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REVIEW SUMMARY
Event. Florida Venture Capital Conference
Industry. Finance
Key. Venture capital investors are scouting more opportunities to buy and sell stakes in growing companies.
The Florida Venture Forum's annual conference in Naples in 2009 wasn't exactly a celebration of private enterprise.
The star of that event was a state-sponsored investment fund. The financial markets had come to a stop after the collapse of Lehman Brothers in late 2008 and entrepreneurs were eager to tap into government funds to grow their business, the only source of money available.
So it's fair to say that the mood at the Florida Venture Forum's 2012 affair recently in the same venue was more about tapping private capital than government coffers. “There's a plethora of capital looking for deals,” says Glenn Oken, managing director of Mangrove Equity Partners in Tampa.
Still, the government remained a looming presence.
At a discussion panel about “exit strategies,” experts said it's unlikely many entrepreneurs will sell their businesses via initial public offerings because of the regulatory burdens the government has imposed.
In the late 1990s, hundreds of companies turned to the public markets, providing an exit for venture capitalists that had funded many of these companies. “They wore it as a badge of honor, something they aspired to,” says Stanley “Stash” Jacobs Jr., a shareholder with law firm Greenberg Traurig in Fort Lauderdale. Now, he says, “they wonder when the regulators are going to show up and show their badges.”
The Facebook IPO notwithstanding, a company needs to be valued at least in the $300 million to $400 million to consider a public offering, says John Hill Jr., senior managing director with Hyde Park Capital Partners in Tampa and the former head of investment banking technology group at Raymond James in St. Petersburg.
What's more, adds Jacobs, companies can expect to pay between $1 million to $2.5 million in annual expenses to comply with laws such as Sarbanes-Oxley and Dodd-Frank.
With the doors mostly shut for all but the biggest public offerings, the main route for venture exits will be via private mergers and acquisitions. Fortunately, many buyers have solidified their balance sheets and are seeking acquisitions. “We are seeing pretty good deal flow,” says Hill, noting that 2009 was the bottom.
But in a sign that the recovery remains uneven, the conference's industry panels focused exclusively on trends in technology and health care, though even the latter remains under pressure by the government.
Richard Brandewie, managing partner of Ballast Point Ventures in St. Petersburg, says his investment focus is on those companies that will help health care providers save money because of looming government cuts, particularly the state's Medicaid program for the poor. “Reducing costs is key,” he says. “You have to fit in with the reimbursement system going down. Medicaid's the big wild card.”
In addition, Brandewie and others discussing health care are concerned about the regulatory complications of drug approvals in the U.S., which can drag out for years. “Overseas markets are much more receptive,” he says.
A total of 19 Florida companies pitched investors at the conference this year, which was attended by about 500 people. Of those, four were from Tampa and two were from Sarasota. None was from the Fort Myers-Naples area.
Company: Health Integrated
Industry: Health care
Headquarters: Tampa
Website: www.healthintegrated.com
CEO: Shan Padda
2011 revenues: $31.6 million
2010 revenues: $28.8 million
Employees: 250
Capital seeking: N/A
Elevator pitch: “Our customers are health plans and we help them control their medical costs,” says CEO Shan Padda. The company's specialty is helping small and midsized health plans manage patients, particularly those with chronic diseases. Health Integrated helps plans identify patients who use health care services the most, gets them to seek help and works with them to change their behaviors and stabilize their disease. Padda says doing that can save plans $2 to $4 for every dollar they spend on Health Integrated's services.
Company: Mad Mobile
Industry: Mobile commerce
Headquarters: Tampa
Website: www.madmobile.com
CEO: Greg Schmitzer
2011 revenues: $1.5 million
2010 revenues: $218,000
Employees: 25
Capital seeking: $5 million
Elevator pitch: Mad Mobile creates corporate Web pages specifically designed for mobile phones, pulling data from companies' existing websites, without having to interrupt customers' tech staff. “We're able to do that with no interaction with the IT guys,” says CEO Greg Schmitzer. “The marketing guys want this tomorrow, but the IT guys can't deliver for 18 months.” Clients include Pier 1 Imports, Panera Bread, Lenovo, Suzuki and Major League Baseball.
Company: Laser Spine Institute
Industry: Health care
Headquarters: Tampa
Website: www.laserspineinstitute.com
CEO: Jimmy St. Louis
2011 revenues: $120 million
2010 revenues: $115 million
Employees: 450
Capital seeking: N/A
Elevator pitch: The company's doctors specialize in performing endoscopic spine surgery. “We do one thing and do it over and over again,” says CEO Jimmy St. Louis, who says that the company's focus on a single surgical procedure and “Ritz-Carlton-like” service has been key to success. “Our patients will travel from 500-plus miles to see us,” St. Louis says.
Company: Postcard Services
Industry: Printing, advertising
Headquarters: Tampa
Website: www.postcardservices.com
CEO: Newell White
2011 revenues: $4.6 million
2010 revenues: $4.6 million
Employees: 17
Capital seeking: $2 million
Elevator pitch: Postcard Services combines software technology with direct-mail advertising, helping customers tailor mailings and measure results. The company won an award last year for its software integration with QuickBooks, for example. Its applications also integrate with e-commerce programs and mailing-list systems. Clients include L'Oreal hair salons. “We're both a printer and a software developer,” says CEO Newell White.
Company: Mustang Vacuum Systems
Industry: Solar equipment
Headquarters: Sarasota
Website: www.mustangvac.com
CEO: Richard Greenwell
2011 revenues: $13.2 million
2010 revenues: $7.6 million
Employees: 40
Capital seeking: $5 million
Elevator pitch: Mustang Vacuum is making a big push into making manufacturing equipment for the solar industry. “We're a global business,” says Todd Komanetsky, director of business development. The company builds machines for U.S. and foreign manufacturers of photovoltaic equipment, which Komanetsky says is projected to reach $5 billion in sales by 2015.
Company: Quasar Bio-Tech
Industry: Health care
Headquarters: Sarasota
Website: www.quasarbiotech.com
CEO: Peter Nesbitt
2011 revenues: $3.8 million
2010 revenues: $2.9 million
Employees: N/A
Capital seeking: $3 million
Elevator pitch: Quasar sells hand-held devices that use light to treat acne and wrinkles. The company sells through retailers such as Neiman Marcus and Saks Fifth Avenue. The company has developed new devices for treating skin conditions that it plans to sell through mass retailers and television advertising. The Food & Drug Administration has approved the company's devices.
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