Risk takers, value makers

Kellogg School grad leads Chicago's premier entrepreneurial resource, advancing 'wealth creation and economic development' in the Windy City and beyond

By Matt Golosinski

Turn Chicago into Silicon Valley East?

David Weinstein '00 sounds like he could do it. He bristles with the gritty, get-deals-done energy that makes him a powerful advocate for entrepreneurship.

But he and his seven-person team at the Chicagoland Entrepreneurial Center believe that the West Coast model does not do justice to the Heartland's innovation diversity. In fact, the Kellogg School graduate says too many people define entrepreneurship too narrowly, identifying it solely as high-tech ventures.

"We believe that entrepreneurship, particularly in Chicago, touches many areas," says Weinstein, president of the CEC, a nonprofit affiliate of the Chicagoland Chamber of Commerce. It was founded in 1999 to help regional entrepreneurs build sustainable and profitable enterprises. "We work with a variety of businesses: food service, retail, the creative industries, professional service industries."

And, yes, technology firms too.

But Weinstein is convinced that entrepreneurship means far more than just IT. It also means Argo Tea, a thriving, seven-store local chain founded in 2003. CEC helped provide networking opportunities, public relations and financing strategy for the venture. Typical CEC clients are early stage prospects demonstrating 40 percent annual revenue growth with employee counts that double each year. "Our sweet spot is companies with a half million to $10 million in revenue," says Weinstein. CEC provides sales expertise — making introductions so that entrepreneurs can get their first big clients or penetrate new markets — and financing. Weinstein says his organization has helped 50 companies in four years raise $40 million in early stage capital. The goal is to develop entrepreneurs to where they have "predictive streams of revenue" that move them into the early middle market.

"At that point, they've graduated from what we can do for them," says the Kellogg alumnus.

What CEC can do for entrepreneurs, though, has enjoyed a boost with the March launch of a $10 million fund called the Illinois Innovation Accelerator Fund (or i2A). This seed-stage, for-profit investment fund will be "huge for the region," says Weinstein, especially since several top entrepreneurs have invested in it, including J.B. Pritzker, Michael Ferro, Larry Levy '67 and James Tyree. 

"It's a testament to how many transactions we were doing that these big guys got involved," says Weinstein. CEC will be the administrate of the member-managed fund, directing deals to the marquee entrepreneurs. The fund plans to invest in 16 diversified companies that have the chance to become "the next innovative leaders in the state."  

Weinstein's passion for what he does comes from seeing entrepreneurship's power to build communities. "It's about wealth creation and economic development," he says. "Eighty percent of all new jobs are created by small business. The majority of those businesses are characterized as entrepreneurial."

The former technology adviser to the City of Chicago (1996-2000), Weinstein launched his own venture — Blue Meteor — in 2000 at the age of 29. It ultimately fizzled but the experience proved invaluable.

"I raised $30 million. It was the largest round of capital in Chicago for the quarter," he recalls. "I was in over my head quickly."

While Weinstein says he was a good manager, he had never before managed 100 people — the number of employees Blue Meteor gained in just five months. He also "totally underestimated the sales and revenue challenges" associated with the fledgling venture. Tough lessons, but ones he says he has taken to heart.

"I've turned these around as my strengths now," says Weinstein. "I was the right guy to start the company, but the second the company went into huge-growth mode, we needed somebody with a different skill set."

Weinstein credits the Kellogg School's teamwork model with giving him the "greatest toolset you can have when starting a business, since you are going to have to know your role and know how to manage other people's talents." Kellogg also helped him assess business issues and imparted technical skills, such as accounting, instrumental in managing a budget. In fact, he encourages would-be entrepreneurs first to get involved with a company's profit and loss stream.

"Understand the pressure of revenues. Understand the pressure of selling," he says. "That can really help when you launch your own venture because you are going to be shocked by the sales pressure."