For the second time this year, the FACCSF High-Tech Committee organized a conference in Palo Alto. Gathering investors and entrepreneurs, the Alternative Financing Conference was a unique occasion to study all opportunities to attract investment in an uncertain economic climate.

Raising money in a crisis gives a competitive advantage. As the moderator Stephen Clinton (Nixon Peabody) said, there is still money but it is just harder to get it. According the MoneyTree Report published by PricewaterhouseCoopers, Q1 2009 was the lowest venture investment level since 1997. In spite of the crisis, there is a good activity in M&A according to Gary Moon (Ridgecrest Capital), and alternative financing is less known but diversifies the potential sources of money than just VCs.

Fabien Degaugue funded PeerPong by Angel investors and recently closed a VC round. Fabien received a helpful support from the French community when he arrived in the Silicon Valley: his first investors were French, quickly followed by Indian and American ones. Raising money with angels can be really fast, all is a matter of feeling and relationship.

Follow up:

Senior Director of Strategic and Emerging Business for Microsoft, Anne-Marie Roussel presented a leading example of corporate venture. Even if it is organized by portfolio, Microsoft’s corporate venture doesn’t behave like VCs and doesn’t compete with them. Equity investment is an exception and the usual strategy is a partnership with startups matching Microsoft’s road map. The startup’s most important “homework” is to target the pitch to the corporation’s needs. “When you pitch a corporation, you have to do your homework and be patient” concluded Anne-Marie.

André Gueziec funded Beatthetraffic.com with public grants from the National Science Foundation and SBIR (Small Business Innovation Research). Applying for grants implies a strict process, but feedbacks from the program manager are a great help to rethink a good strategy. According to Alain, grants are optimal if you are process oriented. Another advantage is that the government doesn’t take equity, only a license on your technology.

Founder of the Entrepreneur Commons, Marc Dangeard launched the Entrepreneur Commons Seed Investment Fund to invest in early stage companies. According to Marc, a loan has a healthier impact on the strategy of the company than VC or Angel investments. Indeed, equity forces the issue and puts a lot of pressure on the entrepreneur as the company is pushed at maximum to be sold 3 or 5 years later. On the contrary, a loan leads the company to make cash as soon as possible to reimburse it quickly, keeping the strategy to the market needs.

Thank you again to the speakers and to Nixon Peabody for their generous and helpful support.