This panel on the second day of the event program saw participation from Signal Hill Capital, DH Capital, Media Venture Partners and Stifel Nicolaus – some of the big investment companies most knowledgeable about, and involved in, the hosting space.
(I unfortunately missed the first few minutes, making the trek of several hundred miles in each direction to check out of the hotel.)
Moderator Dan Golding asked early about the impact, historically of the dot-com bust (and the impact of large-scale failures like Exodus) on the banking business’s opinion of the hosting business. Interestingly, it’s still a problem. Not an enormous, prohibitive problem, but according to a couple of the panelists, some big institutional investors have reservations about the hosting business based on that circumstance.
Reiterating one of the most oft-repeated notions of the conference, the panelists discussed that there is a light at the end of the tunnel, and not so far off, as far as access to capital is concerned. In order to access that capital, however, it’s going to be difficult (if not impossible) that is small and not growing. Growth is a good way to get investors interested.
Companies need to figure out how to get big enough to get the funding to fuel further growth. According to several of the panelists, mistakes that can turn off investors include strategic detours and too much diversification (in terms of deviation from a really core business model).
Doug Webster from Signal Hill points out that there isn’t and hasn’t been debt available to build raised floor – that is, you cannot, and have not been able to borrow money to build data centers. And that is true for large public companies. You have to get financing for data center building through lending against your cash flow, or through equity investment.
About Liam Eagle
Liam Eagle has worked as a contributor to the Web Host Industry Review since its inception in 2000, and as editor since 2003. He has been editor of the WHIR's print magazine since its launch. His daily involvement in the gathering and reporting of Web hosting news and his regular interaction with Web hosting leaders gives him an uncommonly broad appreciation of the issues and tends facing the business. Through his WHIR blog, Liam spots Web hosting trends and offers opinions on the industry-wide impacts of major developments and the motivation behind big announcements. Follow him on Twitter @liameagle
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