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by Troy Graham
(Tuesday, June 30) FAIRMONT - The West Virginia High Technology Consortium hosted a forum Monday on how to secure funding from venture capital firms, which invest large sums of money in rapidly growing industries, indicating that local technology companies may be poised for huge growth.
Larry Milov, the president of the consortium foundation, said nearly a dozen companies that have spawned from the consortium's incubator program are positioned to make the leap out of the start-up stage. It could mean expanding a business of five employees to 50 employees, he said.
While the incubator system provides a forum for start-up companies to develop their ideas, supplying them with low-rent space and a network of industry contacts, it takes a considerable investment for start-up companies to move to the next level, Milov said.
That's where venture capitalists may come in, he said.
"There's no reason why we shouldn't add venture capitalists to the tool box of what we're doing already," Milov said. "We've made great progress with the banking community, but there are other financial organizations that can play a role and spread the risk around."
Entrepreneurs are often afraid of dealing with venture capitalists, Milov said. Tom Loehr, of Fourth Venture in Charleston, said that venture capitalists often take an aggressive role in monitoring the companies in which they invest.
"We'll probably be more involved in the business than you would like," he warned.
But, venture capitalists have a proven track record of success, said Gary Glausser, of CEO Venture in Pittsburgh. Venture capitalists invested in such financial giants as Microsoft, Lotus and Apple when those companies were in their infancy, he said.
In addition, firms who have secured the aid of venture capitalists outperform the average American company as far as job growth, number of employees and research and development investments, Glausser said.
"We're pushing the entrepreneur to grow this thing as quickly as possible," he said.
Milov said very little venture capital is currently flowing into West Virginia. Having the ability to attract venture capitalists, who are extremely selective with their investments, could be the next step in the evolution of the area's fledgling technology industry, he said.
"This is a big deal for us," Milov said.