Dry Powder and the Spark of Innovation

A couple of weeks ago, I attended the Deutsche Bank Fintech 2009 Senior Executive Forum at the Time Warner Conference Center in New York. The event consisted of a number of outstanding and well-organized panels that addressed critical issues such as market expansion and global competition. Like other engaging affairs, the interaction off the dais was as important as the communication on it. Having been through a recent funding round and not pitching for money, I was able to have a more interactive and balanced session with some great venture capitalists and other private equity leaders.

Guy Fawkes and Gunpowder Conspirators
Guy Fawkes and the Gunpowder Conspirators

Nearly all the dialog I had with the financiers turned to the concept of “dry powder,” an interesting and well-known metaphor for uninvested capital. The irony is that there are many emerging firms searching for money – looking for powder – and unable to get it. Is there a disconnect? Yes and no. Yes, because investment criteria are different and, in most cases, more exacting and stringent. No, because the model – as always – must address two markets: the one in which you’re trying to build a business and the other in which you’re seeking to raise money. Interestingly, elements of Sequoia Capital’sPresentation of Doom” still ring true, but viewed in a different light it’s just common sense.

Entrepreneurship 101 right? Yes, but…we remain in a bit of a broader technology market malaise. Fortunately, because I lean toward optimism, there are encouraging signs, as indicated by a recent piece in the Merc. When conditions improve – and they will – the success of the outcome will be directly correlated to the dryness of the powder. Right now, that powder may be just a bit damp.

Rob Ciampa

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