Seed Capital From Angel Investors: Eric Pozzo, Fund Manager, Oregon Angel Fund (Part 7)

By guest authors Irina Patterson and Candice Arnold

Irina: When you invest do you consider the size of the market?

Eric: We just invested in a company that does a catheter for cardiothoracic surgery. It basically is a self-cleaning catheter with a little wire in it and a magnet device that can clear gunk out of a catheter for keeping the chest cavity drained [during the surgery].

We looked at the overall market there. It’s probably not even a $100 million market, the entire market size. However, this technology is licensed out of the Cleveland Clinic. The company is run by a very experienced entrepreneur and cardiothoracic surgeon, and we’ve got great connections into three hospitals and hope to establish it as the standard of care in chest surgery.

So, it is a very small market but one where, with the technology, we think we can dominate and create a position where someone wants to buy the company sooner rather than later.

So, at the low end of the market that would be a $100 million market. Some of our other markets can be absolutely enormous, but who the heck knows how much market share you’re going to get long term?

Let me be very specific, we’re agnostic as far as the industry we invest in. We invested in a branded apparel company, basically, T-shirts and hats and things along those lines. The name of the company is Wicked Quick. NASCAR drive teams wear the gear, they’re carried by Nordstrom and things like that.

The size of the branded apparel market is billions and billions of dollars, and given the ability of some companies to hit home runs in this market – like No Fear and Hurley and companies like this – there’s really a lot of upside. It’s an enormous market but, golly, no matter how well a company does they’re not going to have a very large market share. And there are no barriers to entry other than the fact that you know your customers and you have nice designs and you can keep pace with what the fads and the trends are.

If you were to go to our website, all the companies in our portfolio are listed there. I just described a medical device for surgeons and then I described a T-shirt company. Going into both due diligence processes, I wouldn’t have guessed we were going to invest in either of them. But going through the process and seeing everyone get enthusiastic, including me, who knows where the process will take us?

Irina: Do you require entrepreneurs to have experience?

Eric: Well, we certainly like deep domain experience. That T-shirt vendor that I mentioned, the branded apparel, the CEO of that had been actually the creative director at No Fear and then he was creative director of some major groups within Nike. His partner is also a merchandising director at Nike. So, these are individuals who have deep domain experience in what is a very difficult domain to penetrate.

You and I could start a T-shirt company, but we wouldn’t know how to go about making a successful company in that arena. That’s very important to us. We have funded entrepreneurs who are learning new markets, and they probably got some scars on them from learning them, but it’s always best if someone comes at a market with expertise as to what the market needs, how to sell to that market, how to talk to that market, how to market to that market.

Irina: How about people right out of school?

Eric: We have not invested in people right out of school. I have personally invested in people right out of school, and have not been successful at it, by the way. It’s always been the idea that I’ll put in a lot of time and help and nurture them. But as a fund, we’ve not invested in folks right out of school. I just don’t think folks would make it through the full due diligence process with no industry experience, no management experience. We probably missed the next Microsoft or Google. You know, Bill Gates could have come to us after dropping out of school and we’d say, “Go finish your degree, then come back.”

This segment is part 7 in the series : Seed Capital From Angel Investors: Eric Pozzo, Fund Manager, Oregon Angel Fund
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