Jim Hunt of The MITA Group
In this series of articles, I will describe several discussions that I had with investors in the Washington DC area. They range from angel investors to senior partners in well established funds. I have known most of them for many years. That allowed us to cut through the usual PR crap and get to the heart of the process of reviewing investment opportunities. When I told them that my objective was to provide a series of articles which would help companies seeking funding, each was very willing to help – it is, after all, in their interest to improve the process. I owe each of them a debt of thanks for agreeing to sit down and ‘open the kimono’ so to speak.
Visit with an Angel Investor
I have known Jim for many years. Like many angels in the area, he was a very successful entrepreneur. A seasoned veteran of the technology industry, over the past twenty years he founded and ran four successful technology companies. Jim founded and served as President and CEO of Ernst & Young Technologies, Inc., leading it to $75 million in profitable sales after just three years of operation. He then orchestrated the sale of EYT in late 2000 to Cap Gemini and served as President of the newly created Cap Gemini Technologies. Prior to his work at EYT and Cap Gemini, Jim ran a number of firms including BDS, Inc., a systems integrator focused on sales to the federal government. In addition to Jim’s primary responsibilities as a line executive, he has helped launch and advise over a dozen companies in the high technology sector, with particular focus on software for federal and commercial markets. Much of his expertise has been directed at federal government market penetration for software application companies, system integrators, and IT service firms. In short, Jim has the experience to know what he is doing when considering an investment.
The Initial Screen
We sat down at a local watering hole and got caught up on the goings and comings of people and companies we knew. Then things turned to the ‘interview’. I told Jim that I wanted to focus on how he decided whether or not to make an investment. My first questions was, “What percentage of the deals that come over the transom do you discard out of hand?”
“Seventy percent of what I see is of no interest to me”, was his reply. That means that only three in ten get any extended consideration at all. His principal reasons for discarding opportunities were 1) it’s not in my area, 2) the team does not have the necessary experience and 3) they don’t have any adult supervision.
The first reason related to Jim’s area of expertise – what he knew about and felt comfortable getting involved in. What disturbed him was the tendency of some founders to lump all funding sources into a single category. “My history and investments are out there and easily found. People who don’t take the time to see if their company matches my interests don’t understand the process very well. I don’t pay much attention to them.” Jim’s statement is certainly true for all the other investors I interviewed for this series of articles. It is very easy to discover the interests and investment preferences of any established investor. People who do not take the time to match their company with those interests do themselves a great disservice.