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The following is an interview with Bill Reichert, President and Director of Garage Technology Ventures since March 1998. Prior to joining Garage Technology Ventures, Bill was co-founder and Vice President of Academic Systems Corporation. Bill has been involved as a co-founder or senior executive in several venture-backed technology startups. He has also held positions at McKinsey & Company and Brown Brothers Harriman & Co. Bill holds a B.A. from Harvard College and a M.B.A. from Stanford University.
Garage Technology Ventures is a venture capital investment bank that provides private placement services for high technology companies and investors. Garage Technology Ventures serves companies in the communications, network infrastructure, and software sectors that seek to raise between $2 million and $15 million in a first or second institutional financing round. Since 1999, Garage has completed 82 transactions raising over $340 million in venture capital for clients including Digital Envoy, Digital Fountain, LeftHand Networks, Tripwire, and Xora, among others, through its wholly-owned broker/dealer subsidiary, Garage Securities, Inc.
1. Given the vast [and growing] plethora of nano-this and nano-that companies, how does one go about investing in a company with real potential?
In most ways, investing in nanotech is no different from investing in other emerging high technology sectors. It comes down to understanding the customers. Sometimes investors get diverted by an awesome team or a mind-bending technology, but in the end you need to drill into the target customer base and find out if they have a strong compulsion to buy the product.
2. About what percent of this year's venture capital will nanoscale technology companies receive?
The enthusiasts are hoping for 5 pct. Realistically, it is more likely to be one to two percent, based on what we've seen and heard. Over time, however, I expect nanotech will become a feature of certain technologies, not an industry unto itself.
3. Do you expect to see the same kind of frenzied investing in MNT as happened with the dotcom boom, or have we learned our lesson?
No. The difference is that everyone thought they understood the Internet business opportunity, and that it was virtually limitless. Nanotech is clearly more specialized, and the business models are inherently less frothy. There will certainly be some irrational exuberance over a couple of subsectors, but the need for high specialized expertise in this domain makes it naturally self-limiting.
4. Out of every 10 start ups that you typically fund, how many succeed past the third year?
We've only been doing this for three years, so the jury is out. The good news is that the first company we funded just three years ago, Tripwire, is doing very well. The bad news is that last year devastated a lot of companies, including some good ones. The harsh reality is that many early-stage companies do fail in their first few years.
5. Is there any one nanoscale technology of special interest to you or your firm?
We are particularly interested in new fabrication technologies that are applicable across a number of nanotech domains. We are also interested in hardware and software technologies that enable manufacturers to characterize materials at the nano level. Overall, however, we want to be looking at the sector broadly. I know it is going to evolve dramatically over the next five years.
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