Investor shares tips for getting most for money

Categories : EnterpriseWorks, Investments
Posted on: July 11, 2008


Angel investor Teresa Esser speaks during the first of the ‘Startup Cafe’ series lectures Tuesday at EnterpriseWorks on the University of Illinois campus in Champaign. Esser is the author ‘The Venture Cafe.’

CHAMPAIGN –Angel investor Teresa Esser has a few rules about which companies she’ll invest in.

One is, she won’t invest in an entrepreneur who has a background in engineering but no experience in sales.

“You need to have a sales-oriented CEO,” she said. An engineer with no sales director or CEO managing him will simply “play with toys until he runs out of money,” the Milwaukee-based author and investor declared.

That probably scared the daylights out of a few people who heard her speech Tuesday at EnterpriseWorks on the University of Illinois campus. Many of the 100 or so in the audience were engineers who work for startup companies or want to start one of their own.

Esser, who wrote the book “The Venture Cafe: Secrets, Strategies and Stories from America’s High-Tech Entrepreneurs,” is also managing director of the Silicon Pastures angel-investor network in Milwaukee.

A graduate of the Massachusetts Institute of Technology, she is the wife of Pehr Anderson, who co-founded NBX Corp. and sold it in 1999 to 3Com Corp.

Esser said she was told some Champaign-Urbana residents fret because local companies sometimes recruit CEOs from other places –and occasionally the companies migrate there.

The answer to that, she said, may be exposing engineers in training at the UI to “a process that makes them sales-oriented.” That way, local companies won’t have to seek that expertise elsewhere.

In an interview after the speech, Esser discussed entrepreneurship and some reasons there are fewer female entrepreneurs than male entrepreneurs.

Some of it has to do with whether someone is encouraged –or not encouraged –to start a business, she said, but it’s also a question of “at what point do you have no fear.” And that, she said, may be influenced by hormones.

“I believe risk behavior in males is largely determined by testosterone (levels) and risk behavior in females is largely determined by oxytocin (levels),” she said, referring to a hormone that stimulates contractions of the uterus and facilitates the secretion of milk.

As anecdotal support for her theory, Esser cited the case of a female entrepreneur who raised a lot of money for her company when she was “very pregnant.” Among the businesses founded by that entrepreneur is Comic Wonder, a business tied to an Internet site dedicated to the art of joke-telling.

From her interviews with 150 entrepreneurs, Esser found one of the key characteristics was their “attitude toward failure –they look at it in a completely different way.” Some consider it more risky to work for a well-established company than to go off on their own in business.

Esser said probably her worst investment came during her days in Boston when she invested $50,000 in an energy-related concern and the principals disappeared, leaving no trail. The problem, she said, was “the people were not trustworthy. We were not their equal, so we didn’t have a lot of clout.”

The best situation for angel investors and entrepreneurs alike is to align interests so that each party has incentives to make the deal work, Esser said. She characterized that as, “I make money on the day you make money, and you make money on the day I make money.”

Esser’s speech was the first in EnterpriseWorks’ “Startup Cafe” series. The next speaker, Steve Miller, whose family founded Quill Corp. and later sold it to Staples, is slated for noon Aug. 5.