Tech panel: Companies should look for high-quality investors
By Roy Moore - Nashville Business Journal, January 14, 2005
Technology companies looking for funding should try to land high-quality investors and not get caught up on the valuation of the company, a panel of local technology executives said Thursday.
"Very good investors are less concerned about the percentage they're getting of the company because they're very good at playing the (investment) game," says Bruce Lynskey, a clinical professor in entrepreneurship of management at Vanderbilt's Owen School involved in a number of tech startups.
Bobby Frist, chairman and CEO of HealthStream, told attendees at the Jan. 13 Nashville Technology Council event to set the stage quickly when pitching their companies for funding so the investors can draw analogies to other good companies.
He added company founders should let their emotions get the best of them over such issues as dilution during the offer sheet process.
Cliff Duffey, chairman and CEO of Cybera, says companies that focus too narrowly on the valuation can miss out on other clauses in the agreement that could prove to be more onerous.
Speaking at a roundtable focused on the drivers of corporate valuation for technology companies, Duffey says business owners should view the term sheet offer as the beginning of the process rather than the end.
Beth Chase, executive vice president and co-owner of InfoWorks, said she and her co-owner re-value their business each year, a move that could be beneficial if a purchase offer is made or one of the owners dies unexpectedly.
Most of the panelists disclosed they either use or endorse stock options for employees, while Lynskey advocated advisory boards to assist the companies.
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