Partners say cross-country investments are not a problem when the companies are mature enough to forgo intense hand-holding
BY DAVID SPEAKMAN
A solid business model and products on the shelves has one of the valley’s largest venture funds willing to leap the continent to invest in a Sunshine State startup security technology company.
By leading a $12.1 million third round of funding for AuthenTec Inc. of Melbourne, Fla., Sierra Ventures of Menlo Park, arguably best known for helping launch Intuit Inc. of Mountain View, strengthens a venture capital presence in the Southeast, the nation’s third-hottest venture capital region.
AuthenTec began as a semiconductor startup and morphed into biometric sensors — touch pads that read fingerprints for security doors and locks to keep people out of laptop computers and mobile telephones.
Because AuthenTec already has product on the shelves, investing millions of dollars in a company more than 2,000 miles away doesn’t worry Sierra, which is drawing from a $500 million fund raised in 2000.
“If we were investing in a series A company with two guys out of a garage, we would almost always invest in Silicon Valley just because of the amount of attention we must give to the company,” says Sierra Partner Ben Yu.
“But given the fact that [AuthenTec CEO Scott Moody] is a very seasoned executive and we feel the management team is very complete, we get enough level of comfort to feel that distance will not be a problem.”
This is not Sierra’s first cross-continent investment. Along the East Coast, Sierra’s portfolio contains companies stretching from Florida to Canada.
According to PricewaterhouseCoopers’ MoneyTree research, startups in the Southeast region, which includes Florida, Georgia and North Carolina’s Research Triangle, raised $399 million last quarter, making the region the third most-popular destination for venture capital dollars.
The Southeast comands 9.6 percent of the national venture-funding pie.
Silicon Valley, by comparison, led venture funding with $1.5 billion in the fourth quarter of 2002, or 35.9 percent. New England was second with $491 million, or 11.9 percent.
While most of Sierra’s investments are in the Bay Area, Yu says AuthenTec had the right mix to attract a long-distance round of capital.
“It’s going back to basics — solid management teams and great fundamental technologies aiming at an emerging market,” Yu says.
Since the 2001 terrorist attacks, security is a venture buzzword “that’s what we saw in AuthenTec,” Yu says.