Wayne Embree, Reference Capital LLC - Shifting Economies

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Wayne Embree discusses the fundamental shifts in Oregon and the nation's economy at the OBC Access to Capital Meeting March 4, 2010

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Wayne Embree, Reference Capital LLC - Shifting Economies

  1. 1. © 2009-2010 Reference Capital Management, LLC<br />Oregon Business CouncilCluster Network Briefing4 March 2010<br />Wayne Embree, Managing Partner<br />Reference Capital Management<br />12909 SW 68th Parkway, Suite 430<br />Portland, OR 97223<br />503-619-4310 x 202<br />wle@refcapllc.com<br />
  2. 2. © 2009-2010 Reference Capital Management, LLC<br />Overview<br />Oregon, US economies undergoing a permanent, structural shift<br />This is a jobless recovery<br />Net in migration continues<br />Political economy of “green”<br />It’s a hollow promise, unless…<br />
  3. 3. © 2009-2010 Reference Capital Management, LLC<br />Wayne Embree<br />Co-founder / manager of seven seed-stage funds since 1986<br />Our funds have backed over 100 companies, about 60 Oregon based<br />Pioneered Oregon universities taking equity<br />Masters thesis examined venture capital and university tech commercialization - 1983<br />USAF tactical ops officer (Capt) 1975 - 1980<br />
  4. 4. © 2009-2010 Reference Capital Management, LLC<br />Oregon Has Grown its R&D Base23-Year Change in Federal R&D Funds<br />Source: Nat’l Science Foundation 1985-2008<br />
  5. 5. © 2009-2010 Reference Capital Management, LLC<br />Oregon Competes in Creating Intellectual PropertyPatents per Thousand Population<br />USPTO, May 2009<br />
  6. 6. © 2009-2010 Reference Capital Management, LLC<br />= ~$1 Bill. Source: NVCA 2010<br />Source: NVCA 1980 - 2010<br />US Venture Capital Distribution (2009, $28 Billion)<br />
  7. 7. © 2009-2010 Reference Capital Management, LLC<br />Oregon Comparisons<br />Sources: GDSP, Federal Reserve (2008)<br /> Univ R&D, National Science Foundation (2009)<br /> Population and Education data, US Census (2008)<br />
  8. 8. © 2009-2010 Reference Capital Management, LLC<br />Over the last six years…<br />State Average per Year (mm)<br />Washington $126.2<br /> Utah $ 37.5<br /> Oregon $ 17.2<br />Seed, Startup & Early StageInitial Financings ($millions)<br />Source: NVCA 1980 - 2008<br />
  9. 9. © 2009-2010 Reference Capital Management, LLC<br />Utah Fund of Funds<br />Smart Forest<br />Shaw I<br />Shaw III<br />Berkman?<br />Shaw II<br />Total venture funds raised by in-state managers (Millions)<br />NWTV<br />Source: NVCA 1980 - 2008<br />
  10. 10. © 2009-2010 Reference Capital Management, LLC<br />Too Little Innovation Capital<br />Sources: 1985 - 2008 Federal R&D Expenditures. PWCMoneyTree 2009<br />
  11. 11. © 2009-2010 Reference Capital Management, LLC<br />Oregon Growth Account Oregon Investment Fund<br />OGA: since 1999, $91 mm to 17 funds<br />$34 mm to 5 Oregon-based venture funds<br />OIF: since 2005, $108 mm to 11 funds<br />None to Oregon-based venture funds<br />
  12. 12. © 2009-2010 Reference Capital Management, LLC<br />Comparison:OIF & Utah Fund of Funds$100 million Allocation Since 2005<br /> OIF Results to Date<br />11 Funds - 0 Oregon managers<br />~13 Oregon companies funded (11 alive)<br />$250 mm total investment (est) <br />$100 mm from OIF funds (est)<br /> Utah FoF Results to Date<br />27 Funds - 8 Utah venture funds (80% of all in-state managers)<br />38 Utah companies funded (35 alive)<br />$1,030 mm total investment <br />$ 204 mm from FoF managers<br />>2,000 emp, $63,000 avg wage <br />>60% of investments led by Utah managers <br />
  13. 13. © 2009-2010 Reference Capital Management, LLC<br />What are our Options?<br />Wealth Redistribution?<br />US - Roughly 130 million jobs <br />20%, or 26 million, pay >$60,000 per year<br />80% average $33,000 per year<br />Oregon - 1.6mm full-year tax filers 2007<br />173,000 with $100,00 - 249,500 (86%)<br /> 32,000 with $250,000 or more (88%)<br />Sources: Business Week, Oregon Dept. of Revenue<br />
  14. 14. © 2009-2010 Reference Capital Management, LLC<br />Other Economic Choices…<br />Inflation?<br />Wealth Creation?<br />
  15. 15. © 2009-2010 Reference Capital Management, LLC<br />Fueling an Entrepreneurial Economy<br />Every other business grows its base<br />Startups are a numbers game - volume matters<br />Oregon doesn’t need more money - it needs different allocation<br />Free treasury / OIC staff from any perceived local mandate - assign a dedicated manager<br />Engage other capital sources in the discussion<br />
  16. 16. © 2009-2010 Reference Capital Management, LLC<br />Best Start-Up Climate in 20 Years<br />Smart, experienced entrepreneurs<br />Embracing capital efficiency<br />Bay-area VCs overly conservative<br />Potential customers actively seeking competitive advantages<br />Must accelerate the innovation cycle<br />
  17. 17. © 2009-2010 Reference Capital Management, LLC<br />Why We Might Blow it…<br />Oregon Opportunity - $200 mm bio-science initiative<br />No local venture funds focused on life science startups<br />ONAMI - ~$50 mm for nano tech<br />Too little venture capital focused on company creation<br />University Venture Fund<br />Poor timing, poor support and confusion<br />Green - BETC, Federal funds, etc… <br />Local money enabling innovation? <br />
  18. 18. © 2009-2010 Reference Capital Management, LLC<br />Thank You<br />Questions?<br />
  19. 19. © 2009-2010 Reference Capital Management, LLC<br />Little Regional Variation in Deal Outcomes(Venture Source Database 1990 - 2008)<br />Share of <br />all Deals 39% 10% 11% 17% 23%<br />© 2009 Robert Wiltbank, PhD, with permission<br />
  20. 20. © 2009-2010 Reference Capital Management, LLC<br />Oregon’s Technology Cluster: Roots in 1980s Recession<br />Establish Oregon Operations 1976<br />

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