Belzer hassid Yosef Baumgarten runs a unique venture capital firm.
By DAVID SHAMAHYosef Baumarten 88 248(photo credit: Courtesy)
Venture capital is usually thought of as a rich (wo)man's game: start-ups need money to burn, and VC firms usually turn to wealthy investors to supply the funds. Investing in a fledgling company is a gamble, of course (I think the investment reality of the last few months has driven that point home for most of us). You could end up losing your shirt if your company doesn't live up to expectations. Choose well, though, and you could rake in profits. For most people, the idea of investing large sums in anything is a bit frightening; they prefer to put their money in "traditional" investment vehicles, such as stocks and bonds. On the other hand, we've all seen how well that's gone in the past months! So maybe sinking some money into a new startup that has a good chance to succeed is actually a good idea.
But which company? And what if you don't have millions - just thousands? Are there any options?
Well, yes. The Beshalva Investment Fund, run by Yosef Baumgarten, does just that. While handling large investments as well, Beshalva also has a program for small investors (in the $10,000 range) who can invest money in start-ups the company has investigated and done due diligence on, exactly as it would for a million-dollar investor.
It's a unique program, but not as unique as Baumgarten, who is an ordained rabbi and a Belzer hassid. As a religious person ("ultra-Orthodox," in journalese), Baumgarten says his conscience and commitment to the Torah guide his investment strategy - both in the types of companies he will or won't invest in, and the conservative attitude he takes when considering a company, especially for small investors.
"We generally invest in mature start-ups that have a product or service ready to go to market," he says. "If the product is viable and the company fundamentals are good, we will invest in companies that we believe will succeed with their product or find a successful exit. While there are some larger investors who are willing to invest their money in more speculative companies, we would rather not take a chance with the funds in our small-investors program."
Among the projects Beshalva is currently working with are Nethrone (http://www.nethrone.com/), which makes an ergonomic chair/table/desk setup - a "throne" - for computer users, and Verifuel, which checks to make sure that there isn't too much water in airline fuel.
Both of these companies fill the criteria Baumgarten requires for an investment. "Both of these are practical ideas that are already making sales for their manufacturers," he says. "Those sales prove the viability of the product, and makes the likelihood of a buyout greater."
Baumgarten expects both to make money, but doesn't know how much yet. "We've been investing as a company since only 2007, so it's too early to tell how well these investments will do," he says, "but we expect them to do significantly better than banks or the stock market this year."
Baumgarten says there are companies he won't invest in. "Anything that I feel runs counter to the spirit of Judaism is a nonstarter for us," he says, specifying companies that work in the area of television and certain Web sites.
Even though most haredim eschew the Internet, Baumgarten does not necessarily rule out on-line applications and services. "For example, we are working with an on-line gaming site that will produce a game for Jewish youth, encouraging Jewish identity and community," he says.
Other companies Beshalva is planning to ramp up its investments in are a Spanish company working in the solar-energy field and a networking product designed for banks, home and professional investors.
Past investments Baumgarten has been involved in include electrical devices, biotechnologies, medical devices, networking systems and others.
Baumgarten is not your typical hi-tech hi-flyer, in more ways than one.
As a haredi Jew, he makes sure to set aside time for daily prayers, attending Torah classes and family obligations. The lifestyle may be different, but, Baumgarten says, business values are the same no matter who he is dealing with.
"I have never had a problem with anyone in the business world regarding my lifestyle," he says. "Business people value commitment, honesty and industriousness - the values Beshalva is built upon.
"Not only have I ever encountered any problems anywhere, dealing with people of all backgrounds and religions - certain businesses, such as banks, actually go out of their way to deal with me, because my appearance - and hopefully my actions - give them and their investors confidence."
It's that confidence in the way he does business that has attracted both small start-ups - and even smaller investors - who seek a piece of the hi-tech action.
startup@newzgeek.com
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