Q&A with Kathy Harris
Kathy Harris, Partner, Noro-Moseley Partners
by Mary Welch, Editor
August 20, 2007
AW: What is venture
capital?
Kathy Harris: Venture capital is money provided to young, rapidly growing
companies that have the potential to create significant value for their investors. Venture
firms typically raise capital through private partnerships funded by private and public pension
funds, endowment funds, corporations and wealthy individuals.
AW: What do you need to make a presentation to a venture capitalist?
Kathy Harris: We typically begin the process (and it is a process) by reviewing an
electronic version of an executive summary and a PowerPoint presentation. The slide
presentation should be clear and consistent with a focus on the opportunity, the market, management
and the business model (revenues and profits). The entire presentation, including Q&A,
should be kept to an hour. Entrepreneurs often ask how important a full business plan is to
our analysis. It isn’t critical for the first interaction, but I firmly believe that you
haven’t done enough homework around the company’s long-term viability if you haven’t done the
research to write a business plan.
AW: At what stage should a company seek venture capital funds?
Kathy Harris: A company should pursue venture capital when management has a valid
use of proceeds such as scaling a viable business model, funding product beta tests, attracting and
supporting early customers and in some situations, funding acquisitions. Companies in the
seed stage or idea stage are generally better suited for individual or angel investors.
AW: What are VC looking in a company?
Kathy Harris: VC’s want to back companies with a management team with extensive
domain expertise and start-up experience; a sizable market with a steep growth curve, significant
pain in the marketplace that can be cured with the company's products or services; and a clear,
defensible path-to-profitability.
AW: What are the different avenues for funding available to a start-up company?
Kathy Harris: Most of the funding for a start-up comes from personal savings (I’m
astonished at the number of entrepreneurs who have charged payroll to their credit cards), friends
and family and angel investors. We also see owners fund start-ups from consulting fees and
occasionally an early customer or two. Bank lines of credit may be available if entrepreneurs
or investors are willing to guarantee the debt.
AW: What are the different avenues for funding available to a second-stage
company?
Kathy Harris: Expansion and later stage capital has certainly been the largest
part of the total funding mix over the last few years. Money is plentiful for companies that
need capital to grow beyond a critical mass of customers or bridge the gap between the early stages
and an exit. Private equity sources, such as buyout groups or firms specializing in
recapitalizations, are available for more mature companies as well as bank and mezzanine
debt. Additionally, hedge funds are becoming more prolific in the later stage arena which can
bode well for entrepreneurs; hedge fund terms tend to be looser than traditional venture capital
alternatives.
AW: How is the market now?
Kathy Harris: The venture market is particularly strong for companies in “hot”
areas such as new media, green technology, healthcare devices and biotech and open source
software. However, I’m convinced that great entrepreneurs and great companies can always find
funding, no matter the economic cycle. It’s unclear how the recent unrest in the
institutional debt and financial markets will impact venture, but it will take awhile for any
impact, positive or negative, to trickle down to the early stage market.
AW: What advice would she give someone thinking about starting up a company?
Kathy Harris: I would talk to everyone I could possibly find who has started a
company and managed it to a successful exit. Starting a company and sticking with it through
the challenging times takes an incredible amount of intestinal fortitude. The more you can learn
about the process, the better you can appreciate the passion and commitment a start-up
demands.
Kathy Harris
Partner
Noro-Moseley Partners
Kathy Harris joined Noro-Moseley Partners (NMP) in 2002 as senior vice president - business development and was promoted to partner in 2007. With more than 20 years of financial and private equity experience, she focuses on identifying and evaluating attractive early and growth stage companies.
Prior to NMP, Harris was a partner at Atlanta-based Technology Ventures where she evaluated investment opportunities primarily in the software and information technology areas and actively worked with the firm's portfolio companies. Prior to Technology Ventures, she served as vice president/national marketing manager of Sirrom Capital Corporation, where she oversaw all business development and loan origination activities.
Prior to Sirrom, Harris spent more than 10 years at J.C. Bradford & Co. (now UBS/PaineWebber) where she was a senior vice president in the investment banking group. While at Bradford, she was involved in public equity and debt offerings, private placements and M&A/advisory work for a broad array of industries.
Harris started her career at KPMG International and is a licensed CPA in Tennessee. A native of Kentucky, Kathy holds a bachelor of science degree in accounting from Murray State University and an MBA degree from Vanderbilt University.
