Archive for the ‘Investment’ Category

Since October of 2010 the Thunderbird Angel Network has invested in one company and three other companies are being watched and mentored by TAN Investors.  TAN investors have seen presentations from twelve companies, including 5 companies with alumni in their management team. Presenting companies have been from Arizona, California, Colorado and Texas.  Half of the member investors are Thunderbird alumni and several investors fly in from out of state for meetings.

The Thunderbird Angel Network (TAN) was established in the fall of 2010 by friends of the Walker Center. TAN was created to develop a robust network of investors and entrepreneurs among Thunderbird’s network of alumni, friends and local investors. TAN provides a venue for investors to consider investing in early-stage companies having the potential to grow rapidly. Angel capital fills the gap in start-up financing between “friends and family” and venture capital.

September 15 is the next TAN meeting. If you are interested in attending or being an Angel investor with TAN or you are a company seeking Angel investors visit the TAN web site www.thunderbirdangelnetwork.org or email at thunderbirdangelnetwork@gmail.com or call 602.978.7173.

Manuela Emmrich ‘11 is the winner of the 2011 Thunderbird Business Plan Competition.   Her patented tennis racquet has captured the interest of several Thunderbird Angel Investors.  Manuela is also a former NCAA Tennis player and champion.

What is Swirve?

Swirve produces an ergonomic tennis racket, the CarvingStar. The unique shape of this racket ensures a natural wrist position at all times and reduces vibrations. This reduces the onset of injuries such as tennis elbow and enhances play through a faster serve and a better slice.

How long have you had the idea to bring the Swirve racquet to the US market as a business venture?

I moved to the US in 2002 and was first introduced to the racket during a vacation in Germany in 2004. I was immediately impressed by the design and functionality. Most importantly, after using the racket for a few months, I experienced significantly less wrist pain that I had developed over the years playing with a regular racket.  In addition, I could finally play a great slice. It was only until I started my MBA at Thunderbird in 2009 that I realized that I can turn this product into a business venture.

Who is your market?

The primary target market is the senior tennis player who suffers from tennis elbow and wrist/arm problems. The secondary market is kids and teenagers who start playing tennis at an early age and should use an ergonomic racket in order to prevent overuse injuries early on.

What do you see as your biggest challenges in launching Swirve?

Tennis has been a very traditional industry and innovations have been minimal. The biggest challenge is to overcome the mental barrier that a tennis racket is “supposed” to be straight. Marketing and consumer education will be very important.

What opportunities has Thunderbird provided you in bringing Swirve closer to reality?

Thunderbird has been a tremendous experience and catalyst. Through the Global Business Plan class I was able to thoroughly think about the idea and write a comprehensive business plan. The Thunderbird Business Plan Competition was another big stepping stone and after winning this competition I was invited to present in front of the Thunderbird Angel Network. Since that presentation I have had several meetings with investors and I am now close to launching the venture with my business partners. All in all, I would not be in the position I am in now without all the support and guidance from the Thunderbird Walker Center for Global Entrepreneurship.

What do you believe is your strongest personal trait that will make Swirve happen?

I have been a passionate tennis player since age 6 and my entire family loves this sport. My drive to succeed combined with this lifelong passion will hopefully enable me to launch Swirve successfully.

Why did you choose to attend Thunderbird?

I was backpacking overseas for 3 years; at the end of that period in my life wanted to become involved in international business and trade. Even in 1978, Thunderbird was the leading institution in global business education and served as a model for other schools.

What was your first job after graduating from Thunderbird?

My first job was with an industrial hand tool manufacturing company, Armstrong Bros Tool Co. I was the international sales representative for Latin America (less Mexico) and the Caribbean. I traveled a great deal throughout the region with trips running about 3 to 4 weeks at a time. While I worked hard building the distribution channel for Armstrong Tools, I always used my free time to see the sights like Machu Picchu, Iguazu Falls, and of course the beautiful beaches of the Caribbean.

Tell us about your entrepreneurial ventures?

I had a great experience working for two start-ups in the water purification business. One failed and another was tremendously successful. I bring this up because they provided examples of what not to do as well as what to do when I started my own companies.

My first attempt to start a business was in the premium trade providing custom printed Tyvek jackets to a variety of small to medium sized companies. It was a failure! But again, a lot was learned and the mistakes were never repeated.

I founded TUBS, Inc. in 1991. It was based on a concept I discovered in Australia while traveling for business there. TUBS, Inc. provides small dumpster to homeowners (DIY) and contractors. We were the first ones in the US waste industry to specialize in this niche market and we thrived! We built a brand around TUBS in our first metro market, Minneapolis, and as we expanded to Denver and Cleveland began to work on developing our brand in those markets. TUBS, Inc. designed proprietary equipment to efficiently pick-up, deliver, and dispose of the TUBS 3 cubic yard containers. We are currently licensing the TUBS concept to operators in other metro markets.

In 2005 we were introduced to the dumpster bag concept from Europe. It fit so well with our TUBS business, we immediately set about to build what became Bagster. This venture involved brand building, customized collection equipment, technology for tracking, call centers, trademark and patent registration, and a higher degree of web site development to allow customers to schedule collections and pay on line. It also introduced a new factor for us, the DIY retail business. Bagster bags are sold in hardware stores and Home Depots. This required us to design packaging and point of sale units. It demanded a thorough logistics plan to include remote warehousing to provide bags to our retail network.

Our group set up a franchising unit under Bagster, LLC. By 2009 Bagster was in 15 major metro areas.

Bagster was recognized as one of the hottest brands in the US for 2009 by Ad Age.  In the same year, 2009, Bagster caught the attention of a Fortune 100 company and Bagster was acquired by mid-year.

What are the most valuable lessons you learned from being an entrepreneur?

1) Persistence does pay. If you believe in your concept, don’t give up!

2) Don’t be afraid of failure but to reduce your risk of failure, do your homework – build a plan

3) Know your weaknesses. This will help you find a means to shore up those weaknesses.

4) Even in areas where I thought I “knew it all”, I learned to listen to others to at least check my thinking. Sometimes you tend to become myopic because you are too close to your work.

5) Be careful! There are a lot of predators out there! On the other hand there are even more people willing to help you succeed.

6) You need to answer some very personal questions such as: Am I building a legacy business to pass onto my family or am I building a business to exit in X number of years? These questions are important in the way you will structure and build your business.

Why did you become an Angel investor?

I enjoy building and developing businesses. I have learned a set of skills that can be valuable to a new entrepreneur. Nothing would be more gratifying than helping someone else succeed.

There are Angel groups closer to your home in Minnesota what were the deciding factors to join the Thunderbird Angel Network?

Thunderbird is such a valuable world resource. To be able to become active again with Thunderbird was too enticing to pass up and since becoming involved it has greatly surpassed my expectations. The quality of the faculty and participants has been outstanding.

 By Ernesto Poza

 In a world where only 32% of family businesses make it to the second generation and only 12 percent survive to the third still controlled by the founding family, it is worth looking at  family enterprises that have beat those odds and grown into multimillion-dollar companies. What are these long-lasting family businesses doing to survive and even thrive? How are they transferring the accumulated business wisdom and the spirit of enterprise from generation to generation?

 A few years ago, I examined the adaptability and continuity of family-owned and family-controlled companies by interviewing fourth-, fifth-, and sixth-generation leaders of companies that were at least 100 years old around the world. Those included 16 companies with annual revenues ranging from $18 million to $5 billion, and operating in industries including newspapers, textbook distribution, brick and tiles, food and beverage, wine producers, insurance, baked goods, leather accessories, farm equipment distribution, and automotive sales.

 It became clear that regardless of industry or home country, the common ingredient to success was advocacy of change by the next generation. This change was driven either by strategic planning, by promoting a spirit of entrepreneurship or by relying on a continuing series of entrepreneurial ventures; what I call “interpreneurship” or intergenerational entrepreneurial activity.¹  Every one of the companies had elements in their culture that enabled them to reinvent themselves with every generation.

 Guy Renkert, fifth-generation CEO of Ironrock Capital in Canton, Ohio, explains that since its founding in 1866 by his great-great grandfather, each generation of his family has paid close attention to the customer to adapt the business to the changing market. The company began as a manufacturer of paving bricks, becoming the largest such company in the world. As the demand shifted to concrete and asphalt, the company moved into producing structural bricks. In the 1960s, it exited the brick business and used its knowledge of clay extrusion and firing to enter the unglazed quarry-tile business, again becoming a market leader. In the 1980s, Guy’s mother convinced the company to add glazed decorative tiles with an American motif; much like Italian, Spanish and Mexican tile makers have successfully done. Now, under Guy’s leadership, the company still produces quarry and decorative tiles, but has returned to brick manufacturing, producing a “thin brick”, that allows architects and builders to construct buildings with all the richness of real brick, but with the speed and cost-effectiveness of bare steel structures.

 These NeXt Gens remind all family members that what is good for the business is good for the family. And what is good for the business is change. The premise is systemically elegant and robust: To the extent that next generation leaders bring more variety inside an organization, the company will have more resources to deal with the increasingly varied and changing marketplace outside. That often means NeXt Gens hire new people with new skills, implement new information and social media technology, take the company global, add younger independent outsiders to a board, and adopt team structures of work.

From this perspective, the conflict that is inherent across generations of owner-managers is often key to the survival of the family business. It provides the wake-up call needed to reinvent the business as conditions change.

 Sometimes that call comes from the family’s inability to sustain enough income to support, via dividends or distributions the living standard the younger generation expects. In the early eighties, McIlhenny, makers of the famous Tabasco sauce, was seeing a slow-down in growth. Edward McIlhenny Simmons, the fifth generation CEO of the Avery Island, Louisiana, company posed this question to family shareholders during a family retreat: Should we invest in growth so as to expand the profit-generating capacity of the firm or invest in a family assistance program aimed at helping family members adjust to their new, less affluent, reality? Naturally, the family members voted to support reinvestment in growth. New products, such as a steak sauce, and a Bloody Mary Mix, were created and revenues increased. The company currently ships over 175,000 two-ounce bottles of a variety of peppery sauces daily.

 Successful centennial family companies chose to change both family dynamics and business strategy in order to continue to realize, across generations, the value of their particular competitive advantages, advantages that were often rooted in the unique culture of a family-owned company.

 They did this by:

 1. Making next generation members that are active in management responsible for bringing their own vision for the enterprise in their generation. Samuel Curtis Johnson III did this at S.C. Johnson, a family company, when, as a junior chemist he brought with him his dream of a new class of insecticides and insect repellents that would become Raid and Off and grow the company from annual revenues of $60 million to yearly sales of $4 billion.

2. Creating a family venture capital company or bank that reviews and sometimes funds business plans by next generation members. These new ventures either took the business in new directions or facilitated the formation of separate entities for which next generation family members had entrepreneurial passion. (After all, what is the point of forcing or incentivizing a family member with a future as a world-renowned gourmet chef into the family’s construction company? And what is the long-term value of having the company remain the most recognized national brand if most of the sales growth will be taking place in other markets?)

3. Capturing the legacy and identity of the firm and its brand from previous generation leaders before they retire. While this used to be captured in special anniversary books, today’s digital media makes video recordings and multimedia collections a much more attractive way of engaging younger generation family members in the continued spirit of enterprise. Stories of wisdom plus innovation, coming from two generations with a common purpose, nurture the spirit of continued family enterprise.

4. Having well-qualified next generation members serve on the board of directors. And having this board hold management, which could be increasingly nonfamily in larger family companies, accountable for change and adaptation. Success often lulls professional management into the proven way of doing things. It often takes alert, responsible young owners to question the status quo and provide a needed wake-up-call as new technology, new supply chains and new customer preferences emerge. Next generation Hewlett and the Packard family members did this for a slumbering Hewlett-Packard while they were still active controlling shareholders.

5. Restructuring ownership and control of the company and pruning the family tree. Ownership structures don’t transfer well across generations. The speed and agility advantage of many entrepreneurial companies is easily dissipated as founding families and their businesses grow. Ownership is not an exercise in democracy. And loving all family members equally is no excuse for fair/equal distribution of company stock among the many heirs.

References:

¹Poza, Ernesto. A la Sombra del Roble, Editorial Universitaria, 1995 and Smart Growth: Critical Choices for Family Business Continuity, University Publishers, 1997.

Ernesto Poza is a world renowned expert on family enterprise. He is a clinical professor of global entrepreneurship at the Walker Center for Global Entrepreneurship at Thunderbird School of Global Management in Glendale, Arizona and the author of Family Business, 3^rd edition.    Follow him on twitter @familybusiness

By Sampad Das, MBA Candidate

Ronald L. Siegenthaler serves as Chairman of the Board for Xeta Technologies, a NASDAQ listed company that he helped found in 1984.  He also provides sales and marketing services for multiple opportunities through his consulting firm, Myriad Technologies. Mr. Siegenthaler started with sharing experience of his first venture. He presented insight into deal structuring which was knowledgeable as well as enjoyable. He also stressed on how important it is to learn from failure, bounce back and being confident. Some of his advices such as learn to hate losing, need to get prepared, develop a good plan, don’t be lazy be aggressive, must be creative; which he explained with interesting stories was inspirational. He concluded the presentation with his thought “THINK BIG”.

By Brent Selmins, MBA Candidate

Running a private equity firm gives a person unique insights into the entrepreneurial mind.  Sitting on the money side of the deal, Ron Siegenthaler has seen a lot of people with a lot of proposals for investment consideration.  His lifetime of success as an oil entrepreneur allowed him to be in the position to offer up millions of dollars in capital to aspiring entrepreneurs.

Mr.  Siegenthaler attributes his success to the entrepreneurial spirit—the indomitable characteristic that drives people to succeed at their goals no matter what obstacles are in their way.  He summarizes the spirit in a brief exchange he once had with a business partner.  “Why do you want to keep doing this,” his partner asked.

Mr. Siegenthaler replied, “Because if we walk out of here one day too soon, I would have been looking over my shoulder wondering what would have happened if we’d stayed one more day.”
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by Jim La Marche, TPEC

After nearly 24 hours and several layovers, the TPEC team successfully arrived in Ho Chi Minh City, Viet Nam for the Thunderbird Southeast Asia Private Equity Investing Conference. The team of alumni, faculty, and staff has been preparing diligently for Thunderbird’s first private equity symposium in Southeast Asia, so our arrival was much anticipated.

Thunderbird alumni Ryan Galloway, Takeshi Kamada, Jessica Tartell, Loan Ma, Hao Diep, Tavy Long, and MaiLuong, have led the effort in developing a stronger presence in Indochina by representing Thunderbird as TPEC Chairs in Viet Nam, Cambodia, and Japan.
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Last week, President Obama signed the Small Business Jobs Act of 2010, which includes several benefits for small businesses and also a benefit for angel investors. This benefit relates to investments made between September 27 and December 31, 2010.

The new law includes a 100 percent exemption for gains made in Qualified Small Business Stock, and this new bill effectively means that you pay no taxes on gains from your investments that meet several criteria below and Alternative Minimum Tax does not apply.
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By Melissa Beran Samuelson

Microfinance has become a trend that’s catching attention across the world.  This Wednesday, October 6th, the New York Times reported on Vinod Khosla, an Indian Angel Investor who was also co-founder of Sun Microsystems, and his support of microfinance as a powerful social enterprise tool.  In fact, he believes more wealthy Indians should look to these businesses as opportunities and invest (rather than donate) to combat poverty.  It’s a compelling argument, supported by the evidence of SKS’s success with its IPO in August.
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by Jim La Marche

The recent publication of a joint report by PricewaterhouseCoopers and the National Venture Capital Association has resulted in a flurry of articles in Arizona newspapers—two articles to be exact. Unfortunately the limited media coverage is analogous to venture capital’s (VC) role in Arizona’s economy. The MoneyTree report cited a grim picture for Arizona small businesses, where only six companies received venture financing worth $33.8 million. Though this number pales in comparison to other regions around the nation, it is indeed reflective of the difficulties that confront the venture capital industry.

Venture capital has existed almost as long as business. Where there was an entrepreneur, there was an investor financing the venture. However, venture capital only became an industry shortly after World War II, under the direction of the innovative Harvard professor Georges Doriot, now recognized as the father of present day venture capital.
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