Puget Sound Venture Club has connected investors and entrepreneurs for more than 30 years.
In 1977, when I was 15 years old, I often went to Mariners games, taking the 307 Metro bus there and home again. More often than not, the buses would be packed, and we passengers were stuffed like sardines into a too-small can. I remember thinking on one trip, “Wouldn’t it be cool if you could put two buses together and connect them with a spring or something so we could have more room?”
A year later, Metro unveiled its first articulated buses, and all I could think was, “I could have made a fortune!” It was the classic entrepreneurial scenario: I had a great idea, but lacked capital or another means to help bring it to fruition.
If only I’d known someone or an entity who had invested countless hours and personal resources to take his or her idea to market. That’s exactly what the Puget Sound Venture Club does.
Bellevue resident Gary Ritner co-founded the club back in 1985 with the sole purpose of matching investors with entrepreneurs. To date, Venture Club members have helped finance more than 900 companies. And there’s probably more than a few of them you have heard of, such as DocuSign, Julep Nail Parlor, and Theo Chocolate.
“The biggest one that comes to mind is Starbucks,” Ritner said. “Although, at the time, it wasn’t called Starbucks; it was called Il Giornale. Howard Schultz pitched us and got one member to invest. Needless to say, that member did very well.”
Currently, there are 30 members in the club, which has a cap of 35. To qualify to join, a potential member must have $1 million net worth (not including his or her residence), some history of venture investing, and an affirmative vote by the total membership. Currently, about 30 percent of the Venture Club members are Eastsiders. The club itself is Northwest-focused — Seattle, Vancouver, Portland, Spokane, and sometimes Boise. “Our sweet spot,” said Ritner, “what we’re looking for, is a startup where the product is done and they’re looking for marketing money.”
The process for funding begins with a half-hour phone interview with the entrepreneur. If, after that call, both parties agree that there’s potential, the club sends out an executive summary to the membership at a cost of $150 to the entrepreneur. That’s the only cost involved in the process, although members pay an annual fee of $600. If a few members indicate interest, the entrepreneur goes before a screening committee of about 10 members on the first Tuesday of a month. At the screening, the entrepreneurs have 10 minutes to make their case, which is followed by 15 to 20 minutes of questions and answers. After that, the committee votes on whether a presentation should be made to the full club. If the entrepreneur passes the screening, he, she, or they get to present at the regular club meeting on the second Tuesday of the month at the Washington Athletic Club in Seattle.
The typical member investment is approximately $50,000, or occasionally $100,000.
“We’ve had some big winners, but we’ve also had a lot of losers,” Ritner said. “That’s the way it is with angel investing. But we’ve had some members for a long time, so overall we must be doing OK.
“If you do 10 deals, half of them go broke in the first two years,” added Ritner. “Two or three of them get you something back but not all, and you make all your money on one or two of them.”
What do the members look for in a pitch?
“We want to see how organized the presenter is,” Ritner said. “Do they have sales skills? How well do they answer questions? Can they build a team? Three other critical elements are: Do they know what they don’t know? Do they listen? And do they recognize mistakes early? Those first two you can pick up in two interviews; the third one, unless you’ve known the person for a long time, you’re not going to be able to pick up on that one. I don’t know Jeff Bezos personally, but he strikes me as the type of guy who recognizes his mistakes early.”
The obvious comparison most people make with the Puget Sound Venture Club is with the TV show Shark Tank, where business hopefuls pitch their concepts to a panel of investors. According to Ritner, the similarities end there.
“Other than the pitching, and the pitches are not very professional, it’s not very realistic,” he said. “On the show, they make a pitch and if they make a deal, they shake hands and that’s it. I wonder how many deals on Shark Tank don’t get finalized because of legal matters. What you’re seeing on TV is a simplified version of the process.”
What the Puget Sound Venture Club really offers is hope and opportunity, two commodities in which entrepreneurs always are in need. They make dreams come true. Isn’t that what angels are supposed to do?
Puget Sound Venture Club (PSVC)
by the numbers
Year Founded ⇒ 1985
Number of Companies Invested ⇒ 970+
Millions Invested Since 1985 ⇒ $151
Millions Invested In 2016 ⇒ $3.8
Millions Invested In 2017 ⇒ $7.3
- PSVC has invested in nearly three dozen businesses in industries such as gaming, cloud computing, education, finance, real estate, life sciences, and food and beverages.
- Notable companies include Amazon, Coinstar, Costco, Redhook Ale Brewery, Starbucks, Taco Del Mar, and Theo Chocolate.
- Last year, PSVC joined SWAN Venture Fund, Alliance of Angels, and others to invest $1.25 million into Bellevue-based Sharkbite Games.
- In 2013, Portland-based Indow Window received $1.3 million in funding from PSVC and other investors to help grow the company’s innovative window insulation inserts.