Posted on: Friday, June 22, 2001

Entrepreneurs pitch projects to investors

By Timothy Hurley
Advertiser Maui Bureau

Dean: Sees rocky tech market ahead

KA'ANAPALI, Maui — Entrepreneurs hoping to snap up millions of dollars for their money-making ventures appeared to meet with a good reception at a gathering of more than 100 investors here yesterday.

But whether their pitches to the 2001 Investors Choice International conference at the Westin Maui resort will lead to the venture capital of their dreams is another question.

Silicon Valley Bank Chairman John Dean tempered some of the enthusiasm in his keynote address yesterday. He said he sees a rocky technology market over the next 18 to 24 months as it struggles to recover from the excesses of last year's dot-com bust and faces a slowing overall economy.

Venture funding will be hard to come by, said Dean, noting that investment continues to drop both in total dollars and in number of deals. And, as if to illustrate, this year's conference drew about 50 fewer investors than last year.

"I would like to tell you that capital is going to be easy to get again. It isn't,'' he said. "It will get a little better. But they won't be throwing money around like they did in the last couple of years. Those days are gone.''

But Dean also had positive news, noting there still is capital available for entrepreneurs who come up with the best business plans. To entrepreneurs, he said the economic fallout has created opportunities to create top-notch management teams. And once financed, he said, these new ventures will have less competition, and valuations will be more in touch with reality.

Venture capitalists who pick and choose wisely will come away with a winner, Dean said. Some of the best companies will be created during this down period, he said, and some of the best returns will be generated as well.

"Great wealth will be created, but through reasonable growth,'' Dean said. "The technology market looks like crap the next couple of years. But, God, what a great time to invest.''

Earlier in the day, 13 companies — six from Hawai'i — each got 10 minutes to introduce themselves to the dozens of Mainland and local observers, including investors from at least nine Hawai'i, California and Utah venture capital firms. The companies were chosen from more than 50 that applied.

In past years, about 60 percent of the presenting companies — but only about a third of the Hawai'i companies — have gone on to get some form of venture funding, said Marlowe K. Ashton, chief operating officer for Wayne Brown Institute, which has been running such conferences for nearly 20 years, the past three on Maui.

Wylci Fables, chief executive of Maui-based IndaSea Inc., said he was thrilled to be given the opportunity to make his presentation. "I'm optimistic. We got a very good response,'' he said.

IndaSea creates software tools that allow for rapid transformation of online content, allowing programmers to change applications "on the fly.'' He asked investors for $3 million while suggesting a return of $100 million within five years.

The concept has intrigued several venture capitalists, who have requested further talks with IndaSea.

David G. Watumull, president of Hawai'i Biotechnology Group Inc., said he was gratified by the response following his pitch. The vaccine developer and research firm is seeking $10 million over two years.

"We think we have an excellent chance,'' he said. "But you never know until it's done.''

Watumull said he believes his chances are especially good because problems in the high-tech sector have created opportunity in biotech.

"It's more of the best of times than the worst of times for us,'' he said.

Other Hawai'i presenters included Destination Technologies Inc. and Viata Online, which offer software platforms for the tourism industry; PixelWorld, which focuses on online content streaming; and OptimEyes Supply Corp., which wants to do back-office logistics for the eyewear industry.