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Beach-Blanket Business Dennis Mitchell spent much of the day at a big Annapolis boat show in October encouraging the parka-clad crowds to check out his booth for eHarbor, a new company that provides wireless Internet access to boaters.
But he wasn't. The man was 40-year-old Jeff Osborn, the super-casual, super-stealthy angel investor behind a slew of DC and Boston-area startups. Osborn is the tie-dyed principal of Osborn Capital LLC, an angel investment firm that has held positions in 28 emerging technology companies, and he's got a knack for sniffing out new ideas. After a few phone calls and a visit with Osborn at his Key Largo, FL, home, Mitchell walked away with about $100,000 in seed money and access to the former UUNET vice president's business savvy. That's a fairly typical encounter with Osborn, who sounds less like a financier and more like a character you'd meet following the Grateful Dead or Phish, who brags that he likes to cut checks to startup CEOs while sitting with them at a bar near his home in the Keys. Osborn loves doing this kind of thing, mostly because he can - and because he's good at it. In 1997, Osborn took a month off in the Keys - and liked it enough that he decided to retire there. He cashed out with about $10 million dollars and began spending his time sailing and investing in his friends' companies across the Northern Virginia high-tech corridor. In 1998, he crafted a permanent structure for his hobby and launched Osborn Capital. It's an endeavor that he says allows him to make money, spend significant time on the beach, and adhere to the two rules he set down when he became a multimillionaire - no suits and no haircuts. He now lives in a beachfront home with his wife, Elizabeth, though he also maintains a 28-acre property in Loudoun County. "Let's see, I have fun, make millions and sleep until 10," Osborn muses as he chats with a reporter by cell phone from the Keys. He also lets it be known that he's standing knee-deep in the surf and watching sailboats as he describes his career as an angel investor.
Yet Osborn Capital still has only one employee - Osborn's long- time friend and colleague Eric Janszen. The two met at an early Internet company that made TCP/IP routers, Cayman Systems, in Massachusetts in 1988. "We look for efficiency in markets that are not efficient and businesses that are solving real problems in areas of great expertise," says Janszen. "Essentially we look for good people with good ideas who need to firm up their business plans, to get customer validation…[and] to be accepted by a venture capital firm." It's been a close personal and lucrative professional relationship. Osborn, mindful of the stress of Janszen's job vetting the firm's potential investments, bought Janszen's wife Candy a silver Audi TT she had admired as a peace offering for their lost hours together. Osborn Capital aims to get in on the ground floor of a new
business - or in the basement, if possible. "I love walking to the
front of the line," Osborn says. The firm typically invests between
$25,000 and $125,000 in each company in exchange for equity and
occasionally a seat on the board. "You can let someone live the
dream they have been obsessing over. Typically we get involved when
there is someone who still has a day job or just quit their job and
is running on very little cash. That's when I like to come in.
There's maybe three people, max - usually a few fanatic guys who say
'you have just got to hear my idea.' My part is to get them to the
venture capital stage and help them with a sales composition plan
and maybe [help] hire some people," Osborn says.
"Part of the reason our track record is pretty good is because we primarily invest in people we know," explains Janszen. Although he receives about six business plans each week, the firm tends to go with people Janszen and Osborn either know or have been introduced to through colleagues. Osborn focuses on businesses that specialize in Internet infrastructure and business-to-business communications like EyeCast, a Herndon, VA-based application service provider that delivers video solutions over the Internet with advanced capabilities for monitoring, merchandising, training and video conferencing. Osborn liked the idea so much that he handed the founder, Shaun Amini, $100,000 after their first meeting and has given the company, which plans to go public by the end of 2000, an additional $200,000 since then. John Hawley first encountered Osborn when he interviewed for a job at UUNET in 1996. The two stayed in touch through the small world of the Northern Virginia high-tech social scene. Last year, Hawley sprang out of bed one night at two in the morning to jot down notes about a service that would alert website owners when their sites went down. He immediately talked to Osborn. The two had a brainstorming session at Maggiano's in Tysons Corner. Osborn was impressed and decided to add the company, called Netwhistle, to his portfolio. He provided the company with money to move Netwhistle out of Hawley's basement and into a Sterling, VA office. Osborn attributes part of his success to his and Janszen's nearly 30 combined years of experience in high-tech. Both have been involved with four startups. One that Osborn considers a particular badge of honor was Wilder Systems, a company Osborn was the president of that declared bankruptcy in 1990. "[After that] I came to DC with my 10-year-old Jeep, my dog and my clothes and - because this is America - about three years later I made about $10 million with UUNET," Osborn recalls. And the millions look like they will keep coming. If the market holds, Osborn stands to make tens of millions of dollars this year from his portfolio companies that go public or get bought. "He looks like he just came in from fishing, but he is always thinking," says eHarbor's Dennis Mitchell. "He knows what the market will do. He knows how to position companies and he knows how to launch new services." And he knows how to do it while keeping one foot in the ocean.
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