Bloomberg Press: Market Chalk Talk
Corrections or additions?
These articles were prepared for the July 18, 2001 edition of U.S.
1 Newspaper. All rights reserved.
Venture $s for Telecoms
Teltier Technologies — represented on the New Jersey
Technology Council panel on July 19 (see story above) — has the
distinction of being the second company to get seed money from the
venture capital fund that is sponsored by the NJTC. Jim Gunton
is the fund’s general manager.
How does Gunton justify investments in telecommunications when that
industry is doing so poorly on Wall Street? “Over the longer
term,”
he says, “we think it is an attractive area and are taking
advantage
of the depressed valuation to get a good price.”
Teltier Technologies, located in Summit, was founded by a team that
had been in charge of Lucent’s investment in the wireless space and
decided to take the entrepreneurial jump. “They decided that,
if there is no security in the corporate environment, they would
pursue
the entrepreneurial realm,” says Gunton. Teltier makes middleware
that enables third party application software developers to create
applications (908-598-4782, www.teltier.com). Founded in the
first quarter of 2001, Teltier has about a dozen employees and is
hiring. It received about $500,000 from the fund in the second
quarter.
What sets NJTC Venture Capital Fund apart from many of the other funds
based in New Jersey is its focus on early stage companies in the
state,
says Gunton (E-mail: venturefund@njtc.org or call 856-787-9700). Early
stage falls between seed stage and the majority of current venture
capital investment. The seed stage company has probably gone through
one or two rounds of angel financing or is a spinoff that was
privately
financed by a larger firm, and a venture capital fund’s seed stage
investment might range from $300,000 to $3 million.
The NJTC fund ends up owning 5 to 40 percent of the companies it
invests
in. “We have done exactly what we were hoping to do,” says
Gunton. “On fund raising, we have been oversubscribed.” He
has $35 million, $28 million from individuals — from angels and
such institutions as Kemper Ventures, Commerce Bank, Silicon Valley
Bank, and Progress Bank — and the rest from the New Jersey
Economic
Development Authority. The NJEDA matches every $3 that Gunton raises
with $1 from its own funds — income from its own investments and
monies raised through bond issue.
“On the investing side, we made three investments in the first
half and expect several more by the end of the year,” says Gunton.
He expects the third deal to close this month.
Gunton’s first $500,000 investment went to Somerset-based Netilla
Systems (732-764-8858), which provides virtual private networking.
“It allows you, when you are away from the office, to work over
the web and access your computer files as if you were in the office.
It is less expensive, more secure, and more user friendly than current
solutions, which until now have been dialup solutions,” says
Gunton.
Companies that get seed financing from the NJTC fund can piggyback
on the prestige this money gives them. Netilla Systems, for instance,
has obtained a bank line from PNC and is applying to the NJEDA for
another $500,000 under its direct seed financing program.
Currently only about 10 percent of the venture capital raised in New
Jersey actually goes into enterprises located here, says Gunton.
“My
aim is to get 100 percent of the fund invested in New Jersey
companies,”
he says. “We’re looking for companies to invest in with the
potential
for rapid growth with sustainable competitive advantage and
opportunity
for a premium exit. The appeal of early stage venture capital is that
you are looking for the home runs.”
Gunton is understandably optimistic that the rewards for NJTC Venture
Fund investors will be high, and earlier this year he guesstimated
that they would get a return of 30-40 percent. Says Gunton: “I’m
still optimistic.”
— Barbara Fox
In college, they used to call them bull sessions. In
the days when most women stayed at home, they were called
kaffeeklatches.
In the business world, they are called “round tables,” chances
to meet colleagues in your field to discuss common problems. The New
Jersey Technology Council calls them Tech Talks.
“I suggested the Tech Talk idea to NJTC last fall,” says
Rick
Weiss, founder of Princeton Multimedia Technologies on Witherspoon
Street. “Some of the small companies were trying to resolve some
technology issues, and I thought we could have a forum to help each
other through our personal experiences.”
“We did get criticism that our programs were so carefully
structured
that there was no time for getting to know each other and listen to
each other’s issues,” says Maxine Ballen, NJTC’s president.
Panels usually last two hours, but by the time panelists have had
their say, only 20 to 30 minutes remains for questions and discussion.
“There is always a need to provide information from experts,”
says Ballen. “But we also now have woven in more interactive,
less structured programs.” NJTC will hold a Tech Talk at the
Princeton
University School of Engineering on Tuesday, July 24, at 6 p.m.
Victor
Boyajian, of Sills Cummis Capital Markets Group, joins Weiss for
the session. It is open only to NJTC members and is free by
reservation,
but member walk-ins will pay $20.
Weiss (E-mail: rick_weiss@compuserve.com) was an electrical
engineering and math major at Carnegie Mellon, Class of 1980, and
has a master’s from Princeton in electrical engineering and computer
science. He worked at Bell Labs, ADR (now Princeton Softech), Digital
Equipment Corporation, and (the now defunct) Health Information
Technologies
at Canal Pointe before founding Princeton Multimedia Technologies
in 1993.
His five-person firm has developed a number of applications for
dietary
analysis, including a software program that calculates and manages
metabolic diet studies to eliminate paperwork. His company’s story
(U.S. 1, January 3) is a textbook case of how a technology startup
can leverage government help.
At the time he was suggesting a forum or roundtable, Weiss needed
information about the different web application techniques, “so
we could lower our risk by hearing what others were doing in the same
space.” Though Weiss has made his own web application decision,
he will prod those who attend the July 24 meeting to think about the
future of web application technology. He will ask where other
companies
are focusing their long-term technology attentions and what are they
using in the meantime.
What difficulties are they having in supporting theirprogram?How are they hiring individuals who know this program?How are they training people?Among the available web applications now are Java Server pages,Cold Fusion, and the updated version of Microsoft’s Active ServerPages. “I think we are in a market where there is no clearleader,”says Weiss.— Barbara FoxTop Of PageBloomberg Press: Market Chalk TalkThe market doesn’t wait around for you to catch up.It is a moving target, and when situations change, you must knowinstinctivelywhat your next move is going to be.” So says Tom Dorsey,president of Dorsey, Wright & Associates, an investment advisory firmbased in Richmond, Virginia, and author of Tom Dorsey’s Trading Tips,a new book from Bloomberg Press on Business Park Drive in Montgomery.After daring new technology stock market darlings dipped, and evensolid former stars like Lucent took shocking tumbles, investorconfidence— and interest, too — dropped out of sight. Maybe investingin the market was just for pros all along. Not so, says Dorsey. Thedust jacket on his new book draws timid investors back in with asportsimage — a chalk board liberally sprinkled with the X’s and O’sand arrows so familiar to fans of football telecasts, especially anywhere the ebullient John Madden is in the booth.Dorsey calls up that old fighting football spirit early on when hequotes famed coach Vince Lombardi saying, “Discipline is a partof the will. A disciplined person is one who follows the will of theone who gives the orders. You teach discipline by doing it over andover, by repetition and rote, especially in a game like football whereyou have very little time to decide what you are going to do. So whatyou do is react almost instinctively, naturally. You have done itso many times, over and over and over again.”Here are excerpts from Dorsey’s lively bookTerada.Practice, Practice, and Then Practice Some More.Many comparisons can be made between the stock market and sports.Most parents want their child to be involved in some type of sport,from baseball to basketball to football to swimming to dance. It isbecause sports teach us valuable lessons that we carry throughoutlife. Participation in sports teaches us about commitment, hard work,the value of teamwork, wanting to excel, the thrill of victory,learningto accept defeat, sportsmanship in victory and defeat, and theimportanceof practice.Very few people are born with the natural instinct to hit a baseballor throw a football. Some may be born with a body built for beinga defensive lineman, for example, but the actual skills have to belearned. To be learned well, those skills must be practiced over andover again.When it comes to making a decision in the market, it’s very much likea football game. As the quarterback, the ball’s been snapped, it’sin your hands, and now you have to try to make forward progress. Youhave a split second to decide whether you’re going to throw the ball,hand it off, or carry it yourself. So what you do is react almostinstinctively, as Vince Lombardi says. You have been to practice somany times that when you step back and take a look at the defenseas it is coming at you, you instinctively know what the defense isand you react.The only way you are going to know how to instinctively implementyour game plan is by practice. Practice looking at different chartpatterns and analyzing what happens afterwards. If you look at thebearish catapults, you will develop an understanding that this patternusually leads to lower prices. Look at enough bullish trianglepatternsand it becomes instinct that stocks usually see a nice trading popafter the breakout. Look at enough sectors above 70 percent and you’lllearn that it is an extremely risky time to be buying, as stocksalmostalways can be bought later at better prices.Make flash cards of the patterns; take 15 minutes each day and studya stock’s historical chart; devote a weekend to looking at sectorbullish percent charts; and do practice case studies, so that whenthe time comes to make a decision, you’re ready.Did you get the outcome that you had anticipated. Does that mean youwere wrong? No. Not every trade is always going to work out exactlyas you have planned. You will have times when a stock will go againstyou for any number of unforeseen reasons. That is life on Wall Street.But investors falsely believe that if a trade doesn’t work out, youmade a bad decision. That’s wrong. Therefore, it is imperative toeducate yourself. Be sure you understand the game plan and know whyyou are making certain decisions. If you know you used the toolscorrectly,you will be able to accept the outcome, good or bad.To illustrate how the “decision” should be looked upon asseparate from the “outcome,” let’s look at the followingscenario:Take a coin with both heads and tails. If the coin is tossed and headscomes up, you will be paid $1.25. If the coin is tossed and tailscomes up, you will be paid $1.00. Shouldn’t you always bet on heads?Fifty percent of the time heads will come up and you will be a winner,and 50 percent of the time tails will come up and you will be a loser,but over time you will make more money because you are paid more forthe heads.So the point is, if your investment research tools tell you to makea certain decision based on the information you have at the time,make that decision. Over time, since these tools are designed toincreaseyour odds of success, you will be a winner.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
