Friday, February 6, 2004
Interview with David Hanna, Chairman of Hanna Ventures
David Hanna is Chairman of Hanna Ventures, and was just awarded the 2004 Lifetime Achievement Award from the Software Council of Southern California (www.scsc.org). David was an early investor in such companies as Sun Microsystems, Network Appliance, CacheFlow, and many others, and has been president of many high tech companies including Tropos Networks, Grid Systems, NetFRAME, Emulex Systems, CacheFlow, and many others. I asked David a bit about his successes and his advice to entrepreneurs.
BK: You've been involved in a fair number of successful companies. What do you feel is the reason these companies have been successful?
DH: Our successful companies have three things in common.
1. They are in big growing markets vs. mature, NICHE markets.
2. They all have a great product that is usually best of breed. I call it picking a product that is a "pain killer" vs. just a "vitamin".
3. Above all great people from the top to the bottom.
BK: What is the focus of Hanna Ventures, and what has your firm been investing in lately?
DH: Hanna Ventures is focused in two areas with our newest fund.
1. 1st Security - products that affect Internet Security - Proxy Security appliances like Blue Coat Systems and those products and services that address Homeland Security & Public Safety like A4Vision that does 3D Biometric Facial Recognition.
2. The second is wireless. We are specifically interested in Broadband Wireless Data Products that ride on an Industry Standard like "WIFI" and address areas like Digital Divide (last mile in rural areas). An example of a company in this area is Tropos Networks.
BK: What is the size of your current fund, and who are some of your portfolio companies?
DH: The current fund plus the one we are raising is $10 million. Our current portfolio companies include:
- Tropos Networks - Metro Scale WIFI infrastructure systems
- Blue Coat Systems - Internet proxy security appliances
- Handmark - Wireless and game software for smart phones
- A4Vision - 3D Biometric recognition systems
- Next Estates - Prepaid Master Cards
BK: How active are you now with investments, and with your portfolio companies?
DH: We are very active with all of our portfolio companies and in the process of raising a new fund.
BK: What do you see as the future for technology-post bubble? Is there any types of companies/technology which you feel have lots of promise?
DH: I feel that the 90's were a period of excess for much of the Technology sector driven by everything from the Internet to Y2K. Post Bubble, we will see much less growth in the big traditional sectors. On the public side I am most comfortable with the market leaders in each sector like IBM, Dell, Microsoft, etc.
In the private sector, I'm excited about companies, technologies and services that address the enormous requirement for: - High Speed (Broadband) data in unlicensed spectrum for public safety and the world wide Digital Divide (last mile) opportunity. - Companies that have products that enhance public safety and homeland security.
BK: As someone who has both served as a CEO and as a VC, which do you prefer and why?
DH: I really enjoy both roles and that's why I've been a bit of a hybrid the last few years. I like to be a hands-on operational investor.
BK: Most entrepreneurs haven't had the advantage of understanding what it's like to be an investor. As someone who has done both, what one piece of advice would you give to CEOs looking for capital and/or working with investors?
DH: Don't try to raise money to early. Bootstrap your company as far as you can with personal and family funds until you get some revenue traction in your primary market. Recruit investors that bring more than just money to the table. A proven ability to help your recruit world class people and teams is a key attribute. I look at investors - in other words - track record.