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August 17, 2004 


 Q&A: Origin Ventures Co-Founder Steven Miller on Investments, Angels 8/17/2004
The mission of Going Global is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO Ė ePrairie international columnist Michael Muth concludes his Q&A with Steven Miller, a co-founder of Chicago-based Origin Ventures and a Quill veteran, by delving into his take on angels and investments.

Michael Muth: Did you learn French to work with the Quebecois?
Steven Miller: I took four years in high school. It came back to me, but living in Toronto, I didnít use it much.

MM: Did you study international business at the University of Illinois?
SM: No, because 20 years ago, international business was less important than it is today. It was a lot less intertwined. My focus was on preparing to run my family business, which was all based in the U.S. International business wasnít on the plate to prepare to run my business.

MM: Would you buy your medications/pharmaceuticals from Canada?
SM: Itís a good and bad thing. Iím a libertarian and for free markets. Let the free market decide. If it works, is less expensive and doesnít exploit people, Iím all for it.

The problem is the reason theyíre cheaper in Canada. Itís because the government regulates the prices.

If Iím against government intervention, Iím against it regardless of whether itís the Canadian government or the American government. I have a problem with the reason why theyíre less expensive. Iím against government involvement in health care.

MM: Are there any other technologies in which Canadian firms have advantages?
SM: They really knew how to clear snow from the highways. Seriously! Also, they had strong telecommunications because of the presence of Nortel.

MM commentary: Oodles of companies have spun off from Nortel in the last five years.

MM: Did you have any other international experiences with Quill?
SM: No. Quill looked at the Mexican market, but after careful study, we determined it wouldnít work because there were so many differences. We couldnít make it work there.

MM: I understand that your geographic investment focus for Origin Ventures is the Midwest (specifically Chicago). How do you define outstanding projects to be considered elsewhere?
SM: We look for the same characteristics you look for in every opportunity: a good management team, the business opportunity, the resources necessary (and if thatís a good fit) and the industry (and if thatís a good fit).

Weíre active angel investors. Weíre not just a check writer. All of that is important no matter where it is.

If they all fit and happen to be in Houston, weíll do it. Itís just our preference to stay local. Weíre not a VC. Angels invest close to home. If I were in Laramie, Wyoming, Iíd be limited there. Weíre not limited here in Chicago. Besides, I donít like flying.

MM: Have you considered any investments outside the U.S.?
SM: No.

MM: Why not?
SM: In addition to currency risk, there are lots of other kinds of risk. We try to minimize our risk.

I have exposure to foreign equities in my personal asset allocation. Thatís enough for me. I donít need to put more in private equity. While other guys know more about foreign markets than I do, I know more about early stage e-commerce companies In Chicago.

MM: Has Prairie Angels seen any deals from firms outside the U.S.?
SM: Though one or two have applied from Canada, I donít think any have made it to the presentation stage. Angels invest close to home. There are too many other risks.

MM: Are you aware of any differences with other angel groups that do invest outside the U.S.?
SM: No, but that doesnít mean itís not happening.

There are bigger, older and more established angel groups out there and Iíd find it hard to believe itís not happening. The Kauffmann Foundation in Kansas City is getting Prairie Angels and other groups together to leverage resources. Those close to the borders may see Canadian deals.

MM: Other than currency risk, whatís the additional risk of investing in Canadian companies compared to one, say, in Ohio?
SM: There are a few, but I havenít invested in any Ohio companies, either.

There are greater risks because I donít know the M&A markets in Canada. Itís all about the exit. I donít know if the Canadian company presents greater risks of exit or if there are problems with potential acquirers. There is also the issue of taxation.

MM: At what stage do you see companies crossing borders to get and receive investment?
SM: Though I donít have a definition or a number, I know it when I see it. I canít speak for VCs. Thatís not what I do.

MM commentary: While there are additional risks when considering to invest outside the U.S., there also can be higher returns.

For example, if Miller had simply bought Canadian dollars (which have appreciated 15 percent since his family sold Quill), this would have worked to the benefit of investors in Canadian-denominated investments. Itís also simply a matter of comfort.

Investors invest in what they know. As he alludes to, diversification is important in any portfolio. Itís important geographically as well. There is less difference selling in Canada versus Ohio. If you sell to Toledo, why not Windsor? Thereís not much difference. Cross-border investments are more complicated to consider.

MM: I see that BoysHopeGirlsHope.org helps children in Brazil, Guatemala and Ireland. That seems like an odd mix. Any idea how they got involved in those countries?
SM: It happened before I got involved. There were organizations that did similar work and they simply decided to affiliate. These were not expansion forays. Instead, they were gathering together common interests that were already established.

MM: Since theyíre based in St. Louis, how did you get involved with them?
SM: I went to high school with the CEO. This organization is a major charitable organization. The active members of the board include the CEO of Anheuser Busch. It has been around for 25 years.

My friend is bringing in new people on the board using new measurements to evaluate how theyíre doing. Weíre seeking to find out how to do what we do better and he asked for me to come on board.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at mike@intlalliances.com.
Click here for Muthís full biography.

Previous Columns:
Q&A: Origin Ventures Founder Steven Miller on the Canadian Way (8/9/2004)
Q&A: CPCP Founder David Baeckelandt on Multilingual Importance, Mentoring (8/3/2004)
Q&A: CPCP Founder David Baeckelandt on Japanese Disclosure, Due Diligence (7/27/2004)
Q&A: Chicago Pacific Capital Founder David Baeckelandt on Overseas Funding (7/20/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on the Art of Partnering (7/13/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on BP, AstraZeneca Wins (7/6/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on Global Software (6/29/2004)
Q&A: CEO Terry Howerton on Why Chicago, Ukraine Made FastRoot (6/22/2004)
Q&A: FastRoot CEO Terry Howerton on Blended Chicago Approach (6/15/2004)

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