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Business Observer Friday, Jun. 19, 2015 6 years ago

Venture awaits

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Who needs Silicon Valley? Ballast Point Ventures find success far from venture capital hot spots.
by: Michael Hinman Tampa Bay Reporter

There are some business leaders who would give almost anything just for the chance to say hello to Thomas James.

The partners at Ballast Point Ventures? They get a monthly meeting with the chairman of Raymond James Financial. That's helped make the St. Petersburg-based venture capital firm, a successor to Donald Burton's South Atlantic Venture Funds, a success.

“He saw an area here in the early 1980s that was completely underrepresented when it came to venture capital,” says Matt Rice, one of three partners in the firm with Drew Graham and Paul Johan. “Everyone focuses their money out west in Silicon Valley, or in the Northeast in places like New York and Boston. But Don knew there was plenty of opportunity here, and that's the tradition we're continuing.”

Burton raised four funds and supplied money to 60 companies in the South before the dot-com crash of 2000. That prompted Burton to take a different direction, and led Graham and his former South Atlantic partners to create Ballast Point Ventures. The firm was founded in 2001.

Ballast Point has since raised three funds, including a $164 million raise that finished in January, above its initial $140 million target.

With this new money Ballast Point will continue concentrating on health care, technology and communications, as well as a pinpoint focus on the Southeast and Texas. The latest fund will give Ballast Point a chance to invest in as many as 50 companies, if it sticks to its minimum $3 million equity stake.

That market, in reach and geography, allows Ballast to move quietly. The firm, for example, recently invested in PowerDMS, an Orlando-based software company that deals with governance and risk compliance. Other investments include Tampa-based nutritional supplement marketer and distributor KeyView Labs; the PDQ fast casual restaurant chain; and mobile carrier technology company Tower Cloud of St. Petersburg.

Quiet, to Ballast Point, is a large part of the strategy.

“It's not as competitive as what you might find in the hotspots out west and up north, but that's good for us,” Rice says. “That lets us take a deliberate approach to find the companies that are the right fit for us, not just financially, but in how they work with us as people, too.”

Companies attractive to Ballast Point generate $3 million in annual revenues, and are operated by what Rice calls high-quality management teams. Rice says they're looking for companies growing at least 25% year over year with a proven business model. He says their goal is to make three to five times their investment in each company over three to five years.

Ballast Point is independent, but maintains a close relationship with Raymond James Financial. In addition to monthly meetings with James, the company works out of the massive financial adviser's Carillon headquarters in St. Petersburg.

Another integral part of the strategy at Ballast Point is these investments aren't at the angel capital stage. That means the firm doesn't gamble on untested products or leaders. The downside there, of course, is Ballast doesn't have the kind of power an early-stage investor might have to make changes at the top if necessary.

At Ballast, where Rice says investors will commit 10 years to an investment, the approach works. “A lot of our investors, by nature, are pretty patient, and realize there is virtue to putting capital to work in a measured way, over a long period of time,” Rice says.

But quiet and deliberate doesn't mean boring and stale.

“The economy has been good, and the economy has been bad,” Rice says. “But for us, the best time to invest is when everyone else is a little hesitant or scared to put good money to work. The best companies are the best companies, even in bad times, and you just can't be afraid to take a chance.”

Follow Michael Hinman on Twitter @BizTampaBay

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