VCIR Hangover

Some assorted notes from the past few days in Beaver Creek, as I reacclimate myself to Eastern Standard Time…

*** VC in the Rockies was not a “boondoggle.” I don’t write this in order to preempt corporate overlord questions about my pending expense report, but rather because this was the term used by almost every local (read: Boston-area) VC who knew I was planning to attend. They didn’t use the word maliciously, but rather to suggest that the event would be little more than an excuse to ski and drink. And I didn’t take it maliciously, as I was actually looking forward to a few days of S&D (with just a bit of writus interruptus).

But the reality is that VC in the Rockies had an enormous amount of value from a content perspective. In fact, more than a few out-of-towners mentioned to me on Wednesday that they were bailing on ski plans in order to keep attending company presentations. Perhaps next year’s slogan should be: “Come for the cocoa, stay for the content.”

I was one of those out-of-towners, and tried to attend as many of the company presentations as possible (but obviously failed, due to a multiple track setup). Like with all such events, the presenters were heavily skewed toward portfolio companies of conference organizers. My favorite was probably Adam Aircraft, which is in the process of securing between $100 million and $125 million in notes with warrants (already lined up a lead I-bank, but will look to syndicate). Not quite a typical VC play, of course, but CFO Chris Naro successfully demonstrated and defended his company’s competitive advantages over the current makers of small planes for the corporate, personal and taxi markets.

Naro’s only hiccup came when he compared price points between an Adam model and the cheaper Eclipse. He said: “If you can afford $1.7 million for a plane, you can afford $2.25 million.” The line got a laugh, but then an audience member asked about a pending Honda plane. After Naro responded that he wasn’t concerned because the Honda would run around $4 million, someone shouted out: “If you can afford $2.25 million for a plane, you can afford $4 million.”

*** Another notable moment came from NVCA president Mark Heesen, who gave a lunchtime keynote address. After railing against the Big 4 accounting firms for vociferously opposing SOX reform for small-cap companies, he suddenly realized that KPMG was one of the conference’s sponsors. A fleeting moment of sheepishness, before returning to his conviction that while accounting firm improprieties helped prompt SOX, they are among the legislation’s primary beneficiaries.

*** Everyone was obviously gung-ho for Colorado, but more than a few people were surprised that Infinite Power Solutions CEO Ray Johnson promoted the fact that his company’s inaugural battery manufacturing facility was in Golden. “Shouldn’t it be in China or India,” many people asked? Good question, but unfortunately not one that got asked during the Q&A (I raise my hand in blame).

*** Speaking of presenting companies, I’ve compiled a list of each presenting company that is currently in the market for new VC funding (about 2/3 of them).

*** There was a media roundtable on Tuesday to discuss various issues related to the Colorado market. Here’s the podcast (long, but interesting).

*** A reader used the anonymous tip button to ask the distinction between Mobius Venture Capital and Foundry Group. I assume it was a conference attendee, since both names were thrown around a bunch. The answer is that Foundry is a new spinout firm from five Mobius partners – Brad Feld, Seth Levine, Ryan McIntyre, Jason Mendelson and Chris Wand – and is currently in market with its inaugural fund. Mobius itself continues to wind down, although will continue to be operational for the next five years or so (including active portfolio company support).

*** I mentioned yesterday that Battery Ventures’ Mike Scanlin won the poker tournament, but not how proud of him I was. You see, both Mike and I were among several “ducks.” This meant we were handed yellow t-shirts when we walked in, and anyone who knocked us out would automatically win a nice bottle of wine. Glad to know that there was at least one bottle remaining at night’s end…

 

3 Comments

  • [...] I didn’t get to see about 10 of the other IT presentations, but I was told they were all excellent and interesting. There has been some nice national reaction to the VCIR conference, which is nice to hear. [...]

  • [...] Daniel Primack of PE Week Wire/PE Hub has a VCIR hangover [...]

  • Dan,

    I am the wise guy that you mentioned here that stated you could afford a $4 million Honda if you could afford a $2.25 million plane. My first career was as a pilot and an aircraft mechanic. I still hold a commercial pilot’s license.

    I was only being half flippant with my comment as the total cost of owenership of an airplane only begins when you purchase it. Pilot costs, insurance, fuel, hanger, maintenance, etc. are much more relevent than most think.

    I have nothing against the Adams Aircraft or their presentation. However, like any powerpoint it only showed a small part of the story. If Honda aircraft are as fuel effectient as their cars, it might actually be cheaper to operate despite a much higher price tag.

    Several people have tried to make similar aircraft over the years. Most have not made it to market Google a company called VisionAire that was building a plane called “Vantage”. That company burned through millions in venture capital befor it went bankrupt. It used similar construction, the same price point and the same sales story, but did not succeed in the end.

    In fairness, the technology has developed more in the past decade, Adams Aircraft is better funded than other companies that have failed at new aircraft designs. (Although likely to have much less funding available than Honda) It appears to have a better design. I hope they suceed as I love really cool airplanes.

    Composite aircraft are very interesting and on the drawing board have large weight and strength advantages, but even as the presentation mentioned, the 30% weight advantage over aluminum construction almost disappears after going through the FAA certification processs. If you ding a wing on a composit plane it is very costly to repair ( if it can even be fixed) and no one knows how long that stuff lasts. An aluminum plane can be repaired much like a car that suffered a fender bender. Also, have you seen any other plastic that looks good after years in the sun? No one knows what a composite plane will look like in 25 years. We do know that aluminum planes can fly 50 or more years if well maintained. Also, good luck finding a mechanic to even work on a composite plane.

    There are solutions for many of these problems, but like many deals that are pitched, the story may not be quite as good as it sounds and the devil is in the details.

    Lots of questions I would have loved to ask, but not enought time.

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