Venture Capital
Running a business requires great solutions, talented employees and cold hard cash. For start-ups, funding
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▲Gadi Piran, President of On-Net
Surveillance Systems |
from venture capitalists helps maintain their operations and get them on their feet. Young video surveillance players who have successfully raised venture capital include ObjectVideo, 3VR and Pivot3. Component suppliers in security with venture capital funding include Pixim and Stretch, as silicon designs require a significant investment.
However, several companies do not depend on venture capital. Next Level, OnSSI and SightLogix are privately funded, so they do not need to attract investors.
Redefining Distribution
From the distributor perspective, business practices have changed with the times. "A lot of what we do is project-driven for installations, so correspondingly we don't need to hold that much stock," Harraway said. "The days of sitting there waiting for orders to roll in are long gone. We're seeing projects being delayed."
Warehousing requires balancing supply and demand. "Switches move incredibly fast," Harraway said. "The hard drives you ship in January will be twice that size in December. Currently, 2 TB is the standard, and now there's talk about 3 TB; last year, we thought 750 GB was big. You don't want to hold that inventory because in three months, you'll be seeing something else."
Depending on the project, the distributor may ask for advance payment or specific payment terms. "We can renegotiate those terms depending on the challenges the integrator is facing, and then go back up the channel to
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| ▲John Romanowich, President and CEO of SightLogix |
the manufacturers," Harraway said. "In regard to warranties or other services, the moment I ship, the clock starts ticking."
Manufacturers look to distributors for their contact base, which requires them to pound the pavement. "The best way to do that is to pick up the phone and tell customers about a new product for their market and ask if it is of interest," Harraway said. "Users want to spend the minimum they possibly can but still get the best system."
Customers are always looking for the biggest bang for their buck, but limited means has forced end users to be even more selective. As manufacturers and channel players have offered more flexible payment options to users, they help meet needs without overly burdening themselves. In turn, distributors, integrators and manufacturers are working together on lending, with extended terms, preferred pricing or rental options. In short, the recession has brought challenges, but nimble players have managed to beat the market with creative thinking. Money is hard to come by, but understanding customer needs and utilizing all possible financing options can still yield a profitable outcome.