Corporate Angels

The Chamber’s Walk

Participate Please

Donate Please

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These articles were prepared for the November 29, 2000 edition of

U.S. 1 Newspaper. All rights reserved.

Empowering Angels: Manny Ratafia

Archangels are a new breed," says Daniel Conley

of Silicon Garden Angels Plus Investors (www.oncallcfo.com).

"Archangels

bring enough capital to the table to do good, big work," says

Conley, "but they also add value with their wise technical

counsel.

Other investors consider this `the smart money.’"

Two from this "new breed" of investor, Warren Bagatelle

of Loeb Partners and Manny Ratafia, an individual investor,

share the program at the New Jersey Entrepreneurial Network meeting

on Wednesday, December 6, at noon at the Doral Forrestal. The title:

"Archangels: When $1 Million Is Not Enough." Cost: $45. Call

609-279-0010 (www.njen.com).

Bagatelle made his reputation as a "workout" manager, someone

who takes over direct management of companies that are having

difficulties

and therefore has insight on how to analyze management and product.

The son of a professional photographer, he majored in economics at

Union College in Schenectady, Class of 1960, and has an MBA from

Rutgers.

He spent seven years with Arthur Andersen and 12 years doing workouts

for industrial companies in Rochester, New York. For this he was hired

by large investors, such as GE Capital, to be the operating officer.

"I did five or six," he says proudly, "and never lost

one."

Bagatelle left line management for Wall Street in 1981 and was CEO

of a small New York Stock Exchange member firm, and then became a

managing director of the venerable Loeb Partners, nearly 100 years

old. Personally, he has about three dozen investments, and the firm

has 10 times that number. For his personal investments, Bagatelle

says he generally chips in $50,000 to $100,000, along with one or

two of his partners, to a variety of small companies (U.S. 1, March

15, 2000).

Manny Ratafia led the angel round of investment for SealTech, an

incubator

company out of Stevens Institute (www.sealtech.com). "Because

it had a value-added angel — Manny Ratafia — contributing

a significant six figure amount, all the other cards in the deck

shuffled

together," says Conley. "Other investors followed the `smart

money,’ resulting in more than $1 million of equity investment and

over $5 million of capital."

Ratafia, an individual equity investor in startup companies, is based

in Woodbridge, Connecticut (E-mail: manny@commtechsoftware.com).

Growing

up in New York on the Lower East Side and in Brighton Beach, he comes

from a long line of entrepreneurs and always knew he wanted to be

one. His Polish grandfather owned apartment buildings, a bus service,

and a shoe factory, and his cousins currently have businesses.

An alumnus of Cooper Union, Class of 1971, Ratafia has two master’s

degrees in engineering from MIT, one from Harvard, and an MBA from

Dartmouth. He had a consulting firm, Technology Management Group,

that provided consulting and market research on biotech and medical

products, and he also has a software firm, Commtech.

Always a voracious reader and researcher, Ratafia created a niche

for himself by working around the clock to create special industry

reports that beat the competition by six months. Pharmaceutical firms

and venture capitalists paid $2,000 and $3,000 for three 1986 reports

— on a new cancer treatment, on the implications of AIDS research,

and on the impact of biotech on veterinary medicine. "There was

a great need for information on biotechnology in the mid ’80s, and

it wasn’t being fulfilled," he says.

From what he earned with these reports, he invested $500,000 in

SealTech.

Based in Parsippany, this company is making environmentally friendly

plastic film adhesives that do not expose workers to solvents.

"Right

now just one other company makes this kind of thing and it was founded

by Tim Peck, who now runs SealTech," says Ratafia. "The

downside

is very low, because we already have customers waiting for product.

It has a tiny sliver of the market in each area where we think we

have opportunities."

At the NJEN meeting he will discuss his experiences at SealTech.

"Angel

investors and entrepreneurs don’t have enough information," he

says. "It’s difficult to get quality information. Everyone has

their own ax to grind, which introduces biases into their advice.

I will tell how to try to make the playing field a little more

level."

He will also tell how a small investor can negotiate better deals.

"Venture capitalists would like to perpetuate the myth that they

hold all the cards and have all the power," says Ratafia. "At

almost every meeting I have gone to, they keep repeating that there

are so many deals out there, that whatever terms they want to set,

everybody else should go along with. That is not an accurate portrayal

of their relative power," he says, "because once they have

selected something they are interested in, they are not going to walk

away from it that quickly. The VCs are under great pressure to invest

the funds and invest them well, and if they have a good deal they

are not going to walk away from it because someone wants to change

something here and there."

Ratafia is a skilled negotiator and, in fact, negotiation classes

with Leonard Greenhaulgh at Dartmouth were among his favorites. As

the angel with the largest investment in SealTech he successfully

bargained with the lead investor (an institution) to make the deal

better for himself and the other angels. "We just insisted on

what was appropriate," he says, "and got them to change huge

numbers of things." Various agreements had been set up so that

larger institutions were favored in subtle ways, such as how those

with a certain percentage of ownership can make certain decisions.

His tips:

Do the negotiating yourself. "They initially wanted

to talk only through my lawyer as opposed to me directly," says

Ratafia. "That is more difficult, less efficient, and more

expensive.

Angels who are putting in $50,000 — no way they can justify

spending

$10,000 on lawyers. As an entrepreneur I wrote my own contracts,

rarely

used lawyers to help me, and if I did they would come in at the very

last stage."

Get the support of the other angels. "In addition

to representing my own $500,000 investment, I also represented the

others and had quite a bit of leverage." If smaller investors

assert themselves, he says, it is "not that difficult" to

make the agreements fairer. "Even someone putting in as little

as $25,000, if they can represent all of the angel class, they can

have quite a bit of clout."

Negotiate a little at a time and you are much more likely

to get what you want than if you present one long list. "I said

that here is something I had a little bit of a problem with, and once

they have agreed to one list of terms, each additional term is just

one more little item."

Don’t take for granted that things can’t be done. "You

never know until you try. As an entrepreneur I did lots of things

that the rule books say you can’t do. It helps you stand out. As an

angel, I have an unusual style of negotiation, tough and

creative."

Go for the win/win solution. "All of the investors

in SealTech feel we have a really good deal and a really good

company,"

says Ratafia. "It is very important to create the feeling that,

in the end, we are all on the same side and are working together."

— Barbara Fox

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Corporate Angels

Prevent Child Abuse-New Jersey honored Steven

Rosenthal,

co-CEO of Epix, as Man of the Year. Deborah C. Brittain,

president of the Association of Junior Leagues International, received

Woman of the Year award. Epix is the Woodbridge-based professional

employer organization (PEO) that Rosenthal founded less than 10 years

ago. It now has over 50,000 worksite employers and is the nation’s

largest PEO.

The state headquarters of the social service organization is in New

Brunswick. The annual dinner, at which Rosenthal was honored, raised

more than $107,000 — a record amount.

Harriet Bryan and Ted Vial received the fifth annual

Leslie "Bud" Vivian Award for Community Service at the

community

service on Thanksgiving Day in the Princeton University Chapel. The

award comes with $2,000 to be donated to a nonprofit organization

of the recipients’ choice.

Bryan was instrumental in the development of Princeton Community

Village,

Elm Court, and Griggs Farm, and has also been honored with a U.S.

1 Helping Hands award. Vial was the first president of Princeton

Community

Housing and urged early efforts to end racial discrimination in

Princeton’s

housing.

Top Of Page
The Chamber’s Walk

The New Jersey Chamber of Commerce solicits sponsorships

for the 64th annual "walk" to Washington, set for Thursday,

February 1. The walking is done on a special Amtrak train that takes

business people and politicos to the nation’s capital. So many people

want to go that this year the chamber will send two trains — one

bustling, the second one more quiet. The Capitol Steps, a troupe of

Congressional staffers-turned comedians, will entertain at a dinner

at the Marriott Wardman Park. In previous years, the newly elected

president has consented to speak at the dinner.

Advertisements in an "attendance book," which is placed on

every train seat, start at $250 for a quarter page, and similar ads

are available fro the "Congressional Directory" to be

distributed

at the dinner. Call Kevin Friedlander at 609-989-7888. Tickets

for the train ride, reception, and dinner cost up to $565 for those

who are not chamber members.

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Participate Please

New Jersey high school seniors can win Future

Technologists

Awards granted by the New Jersey Technology Council and sponsored

by Vega Consulting Solutions in Parsippany, u.1 net of

Marlton, Dathil in Trenton, and NJTechNews, the house

organ of NJTC. Other sponsorships are available at from $2,500 to

$15,000.

These awards have the purpose of encouraging students to stay in New

Jersey and to expose them to technical careers. One award is for

web-based

information technology and another for life sciences and

bioinformatics.

Student applicants should be planning to attend a New Jersey college

or university and to major in a high-tech subject. They may enter

as individuals or as a team of two or three from the same high school,

and they must do a project that shows skills in critical thinking,

leadership, communications, presentation, and collaboration. The

deadline

for submitting the project is March 30, 2001. Those who make the first

cut will be given a final interview on May 23.

Bob Carullo (of the Lakehurst Naval Air Station) and Ray Ingram

(of Dathil) co-chair the NJTC’s technology workforce committee, which

developed the scholarship program, along with the Technology Educators

Association of New Jersey and a design team lead by Ingram and NJTC’s

Sara Lee Pindar. Call Pindar at 856-787-9700.

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Donate Please

Dave Collins, one of the DJs for the WNJO morning

show, is camping out in the parking lot of Lawrence Toyota on

Route 1 South and will stay there until the 18-wheeler trailer from

Princeton Moving and Storage is filled with canned goods. The

food will be donated to the Community Food Bank of New Jersey and

Second Harvest in Hillside New Jersey. Live updates will be aired

on 94.5, the oldies station. Supporting this "WNJO’s Camping for

Cans" effort is Applebee’s Neighborhood Grill and Bar.


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