His company didn't start in Pittsburgh and it doesn't operate here, but Paul Hugenberg came to the city hoping its burgeoning startup and investment community could help his Ohio-based company grow.
The city is increasingly becoming a Midwest magnet, offering a slower, more deliberate pace of deal-making for investors looking for new companies with big ideas, say startups and investors.
Both came together on Wednesday for the 3 Rivers Capital Fair at Heinz Field, where 42 companies, half from Pittsburgh and half from Ohio and other parts of Pennsylvania, pitched their vision and their plans to those who could fund them.
“Pittsburgh is an ecosystem for capital,” said Hugenberg, who's company, InfoGPS Networks, Inc, makes cybersecurity software.
Investment channels from Pittsburgh flow into a westward corridor that attracts businesses in Cleveland and Akron as well, he said. “Finding capital in the Midwest is hard. Very hard. It's harder when you're not associated with a Carnegie Mellon. What the Pittsburgh-corridor ecosystem has started to generate is a level of investment that helps keep companies here instead of leaving to the coast to get funds.”
Organizers say the fair has drawn more investors each year, and investors agree.
William Crowder, an investor with Comcast Ventures, primarily works out of New York and Philadelphia, but came to Pittsburgh after another investor, Jennifer Hsin, of CNF Investments in Washington, suggested he check it out. The two served on a panel, hearing pitches and questioning presenters on the viability of their products and business plans.
Hugenberg claimed his software is distinct because it indexes and captures information while securing it and could have prevented breaches of customer information like the incidents at Target and Home Depot.
“There is a tremendously under-served secondary market for talent, and tapping into that is a challenge for people that are not geographically there,” Hsin said. “So coming here and trying to figure what's going on, what are the underlining themes in Pittsburgh, how they're doing it and how they're expanding is actually really interesting.”
Hugenberg said Pittsburgh-based non-profits and incubators like Innovation Works and Idea Foundry aim to sustain new Pittsburgh companies, but the home-grown dynamic benefits other regional startups, too.
“One of the reasons for coming here is there are people in the room who have a vested interest in trying to develop that ecosystem ... when you attract those people who are invested in building a big ecosystem ... it's a win-win.”
Startups in smaller markets often have to overcome a perception of lack of innovation from venture capitalists accustomed to the frenetic buy-in pace of New York City, Silicon Valley and San Francisco, Hsin said.
“I think it's an uphill battle for cities like Pittsburgh and some of these other small markets, (like) Atlanta, Raleigh,” she said.
As Pittsburgh's talent becomes more visible, the slower, relationship-building business ways become more attractive for investors parachuting in, said Crowder.
For Pittsburgh-based startups like 3-year-old Thread Inc., which makes fabric from plastic waste gathered in Haiti, money flowing from events like the 3 Rivers fair is crucial for the next development steps.
“It puts you in front of the people who need to know about you,” said Ian Rosenberger, Thread's CEO and founder. Two investors who were uninterested in putting money into Thread now are interested, he said, approaching him after seeing his presentation.
“The amount of good ideas that are coming out of ... incubators all over the city is really amazing right now,” he said. “We need more events like this.”
Source: Braintree tenant InfoGPS Networks in the news: Three Rivers Capital Fair brings investors, startups together URL: http://triblive.com/business/headlines/6930256-74/pittsburgh-investors-fair#ixzz3GB9Cda88