In my current role as a VC (or “venturepreneur,” as we refer to ourselves at our firm), I have become an evangelist in my own right, but for the concept of Less Venture Capital and “building value not excess.”

There have been many posts recently regarding what some are calling the Venture Capital Squeeze so I’ll try not to re-state what has already been said. The problem is not that venture capital is a bad idea; the problem is that too much venture capital too soon will hurt the startup if market forces make it clear that an early exit is the best option for the founding team.

The Fund Size Valuation Mismatch

The average venture capital fund size currently stands at $280 million, which presents a problem for VCs focused on investing in early-stage software companies. Generally speaking, the larger the fund, the more money it must invest on a deal-by-deal basis in order to justify the time commitment by the fund. But significant venture funding is not what today’s capital-efficient, Web 2.0 startups need—especially those that leverage the LAMP -stack, open-source frameworks and blog-fueled promotion. The old style of venture capital just doesn’t work for the type of company generally seen profiled on TechCrunch.

I became a VC because I believe that early VC involvement in any venture can add significant value (see: Venture Capital 2.0: Beyond the dark side). I also believe that it is a great time to be an investor. Having been the recipient of venture capital as an entrepreneur I recognize that too much venture capital too soon, is a bad idea. Too much capital too soon can create an impediment for taking advantage of potential opportunities for early liquidity – which, in most cases, is the best route for small startups to take. Om Malik sums this up nicely in a recent Business 2.0 article discussing how Google is now competing directly with VCs for certain deals:.

VCs looking to fund startups and flip them to Google are facing an unlikely rival — Google. The Mountain View, Calif., search giant has started buying companies on the cheap, before they even make the pilgrimage to Sand Hill Road.

Instead of VCs changing their model to invest smaller amounts, we are seeing an increase in Series A valuations. It’s not that startups have suddenly becoming more valuable, it’s that funds need to deploy larger amounts of capital. Considering the movement towards less capital and competition by the likes of Google, VC’s are increasing the valuations of young companies. The valuation increase enables the fund to deploy enough capital to make the investment worth their time.

Entrepreneurs giddy that their company has just been valued at a significant multiple often take the bait and raise more capital then they need.

The problem is that increased capital is always accompanied by expectations of increased return, which translates to increased time to liquidity and increased market risk. Unfortunately for the entrepreneur, additional capital seldom equals additional return. If the company is going to be sold, the acquisition price has to be significantly higher than it would be had the entrepreneur taken less venture capital to begin with. If it isn’t significantly higher, the entrepreneur stands to lose out on all or a substantial portion of their return. As many experienced during the bubble, this outcome was the norm, not the exception.

We foresaw this problem early last year when we decided to form Venturepreneur Partners. We saw it as an opportunity to change venture capital. Our model is predicated on getting involved much earlier in the process. We leverage our entrepreneurial experience and, in many cases, take on what could be considered a co-founding role in young companies. We fund prudently and roll up our sleeves early enough to add significant strategic value. We help shape the team, the product and the business model. In some cases, when we identify a need that fills a significant market opportunity that has not been pitched to us, we create the company ourselves (see: CollectiveX).

We don’t wait for momentum to occur and then over-fund in order to gain a significant equity stake in a young company. Instead, we add value early, or create value ourselves, then let the market determine the best route for ultimate success.

This is our model… and we’re sticking to it!

If you haven’t already noticed, Web 2.0 has enabled the formation of “virtual social circles” — circles that are so geographically sparse that they can only exist virtually. Since “virtual social circles” is a mouthful, for simplicity sake, I will refer to these circles as “Web-circles.”

While at the Techcrunch BBQ, I met a number of guys who I already knew — and somewhat surprisingly, already knew me — even though we had never officially met. Guys like Jeff Clavier, Nivi, Fred Oliveira (visiting from Portugal) and others who I knew (virtually) — although we had never actually spoken, seen each other in person, or even exchanged emails. Considering that I am an East Coast guy residing in Maryland, more than 3000 miles away from the Bay area, makes the fact that we already knew each other even more powerful and profound. In essence, we have been traveling in the same Web-circle, connected by our mutual interest in technology, startups, investing and Web 2.0. Our initial face-to-face conversations were aided by the fact that we already had mutual respect for each other’s background, talents and thoughts on the subject matter — knowledge that we gained primarily through blogging, but also through tagging and sharing data using services like del.icio.us.

A few years ago, prior to the emergence of this new two-way Web that we’ve collectively coined Web 2.0 — a moniker thats come through mass-collaboration and mass-debate, Web-circles really didn’t exist. Some would argue that newsgroups and IRC chat rooms qualify, however, I would counter that those Web-circles are small by today’s standards. So while traveling back to the East Coast on the red-eye, I considered the impact that Web-circles are starting to have on value creation.

The emergence of virtual founding teams.

Over the past several months, I have received more business plans and pitches from startups made up talented founding teams that are geographically fragmented. It hasn’t been uncommon for the CEO to reside in one State; the interface guru to reside in another State; the programmer to reside in another State (or Country); and other geographically dispersed freelancers to be involved. It’s becoming more apparent that founding teams are forming though pure virtual means. In many cases, I am already familiar with one or more members of the team as well as the startup itself -– through my involvement in the Web-circle.

Due to the difficulities associated with providing “hands-on” guidance from afar, it has historically been a “no-no” for an early-stage VC to make a lead investment in a startup that is located outside of its geographic area. Will Web 2.0’s enablement of Web-circles and virtual founding teams change this paradigm? There are many investors, including myself, pondering this question.

We’re funding eight new startups at the moment. A friend asked what they were doing for office space, and seemed surprised when I said we expected them to work out of whatever apartments they found to live in. But we didn’t propose that to save money. We did it because we want their software to be good. Working in crappy informal spaces is one of the things startups do right without realizing it. As soon as you get into an office, work and life start to drift apart.

Paul Graham - Essay

If the entire founding team is dispersed, the product is complete or near completion and momentum has begun to build around the startup; can a small investment be made to fuel further growth? Or should the executive team be immediately required to come together and establish roots in a single location near the investor. Historically, this has been determined by “the golden rule.” Which states that, “he who has the gold, makes the rules!” However, now that The World is Flat, and talent is boundless, should we reconsider this approach? I’m not sure, but it has been my experience that talent attracts talent. So if Web-circles are enabling high concentrations of talent to come together in founding teams – that’s a good thing. So for now, our firm will consider these opportunities, carefully, on a case-by-case basis.

Moving from Web-circles (social networking) to true connections.

It is now obvious that working relationships can be formed through Web-circles. But can true working relationships be sustained by pure virtual means? Absolutely. There are more than a few individuals (primarily developers) that I have never met in person, but continue to work with on a semi-regular basis. However, Skype and instant messaging has brought these individuals to my desktop, so considering how much time I spend online, its almost akin to being in the next office.

So will Web-circles ever replace the need for true “face-to-face” business connections? Not for me. Despite my success in establishing virtual connections through Web-circles, the extrovert in me will always prefer in-person connections. So if you’re reading this essay and are planning to attend the Web 2.0 conference next week in San Francisco, be sure to say hello, there is a high likelihood that I already know who you are.

By leveraging these platforms, a plethora of new Web 2.0 startups are being bootstrapped and rapidly building focused WebApps such as Basecamp (web-based project management), Blinksale (web-based invoicing), Chalk.it Writeboard (web-based white boarding), and many more (see TechCrunch for daily examples). Innovation at this level has not been seen for some time. Ten years ago this month, Netscape had its wildly popular IPO which was the tipping point that marked the beginning of the Web 1.0 boom.

So what makes the creation of Web 2.0 businesses different from the Web 1.0 startups that preceded them? I believe, three things separate the two:

1) open source, 2) blogging, and 3) social networks.

The impact of open source.
Although it existed ten years ago, open source was not pervasive or widely accepted. Today the open source movement has become, in many ways, the culture that defines Web 2.0 itself. The open source attitude extends far beyond software and has created a mentality of collaboration that is driving the adoption of standards that will inevitably lead to interoperability – valid XHTML, CSS, and microformats are good examples. This movement has led to the creation of open API’s enabling apps to be built on top of existing apps. Open APIs and the LAMP stack of open source applications are enabling the launch of capital efficient enterprises that spend virtually zero on software infrastructure. As a result, infrastructure costs are limited to server and bandwidth charges, which today, are relatively inexpensive. This alone, is having a major implication on bootstrapping. Startups are being launched 100x cheaper.

The impact of blogging.
Fred Wilson summed up blogging very well in his recent post by defining it as posting, subscribing and tagging. I would also add pinging to that list. Trackback pinging is the enabler of multi-blog communication, and is the mechanism that allows global conversations occur among bloggers with shared interests. These conversations have transformed the Web into a two-way medium enabling ideas and information to spread across the Web quickly via word of mouth.

Futhermore, through tagging and subscribing, blog (post) information can be instantly and conveniently delivered via RSS directly to desktop news aggregators. Blogging’s growing impact on mainstream publishing, PR and promotion have fundamentally altered the Web’s power structure. Unlike during the Web 1.0 era where launching a new website required significant capital and channel relationships to acquire initial traffic, Web 2.0 startups are able to leverage word-of-mouth blog-fueled promotion to gain early traffic and customers to quickly validate their value propositions. Additionally, blogging creates a feedback loop that can be used to quickly improve the product. These developments have further influenced bootstrapping and a sort of “democratization” of the Internet. Through blog communication, startups are now able to bypass expensive advertising, yet still gain enough visibility to demonstrate value quickly by leveraging early customer adoption and feedback to incorporate rapid product improvements.

The impact of social networks.
In this second, Web 2.0, phase of the Web, networking has now extended from machines to people. The underlying networking infrastructure of the Web has become the foundation for a vast social networking infrastructure for groups. Popular social networking services such as LinkedIn, Del.icio.us, and MySpace are enabling like-minded individuals to come together and form social networks that are empowering groups to create value and share value like never before. The GoingOn Network plans to take interoperability between social networks to a new level.

Through these networks, talented individuals can now find each other and collaborate on software development projects, including those created in open source communities as well as those created by individuals forming virtual startups. Furthermore, folksonomies are enabling individuals to share value through spontaneous categorization of content by shared-tagging. Del.icio.us and Flickr are prime examples – both services gained rapid popularity by enabling their users to share value through tag categorization and subscribing.

Startups are able to use social networks to easily locate development talent pre-product launch and to spread information about their products/services post launch. Consequently, social networking further fuels a startup’s ability to bootstrap.

Which brings me back to my initial question. Will Web 2.0 result in an opportunity for venture-fueled value creation, or will the landscape be defined primarily by bootstrapped startups that leverage open source, blogging and social networks to fuel a Web-based lifestyle business boom? My guess – Web 2.0 will create many examples of both. Moderately successful startups will result in Web-based lifestyle businesses, while the few that gain significant traction will become attractive platforms for growth. These startups will be candidates for early acquisition or will leverage the “Two Stage Venture” model defined by Tim Oren to build significant standalone businesses.

With accelerated communication and collaboration driven by the above-mentioned movements, it shouldn’t take us long to find out. What are your thoughts?

Web 2.0 is a collection of small pieces of loosely joined technologies coupled with a movement towards collaboration and interoperability. This has enabled control of information to shift to individuals and has given us a voice like never before. We are now able to easily locate and connect with like-minded circles and form social networks that drive mass-collaboration — wikis, open-source and tag-based folksonomies are all examples of this.

Implications of Web 2.0 will be far reaching. It has already significantly affected how I use the Web. I now find information not through Google or Yahoo but through services like del.icio.us, Technorati, and Gataga. I use these services to create RSS feeds from tags so that new postings are delivered daily to my news aggregator. I now categorize the most relevant information into new RSS feeds of blogs that I then subscribe to. In some cases, I use a collection of these feeds to create TagClouds that generate automatic folksonomies that allow me to analyze the popularity of related information (tags) over time. Does this make me a geek? Probably so, but it also makes me an early adopter of things to come that will have implications on every major Web property — from Ebay to Amazon. An arms race is clearly already happening between Yahoo and Google as evidenced by a spate of recent micro-acquisitions of promising Web 2.0 startups Flickr, Dodgeball, Blo.gs, etc. These strategic acquisitions are a clear attempt by each to acquire knowledge, technology and data to position them to capture mindshare and advertising dollars from the changing Web.

A changing investing landscape

The post, It’s a great time to be an entrepreneur, by Joe Kraus provides interesting details of how cheaper hardware, free software infrastructure and search engine marketing have made it less expensive to start a company. Additionally, I’d add that Web 2.0 has changed the rules for entrepreneurship by lowering barriers to entry enabling bootstrapped startups to gain visibility not through advertising, but primarily through social networks and blog fueled promotion. These changes are impacting venture investing as well – consumer applications are now back in vogue while investments in enterprise applications are suffering due to the pricing pressures that open-source applications and LAMP architecture are creating within the enterprise.

Even more dramatic will be Web 2.0’s impact as a platform for the development of rich Internet applications and services. Ajax is enabling the creation of plug-in free Web apps that rival the performance of client-based desktop applications – Oddpost and Google Maps are great examples. Open API’s are enabling the creation of apps on top of apps – TagSoup and the Craiglist - Google Maps hack illustrate this. It is my opinion that these developments represent the very tip of exciting innovation to come — innovation that will require a new approach to venture investing led by a new breed of angel and venture investors that are able to successfully balance irrational exuberance with prudent funding to fuel the creation of new platforms for growth.

After a few Google searches and visits to Stylegala, I located the talents of Ryan Cramer and Maksim Rogov. Ryan’s grid-based template design nails the look-and-feel and usability standards that we set out to achieve. Maksim’s standards-based CSS coding and flawless MoveableType and Markdown integration is the engine that makes our content go. Speaking of content, I must thank my friend and long-time advisor Kristin Zhivago for editing, wordsmithing, and reviewing the site's content. I wouldn't think of launching anything without her feedback.

This website/weblog was built to facilitate communication with others. Please feel free to comment on each post -- including this one -- we appreciate any and all feedback.

That’s the question we pondered as we decided to join “the dark side” (as our entrepreneurial friends would say) and formed Venturepreneur Partners.

We have started, managed, acquired and successfully sold several companies. Our own experiences and observations led us to challenge the notion of the standard VC model, which typically looks like this:

• Companies with “breakthrough” ideas are given significant capital to build route-to-market infrastructure (i.e., sales, marketing, support, and IT) with the goal of accelerating growth in pursuit of an IPO or large, later-stage acquisition.

• Of every ten companies funded by VC’s, one or two end up as home runs. The remainder end up as base hits or strikeouts. The home runs fuel the fund and the base hits simply return invested capital. The goal is to deliver an internal rate of return (IRR) that will enable the partnership to raise its next fund.

• About 10-20% of funded entrepreneurs end up rich. The remainder gain nothing more than experience.

Sure, this model has been successful for many top-tier VC’s, but it overlooks a clear market opportunity, and in the current environment, it has become increasingly difficult to sustain. Besides, most of the entrepreneurs who go through this process learn – the hard way – that their acceptance of early funding focused on building route-to-market infrastructure substantially reduces their return, if their companies are eventually acquired.

Potential acquirers heavily discount the value of this infrastructure if the company is sold prior to achieving significant customer and revenue traction. Large companies already have sales and marketing infrastructure that includes customer support, IT systems and management. Plus, they want to brand the acquired product as their own, rather than perpetuate the brand of the acquired company.

Can success be determined prior to investing?

We believe that the majority of early-stage venture backed technology companies are better suited for early acquisition rather than continued growth as standalone companies. How many companies have the potential to become the next Google or Microsoft? Not many. In most cases, channel dynamics, more so than technology, determine market winners.

Furthermore, when a company is in its formative stages, no one really knows if it is going to grow up to become the 800-pound guerilla that dominates its market. Google couldn’t have imagined it would become the dominant search company during its first few years of existence. Microsoft couldn’t have known that IBM would clear the path for them to dominate the PC market for operating systems.

Neither of these companies had “breakthrough” ideas, but they reached a point where momentum and sales took off, largely due to the market oversights of established industry incumbents.

Which brings us to Venture Capital 2.0

Why not invest in capital-efficient companies that capitalize early on technological shifts within markets? Companies whose concepts aren’t always “world-changing,” but that have a clear potential for early success? Why not fund and help position these capital-efficient companies in a way that makes them attractive for early acquisition - if that’s appropriate, while ensuring that they are also attractive targets for follow-on capital, if standalone growth continues to be the best direction? What’s wrong with an approach that offers a dual-path to success for the entrepreneurs and the investors?

This is how we define the new model:

• High market demand is not limited to “world-changing” innovations. Capital-efficient companies focused on addressing unmet needs in large markets can produce significant returns for both investors and founders, by actively creating dual paths to liquidity. One path leads to early acquisition, the other to a traditional later-stage exit.

• Great marketing always beats great technology. Market positioning and product development should occur simultaneously. Early exits require early preparation. Young companies are not acquired by pure coincidence.

• Early, hands-on investing in companies with clear acquisition potential makes sense, but ultimately market dynamics determine the best liquidity strategy. Be right-sized for exit at every stage of the company’s lifecycle.

Read our Strategic Approach: Building Value Not Excess »

No one wants to repeat the mistakes that led to the crash. Investors are taking a much more prudent approach toward funding, even for innovative startups. And the “me-too” companies are not getting funded as quickly as they did in the past.

In today’s environment, companies are not attractive to acquirers unless they are able to first build —and prove — their value. So what does it take to build value? When can it be proven? The answer is different for every company and industry.

In software, value can be demonstrated quickly; in some cases, less than two years. Hardware often requires more time and capital to arrive at the value point, making it difficult to create an early acquisition situation.

Building Value

It has been our personal experience that value is created when the product has been developed, customer feedback has been incorporated, product improvements have been made, and the initial paying customers arrive.

At this point, technology risk has been eliminated. Market risk has been reduced, because it has been proven that a large market of paying customers exists.

This is one of the key inflection points in a company’s lifecycle. This is the moment when company founders and investors need to ask themselves: scale or sell? Or, put another way, expansion or (early) acquisition?

• Option #1: Expansion. Particularly in the case of software, the amount of capital required to market, sell, and support a product is significantly greater than that required to develop a product. This is the point at which many founders solicit venture capital, with the goal of growing the company, then going public or being acquired later.

• Option #2: Early Acquisition. In this case, the founders attract and are acquired by a company that already has the necessary marketing, sales, and support infrastructure in place, and sees the acquired product and development team as an important strategic addition to its current product line.

Company founders and their finance partners have traditionally chosen Option #1. The investors often replace the founder, typically the main product developer and product evangelist, with a more operations-oriented CEO.

While this route is certainly viable, and we are as open to Option #1 as we are Option #2, we also believe that today’s environment and many of today’s entrepreneurs and companies are better-suited to Option #2. It’s a win-win situation all around. The founder can focus on what he/she does best — product development and improvement. The acquiring company improves its talent base and its technological reputation. Its customers get access to the new product, along with a professional and well-managed development and support infrastructure.

Preparing a company for a successful early acquisition does not happen by accident. It takes planning and proper execution. That’s where our Reverse-Liquidity Planning™ process comes into play.

Early-stage companies are not acquired by pure coincidence. Successful “serial entrepreneurs” take steps to increase the chances of achieving a desired exit scenario. Other entrepreneurs seek this result, but most are not sure how to go about it.

Reverse-Liquidity Planning involves laying the groundwork for synergistic partnerships with potential acquirers concurrently with product development. The process is not about selling companies, because it has been our experience that companies are bought, not sold. We have found that companies interested in distributing a product to their customer base often ultimately become interested in acquiring the product and its associated development team. Thus, by identifying likely distribution partners as part of our pre-investment due diligence process, we begin the process of reverse-engineering several possible paths to liquidity.

Immediately following investment, we develop a detailed Reverse-Liquidity Plan in parallel with refinement of the company’s business plan. Once developed, the Reverse-Liquidity Plan serves as the roadmap that aligns the objectives of the entrepreneur and the fund. The portfolio company focuses on executing its business plan while we focus on building relationships with the optimal exit or growth partners for the company.

One of the most important aspects of the Reverse Liquidity Planning process is the discipline that it imposes on our portfolio companies. It ensures that each company that we invest in:

• develops and launches an exceptional product offering;
• quickly proves its value proposition in the market served;
• is capital-efficient and thus possesses a relatively low cash burn rate;
• is optimally positioned for early acquisition by market leaders; and
• possesses sufficient market value to attract expansion capital if it becomes clear that expansion will produce greater value to the founders and investors.

When an early acquisition is successful, the acquiring company gains access to leading-edge technology and the people who created it — prior to the infusion of multiple rounds of venture funding. The founders are able to continue improving their product and take it to market, backed by the acquiring company’s marketing, sales, IT and support infrastructure. The early-stage investors and founders realize a strong return on their investments.

The Reverse-Liquidity Planning process is the driving force behind our decisions and actions. It determines which companies we invest in, how much capital we commit, and how we add value to support each investment.

The origin of the Reverse-Liquidity Planning process

The Reverse-Liquidity Planning™ Process evolved from our experiences as co-founders of ImageCafe back in 1998. We set out to achieve an early exit, and achieved our goal when the company was less than 2 years old by having it acquired by Network Solutions/Verisign for a 11x investor return.

After the sale, Clarence Wooten became an angel investor, building a portfolio of start-up firms. Lori Whitted co-founded a boutique M&A firm focused on raising capital for early-stage companies and helping technology companies in general achieve liquidity through acquisition. Their experiences with ImageCafe and other companies convinced them that the majority of tech companies are better-suited for early-acquisition rather than continued venture-funded growth. Consequently, a market opportunity existed for a new type of venture firm that focused on identifying appropriate opportunities for a carefully planned and professionally executed position-for-acquisition strategy.

In early 2002, Clarence - with the aid of fellow entrepreneur J. Bogh - synthesized his thoughts around this phenomenon. He extracted the common elements of success into a proprietary, repeatable methodology that he named the Reverse Liquidity Planning™ Process. In late 2004, Clarence and Lori rejoined forces to launch Venturepreneur Partners.

The Reverse Liquity Planning™ process drives the investment philosophy of Venturepreneur Partners and is based on the following beliefs:

• Early-stage companies are not acquired by pure coincidence.

• Successful “serial” entrepreneurs take steps to increase the chances of achieving a desired exit scenario.

• With strategic planning and execution, early in the lifecycle, companies can be positioned as attractive candidates for strategic acquisition by pre-identified potential acquirers prior to investing in significant route-to-market infrastructure.

Capital Efficiency

We use our “3-on-3 Rule” to determine if a company is capital-efficient.

The 3-on-3 Rule states that a capital-efficient company, using less than $3 million in funding, in less than 3 years, can:

• Build a great product
• Incorporate customer feedback to improve the product
• Validate that a large market of paying customers exists

Put simply, capital-efficient companies don’t spend more than they have to. They spend just enough to develop the product to the point where its value can be validated by real customers. Once this value is validated, an early acquisition or capitalization to build route-to-market infrastructure can occur.

Platforms for Growth

Value is critical, but it has to be aligned with market forces and timing in order for significant growth to occur. Once these conditions are met, the product and its associated development team are poised for growth. It’s time to apply additional funding to build out the appropriate route-to-market infrastructure. The route-to-market infrastructure could come from an acquiring company, or could be built internally, using additional funding.

Many technology companies meet our definition for capital efficiency. Unfortunately, most of them don’t have all the pieces in place to be considered a platform for growth.

For the ones that do meet the Platforms for Growth criteria, we are committed to helping them create significant value over an accelerated time span. We infuse each company with our operational expertise, business development know-how and marketing savvy—strategically executed through our unique Reverse-Liquidity Planning process.

We tend to invest in development teams working on products related to our own areas of expertise, which are:

• Enterprise Software and Services
• Internet Applications
• Mobile Applications

The products that interest us right now are those that are software-based, or that leverage and apply technology in new ways.

Most importantly, blogging, social networks and applications built on LAMP-stack architecture are enabling entrepreneurs to locate, form and lead virtual teams to bootstrap the creation of capital-efficient software enterprises.

We not only recognize these changes, we have incorporated them into our model for Venture Capital 2.0. These developments and other factors have lead some to believe that a profound structural impact is transforming venture capital. Regardless, it is clear to us these developments require changes to existing models for early-stage investing.

The best way to get a dialog started is to use the form on this page to answer the following questions. Feel free to compose your answers in a separate document and then paste the copy here. Your document should be no longer than two pages.

Application Form

10320 Little Patuxent Parkway
Suite 1202
Columbia, MD 21044
410.715.1400 tel.
410.715.1450 fax

Aerial view from Google Maps.

Southeast Office

3350 Riverwood Parkway
Suite 1900
Atlanta, GA 30339
770.984.5373 tel.
404.699.0781 fax

Aerial view from Google Maps.

Introduce your business to us by by clicking here.

Bio Highlights

• Earned a B.S. in Business Management from the Johns Hopkins Univ. and an A.A. in Computer Aided Design for Architectural Engineering
• Founded Metamorphosis Studios, Inc. in 1994; sold the company in 1998 to MediSolv, Inc.
• Founded ImageCafe.com in 1998; raised less than $1 million in capital; sold company seven months after launch to Network Solutions/VeriSign for more than $20 million.
• Continued on as VP and general manager of the ImageCafe.com business unit for Network Solutions/VeriSign through 2001
• Founded Wirespan Communications; achieved 763% growth from 2002 to 2003; named the fastest growing private company in the Baltimore metropolitian area.
• Chairman of the Board for Wirespan Communications, Inc.
• Co-Founder and General Partner, Venturepreneur Partners

Prior to establishing Venturepreneur Partners, Clarence Wooten was managing partner of Wooten Ventures, an angel investment firm providing seed funding and guidance for entrepreneurs building innovative businesses.

Coined a “serial entrepreneur” by Entrepreneur Magazine in its February 2000 issue, Mr. Wooten has co-founded and operated numerous businesses that leverage technology-based platforms and tools for multimedia, computer-aided design, the Internet, and broadband services. Articles about Clarence have appeared in Forbes ASAP, Entrepreneur, CNNfn, The Wall Street Journal, and Fast Company magazine. Clarence’s entrepreneurial experiences are also the subject of a recent Babson College case study.

Clarence founded his first company, Envision Designs, an architectural visualization company, while an undergraduate in college in 1991. The company created computer-generated, 3-D animated models of architectural plans. In 1992, Clarence was awarded Catalyst Magazine’s Caddie award for is work in PC-based animation. His next company was Soft Ideas Corp., which he co-founded to develop, PricePerfect for Kitchens, a price-quoting database software application for kitchen designers. From 1994 to early 1998, Clarence ran Metamorphosis Studios, Inc., a multimedia and Web design firm with co-founder Andre Forde. Metamorphosis Studios was acquired in 1998 by MediSolv, Inc.

From early 1998 through 1999, Mr. Wooten served as CEO of ImageCafé.com, a leading e-commerce website solutions company he co-founded with long-time business partner Andre Forde and Lori Whitted. Under Clarence’s leadership, ImageCafé raised a total of $750,000 in private equity and bridge financings. By using this modest sum of capital to rapidly develop an exceptional product, secure key channel partners, and position the company within the sights of large companies that provided complementary services, he was able to guide ImageCafé to swift liquidity. Just seven (7) months after market launch, ImageCafé was acquired by Network Solutions/Verisign for more than $20 million providing in excess of an 11x return for the company’s investors. The lessons learned from this quick jaunt to an early acquisition became the foundation for the Reverse-Liquidity Planning™ process.

Through 2001, Mr. Wooten continued to drive ImageCafé’s growth and direction as vice president and general manager of Network Solutions/VeriSign’s ImageCafé business unit. Today, ImageCafé’s technology assets are completely integrated into the overall Network Solutions Internet domain registration and website offering.

After completing his earn-out with Verisign, Clarence enlisted the expertise of two former Verizon executives to a new company that he funded and co-founded in 2002 called Wirespan Communications, Inc.. Since that time, Wirespan has grown to more than 50 employees and become a premier broadband installation and technology integrator in the Mid-Atlantic region. In 2004, Wirespan was recognized by the Baltimore Business Journal as the fastest-growing private company in the Baltimore metropolitan area after achieving 736% revenue growth from 2002 to 2003. Today, Clarence serves Wirespan as Chairman of the Board.

As a General Partner of Venturepreneur Partners, Clarence leads the Mid-Atlantic office. He is a native of Baltimore and is well-connected within the Baltimore/Washington venture community. Mr. Wooten is also a charter member of the NAIC’s Marathon Club.

Clarence is currently a board member of the University of Maryland’s Dingman Center for Entrepreneurship, the NeoTech Technology Incubator, Banneker Capital Management, and the Babe Ruth/Maryland Sports Legends Museum. He is an honors graduate of the Johns Hopkins University with a degree in Business Management.

• Techcrunch
• Om Malik’s
• A VC
• Software Only
• Venture Blog
• Jeff Nolan
• Paul Graham
• Revenue Journal
• Seth’s Blog
• Genuine VC

Just to mention a few.

Bio Highlights

• Earned bachelors from Duke University and M.B.A. from Harvard Business School.
• Boston Consulting Group; strategy consultant. Advised Fortune 500 clients with focus on telecommunications, media and consumer marketing.
• Washington Post, director of Corporate Development. Analyzed strategic M&A and private equity investment opportunities across all company divisions.
• Co-founder/officer of TheWashingtonPost.com, serving as vice President of Finance and Business Development
• Officer and vice president of Marketing and Business Development for LocalEyes.com, sold to AOL, Inc.
• Co-founder of ImageCafe, with Clarence Wooten. Sold to Network Solutions/VeriSign for an 11x return on the original investment
• Co-founder of the McLean Group, a boutique M&A and private equity investment firm.
• Vice president, Network Solutions/Verisign. Led business development, product management and marketing for the Internet Naming and Directory Services division.
• Vice president, Worldspan, a company that processes over 65% of all online airline transactions made in the U.S. Led corporate e-commerce division and product planning for travel agency and corporate markets.
• Co-Founder and General Partner, Venturepreneur Partners

Ms. Whitted brings a wealth of start-up, public company, consulting, and private equity experience to the Venturepreneur team. Lori spent the first six years of her career as a financial manager for GE Company/GE Capital and for First Union National Bank, where she received numerous commendations including National Honors in GE’s Financial Management Program. After completing Harvard Business School in 1992, Ms. Whitted joined the Boston Consulting Group where she specialized in providing strategic analysis and advice to telecommunications, supply chain and media clients such as AT&T, Staples and The Washington Post.

Lori was then recruited by The Washington Post Company as Director, Corporate Development, where she participated in analysis, due diligence, and structuring for a number of proposed private equity investments, divestitures, and acquisitions, ranging in size from $15M to $600M. She later leveraged these skills as co-founder of The McLean Group, a private investment bank located in Northern Virginia. While with the McLean Group, Ms. Whitted had an impressive client list and track record. She helped raise Series C funding for the Motley Fools to facilitate international expansion. She lead efforts to secure $15M in Series A funding for Quantum Alliance, an early stage financial services company located in the Mid-West.

Prior to co-founding The McLean Group, Ms. Whitted was a co-founder/officer of The Washington Post.com (a wholly-owned subsidiary of the Washington Post Company) where she served as vice president of Finance and Business Development as the company grew from 7 to 100+ employees, and was an officer of LocalEyes.com (sold to AOL, Inc.) where she served as vice president of Marketing & Business Development from seed stage through preparation for asset sale.

During the late 1990’s, Lori co-founded and was instrumental in establishing the corporate structure, developing the business model and creating the channel development strategy for ImageCafe.com. In partnership with Clarence Wooten, Lori was a key stakeholder throughout ImageCafe’s rapid assent to liquidity. ImageCafe’s early sale to Network Solutions/VeriSign for more than $20 million - less than 2 years from inception - provided more than an 11x return for the company’s investors. Lori ultimately joined Network Solutions/Verisign as a division vice president. In this role, she led business development, marketing, and product management for the Registry Division, and was pivotal in Verisign’s entre into VoIP through the $1B acquisition of Illuminet Holdings in 2001. In August 2002, Ms. Whitted returned to Atlanta, GA, her hometown, and joined Worldspan, L.P., the leader in e-commerce for the travel industry.

In 2003, Worldspan processed over 65 percent of online airline transactions made in the U.S. Worldspan is the technology engine behind over 16,000 travel agencies including the well-known consumer online agencies Expedia, Orbitz and Priceline. Initially hired to lead various cross-functional strategic initiatives, Lori was quickly tapped to lead Worldspan’s growing corporate e-commerce division including sales, marketing, partner management and product planning. In October 2004, Ms. Whitted resigned from her role as vice president for Worldspan, L.P. and soon reunited with her longtime business colleague, Mr. Wooten, to co-found Venturepreneur Partners.

As an entrepreneur, executive, and intra-preneur leading smaller business units of large companies, Lori has developed a solid understanding of what is required for an early-stage company to successfully define and execute its value proposition and attract the attention of large industry incumbents for acquisition.

As a General Partner of Venturepreneur Partners, Ms. Whitted leads the Southeast office. Her investment focus is early-stage Applied Technology Companies, with particular emphasis on companies that leverage telecommunications, Internet, VoIP or enterprise software technologies.

She serves as an active Board member for a number of local not-for-profit organizations. In addition to earning an MBA from Harvard Business School, Ms. Whitted holds an undergraduate degree in economics with a minor in biomedical engineering from Duke University, where she was an A.B. Duke Scholar. Lori lives in Atlanta with her husband and their three young sons.

Bio Highlights

• Over twenty years experience in the telecom industry
• Venture partner with Bessemer Venture Partners
• Executive VP at Corvis Corporation; took company public in 2000
• Nortel Networks, various executive positions, including president of the company’s Internet Service Provider business
• Engineered Nortel’s acquisition of Aptis Communications and played a key role in Nortel’s acquisition of Bay Networks
• Currenty Venture Partner, Venturepreneur Partners

Mr. Falcao is an accomplished executive with over twenty years of experience in the telecom industry. Glenn is a prior venture partner with Bessemer Venture Partners, bringing top-tier private equity experience to the Venturepreneur team. As a Venture Partner of Venturepreneur Partners, Glenn focuses on creating and identifying investments in the communications sector.

He was most recently the Executive Vice President at Corvis Corporation, where he was a member of the executive team that took the company public raising over one billion dollars and achieving a market capitalization of over thirty billion dollars. Corvis’ IPO was one of the most successful in the telecom sector in 2000.

Prior to joining Corvis, Glenn had an accomplishment-rich career with Nortel Networks, where he held a number of executive positions. One initiative hed led was the launch and development of Nortel’s optical business. As President of the company’s Internet and Service Provider business, he was a key executive in positioning the company in the Internet Protocol sector with the specific focus of achieving leadership in high-speed access.

In 1997, Glenn engineered Nortel’s acquisition of Aptis Communications and played a key role in its acquisition of Bay Networks. He currently serves on a number of boards. Glenn received a bachelors degree in Electrical Engineering from McGill University, in Montreal.