5 questions with Ray Carey

Venture capital may be all about niche expertise, but there’s one area in which every VC can claim to be an authority: the PowerPoint presentation. And Azure Capital’s Ray Carey says he’s no exception.

That may be changing. Last week, Azure led a $5 million Series B round in SlideRocket, developer of an online tool for making presentations that competes with PowerPoint. Going forward, Carey says he “would love everyone to use SlideRocket to pitch Azure.” But the real target market, he says, “is a much broader set of companies that share their information internally and externally via slide shows.”

In many ways, SlideRocket is an unusual portfolio pick for Carey, who invests primarily in the communications sector. Lately, Carey, who swam in the 1996 Olympic Games in Atlanta, Ga., says that he has looked at a broader array of startups as “the technology world does not have as bright lines as it used to between different disciplines.”

Since last year, Azure has racked up three profitable exits, including two in the communications sector. The most recent was audio-conferencing firm Vapps, which was acquired by Citrix for $26.6 million plus up to $4.4 million for meeting performance milestones. Another exit was World Wide Packets, a network device developer that was acquired for $305 million in January 2008 by networking equipment provider CIENA.

Following the market correction late last year, Carey tells PE Week Senior Editor Joanna Glasner that he held off some in making new investments. But, as evidenced by SlideRocket, the pace is now picking up.

Q: How would you describe your investment philosophy?

A lot of our investments focus on the idea that ‘now you have a big broadband pipe. What are you going to do with it?’

There’s a big need for smart bandwidth. Everyone expects more bandwidth, but no one expects to pay any more for it. So while people are upgrading their networks, they need to do it in a much more cost-effective manner.

Q: Is now a good time to invest?

The last three quarters was a difficult environment because venture pricing has not caught up with rest of the world’s pricing. We’re in a great environment for doing deals now, but that wasn’t true at the back half of last year.

Q: Telecommunications has a reputation as a capital intensive sector. Is that still the case?

It’s changed a lot. For example, when we invested in Cyan Optics [a developer of optical packet systems] in Petaluma, Calif., we told the founder: ‘We would love to do business with you, but this is an environment where you really have to be capital efficient.’ He built the company for a quarter the capital it would’ve cost five or six years ago.

Q: Are there technologies you see coming down the pike that will inspire people to extend their telecommunications and home entertainment budgets?

I’m a believer in the idea that there are reasonably fixed budgets. People will flex for an iPhone that’s a little more expensive, but I believe that communications and entertainment service is reasonably fixed. I think that’s true on the enterprise side as well.

Q: You’ve had some good exits recently, but for most of the venture industry, the pace of IPOs and M&A has been pretty slow. Any thoughts on when or whether we’ll see a pickup?

You hear people say the back half of the year. What they mean is not right now. At Azure, we think it’s like 2001 to 2003, a great time to invest. Fox example, looking back this decade, what VCs should have done is invested between 2001 and 2003 and sold between 2004 and 2007.