Venture Capitalist Mark Frantz’s DC market forecast
May 26th, 2009 by JD Kathuria
Mark Frantz of RedShift Ventures
By now, we’ve all become pretty much numb to one dismal economic forecast after another. How the recession will ultimately play out, and what it may mean to the local DC economy is yet to be seen. For ideas, we recently turned to local venture capitalist Mark Frantz. A Washington native and entrepreneur, Frantz is general partner with the venture capital firm RedShift Ventures. Here’s what Frantz is saying.
ExecutiveBiz: What growth opportunities do you see for companies in the region?
Mark Frantz: Obviously, the government technology market continues to show growth. There’s going to be significant growth as a result of the president’s budget, particularly in healthcare IT and clean energy. I also continue to see solid, though not unbelievable, growth in the telecom sector. Online media has plateaued for now it seems. However, growth opportunities do exist in that sector and others, as people take market share. For example, you have newer technologies, like wireless broadband, continuing to evolve and take market share from older ones like dial-up service.
ExecutiveBiz: How is the economic downturn affecting your companies’ fundraising activities?
Mark Frantz: We took care of most of our companies last year so they wouldn’t have to be out fundraising this year; they either raised outside rounds or we worked with existing co-investors. That said, we’ve had a couple of companies that have had to go out this year. They’ve all been successful, knock on wood, mostly though strategic investors — firms such as large, publicly traded technology companies.
ExecutiveBiz: How would you characterize the strength of the technology industry in the DC area?
Mark Frantz: The technology industry as a whole — which would include the venture-backed segment of the industry, of course — is feeling the economic downturn like everyone else, though the degree of the severity is less than in other areas. Still, while government funded projects have served as a force of stability around the Washington region, a number of firms don’t know if their next project is going to be there or if it’s going to get delayed. Everybody was waiting to see what kind of budget President Obama would propose and now what gets passed, as well as the restrictions around the stimulus money that is finally starting to flow.
“A lot of people are starting to look over the horizon at what that potential might be,and if the economy recovers and stabilizes in that two- to three-year timeframe, then I think we will have planted some seeds that could reap some great rewards.”-Mark Frantz
ExecutiveBiz: Speaking of stimulus money …. what opportunities might it present privately-held technology firms?
Mark Frantz: It’s interesting. I recently saw a presentation where one of the requirements — if you do get stimulus money — is SEC-like reporting. For instance, you’ll have to report the top five compensated individuals in your firm. Private companies in this region are going to have to make interesting decisions about whether to open up their books just for those stimulus dollars. I’m all for transparency but at the same time, some things in these provisions may hurt a business later on given all the information they will have to disclose.
ExecutiveBiz: What impact, if any, might the administration’s budgetary goals have on potential transfer technology projects?
Mark Frantz: People are excited about the potential long-term. A year or two from now, if Obama’s budget and the stimulus money should have gone in to enabling lots more IT in healthcare, new clean energy sources, etc., what may evolve from that first wave of funding, will in two to three years potentially provide some catalyst to next gen R&D that’s ready to go out of the labs into the commercial marketplace. A lot of people are starting to look over the horizon at what that potential might be, and if the economy recovers and stabilizes in that two- to three-year timeframe, then I think we will have planted some seeds that could reap some great rewards.
ExecutiveBiz: What’s your economic forecast for the Washington region in the short- and long-term?
Mark Frantz: I’m a native, so I’m highly biased, but I remain cautiously bullish on this area. While things are not easy — there are serious pains in certain subsectors in this region — in general, we’ve done better than other regional economies throughout the country. We’re a healthy, vibrant, diversified economy. If you were to come down 270, over and around 95, then across the Wilson Bridge and cut in 395, then back out 66 and out the Dulles Toll Road … the building signs of the brand names you would see of leading companies both nationally and internationally is rather stunning — across technology, healthcare, defense, telecom, real estate, hospitality, etc. That is a vibrancy that I think this region will continue to maintain and grow on.
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Mark – good to read such positive insight.