Tuesday, February 26, 2013
Posted by Annie Zaleski
Lee Zapis is the President of Zapis Capital Group, which makes equity investments in “people with passion and expertise to lead their business to success” and includes companies such as ONOSYS, Sonicbids and Cleveland Heart Lab in its portfolio. However, Zapis himself is also a Northeast Ohio-based accredited angel investor, as well as a mentor with JumpStart’s mentoring program. JumpStart asked him to share some of the best advice and insights he’s gained from his angel investing experience.
What made you decide to become an angel investor?
I had an interest in technology, going back to the mid-’90s. I was getting enamored with the internet and all the different stuff that was swirling around that space. So I attended my first investor conference back in, I think, in ‘95 or ‘96, and I went to a thing called the Red Herring conference that went along with it. I sat in, listened to some pitches, met a couple guys from out in Silicon Valley, liked their story, and that’s kind of what started it.
What do you personally look for in a company?
Primarily chemistry with the founders, the entrepreneurs. I look for somebody I want to be able to work with. Most of the stuff that I’ve done, it’s stuff I have a personal interest in and think I can have an impact on, as opposed to just writing a check and saying, “Call me in six months and let me know how things are going, or let me know if you need more money.” What I’m looking to do is not just write a check; I want to have some role in the business. Not a managerial role, obviously, but [the way] I heard somebody refer to it is wanting to work on the business but not in the business.
What specific quality do you look for in management teams?
A team is really important. I get a lot of people come to see me about investing, and it’s usually one guy with an idea, or there’s a couple of guys that have similar skill sets, but they haven’t built up a team.
One of my more rewarding experiences was with a company called ONOSYS here in town. When I met them, they were three kids about to graduate from college, but they’d worked together for years, they were best of friends, and they had different skill sets and different interests. When I say skill sets, I use the term loosely because they were in college, but they had their little web developing company that they all worked on. Oleg [Fridman] was the technical guy, Stan [Garber] was the sales guy and Alex [Yakubovich] was more of an operational guy. They all had their roles; they were all supportive of each other, and one wasn’t telling the other one he could do a better job. It was just a very positive experience, and you’d be lucky to find something like that again.
What have you learned in your investing career?
I don’t think there’s a penalty for investing too early. But I should say, there’s no big benefit to investing early. Try not to ever fall in love with the deal, because there’s always another new one around the corner...and I think it all comes down to people. Don’t bet on the horse, bet on the rider.
What advice could you give companies looking for angel investment?
When they’re presenting their business not just to me, but to anybody, they have to keep in mind that people they are presenting to are probably being pitched by a handful, if not a dozen—or even more—businesses. So they’ve got to make themselves the most attractive opportunity. They can’t be operating in a vacuum, they have to be flexible. Timing is critical. There’s a handful of businesses I looked at last year that just kind of dragged on getting back to me; they just didn’t seem as committed. I just lost interest.
It’s almost like a kind of romancing—or when you’re a kid and you go to the dance, you know, everyone wants to dance with one person, and you have to make yourself appealing. It’s a dog-eat-dog world out there. You gotta get out there and try to make yourself and your company an appealing investment opportunity.
Annie Zaleski is part of the marketing/communications team at JumpStart. A graduate of Harvard University, she has over a decade of professional writing and editing experience. She is especially passionate about blogging, social media, content management, branding and rock & roll.