Some insights from the Mid-Atlantic Capital Conference

Dateline: Philadelphia

Your loyal scribe is on the road again. The 2009 Mid-Atlantic Capital Conference is another example of the right way to run a venture capital conference: combine the traditional VC panels and networking stuff with companies pitching their story. The PVCA event in Pittsburgh had the same format, and the benefit of having entrepreneurs around is pretty clear. Good buzz when you mix the two worlds.

The VC panel last night demonstrated something about the U.S. V.C. industry that isn’t all that prevelant in Canada. There’s lots of grey hair around, and not just on middle-aged guys like me. Here’s a snapshot of the “VC Luminary Roundtable”: Fred Beste of the Mid-Atlantic Venture Funds joined the industry in 1968. I was three at the time. John Martinson, Managing Partner of Edison Venture Fund got Edison rolling in 1986. Sherrill Neff is the founding partner of Quaker BioVentures, which started when he left as President of a publicly-traded lifescience company. Dennis Purcell, the senior Managing Partner of Aisling Capital was once a member of the Advisory Council at Harvard Medical School. A stellar group.

Here are some random takeaways from the panel:

Fred Beste:

“My one piece of advice for entrepreneurs is be well introduced [when you’re looking for capital]. Otherwise you are guilty until proven innocent. If you come well introduced I’ll spend a lot of time with your business plan trying to determine if we should have a meeting. If you don’t, I’ll be looking for reasons why we shouldn’t.”

“I did a paper for my University students that should for the 25 years leading up to 2003, the annual capital deployed by the U.S. VC industry grew at a compounded rate of 18%. There is no way the number of good companies to invest in grew at the same rate. The industry needs to shrink.”

Dennis Purcell

“The chances of big pharma acquiring a biotech deal is about 1%.”

“Unlike tech VCs who are looking for 5x or 10x, healthcare VCs would often be happy with a 3x.”

“It is unclear right now if the market is paying investors for taking risk.”

John Martinson:

“One of our most successful investments has spawned more than half a dozen senior executives for other portfolio companies. And it made 50 employees millionaires, which paid for a lot of college tuitions for their kids. That’s a fun part of our business.”

Of the 35 investments Edison has made in Pennsylvania, 25 of them accessed the Ben Frankin fund (a gov’t program) at one point in their early growth. It’s proof that state-backed efforts can work.

Sherrill Neff:

“If I don’t think it’s going to be fun to do business with someone, that’s a problem. A key criteria is the feeling I get about the people involved.”

Amen on the last point.

MRM