SoCal TechNews - Thursday, July 29, 1999
Copyright (c) 1999 by Benjamin F. Kuo
http://www.socaltech.com
-- Special: Interview with Terry Bess, Silicon Valley Bank
-- Vitesse Double Digit Growth from Communications
-- EToys, Ticketmaster Online-CitySearch Announce Results
-- Loki Looks to Linux for Games
-- Winds of Web Fortune Not Always Favorable
Upcoming Events http://www.socaltech.com/calendar/calendar.pl
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*** I'd like to take a few moments to thank the continued supporters
of socalTECH, who have over the past half a year enabled me to
continue providing this service. Koffler Ventures
(http://www.kofflerventures.com), Deloitte & Touche
(http://www.deloitte.com), and the Human Capital Group
(email@humancapitalgroup.com) have stepped up and sponsored
sections of the web site. In addition, I'd like to especially
thank Rohit Shukla and LARTA (http://www.larta.org) for their continued
moral support and their honest efforts to promote the high tech
industry
here in Los Angeles. Thanks to all of you on the mailing list as well,
without your many emails of support as well as help and advice,
I wouldn't be sending out this email! - Ben
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Special: Interview with Terry Bess, Silicon Valley Bank
----
Terry Bess is a Senior Vice President at Silicon Valley Bank, which recently
opened a Westlake Village branch, and is one of the most involved and
connected organizations in the high tech business here in Los Angeles. I
asked him some questions about what Silicon Valley Bank has been doing
here, as well
as what the differences he sees between Northern California and Southern
California high tech activity.
Terry Bess:
BK: Silicon Valley Bank's been fairly active here in Southern California
recently. What made you decide to open a Westlake Village branch,
and what other areas here do you see lots of activity?
TB: We opened or first office in Southern California nine years ago due to the
concentration of technology companies. Since that time we have spun-out
three other offices primarily as a result of our growing account base
throughout the geographic area from San Luis Obisbo to San Diego. The first
Office in Irvine was near the Airport and is now located in the Irvine
Spectrum, the San Diego was opened about four years ago as the first
out-growth office. The West LA opened 1 1/2 years ago as our client
activity growth continues north of Orange County. In May of this year we
opened our Westlake Village Office to get closer (geographically) to our 40+
clients along the 101 corridor. We continue to see strong fundamental growth
in a variety of technologies throughout the greater area.
BK: For the people on the list who aren't familiar with venture lending,
and high tech focused banking, can you tell us what the key differences
between a bank like yours and the traditional business oriented banks
here in Southern California?
TB: "Traditional" commercial bank lending guidelines were developed in a
regulatory environment which basically caused banks to develop check lists
for lenders to operate within. These lists causes the lender to evaluate
historic financial data of a company to try and determine the likelihood of
a loan being repaid in the future. In the start-up and early stage side of
the business cycle there is no history of financial performance and as a
result it makes it difficult (if not impossible) for traditional lenders to
lend into this arena. Silicon Valley Bank was organized to address this
issue. The realization that putting debt into the capital structure early
in a company's lifecycle greatly enhances ownership values and increases
returns for investors was the geniuses that caused the bank to be
established in 1983. If an entrepreneur leverages investment capital he
extends the runway so that better valuations are received at the next round,
the investor's IRR increases as less money is employed over a given period
of time. This is a win-win.
What separates SVB from other commercial banks who play from time to time in
this arena is this is primarily all we do. We have established long term
relationships with the investor community that allows us to bring our
clients to capital. We have tailored our services to match the needs of the
start-up (our clients) rather than trying to make the client fit inside the
way the bank operates (the traditional bank model). We are organized
internally along five primary vertical technology markets (software,
communications and on-line services, semiconductors, computers and
peripherals, and life sciences). This allows us to drill-down into the
technology that our clients develop by having dedicated personnel in these
markets. No one else can do this as they do not have the breath or market
presence. The benefit that our clients enjoy is debt structures that allow
for anticipated changes in the tech cycles that occur in these separate
vertical markets, and the ability to hang in there with the client when the
less knowledgeable banks cannot.
BK: What kind of differences have you noticed, if any, between the types
of companies you serve here in Los Angeles vs. the companies SVB serves in
the bay area?
TB: The primary difference we have noticed over the nine years in Southern
California vs. what we see in Northern California is the entrepreneur
attitude towards venture capital. From our view there are several reasons
why the acceleration of the technology market in Northern California has
out-paced other markets. The one that stands out the most in So. Cal. is the
bias against VC's, and the bad advice entrepreneur's have received overtime
in that regard from local advisors. We see too often companies reject
professional money for other sources that bring little value to the company
other than the money itself. Once that money is used, the company finds
itself stranded. The Northern California entrepreneur has figured this out,
they understand the value of professional money and the community (not to
mention the individual) is much better off today as a result.
BK: What advice would you give an aspiring high tech entrepreneur on
best utilitizing the services of a bank like yours?
TB: Compare the banks you talk to. Find out their knowledge of your business
and technology. Ask to see who else they bank in your sector. Talk to their
clients about their experience when things didn't go as planned. Ask who and
what they can bring to the table beside the money. Ask if they are set-up
internally to hand hold start-up companies and if their services are
designed for companies your size.
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Vitesse Double Digit Growth from Communications
----
Camarillo based Vitesse Semiconductor credits robust demand in
communications ICs for its double digit growth.
http://www.ebnews.com:80/story/OEG19990728S0040
EToys, Ticketmaster Online-CitySearch Announce Results
----
Santa Monica based EToys and Pasadena based Ticketmaster Online-CitySearch
both announced earnings Tuesday. EToys posted a loss of $20.8 million
for the first quarter on sales of $8 million. CitySearch had sales of $25.53
million.
http://www.msnbc.com:80/news/294357.asp
Loki Looks to Linux for Games
----
Tustin based Loki Entertainment Software is looking at the Linux operating
system as a game platform. By licensing popular Windows titles and porting
them to Linux, Loki hopes to capture the business early, as well as help
promote the Linux cause to mainstream users.
http://www.upside.com/texis/mvm/open_season?id=379e48020
Winds of Web Fortune Not Always Favorable
----
Not everyone's making a fortune on the web. Just ask John Rigos, founder
of CDuctive, a New York company which turned down an offer from Bill Gross
last year for the right introductions, because of the cost--and now faces
competition from well financed from Emusic.com, backed in part by
Pasadena based Idealab.
http://www.forbes.com/forbes/99/0809/6403072a.htm
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Upcoming Events This Week
Full calendar at http://www.socaltech.com/calendar/calendar.pl
** Am I missing your event? Tell me about it! ben@socaltech.com
July 29, Westwood -- "Summer-Brew" Westwood Biobrew. Swap surfing tips and
tanning secrets with your fellow biomedical industry entrepreneurs,
investors, bankers and service providers. Contact Bill Robbins at
Convergent Ventures (310-643-7990, billr@convergentventures.com) or Steve
Sisskind at Angeles Ventures (310-550-1080 steve@angelesventures.com).
http://www.angelesventures.com/biobrew.html
August 1-3, Los Angeles -- Herring on Hollywood. Conference examining the
role of digital technology on Hollywood. See
http://www.redherring.com/events/hoh99/
August 1-5, Santa Barbara -- "TOOLS USA 99, Technology of Object-oriented
languages and systems" This conference will provide quality training and
education on component and object technology along with other modern
approaches to software development. For more information visit:
http://www.tools.com/usa
August 3, Century City -- Internet Professionals Network. Summer Social
after the Red Herring Event. Join us for an evening of fun and
inspirational people after the Red Herring conference. A great way to
expand your network, drive more business to your company and have some fun
in the process. http://www.iProNetwork.org
August 4, Santa Monica -- "To Patent or Not To Patent: YET SOMETHING ELSE
TO WORRY ABOUT" SCSC LA Chapter. Question & answers session with some of
the brightest intellectual property thinkers in Los Angeles. See
http://www.scsc.org/la.htm
August 5, Los Angeles -- "Y2L: You're Too Late!:Y2K Tips That Can Save Your
Home and Business". Leslie Gornstein, a technology writer and columnist for
the Orange County Register, and Kevin Merritt, Director of IT, The Geneva
Companies, Irvine. Software Council of Southern California, Orange County
Chapter. See http://www.scsc.org/orange.htm
August 7, Los Angeles -- "HTML Chat" WebGrrls Los Angeles. See
http://www.webgrrls-la.com
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