Jim Kerstein, 44
Edison, New Jersey
Sales: $3 million
At the reins of a company that recycles waste plastics into plastic lumber for industrial use, such as building bridges, decks and railroad ties, Jim Kerstein wasn't a run-of-the-mill VC candidate. Still, in 2002, he signed a deal securing $4 million to be delivered in stages--the first installment was $500,000. Kerstein had one experience with raising half a million dollars in 2000 from individual investors. But even with that experience under his belt, it was slightly different this time around.
How did you hook up with the venture capitalists?
Jim Kerstein: We spent a year working with a major paper company [that] was very interested in buying us, and those negotiations--on a very cordial basis--fell apart. But a couple of key executives at that company remained extremely interested and committed to Polywood and loved the idea.
One of them had been an entrepreneur, and as he approached retirement, he decided he wanted to start working on other projects and get involved in investing in small businesses. He and another gentleman were the primary driving forces of putting money into us. Through them, we've had the opportunity [to] meet other individuals and start to line up the potential for the rest of this investment.
Was your funding in 2000 with this same group of people?
Kerstein: It was a completely different group of people. I did not even know the current group at that time.
Did you approach them?
Kerstein: No, actually, this company had a group they called the Radical Innovation Group. Their job was to go out and look for things that were completely off the beaten path, so they would travel and talk to leading technology universities. While they were at Rutgers one time, our name came up, and literally that day, they came over to meet with us.
How were you involved with Rutgers?
Kerstein: We licensed a technology from Rutgers and through the New Jersey Commission on Science and Technology, a funding arm of the New Jersey Department of Commerce. We were awarded research dollars and invested that in Rutgers to help develop our railroad-tie business.
What do you think made the difference for you? What sealed the deal?
Kerstein: It was a truly compelling story: a pro-business and pro-environment type of product, and one that has virtually unlimited growth potential. I think they just felt we were on the right path.
Do you have any words of advice for entrepreneurs who are looking for VC money in a bad economy?
Kerstein: Certainly not to wait until you're desperate for the money. You have to start working on it when you have some negotiating position and you have the ability to step away from a deal when it's not good for you. --N.L.T.