That Was Then, This Is Now
But what a difference a few months make. Tech stocks soured and share prices for technology companies sank fast, making the business and financing climate much cooler for young companies in that sector. Or was it? That depends on your perspective. Outside the United States, capital-raising dynamics were much different during the latter half of 2000, and investors remain eager for access to new deals. So ravenous is the appetite overseas for U.S.-grown ventures that ReMark's news release about its May funding round appeared on a radar screen at venture firm Network Asia in Hong Kong- and led to a meeting between the two companies in San Francisco and ultimately a $1.5 million financing deal in December 2000.
That's good news for Rapchinski, who says Network Asia helps put ReMark in an advantageous position in the market. He says, "What they can provide in the way of experience and business connections really made them a natural partner."
According to Michael Roy Fugler, director of corporate finance for I-Bankers Securities, an investment banking firm in Dallas that concentrates on raising overseas financing for companies around the world, there are several reasons why international markets are now productive hunting grounds for U.S. investors. "First," Fugler says, "looking for capital outside the United States is the road less traveled. Here you might have 30 players in a single niche, all focusing on the same investors. But once you start looking in foreign jurisdictions, your competition is minimized, if not eliminated.
"Second," Fugler says, "angel investors, which were rare in overseas markets before, are emerging en masse." Fugler's firm focuses on institutional investors in Europe, but he says the activity there indicates a change in the capital markets on a global scale. "Estimates indicate that during 1999, some $25 billion was invested in 11,000 companies in Europe," notes Fugler, "which amounts to a 94 percent increase in investment in the technology sector and an 89 percent increase in capital committed to start-up deals in 1998. We've also seen an upward trend in 2000."
Fugler says such astounding figures mean a much richer target environment. "In Munich, for instance, many firms did not have venture capital arms 18 months ago," he says, "but now they do. They've seen the Microsofts and the Intels flourish into budding technology companies, and they feel left out. Although the bubble has burst, and there is [now] an emphasis on profits, there is still a strong desire to participate in the New Economy."
The dearth of entrepreneurs overseas vs. their abundance here is another factor. "In Europe, and globally, you have a stimulated market that is entrepreneur-enthused without a lot of options," says Fugler. "Therefore, the capital overseas looking for U.S.-style opportunities must focus on the U.S. marketplace if they hope to get a wide cross-section of opportunities."