Editor’s Note: Chris Matton is a partner with Kilpatrick Stockton LLP practicing in the areas of corporate and securities law. Matton has worked with a variety of companies ranging from early stage to publicly traded companies. These companies have been engaged in various industries, including life sciences. He has represented clients in connection with venture capital financings, mergers and acquisitions, public and private offerings of securities and other corporate matters. This column is the latest in the Entrepreneurial Spirit series done in partnership between the CED and WRAL Local Tech Wire.
RESEARCH TRIANGLE PARK, N.Few things are more important to entrepreneurs than finding the right climate to grow their business in. According to Chris Matton, partner with Kilpatrick Stockton, the Research Triangle region has some of the most important elements to facilitate the growth of startups.
What is the environment for mergers and acquisitions (M&A) like in the Triangle today?
I believe we have a reasonably strong M&A environment in the Triangle. Nationally, we have a combination of strong public companies loaded with a fair amount of cash and reasonably strong stock valuations. In the Triangle, we have strong venture-backed companies that have survived through a tough several years, but have been well positioned with the backing of strong investors. Strong companies have great opportunities.
What is the biggest challenge entrepreneurs in the Triangle region face?
Early stage capital remains the single greatest challenge. Angel investors who had previously played a very strong role have been somewhat reticent to invest in the wake of the downturn in the technology sector and the lack of substantial exits to this point over the last five years.
As we see stronger M&A activity and significant liquidity events, we will see a resurgence of angel activity. At the moment the biggest challenge remains: How to raise those first dollars to get yourself out of the garage?
What are some of Triangle region’s strengths and weaknesses?
The Triangle region has an extraordinarily strong university environment and a strong corporate environment. Combined, the two create a great base of ideas and people that result in great companies at an earlier stage.
We’re also blessed with an area that allows us to attract and retain talent – people want to move here and stay here.
We need to develop more early stage and late stage capital. It doesn’t matter whether those investors have a physical presence here in the Triangle – or if they are coming on planes, trains or automobiles. We simply need more investors following the great companies that are on the ground here in the Triangle.
How has the angel investing climate changed over the past three to five years?
The most notable change for angel investing is the deal flow. Five years ago, angels were fighting their way to get into early stage deals with venture capitalists. Today, angels are presented with a variety of early stage deals, but they have to be ready, willing and able to pull the trigger.
What sectors have been attracting the most capital recently?
Recognizing that everyone has a different vantage point, I believe that we continue to see strength in nanotechnology, “software as a service” models, open source models, and in telecommunications convergence here in the Triangle.
If you had one piece of advice to give to entrepreneurs, what would it be?
Pursue the BIG ideas, the game changing ideas, whatever they may be. Those are the ones that are going to enthuse your team, potential investors, the market and potential acquirers.