By Allan Maurer
VIENNA, VA – In the new “recession-driven” America, there is a big opportunity for startups to develop technology that helps people save, manage, and spend their money, says Don Rainey, a general partner with Potomac-based Grotech Ventures.
In an interview that ranged from companies providing local buying deals, such as Groupon and Grotech-backed LivingSocial, to the future of Facebook and Twitter, Rainey said the recession has made consumers money conscious.
Grotech focuses on early stage information technology companies. Rainey currently serves on the boards of Grotech portfolio companies ARPU, Clarabridge, LivingSocial and Zenoss, as well as the Northern Virginia Chapter of the March of Dimes. It has offices in Maryland and Virginia.
In Fall 2008, Rainey was appointed for a second term as an emerging technology consultant to the Chief Information Officer of the US Department of Defense through the DeVenCi Program. The DeVenCi Program consists of a handful of venture capitalists who research and nominate companies to solve the US Department of Defenses’s unmet technology needs.
Money is where the money is…
Money is the dominant concern of consumers these days, Rainey says, which opens a number of opportunities for startups.
“The consumer in the 1990s was enamored of technology focused on the new, new thing and the Internet brought a lot of that to their doorsteps,” Rainey told us. “Today, there is a different focus in the minds of most consumers.”
They have lost their fundamental trust in banks and Wall Street, he notes. “Consumers are going to be open to different banking offers.”
That means there are opportunities for startups offering new savings, investment and payment vehicles.
More firms will leverage electronic money management
Also, Rainey sees alternatives to credit card payments–which cost merchants a processing fee–as generating competition in the electronic payments space. “There’s a tremendous inefficiency in payments that doesn’t benefit the consumer or merchant,” he says. “If people pay in cash, they want to benefit from doing so.”
He points to a program in the DC area that allows people to link their grocery store purchases to a gas station, resulting in points that can be used to get 12 cents a gallon off when they refuel.
“I think we’ll see more things that leverage electronic expenditures,” he says.
We mentioned that Atlanta has a number of startups and more mature players in that sector, particularly in online payments. “Banking centers are a logical source of this,” he agreed.
Charlotte, also a banking center, is on the other hand, not active at all in what seems a natural space for similar activity. “I was in Charlotte this summer, and I love it,” Rainey said. “But it’s curious…I don’t know if they need more local money or a pied piper to lead the way, but they have the talent to do this.”
Look for part two
Rainey is one of more than 50 digital domain experts, entrepreneurs, and venture capitalists participating in the first Digital East event at the Hilton, McLean in Tysons Corner Virginia October 18. The event will cover topics such as Social Media, Cloud Computing, Web Analytics, Online Marketing, Ecommerce, Email, and Search among others. It is presented by Tech Media, which is also presenting the third annual Internet Summit in Raleigh in November.
This is part one of a two-part report on our interview with Don Rainey. Part two will take a look at his thoughts about local buying and advertising, privacy, personalization and social networking, particularly Facebook and Twitter.
To contact TechJournal South Editor & Writer Allan Maurer: Allan at TechJournalSouth dot com.
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