Let’s make a deal – Southern Capitol VC talks about eTix investment

So how does a venture capital firm justify making investments?

Jason Caplain, a former executive at Red Hat and a general partner at Southern Capitol Ventures, offers some insight into the decision-making process in an interview with WRAL Local Tech Wire. The firm announced Thursday a $1 million investment in Morrisville-based eTix, a provider of on-demand ticketing software.

How did you come to know eTix as a company?

Because of its focused management team, eTix has become a tremendous success story and one of the largest ticketing companies, helping over 2,000 venues globally sell well over 30 million tickets in 2007 alone. In addition, with our investments in Batanga and eMinor, we have been spending more and more time in technology spaces closely related to eTix. And, just in our local market, some of their customers include Cat’s Cradle, Lincoln Theatre and the Carolina Mudcats so we have been seeing the eTix brand around for a while.

They are established firm - why do they need and how do they plan to use financing?

While the capital is important, the real story here is that eTix is very interested in having Southern Capitol Ventures involved with our time and energy. eTix represents two investment areas that we really like: e-commerce and Software-as-a-Service. And in addition, we have 2 investments in online music related companies. As a Southern Capitol Ventures portfolio company, eTix will benefit from our knowledge of these business models and our extensive network of industry connections. eTix is already well ahead of the competition in many areas and their technology platform is extremely robust. So, in this case, the capital will be leveraged primarily to further ramp up their sales and marketing efforts.

Do you or someone at SCV join their board?

I have been actively involved for some time and will now be a board observer.

Why make the investment?

We continue to invest in the very best entrepreneurs in our region and in companies that we understand really well and believe we can help take to the next level. Like all of our portfolio companies, eTix is right in a sweet spot for us.

In a market dominated by Ticketmaster, what's the eTix niche? How big is market?

That’s the great thing about eTix. The market growth with the small and medium venues is very strong and eTix is well positioned there today as the market leader. But while their focus is on the small and medium venues, their Software-as-a-Service model is incredibly scalable and would allow them to serve the bigger venues if that is where we chose to focus the company. We’re fortunate that eTix has a large technology lead within the industry. Today over 2,000 customers rely on their software 24/7 including theaters, arenas, sporting venues, movie theaters, fairs and festivals, travel and tours, ski resorts, and other specialized venues. eTix’s competition really isn’t in a position to successfully pursue these verticals.

Southern Capitol Investments:

Making a play in e-commerce is one made on familiar ground by Southern Capitol Ventures. Its portfolio includes:

E-commerce: Art.com; ChannelAdvisor

Wireless: Motricity

Software: DoublePositive; FullSeven technologies (now part of Research Triangle Software)

Digital media: Batanga; eMinor

Healthcare information technology: Synthematix (acquired by Symyx)