So close, now it's down to cash
Three Tampa Bay area companies turn to venture capitalists this week to bring their ideas to fruition.
By KRIS HUNDLEY
Published January 26, 2005
Mark Gianinni, chief executive of St. Petersburg's Accel Networks LLC, wants $1.5-million to build a high-tech modem that speeds retailers' credit and debit card transactions.
Michael Yuhas, head of Health Integrated in Tampa, could use $4-million to ramp up his business of managing patients' health care.
Persystent Technology Corp.'s Ray Weadock of Tampa is looking for $5-million to build out his software company's marketing and sales organization.
And Russ Thomas, chief executive of Tampa's Gold Standard? He's not looking for a dime, even though he will join local entrepreneurs as a presenter at an investment conference starting Thursday in Orlando.
"We really are not in a capital-raising mode," Thomas said with the confidence of an executive whose company has reached profitability. "We're just going to be telling venture capital firms why they should be investing in Florida."
The four Tampa Bay area companies will be among 19 from around the state presenting at the Florida Venture Forum's annual two-day conference. Each executive will have 12 minutes to make a pitch for funding before an audience including about 140 private equity investors.
The conference, now in its 14th year, gives venture firms from around the country instant access to carefully screened investment candidates. More than 340 applicants competed for the right to tout their companies. Those chosen have a good shot at landing some money; over the past 13 years, presenters at the conference have successfully raised more than $680-million in venture funding.
Steve Lux, head of Stonehenge Capital Corp. in Tampa and past chairman of the Florida Venture Forum, said institutional investors are back in the market for deals after a few years of tending to troubled portfolios.
"They've worked through their 1999 to 2001 investments that may not have enjoyed as much success," he said. "And general market conditions are very favorable, with the economy stable to growing. VCs continue to have a lot of money to deploy."
Especially encouraging, Lux said, is more venture-funded companies are going public or getting acquired. That gives funds confidence that their investment will be recouped in the foreseeable future.
Underscoring Lux's optimism is the response to this year's conference, which is attracting a record crowd of close to 1,000. That includes accountants, attorneys and entrepreneurs who weren't lucky enough to be chosen to make presentations but hope to button-hole potential investors in hallways and meeting rooms during the conference.
About 140 of the attendees will be from venture capital firms. Robin Kovaleski, Florida Venture Forum's executive director, said registrants include investors from parts of the country that have never before shown an interest in Florida.
"We're getting VCs from Seattle and Los Angeles coming to take a look," she said. "It's not just the usual cast of characters."
What they're seeking, Lux said, are companies with revenue, products and customers. "You won't see anybody saying, "I have an idea,' like you might have seen back in 2000," Lux said. "Investors want a clear pathway to positive cash flow."
One of the early-stage companies making a presentation will be St. Petersburg's Accel Networks. The business, built over the past two years with $600,000 from family and friends, has developed proprietary technology that sends cashless transactions from retailer to financial processor particularly fast.
Gianinni, a veteran entrepreneur, and partner Elaine Healy, Accel's president, have proven their technology works at four initial sites. Now the company has orders for about 500 modems and needs cash to make them.
"These are real merchants, real locations," Healy said of the company's orders. "We're not a raw startup."
Healy, who worked in venture capital for 17 years, said the company isn't going into the meeting cold. Accel has lined up a lead investor on its first round of institutional funding and is just looking for other money to join the deal.
The other presenters from the Tampa Bay area are similarly optimistic. Yuhas, chief executive of Health Integrated, said his company has raised $7-million from venture funds in the past two years. As it builds its infrastructure providing disease and behavioral health management for government and commercial insurers, Yuhas said he needs about $4-million more.
"We want to add technology and build out a redundant call center," said Yuhas, whose company has 200 employees in Tampa. "We're at a point where we think we're on to something a lot of other companies are beginning to recognize and we don't want to lose time."
Weadock, president and chief executive of Persystent Technology, does not doubt that money will be easier to find now than it was three years ago, when he founded his company.
"Then it was virtually impossible," said Weadock, whose software provides automatic repair and security for computer networks. "You had to go outside the area to raise money."
Despite difficulties, Persystent landed $1.6-million in venture funding in mid 2003. Since then, the company has sold its software to 45 customers, including Yahoo and the Army. Weadock thinks the big names and repeat business should sway investors his way.
Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.