Seeking Investors, Small Firms Strut Their Stuff : All These Emerging Companies Want Is a Little Attention--and Some Cash
It was like the high school prom all over again, complete with sober suitors and invitations waiting to be extended. But no one was searching for a dancing partner Tuesday morning; instead, they were looking for money, and lots of it.
Eighteen emerging Southland companies got nine minutes each to attract a date from a venture capital firm. And they went about it with a variety of styles, from bold to polite to stammering.
These firms paraded for the benefit of about 150 investment bankers and venture capitalists, strutting their stuff and asking for favors ranging from the opportunity to “explore a financial relationship” to $10 million in cold cash.
The forum is Cruttenden & Co.’s third annual Southern California Conference for Emerging Growth Companies, a two-day showcase for 36 companies that ends today at the Newporter Resort in Newport Beach. And it has attracted money from firms throughout the nation and as far away as Singapore, London and the Netherlands.
Walter Cruttenden III, chairman of the sponsoring company, touted the conference as the largest gathering of institutional investors to converge on Southern California in search of the next Apple Computer, a strong start-up company with the look of a gold mine.
“Investors pay $400 to come,” Cruttenden said. “They’ll see more good deals in two days here than they’ll see in a month. The companies pay $700; they’ll meet more investors in two days than they’d normally see in a lifetime.”
And the companies’ representatives were prepared for the challenge--with gray suits, power ties and slick slide shows highlighting the life stories (usually brief) of their current life’s work.
Jeffrey B. Baer, chairman of the Famous Amos Chocolate Chip Cookie Corp. in Torrance, scattered bags of his confections throughout the luncheon room and flashed pictures of pecans and milk chocolate, believing, perhaps, that the way to a bank’s vault is through its executives’ stomachs.
Michael Pastore, president of Music to Go in San Juan Capistrano, tried the indirect approach in the search for backing to expand his two-store chain of high-end home entertainment systems and consumer electronics products.
Pastore has planned 23 stores in Southern California’s tonier regional malls. And he wants to leave Circuit City, Federated and Sharper Image in the dust when it comes to the sale of pricey plug-ins and portables.
“You can find a $50 Walkman at any mass merchandiser,” he explained to the group, “but you can’t find a $350 Walkman that does exactly what you want it to.”
You probably can’t find much of his other stock at Federated either, those things that go ring in the dark in which he specializes: lavender lip phones, duck phones that quack, cable car phones that ding, $250 neon-edged transparent phones that light up. And then there are those prepackaged audio-visual systems for, oh, $5,000, from well-known makers such as Fisher, Marantz, Yamaha.
What will it take to fund this proposed expansion? “Five million dollars,” Pastore said.
Before the conference broke up into small groups--an opportunity for investors to further screen the firms--Pastore and partner Keith Powell had received a couple of inquiries. Wolf Gluck, with Grayrock Shared Venture Ltd. of Ontario, Canada, was interested in further discussion at 2:45 p.m. So was W. Barry McCarthy of First Boston Corp. in New York.
And by 3 p.m., Pastore and Powell had at least one honest-to-goodness date, the promise of a later meeting with Terry M. Betz, vice president and managing director of Guaranty Acceptance Capital Corp. in Los Angeles.
Like any potential suitor, Betz was coy.
“This deal is so small,” he said after making arrangements with Pastore, “that it’s hard to attract big money people. We usually start at $15 million to $20 million and we operate in the $50-million to $100-million range usually.”
He paused. “But they’ve got an outstanding idea.”
COUNTY-BASED COMPANIES AT CONFERENCE
Name of Company Location Type of Business Auto Tech Data Systems Santa Ana Data management computer program Universal Photonix Laguna Hills Electro-optic security products Music to Go Inc. San Juan Capistrano Consumer electronics stores Lasodyne Corp. Tustin Document imaging optical disk system Floorplex Inc. Irvine Floor covering stores Triple Crown Industries Santa Ana Telephone system for jails Storage Concepts Irvine Parallel disk processors and disk-drive systems Restaurant Express Newport Beach Home delivery of restaurant meals Surfers Alliance Santa Ana Surfwear/beachwear Laguna Medical Systems Laguna Beach Consulting services to acute care hospitals Photonics Laboratories Cypress Data storage and retrieval TG Environmental Inc. Tustin Holding company for four operating companies Cable & Computer Technology Anaheim Computer emulation products Cresco Inc. Irvine Central purchasing services to nursing homes & hospitals Corollary Inc. Irvine Computer products Silicon Development Corp. Huntington Beach Custom computer microchips Cortex Pharmaceuticals Costa Mesa Drugs and technologies for the central nervous system Velie Circuits Costa Mesa Printed wiring boards OAZ Communications Tustin Document processing products
