Tag Archives: Big Money

VAST PILES OF MONEY

Chicago Social Enterprise Eyes a Trillion Dollar Market

Piggy BankImpact Engine Part 9 – by Jeff Segal, Message Therapist –

“Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”— James Baldwin

Imagine your reaction if your bank charged you a 9% fee to write a check to your sister in Cleveland. You send $100, but she only gets $91.

It’s unthinkable. But if you’re a low-wage immigrant sending part of your wages to family in your native country, that’s standard procedure—just one of the ways  you pay more for being poor.

But this isn’t an article about how immigrants get ripped off. It’s about vast piles of money.

Dubai is one of the world’s largest employers of foreign workers

Dubai is one of the world’s largest employers of foreign workers

Estimates vary, but there are currently well over 200 million people who work in one country

and send their earnings somewhere else. Rahier Rahman, Founder and CEO of Pangea a Chicago-based global payments company, says “Remittances through formal channels in 2012 were estimated at $534 billion. Many experts believe that flows through informal channels double that estimate. We’re looking at a trillion dollar market.”

Do I have your attention yet?

Rahier Rahman - CEO

Rahier Rahman – CEO

Between fees and the spread on exchange rates, the World Bank claims the average cost of an international transfer is 9.3%. Nine percent of a trillion dollars is a vast pile of money. Hell, any percent of a trillion dollars is a vast pile of money.

“And some markets are more competitive than others,” adds Rahman. “In corridors like Japan-to-China, fees can be as high as 20%.”

Now then. On the one hand we have millions of hard-working, poorly paid people getting the

Carson Junginger - Product Dev

Carson Junginger – Product Dev

shaft from the corporate banking establishment. On the other hand, we have vast piles of money. It’s a textbook opportunity for a social enterprise solution.

That’s where Pangea comes in.

.

A textbook social enterprise solution

To review: a social enterprise generates its sustainable revenue and profit from a business model that achieves a social benefit. Startups from Chicago-based incubator Impact Engine are proving that profit-driven innovation can create solutions to some of the world’s direst problems.

pangeaPangea is one of eight startups from Impact Engine’s first cohort They’ve developed a new approach to money transfer that skips the entrenched, agent-based system. With a beta launch scheduled for later this year, Rahman doesn’t share many details, but says Pangea will work through existing retailers, online or mobile, will make funds available instantly, and will “help consumers save between 50% and 80% of what they’re paying now.”

Some perspective: Workers in the US remitted $22.4 billion to Mexico in 2012 —more than all foreign direct investment in Mexico—and incurred just over $2 billion in fees. Cutting those charges by half would put an extra billion dollars into the hands of 1.4 million Mexican working class families.

remittance1

Workers transfer billions to Mexico every year. Workers in the US remitted $22.4 billion to Mexico in 2012

Money like that has what Rahman calls “a reverberating impact,” since earnings are so much lower in developing economies. What we Americans might consider spare change can create meaningful lifestyle changes for poor families in places like India or Latin America.

Bottom line—if Pangea succeeds, millions of people will lead better lives.

.

Investors Won’t Do Badly, Either

Omar Khudeira - Engineering

Omar Khudeira – Engineering

Of the five Impact Engine startups to receive funding since December’s Investor Day , Pangea has closed the most to date—a $1 million angel round. “Our partners recognize and respect our mission,” Rahman says.

I imagine they also recognize and respect the profit potential of a company that seizes even a fraction of a percent of a trillion dollar market.

That’s not cynicism. That’s capitalism.

Pangea has identified an underserved market, determined a pain point, and built a solution.

Lamia Pardo - Marketing

Lamia Pardo – Marketing

Like any other startup, their success will make a few wealthy people even wealthier.

Unlike any other startup, their success will also make large numbers of poor people a little less poor.

.

Contacts

Pangea – gopangea.com

Impact Engine – www.TheImpactEngine.com

Image credits: guardian.co.uk   arstechnicaPangea

This article appeared on the wildly popular WE’RE NOT EXPECTING ANY SURPRISES

.

About the Author

Jeff SegalJeff Segal Twitter Bird @MsgTherapist, works with entrepreneurs as a Message Therapist, translating great ideas into messages that connect with customers, partners and investors. He also writes at BrokerSavant and We’re Not Expecting Any Surprises. Contact him at mt.jeffsegal@gmail.com

.

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

.
.

Advertisements

2 Comments

Filed under angel, angel capital, angel investor, big money, Chicago Ventures, Entrepreneur, Entrepreneurship, Impact Engine, Impact Investing, Innovation, Innovation and Culture, investor, Jeff Segal, Kellogg, Northwestern, Social Entrepreneur, vc, venture capital

THE BUM IN ME

Funding Feeding Frenzy – Part 2

VERBATIM by Loop Lonagan—investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m headin’ out to this year’s Funding Feeding Frenzy. It’s the big event if ya wanna see all o’ Chicago’s best startups in one place. This time the FFF is happenin’ at a place called the Chopin Theater northwest o’ downtown and I wanna see how that’s gonna work out. Will there be a string quartet? They yusta hold it at a huge automobile showroom which seems weird but worked out. It had about half the floor space of McCormick Place and plenty o’ room fer hordes o’ people to roam. But this is gonna be a lot different.

One thing I wanna impress on your readers, John, is about Chicago itself. You know I love this place but face it—it’s a city with all the usual warts ‘n’ barnacles. And every neighborhood is different, so yer either at home here or yer not. Nobody never gave me no trouble. Maybe I’m no pushover, so I got an advantage. But if I’m gonna tell this story, I gotta give you the whole picture. And I’m gonna give it my best shot.

Clybourn

The Street

I’m comin’ in by train and can’t resist gettin’ off at the old Clybourn Station. From here, it’s only a mile walk to where I’m goin’. That looks real good on a map. But my advice to you is don’t do it. Get off all the way downtown and take a nice comfy cab to the event. This ain’t a bad part o’ town. Nothin’ like that. Just take my advice.

Once I’m on the Clybourn platform I draw in a lungful o’ cold air. It’s feelin’ like the Christmas season just gettin’ started up here and I got a wad o’ money in my pocket. I get my choice o’ passages down to street level. That always feels like descending into the bowels of hell. Mincing little concrete steps winding through grimy concrete tunnels. Once-yellow paint peeling off the walls. And the best part is you get yer choice o’ tunnels! They’s all the same!

It’s still early and the usual crowd is layin’ about the sidewalk. I step over Old Man Percy, ‘cause I don’t wanna disturb his sleep, but the others is startin’ to rise’n’ shine. I give a hearty good morning to Fred and Big Bubba and ignore Merry ‘n’ Pippin huddled in a corner—those two give me the creeps. Summa these people are new to me but you can’t never know ‘em all. Familiar faces go missing but still, there’s never no shortage. I got it on good authority that the poor will always be among us.

People tell me these guys makes Fifty Gs just panhandling. I say it’s a buncha hooey. The idea got invented in that Sherlock Holmes story, The Man With the Twisted Lip, ‘n people been repeatin’ it ever since. If it was true these guys’d find a warm place to sleep. Ever try an icy Bridgesidewalk ‘round about Christmastime? And there’s more ‘o these people hangin’ ‘round than ever. That means more competition. That means harder times fer all o’ them. Sure, any profession’s got it’s elite that strike it rich, but that leaves the multitudes, scrablin’ fer crumbs.

The Professionals

I always say there’s a lot to bein’ a good bum. You feel so warm inside when you drop a buck in his hat. ‘Specially near Christmas. Makes your whole day. Some ‘o these derelicts play musical instruments and summa them is pretty good at it too. Come to think of it, these guys fill an important role in society. They’re public servants. Maybe the city should fit ‘em into their patronage system. It’d mean more votes for The Chicago Machine. After all, The Machine is politicians.  And politicians is people paid to be bums.

Hell, when you get down to it, there ain’t much difference between these guys ‘n’ me. Maybe I invest alota money, drink good liquor, sleep in a warm bed. But whadda I really do for the world? I been givin’ that some thought lately and all I comes up with is this—I provide liquidity. Sounds pretty shallow, don’t it? Let’s just imagine some day I make a big mistake and lose it all. They throw me on the street. In no time, I’m part o’ this crowd. Makes a guy think. Maybe I got a talent for it, though—who knows? But it’s a profession without nobility.

Of course there’s gangs and outright criminals in the mix. Then there’s a lotta homeless people with no hope. Alcoholics, drug addicts, and whack jobs. Minds gone over the edge. They say Old Man Percy’s got millions stuffed in the bank but he’s sleepin’ here on the pavement whenever they shove him outa the loony bin. You think you can change him? Think again.

The Scholar

Everybody’s awake now. I always ask if one of ‘em can recite a famous quotation. Gotta keep up the level o’ education here. So I calls for somethin’ Christmassy. I give ‘em a choice—Isaiah 7:14 or Matthew 1:23, whatever their preference—theys exactly the same text. And Fred rattles it right off while Big Bubba stares him in the face, mouth hangin’ open. Fred’s a real intelligent guy. He’d be a good addition to my team.

Note to John – Why not make him a reporter?

Note to Loop – Bring him around for an interview.

Anyway, Fred’s recitation earns a C-Note for every one of ‘em that’s present—even Old Man Percy and the two Hobbits. Except I peel off ten fer Fred. Hell, it really is almost Christmas. I know most of ‘em is gonna waste it but I ain’t tellin’ these guys what to do with their own money.

Then Big Bubba rumbles to himself in a deep bass, “Emanuel—I thought dat was da name o’ da mayor.” Whadaya gonna do with guys like that?

Note to John— I ain’t had no coffee yet this mornin’ after a real rough night. Too much booze and no sleep, so maybe you oughta clean up my copy. I think I’m runnin’ on like the old days—I mean before I got some college. Understand what I’m sayin’?

Note to Loop— I find your account lucid and concise. I’ll publish it as is. And a graduate degree in finance at the University of Chicago is more than “some” college.

Overpass

Stumbling over the Truth 

Fred and Big Bubba take me up on my offer of breakfast. There’s a good old diner along the way. That’s the real reason I picked this station. But before you get to the gentry part o’ town, you gotta walk under the overpasses. The Kennedy Expressway bridges make natural roofs fer the homeless and the piles o’ rubble at the sides reek somethin’ horrible. Yeah it’s raw but so is any city.

Another thing about cities is potholes. In good times there was always holes in the street. Now, with this economic depression it’s worse than ever. So we’re walkin’ down Ashland Avenue at a brisk clip, enjoyin’ each other’s company and I’m scannin’ around like any careful city dweller when the next thing I knows I’m on my face. Lousy pothole—right in the sidewalk of all places.

Fred and Big Bubba haul me back to my feet and brush me off and I check for damage. Maybe a guy can get away with slashed knees and filth on his rumpled blue jeans but it don’t look right on a $2,000 suit. In an instant I go from Mr. Bigshot to a reject from the Salvation Army. But now I fit in with my companions, so I shrug it off. And I got a mile ahead o’ me to walk off the sprained ankle. But in a couple blocks we reach the nice section and the diner I told you about.

The Private Room

The cashier at the restaurant tries to push us out the door like we’re the Blues Brothers or somethin’. Probably thinks we’ll drive off the clientele. Phooey. Maybe this is a classier joint than Julio’s House of Jalapeños but hey—it’s still a diner, not the Chez Paul. So I ask for Lonny, the owner, and he leads us to a back room stacked with boxes. They lay a nice table for us and the room is perfect for planning out crimes and runnin’ poker games.

Big Bubba orders three stacks o’ pancakes. He butters every one of ‘em and drowns ‘em all in maple syrup. Fred sticks with a piece o’ pecan pie. But I dig into steak ‘n eggs with toast and A-1 Sauce ‘n’ bacon. And more important—a big pot o’ coffee for each of us. Round about the fifth cup I’m feelin’ a whole lot better. Fred smokes a cigarette. We talk. Lotsa stimulating conversation. It cheers me up. Now I’m ready—ready to meet with big money at the FFF.

Back on the street, Big Bubba and Fred part ways with a wave and a Merry Christmas. When I suck in the brisk air, I feel more coherent and alert—ready to pick winners, negotiate terms. Less than a mile left to walk off this sprained ankle. I think about them that puts their heads down on a frozen sidewalk and the ankle don’t seem so bad no more.

Note to John—Do I sound more coherent and alert now that I had my coffee?

Note to Loop—You’re always alert.

The Gentrification

Here’s another thing I find interesting about the city. Here in these gentrified sections you can never tell what’s inside a building. Alotta these are new construction or complete makeovers with big-time brands on their signs. Those buildings are nice inside—most o’ the time. But the others can surprise you. The outside of the Chopin Theater looks like a dump that’s been a dump for the last hundred years. Turns out completely different once you walk in the door. This place is gorgeous. A great spot for the FFF.

Chopin Theater

Chopin Theater

A beautiful lady greets me like royalty. I check the layout. Nice lobby. Nice coffee bar. Nice theater space for the companies to present. Steep stadium seating so everybody can see. Doors and windows floating around the stage give it a class look. I figure them’s props for some production but it’s a bonus for us.

Chopin Theater Lobby

Chopin Theater Lobby – photo courtesy of theater

I take in the morning’s presentations. Then I go bummin’ downstairs. Wow! A huge room with a great spread of food and drink. This is way better than the old place. People can talk and strike deals while they feed at the trough and make all the racket they want. Meanwhile, the presentations go on in the kinda setting they deserve—quiet and focused. Kudos to David Culver and company for finding this spot and nailing it down.

Chopin Theater Stage

Chopin Theater Stage – photo courtesy theater

So what’s the FFF all about? One o’ the most important things in the world—starting brand new companies! That means keepin’ as many people off the streets as we can! So here I am wolfing down food, crackin’ jokes, and talkin’ to intelligent company. Lotsa stimulating conversation. It cheers me up. Just like breakfast with the bums. Now I’m ready—ready fer the rest o’ the day.

Chopin Theater

Chopin Theater – photo courtesy theater

Listen John, I went off on a tangent and didn’t even cover the event yet. Now my batteries is gettin’ kinda low. I’ll buy some fresh ones and get back to ya later. Fer now, have a joyous Christmas.

.

Continue to Part 3

Go back to Part 1

Links

Chopin Theater

http://www.chopintheatre.com/event.php?id=2275&pageId=soon

Funding Feeding Frenzy

https://www.facebook.com/FundingFeedingFrenzy

Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. I do not guarantee accuracy. It’s not my fault if you lose money.

.Copyright © 2012 John Jonelis – All Rights Reserved

.
.

8 Comments

Filed under Characters, Chicago Venture Magazine, Chicago Ventures, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, FFF, Funding Feeding Frenzy, Innovation, Innovation and Culture, jobs, The City

SHARK TANK MEETS THE APPRENTICE

Funding Feeding Frenzy – Part 1

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m at the Funding Feeding Frenzy ‘n’ there must be more’n 1000 people here and lots more goin’ in and out all day. If you wanna see what’s happening in the Chicago Startup Community, this is the place to be and you can do it all in one single day. But don’t ferget—there’s sharks in them waters and they bite.

This is the place where the judges hold up cards like they used to at the Olympics way back when. They say either FUNDABLE, which almost nobody gets, KEEP FISHING, which I see a lot, or the dreaded GO FUND YOURSELF. Plenty of those too. I watch one company get the thumbs down from the judges but later in the day that same company finds itself an Angel Investor right here at the event.  I’m trolling for a couple good companies myself.   And maybe some fun on the side.

It takes all day before I see any blood in the water. And I’m sittin’ here with a big grin. I always like a good fight.

The Setup

FFF is so big they hold it in this enormous indoor car dealership – almost as big as McCormick Place.  I crawl into a hot new Camaro and ogle the red Corvette.  In past years, with room to spread out, they ran three stages at once.

This year for the first time, the FFF runs just one stage—not the usual three. This poses some pros and some cons. It allows David Culver & Company to put together a large panel of distinguished judges—all recognized Chicago investors. That’s on the good side. I get to see every company that presents. That’s good too. They already weeded out the weak companies and lotsa these presenting here bear a deeper look. I’ll check into those. These companies seem like they’re coached better than ever before and I appreciate the professionalism. All o’ that is on the good side.

But some things don’t work so good on a single stage. You gotta picture the situation. This event goes on ALL DAY. Sure, you can walk around but with only one stage, there’s nowhere else interesting to go. And it’s a hot day. Real hot. The AC keeps going till afternoon, then it gets nasty. But I like investing in startup companies and I like fireworks. I expect to see some of both. So I show up bright and early and stay late. And so do the judges—the whole day. That’s what causes all the trouble.

FFF Corvette

FFF

Just like any good event, they save the best fer last. That means the big show happens late afternoon. By this time I see lotsa shiny faces. The audience gets kinda thin. Most of ‘em are feedin’ their faces and indulging in various liquid cravings and raising a terrific racket in back—so loud it’s hard to hear the panelists. Like I said, these judges been workin’ their tails off all day and barely time for a pit stop. Anybody can see they’re all wrung out. And cranky. For what it’s worth, I figure this thing needs to start at 10:00 am and end at 3:00 pm max. That gives time for a couple two-hour sessions and a nice break.  But that ain’t the way it is.  No it’s every minute all day.

I think it’s crazy to pitch to a buncha investors suffering the miseries, but I see that’s just what’s about to happen. I prick up my ears and lick my chops. I wanna see what develops.

The Donnybrook

After four o’clock, the panelist’s questions are gettin’ kinda testy. They’re attention spans are probably at the breaking point too. I figure some promising offering is about to get chewed up.

Lemme tell you what happens but first, remember my rules:

  1. Tell a good story.
  2. Don’t get the judges mad.
  3. There ain’t no third rule ‘cause three strikes and yer out.

The next company is real special. After hearin’ their pitch over lunch, I believe they’re the real deal. But the guy I talked to at lunch ain’t the same guy givin’ the presentation right now. No, this presenter comes off as a know-it-all. What’s the word? Arrogant. Could be the heat because I meet him later and he ain’t that way at all. But right now, it’s painful to hear. He’s breaking rule #2.

And sure enough, the first judge turns nasty right away.

FFF Speaker

FFF Speaker

“I don’t understand your value proposition.” That’s the opening salvo. Then he starts firing off questions at the poor guy like a machine gun and when he’s done, you can sweep the pieces off the floor. This judge is an investor I respect. He’s the kinda guy I call the sharpest knife in the drawer. Some people think he’s intimidating. This time as it turns out, it’s the kiss of death. No way the other judges are gonna say anything positive after this guy turns vicious. No—they all fall right in line:

It’s like lecturing a schoolboy when the next judge says, “Within the million dollars, how do you see using that money?” Hey, the presentation covered all that stuff. Was he asleep or what? Like I say, it’s late and these guys attention spans are all shot to hell.

They could rattle off the rest of the objections in their sleep:

“You spent virtually no time on the business side.”

“Can you describe in more detail…?”

“How is that justified…?”

“I have a concern…”

Then back to the first judge. “There’s some big players in the marketplace. Some BIG, BIG competitors. One is coming to Chicago probably this year. It’s gonna—they’ll crush you!”

It’s all a buncha hogwash. But now the poor guy is back on his heels. He’s shot his wad.

Here’s the problem: He’s fielding questions all alone—something I like to avoid. He let himself get caught up in details and he don’t recognize these questions is coming at him from an entirely different perspective. Naturally he gets defensive.  Naturally that offends the judges. What he needs is a colleague to observe and step in when there’s a problem. But he’s all on his own.

FFF Speaker

Then we hear objections shouted from the audience.

Can you move so I can see?” Sheesh, I been sittin’ here all day. I’m tryin’ to pay attention to the shellacking going on in front of the big screen. I don’t even need to turn around to recognize the loud, harsh voice of Rong Mayhem. Why’d he wheel himself behind me?

“Somebody make him move.” I don’t budge. Rong can take a flyin’ leap fer all I care. Then he calls out to the speaker—as if the guy didn’t have enough trouble. “What happened to your last venture? I heard it went bust.” I have no idea what he means by this remark. Their last venture is a film that turned out real good.

The moderator interferes before another word gets out: “Don’t talk to him,” he says, meaning the speaker and audience shouldn’t oughta talk to each other. That’s the rules but it seems kinda rude given the circumstances. I like Rong but he gets banned from alotta these events. Can’t keep his mouth shut.

Then there’s a burst of noise from the beer drinkers in back ‘n’ that gets a response from the audience.

“Turn up the speakers. I can’t hear anything,” shouts Rong Mayhem.

“Who cares?” yells Sheldon Tommygun.

“Shuttup Sheldon,” booms Rong.  This delightful interchange leaves me wondering if I’m gonna see an old man and a guy in a wheel chair duke it out. That’d be somethin’ to see.

Another judge goes on as if there was no interruption: “What does adopt the platform mean? C’mon, whaddaya think it means? Then he suggests a major change in the business plan and the poor guy is so beaten down he accepts it—even calls it “smart.”

Time’s up. The presenter limps off.

Next!

This comes as a big surprise – the very next company,  Pallette App, gets a nice warm and friendly reception and takes first place fer the whole event.

bnc-pallete-app

The Winner

I gotta admit, they’re good. Real good. But where’d all that irritability go? Maybe the shark’s bellies are full. To my mind, they just butchered a promising offering and missed a shot at a great investment.

The Happy Ending

I always say: If you tell a good story with passion and don’t personally offend the investors, they’ll gleefully fill-in the holes in your business plan using their own imaginations. Without a good story, they’ll pick you apart like vultures on a carcass. Well it isn’t hard to offend the investors this late in the afternoon. And that’s what just happened here.

So here’s what I do the next day: I run off a transcript of the Q&A. I go to the company’s offices and present it to them. There’s nothing like seeing something in black and white to get your attention. Then I encourage ‘em to show up at a couple other events. And sure enough, the next time these guys present, they do great. And I watch ‘em get fully funded. So this story has a happy ending.

A Promising Company

A Happy Ending

Upcoming FFF Event

So’s I’m goin’ to the next FFF.  It won’t be like this one was.  Probably strictly business. They’re holdin’ it in an auditorium where they can keep tighter control. All the noisy food and venders is gonna be separate. I’m sure David Culver’s got it figured out. It’s his show and he knows what he’s doin’. And I’ll be there ‘cause I’m always ready to pick up another great company or two.  And it’ll be ALL DAY again, so maybe, just maybe, we’ll get some fireworks on the side.  If not, I’ll see what I can stir up.

.

Continue to Part 2

..

Hey, you wanna know how it actually feels to give a pitch to this kinda crowd? Check out “My Kraken Encounter.” Just click da link.

My Kraken Encounter

.

.

Continue to Part 2

Contacts

Find the Funding Feeding Frenzy at https://www.facebook.com/FundingFeedingFrenzy

.

Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

.

Copyright © 2012 John Jonelis – All Rights Reserved

.
.

8 Comments

Filed under Characters, Chicago Ventures, Entrepreneur, Entrepreneurship, Events, FFF, Funding Feeding Frenzy, Innovation, Innovation and Culture, Internet, Invention

A CONTRARIAN VC MODEL

Midwest Renaissance FundMidwest Renaissance Fund Launches in Chicago

As told to me by Loop Lonagan –

“Hey, I’m a Futures trader but that ain’t workin’ these days.  I seen these computers swallow up 75% of the market.  Used to be 7,500 floor traders here in Chicago.  Now I count just a few.  Most of those oh-so-carefully-tested trading strategies don’t work no more and the old rules get broken all the time.  Bonds don’t look so good either.  Our own government got downgraded for heaven’s sake.  Real estate is in the tank and still sinking.  Even gold took a plunge this month.  Maybe 20% of the country is out of a job.  Nobody hiring.  Nobody lending.  I think the VCs are asleep in bed.  Cash just sits. Lots of it.  This economy is all clogged-up and nothing moves—it just shakes real hard.  The bank pays exactly the same interest as my Serta Perfect Sleeper and inflation looms.  So tell me some good news.  Where do I put my money?  I wonder.  Is this that rare time in an investor’s life when the smart money—the real smart money sees blood on the streets and buys for the long run?  Warren Buffett seems to think so. Gotta go with Warren.

“So the food is great. I like the people. I sit in this plush chair in a room of 60 others.  Not the retail crowd. These are the pioneers of today.   Yeah, lots of ’em got MBAs from Kellogg and Booth and I know some guys here got their Ph.D. I also know some of those grew up on the tough streets and fought their way to the top. Now they’re all movers in the financial world. Any one of ‘em can plunk down a quarter mil without even mentioning it to the wife.  Like tipping a waiter.  I stick to coffee and listen real close while most of my friends hit the hard stuff.  The room gets hot and I take off my Hart Shaffner and Marx suit jacket and loosen my hundred-dollar tie.  This is what I hear:

“Len Bland, Ray Markman and a real big team of experts are ready to launch the Midwest Renaissance Fund.  Len built this organization brick by brick. I watched him do it. That gives me confidence.  Now he’s ready to pounce.  Does he smell blood on the streets like Buffett does?

“I like to see discipline in a fund.  I also like a strategy told in a few words. In my experience, the best ideas are clear and simple.  Here’s their plan:  Invest in and mentor early stage Midwest companies at a discount in under-invested sectors. Hey, that sounds pretty good.  What do they look for in a company?   A good product.  Good management.  Okay, that makes sense.  What makes a good team?  Education.  Straight thinking.  A track record of success.  Those are good old-fashioned business values.  I can relate to that big-time.

“I ask a few questions and like the answers.  This bunch has their own skin in the game—even more, they committed their own sweat. If a company in their portfolio needs a manager, one of the founders of the fund does the job or sees his stake get knocked down.  They even help manage some of these companies before they put in any money.  They plan to monitor progress day-by-day.  How’s that for oversight?  This is way beyond the usual seat at the board or quarterly checkup.  So I sit straight, grab my gold Cross pen and scribble notes all over their full-color brochure.

“What do they invest in?  Mobile apps?  Biotech?  Silicon Valley?  Nope.  They’re into consumer packaged goods, software, financials, healthcare, clean tech—wherever their team can make a difference.  All under-invested sectors.  That means Midwest businesses.  The Big Ten states.  The breadbasket of the world where you almost never see a VC.  And their target is a sweet spot called “The Valley of Death.”  Don’t let that throw you.  It’s is a stage in a company’s life when they’re too big for Angels and too small for VCs so they can’t get funded no matter how good they are.  And what kinda return do they expect?  They’re talking 25-35% IRR.  That’s huge.  I scooch up straighter in my chair but I notice that the numbers don’t faze anybody in the room.  That’s normal stuff in the VC world.

“What’s safe these days?  Sounds like venture capital might be.  Strange world, isn’t it?  Renaissance is gonna stay small and nimble and they’re already 85% of the way to their funding target.  That means I gotta get my research done and make up my mind.  Am I in or out?”

That’s what I heard.  What did you hear?  Comments welcome.  View the Midwest Renaissance Fund website at www.midwestrenaissance.com

.

Go to – EVERYBODY GETS FUNDED

Go to – BNC SUMMER #4

.

Find Chicago Venture Magazine at
www.ChicagoVentureMagazine.com
Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2011 John Jonelis – All Rights Reserved.

15 Comments

Filed under BNC Venture Capital, Chicago Ventures, Events, Midwest Renaissance Fund