LARRY GERDES, CEO AND EXECUTIVE CHAIRMAN OF PURSUANT HEALTH, spoke at this month’s meeting of the Southern Capital Forum about his experience as a business builder and venture investor. In an engaging presentation, Larry spoke without slides or a formal presentation. Instead, he shared stories about his long career in business and investing.
Larry has been building businesses in the health care industry for more than 35 years, beginning his career as the 24 year-old banking officer in Peoria, Illinois who convinced his bosses to lend the startup company HBO & Company it’s first $1.0 million. After two more investments, Larry became CFO of HBO & Company which moved to Atlanta in 1979 and went public two years later. Larry spoke about this and the addition of Silicon Valley pioneer Don Lucas (National Semiconductor, Oracle, etc.) to the HBO board.
He went on later to invest with Don Lucas and Walter Huff, founder of HBO & Company in a number of early stage companies, including several health care related investments. One of those was a predecessor to Transcend Services, Inc., where he served as Chairman and Chief Executive Officer until Transcend was acquired by Nuance Communications, Inc.
Among the stories he shared was one involving Sandhill Capital, a small venture fund turned syndicate Walter Huff started with Don Lucas. Larry became a co-general partner with Don Lucas a few years later. Don Lucas got curious about a small company in their Silicon Valley office building that was working late into the night. He introduced himself to the founder, Larry Ellison, and advanced a couple of payrolls before they invested in what became Oracle.
He also discussed how they switched Sandhill Capital from the traditional venture fund limited partnership model after their first fund to adopt a syndicating model with their fund investors. Each fund investor was offered the opportunity to invest in companies they sourced up to their percentage ownership in the earlier fund. If they passed on a deal, their access to future deals ended. He noted that the model served them well.
Pursuant Health is an Atlanta based company where Larry currently serves as CEO. It provides health data to the managed care and provider communities to help manage large healthcare populations and is, he says, finding it challenging to raise money. He characterized the current market for early stage company fundraising as one of the most difficult he has encountered in his long career. As an experienced venture investor himself, he wondered if modern venture investors are not so focused on business models that they are under appreciating the value of good management teams.
The luncheon where Larry spoke was part of the Southern Capital Forum's regular meeting schedule. The organization, founded in 1984, serves both the venture and the private equity community in the Southeast and hosts the annual Southern Capital Forum each fall that brings fund managers and their limited partner investors together to discuss the business of investing and raising capital. Today’s audience consisted predominantly of regional venture and private equity fund managers.
Image copyright Clinton Richardson 2016. Detail from the Arch of Constantine in Rome.
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Clinton Richardson, has been writing for decades. His critically acclaimed venture strategy books first appeared in 1987 and are now in their 5th edition. His Ancient Selfies is an International Book Awards Finalist and an eLit Award Gold Medal Winner. Ancient history and capturing photographic moments are among his passions. See his photo galleries at TrekPic.com.