Economic Edge: Notes, Musings and Links

We all know there’s nothing more critical to the typical business than location. If you don’t get cars passing your stand-alone store or foot traffic in shopping centers, chances are your enterprise will struggle or fail.
Turns out location is just as important when it comes to rounding up financial backing for start-ups and early-stage companies.
That, in essence, is one of the driving forces behind the Southern Oregon Angel Investment Conference.
During a question and answer period, a panel of venture capitalists made the point that many investors won’t put their money into companies that are more than 50 miles from where they live. In other words, if you operate more than an hour away from a potential investor, you’ve got two strikes against you and the fellow on the mound throws nasty sliders.
“People want to invest locally,” says Greg Semler, of Pivotal Investment in Portland, and a member of a panel that picked apart the presentations delivered during the Wednesday conference at Rogue Valley Country Club.
Semler notes that economic connections are fare more likely to be made in the Bay Area than Portland and more likely on the banks of the Willamette River than in the Rogue Valley.
For the most part, the people with money in Southern Oregon haven’t connected with a generation or two of would-be entrepreneurs.
The role of such conferences is to bring investors and entrepreneurs under the same roof.
“There’s both a supply of capital and a demand,” Semler says.
He says there needs to be more entrepreneurs providing ideas that can be turned into going enterprises for baby-boomers that have capital to invest.
“Young people will be looking for capital sources,” he says. “It doesn’t take a lot of capital to create software. But if a young person can develop an app or service cheaper than General Electric can,
it’s got a huge advantage. You build from there, by developing an eco-system.”
If that doesn’t happen, Semler says, the money winds up elsewhere.
“If the options aren’t available here, they invest their money back in the Bay Area.”

So what did the Angel Investor Conference 10-minute pitches reveal?
There are multiple Southern Oregon start-up companies with ideas ready to capture market share, create jobs and return for investors.

If any of the four — RedCloud, Cascade Peak Spirits, Folium Partners or Yogi Tunes — gets the kind of funding they are looking for, they will be profitable ventures for years to come.
The wild card entrants have viable ideas, but it was hard to see what they will be able to do with a more indepth pitch.
It’s break time and momentarily the fifth finalist will be named and allowed to makie a 10-minute presentation.

Here are a few thoughts from Jim Teece of Project A:

Jim Teece REDcloud looks to have a great green solution for fleet vehicles. Ford Ranger makes up 60% of the national class 1 fleet. I love the idea of re-cycling vehicles and creating “Green Collar Jobs” in southern Oregon.

Cascade Peak Spirits is a cool artisan organic distillery with global competitive reach and a great exit strategy. They already have distribution in multiple states.

Folium Partners has a modern book factory with a smart management team and a great global potential for the mobile future.

Yogi Tunes music service for the yoga world. Very interesting how yoga has evolved. Technology driven team seems to have the contacts, connections and

ReadyBook looks to be the wildcard winner. They have a great analog approach to emergency management and a network for distribution nationally. Huge potential upside here.

About this time every year, my wife and I clear out a year’s worth of receipts along with odds and ends kept for tax purposes to make room for current stuff.
While it’s not exactly an anthropological or historical exercise, revisiting where and how the money was spent in 2002 can prove instructive.
The $15 fill-up has jumped to $45, or more depending on the vehicle.
Schlotzsky’s Deli, once a favorite Sunday lunch stop, has disappeared from the corner of Stevens and Biddle, morphing into a bank. The Red Baron Restaurant has flown off into history along with the old airport terminal. The Texas Pitstop BBQ — arguably the best barbecue in Southern Oregon during its brief existence — is gone.
Frodsham Foto Finishing was a regular stop well into the digital photo age, but time marches on and left many a one-hour photo operation in the dust.
There is the final payment to CDS Internet for dial-up Internet service as well as a monthly Qwest Communications bill. Today, the Internet and telephone bill are bundled with InfoStructure, although I’m told Qwest ends up getting a cut indirectly.
GI Joe’s July tent sale was forever a summer highlight. Then there’s Circuit City, once the biggest electronic store for miles. Now the former Medford Center location is merely 20,000 empty square feet.
In the intervening years since 2002, new restaurants have popped up along with retailers such as Best Buy and Sports Authority
Doubtlessly, next year’s clean out will reveal more changes in our continually evolving Rogue Valley economy.

Lithia Motors capped a strong 2010 comeback with net earnings of $5.6 million, or 21 cents per share, in the fourth quarter on sales of $555.6 million.

For all of 2010, the Medford-based auto retailer earned $13.72 million, nearly 50 percent more than its $9.15 million 2009 profit. Revenue for 2010 grew 19.7 percent to $2.13 billion from $1.78 billion 2009. Fourth quarter revenue grew 30.8 percent

Lithia said its new vehicle same store sales increased 34.4 percent, used vehicle retail same store sales increased 21.1 percent and service related revenue grew 5.4 percent.

“The economic recovery continued to accelerate through the fourth quarter,” said Sid DeBoer, Lithia Motors’ chairman and chief executive officer. “All states we operate in posted double digit increases in same store sales. For the full year, our adjusted earnings per share from continuing operations increased 71 percent. This improvement is a testament to the earnings potential Lithia can realize as we increase our market share in an improving economy.”

Lithia also announced it would pay a 5 cent per share dividend March 25 to shareholders of record March 11.