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Secrets of Silicon survival
By CNN's Graham Jones
LONDON, England (CNN) -- The secret of high-tech survival in a world of edgy markets, chastened investors and dotcom gloom has been revealed at a conference for European investors. Silicon Valley was hit hard by the global economic downturn after the high-tech bubble burst in March, 2000, but some of the survivors are now saying the worst is over. Fifty brightest stars of California's Silicon Valley have been showing their wares at London's Hilton hotel at the 7th annual California Information Technology Partnering and Investment Forum (Cal-IT).
They are private, pre-IPO technology companies who have not only come out of a chilly business climate still standing, but are now on the road to expansion. Cal-IT -- funded by the State of California, which has the fifth largest economy in the word, bigger than France -- brings together what are described as "the year's hottest young California companies" and leading European players such as France Telecom, Siemens, Ericsson, Bertelsmann and Nokia. The conference prides itself on its filtering process. More than 1,000 applicants are whittled down by a European Advisory Board of representatives from top European companies to just 50. The organisers say what they bring to Europe are "the cream" of California's tech companies. So how have the Silicon stars on show in London succeeded through the tough times? Through sound business principles and high-class management teams, say California's Technology, Trade and Commerce Agency. Jeffrey Gersick, Managing Director, Europe, Middle East and Africa of the CTTCA says the fundamentals are the same as ever. "If a company has a solid business plan, a good management team and good technology that's the recipe for success. "Prior to the bubble bursting we saw companies who had got ideas and nothing else," he says. "They got funding then but it's not the recipe for success any longer." "A few years ago people invested in ideas and products," says Adrian Chitty, spokesman for Cal-IT. "But now no one will invest in companies which do not have a firm business base." Don Massaro is CEO of Silicon Valley's Array Networks, a company which raised $12.5 million last week and has successfully diversified into Web security. "There's still an environment for investment though not what it was a couple of years ago," he told CNN's Richard Quest. "If there's an experienced management team, if you've got some interesting technology and if the investors think you are on the forefront of the next revolution, you can get investment." Added Scott Barnett, Vice President of Atomica Corporation: "I don't think the dotcom companies really exist anymore. It's really companies. And companies that are going to survive, going forward are the ones that find the customers and can deliver value. "And so what we're really all about is delivering value and meeting -- and exceeding -- expectations of our customers and them run their businesses more efficiently. If we can do that, you can call me what ever you want, dotcom or otherwise." Over the last six years Cal-IT presenters have included Clarent, Inktomi, eGain, PacketVideo, Portal Software, LoudCloud and Vicinity. The organisers say in its first five years, Cal-IT generated more than $350 million in deals between Europeans and Californians, including such participants as Alcatel, Clarent, Metro AG, Vicinity, Cap Gemini, Zland, Audiosoft, Intershop, Deutsche Telekom, Blue Pumpkin, Extreme Networks, Siemens, Ericsson, and Phillips. Two thirds of that has come in the form of strategic partnerships and joint ventures -- only a third has been in the form of straight equity investments. Blue Pumpkin, the workforce optimisation specialist, is one of Cal-IT's great success stories. It debuted at the conference in 1998 with very little financial backing. In 2002 it has just been named as one of Inc magazine's top five fastest-growing U.S. private companies with revenue growth of 10,945 percent in five years. The conference audience of 400-500 delegates comes from a broad range of European IT and telecommunications companies, venture capitalists, financial institutions, distributors, resellers and marketing partners. Peggy Johnson, president and general manager of Qualcomm Internet Services gave the opening address. Sessions include "World class marketing on a budget," "Focus on Germany" and "Corporate partnering -- partner or perish." Britain's e-commerce minister, Stephen Timms, also spoke to the conference.
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