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Can Rutberg & Co Find Money VCs Won’t Provide

Monday, January 1st, 2001

San Francisco –In tough markets, there are contrarians and there are losers. Bryan Rutberg says he’s a contrarian. Rutberg, 32, a former executive director and head of domestic Internet investment banking at UBS Warburg, launched an investment bank in September with the aim of raising money for capital-hungry startups through private placements.

But Rutberg has an angle. He calls his San Francisco-based Rutberg & Co. a research-centric investment bank. As venture capitalists retrench and lick their wounds, he argues that there is a niche for someone who can identify the most promising, capital-hungry young companies for investors-mainly venture funds and other institutions.

VC’s don’t have the resources the research companies other than those they fund, he contends. And Wall Street firms aren’t interested in tracking small, privately held companies.

‘There’s an enormous population of private companies in a market where there’s radically inefficient information flow,’ Rutberg says.

‘And there’s literally no one on the Street who looks at research form the exclusive perspective of private companies.’

He cites the wireless sector, which will be the initial focus of the company’s research. Rutberg & Co. research shows that 1,400 wireless companies were funded in the last 18 months.

Nine hundred or so don’t deserve coverage, he says. ‘They don’t have legs, they’re overfunded, they’re not big stories and they can’t have $1 billion in revenue’ –a virtual mantra among VCs.

That narrows the field to 300 to 500 companies. From there, it becomes a matter of picking subsectors. Wireless infrastructure and enabling technology is hot, wireless application and middleware are not. His analysts will then winnow the list to their own top 20 deals to bank.