Update 4: Blogging live from ‘Internet Summit’ – A warning from a VC, and marketing in Web 2.0 world …

Free-lance writer Noah Garrett is covering today’s Internet Summit in Chapel Hill for Local Tech Wire. His latest report: Marketing in a connected world. Earlier reports: SaaS is hot …

CHAPEL HILL, N.C. - When veteran entrepreneur and venture capitalist Kip Frey speaks, people listen. Such was the case at TechJournal South’s “Internet Summit” on Wednesday.

Here are some of the highlights from the Intersouth Partners sage of finance:

“Venture capitalist companies absolutely must become cash flow positive as quickly as possible …”

“There is less capital available right now and a lot less certainty in what funding will be available this round or the next. We haven't had any issues from our current portfolio making capital calls, but for new companies looking for funding, it's a completely different world …”

“My advice to companies looking for VC right now: have a plan that gets you to cash-flow-breakeven as quickly as possible with an investment syndicate that can arrange around the company.”

Web 2.0 Marketing

Marketing in a connected world has been both beneficial and challenging for experienced professionals in recent years. Going forward, how will marketing strategies evolve? A panel of experts gave a brief snapshot of what is means to marketing in a Web 2.0 world.

(Special Note: Panel Moderator accepted audience questions via Twitter. Interesting.)

Jim Tobin, President of Ignite Social Media (moderator):

“We are entering a land of authenticity. The difference between 1.0 and 2.0 is that you can talk back. The power really has shifted to consumers with the ability to editorialize everything you do. Nothing is more powerful than social media segmentation.”

Mark Hopkins, Lenovo:

“Finding the right partners and understanding who your customers are is key to having a successful social media presence. For example, the work we did during the Olympics was the Lenovo brand supporting the athletes. Social media allows us to "touch" the customer other places other than just support and sales channels. Monitoring and tracking customer behavior is a good way to measure social media advertising.”

Reggie Bradford, founder and CEO, Viture:

“How do you make yourself more available and make your brand more social? You have to have openness and honesty. One of the challenges of Web 2.0 is the explosion of inventory. If you can build the right experience or application and tie it into the traditional offline ad campaign, it becomes complimentary and almost essential. This is the new now.

Brian Handly, Senior VP, Atlas, Microsoft Advertising:

Content is important to attracting traffic and advertising. It's also becoming more and more important to attract and segment the audience coming to your site. The data is becoming so important.

Ben Weinberger, CEO of Digitalsmiths:

“You want to deliver advertising that is relevant. In my business, the level of intelligence continues to rise daily and you want to demonstrate that your advertising is "safe" for customer consumption.”

Earlier poosts:

Sitting in on a panel discussion about software-as-a-service, I thought entrepreneur and venture capitalist Kip Frey of Intersouth Partners posed an interesting question.

Moderating the SaaS panel, Frey asked:

“We used to always think of revenues as the key metric. Today, metrics are quite different. I'm interested in learning how you look at the progress of your company and how it translates to evaluations.”
Duke Chung, CEO and president of Parature:

“Two things I look at are net new sales and the actions happening on current accounts.”

Lee Prevost, president and co-founder of Schooldude.com:

“1. New client acquisition
“2. Units/revenue per client
“3. Retention”

Steve Wiehe, president and CEO of SciQuest:

“1. Cashflow and Revenue multiples
“2. Page views and tracking database transactions
“3. Transaction volumes”

Earlier comments from the same panel, starting with Wiehe:

“There's been a lot of hype with SaaS. It's a great technology that also has a lot of challenges to it.

“Let me talk about one dirty little secret about SaaS. SaaS requires a different funding model to raise cash flow and customer acquisition. It requires significant investment up front. As a result, there are a lot of questions on how to monetize your customer base. It's something to really think about if you're a company thinking about entering the SaaS market.

Plus from Prevost at SchoolDude:
“We are 100 percent committed to the on-demand model. Our belief is that is it is very difficult to run a hybrid model because it's really two different businesses. It's like trying to straddle two horses…a thoroughbred and a nag. Eventually, one is going to break.”

And:

“There's a whole lot more depth to software-as-a-service now and a lot of niche and vertical markets available. Despite the hype, we still see a lot of companies playing both sides of the fence. I feel that SaaS is great for this economy and a differentiator in our market."

Here are a couple more comments about the state of SaaS:

Chung of Parature:
“There is still a lot of opportunity with SaaS. It's really a race for companies to get products to the web.

“The most important component to SaaS companies is cash flow. This is key because it's difficult to raise capital right now. The beauty is the customer retention rate of SaaS. If you build it into your model early on, you can continue to fund your business during difficult economic times.”