Venture fair is opening in D.C. tomorrow

Investment angels will hear companies looking for capital

200 applied, one-fourth chosen

May 27, 2002|By Liz Steinberg | Liz Steinberg,SUN STAFF

Jonathan Cohen's company may have been chosen because it's atypical, but it shares several traits with the other 50 companies selected to participate in the Capital Connection 2002 venture fair.

Rockville-based 20/20 Gene Systems Inc. has a product on the market and has already received $1.5 million from individual angel investors, said Cohen, its founder and president. The 2-year-old biotech company is looking for its first round of venture capital funding, and Cohen hopes to raise between $3 million and $5 million to ready his product, which takes snapshots of the characteristics of diseased tissues for clinical use.

"We think the fact that we have revenues ... has made us attractive," Cohen said.

His company is one of more than 200 that applied to present.

Like 20/20, many of the companies presenting in Washington tomorrow and Wednesday have a few employees (20/20 has eight) and are past the "garage stage," but are not yet widely known, according to the Timonium-based Mid-Atlantic Venture Association, or MAVA, which has run the fair annually since 1986.

They're also better-developed than they were two years ago during the technology boom. The slow economy has thickened venture capital flows, forcing companies seeking funds to become leaner and meaner, said Susan Clinnin, a MAVA staff member who works with the startup companies.

"They've done this before and they know what they're getting into," Clinnin said.

According to Larry Macks, fair co-chairman and general partner of Owings Mills-based Boulder Ventures Ltd., "The companies that make it through the selection process are really quite strong. The nature of the market is they're going to have to do more with less."

Companies are seeking between $2 million and $25 million on average, he said. As of January, 14 companies had raised $102.2 million in venture capital due to last year's fair, according to MAVA. Generally, about 30 percent of companies in attendance receive venture capital as a result.

"I think if we were to hold constant at those levels, that would be a pretty good outcome," said Anirban Basu, senior economist at RESI, the consulting arm of Towson University.

MAVA expects up to 1,000 people - from venture capitalists to service providers, and paying $800 to $1,500 a head - to attend the fair.

It's a good deal, said Steve Dubin, one of the four principals of Chesapeake Emerging Opportunities Club LLC, a 6-month-old, $3.5 million Columbia-based venture firm.

"I get to see a lot of pre-screened companies that have passed somebody's test. ... It saves me a lot of work, basically," said Dubin, who attended last year's fair. "The cost of me seeing 20 good companies in other ways would be a lot more."

Given the current state of the economy, "I think [company] valuations are probably lower - it means there's probably more good buys out there," Dubin said.

The fair will be held in Washington's JW Marriott Hotel. Last year it was held in Baltimore.

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