IVCA Profile: 2015 Richard J. Daley Award Recipient Warren E. Holtsberg, Co-Head of Portfolio Management at MVC Capital

The 2015 IVCA Annual Awards Dinner will take place December 7th, and the recipients of each of the awards being given at the 14th edition of the event have been announced. The honoree for the Richard J. Daley Award is Warren E. Holtsberg of MVC Capital, Co-Head of Portfolio Management of the Fund and a member of the MVC Capital Board of Directors. The award is named for Chicago Mayor Richard J. Daley – serving in that office from 1955 through 1976 – and historically one of the most influential city leaders of the 20th century. Mr. Holtsberg is being recognized based on the defining principle of the award, as an “individual who has given direct and extraordinary support to the State of Illinois by participating in or being an advocate for the Venture Capital and Private Equity industry.”

Mr. Holtsberg, who joined The Tokarz Group Advisors (TTGA) in 2007, is a senior investment professional with almost 20 years of lending and investment experience. Warren is Co-Head of Portfolio Management of the Fund and is a member of the Board of Directors of MVC Capital. In his role at TTGA, Warren sources and executes new investments and helps manage the Fund's global portfolio of private equity, venture, and small and mid-cap debt and equity investments across a broad range of industries – including technology, consumer/retail, energy and finance. He also heads the Chicago office of TTGA. Mr. Holtsberg also serves on the Advisory Board of Arcapita Ventures, the PE and VC arm of Arcapita Bank.

Previously, Mr. Holtsberg founded Motorola Ventures, the venture capital and private equity investment arm for Motorola, Inc., where he led the worldwide fund for eight years. Mr. Holtsberg was also a member of the Motorola Corporate Credit Committee. Before Motorola, Mr. Holtsberg spent two decades with the U.S. Government where he held a number of senior executive positions in the aviation, defense and intelligence communities. Because of that service, Mr. Holtsberg is an active supporter of multiple private foundations that benefit the families of fallen Intelligence officers and special forces operators, which includes the Navy Seal Foundation.

Mr. Holtsberg serves as a member of the Board of Directors of the Chicagoland Entrepreneurial Center, the Big Shoulders Fund for the Archdiocese of Chicago's inner-city school fund, and Illinois Ventures – a University of Illinois focused VC seed fund and high technology incubator, and he is a Director of a related Private Equity follow-on investment fund. He is a former member of the board of IVCA.

Mr. Holtsberg is a graduate of the University of Illinois, and the Kellogg Management Institute at Northwestern University J.L. Kellogg Graduate School of Management.

The IVCA begins its series of profiles of the award recipients by talking with Warren Holtsberg, as he discusses his background and career.

IVCA: Congratulations on the Richard J. Daley Award. What does it mean to you to be honored by your peers in the Venture Capital and Private Equity industry?

Warren Holtsberg: Simply put, there is no finer award than one received from your peers. It is a sign of mutual respect and appreciation for what we all go through on a day-to-day basis in this industry. I look at the list of people that have received this award ahead of me, and I’m flattered to be included in such an amazing group.

IVCA: You've had a broad range of job titles before you became an investment professional. What type of experiences in your former professions best prepared you for the challenges you face as an investor in private companies?

Holtsberg: I’m often asked the question – what was the best professional training I had before I got into the Private Equity and Venture Capital? And my answer: it was my pilot training. An airplane will do one of two things – fly safely or not. As the pilot, you have to be decisive, pull information from disparate sources, and come to conclusions quickly once you have processed all the information.

I look at that flight training – I did it during the time I worked for the F.A.A. – and how it taught me to be decisive and intuitive, and on constant lookout for additional inputs. It was excellent training for what I do now in finance. It has been applicable in more decisions than you would think when making investments.

IVCA: In your role at The Tokarz Group Advisors, the portfolio you help to manage is in a wide range of industries. What is your approach to educating yourself and your colleagues on the various industries in which you might invest?

Holtsberg: Many years ago somebody wisely told me that it’s very easy to throw money out the window, but it’s much harder to bring it back into the building. As such, you can view what we do in simplistic terms – make smart investments, don’t overpay, create value, and sell at a profit. If you can’t do each and every step efficiently, you haven’t closed the full loop of the investment. I see many people in our business who are very good at the front end of the investment process, but challenged at the back end. Very few businesses can run on autopilot, it takes a lot of hard work.

I have always referred to myself, and the teams that have worked with me, as ‘activist investors.’ We spend time in our investments, we get to know their business and we offer our insights from years of experience. I do believe that the activist approach has paid dividends, it’s a matter of proactive learning about these businesses. Often what you see at the beginning of the investment opportunity – particularly in venture capital investments – doesn’t always turn out to be the ultimate winner at the finish line.

IVCA: Your resume includes the founding and leadership of Motorola Ventures. What was the origin of that group, and what goals were accomplished in the years you were involved in it?

Holtsberg: I was very fortunate to be recruited out of federal service by the Galvin family [founders of Motorola]. I brought to Motorola my global living-and-work experience, and multiple technology fields. Both Bob and Chris Galvin talked to me, in addition to  George Fisher – who was still there – and they all appreciated my global technology and business experience. They were all understandably proud of the innovative technology Motorola continued to create, but they worried about becoming too inwardly focused. They challenged me to find and marry exciting outside technology opportunities with internal innovations at the Corporation.                  

IVCA: Where did you come in, regarding that discussion?

Holtsberg: They told me that Motorola had an international exposure to technology, and markets, and what they wanted me to do was to look for those opportunities on the outside – whether it was tech product, talent or new markets – and bring those in to bear for the benefit of Motorola, and its customers. So what we created was an evergreen fund, where the corporation provided an annual fund to invest in outside technology-based opportunities, and over the course of the next eight years we invested - profitably - in over 200 startups globally.

Motorola Ventures operated from international offices in Tel Aviv, London, Beijing, Toyko, Shanghai and Hong Kong, and domestically in Boston, Chicago and San Francisco. We had opportunities to invest in some really amazing things, that were beneficial not only to Motorola, but to technology advancement in general. Yes, we were strategic investors, but we also invested to make money for our shareholders as well. I said to Chris and Bob at the time, that we were a public corporation investing corporation dollars. If we don’t make a profit, then it’s not very strategic. Some of those technologies didn’t directly benefit Motorola from a corporate production standpoint, but Bob and Chris understood if we were successful selling some investments for a profit, it was to our benefit.

IVCA: Since you’ve traveled so extensively outside of the United States, to which countires do you feel most connected?

Holtsberg: I took dozens of trips to China over the years, even very early on, and was fortunate enough to experience their Western business acumen as it began to develop. One of the Chinese CEOs I recall was a very bright woman, who had graduated from the University of Chicago Business School. The epiphany I had at the time regarding her was that she had chosen to return to her homeland. She wanted to bring back her education and business skills to build her new company in China.

What that said to me was that we were going to see business growth in China through Western-based business models, which proved to be the case. I’ve always found China to be interesting, but I’ve also found some good opportunities in Europe because there are so many varied interests there as well. My travels taught me that it’s naive to think that all innovation comes from one valley in the United States.

IVCA: Your award is named after former Chicago mayor Richard J. Daley. What does the honor mean to you in the context of his and the city’s history, in the way that you have contributed to the city and state?

Holtsberg: In the middle of all the opportunities my family and I have had around the world, I’m still just a guy from the Southside of Chicago – 112th and Western Avenues. I grew up in the city, and I’m a proud product of the Chicago Public School system. My family has had season tickets to the Chicago Bears since 1957. So when we had the opportunity to move back to the area to join Motorola, we jumped at it. This city has always been very good to us, and I always felt an obligation to give something back to it – hopefully I’ve accomplished that to some degree.

IVCA: One of the testimonials in your award profile describes you as a 'people person.' How do you personally define that term and how has it best served you in your business and community pursuits?

Holtsberg: Oftentimes awards are given to individuals, but I believe the award is usually based on collective efforts. I’ve been blessed to have worked with some great teams, and great people within them, over the years. An award like this has allowed me to reflect back to the folks that I have met, and some of the people who took the time with me when I was younger, and learning about business. When you get to the stage when you have an opportunity to give back, that is not an alternative, that is an obligation.

I say to the younger people who work in the business now to make sure they work for somebody who is more interested in mentoring that young person, more than even promoting their own careers. It’s important not only to prepare the up and comers, but to know when the time is right to turn the reins over and give them the opportunity to run the show. I found that if you nurture good people, give them the freedom to operate, and then expect great things from them, more often than not they will surprise you on the upside.

IVCA: You serve on many charitable boards and you support foundations that benefit families of fallen intelligence and special forces members.  How has your participation in these charitable concerns given back to you?

Holtsberg: I’ve always felt it was a little presumptuous to talk about charity, it’s a personal choice. But I’ve lost some friends over the years – some on September 11th – and they left behind families and children. Were it not for some of these benevolent organizations, many of those children would not have received the benefit of their continuing education. It’s a great personal satisfaction for me to be able to help out, and to make sure that the families of people who have served this nation are taken care of, especially after they are gone.

It’s important to me, and a personal mission, to make sure that youth – no matter where they live or what backgrounds they have – get the opportunity to receive a quality education. That is why I’m also on the board for the Big Shoulders Fund, which aids inner-city Chicago kids in achieving that quality education.

IVCA: You have closely supported the IVCA over the years. How do you view IVCA in its service to the Venture Capital and Private Equity community?

Holtsberg: It is outstanding for a number of reasons. There are unfortunately many negative opinions about the finance industry in the current environment. Much of the important and good work done by our colleagues in finance gets lost in negative and simplistic publicity about profit and loss. What is also often lost is the impact we have on the economy and its positive growth, adding new job development and the creation of new career opportunities.

I think the IVCA is instrumental in getting more positive messages out there regarding the importance of the finance industry, and I don’t think we can ever do enough of that type of positive public relations.

The 2015 IVCA Awards Dinner, presented by Kirkland and Ellis LLP, will take place on December 7th, 2015, at The Four Seasons, 120 E. Delaware Street, Chicago. Individual tickets are still available, contact Kathy Pyne for information.