Ga. venture firms like flavor of home cooking - Silicon Valley / San Jose Business Journal:

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It also points to a surgse of new venture firms inAtlanta -- at least four new firmzs have been formed since the beginning of 1998, bringing the numberf of venture capital firms in Georgia to almost a Existing firms also have created considerablyt larger funds -- Alliance Technology Venturesx L.P.'s newest fund is three timeds as large as its previous one -- and nationalk firms, such as Mellon Ventures, have opened Atlanta offices durin that time as well.
Still, even with the increasedc amount of capitalbased in-state, Georgia firmzs were responsible for less than 20 percenf of all investments in locaol companies last year, according to figurees prepared by Venture Economics, a New Jersey-basedc research firm. Massachusetts-based firms were responsible for the next largestf proportion of allGeorgia investments, followedc by firms in California and New York. (See related Page 15A.
) In general, Georgia funds were more likely to invest in East Coast companies than West Coast and more than 50 percenr of their investments were located in Georgia andNorth "A lot of the money being raisedr here now is really beinb positioned as regional money," observed Stephe n Fleming, general partner of Allianced Technology Ventures. "And the investor s will want to keep as much of it as closse to home as because we hatecatchingv airplanes." Georgia venture capitalists invested $123.8 million last year in 70 companiesd through 87 different deals, according to figureas prepared by Venture Economics on Aprilk 13, 1999. The average round of fundinb was $1.4 million.
Georgia firms invested about $41 or 33 percent of all in 26software companies. They infused only $18.34 million into computer hardware companies, but thesee deals were larger on average; only four computer hardware companies receivedd funding from Georgia venture capitalists last Eleven medicalor health-related businesses receiveed $12.6 million in funding last year, or about 10 percent of all investmenft dollars. Expansion-stage or early-stage companies captured $53.6 millio n -- a majority of the funding. Georgiqa venture firms invested $28.3 million in acquisition-stage but those deals averaged $5.7 million per round, as opposedx to an average investmentof $1.
2 million in expansion-stagre companies. Last year, Georgia venture firms closedr 16 dealswith early-stage companies, but only five with acquisition-stagd firms. More than 40 expansion-stage deals were Georgia firms invested lessthan $10 milliohn in start-up or seed funding -- deals averaging less than $1 milliob each -- just one part of a generao lack of money for very early-stage ventures. Atlanta technology veteran Howard Morrisoh said there seems to bea "crying for this kind of funding, which, in Atlanta, is oftenn accomplished by private, or angel, investors and a numbeer of small firms, such as John Imlay'sx Imlay Investments Inc.
"You're findingv more examples of people like John Imlay who have done very well in technology companies and have been willing to recommit theirf success back into the technology Morrison said. Small, very early-stage investments requiree as much time, energy and due diligencs as later ones, Morrison said, so venturde capitalists are more likelyy to make one large investment rather than a numbert ofsmaller ones. But now in Georgiqa "there are more little people with ideas looking for a littles bit of money to get he said. "Early-stage investing is hard," Flemingf said.
"It tends to take a lot more hand-holdin and a lot more time spent with the That takes a lot of people and a lot of Because our investment community is still relativelysmall -- in termw of the size of the firms -- it's easier to do latedr stage deals than earlier stage One of Atlanta's oldest venturer firms, 16-year-old Noro-Moseley Partners, is beginning to make more earliere stage investments, founding partnee Charles Moseley said. He said that transitiom is a function oftwo factors: a growinh number of more attractive, early-stage investments and the fact that companieas are going public earliere than they used to.
"We've moved earliere to catch them before they become apublic company," he Moseley has observed many changes in the locapl venture capital community during the past decade and a He has seen his own business move from havinf a general interest in good private companiexs to a more specific focus on technology-oriented His first investment, made in the summer of was a hint at things to It was a Florida company, Sawtek, that manufactured electronic Part of Noro-Moseley's orientation toward technology companies comex from the backgrounds of its Morrison said. The firm' s second partner, Jack Kelly, was previously an executivse with Scientific-Atlanta Inc.
Its third partne r was an adviser to the CEO of HealthdyneTechnologies Inc., prompting Noro-Moseley's continued interestf in health-care-related technology businesses. Also, the newer players in Georgiaw venture capital circles often come fromindustr backgrounds. Jim Gilbert, the general partner of the $70 millionh LiveOak Equity Partners L.P., founded last year, was previouslg an executive at ImnetSystems Inc. and HBO Co. Buck Goldstein, the founding partner of netWorth was formerly the foundetr ofInformation America. Rob Guyton, managing partned of Monarch Capital Partners, was an executivew at Inktomi Corp. before returning to Atlants tostart Monarch.
And, one of Noro-Moseley's recent Alan Taetle, was previously one of the top executivess at MindSpringEnterprises Inc. Georgia venture capitalists "havw a vested interest in seeing Georgiwcompanies succeed," said Maureen Morrison of PricewaterhouseCooperd LLP, which compiles a quarterly list of ventured capital investments. "A Georgia investment fund typically hasGeorgis investors, and they are interested in businesse close to home. It'ws also a lot easier to become more closely involvee with acompany -- many of the venturr capitalists sit on the boarda of the companies they invest in -- if you're closew to home.
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