trying to find funding for a startup in the 2000-2002 period – which wasn’t much fun! But then, just as the VC community started to recover from the Internet ‘bubble’ in 2003, I came up with the vision for DATAllegro. Since that time, we’ve raised just under $65m in venture capital and created a hugely successful exit for my investors, my great team and last, but not least, me!

Read full blog posting

Vist www.vcintheoc.com to register and for more details.

I’m writing this post for one simple reason: to be able to point every would-be-entrepreneur who asks me what it takes to “get venture capital” to the permanent link rather than continue to explain to them. It’s all about efficiency. So, what are VCs looking for before they decide to invest in a start-up? The good news is that I’ll disclose the secrets here. The bad news is that even if you cover all of these elements it still doesn’t guarantee you will get funding (more on this point later). Without further adieu, here is a short list with brief explanations (see if these sound familiar)…

Some sort of differentiated, proprietary technology / competitive advantage. You need to be able to convince VCs that your idea/company is differentiated from the current masses as well as those that will inevitably come to market if it is such an attractive market. I think Jack Welch said it best when he said, “If you can’t be #1 or #2 in your market, why bother…” Spend the time to understand how your idea/product/service is different from what is currently being offered and make sure it is a material and valuable difference. You’ll often hear VCs complain about the plethora of “me too” companies that flood any particular market of interest these days. Most VCs don’t like making these types of investments.

Large ADDRESSABLE market. VCs invest in companies that are going after very large markets. How large? We’re talking annual, aggregate sales in the hundreds of millions to billions of dollars. Most entrepreneurs make the mistake of assuming “available” = “addressable” when calculating the size of the market they want to sell into. Be realistic here and spend the time to understand that market segment with the total available market that you can pragmatically sell into near-term.

A clear plan, budget, and use of proceeds. I use the term “clear” here loosely as most VCs are willing to overlook the fact that such a plan hasn’t been articulated in writing if they can see it for themselves (under principles of “been there, done that”). Having said that, you should have at least thought through how much money it will take to bring the product/service to market, have an idea on how you might actually go about achieving such results, and how - if funded - the money will be spent. To elaborate a bit, there needs to be a correlative use of the VCs dollars such that he or she knows how the money will be spent so as to reduce/eliminate any technical, market, financial, and operational risk of the company succeeding.

Manageable Risk. You can read my previous post on risk, Arbiters of Risk, for more information but it suffices to say that we VCs are “risk masters” and attempt to create value through the calculated and systematic reduction of the technical, market, financial, and operational risk found within start-ups. One of our jobs is to be able to reasonably and quickly identify such risks, calculate them, and then work with the management team to mitigate them. Some funds take bigger “leaps of faith” than others, but almost all of us focus on this aspect of the business from the first day.

Strong team able and willing to work with the VCs. Have you seen the acronym D.O.E.? No, not the Department of Energy. I’m speaking from a human resources perspective. D.O.E. stands for “depending on experience” and is typically associated with compensation but, for VCs, it’s a subjective measurement of operational risk based on a company’s founders/management team’s background. The more empirical evidence that you can show that you/your team can succeed the better your chances of attracting and obtaining venture capital. This criteria is a bit more nebulous that the others in that funds differ on how they judge the strength of the individuals involved. Even if you have all the relevant academic degrees from all the top universities, all the relevant work experience from all the right companies, you still may not get funding. The entrepreneur/ VC relationship is a marriage of sorts in that you will be working closely with your VC (some more closely than others) for an extended period of time and VCs must want to and enjoy working with you. I’ve seen hugely successful entrepreneurs essentially ostracized by the venture community after having developed a relationship of being too difficult to deal with.

This last criteria brings me to my final point. Even if you satisfy all of the aforementioned criteria by anyone’s definitions, you still may not get funding for a couple of reasons. Objectively, despite the public’s perception to the contrary, there is actually a finite about of money that any one fund will invest and your investment opportunity will not be simply measured in a vacuum. VCs see a ton of opportunities and often decline to invest in companies they actually think would be good investments in favor of those opportunities they think are better. Subjectively, I’ve seen VCs turn down investments simply because they didn’t like the people personally. I know it may be hard for many of you to imagine this, but VCs are people just like you. As such, we each have our own idiosyncrasies, ideologies, and sector preferences that we bring to any table we sit at.

In conclusion, hope is not a strategy. If you want to obtain venture capital, spend the time to understand these criteria, do a little planning, and work hard to present your investment opportunity in the best possible light. Happy venturing.

•

Last year, I wrote a piece about things to consider when selecting company counsel for your start-up so I felt compelled to briefly revisit the topic after reading some very insightful musings from Jason Mendelson from the Foundry Group (appropriately titled: Why Start-Up Lawyers Frustrate Me). Jason is another recovering-attorney-turned-VC like myself, so I encourage you to read his rant.

One of my current frustrations is when a portion of my fund’s investment in a company goes to paper the transaction and pay said start-up’s past legal bills. I realize it is a necessary (evil) for a number of reasons, but it doesn’t mean I have to like it. To add to this frustration, I’m beginning to think that the time spent going back and forth on “non-material” terms is an even bigger disservice to the company than the fact that a portion of it’s first institutional investment is going to pay for legal fees.

So, what’s a conscious entrepreneur to do when choosing counsel? First, read my prior Legal Eagles post. Second, choose wisely. Finally, understand the situation and manage counsel accordingly.