Courting cash the right way
Engagement, passion and patience are pluses in an investment partner, one CEO says, while inexperience and passivity are minuses.
By KRIS HUNDLEY
Published January 27, 2006
[Times photo: Dirk Shadd]
|Sheila Schweitzer, chief executive officer of CareMedic Systems, will be making a presentation at Florida Venture Forum on Tuesday, explaining how to connect with the right investment partner. CareMedic landed a $20.6-million investment a little more than a year ago.
Sheila Schweitzer, chief executive of CareMedic Systems Inc. in St. Petersburg, will be making a pitch in front of hundreds of private investors at the Florida Venture Forum's meeting in Ponte Vedra Beach next week. But don't get the wrong idea: She's not really looking for money.
CareMedic, which provides revenue management software to hospitals and outpatient surgery centers, landed a $20.6-million investment from Oak Investment Partners of Westport, Conn., a little more than a year ago.
So instead of foraging for funds at the annual conference, Schweitzer intends to offer advice on what makes a great investor and what to avoid.
"The chemistry has to be right between you and your investor," said Schweitzer, 58, who has built and sold several companies over the past 30 years. "You want someone who can articulate your strategy as well as you can and who shares your passion. You don't want someone who hasn't had operating experience or wants to be a passive investor. They have to understand there will be ups and downs."
Having survived what she calls the "nuclear wasteland" of investing following the dot-com bust in 2000, Schweitzer is pleased private equity funds are once again active. In fact, she said that when CareMedic's board gave her the thumbs-up to grow in 2004, one year after she joined the company, she had little trouble finding money.
"I didn't even put a book together and I got four term sheets," she said of her successful equity-raising effort. "But we've got a fairly seasoned team here that has raised a ton of money. And Oak Partners is a very sophisticated investor. It knows the market and understands it."
CareMedic, which was started by a husband-and-wife team in 1997, made its mark with proprietary software that allows real-time billing to Medicare.
That means that every night, Medicare's computers receive billing information about thousands of patients from hundreds of hospitals using CareMedic's software, expediting the reimbursement process.
CareMedic receives a fee for each transaction, which takes less than a second to complete.
Schweitzer's goal has been to add complementary products through acquisitions, using Oak Partners' capital.
Of the dozen or so steps a hospital goes through in managing revenue, from patient registration through reimbursement, CareMedic now has software to handle nine of those processes.
By adding customers and selling existing accounts' new products, the company's revenues rose to $70-million last year, up from $8-million three years earlier. CareMedic has about 300 employees, 85 of whom work at the company's headquarters in St. Petersburg's Carillon office park.
Though Schweitzer said managing such growth is always a challenge, having the right investment partner can be a big help.
"CEOs need to be able to look to their board and their investors for support, because nobody has all the answers," she said. "You want someone you can go to with confidence and trust and say, "What do I do now?' "
Schweitzer said entrepreneurs seeking first-round financing have to seek a balance between selling themselves short to investors and demanding an unrealistic valuation for their startup.
A company like CareMedic, meanwhile, which already has a substantial equity investor, has to weigh its options carefully before accepting additional capital.
"You always have to consider what's best for your shareholders," Schweitzer said, who added that it is unlikely CareMedic would accept new equity partners at this point. "I don't think my investor would let me take it."
Kris Hundley can be reached at firstname.lastname@example.org or 727 892-2996.
WHAT: Florida Venture
WHEN: Tuesday and Wednesday
WHERE: Sawgrass Marriott Resort, Ponte Vedra Beach
KEYNOTE: Brian Swette, former chief operating officer, eBay
WHAT: Presentations from
25 companies in search of
EXPECTED ATTENDANCE: 1,100
SUCCESS RATE: Of 19 companies that made presentations at the 2005 conference, 14 have received funding totaling more than $80-million
[Last modified January 27, 2006, 01:29:04]
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