As a kid, Peter Dolch always wanted to be a Sci-Fi author. But, as summer approached and he prepared to start his first book, Peter’s father told him that he needed to make money instead. Dolch had no idea that starting his first business that summer would redirect his energy, and lay the foundation for a career of 25 years in managing and launching technology-based startups. Today, Peter Dolch still serves as the Managing Partner for one of his first endeavors—Thaumaturgix, Inc. (Tgix)— a boutique software development and infrastructure company that was twice ranked in the Inc. 500 Fastest-Growing Private Companies List. But, more rewarding than growing Thaumaturgix was the opportunity to help others get on their feet.
During that twenty-five year period, Dolch found inspiration by helping launch over fifty startups, a couple of which were incubated in his office. This inspired him to step back from active engagement with large client projects so he could focus on early-stage startups as a mentor and strategist, sometimes playing a more active role. By offering all of these services, Peter was able to gain equity in the companies he worked with, but it took careful evaluation to put himself in a position where these equity deals were lucrative. Incubating companies was a way for them to try and monetize underused resources while creating new opportunities to grow Tgix inorganically.
Finding the Right Fit
CheetahMail was one of the deals that paid off, and once it was ready for sale they agreed to an exit plan of $36M. However, not all of Peter’s deals work out this way. Regardless of his efforts to critically vet startups based on what Tgix could offer and how the startup’s mission aligned with Dolch’s goals and resources, things happened that were beyond his control. Dolch learned a lot from those failures, but the biggest takeaway is that there are a lot of external factors out of your control that doesn’t necessarily reflect your business decisions. Nevertheless, Peter has defied the odds of startup success because when you are investing your own money and resources you have ultimate control over the deployment of your funds.
Now Peter Dolch is also the Managing Partner at AEON Foundry where he continues his work with budding entrepreneurs in New York City. This position brings new challenges since the outside funding brings more expectations for returns from investors and the dilemma of having capital deployed versus making good business decisions. Peter has a methodical approach to finding new business opportunities, and an open line of communication between him and his veteran investors maintains a productive dialogue where decisions can be made with more efficiency.
At AEON Foundry, Peter has very clear expectations set out with his investors and he is upfront about the fact that the money will be locked up longer than typical capital. But he explains the binary nature of these startup investments, where the business are either going to do really well or flame out. In the long run, with the right investment choices, you’re likely to benefit significantly more from the exit of one or two of the successes than what you lose on the ones that don’t make it.
Peter also discusses the angel groups he works with and what they do. There are numerous ways for entrepreneurs to go out and get funding, but angel groups try to streamline this process by holding events like accelerators, incubators, pitch events, etc. With these opportunities popping up constantly in Manhattan, investors can focus on a specific vertical that fits their investment strategy. Dolch prefers to work with other people who he can depend upon to do their due diligence, which is why he joined the New York Angels. If an opportunity comes through New York Angels, there is a rigorous vetting process followed by a presentation to the broader angel community.
If you are thinking about investing in similar opportunities, it is important to identify whether or not the company is able to use the cash to achieve an inflection point that dramatically alters the valuation, or positions it to do so. Even if a company has a successful business, there might be an opportunity for them to grow faster – so do your due diligence, and find a deal that resonates with, and is authentic to, you.