Ira Weiss on Starting a Start-up

Last Wednesday, I had the opportunity to hear Ira Weiss, a professor at the University Of Chicago-Booth School of Business and also an investor in start-up companies through Hyde Park Angels, speak as part of the UIC Business Scholars Speakers Series: A View From the Top. It was a great opportunity to learn about start-up companies and venture funding.

Weiss did his undergraduate studies at the University of Illinois at Urbana-Champaign and received his MBA and PhD through University of Chicago in accounting and economics.

Weiss is mainly interested in investing in technology-based software start-ups. Not only does he give the funding once he likes the hard work that has been put in the start-up, but he also tries to give advice on the critical information that one might be missing.

Let’s say you wanted to solve one of your everyday problems by writing an app, and you think others would use it in their life too. To get this app into other peoples' hand, first thing you need is to prove that people are interested and they are willing to use it. Next comes the funding to take the app to the next level and make it available to mass consumers.

Where do you go to get the funding that is need to make this app successful? Family? A bank? If you do get the money from family members and lose it, then let's just say that you have to see them for Thanksgiving, Christmas and other occasions. Getting a loan from a bank is hard because “they look for sales” and most of the time, banks are not willing “to take the risk in  start ups that are not proven on a large scale.” This is where venture capitalists like Ira Weiss come into play. They are willing to take the risk by funding a company once they see the vision of the start-up and most importantly their “hard work and passion.” After getting funded, the app is released to the public and it’s just a matter of time to see if it’s the next "it" app in the app world.

Some of the ways that a company makes profit is by selling out to the big companies, going public, introducing in-app purchases or advertisements in the app. Another type of example is when the big company buys a small company. Not everything is a success story. There are some downfalls to being a venture capitalist. Often an investor does not get his money back, and even if he does, it takes about “5-7 years” to see any returns.

It was fascinating hearing from someone like Weiss, whose work is based on risk and research. He provided us with some great parting advice as well, “take at least one computer science class” even if it has nothing to do with your major. You never know when it comes in handy or it can be the differentiator when you are applying to jobs.