William H. ("Bill") Payne is 63 years old, and he thinks one of the great things about angel investing is that he can keep doing it for at least another 20 years.
"That way," he says, "I can avoid playing golf five days a week, help some entrepreneurs, and maybe make some money at the same time."
For Payne, angel investing is a "do good and do well vocation." Return on investment, for sure, is a motivating factor, he says. But doing good and giving back by helping young entrepreneurs as mentors once helped him – takes doing well to a whole new level.
For one thing, it fulfills a desire he’s had since receiving degrees in 1964 in ceramic engineering from the University of Illinois to do more than develop technology. As a research engineer for two Fortune 500 companies, he became increasingly frustrated at his lack of involvement in commercializing the products he developed. Payne started down the entrepreneurial path in 1971, co-founding Solid State Dielectrics, Inc., to manufacture dielectric powders for the multilayer ceramic capacitor business.
For those not familiar with ceramic capacitors, they’re the most prolific electronic components in the world. One hundred billion are made every year. You have 200 in your cell phone.
Angel and Mentor
Solid State Dielectrics was worth about $10 million with customers worldwide when Payne sold the company to DuPont in 1982 and realized how much he enjoyed creating, growing and selling companies. When he started SSD in 1971, he'd never met an angel investor. A decade later, freed from responsibility for day-to-day company operations, he decided to become one.
Since then, Payne's been involved with more than a two dozen early-stage companies, served on the boards of 12, and chaired eight.
"Helping the CEO plan strategy, holding regular meetings, bringing in advisors to help develop partnerships and connect with large customers, monitoring metrics, it's relatively intense when you're the chair of a company that meets monthly, as most startups do" says Payne, explaining that these are equity rather than cash-paid positions.
Early on, Payne admits his biggest mistake was not enough due diligence on the business plans of the companies that he was considering for investment. About five of his entrepreneurial startup businesses have become success stories.
"Entrepreneurs are an unusual breed," says Payne. "They're builders and risk takers. Working with entrepreneurs isn't for everybody because many of the companies we work with don't succeed. The failure rate is high, 25 to 50 percent."
How does Payne find and evaluate companies with investment potential?
"As a solo investor in the 1980s," he says, "I didn't come across a lot of deals. But in 1997, a new trend started in this country. Angel organizations share the work of looking at 10 to 20 companies a month to sort through possible winners that might be worthy of deeper study and investment. This sharing of skills, experience and duties is very powerful, so I have committed now to only invest in deals that I find through angel organizations."
Payne was one of the original board members of Tech Coast Angels, San Diego's angel investing network founded in 1996. In San Diego, he was also active in the Aztec Venture Network, as well as Social Venture Partners, which brings investors together to support charities with money and expertise. Now a resident of Las Vegas, he's a member of the Vegas Valley Angels.
Well versed in the value mentors play in the success of startup companies, he's also working to establish a business mentoring group modeled after the Chairmen's RoundTable that he helped direct in San Diego, as well as a new nonprofit organization, the Center for Entrepreneurship and Technology, to expand entrepreneurship throughout the State of Nevada.
Leveraging Varied Interests
Giving back to entrepreneurship can take many forms. Perhaps what's most extraordinary about Payne is the number of ways he does it that tie his varied interests together.
Years ago, he hired summer interns to help bootstrap companies he started, a winning proposition all around.
"You get some very talented people who can make a lot of progress on special projects. You give a student experience in the industry. You create good relationships with the universities you want to work with. And, you only have to pay them for three or four months."
He leverages his expertise as a ceramics engineer and angel investor to commercialize new products, develop strategic partnerships that facilitate new product implementation, and advocate for technology transfer from universities into U.S. companies. Payne serves on advisory committees to materials science and engineering departments at four universities.
He feeds his appetite for learning about new ventures around the country by speaking frequently at conferences and universities. Six months after a presentation to the Angel Capital Association, he received an email from someone who wants to start an angel organization in Arkansas. Recently, he addressed student entrepreneurs at the University of Arizona in Tucson and the University of Nevada in Las Vegas and gave them all his business card.
"I'm sure that will result in some students getting back to me," he says.
An entrepreneurs-in-residence at the Kauffman Foundation since 1995, Payne served as liaison and board advisor to the Young Entrepreneurs' Organization, a group of nearly 6,000 young entrepreneurs with businesses exceeding $1 million in annual revenues. Currently, he's helping the Foundation roll out a new full-day seminar on angel investing for accredited investors in communities around the country.
In addition, Payne makes himself available for interviews and to write about entrepreneurship for national publications, including the Wall Street Journal, Fortune, Inc., INC Magazine and American Venture. He is a prolific contributor to entreworld.org, sponsored by the Kauffman Foundation to increase small business owners' productivity by providing essential information quickly and easily.
When it comes to giving back to entrepreneurship – from mentoring, teaching, and serving on boards to investing in entrepreneurial companies, evaluating and incubating innovation, and writing. Bill Payne covers most of the territory and has a lot of fun doing it.
© 2006 Ewing Marion Kauffman Foundation. All rights reserved.
William H. (Bill) Payne Senior Program Consultant Kauffman Foundation