Seed Capital From Angel Investors: Basil Peters, CEO and Fund Manager, Fundamental Technologies II (Part 15)

By guest authors Irina Patterson and Candice Arnold

Basil: I remember when I was I student, I had no idea about business or life. It’s embarrassing how little we know in our early twenties, and what I’ve been trying to do is influence as many students as I can to think about entrepreneurship as a business and life decision.

I believe if we could get more people to try it, and, if we could get more mentoring and angel investors to help them, that we could create more successful young companies that would be bought by bigger companies that would contribute to the overall growth of the economy.

Anything that we can do to raise the awareness in younger people all around the world that being an entrepreneur is not only a viable choice, but for many people it’s the best choice. That would be something that we could do to make a difference to the future of mankind.

Irina: And all entities need to cooperate more on this, right?

Basil: You’re right. It’s quite sad, actually, how many universities are negative about entrepreneurial activities. They suppress entrepreneurial activities. Even entrepreneurial thinking is suppressed at a lot of the older universities. I’m dismayed by that. The optimistic point is that there are a lot of younger universities, universities that are only ten, twenty, or thirty years old that are very entrepreneurial. Those younger universities are already making a noticeable difference in the output of entrepreneurs and the output of spin-off companies.

I wish that there was a way that we could accelerate that process, because we would be better off if we could make it happen faster. It is another area that needs work.

Irina: Do you track your internal rate of return for the fund?

Basil: I do better than that. I actually put it up on the home page of my fund.

One challenge is that internal rate of return is not a useful measure because it’s a measure that works only for a limited partnership fund, and limited partnerships work very well for traditional venture capital funds but they don’t work for modern funds.

If you look at the graphs on the homepage of Fundamental Technologies II, you can actually see how the returns have evolved and you can see that I made good money in 2006 and 2007, had a bad year in 2008 and 2009, and 2010 is looking up.

If somebody would have invested at $10 in, let’s say, June 2005, that would be worth like $14 now. That is not a great result, 40% increase over that period, but the reason is that in the middle of 2007, it would have been worth $17.

Irina: Let’s not forget, that you also create companies, you create jobs, you create some happy people.

Basil: Yes, there is more than one measure. By the way, that return that we’re talking about right now, that would put my fund in, I’m guessing, about the ninetieth percentile or higher of successful funds over that period.

The reason is that the past two years were terrible years, so when you look at any funds results now in 2010, they’re suffering through 2007and 2008, which were probably the biggest downturns, hopefully, that we will ever seen in our whole lives.

Irina: Thank you, Basil. Great observations and analysis!

This segment is part 15 in the series : Seed Capital From Angel Investors: Basil Peters, CEO and Fund Manager, Fundamental Technologies II
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