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The Download, Shannon Henry

More Hunger At Investor Lunches

By Shannon Henry
Thursday, September 23, 2004; Page E01

Jeff Grass stands in front of 100 potential investors, pitching his Alexandria-based company, BuySafe, a bonding service for people buying products through online retailers or auctions. He has eight minutes to wow the full house as most of those in the audience balance lunchboxes of turkey sandwiches, peaches and brownies from Balducci's on their laps.

Grass, who founded and sold California online bill-paying company PayMyBills.com, recently moved back to his hometown of Fairfax to launch his latest company, which offers a financial guarantee to wary online buyers.

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"The idea is to give us a little exposure," says Grass. That's why he came to the Reston office of law firm Cooley Godward LLP last week for Capital Call, a matchmaking lunch for technologists and financiers.

At first glance, the gathering brings back memories of the late 1990s, when such beauty-contest events were far more numerous. Back then, start-ups without so much as a business plan were showered with money by financiers eager to bet on the next big thing. These days, the money flows much less freely and the mood is far more restrained, and pragmatic.

But after a few years when many investors kept their checkbooks in their pockets, things are starting to pick up. The environment for "deal flow" is definitely improving, says Carl Grant, the creator of Capital Call.

Grant, who is Cooley Godward's vice president of business development, had organized a similar event in 2001 at a start-up he was working for. He brought the concept with him to Cooley in 2002.

Auditing firms PricewaterhouseCoopers and Ernst & Young and banks Comerica and Silicon Valley Bank co-sponsor the talent-show gatherings.

About a third of the companies that present at Capital Call eventually receive funding, either as a result of the sessions or on their own, says Grant. Along the way, the mood at Capital Call has become an unscientific measure of how well, or how badly, the technology community is feeling.

For the first time, the group had to scramble at the last minute to find another firm to present when UltraBridge of Owings Mills, which builds technology systems for health care organizations, received a commitment for funding between the time it was invited to this quarter's Capital Call and the day of the event. Grant also says he has seen many more early-stage investments lately, meaning venture capitalists are putting out more money and start-ups are finding it a bit easier to win funding. (Not all of the deals are publicly announced.)

Grant is also seeing more competition from out-of-state venture firms for local deals, especially from Boston investors. Several out-of-town funds were represented at the event, including Aurora Funds of Durham, N.C.; Southern Capitol Ventures of Raleigh, N.C.; and Alpha Omega Capital Partners and Harbert Management Corp., both of Richmond.

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