Cal-IT, held in London on October 21 & 22, saw 55 CEO’s and senior executives make their 15-minute pitches to interested delegates in two parallel sessions. The 15 minute pitches, while interesting, are not the primary means for assessing investment potential. This year the organisers allocated 15 meeting rooms, which were used to hold pre-arranged meetings with CEO’s to allow private discussions. The organiser, Cal-IT, is part of a wider international business development programme financed by the State of California and managed by the California Technology, Trade and Commerce Agency.
This year over 400 such meetings took place. Sector coverage was broad with areas such as web security and privacy software, knowledge management, semiconductors, networking gear, optical networking and wireless plus many others all well represented.
Even smaller firms with weaker deal flow might argue that such events are for the desperate only. But apart from the obvious networking opportunities, there are two main reasons why European investors attend Cal-IT year after year. The first is the possibility of making an investment and the second being the ability to benchmark your portfolio by geography, deal stage or sector considerations.
One big name technology VC that has attended the event for several years admits to having made an investment in a company he first saw at Cal-IT. So it really does work and, according the CTTCA, for the first six years of the event, $150 million has been invested in showcased companies by European-based VC’s as a direct result of the event.
Jeffery Gersick, managing director EMEA for the CTTCA, says: “Our USP is that because we are a government agency, there’s no sponsorship so people can’t buy their way in. And having a full time staff means we can afford to take our time and pick only the best. We actually spend months selecting our companies and getting to know the management teams.” This, together with a solid selection panel consisting of nine VC’s and four senior IT executives drawn from across Europe, means investors get to see quality.
So why are Silicon Valley technology companies so highly rated? As a rule, Californian technology start-ups tend to have more experienced management teams than their European counterparts, partly because the US is further along the road in developing venture capital as an asset class. Consequently, talented executives buried in corporations are more likely to be tempted to launch out and start or join a new venture than is the case in Europe. Also, the sense of urgency and scale, even today, in the
local technology market means entrepreneurs find it easier to identify opportunities and build management teams. This is against a background of a gross state product of $1.4 trillion, which makes California the fifth largest economy in the world.
Investor representation at the event was strong with 38 VC firms and 59 professionals in attendance. Judging from the standard of the 15-minute pitches to investors the day was worthwhile for anyone that wants to understand what the term compelling proposition’ really means.
The 15 minute pitch of Rod MacGregor, serial entrepreneur and CEO of three and a half year old NanoMuscle, outlined how his company’s IP consists of taking an existing material that flexes when an electric current is passed through it and using it to build a tiny motor. Because the underlying material has an energy density 10,000 times greater than a conventional motor, a paperclip-sized device can be built that has the same performance as a matchbox-sized motor built using 180-year old electromagnetic technology and it consumes half the power.
For his main target market, MacGregor wants to use his super-efficient, miniature motors to replace many of the small motors found in cars which carry out a range of tasks like powering windows and wing mirrors. The benefits to automakers, one of which is an investor, are reduced weight and cost. Whether MacGregor’s leadership can guide Nanaomuscle to success remains to be seen, but his audience was certainly impressed.
You could hear a paperclip drop.