An interview of Richard Sudek, an Angel Investor

An interview of Richard Sudek, an Angel Investor

Below is our note from a portion of the interview of Richard Sudek, an angel investor and director of the Leatherby Center at the Chapman University.  The interview was conducted by JJ Richa, Managing Director at Trenchant Ventures, LLC – a private equity firm with concentration on distressed business acquisition and restructuring.

Dr. Richard:            I was basically a geek as an undergraduate, doubling computer science major and started a Computer Consulting Integrator Firm when I was 24 and that up, we set that up for 17 years and sold it in 1999 to SAIC a large engineering firm down in San Diego. And I joined Tech Coast Angels actually in 2000 and have been involved petty heavily with Tech Coast Angels since then, I was chairman a couple of years ago and started about 900 companies. I decided to go back to school and pursued MBA and then kept going to get a PhD, because I wanted to teach and joined Chapman in 2007 and became Director of the Entrepreneurship Center, Leatherby Center June of last year. And we’re really trying to change the landscape of the antralegal system here in Orange County and help connect it and make it more cohesive and so I enjoy teaching entrepreneurship and working with entrepreneurs. And my research focuses on how investor makes investment decisions. So that’s maybe what you need to know that a little background.

JJ Richa:             Also you’ve been doing a lot of research on companies and angels and…could you tell us a little bit about that?

Dr. Richard:            Sure, so you know I’ve talked about the last 300 companies from Tech Coast Angels and actually video taped about 200 plus and looked at, what things get entrepreneurs on these companies to screening. And there’s really a number of thing, but a few of the important things are passions, showing passion for what you’re doing, building trust, showing you know perception of trustworthiness in the pitch, the business model is very important and I would say how the entrepreneur presents him or herself, answers questions and is basically honest and straight forward is really important. One of the things that sometimes younger entrepreneurs tend to want to do is have all the answers and the reality is that they need to get all the answers and solve problems. And so we want the to have a number of answers, they don’t have to have all the answers and its best for them to, if they are not sure, to go back and get the full data with full information and answer based on that.

JJ Richa:          That’s true as I remember; I probably was just like that, where instead of getting answers where we are trying to think through. Can you tell us a little bit about your investment strategy, what have you invested in or what kind of companies you’d like to invest in?

Dr. Richard:          Well you know when I started in Tech Coast Angels back in 2000, there was a company that came through and it was 2001. And the wise or sage advice at the time was, you know invest in what you know, which for me was basically high tech, computer networks, infrastructure, etc. And there was a company that came through called Green Dot and I loved the entrepreneur, but it was financial services. And that’s something that I don’t know anything about as forging a company or really investing, I really was interested in that company but I decided not to invest. And of course that was one of our most successful investments that went IPO last year, and so now I only invest in things I don’t understand, so my strategy completely changed. But I guess seriously if things that I look for, you know I do tend to focus more on the high tech area although I do have  at least one life sciences deal. But I’m really looking more for the entrepreneur and how focused they are, and how knowledgeable they are, a little bit about their track record and the how possible an exit it is for them. Because as you know, as Angels investors, we don’t gain any benefit and so they exit, so how possible is their exit and what’s the competitive barriers for them. Long time ago back in the Dot Com days fast [00:14:20] was a big advantage and that’s where the advantage nowadays but really what’s unique about them is, what’s proprietary and how can they have some barriers for entries for us competitors.

JJ Richa:            Yeah, how many investments have you done so far since 2000?

Dr. Richard:            Well, I’m in a couple of funds which of course is spread over a number of investments and then individually, I have probably about 15.

JJ Richa:            Okay, that’s quite a bit, that’s a loot of investments, so people don’t realize entrepreneurs on channel don’t realize how risky investments are and when you talk about 15 or 20investmenst, that’s quite a bit on investments. Can you tell us a little bit about maybe things that you do outside of Chapman and mentoring entrepreneurs and investing in startup companies? Anything that’s kind of, maybe philanthropic or somewhat different the environment you’re in on a day today basis.

Dr. Richard:            You know allot of my philanthropic work has actually focused to entrepreneurs, so used to be more to big brother, big sister. I was heavily involved with that organization and some other non profits; I got involved with the social entrepreneurship institute which basically helps non profit or social…

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