Editor’s note: Basil Kushnir, a venture banker with Square 1 Bank in Durham, N.C., reviews the “Venture Outlook 2011” event for WRAL Tech Wire.

RALEIGH, N.C. – Wednesday morning, Southern Capitol Ventures hosted Venture Outlook 2011 at the Brier Creek Country Club in Raleigh. The sold-out event was kicked off by General Partner Jason Caplain, followed by a panel discussion moderated by Partner David Jones.

The panel consisted of four other Venture Capitalists from around the U.S.:

• Matthew Witheiler, Principal, Flybridge Capital Partners (Boston, Mass.)
• Hooks Johnston, General Partner, Valhalla Partners (Herndon, Va.)
• John Burke, General Partner, True Ventures (San Francisco, Calif.)
• Tom McMurray, former General Partner of Sequoia Capital and current Angel Investor (Raleigh-Durham, N.C.).

Each panel member has ties to the Triangle area from past experiences/education and has funded and continues to look to fund entrepreneurs and start-ups in North Carolina. The majority of the attendees were representatives of the local area start-up community, from the entrepreneurs themselves to the service providers that serve them.

The panel discussion covered topics such as funding preferences of the investors, different avenues of funding based on the size and stage of the company pursuing funding, and specific market sectors that the investors tend to focus on in the current economy.

There was a good deal of discussion on the investors participating in smaller angel or “seed” investments versus larger Series A rounds of financing. A majority of the panel members confirmed that they do indeed participate in smaller, angel-like investments ranging from $100,000 to $1,000,000 in addition to their more typical Series A investments; but few are looking to participate past the A round initially.

As might be expected with investors participating at such an early stage, the panel members confirmed that they like to take an active role in management of the Company, as most come from an operating background. It was also cautioned that it has become increasingly more difficult to raise a concurrent Series B round unless the Company has been able to successfully reach their milestones and prove their product in the marketplace long enough to show the starting of a strong revenue ramp.

One member of the panel explained the difficulty in differentiating between investments that he considers to be “Low Beam” companies, where the forward illumination represents only a limited defined area of growth, and “Hi Beam” companies, which project much further and have greater potential for a larger multiple exit for the investor.

The panel agreed that e-commerce and social shopping has been a strong market and will likely continue to succeed in the future. Other markets in the Southeast United States that continue to shine are data mining and management, logistics, financial services and security. They continue to see worthy companies sprouting in North Carolina such as BlueTharp Financial (Charlotte), StatSheet (Durham) and BlueStripe (Morrisville), to name a few.

Other areas that were addressed through questions from the audience include the investors’ role in helping technical CEOs face the market, and difficulty in funding companies that focus on international sales without proving their U.S. business model.

Supporters of the event included WRAL Tech Wire, Business Innovation & Growth Council and the Southeast Venture Conference.

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