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.

I spent last week on the couch with some sort of cold or flu bug and so I spent a lot of time thinking about the financial markets and my previous post on Venture Capital being a safe haven… in light of more recent posts about the potential gloom and doom to the the VC industry and was preparing to clarify my thinking with another post when I ran across Brad Feld’s post Let’s Get Practical.  Enough said.  Thanks for reading my mind Brad.

A special thanks to Emily Mendell over at the NVCA, and to the NVCA in general, as the basis of this post is my color commentary on the NVCA’s position on the financial market crises that we are in the midst of.

The venture capital industry is neither directly involved nor immediately impacted by the financial markets crisis and any resulting bailout.

A venture capital investment is a long term (typically more than 5 years) investment in private companies and is not as vulnerable to shorter term market fluctuations in a traditional sense.  While I agree with the NVCA’s position here, I feel compelled to clarify that a venture capital fund’s portfolio companies might be potentially impacted in the short term by:

• constrained lending (for those companies with significant capital expenditure dependencies employing a debt strategy);
• a reduction in corporate information and communication technology spending (for those companies that offer such technology products and services);
• a reduction in ad spending (for those consumer internet companies whose business models are predicated on ad revenue;
• personal dynamics within portfolio companies wherein such people are affected by the financial crises on a personal level (mortgages, laid-off family/friends, etc.)

As most VCs invest only invest in companies having thought through the longer term capital requirements necessary for success and have planned for the possibility of development / market snafus and other such rainy days, such potential impact on their portfolio companies is manageable and a normal part of the company building process.

A venture capital investment does not typically carry a debt component like a buy-out transaction does so the industry, as a whole, is less impacted by the credit crisis.  VCs do not require leverage to do business.  I do, however, worry about the buy-out funds having witnessed debt-to-equity ratios climb from 2:1 up to as high as 12:1 during the past few years.  I also worry about any potential “drag” the buy-out funds will have on the ability of venture capital funds to raise institutional capital within the private equity / alternative asset class given the continuing capital commitments institutions have made to buy-out funds and the lack of shorter term liquidity.  While I’d like to think institutional LPs have utilized contingency planning as part of their investment process, I’m just not sure in today’s broader financial market.

Venture capital risk is very different from the risk which is now being addressed by Congress in that it is much more controllable.  Our risk is not systemic risk; it is typically understood prior to making an investment (see Arbiters of Risk).  While many venture backed companies fail, the simple structure of venture investing – cash and equity used to build a company — is very different than the complex financial instruments backed by the debt-dependent structures employed other industries (e.g. buy-out).

Ironically, in light of the recent failures and challenges in other asset classes, venture capital is being viewed as one of the safer investment alternatives for institutional investors today.  According to Thompson Reuters / NVCA U.S. Private Equity Performance Index (“PEPI”), the numbers are even more attractive (especially early/seed stage venture, ahem…):

The venture capital industry experienced its own crisis in 2000 with the technology bubble burst from which we learned many valuable lessons that are employed today.  While only time will tell, we like to think we have learned from our mistakes and have grown even stronger as an industry.

One of the upsides of the current economic conditions (if there is such a thing), is that valuations for start-ups have come down and continue to decline for most sectors.  As always, good investments are being made and will continue to be made in the months to come.

In light of all this, I am very excited about the prospects of venture capital as an asset class.  More specifically, I think now is an ideal time to be in early-stage venture capital (especially in Southern California) and, in fact, I continue to put my money where my mouth is here and will post more on the specifics of the SoCal venture ecosystem in the months to come.

My partner and I recently attended the NVCA’s 35th Anniversary event up in Mountain View so I thought I’d share a video from that event here as I think it is particularly relevant and timely given that it is an election year…that our public capital markets are currently in an apparent state of “flux”…and we here in The OC’s VC ecosystem recently had yet another outstanding VC in the OC event. For those of you looking to solutions to large, macroeconomic problems, I think you’ll find the answer in a word: Innovation. Support innovation and all that entails and things are bound to improve, in my humble opinion. Until next time, enjoy the video.

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.