Is This What a Proletarian Revolution Looks Like?

As I was completing my last post, I realized that what scares me more than those near-term impacts is the long-term cost of added government regulation and spending in the wake of this meltdown -- and a bold new chorus of socialist attacks on free markets and capitalism.  The $700B being considered by congress will be a drop in the bucket of American losses if this event sparks the proletarian revolution many here and abroad yearn for in America.

From Wikipedia: Karl Marx posited that socialism would be achieved via class struggle and a proletarian revolution, it being the transitional stage between capitalism and communism.

"My object in life is to dethrone God and destroy capitalism" & "From each according to his abilities, to each according to his needs." -- Karl Marx

On a lighter note, as I was looking for John Galt's response to the Marx quotes above, I ran across this parody of Atlas Shrugged in 1000 words.  It's my favorite book, but I couldn't help chuckling at the critique -- in a mocking sort of way ;-)  If you haven't read Atlas Shrugged yet, buy it now and I'll see you at Galt's Gulch!

How Does the Mortgage Meltdown Affect VCs?

I've heard today's frequently asked question multiple times this week as many colleagues, friends and family put all financial categories in the same mental bucket. Depending upon where you are in your fund cycle and the industries you back, the answer varies. Luckily, venture capital is a long-term business and private company valuations/fortunes don't fluctuate like public entities -- particularly when the mess has mortgage roots (little direct tech connection).  However, there are plenty of indirect effects on VCs and the portfolio companies.

In honor of the $700B bailout being considered, here's at least 7 ways the mortgage meltodwn affects VC funds.
1) Funds focused on financial technology investments are seeing customers disappear or cut technology spending.  However, companies with cost-saving products/ROI are still knocking down deals.
2) "Quant jocks" are on the market and smart tech companies are picking up the talent to squeeze ROI out of a microeconomic model, advertising arbitrage or customer value/acquisition. 
3) Portfolio debt from venture debt pure-plays (e.g. SVB, Square1) is calm, so far; but debt from diversified banks with mortgage exposure is nervous/gone -- watch those MAC clauses.  This is a very different bubble burst from the tech bubble, which left SVB licking their wounds for years.

4)  Alternative asset classes that relied heavily upon leverage/liquidity, like hedge funds, are getting creamed and regulation could change/kill many models.  That means venture capital gets a growing share of alternative asset allocations.

5) However, as public equities drop in value, the relative percentage of an LP's pool in venture capital grows even if VC valuations do not change -- putting some LPs over-allocated in venture capital.  Weird huh: as public securities perform poorly, LP allocation rules can actually discourage investing in a better performing category like VC.

6) "Mark to Market", one of the culprits behind the meltdown, is often derided by VCs who believe interim, illiquid valuations mean little compared to realized valuations.  Some bailout discussions include changing/removing mark to market -- could that simplify VC valuations/reporting going forward?

7) VC's in market for their next fund might as well hit the beach until all this blows over.  I've heard from at least one foundation friend that meetings with VC funds are being attended only as a courtesy right now.  LPs managing large pensions, foundations etc. are too busy ducking and moving money to really engage.

Neurodegenerative Disease Treatment

Guest Post by: 

Mike Schmitt, MD

Life Science Analyst and Editor of the Florida BioDatabase

Mike can be reached at M2Schmitt@aol.com

 

On Wednesday, September 10th, I had the opportunity to attend the Foley Lardner Leadership Education Series in Orlando. It was held in the law firm’s board room on the 18th floor of the Regions Bank building with breathtaking views of downtown—it was nice to see first hand the amazing economic development taking place in the metro Orlando area.

The conference was an update on treatments for neurodegenerative diseases (Alzheimer’s, Parkinson’s, etc) presented by Stuart Lipton, MD., PhD, who is the Director of the Burnham Institute’s Center for Neuroscience Research in La Jolla, California. 

Dr. Lipton presented some cutting-edge data on how a drug that he has already developed (Memantine) may be useful for not only treating existing Alzheimer’s disease, but for preventing it in high-risk individuals. The drug is FDA approved (has relatively minimal side effects) and is currently on the market. Dr. Lipton is hoping it gains wider usage among the neurology community to benefit Alzheimer’s patients.

Dr. Lipton indicated that if left unstopped, dementia-related diseases will consume over half of the US GNP by 2050. I think this reflects on not only our aging population, but on the ever-increasing costs of health care as well (good topic for another post).

I’ll remind folks that Dan mentioned the upcoming Alzheimer’s Memory Walk event in his blog on August 7th—be sure to take a look at the link as this is an awesome event to raise awareness of this disabling illness. In fact, the Gainesville “Walk” will be taking place on 10/4, Jacksonville on 9/20, and Orlando on 10/11.

On another note of importance to Florida life sciences—Ed Baxa, partner and member of Foley's Management Committee, and chair of the firm's National Pro Bono Committee announced that the firm will be contributing pro bono legal services (IP, regulatory, health law, etc.) relating to the development of therapies in the “orphan drug” space. The term "orphan drug" refers to a product that treats a rare disease affecting fewer than 200,000 Americans. Pharma companies are often reluctant to take on these illnesses as they perceive the potential market as being too small to justify R&D costs.

These services will be offered primarily to Burnham, university programs, and other non-profit 501(c)(3)’s. Thanks goes out to Foley Lardner’s commitment to being involved in our biomedical community on a research level as well as for patient care. 

Introducing Med Tech Thursdays, Like a Mini MedTechCrunch

Given the amount of medical technology being developed in and around Florida, I've been looking around for a "MedTechCrunch" to add to my daily reading. To be honest, I haven't found anything really compelling; but, there should be.  Have you found one?

That led to a discussion with my good friend Mike Schmitt, an MD and Life Science Analyst who knows Florida's medical device, diagnostic and biotech sector as well as anyone. In fact, Mike is the creator and Editor of the Florida BioDatabase, covered on FVB previously. The result of our discussion is Med Tech Thursday: a guest post each Thursday from Mike on medical technology topics, whether they involve startups, funding, research breakthroughs or Florida's growing life science ecosystem.  I think Mike's knowledge and relationships would provide a great foundation for an informative MedTechCrunch.com (yes, the domain is available, don't everyone grab it at once).  

This concept of topic-specific days feels like a nice experiment to organize my blogging hobby -- which regular readers know currently flows randomly wherever my mind/work flows.  Therefore, I'm also toying with a weekly schedule of New Media Monday, Info Tech Tuesday, Wildcard Wednesday, Med Tech Thursday and FAQ Friday.  Thus, each day could deliver topic-related posts.  Wednesday is designated as a wildcard day, but I don't plan to postpone interesting nuggets when they come to me.  If you have specific questions about venture capital or entrepreneurship, share via email or comment and I'll try answer on FAQ Fridays.  If you have a unique perspective on any of those daily topics, please join the conversation and share comments, or maybe even guest posts, whenever it makes sense.  

Without further ado, here's an intro from Mike and his first quest post will follow this one -- comment early and often!

"I happened to see Dan Rua in January of this year after being a panelist at the Florida Venture Forum in St. Petersburg. Dan told me about his Florida Venture blog along with a number of other blogging sites around the country (TechCrunch, etc.) which prompted me to check out Dan’s site (great job, Dan!). I recently proposed that I do a regular weekly posting directed at the life science industry here in Florida. After much arm twisting and the promise of a free breakfast at Denny’s—Dan agreed to let me give it a try.

By way of introduction, I am currently a life science analyst (grad. of UPenn & Johns Hopkins) and editor of the Florida BioDatabase sponsored by the University of Florida's Sid Martin Biotech Incubator. This is a comprehensive database that follows the life science industry throughout Florida and includes each biotech company's business and technology developments along with tracking the flow of investment dollars into Florida life science companies.

I also authored the 2008 Florida Biotech State of the Industry report which appears on the University of Florida SMBI website along with a link to the BioDatabase. I encourage interested readers (“shameless plug here”) to take a look at both of these resources as they offer a wealth of freely accessible information about our statewide life science industry. Kudos go to the University of Florida and the Sid Martin Biotech Incubator (especially David Day and Patti Breedlove) for supporting these valuable projects.

My intention for the weekly guest post is to stay focused on the Florida biomedical industry and cover a variety of topics including start-ups, investment trends, life science technology and economic development. I want to keep it brief and make it fun to read. Short interviews with some of Florida’s “movers and shakers” will be part of the postings.

Thanks Dan and see you at Denny's." -- Mike Schmitt, MD

IZEAFest Day 1: Tweets Galore and So Much More

Call me tired, but instead of detailing the first day of IZEAFest, I'm just gonna share live-tweets and the video streams. I'll also provide a quick report card on the sessions:
- ShoeMoney Keynote: A-
- Improving Your Content: C
- Big Money Bloggers Panel: A
- Growing Traffic: B
- What Advertisers Want: B
- IZEA Innovations: A
- Overall: A-/B+

The IZEA Innovations unveiled were many, but I particularly liked SocialSpark Causes (Blog for Charity), Smart Blog Rolls, Sponsored Blog Networks (easy-button for large-scale, targeted blog advertising), Affiliate/CPA Posts and CloudShout (real-time presence/communication & one-click blog apps) -- including private alpha keys under our chairs. I'll provide more detail on CloudShout after I've had more time to play with it, but Tony Hung did a good job of capturing the potential of CloudShout -- imagine an iPhone Apps or Facebook Apps platform, built for your blog or the whole blogosphere.

As I often do for conferences, I decided to award a Day 1 Golden KangaRua to ShoeMoney -- delivering great knowledge pulling double-duty for Keynote and the Big Money Bloggers panel. Congrats Jeremy...don't we need to talk about your next project ;-)

OK...OK...it's self-serving, but I also gotta give major KangaRuas to IZEA's dev team -- the team looked like zombies (worse than the Facebook kind), but their innovations rawked!

Related posts:
ZacJohnson.com
ShoeMoney.com

IZEAFest: Like an Obama, Palin, Arrington & CarrotTop Love Child

Imagine combining the best speakers, the best bloggers and Orlando fun into one event-packed conference and you'd have IZEAFest -- September 11-13.

The speaker lineup is crazy, including top bloggers such as Merlin Mann (43folders.com), Jeremy Schoemaker (shoemoney.com), Tamar Weinberg (techipedia.com), Loren Feldman (1938media.com), Stephanie Agresta (internetgeekgirl.com), Loren Baker (searchenginejournal.com), Brian Clark (copyblogger.com), Etan Horowitz (Orlando Sentinel), Tony Hung (deepjiveinterests.com), John Chow (johnchow.com), Alexander Schek (fayerwayer.com), and Steve Spalding (howtosplitanatom.com) -- and that's less than half of them.

Bloggers, advertisers, entrepreneurs and social media butterflies will take over Orlando's Grand Bohemian to discuss topics such as:
- Improving Your Content
- Big Money Bloggers
- Growing Traffic
- What Advertisers Want
- Social Networking for Bloggers
- Compelling Video
- Tools & Plug-ins
- Blog Design

After a couple days of throwing down some knowledge, the event culminates Saturday night with IZEAHunt -- a multimedia team scavenger hunt throughout downtown Orlando. My suggestion: wear clothes you won't mind throwing away at the end of the night. For those still alive Sunday, Universal will experience a blogger takeover the likes of which they've never seen -- bloggers in shorts and tanks, scary...;-)

If you're interested in blogging, social media, online advertising or just Florida's startup/technology scene, don't miss IZEAFest. Whereas most conferences of this scale cost hundreds or thousands, the $65 ticket price is unheard of -- although you do have to consider the "ruined clothes" cost. I hope you join us!

For those of you that don't already know, IZEA is a portfolio company of mine. Oh, and for those of you still hoping for a picture of the Obama, Palin, Arrington, CarrotTop love child, here you go:

+=

Florida Entrepreneurs in the Valley

I spent most of last week out in the Valley for some portfolio discussions and had the chance to catch up with some old friends. It was a nice reunion, giving me a taste of the impact Florida entrepreneurs are making in the Bay Area.

For example, I sat down with the MyBlogLog guys (Todd Sampson et al), founded in Orlando, FL prior to their acquisition by Yahoo and move to SF. That crew has spawned a host of new startups, including Gnip, Lookery, yet to be released Famery & Zentact, and a few others that are still on the drawing board.

I also saw Jason Baptiste (Publictivity), Phil Carter (QuinStreet), and Randy Glein (DFJ Growth, UF alum). Bryan Scott (prior Inflexion intern) is a busy man over at OpenDNS; he and I missed each other this time, but I really like his current gig.

None of these guys forget their roots. If you're ever out West, look them up...maybe they'll have their Tesla's by then.

Related images: dfj growth, famery, gnip, lookery, mybloglog, opendns, publictivity, tesla, tesla motors