Venture summit signals new collaboration

April 26, 2004

BY MICHAEL KRAUSS

Chicago's technology community takes a major step forward Thursday when the Midwest Venture Summit convenes at the Sheraton Chicago. The event signals a new collaboration among local venture capitalists at a time when returns on venture investing are rising. The event could become a global magnet for attracting investors, though organizers are taking things one step at a time.

"The value of the conference is twofold," says Mark Glennon, vice president, Leo Capital Holdings. "It creates a public profile for the entrepreneurial community, and entrepreneurs get introduced to investors. Deals get done at the conference."

The event showcases 26 entrepreneurial organizations seeking venture funding. Local presenters include: Arxan Technologies (software security), BridgePort Networks (mobile telecommunications), Dakota Beef (organic beef distribution), nPhase (machine to machine wireless sensors), PEAT International (waste remediation), Profind (Web recruiting technologies) and Renew Power (micro fuel cells).

Like a juried art fair, companies are vetted by a committee of VCs, and assigned a coach to assure the presentations and business cases are top-notch.

The conference also showcases research under way at local companies and universities. Presenters in that group include: Caterpillar, Battelle/NASA, Motorola, Northwestern University, the University of Chicago and Purdue.

The event's timing is opportune. Thomson Venture Economics reports private equity delivered an 18.3 percent performance in the fourth quarter, the second consecutive up quarter after three years of negative returns. Though one-year returns for venture investors were lower at 8.1 percent, the trend is clearly positive.

"It's a slow, steady recovery for venture capital nationally," says J.B. Pritzker, partner, New World Ventures in Evanston. "We've seen more deals lately. Entrepreneurship is picking up. A few more people seem willing to leave their corporate jobs to be an entrepreneur. I have enormous respect for people who do that. It's the business world's equivalent to conquering the frontier."

Another reason for local optimism is the measured approach organizers are taking to the event.

"I don't expect venture capital nirvana," says Steve Beitler, chairman, Illinois Venture Capital Association, and senior managing director of Dunrath Capital. "Illinois is the sixth most populous state. We're 11th in venture funding. It's reasonable for us to move from 11th to 6th."

Credit Beitler, Glennon and Pritzker, along with Scott Glickson, partner Gordon & Glickson; Dean Stieber, partner, KPMG, and Maura O'Hara, executive director, Illinois Venture Capital Association, with creating this week's momentum.

The collaboration among local private equity leaders bodes well. That ultimately means more locally based entrepreneurial ventures and more jobs.

Concourse expands

Chicago's Concourse Communications is widening wireless Internet access at a second terminal at Detroit's Metro airport.

Headquartered on La Salle Street, Concourse wirelessly connects travelers' laptops at New York's LaGuardia, Newark's Liberty and Minneapolis-St. Paul International airports. Accord-ing to Concourse President Joe Beatty, service expands this week at Kennedy International.

"We relocated to Chicago last summer," says Beatty, who is no stranger to Chicago or the telecommunications industry. Beatty grew up near 83rd and Pulaski, and is one of four founders of Focal Communications, a competitive local exchange carrier. He earned his MBA at the University of Chicago, where today's curriculum includes a case study of Beatty's Focal experience.

Beatty was on campus last week teaching the case in Professor Steve Kaplan's entrepreneurial finance class.

"We're seeing great results in Wi-Fi uptake at airports," adds Beatty, who reports his company's services increased 35 percent each month in the first quarter. Concourse's advantage, Beatty says, is its role as a "neutral host." Concourse allows access to multiple wireless providers. "You can't be a Boingo Wireless customer and use a T-Mobile hot spot. If Concourse provides service, anyone can be connected," he says. Beatty believes his model best serves travelers and airport operators.

Bits & bytes

House Speaker Dennis Hastert appears today at a fund-raiser for the Illinois Coalition. ... Text message promoter Vibes Media inks deals with Anheuser-Busch, McDonald's and U.S. Cellular.

Michael Krauss is a Chicago-based tech writer and consultant.

 

 ©2004 Marion Consulting Partners