Wednesday, July 27, 2011
Guest Post: RIP Regional Venture Funds
Story by Bryce Roberts
Bryce Roberts is Managing Director and co-founder of O'Reilly AlphaTech Ventures. Bryce originally posted this on his personal blog, and gave us permission to repost it here.
I had a different post I'd plan to write this morning, then I read this on the blog of Boise, ID based Highway 12 Ventures blog:
The venture business demands successive funds be raised to keep a firm "in the game" as it relates to quality deal flow and reputation. This creates a tension between growth and bandwidth as a firm progresses. It is with this notion that we've decided to not raise a third fund.
As many of you know, I cut my teeth in the venture business backing companies in the intermountain and southwest region. I saw first hand how challenging it is to build businesses outside of major tech hubs. I also saw how challenging it is to raise money from institutional investors for regional venture funds.
I've said before that I'm afraid there's a dynamic at play among institutional investors that will essentially dry up most local sources of venture capital outside of tech hubs. We're starting to see that now with public declarations from great firms like Highway 12, and in private conversations I've had with VCs in other regions around the US.
On a recent trip back to SLC I was invited to lunch with a group of university professors doing a study on what makes a thriving entrepreneurial community. They talked about innovation clusters and legislative measures, they contrasted SLC to NYC to SF, and they posited a number of potential solutions. But my belief is that we need to start with something simpler- access to local early and seed stage capital. In SLC, it was local capital that seeded Omniture, Altiris, Fusion IO and Skullcandy long before they were interesting to top VC firms.
As local capital becomes less available, I fear we'll see fewer of these hometown stories playing out. And that would be a shame to see happen just as location has become less and less a determinant to entrepreneurial success.
On a personal note- I've had the privilege of watching Highway 12 from their earliest days. Mark Solon and his team have been a powerful organizing force and wildly vocal cheerleaders for the entire region. Their presence will be missed but their impact will be felt for a long time to come.
Bryce T. Roberts is Managing Director and co-founder of O'Reilly AlphaTech Ventures (OATV). At OATV he focuses on consumer and enterprise software and services investments. Prior to OATV, Bryce sourced and led a number of successful early stage investments at Wasatch Venture Fund, a Draper Fisher Jurvetson affiliate. In 2004, Bryce co-founded the Open Source Business Conference (sold to IDG), and was also a member of the team at vertical search pioneer Whizbang! Labs. While at WhizBang!, he defined and launched the FlipDog.com division (sold to Monster Worldwide). His investments at OATV include Bit.ly, Foursquare, Get Satisfaction, OpenCandy, OpenX, Parakey (acquired by Facebook), and Path Intelligence. He holds a B.A. in Philosophy from Brigham Young University.