Betsy Atkins, angel investor, went to the Kentucky Derby last month, as usual mixing business and pleasure, networking with other Silicon Valley hotshots.
The day after the race, she climbed aboard a Lear Jet leased by Sequoia Capital, the famed venture capital firm that has backed many Internet start-ups, and flew to Washington for an hour meeting with ambitious young men who want to start a new communications company.
Then she flew by commercial jet to West Palm Beach to meet with a group looking for money for a Web site analyzing bank rates.
Finally, she ended her weekend by returning to the Miami area, her home for the past seven years.
At 45, a veteran of several successful Internet companies and on the board of seven corporations, Atkins has become a leading angel. In the parlance of the dot-com universe, that means she’s an investor who puts in her own money to help get techno-nerds going to the point where they can interest venture capitalists, who are usually managers of other investors’ funds. The venture folks pour in the millions necessary to develop a start-up until it is ready to go public.
Atkins usually works with other angels–people like Eric Hahn, a former Netscape executive, and Audrey MacLean, such a successful investor that Forbes put her on its cover last November, saying: “If you can get Audrey MacLean to back your fledgling company, you’ve practically got it made.”
MacLean says of her friend: “Betsy is very, very bright. She had established enough credibility with the venture community in Silicon Valley that she can act remotely.”
Atkins’ main career achievement was being one of the first eight employees of Ascend Communications. Working from a “teeny office suite” in Silicon Valley, she says, Ascend’s seven engineers “caught the entire Internet when it was just a glimmer in someone’s eye, and they rode it.” Atkins marketed their ideas.
Lucent is now in the process of purchasing Ascend for $20 billion. Atkins has already gained at least $5 million from selling Ascend stock and she has options on another 96,000 shares, which are worth at least $2 million. Most of her current investments are beyond public view, in privately held companies, and she’s reluctant to discuss dollar figures.
These days, she is seeking out the next Ascend or eBay by forming investment teams with old friends from California and new ones, like Evelyn Greer, mayor of Pine Crest, Fla., and husband Bruce Greer, lawyers who have become full-time investors riding the Internet wave.
Atkins spends a week a month in the San Jose, Calif., area. The rest of the time, she works out of her penthouse in Coral Gables, where a staff of three helps her keep track of her investments and scout start-ups in the Southeast.
“This is a gold mine very few know about. We have some wonderful technology here. And a lot of talent that people don’t think of being in South Florida. . . .
“Today, I don’t think it matters where you are physically. I have video teleconferencing, voice conferencing, e-mail, voice mail. It’s a virtual silicon office. If I were in Silicon Valley, I don’t know if I would see anyone any more than I do now. There’s a lot of traffic there. People are frenetically busy.”
Miami is more relaxed, she finds. “I love to come home here. I get off the plane and that warm, moist Miami air and the smell of that coffee in our airport is fabulous. You can’t beat Miami.”
She built her career as the salesperson who understood how to pitch the intricate doo-dads created by techno-nerds. “I’m the customer-friendly live-ware” is how she puts it.
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Says Gary Tauss, a friend who’s head of Tollbridge Technologies: “She is technically savvy enough to understand what the technologists are doing, and she is the best sales marketing person out there, bar none.”
She’s had a restless, aggressive career, almost never staying more than two years with the same firm. After studying liberal arts at the University of Massachusetts, she took a job selling integrated circuits in the Boston area. One of her customers hired her as a sales manager. She was quickly promoted to vice president, but left in a year to join with an engineer to start Interlan, which designed boards that allowed computers to connect with each other.
After Interlan was bought out, Atkins became a vice president with Bolt Beranek and Newman, a Boston think tank. The year was 1982. Atkins was 29.
BB&N was developing packet switching and software that found the fastest ways over networks to a desired location.
“This was the real start of Internet technology,” she says. “My opportunity was to bring it to the commercial marketplace.”
She sold Visa and Barclays, among others, the technology that allowed them to transmit data among their worldwide offices.
“I was just fortunate. I’m sure I would have worked hard at whatever I did. But if the market hadn’t exploded the way it did, I could have been selling motors for General Electric.”
In 1987, she was lured to Unisys, a huge Pennsylvania company that sold mainframe computers to large corporations. Though she was marketing vice president for a $200 million wing of the company, she quickly became disillusioned.
“Unisys was a slow-moving company with antiquated technology. So I went to Mecca. Which was Silicon Valley.”
In August 1989, after a brief fling with another company, Atkins became vice president of marketing and sales for Ascend Communications. The corporate concept: creating software and hardware to link networks of computers. At Ascend, as with other Silicon Valley start-ups, the standard workday “begins around 6 and you go to around 9 at night.”
Atkins sought Tauss, a friend from her Boston days who was then at GTE. She told him: “I will build you whatever product you need. I need a big company to help get Ascend off the ground.”
Tauss needed concentrators, devices to maximize efficiency in linking computers with the Internet. Ascend built them. “And she got to list GTE as a customer when they went out to get funding,” Tauss says.
Ascend was soon a roaring success, but the always restless Atkins was moving on to other things. In January 1990, she answered a call from an aunt and uncle and became president of their Los Angeles company, Nellson Candies.
“I went from high tech,” Atkins says, “to low tech.” She refocused the company into “healthy snacks and sports nutrition,” increased sales fivefold and arranged the company’s sale to a Belgium conglomerate in 1993.
By that time, Atkins had already been living in South Florida a year, operating the company via long distance.
She says there are two schools of thought about what to look for in a start-up: “Sequoia–they’re behind Intel, Yahoo!–says, `If the product is strong and the market is good and the team is stinky, we’ll change the team.’ The other major firm, Kleiner Perkins– backers of Sun and Hewlett Packard–says, `We believe in the team, because even if they’ve missed the market, if they’re smart, capable and nimble and have sense of urgency, they’ll figure out how to fit their product to market requirements.’ “
Atkins says there’s validity to both concepts, but leans toward emphasizing the team “because there are always unforeseen changes in the market.”
As a prime example of a great team, she points to DataCore Software of Ft. Lauderdale, which is developing data storage technology. Atkins heard about it from friends in Silicon Valley and checked it out.
“The team is extremely strong. These are proven technologists with a track record of success. They have that fire in the belly and a spark in the eye. And they had a fantastic idea.”
Atkins invested and joined the board of directors. “I’m not a passive board member. I suggest marketing ideas, putting together the team, everything.” She also arranged for the Greers and MacLean to invest.
Then she went looking for venture capital to build up the firm. As MacLean says, “If you have a great angel, only part of what you’re getting is the money. The venture capital people are looking for angels as guides. They’re pretty much counting on your success rate.”
MacLean has a fabulous success rate–Forbes guesses she’s made $20 million in recent years by investing $1.2 million in start-ups. Atkins says she is “not in that league,” but she now has the contacts to make things happen. In DataCore’s case, she helped the firm obtain $6 million from venture capital managers.
To get that kind of money, Atkins returns monthly to the San Jose area, where she starts with breakfast meetings and goes on through after-dinner drinks.
Because of traffic in Silicon Valley, she reserves three tables at the Sundeck, a “central hangout” that she uses to talk to venture capitalists and eager start-up execs. She gives each table 40 minutes, then jumps to the next, allowing those she just left time to finish up their meal.
Between meals, she attends board meetings. Most tech companies pay outside directors in stock options. Ascend gives her options on 24,000 shares annually, with the option price set the date of the annual meeting. “That makes sense,” she says. “If directors can’t add to the value of a company, they shouldn’t be rewarded.”
One of her companies, Secure Computing, which creates software for network security, has gone through rough times recently–its stock price has fallen, and a class action suit has been filed against the company, alleging insiders sold shares shortly before the release of a dismal earnings report.
Atkins says the lawsuit was initiated by “pond scum” who frequently sues Internet companies hoping for an out-of-court settlement. She says Secure saw three contracts fall through, which caused an earnings dip, but “the technology works, demand is strong. These Internet stocks just have fluctuations that investors should be prepared for.”
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Though some analysts think the hot tech market is extremely overvalued, Atkins oozes confidence: “I don’t think we’re at the top of the bubble. We’re at the beginning of the wave. We’ve had so much wealth created by successful technology companies that there is a big pool of people like myself right now who are out there, working with younger companies to get started.”