Sophie Barth: [music] Hi! This is Sophie and Welcome to another FundingUniverse.com Business and Investing Podcast. Today, we have entrepreneur turned investor Rick Gibson with us and we’re excited to have him. So excited, in fact, that today is only the first installment of the four-part series featuring Rick.
Some of the background on Rick includes thirty plus years of building businesses. He’s had his hands in companies like Bill Gross’ Idealab and co-founded Knowledge Ventures, Inc. Right now, his so called day-job is with a company called Clear Blue Ventures. It’s a capital fund specializing in biotech and real state. Rick also runs an angel mentor capital fund called HOTventures and sits on the Executive Board of the Desert Angels based out of Phoenix. As impressive as these credentials are, the reason we’ve brought Rick in this show is so he can share some of the experiences he has had along the way.
Some of the lessons you should look for in this first episode include how having a large network and tending to it has led to Rick’s success and also the unspoken key characteristic angels are looking for as they weigh out companies to invest in.
Just a quick disclaimer before we finish. This interview was originally conducted in a Question and Answer session but we decided to cut-out the question part. Not only does this make the viable information more available to you in a smaller amount of time, but I don’t have to listen to my own voice as I edit it again and again - a test for your patience. So, we’ll just jump right in with Rick explaining how he got his entrepreneurial start.
Rick Gibson: As compared to lots of people these days that set their course to become an entrepreneur, I kind of fell into it accidentally. I was on my way to Law School and decided that that wasn’t the right thing for me. I got involved in a series of businesses that all happened to be start-ups. I didn’t know that that’s what you would call them then, but, they all had a similar ring to them and I found myself getting involved in them in an early stage and working them through to success.
I think, my network of people that I’ve known, actually going back to as long as twenty-five or thirty years, is really the asset that keeps me going today. I would say, I’m in touch with everybody and I’m really talking about hundreds in its greatest format - probably close to a thousand people. I’m in touch with everybody at least once or twice a year. Naturally, I have certain individuals, dozens and dozens that I’m in touch with regularly, you know, almost once or twice a quarter. But, these people are amazing to me in the course of my career. I’ve had the very great fortune of working with some pretty awesome people that have, sort of, grown up alongside me and that I’ve watched developed and as I’ve become immersed in my career that I have in theirs. So, I think that the advantage of staying in touch with them and probably the good fortune of having known people of this quality really has been and still is my asset.
I’m involved in two areas: information technology and what I call biosciences light. I can explain why the two and it’s actually not because I’m a scientist or a computer geek of any sort. I really… Like other investors, we look for liquidity and for return-on-investment. And, the technology areas are the most reliable areas with large return. I also should define the term that I’m using - it is biosciences light. These are areas that fit alongside of Angel and early stage venture capital investment where the, sort of, the course of the investment will run between four and six years and where the company altogether might, in it’s lifetime, raise three to five, at most or very most, ten million dollars. This is important because there’s the whole other area in biotech and in pharmaceuticals where companies are really longer-termed placed and where investors need to know that the overall investment in a company could be a hundred million dollars going into hundreds of millions of dollars. We’re not in those categories. We’re in biosciences light which includes products and diagnoses and devices in areas where the products can be actually developed and on the market in a year or two as compared to pharmaceutical products that can certainly take five or ten years.
My so-called day job is with a firm in Arizona - Tucson, Arizona called Clear Blue Ventures. We’re a company that is involved in technology investments and real estate and I’m functioning as a Senior Advisor here. We run like a professional venture capital firm though our investment amount start a little lower and can go alongside of what a VC would invest.
My so-called legacy company is called HOTventures. This is a firm that I started with my own Angel investment money in the year 2000. We have about twelve investments in that company, mostly biotech or biosciences light -- forgive me -- and information technology. I’m also an early shareholder in a California Company called Idealab which started in 1996 and has had some famous and infamous times in the technology area. It was known as a technology incubator during the dot-com area and has naturally gotten played it then but it had some good solid results of the last few years as well.
Although, I live in Arizona, I think of my core focus area as the Southwest. So, in Arizona, I’m on the board of a group called the Desert Angels and also part of the Selection Committee. Secondarily, I’m involved with a group in Phoenix which was known as the Arizona Venture Capital Conference and is recently more known as the Arizona Angel Investment Conference. I also have to mention the World’s Best Technology Showcase which I’m also on the Board of Advisors and on the Screening Committee which just had a big event in Dallas, Texas and, that attracts entrepreneurs from, literally, all over the country but the event itself is held in Texas. That’s probably my World of Angel investment.
It’s good that I can over-simplify here but I should warn everyone that it’s not as simple as it sounds. We look in the categories first that we’re interested in. We, secondarily, are looking for companies that we can provide some real good local assistance with. So, we primarily look at companies that are in the Southwest. We look at the time horizon which is, at longest, four to six years which we would like to have a return on our funds. In four to five years we could, somehow, extend that to six or seven as it got to be. And then, of course, the return on investment which needs to be, because, we raise our money.
Professionally, we raise our money for other accredited investors. So, the time horizon and the return have to be certainly in the high theme and/or higher positioned investors. But, I think, probably the more… The thing that goes on unspoken a lot of times is there’s a lot more to investing than just finding deals that provide a return. We look for deals that stand alone in terms if things we can be proud of. I think finding deals where ultimately, we can point to them to our friends or family and that would stand the test of time where three, four, five, ten years from now, we can say, this is a company that we got on it’s way, that we invested in, we provided some advice and look at what it’s done. In my earlier career, I have some things that stand out like that. I try to replicate that in the projects we work on these days as well. Something we can be proud of.
We’re certainly not known as the traditional passive investor. We do like to be involved with the companies. We are either on the Board of Directors or an advisor or one of the contributors even if we don’t have an official role in the company, and that kind of role is exemplified by some of the things we do. Even with the universities, we do that same kind of coaching kind of feeling that being there; so, we’re called on by these companies. Even if we’re not on the Board of Directors or not an official advisor of the company, we’re a resource because that’s part of what makes our investment worth all that much more.