There goes the neighborhood.
After more than a decade of restricting Cruttenden Roth’s annual investor’s conference to high-growth publicly held companies, organizers are opening the floodgates to private companies for the first time. And though the move seems a radical departure from the members-only club of only a few years ago, officials say, it only acknowledges the reality that in today’s wild and wooly economy, anybody could be the next billionaire.
“You’ve got so much new venture capital out there looking for new ideas, and everybody wants a piece of that action,” says Byron Roth, chairman of the stock brokerage firm hosting the event.
About 30 private companies, a quarter of the total participants, will present their business plans in hopes of securing venture capital and other private investment.
The conference, which starts today, is designed to match promising companies with investors who want to fund them and give analysts a closer look at some lesser-known public companies.
The firm also will announce a name change today, to Roth Capital Partners, reflecting the departure two years ago of founder Walter Cruttenden III, who left to form a venture capital firm. Only three years before that, Cruttenden & Co. had added Byron Roth’s moniker to the company nameplate after taking on the new partner.
(Roth and Cruttenden have been engaged in litigation stemming from the breakup.)
RedChip Leads
In addition to the silicon wizards and dot-com swashbucklers that have become standard fare over the past few years, the Roth conference will add a host of “undiscovered” companies. Many arrive through Roth’s acquisition last year of RedChip Review, a Portland, Ore.-based firm that concentrates on obscure public companies.
With names such as Fat Pipe, OhGolly.com and Plastic Surgery vying for money, investors will have plenty of New Economy companies from which to select.
Salon.com, Etc.
Several well-known Orange County companies will participate, including Newport Corp., Universal Electronics Inc., Emulex Corp. and Emulex spin-off QLogic Corp. Non-OC notables include online magazine Salon.com, cable modem and Internet portal creator Excite@Home and used-car seller Ugly Duckling.
Although the market has seen signs in recent weeks that investors are growing wary of startups that appear to be years away from any foreseeable profit, Roth says many investors are avid about the business-to-business segment, which is expected to far surpass the business-to-consumer market generating attention now.
And as long as Internet companies are enjoying sky-high valuations, he sees no slowdown in investment activity.
The active fiber-optic segment, fueled by insatiable demand for high-speed networking applications, is evident through participating OC-area companies such as Newport Corp., QLogic and Emulex, as well as out-of-state startups JDS Uniphase, SDL, Digital Lightwave and Emcore.
Perhaps the biggest surprise so far is the resurgence of biotech, a once-promising sector that has drowned in recent years in a flood of dot-com mania.
Biotech Buzz
Several big-dollar biotech public offerings over the past month or so have helped bolster excitement. Among them: Sequenon Inc., which is hovering around $105 per share from its $26 opening price Jan. 31, and Diversa Corp., which has shot up to more than $80 per share from its Feb. 14 opening price of $24 per share.
“There’s going to be a comeback, a big comeback,” Roth says. “You’re starting to see biotech IPOs perform like Internet IPOs were several months ago. It took a lot of money to get it here.”
Many of the biotech investments made in the early- to mid-1990s are beginning to translate into market opportunities. Biotech investments typically take years to produce a return, making them unattractive in the get-rich-quick tech market. But with dot-com’s crowding in an already uncertain market, some investors are taking a serious look at biotech investments.
Most of the biotech companies, however, come from the San Diego area.
“It’s a good environment to raise money right now,” Roth says.
The conference runs through Wednesday at the Ritz-Carlton Hotel in Dana Point. n
