Seattle, Boise investors impressed by Spokane-Investment forum brings together area companies (Is Montana ready to have one here?)

No checks changed hands, but entrepreneurs and
venture capitalists who attended an investment forum
Tuesday in Spokane said the event created new
relationships that will ultimately bring more financial
capital to Eastern Washington.

Bert Caldwell
The Spokesman Review Staff writer

The first-time event brought together 10 young area
companies with investors from Seattle and Boise,
some of whom had never been to the area before.

Susan Sigl, for example, said she had not visited
Spokane during her 30 years as a Seattle resident.
The co-founder and general partner of SeaPoint
Ventures said she was impressed by the quality of
the companies that made presentations during the
daylong affair.

Many have the quality that deserves attention from
institutional investors, she said.

Sigl said Purcell Systems, which makes backup
power systems for cellular phone towers, might be
attractive to SeaPoint because the firm specializes in
the wireless industry.

She also praised the informal atmosphere of the
forum, which was organized by Northwest Venture
Associates and Metropolitan Mortgage & Securities
Inc.

"You feel like you’re getting more insight into the
community," Sigl said, compared with more formal
sessions in Seattle.

Brian Chee of Polaris Venture Partners http://www.polarisventures.com was also in
Spokane for the first time. Polaris has $2 billion
under management.

"It was worth the trip," Chee said at a reception that
followed the presentations.

Purcell President Pete Chase said the interest shown
in his company by SeaPoint and others was a relief
after years of scraping by.

The company recently landed a $35 million contract
for its equipment. With potential access to more
money, Chase said, he can look ahead to other
growth opportunities.

"What if I had $5 million," he wondered aloud.

Even for some of the presenters, the work being
done by others in Spokane was a revelation.

Avista Labs President Michael Davis said he has
focused so hard on growing the fuel cell developer
that he was unaware of the activity around him.

"Everything that was presented today had something
of interest," he said. "I’ll bet you there’s a lot of
follow-up."

Northwest Venture http://www.nwva.com Managing Partner Tom Simpson
said the rewards might not be immediate, but just
exposing the venture capitalists to the opportunities
in Spokane begins a dialogue that may pay off later.

He said he was pleased with the quality of the
presentations and the response from investors.

A repeat next year is likely, Simpson said.

Sigl said entrepreneurs must keep in mind that, as
managers of other people’s money, venture
capitalists cannot invest in Spokane, Seattle or any
Northwest companies just because they are local or
regional.

"As an investor, you’re looking for the best
companies in the world," she said.

Still, event organizer Phil Sandifur was optimistic.
Sandifur manages equities for Metropolitan and its
venture capital subsidiary, Jaguar Ventures.

"I think there’ll be some money changing hands," he
said.

•Business writer Bert Caldwell can be reached at
(509) 459-5450 or by e-mail at
[email protected]

http://www.spokesmanreview.com/news-story.asp?date=070402&ID=s1177687&cat=section.business

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Venture Capital: A real find on the other side of the
mountains

Friday, July 5, 2002

By JOHN COOK
SEATTLE POST-INTELLIGENCER REPORTER

Isothermal Systems Research http://www.spraycool.com/ is a profitable start-up with a
unique technology that cools electronics equipment in
fighter jets, tanks and amphibious assault vehicles.

With revenues expected to more than double this year and a plan to expand
beyond military applications, ISR — whose liquid cooling system is dubbed Spray
Cool — is exactly the type of company that gets venture capitalists hot these
days.

But attracting investors to the company’s headquarters, located 100 miles south
of Spokane in the southeast Washington town of Clarkston, is a challenge, to say
the least.

Some Seattle venture capitalists have never been to Spokane, let alone
Clarkston, which is best known for Hells Canyon and the confluence of the Snake
and Clearwater rivers.

But ISR, along with nine other companies from Eastern Washington, got an
unusual chance to show its wares Tuesday at an early-stage investment
conference in Spokane.

"This is a new thing," said David Tilton, ISR’s business development manager.
"So we decided to try it out."

Sponsored by Northwest Venture Associates, Metropolitan Mortgage & Securities
and the Evergreen Venture Capital Association, the event tried to get Seattle
venture capitalists to explore what’s happening on "the other side of the
mountains."

Among the Seattle firms in attendance were Atlas Venture http://www.atlasventure.com , Encompass http://www.encompassventures.com , Fluke
Venture Partners http://www.flukeventures.com/ , Madrona Venture Group http://www.madrona.com , Polaris Venture Partners http://www.polarisventures.com , SeaPoint
Ventures http://www.seapointventures.com and Voyager Capital http://www.voyagercapital.com . Together those firms have more than $5 billion
under management.

SeaPoint Ventures’ Susan Sigl made the trip even though her 5-year-old Bellevue
firm has never made an investment in the Spokane area.

Sigl was impressed with the event and the diversity of companies, which included
everything from an aluminum boat manufacturer to a maker of fuel cells. She said
the Spokane conference reflects a trend in which venture firms — looking for
old-fashioned revenue-generating companies — are more willing to explore
untapped regions.

"Three years ago nobody would have had the time to go over there," said Sigl,
whose firm raised a $33 million fund last month. "It is really a sign of the times.
Given the lull in front of us and the added risk, you are literally more open-minded
than ever in terms of region and businesses you are willing to look at." (See
related column.)

That’s good news for a company such as ISR, which after 14 years only recently
began the venture capital process. It is now seeking $10 million in a second
round.

Investors at Tuesday’s forum were impressed that the 94-person company had
already created a strong foundation around government contracts. Several
investors even requested meetings this week, Tilton said.

"We have a long history of building these systems, fielding them and making
them work," Tilton said. "It is not a pie-in-the-sky dream, it is a mature technology
that is in use today."

Spokane venture capitalist Tom Simpson, who helped organize the event, was
nervous that his Seattle peers might find the trek unnecessary or the companies
less than interesting. However, he was pleasantly surprised by the reception.
About 75 people from 20 financial firms attended.

"I thought if we could get five to seven venture firms from outside the area to hop
on a plane and spend a whole day in Spokane two days before the Fourth of July,
that would be terrific," Simpson said.

Over the years, Spokane has developed a small high-tech cluster around such
companies as telecommunications equipment maker Telect Inc., printed circuit
board maker Agilent Technologies and the start-ups of entrepreneur Bernard
Daines. Both Telect and Agilent, located in nearby Liberty Lake, have hit hard
times in the past 12 months resulting in layoffs of more than 1,500 people. World
Wide Packets, founded by Daines in 2000, also has trimmed staff.

Despite the cuts, Simpson said Eastern Washington has innovative start-ups that
for the most part were ignored during the dot-com boom.

"There are a lot of great companies over here in Spokane that quite frankly people
don’t have the chance to hear about," he said. "By and large, most of these
companies are real businesses: Their product is developed, they have revenues,
they’ve got customers."

With some of the companies even turning a profit, Simpson said they are even
more attractive to early-stage investors.

"A lot of venture capital firms right now are trying to look for new ideas," said
Simpson, who recently made an investment in a maker of wooden toys. "The
really smart firms understand that they have to look far afield to find the right
opportunities and be a little bit contrarian."

In addition to ISR, presenting companies included Aluminum Chambered Boats,
Avista Labs, Bio~OriGyn, Cyan, GenPrime, Purcell Systems, Translation
Technologies and World Wide Packets.

P-I reporter John Cook can be reached at 206-448-8075 or
[email protected]. For more information on Seattle-area start-ups or
venture capital firms, visit http://www.seattlepi.com/venture.

http://seattlepi.nwsource.com/venture/77190_vc05.shtml