For a number of years, the preeminent Silicon Valley law firm Venture Law Group (VLG) represented the American Basketball Leabgue, competitor to the professional women’s basketball league the WNBA,because it was a fun thing to do. One thing VLG lawyers look for in a client is the “fun factor,” but they will be the first to tell you it has not been all fun and games in the tech industry, whereVLG has been focused.
VLG knows the business of startups, having done the fourthlargest number of initial public offerings for technology companies in the country in 1999. The firm’s client list includes Yahoo!, Hotmail and WebTV.
Recently, VLG director Glen Van Ligten attempted to squeeze a week’s worth of business advice into a four-hour presentation to a packed conference room of more than 50 interested attorneys, investors and businessowners in the offices of Honolulu law firm Goodsill Anderson Quinn & Stifel.
Van Ligten hit the high points of setting up companies and funding and exit strategies. His firm has interests in Hawaii and represents about 10 startup companies here. When VLG joined local business accelerator HiBEAM in 2002, Van Ligten said, I firmly believe that there is a lot of potential for Hawaii to develop into the nation’s next technology center. It strikes me that many of the seeds have been planted, and that, with some more planting and careful watering, a vibrant ecosystem for entrepreneurs will develop in due course.”
What’s the outlook for Hawaii’s technology industry today?
I think the outlook is still very, very bright. Hawaii reminds me of San Diego about 20 years ago. … You have a strong university system. You have some good research facilities to spin out technology and companies. You have an area that I assume wants to diversify its economy somewhat, because it’s got a heavy military and tourism presence. You didn’t have a lot of indigenous venture- capital money in San Diego and you still don’t today. And you don’t have that here per se. I think you have a lot of active seed investors.
Do you think one of the challenges will be to ultimately build a base of institutional investors here?
I think that’s the most significant challenge. … I think the most immediate need is really having a much stronger source of institutional venture-capital money that can deploy money in the amounts necessary to grow these businesses into larger businesses.
Any ideas on how that can be kick-started?
God, if I did, I would move here permanently. Again, I’m somewhat of an outsider, but I think focusing on the institutions that are typically partners in venture funds, you know, pension funds, other large institutional endowments to the extent that they exist here. Even in these times, I want to argue that building a heartier portfolio with respect to venturecapital investments in emerging growth companies is a smart diversification strategy.
Any assessment from your standpoint in California about the significance of Act 221 and the way it’s worked so far?
I think it’s very, very significant, because it’s revolutionary that it’s down here in Hawaii. We have presences in other states that are looking at that as a way to jump start and encourage investment, startup enterprises there. So I think it’s worked really, really well. I think we need to be careful that it’s not abused and used in a manner that wasn’t intended by the creators of that act, of that legislation.
What is your best advice, in a nutshell, for Hawaii entrepreneurs?
Crafting a business idea that is unique and being prepared to have to build that idea with very little funding and thinking creatively about how to develop revenue traction, customer traction, etc. Because one thing that all emerging growth companies are struggling with now is that there’s a degree of validation that is being demanded by prospective investors that is much greater than it has been in the past few years. The other nutshell advice is to surround yourself with advisers, whether legal advisers, financial advisers or other folks who know what they’re doing and who have gone through this process before.
In terms of surrounding yourself with the right kinds of advisers, do you see anything missing in Hawaii’s infrastructure right now?
I think what probably is missing is a broad range of people on the investment side and on the company side who have done this and have been successful before. I think what you don’t have is five or 10 or 15 repeat entrepreneurs who have seen the challenges of developing a company, changed a business plan, obtained financing. You don’t have that sort of core group of people yet. But the other thing is on the investment side, people have done a lot of various intelligent investing here, but you haven’t had a lot of people who have a tremendous amount of experience. I think, for example, you need more Barry Weinmans.
What kind of equity position do you normally take with your clients, and why?
We take equity because we believe it aligns us with our clients. If we have an investment in a company, we’re successful if our client is successful. And we also very early on play a VP-like role with companies in that we provide a lot of legal advice, good blocking and tackling, but we provide a lot of strategic business advice as well. … We invest in relatively small increments in a client’s company, so we will make investments in the neighborhood of $10,000 to $50,000 per client, and we invest at the same terms that the preferred investors that invest in the company have. So we don’t go into it saying we want to have this particular percentage. We kind of go into it saying we would like an equity interest and these are the reasons why, and there are some situations, frankly, where – if we’re very, very early in a company and have a major role in helping to form it – then we will have a common stock position that is somewhat significant. On the flip side, I have other companies that are later-stage companies, where I’ve been hired to replace other counsel; I don’t have an equity position, but it’s still a great relationship.
What does VLG look for in a Hawaii client?
At the end of the day, we represent entrepreneurs and very good companies that are going to grow into larger, bigger companies and we grow along with them. So that’s one factor, but I think the other factor is just fun. We like to work with people who are fun. Glen Van Ligten
AGE: 39
EDUCATION: J.D. University of California Hastings College of
Law, 1990; B.S. Managerial Economics, University of California,
Davis, 1985
EXPERIENCE: Various positions and currently a director,
Venture Law Group, 1996-present; business technology
associate, Brobeck Phleger & Harrison LLP, 1991-1996
HOBBIES: Triathlete
FAMILY: Wife, Tracy, retired lawyer; daughter, Alexandra, 6;
son, Connor, 4
Copyright Hawaii Business Publishing Corp. Jul 01, 2003
