Friday, May 30, 2008
Over on the VNC website, our VC Update provides a timely reminder that 'the deals that make sense get funded', but that, eventually, becoming a star technology city will probably hinge on one of our local companies hitting a homer --- the legendary 'Big One', the likes of which created Silicon Valley. Our influential sources include Professors Germain Boer (at left) and Bruce Lynskey, and debt-equity transaction guru Tom Wylly. Read the story here. It's also a reminder that one of the nice things about Nashville's business culture is that most investors here take little joy in bursting someone's balloon. Note: In some other communities, venture forums give the most persistent entrepreneurs a fair hearing, while allowing investors some breathing room. It's been awhile since there was a venture forum in Nashville, although forums in Knoxville-Oak Ridge, Chattanooga and Memphis continue to draw crowds. In addition, most business-plan competitions in Nashville and elsewhere in Tennessee offer little, if any access for those who aren't students or faculty of the hosting campuses. The Nashville Business Incubation Center is an exception, but of more than 30 plans submitted in this year's competition, the few companies closest to tech were in IT services, data management and online e-tailing. Fortunately, the Greater Nashville Area Chamber of Commerce and Partnership 2010 will sometime this summer release their Entrepreneur Project's recommendations on how to fill some of these gaps. Stay tuned, meanwhile, today's article is here.
Tuesday, May 27, 2008
Just a year ago, Brentwood-based Rivals.com was acquired by Yahoo! Inc. in a deal valued by some observers at about $100 million -- or, what Founder-CEO Shannon Terry, tongue in cheek, referred to last week only as "a reasonable sum of money." Today, the college-sports news leader is headquartered on Cadillac Drive and is running at a $30 million annual revenue clip, serving an estimated 400,000 fans, including more than 210,000 paid subscribers. Those and other figures were shared by Terry (pictured above) during last week's Nashville Technology Council annual meeting. Rivals.com traces its lineage from the founding of AllianceSports.com in 1996; the sale of that firm to Rivals Network for $3 million in 2001; and, the repurchase of its key assets back from Rivals Network for $500K, after RN went bankrupt. Terry said the company became cash-flow positive just nine months after being rechristened Rivals.com, helped along by a $2.5 million round of financing. Terry projects that the myriad team pages of Rivals.com will see 4.75 billion page views in 2008. Terry said resisting the temptation to wade into fields other than college sports was a crucial decision -- one that he says was reinforced by reading Forbes Columnist Jack Trout's Positioning: The Battle for Your Mind. During his presentation Thursday, Terry said he's hired about 90 people at Rivals.com, yet, "I think I've only had to deal with one jackass," who didn't fit in. Himself a former Lipscomb University basketball standout, Terry said he thinks former athletes bring both the team orientation and competitiveness he looks for in new hires. Terry said Rivals.com has done well by demanding four traits of itself: Passion; Differentiating to achieve "special" status among subscribers; Mental Toughness to overcome fear of risks; and, "servant leadership." Said Terry, "The last six-seven years of my life, I feel that I've been an effective leader because I've done a good job of putting myself last."
Passport Health Communications' Founder Jim Lackey (left) had a lot to crow about last week, having just announced another acquisition. On Thursday, however, the CEO made clear to a local audience he hadn't forgotten what it was like to plead for a hospital exec to be his first customer, or to go five years without profits. With revenue likely to hit $80 million this year and his workforce swelling to 300 or more, Lackey may be soon outgrow his Cool Springs Boulevard location. Read the whole story here.
Rachael Qualls, the 29-year-old founder and CEO of the Angel Capital Group based in Hendersonville, attracted more than 30 entrepreneurs and investors to her presentation May 22 in Belmont University's Curb Center in Nashville. Entrepreneurs from SmartFurniture in Chattanooga and OptiVia Medical in Winston-Salem joined her and others in pressing the case for a nationwide network of Angels. Qualls told VNC afterward that some attendees are considering signing non-disclosure agreements to allow them trial access to ACG's regional syndication database, which draws heavily on deals flowing through North Carolina Angel groups. Read the full story here.
Thursday, May 22, 2008
A panel of VCs led by moderator and former U.S. Senator Bill Frist (at left) yesterday told more than 450 Nashville executives that while there's lots of cash sloshing-around, few investors in major money centers have Nashville on their minds. Moreover, the investors most deeply involved in technologies are happily ignorant of Nashville's four-decade-old services track record. Frist, himself now a Cressey door-opener for entrepreneurs, VCs and investment bankers, said investors' ignorance of Nashville is a problem community leaders will need to address. In the interim, all agreed there's no help coming locally: While we have a great Angel community, there are no mid-market players in technology, whereas would-be investors like to follow a big lead investor. Unfortunately, entrepreneur Kin Clinton (at right) makes clear in our story that his Woolsthorpe Technologies (Brentwood) may not be able to wait for local investors to step forward, and may need to move his company to one of the Coasts or to somewhere like Alabama. For those of you hoping funding your developing or startup company will get easier: VC Allen Moseley said, "it's still credit cards -- believe it or not -- it's still friends and family, and it's [still] a lot of stress on the entrepreneur" that makes it happen at the git-go. Read the full story here.
Tuesday, May 20, 2008
In Nashville May 21-22 will represent a sort of endurance test for many of us. Wednesday is the Nashville Health Care Council's "Financing the Deal" seminar with focus on healthcare companies. Speakers from Noro-Moseley, Banc of America Securities, UBS and General Atlantic execs comprise the panel, with former U.S. Senator and Majority Leader Bill Frist moderating. The next day it's a twofer: Nashville Technology Council offers-up a daylong conference that includes keynotes by Passport Health CEO Jim Lackey and Rivals.com CEO Shannon Terry. Then, it's all capped-off by Angel Network Group's inaugural "Where Money Meets Imagination" event in Davidson County, at Belmont University. It's for Angel investors and interested others, at 3 p.m., details here.
Pathfinder Therapeutics' CEO Paul MacDonald says the developing Vanderbilt spin-off company is deeply rooted in Nashville, with no plans to leave -- even to satisfy a would-be VC based elsewhere, as Veran Medical said it needed to do. Given its ties to Vanderbilt, Pathfinder seems likely to stick it out. But, MacDonald's polite report on how tough it has been raising money here echoes a familiar refrain. PTI needs about $2 million to traverse the next 18 months and probably a minimum of more than $4 million to become fully commercialized. Read the full story here.
Adamant in his concern about flagging U.S. innovation, Vanderbilt University Board of Trust Member (emeritus) Lewis Branscomb (at right) took both Republican and Democrat policymakers to the woodshed in his remarks May 8 before the American Association for the Advancement of Science. As reported by the AAAS, Branscomb said, "We must have new leadership in the Executive branch which recognizes that a broad range of government policies directly affect the nation's power to innovate... Also needed are policies for transitional technology investments, economic policy, trade strategy, government procurement, standards policy, robust hard and soft infrastructure, and a culture in American society that embraces creativity... We need more than basic science. We need public policies that support useful research and means for converting research to economically sustainable innovations that can grow into profitable and sustainable larger enterprises." Branscomb is a son of the late Harvie Branscomb, long-time Vanderbilt University chancellor, who died in 1998. He is professor emeritus of Public Policy and Corporate Management at Harvard University's Kennedy School of Government and adjunct professor at the School of International Relations and Pacific Studies at the University of California-San Diego. He also has served in top positions at IBM, including vice president and chief scientist, and as chairman of the U.S. National Science Board from 1980-1984.
Friday, May 16, 2008
BioMimetic Therapeutics is widely regarded as the top biotech player in Middle Tennessee. The Nasdaq-traded company led by Founder-CEO Sam Lynch (at left) has come a long way, challenging industry leader Medtronic, and growing from two employees in 2001 to 85 today, with hundreds more high-paying jobs on the way. Recently, an FDA alert related to possible problems with another company's product briefly stampeded BioMimetic shareowners, but the company began recovering, almost immediately. Our Special Report on the Venture Nashville site provides an update on the management team and their strategy for expanding biotech in Nashville. Please click here to read the story.
Tuesday, May 13, 2008
In ways both subtle and dramatic, Rep. Bart Gordon and Sen. Lamar Alexander are maintaining pressure to fund the nation's knowledge agenda: On May 8, Alexander addressed scientists gathered at Oak Ridge National Laboratory and called for a "new Manhattan Project" that would advance technologies to reduce U.S. dependence on imported oil. Then, yesterday in Texarkana Gordon led his House Science Committee's field hearing at a K-12 school with a curriculum centered on science, technology, engineering and math. On these and other occasions, both men have pressed for funding of America COMPETES, which President Bush pointedly criticized, even as he signed the bill into law, citing fears of pork-barrel spending embedded in it. Funding for America COMPETES may not improve until after the next Inauguration, according to observers. For the full story, please click here.
Monday, May 12, 2008
[Updated 4:35 PM] Call it Brain Drain or Brain Drip, those seven jobs at Veran Medical Technologies are still a loss. Why? Because those seven brains that are relocating from Nashville to St. Louis are all fixated on capturing sizeable share of the $1 billion market for medical devices for early biopsy and treatment of lung cancer. And that's just Veran's first target. Read the full story here. The fact that 31-year-old Founder-CEO Jerome Edwards (at left) was a star MBA student at the Owen Graduate School of Management doesn't make it any easier. There's some solace in hearing Edwards heap gratitude on VUMC's Harry Jacobson and Owen's Bruce Lynskey for their guidance over the past few years. But, not much. Veran and its reps sought VC capital in Nashville, but quickly became convinced they'd have to look elsewhere. And, Greg Johnson at Prolog Ventures in St. Louis was more than ready to embrace them, if they'd move to St. Louis. [UPDATE: 4:35 PM - Veran announced the total investment was $4.75 million.] Okay, so investors here were just being prudent, "sticking to their knitting" and focusing on familiar deals in hospitals, surgery centers, e-Health, etc. Veran, meanwhile, is just doing what entrepreneurs do, connecting with winners like Johnson and looking for a way to make their dreams come to life. On the one hand, it's just business as usual. On the other hand, it's one of those pesky "L's" on the innovation scoreboard. It's too much like a year ago, when Ira Weiss pulled-up BioDTech's stakes and moved to Birmingham, after being wooed with Alabama incentives. Ira declared at the time Nashville 'doesn't get it'. On the other hand, the Angels among us have more than once rallied around a similar play, Pathfinder Therapeutics here in town. Makes one wonder if Pathfinder isn't also about set off into deeper waters.
Friday, May 09, 2008
In what they acknowledge is a 'race against time', Nashville-based KravTek Media hopes that within 60 days the company can show potential investors and customers its latest prototype technology for seamlessly integrating content delivery for in-home digital devices. The speed, security, fidelity and wirelessness of KravTek's device could be the kind of breakthrough or disruptive technology that spawns an economic wave, or at least a major ripple. In keeping with tradition, Founders Norm Taylor and Ed Kaeser (L-R, at left) and their team of industry veterans have until recently worked without pay, with operations are divvied-up among the executives' homes in Franklin, Old Hickory and elsewhere, in an effort to conserve cash during their development phase. Next up: Recruiting up to $10 million in equity capital. The fledgling venture faces the customary long odds, but could become the kind of startup Nashville needs to strengthen its standing in entertainment, communications and media. Read the full story here.
Former U.S. Senate Majority Leader Bill Frist, M.D., has recently urged President Bush and others to leverage U.S. healthcare and medical know-how to create "a legacy in which medicine and health diplomacy serve as a currency for peace." Frist, who remains the driving force behind VOLPAC, has gained renown over the years for his humanitarian missions. Closer to home, on May 21 here in Nashville the 55-year-old Frist, who is now a partner in the Chicago-based private-investment firm Cressey & Company, will moderate the Nashville Health Care Council's panel discussion on financing healthcare deals. Panelists include Charles Ditkoff, Managing Director, Head of Healthcare Services, Banc of America Securities; Robbert Vorhoff, Vice President, General Atlantic LLC; Allen Moseley, Partner, Noro-Moseley Partners; and, Maureen Spivack, Managing Director, UBS Financial Services, Inc. NHCC's success with M&A-oriented events means more of that ilk: On Aug. 20, NHCC will co-host with Nashville Capital Network a conference titled "Investing in Healthcare: Early and Growth Perspectives." Panelists will discuss sectors of greatest interest and criteria for investing, as well as "how entrepreneurs can best position their companies for growth." P.S. -- On May 22, the fledgling Angel Capital Group is scheduled to hold a meeting at Belmont University titled, "Where Money Meets Imagination." The group's website says the event is "for anyone in the greater Nashville area interested in Angel investing."
Some of Nashville's most qualified C-level information technology executives are forced to commute to the coasts for jobs, when the gigs that brought them here run out of steam, according to executive recruiter Craig Buffkin (left) of The Buffkin Group. He told us recently that Nissan and other companies' moving to Nashville has increased the numbers of highly qualified senior execs from most corporate roles. When their jobs end, those execs almost always want to stay in Nashville, he said. However, unlike the Bay Area, Austin, Boston and other tech centers, unless Chief Technology Officers' and CIOs' timing is perfect, Buffkin says they're going to have to take a pay cut, relocate or earn a lot of frequent-flyer miles. Buffkin said he could easily think of "8 or 10" local C-level execs in such circumstances. Most of these executives have a combination of strategic and tactical skills, a strong work ethic and the ability to "check their egos at the door," all of which could make them important players in Nashville tech startups or other roles. However, Buffkin explains that those who choose to live here and work elsewhere face a disadvantage in getting picked-up by another Nashville venture. "They're just not around, not at important [civic and professional] functions, not active in the social scene," Buffkin said. That's a problem in a town that still relies heavily on the "Old Boy network." The execs are often more likely to hear about opportunities from colleagues in other cities, before they find jobs here. For these and other reasons, top candidates in the C-level talent pool are often overlooked and perceptions of a talent shortage at that level may be exaggerated. In contrast, there's wide agreement that Nashville suffers from a shortage of what Buffkin calls "really senior technical people," including engineers and specialists with hot skills. To remedy the shortage, the Nashville Technology Council, Belmont University and other allies have been pulling together a consortium of several dozen universities, colleges, government agencies and companies to encourage more students to take up computer sciences and related studies in two- and four-year institutions. The project is dubbed "Turning the Tide of Technology," and it aims to reverse the decline of tech degree-holders; keep more of our grads working in Tennessee; and, more tightly align education curricula with employers' requirements.
Tuesday, May 06, 2008
David Ingram (left), chairman and CEO of Ingram Entertainment, has left the table at Goldleaf Financial Systems, according to GFSI's recent filing. Goldleaf's management team is mostly in Norcross, Ga., while a major operations center and some execs are here in Brentwood. Ingram, 45, will keep two hands in banking: He's apparently leaving Goldleaf with 40,067 shares of the company; and, he's on the board of Nashville's stylish Avenue Bank. Reports indicate Goldleaf kept Ingram busy in eight audit-committee meetings last year. Ingram's seven-year watch inside GFSI ended with a 2007 that saw two CFOs and outside CPAs (they dismissed Grant & Thornton and hired E&Y) come and go, a run on the stock, problems integrating acquired companies and only modest success in migrating customers from the legacy BusinessManager offering to ACH and related software and services. Management failed to meet the board's performance expectations for 2007, leading to a restructuring of exec compensation that places even greater emphasis on EBITDA, integration of acquired operations and other metrics. Some investor message boards recently carried posters' complaints of executive compensation and lagging returns. The company is now absorbing Alogent Corporation, the $42 million Atlanta-area purchase it closed in January. The acquisition occasioned a stock run-up, and then a return to recent-normal altitude. The pressures on Goldleaf today seem, from the outside at least, strikingly similar to those that plagued predecessor Private Business, when reporter David Fox chronicled its struggles in his 2000 NashvillePost.com piece here. Seven months ago, similar calls for a fatter bottom line were heard during a conference call with analysts. The company 1Q08 results are due next Monday (May 12). It has previously declared 2008 goals of $87 million in revenue and $15 million in EBITDA (vs $56.7M and $6M in 2007, on negative annual EPS). Whatever the results, the company's Atlanta technology staffing is likely to grow, as Brentwood-based staffing declines, along with the aging BusinessManager offering.
Monday, May 05, 2008
When Raymond Pirtle (at left) announced his departure from Avondale Partners three years ago, he explained the move would allow him to accept more board seats. Friday's announcement from China Wind Systems (formerly Malex Inc., a wind-energy play based in Jiangsu Province) is the latest evidence Pirtle is staying busy, working as Claridge Company LLC from an office on Woodmont. Complex relationships among China Wind and affiliated companies have attracted some scrutiny. Pirtle is also currently on the boards of Premiere Global Services, Inc. (Atlanta), IceWeb, Inc. (Herndon) and Tricell, Inc. (UK). Earlier, he was a director of eNucleus, Inc. (supply-chain software) and of Sirrom Capital Corporation, which was acquired by Finova Group. The man who's made more than 150 Euro trips to call on portfolio managers and analysts confirmed this afternoon he's a "one-man show" at Claridge, drawing on nearly 40 years' personal experience. Pirtle, 66, was a founder and senior managing director of Avondale Partners. He's also part of the J.C. Bradford diaspora, having served 23 years there (including nearly a decade as general partner) before the 900-broker firm was bought by PaineWebber (itself soon acquired by UBS). He also spent 13 years with SunTrust Equitable Securities Corp.
Both Jill Sobule's music and her attitude are critically acclaimed. The singer-songwriter (at left) makes working trips to Nashville several times a year. She created a different sensation earlier this year, when she decided not to pursue her sixth label contract. Instead, she launched a website and a viral campaign inviting the public to donate funds to help her independently produce, distribute and promote her next album. She aimed for $75K, and 53 days later she had $82,557, in 561 contributions ranging from $5 to $10,000 each. She got one $10K gift, earning donor Jill Pettinger of the UK the Plutonium Donor award, with benefits including voice lessons and singing on the album she supported. Sobule's achievement was mentioned only in passing during Leadership Music's Digital Summit, April 22 at Belmont University. But, the echoes from her "shot heard 'round the world" will not soon subside. During our interview Friday, the NY-LA-Nashville artist said she hopes next to create an online portal to enable other singer-songwriters to recruit financial support for their projects. Sobule -- who's been dubbed "deft ironist" by New Republic and "feisty post-punk feminist" by New Yorker -- said she tentatively plans to name her new indie label "Pink Records." The name, she explained with some laughs, is a "tongue-in-cheek" reminder that not only did some of her songs earn her the "Commie" label "back in the day"; but, also, that technology now enables artists to "control the means of production." Her donor-funded record -- "The California Years" -- is due out this fall. If Sobule follows-through with her artists' portal, she could be providing just the sort of disruptive technology that venture-capitalists and others say they're seeking.
Thursday, May 01, 2008
Creating a World Trade Center will not be a slam dunk in Nashville. However, today Franklin-based entrepreneur Robert Thompson (left) said he and his firm CenTradeX have plunked-down $200K upfront to obtain the franchise for Middle Tennessee from the World Trade Centers Association. You can read the full story here. I learned of Thompson's application a couple months ago, while reporting CenTradeX's development of websites for WTCA members, but couldn't say anything til the WTCA board gave him the nod. Though trade centers face extremely tough development and marketing hurdles, the notion is compelling. I should note that during the Eighties I played a minor supporting role in what turned-out to be an ill-fated effort to create a WTC in Northern Virginia -- an effort superseded years later by creation of the WTCA member known as the Ronald Reagan Building & International Trade Center, on Pennsylvania Avenue. Updated 4:23 P.M.: Alexei Smirnov at BusinessTN saw our scoop and provided this link to his 2006 CenTradeX story.