Seed Capital From Angel Investors: Ira Weiss, Hyde Park Angels (Part 8)

By guest authors Irina Patterson and Candice Arnold

Irina: Do any of the companies you mentioned have any interesting stories?

Ira: The one that we’re hoping is going to be the most successful is a company called Avid, which hasn’t gone liquid, yet, so there’s not a lot of information out about it.

What’s interesting about Avid is what they do. Their product is called Avid Radiopharmaceuticals, and that company has a diagnostic for Alzheimer’s disease. Thus far it’s been very, very successful. The New York Times has written a lot of articles on the company.

Irina: What do you think angel-backed founders could do to increase their chances of success?

Ira: I think they just need to innovate quickly. And they need to look to their customers for what needs to be added to their products and how the products need to change.

One of the things I didn’t mention is I usually like investing in companies where there’s a significant pain point – it’s true of a lot of people who invest.

Is there a significant pain point and is the pain point of the customer significant enough that someone’s willing to pay for it, and pay for it quickly? I prefer to invest in companies that generate cash sooner as opposed to later.

Irina: What can angels do to improve their chances of success?

Ira: That’s a very good question. I would say be patient. Invest in things that you know or are easier for you to analyze, things that you may be more likely to add value to, and entrepreneurs whom you believe in.

Irina: What are the ways that angels can add value to the companies that they invest in?

Ira: I think the most likely way is through connections to help get them good sales calls, to introduce them to somebody they want to be introduced to. I think that’s adding the most value.

Sometimes it’s to strategically help them think through points. My experience is the people who can add the most value are people with strong operating backgrounds, so the other thing we try to do is find people who can sit on the board or be advisors who have strong operating backgrounds in the space that the company is in.

Irina: You also teach, right, besides being an investor?

Ira: Yes, in fact, that’s the way that I’ve been fueling my addiction to investing in entrepreneurs.

Irina: What is your official title?

Ira: I’m a clinical associate professor of accounting at the University of Chicago Booth School of Business.

Irina: What does clinical mean in this case?

Ira: For a business school, it just means that instead of doing a lot of research, you’re primarily teaching faculty, or you do something hands-on in some way.

It’s not really related to accounting, but we use the title. You know, like at the University of Chicago Medical Center there would be some doctors who primarily do research and others who are primarily clinicians and deal with patients.

So, we’re distinguished in some ways in the same way, which is if you do academic research, you also teach but maybe your primary focus in the business school is in research. My focus is on entrepreneurship, it’s on the teaching side and it’s on the real-world side.

Irina: What are your daily personal challenges?

Ira: I think it’s to help the companies that I’ve invested in. That’s how I end up spending most of my time, finding new companies and helping my current companies.

Today I was on the phone with one company we invested in that’s actually done quite well.  Usually we’re the first or the second money in and the investments are very clean – in this case, we invested but the capital structure was a little bit unusual. And in lieu of fixing it when we made the initial investment, which is what we probably should have done, we put a Band-Aid on it, and now a couple years later the company’s doing very well. We want to make sure the cap table is cleaned up so it doesn’t hinder the next round of investment.

Negotiating with entrepreneurs, helping my entrepreneurs negotiate contracts, I think those are things that end up being the most challenging. We have some companies that are doing really well and others that aren’t doing so well.

Irina: How many are doing really well?

Ira: I think of everything that I’m invested in right now, I probably have fifteen that are doing well or don’t require my input to help them do well. And there are probably five that are struggling in one way or another.

Irina: Thank you, Ira. It’s been a very interesting discussion with great insights.

This segment is part 8 in the series : Seed Capital From Angel Investors: Ira Weiss, Hyde Park Angels
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