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December 10, 2007

Making a match | A new social networking website for New England venture capitalists builds a virtual community

By Whit Richardson
Michael Burgmaier, a principal at CEI Community Ventures in Portland, tries to meet up with others in the venture capital community whenever he can. Whether it's a meeting over lunch in Portland or a drive down to Boston after work for a meet-and-greet event, Burgmaier says it's these meetings and conversations with other venture capitalists and investors that lead to new deals and successful partnerships down the road. "Networking is a huge part of what we do," Burgmaier says.

But traditional networking ˆ— trekking to an endless string of events after long days at the office, making small talk and pressing lots of flesh ˆ— can be time consuming and doesn't always fit in a busy venture capitalist's schedule. These days, people like Burgmaier are finding there is an easier way to build relationships: Online.

The popularity of social networking sites like Facebook and MySpace is well documented, but less well known are the hundreds of networking sites that have sprung up to serve increasingly specialized communities. If you're a dog lover and want to connect with other dog lovers, join dogster.com. If you're into the goth scene, join the one million members of VampireFreaks.com. The business community has co-opted the idea with general networking sites like LinkedIn.com and more specialized sites like sermo.com, an online community for physicians.

However, until now, there was no place venture capitalists could call their own. In early November, the New England Venture Network, a group founded in 1999 for young venture capitalists in New England, launched VentureNetwork.vc, the first social networking site exclusively for the region's venture capital and private equity communities. (And, yes, that ".vc" domain really works.)

Members post a profile, but instead of listing their favorite movies, they detail their industry experience, what type of investment deals they're looking for and how much money they're looking to put to work. By perusing other profiles, venture capitalists can find capital providers that might be a good fit if a firm is looking for a partner on a deal, says Dan Klein, a senior analyst at Vesbridge Partners LLC in Westboro, Mass., and co-chair of NEVN. "The Internet has allowed people from across the world to communicate more efficiently," Klein says. "This site is an example of bringing that efficiency directly to the VC community."

VentureNetwork.vc is not meant to replace traditional face-to-face networking, but to enhance it. Its founders say the online community will leverage the network NEVN has already built, and offer a place where people can stay connected once cocktail hour is over.

And for venture capitalists in Maine who may not always get the opportunity to attend networking events in the Boston area and beyond, a forum for making professional connections is a positive thing, says John Burns, who manages the state's Small Enterprise Growth Fund. "This [site] is very helpful because there's no systematic way to have a conversation with lots of capital providers or networks," he says. "The digital world ˆ…brings Maine closer to a bigger capital market."

Widening the net
VentureNetwork.vc takes a lot of cues from traditional social networking sites: Members have a profile page, have "friending" capabilities and can post photos to share with others. But the site also includes tools specific for the venture community, such as business news feeds, industry job postings, a place to post potential investment opportunities, and a research forum, where members can read advice blogs and analysts' reports on an industry, or post questions to the VC community about, for example, the benefits of using a multiple liquidation preference in a deal.

So far, about 25% of NEVN's 300 members have signed up and posted an online profile, according to Joe Medved, an associate at SoftBank Capital in Newton Center, Mass., and co-chair of NEVN. Those 300 members represent roughly 125 firms in the area that control $40 billion in capital, Medved says.

Vesbridge's Klein says that increased connectivity and communication among venture capitalists will most likely improve deal flow. Venture firms get bombarded by potential deals and entrepreneurs looking for capital, but not every opportunity necessarily matches what a firm is looking for. Instead of sitting on potential deals, David Safaii, senior associate at Windspeed Ventures in Lexington, Mass., and the outgoing chair of NEVN, says VentureNetwork.vc offers a forum to pass along potential investment opportunities so they reach a wider audience.

Tim Agnew, a principal in the Portland office of Cambridge, Mass.-based Masthead Venture Partners, agrees. "This could potentially be a resource [for a venture capital firm] to put together a syndicate," Agnew says. However, it stands to "not only help venture funds, but also to help Maine businesses that are looking to raise capital."

But Burgmaier, who says he'll set up a profile on the website, wonders how reliable potential deals posted on a message board will be. "Public posting seems like you've had problems raising money, and there's usually a reason for that," Burgmaier says.

For his part, Klein says the site will be monitored and suspect deals will be removed. "We do want to stress upon the membership that there will be quality deals, fresh deals," says Klein. "We are looking for ways to encourage members to come back for fresh content and the deal exchange is one of those mediums."

Charles "Kip" Moore, who invests his own funds through Little Diamond Island Enterprises in Portland, says angel investors, who often work alone, will probably find the site useful if it offers them a deep pool of experience to tap when a question comes up. But, he says, it will probably take time for people to trust the website, the community and the people behind their profiles before they trust the answers they receive.

Moore, 63, admits online networking may be the way of the future, but says he still prefers old-fashioned, face-to-face networking. "I recognize it's because of habit," Moore says. "I think it could be done online, but I've just never tried it that way."

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