Businessman promotes idea of LV venture capital fund

Kevin Ferguson

Tuesday, Aug. 21, 2001 | 11:12 a.m.

A technology-made millionaire living in Northern Nevada is interested in establishing a venture capital fund to jump-start small tech companies in Southern Nevada.

Fred Sibayan, the co-founder of Santa Clara, Calif.-based Exodus Communications, said Southern Nevada is a "ripe" market to establish a technology-related venture fund because of the strong influences of the entertainment industry in Nevada.

"You have a best-seller here, and it's the entertainment industry," said Sibayan, who spoke last week to the Internet Business Alliance of Nevada.

After retiring in 1997 from Exodus Communications, a company that develops technology data centers, or telco hotels, Sibayan moved to Northern Nevada. In April, he launched Sierra VisionLaunch, an "accelerator" for start-up technology companies.

Accelerators, similar to business incubators, nurture a cluster of small businesses by providing seasoned guidance and expertise in areas the executives may be lacking, such as accounting, legal or human resources.

One aspect of an accelerator is a venture fund that helps finance companies until they have a strong revenue stream to support themselves.

"I recognize the value of these venture funds and I'd like to see it happen in Las Vegas as well as in Northern Nevada," Sibayan said.

A lack of venture capital for Las Vegas startups and small tech companies has been a problem for years.

In 1999, a record $35.6 billion of venture capital investments were made in the United States, and none of those investments were in Southern Nevada, according to PricewaterhouseCoopers LLP.

The booming casino gambling and real estate development industries in Southern Nevada have been financed in recent years not by venture capitalists, but by more conventional sources like the national bond, equity and mortgage markets. And a few Las Vegas technology startups have attracted capital with public stock offerings.

But venture capitalists have not been active in Las Vegas.

And even in technology-oriented cities more suitable for venture capital investments, the burst of the Internet bubble has caused venture capitalists to scale back their investments.

But Sibayan said Wednesday that things are changing and that he had started discussions with Southern Nevada business people and groups, like IBAN and the Nevada Development Authority, to spur interest in a Las Vegas venture fund.

IBAN, which was incorporated about a year ago, has about 100 Nevada tech companies as members. It aims to serve as a unified voice for the state's tech industry.

IBAN Chairman Scott Frost said Sibayan is the kind of entrepreneur with the right connections and expertise to make a venture capital fund succeed in Las Vegas.

"I think a guy like Fred is welcome here and can help take advantage of the synergy between Southern Nevada and Southern California," Frost said. "With the convergence of the gaming industry, entertainment and the Internet, it should happen here. There's no better place where these three industries collide."

Sibayan said he sees a lot of potential for venture funding for software developers in Southern Nevada if and when Internet gambling is permitted in the Silver State.

"Typical venture capital people are very cautious about Internet gambling right now," Sibayan said. "But I think that will change over time because it's going to be a multi-billion dollar industry."