Sid Mohasseb of Tech Coast Angels: Opportunity in Southern California
Guest post by Ned Madden of Madden Communications
During the VentureNet Forum Ned Madden interviewed Sid Mohasseb of the Tech Coast Angels, about the investment opportunities here in Southern California and asked about his thoughts on the VentureNet Forum itself. The interviews is as follows:
Sid Mohasseb, Managing Director – Venture Farm
President, Tech Coast Angels OC
1) You said that the investment opportunities in tech startups were greater in L.A. than in Orange County. Why is this?
Orange County has lot of medical device and biotech companies, so it attracts a different kind of VC funding. LA is more and more attractive because of the presence there of media companies. Due to the dynamics of Internet, content driven and media driven opportunities exist in LA because the talent is in LA.
2) What do you think this show says about the state of Southern California high-tech business?
The VentureNet 2008 show was a good show because it brought out companies at different stages in their development. It was rather dominated by Internet and software companies, but the majority of VC deals get done in areas that are scalable grow very fast. Also, since the show was put on by the Tech Council it would naturally be tech oriented. There are key differences among the areas.
First, there is lots of money in Northern California, lots of venture capitalists. Southern California does not get its share of the investment from the big players. The big issue is the lack of availability of capital. There aren’t many active VC firms with a lot of money here.
Second, the investment “ecosystem.” Silicon Valley has Univ. Ave. with its VC firms and entrepreneurs. Because of this ecosystem, good entreprenseurs. try to migrate to Norther California. Over time people have gone there because they want to be close to capital. VCs like to invest in companies that are local to them.
Third, the risk factor. In Northern California, the VCs are much more tolerant than the SoCal VCs of early stage risk taking because they have more money. Also, the business people in Southern California are more traditional.
3) What does the presence of a heavily Internet-oriented roster of new companies at the show mean?
Some people are saying that another Net bubble coming. In Web 1.0, Amazon offered transactions based on price-driven commodities. By mid-2005, the Web 2.0 concept arrived wherein people can interact with the Internet to express and exchange. The next level is the semantic Web, which is about answering the question about what people need, what are they saying. When the semantics or the true meaning of information and services on the Web are clearly defined, it becomes possible for the Web to better understand and satisfy the requests of people and machines seeking to use the Web content.
4) What do you see as the main trend emerging from this conference?
I didn’t see a particular trend. There’s a lot of SaaS. The old fashioned technology enterprise stuff doesn’t make sense any more. Now it’s about delivering services as opposed to product.
5) What about the money? Is there enough capital to go around and is the SoCal investment community backing a fair number of SoCal companies? Who are the winners?
There is not enough money to go around. VCs are struggling getting second round financing. The majority of investments are another class of asset with a 7-10 yr time horizon. With the economy the way it is, the angel community getting nervous. They don’t want to exit in a downturn.
