Cell Works plans pitch for investors Firm, and 60 others, will appear before venture capitalists

November 11, 1997|By Mark Guidera | Mark Guidera,SUN STAFF

Charles Wheatley III's big moment arrives this morning.

That's when the executive, who heads up Cell Works Inc., a fledgling Baltimore-based company developing tests to detect cancer cells in blood, will make his pitch for $3 million to $5 million.

His audience will be a pretty tough crowd -- an annual gathering of venture capitalists, the people who make a living investing in promising start-ups, at the Mid-Atlantic Venture Fair.

The two-day event is expected to draw several hundred venture capitalists from around the nation.

The fair, being held this year in Tysons Corner, Va., home to a growing number of high-tech companies, is one of the most prominent venture capital events in the country, right behind a similar one in Silicon Valley, the California corridor that has fostered many promising high-tech start-ups.

The aim is simple enough: Give several dozen of the most promising start-up companies in the mid-Atlantic region a forum to meet a broad segment of venture capital leaders and attempt to line up new funding.

Like Cell Works, companies chosen to make formal presentations get just 10 minutes to make their case.

"The venture capitalists who come to this event are all looking for companies that have the potential to become market leaders in their niche," said Frank Adams, chairman of the fair and president of GroTech Capital Group Inc., a Timonium-based venture capital firm.

Wheatley, Cell Works president and chief operating officer, says his company is confident that it fits that bill.

Founded by Paul O. P. Ts'o and three other former Johns Hopkins University Medical School faculty members, the company's technology screens blood to detect even minute amounts of cancer cells.

As a result, it may offer oncologists and other physicians a new and more reliable way to track the presence and spread of cancer and determine the best course of care.

The point Wheatley hopes to drive home today: Cell Works' technology has several potentially global market applications, including the fields of prostate and breast cancer, and its market value is a multimillion-dollar figure.

But for most companies it's a hard sell. The majority of the 61 lucky firms chosen to make formal presentations at this year's event won't land a deal.

Adams estimates that on average 40 percent of companies that make presentations drum up a venture partner. The average amount raised: $3 million.

6 biotechnology firms chosen

Those not so lucky to land a venture deal usually manage to find funding later from other private sources, noted Adams. If history is any guide, about 10 percent of the companies making presentations today will eventually grow enough to go public, he said.

Cell Works is one of just six biotechnology companies chosen this year, though a number of others were selected to set up booths to showcase their technologies to fair attendees.

Retail out, Internet in

Another niche that's fallen out of favor with the venture capital community is specialty retail.

What's hot now are Internet, telecommunications and other information technology-related ventures.

Interest is also high for operations that have innovative ideas for further mining the managed health care trend.

An example: Baltimore-based Pioneer EyeCare Inc., a 2-year-old enterprise providing eye care and disease management services under negotiated managed care contracts. The company, which recently raised $16 million in private funding, is looking for additional capital at the fair to further its acquisition of ophthalmology practices regionally, said Leon Kaplan, Pioneer's president.

600 firms nominated

This year, about 600 companies were nominated by Mid-Atlantic Venture Capital Association members as potential presenting companies. Narrowing that list down proved easier than in prior years, said Adams.

"We were able to identify about 100 companies that were superior and they separated from the pack quickly," he said.

The committee selected a mix of companies, ranging from those seeking early-stage financing to more mature companies.

This year 14 Maryland-based companies, most located in the Rockville-Gaithersburg high-tech corridor, were selected.

Tyson's Corner was chosen as the site after much debate on the organizing committee. Since 1990, the event has been held in either Baltimore and Philadelphia.

But many on the committee believed the event should be held in Northern Virginia because that region has emerged as the "epicenter of the Internet and information technology," said Adams.

More than 25 of presenting companies this year are located in the Washington, D.C.-Northern Virginia area.

Maryland firms at venture fair

Maryland companies making presentations at today's venture capital fair:

Alexus International: Gaithersburg. Resume processing and screening.

Cell Works Inc.: Baltimore. Blood cell screening for cancer diagnosis.

CyberSystem Technologies: Hunt Valley. Intranet commerce for scientific equipment.

Dovetail Technologies: College Park. Cancer drug developer.

Internet Cargo Services: Rockville. Internet commerce software.

LocalEyes Corp.: Bethesda. Internet-based community directories.

Multi-Media Holdings: Rockville. Internet/intranet multimedia design.

National Medical Tech.: Annapolis. Sleep disorder center consolidator.

NETSOLV: Gaithersburg. Corporate network software.

Pioneer EyeCare: Baltimore. Managed care for eye diseases.

Sensors for Medicine and Science: Germantown. Implantable medical sensoring devices.

Sequoia Software Corp.: Columbia. Software for health care records.

Simutronics Corp.: Rockville. Online role-playing games.

Torrent Networking Tech.: Landover. High-performance telecom routers.

Pub Date: 11/11/97

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