Friday, September 17, 1999

Interview with Joseph F. Troy, Troy & Gould

Joseph F. Troy is a co-founder of Troy & Gould Professional Corporation, and co-chairman of the American Electronics Association's Capital Sources Conference being held next week (one of the many local venture forums that happen throughout the year). I asked him a little bit about the conference and what they're trying to do, and some of his views on the startup activity here in Southern California.

Joseph F. Troy:

BK: Tell me a little bit about the Capital Sources Conference and what's planned for this year...

JT: The conference is designed to bring the leading institutional investors, investment bankers, venture capitalists, private equity investors and angel investors who specialize in the technology sector together with public and private technology companies that are seeking financing, mergers and acquisitions or strategic partnerships. The speakers are drawn from the various capital sources present. The attendees will be AEA member companies and selected guests of AEA. Private meetings will be arranged for attendees with the speakers during the conference in separate meeting rooms set aside for this purpose.

BK: How do you see your conference as influencing tech companies here in Southern California?

JT: Over the years, the conference has been a useful source of the latest financing techniques, as well as important contacts, for growing high technology companies. Of the more than a thousand companies that have attended past AEA conferences, many have gone on to become the leaders in their fields with very large public stock capitalizations.

BK: What's your view on the high tech startup activity here in the past year? In particular, what kind of effect do you think it's had on the local business climate?

JT: Start-up activity this past year has been stronger than every before, particularly in the field of information technology, Internet and media technology. The local business climate has clearly benefited from this activity, and should benefit even more in the next two or three years as these companies grow and mature.

BK: What challenges do you see for the local high tech industry in the future?

JT: The greatest challenge of the local high tech industry is to develop a capital base comparable to that supporting the Silicon Valley and Northern California centers, which are an order of magnitude greater than their counterparts in Southern California.

BK: What advice would you give to prospective entrepreneurs on how to attract startup financing here in Southern California?

JT: My advice to start-up venture entrepreneurs is to raise more money than they think they need in the early rounds, roll their products out fast, set themselves the goal of becoming the dominant technology platform in their field, maintain ownership of their technology, recruit strategic partners and licensees to spread the standard as far and wide and as quickly as possible, aim for angel investors in the first round of financing, and immediately shift to the conventional venture capital sources for subsequent rounds. Do not be tempted by quick fixes, such as mergers with shell public companies. Make sure the business model is workable before you start circulating your business plan; test it by discussing it with people experienced in venture capital. Seek patent protection aggressively and early. Do a thorough and professional job on the business plan before submitting it to anybody.