‘My generation has simply lost faith in corporate America to provide us job security. I’m seeing young friends in large companies jump ship, and older employees abruptly displaced by massiverestructurings,” said David Weinstein, 32, the new president of the Chicagoland Entrepreneurial Center, an arm of the Chicagoland Chamber of Commerce. “And what do they do next? More and more of themare starting their own businesses from scratch.”
But wait. With venture capital funds and other private equity sources virtually dried up for the past two years, how does today’s entrepreneur begin?
“On guts and a shoe string,” Weinstein said. “But today more youngsters and displaced oldsters are willing to take the risk, and strangely enough, so are the banks. More debt financing, with personal guarantees, is available and leaned upon.”
On the verge of a boom
Weinstein is passionate about the role of small business formation, “which will be the key economic engine in the state over the next five years as major corporations may stagnate or leave. I believe we’ll see a 20 percent expansion of formations here.”
He has seen all sides of entrepreneurship–as a public official, as private godfather and as a start-upper himself. For four years (until 2000), the Northwestern University Kellogg grad was senior technology adviser to Mayor Daley, and founded the Mayor’s Council on Technology, following an earlier career as head of his own consulting firm that assisted tech companies.
Then, he couldn’t resist doing it himself. With catastrophic timing, he chose 2000 to start up his own tech firm, Blue Meteor, to provide a suite of back office solutions to business. He raised $30 million in venture capital, and grew “much too fast, in just four months,” he said. The firm soared to $5 million in sales, 110 employees, and snared strategic alliances with others like Oracle, winning clients like Schering Plough before hitting the wall in 2002 as e-commerce floundered.
Like a reformed smoker, Weinstein became a fanatic, devoting his energies to helping today’s entrepreneurs avoid the pitfalls he encountered.
“What attracted me about the opportunity to run the Entrepreneurial Center is its unique mission,” he said. “Its primary dedication is not to give birth to new enterprises at all. It’s focused on providing invaluable advice, guidance and connections during that critical time when these elements are most needed–when a start-up is already one to five years old. In 1999, Chicagoland Chamber President Jerry Roper had the foresight to identify a paradigm shift requiring a far greater emphasis on small business instead of large, and he reinvented the chamber to meet this need. It has played a vital role as pro bono management consultant and mentor to more than 700 area businesses and sprouted more than 3,000 new jobs.”
To offer a lifeline to a budding business until its own momentum builds, Weinstein said, the CEC’s small task force of savvy MBA’s assemble “an all star team” of volunteer specialists like attorneys, commercial bankers and marketing and advertising consultants.
When Lisle’s Gary Conkright in 2001 at the University of Chicago developed some preventive monitoring software to detect potential equipment failure, and then spun the unit out as a commercial business called Smart Signal, he needed both marketing and financial help, Weinstein said. A CEC team took on the case in 2002, polished a presentation and facilitated introductions to American Airlines, Delta and other prospects that eventually became clients. Sales blossomed, and it all led to a $24 million equity financing to put the enterprise on its way.
A florist blooms
Similarly, when Chicago’s Connie Rivera last year saw an opportunity to create downtown’s only flower-and-plant center on two acres west of the Loop, CEC did a full business plan and won a credit line with National City Bank.
The CEC might raise upwards of a record $750,000 this year and more than $1 million next, Weinstein said. What that will buy is additional brainpower with which his group can teach more embryonic businesses how to make it on their own.
Ted Pincus is former chairman/CEO of the Financial Relations Board and former vice chairman of BSMG Worldwide. He is an adjunct professor of finance in the MBA program at DePaul University, and is an independent consultant and journalist.
