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By Brian Dunn, Growth Capital Services
There’s a good reason why Investors’ Circle understands entrepreneurs. We are entrepreneurs ourselves, tackling audacious challenges with spirit, creativity and perspicacity. The resilience of this group astounds me, and thus – on IC’s 20th anniversary -- it is a privilege for me to offer this retrospective.
Susan Davis, the Founder of Investors’ Circle, did not lack for entrepreneurial grit and tenacity. She started the organization in 1992 by calling on others from within the Social Venture Network. Over time, Investors’ Circle turned out to be just one of many networks that she would co-create. While there are many people who have been pivotal to IC’s history and development, I believe none of this would have happened without Susan.
Over the next few years, many others stepped in at key times: John May ran the investment presentations and led the Circle; Kristin Martinez spearheaded the creation of several group investment vehicles; Dominic Kulik took on a variety of special projects that helped to keep the organization afloat; Cathy Clark provided crucial perspective on the social capital marketplace; Mary Burns was a constant voice of reason and humor on the Board.
If one were to create a Mount Rushmore of Investors’ Circle, the next face on it would be Woody Tasch. He guided the organization with his words, his entrepreneurial talent, his hard-won personal capital and his ubiquitous gardening metaphors. And of course, he pulled off the most important task of all: he hired me.
Previous to my hire, Investors’ Circle had existed as a project outsourced to a variety of part time consultants. I was the first fulltime staff person that Investors’ Circle ever had, joining in 1998 fresh out of business school. Woody was the Chair, living in Nantucket and leaving the day-to-day operations to me. I was installed in a Palo Alto office by the Board Treasurer, Steve Jacobs, a successful entrepreneur who agreed to keep me under adult supervision. I hired an assistant – the inimitable Janice Judd - and got to work.
I quickly discovered another jewel of entrepreneurial wisdom: the truth hurts. Once I had “rationalized” the balance sheet by writing off bad debt, we were a good bit into the red with no real idea how to pay it off. We had no database, poor accounting support, and no advertising or web presence. Every month we assembled the briefings mailing by hand, not a fun day for anyone. We did have one thing: the domain name www.icircle.com. I sold it for five thousand dollars and we have been www.investorscircle.net ever since. It wasn’t enough to get us out of the red, but it was nice to get paid that month.
Beyond operational difficulties, Investors’ Circle was facing a crisis of confidence. It had been formed as an insiders’ club with no publicity and little visibility outside the membership. Many of our members had the resources to put to work and had made investments, but when some of those failed or stayed illiquid, many became unable or unwilling to participate in the game. Thus membership was dropping just as deal flow was increasing.
How does an entrepreneur react to this type of challenge? By reinventing the concept. Whereas the emphasis had heretofore been on maintaining a high degree of exclusivity and discretion for our high net worth members, we began broadcasting our services to a new clientele and found ourselves approaching fund managers and other professional investors. I can remember putting some late night hours into developing a version of Modern Portfolio Theory that incorporated considerations of Impact, so that we would be well armed when we spoke with the hardcore business folks.
We created the first brochure Investors’ Circle had ever had. We got rid of the old logo, which really looked like a globe with smog around it, and went for the cleaner, hipper logo that we still use today. Under the capable hands of my right hand man Ari Blum, we cleaned and reformed the database to make it reflect reality and actually do work for us. We formed a 501c3 to be able to go after foundation support, seeking recognition for the thought leadership that we inspired. We developed a web-based platform to view deals. We did considerable research into our track record so that we could tell our story as effectively as possible.
Today, some twelve years later, many others have stepped in and continued to fill the gaps. Occasionally I see traces of my work: deal sheets I created, invoices I formatted, disclaimers I fretted over. For the most part, though, my work has been surpassed, and I will be the first to admit that the current materials are fresher, more creative, better. Institutional memory makes a difference.
One thing has never changed. We always trumpeted the message that “to IRR is human, to ERR divine,” where IRR = Internal Rate of Return and ERR = External (or Eternal) Rate of Return. We have been at the cutting edge of that message for 20 years now, an impressive achievement in and of itself. Consider how much the landscape of social capital has shifted over that period – essentially from nothing to something – and the fact that we maintain our relevance shows prescience and endurance.
At one point, I questioned my commitment to this group, wondering if we were dreamers unwilling to accept the harsh dictates of investment reality. I have since realized that our continued existence proves that we offer the solution to a market need, and the group has shown the entrepreneurial versatility to address that need throughout its various incarnations. I am proud to recommit to this organization and be a part of bringing it where it needs to go next.