Les Trachtman didn't mince words when he described meeting the owners of an Internet-based media company in their pitch for investors. “I felt afterward like I had to wash my hands,” he said.
His words carried weight during a meeting with three Union College juniors, who, along with Trachtman, an entrepreneur and 1977 Union graduate, were weighing choices for a college investment fund intended both to help students learn the steely-eyed ways of business and yield a real-world return.
As the group kicked around the company's financials, student Jay Shah, president of the college's Entrepreneurship Club, offered that he had uncovered a lawsuit filed by earlier investors.
And the business — peer-to-peer digital file sharing — is in a “vicious market” with a lot of established competition, said another student, Manuel Ulloa. Added Trachtman, “This open-source stuff can eat your lunch. They don't make any money, but you lose.”
At the end of the meeting, it was thumbs down on that company. But another prospective investment, in another Internet-based company that gives customers the option of rounding up purchases into a charitable donation, seemed promising.
“I love this company,” Trachtman said. “They have already filed two patents.
“It's blue ocean,” he added — entrepreneur-speak for a business alone in a new market.
By a 4-0 vote, they recommended an unspecified investment by the college's Vash Venture Fund, with Trachtman saying he would put in some of his own money. It probably will take $1 million to launch the company into the big time, he guessed.
The fund is supported and managed by the Eliphalet Nott Society, an alumni group that lets successful graduates offer their professional expertise to the college and fellow alumni. It is named for Union's fourth president (and at 62 years, its longest serving), whose investment acumen led to the acquisition of the 250-acre Schenectady campus in the early 1800s. Trachtman chairs the group.
Society members — currently there are 25 — make the final decision on what investments will be made. To become members of the society, they have pledged 2 percent of their equity in a business they founded, led or invested in, which will go to Union when the enterprise is sold or goes public. They also have invested in the Vash fund.
Trachtman — who splits his time between homes in Saratoga County and Connecticut — is adviser to student interns on the micro-venture fund as part of his duties as the college's second entrepreneur-in-residence.
He joins Harry Apkarian, founder of Mechanical Technology Inc. and other local companies, who was named to the post when it was created last year.
“Our goal,” said Trachtman, “is to grow the Eliphalet Nott Society into $10 million by June 2010” with the money being used to help fund college projects.
The program is part of a growing effort by Union — which has a strong engineering history but does not offer a business major — to weave marketplace concepts into much of its course work.
New courses have titles like “Entrepreneurship and the Beat Poets,” “The Mind of the Entrepreneur” and “Entrepreneurship in Medieval and Renaissance Europe.”
Selected students also can spend a semester in Fiji, learning how western business models can be adapted to a third-world economy. Efforts are directed by the college's Center for the Analysis of Productivity and Entrepreneurship, which was created with a $50,000 contribution from Stephen Ritterbush, a college trustee and partner with a Virginia-based investment firm.
“Entrepreneurship is the mechanism to transform the impractical to the practical,” said Harold Fried, director of the center. “It frees students of the burden of worrying about life after Union that all too often infects the undergraduate experience such that is fails to meet its potential.”
For example, a student in visual arts should leave with the “entrepreneurial mindset that will enable them to make a living consistent with their love of art,” he said.
Students from the harder sciences are also being encouraged to think like businessmen and women. Engineering students, for instance, are asked to look at their work in relation to how it fits into the business world.
“We develop intellectual property here, and the next step is to commercialize it,” said Ronald Bucinell, chairman of the mechanical engineering department. “We want to give our students a dose of reality.”
Three years ago, the college set up a policy on the patenting of student-generated inventions. The college invests the $20,000 needed to obtain the patent and, in return, is entitled to half of future profits, if any.
“We've had three or four patents that we've invested in so far,” Bucinell said. One patent involves an improvement in the production of aerosol gels, which are used to insulate microelectronics like those used in spacecraft.
The student involved is working in Washington, D.C., to attract corporate investment, and the college has created a laboratory where faculty and students are trying to push forward research on aerosol gels.
“There hasn't been a financial return on this — yet,” Bucinell said.