IMPACT 2015 Capital Conference; Interactive, local & politicians (But won't the election be over?)

Tom Paine

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PACT's IMPACT 2015 Capital Conference kicks off on Tuesday, November 3 and runs through November 4, primarily at the Ritz-Carleton Philadelphia. The traditional gathering will be held on the 4th at the Crystal Tea Room at the conclusion of events.

And a surprise guest will add to the energy surrounding the event.

The keys to this year's program are more interactive (as in people-to-people, not machine-to-machine) events, according to Michael C. Heller, President & CEO of Cozen O'Conner, the event sponsor, and an emphasis on showcasing more local investors. (I spoke by phone with Heller and Ira Gubernick, psrtner.) Last year there were some gripes when a panel of out of town VC's were asked to give their views of the Philadelphia tech ecosystem as a place to invest. According to some (I was not present), their views towards Philadelphia were rather dismissive. While outside perspective is always helpful and needed, this year key panels will be staffed almost entirely by local investors, all proven with sound, imaginative approaches and big league track records.
Michael C. Heller /President & CEO
Cozen O'Conner
Heller has raised Cozen's profile considersbly since the dark days of 2007. Since then Cozen has benefitted from a combination of organic and inorganic growth, while expanding both the client base and the diversity of the attorneys in the firm.

Heller believes that in order to best serve entrepreneurs, Cozen itself must be an entrepreneurial firm. The two things go hand-in-hand.

Cozen's website states that "an important element of Michael’s practice is making the necessary introductions to help clients raise capital and find joint venture partners and he is constantly relied upon for his business acumen and investment instincts." Heller is personally active as an entrepreneur; for instance, he's part owner of the Valley Forge Convention Center (which includes the casino) so he knows what its like to put his own money into a venture. He's from the Philadelphia area and received his law degree from Villanova after graduating from Penn State.

While Cozen is certainly well established and respected in the Philadelphia entreprenurial community, through this sponsorship and other activities it is engaged in it appears to be raising its visibility a bit more to reflect its growth.

By "more interactive", PACT has expanded on a theme it started in recent years of having entrepreneurs and investors talking with other knowledgeable individuals rather than talking into thin air. A key addition to this year's program will be "The Lion's Den", in which a group of the Philly area's top tech investors will interview some of the most promising ventures that presented during the day panels. It was described to me as being more "Shark Tank" than "Apprentice"; as far as I've heard Mr. Trump is no where on the agenda. By the way, now Mr. Trump says he is the world's best stock picker, so perhaps he should have his own special panel that we all should attend.

The panel for "The Lion's Den" includes Jonathan Brassington, CEO & Partner, LiquidHub (who has also msde some angel investments such as one in SevOne's early days), Walter (Buck) Buckley, Co-Founder and Chief Executive Officer, Actua (formerly ICG), Robert Corrato, M.D. Founder & Managing Partner, Devon Hill Capital Partners, Michael Hagan, Managing Partner, Hawk Capital Partners (ex Verticalnet, Nutrisystem, and LifeShield Home Security), and Michael Wells, Managing Director, Princeton Biopharma Capital Partners, LLC. The moderator will be Marc R. Lederman of NewSpring Capital.

Another panel that should be exciting is "Next Generation Philadelphia investors". These are five individual Philadelphians who, at relatively young ages, have become established investors or venture capitalists in their own rights, and will be important in building a bridge to the future. This group panel, moderated by Juliana Reyes of Philly, consists of:

  • Michael DiPiano, Managing General Partner, NewSpring Capital
  • Karen Griffith-Gryga, Managing Partner, DreamIT Ventures
  • Sashi Reddi, Investment Partner, Serial Entrepreneur, Gabriel Investments
  • Richard Vague, Managing Partner, Gabriel Investments
  • David Bookspan, Founding Partner, DreamIT Ventures
  • Stephen T. Zarrilli, President and CEO, Safeguard Scientifics, Inc.

Reddi, who works out of Philadelphia and  his native India, is a Wharton PHD who has backed numerous firms, the most well-known of which was AppLabs, the software testing firm that sold to CSC in 2011 for a few hundred million. The Indian tech press always claims him as a resident, although on LinkedIn he gives Philadelphia as his place of residence. But that's arguing over minutiae. aa its been clear over time that he cares deeply about and spends considerable time in both countries.

He's since invested in several ventures, some with Philly ties, such as KonciergeMD, which was acquired by Accolade, and iMomentous, which just changed its name to Phenom People and raised an additional $6 million. Recently,he joined forces with Philadelphia's Gabriel Investments. He is also Founder and Trustee of the SRI Charitable Trust, which helps poor chidren in India.

Zarelli, first as CFO and more recently as CEO of Safeguard Scienifics, has help bring clarity and transparency to a company that appeared as a confused mess to many investors. Its public financial reporting system is something to be admired. He was credited for much of the success of Safeguard's portfolio during his years as CFO, and the pipeline appears well stocked to continue.

A LaSalle University grad, he chairs its Board of Trustees, and is involved in various other business and community organizations.

The keynote speaker's address, to be held in a "fireside chat" format similar to last year, will be held as a conversation between Michael Rubin and his friend, David Adelman, President & CEO, Campus Apartments and Co-Founder and Chairman, Franklin Square Capital Partners.

Rubin's business story is transformative. He started a business when barely a teenager that eventually became GSI Commerce, a leading order taker and fulfiller of sporting goods and later other products (Toys"R"Us became a major client). Now GSI Commerce was a great business, more than most of us could hope to build.

But its nature was typified by Rubin's own appearance on 'Undercover Boss'in 2010. He, a reasonably fit young man, couldn't do the job his employees had to do for close to minimum wage in one of GSI's fulfillment warehouses. And you could see clearly that most of the warehouse jobs were like that.

And much like Amazon until recently, GSI was barely making profits and always seeming to need more cash. It was hardly the great digital enterprise of the future. GSI since 2001 posted losses in all but two of its fiscal years until its acquisition.

So Ebay came along. Despite its very bright people, I'm not sure Ebay knew what GSI Commerce really did. But they took "the hardest part" of GSI Commerce of its hands for $2.4 billion, and left the golden goose, the sports apparel licensing and online fulfillment business that offered better margins and more merchandising and marketing control than the rest of GSI Commerce did. Plus added to that was GSI Commece's recent acquisition of another licensed sports apparel online retailer,Fanatics, which was booming. Added to GSI's own sports licensing business, it became a monster. It was valued at over $3 billion two years ago, there is really no telling what its valuation is today (Fanatics completed a smaller financing round recently).

To put a ribbon on the package, Ebay let Rubin keep his other two businesses, ShopRunner and RueLaLa, and threw in some cash for these to boot. And Fanatics, ShopRunner and RueLaLa were all wrapped up in a nice little package called Kynetic LLC for Rubin to keep.

This is just my version of events. The valuations of the Kynetic businesses may go down in the current private company (don't call it a bubble) cooling. And I'm not implying that GSI did anything it shouldn't have done. Only that Ebay was so wiling to accommodate them. Ebay sold GSI Commerce (which they renamed Ebay Enterprise) earlier this year for $925 million. See what happened after the sale .

Maybe Michael Rubin should write a new, improved version of The Art of the Deal.

(Update 11/11): The Inquirer's Joe DiStefano's piece on GSI Commerce and Rubin's recounting of its acquisition by Ebay at the IMPACT event is worth a read.

Governor Wolf is expected to "make remarks" at Wednesday morning's opening session, following Mayor Nutter's. While Wolf ran the family building supply company back in York for many years, many legislators are not convinced he understands the needs of the state's business community. But it says "remarks", which means you're not going get a policy speech.

Another thing to watch for is US women's soccer star Carli Lloyd, late on Wednesday morning. As many remember, she scored three goals in the first 16 minutes in the FIFA World Cup final. She's also from Delran, NJ. Few of us are going to achieve that kind of elation, but it makes you think about working for goals that would be extremely satisfying in your or your teammates' lives.