Interview of the Month: Dan Burstein, Managing Partner, Millennium Technology Ventures

This interview appeared in the newsletter of the New York-based Business Development Institute.

BDI Member Daniel Burstein is a Managing Partner of Millennium Technology Ventures Advisors (http://mtvlp.com), a venture capital fund based in New York City, that is currently focused on a "value-oriented" strategy that spans a gamut of transaction formats from acquiring interests in private technology companies from corporate venture capital portfolios to public market PIPE investments. Prior to founding Millennium, Dan had been Chief Investment Officer for PS Capital Holdings and PS Capital Ventures, the predecessor funds of Millennium. For twelve years from 1988 to 2000, Dan was Senior Advisor at The Blackstone Group, one of Wall Street's leading private merchant banks. Over the course of his career he has served as a consultant to the CEOs and senior executives of major global corporations including Sony, Toyota, Microsoft, and Sun Microsystems.

Dan is also the author of seven books on new technology trends and global economic issues, including Road Warriors, a 1995 book about the birth of digital media and the Internet. He has also written books about the future of China, Japan, and the European Union. His most recent book is the New York Times bestselling blockbuster, Secrets of the Code, a guidebook to understanding The Da Vinci Code. He is also at work on a new book about the blogging phenomenon. BDI sat down with Dan in his New York office.

What motivated you to become a venture capitalist?

I have had a lifetime fascination with the process of venture capital and technology. I started out as a journalist in the 70's and 80's covering new technologies that were developing out of Japan. At that time, many Americans were concerned about competition from the Japanese and the economic impact it would have on our country. Through those early writings, I learned about the way the entrepreneurial spirit of American culture worked - and, in particular, the powerful role of American entrepreneurship on invention, discovery, and technological development. I came to understand that this was a deep-seated strength of American culture that would stand us in good stead as the American economy went head-to-head with others in the evolution of a new global marketplace. Shortly thereafter, I became a consultant to early computer companies in Silicon Valley, often trading services for equity. It was an exciting time, and I learned a great deal about emerging software and hardware technologies. I joined The Blackstone Group in 1988 and served as Senior Advisor for 12 years.

"Some of the most pioneering ideas and technologies are not capable of getting outside funding, so if you believe in the idea enough you have to be prepared to do what great entrepreneurs have always done - finance it yourself with sweat equity, home equity loans, etc."

During my tenure, the journalist inside me kept calling and I continued to write books, including Road Warriors: Dreams and Nightmares Along the Information Highway. Published in 1995, this book was an early examination of emerging technologies like digital media and the Internet. As a result of the research I conducted for the book, I became more convinced that the Internet, the nascent World Wide Web, and related technologies, were going to provide great new opportunities to invest in a venture capital mode. Pete Peterson, the chairman of Blackstone and the greatest mentor any one could have in business or in life, saw my desire to move into venture capital and offered to help me find the way to do it. With Pete's support I was able to launch a small venture fund in 1997 with a focus on early-stage Internet infrastructure companies. This fund ended up being the right fund with the right strategy in the right time and right place for that time period.

What is your primary investment focus currently?

Today, Millennium Technology Ventures has moved away from early-stage investing and is focused on a variety of special situations that tend to be much later stage and share a common theme of a value orientation. We focus on achieving high venture capital-type returns, but significantly mitigating venture capital risk. Many of the deals we have done recently involve buying interests in good quality technology companies from large corporations, banks, hedge funds, and mutual funds that have decided they want to exit from the venture capital business, or from distressed or bankrupt holders of private venture capital interests.

Where do you see the biggest investment opportunities coming from now that the bubble of the late nineties has burst?

The phenomenal success of Google is a reminder that some of the hype about the web and venture capital investing from the late '90s is still going to come into fruition. As we continue to make the shift towards a more connected economy, and the true power of the Internet is realized, we are going to need a great deal of new hardware and software tools. Technologies that enable communication and collaboration are going to continue to grow and evolve. Every aspect of the wireless experience is obviously huge and growing. Nothing can succeed in our new world of electronic commerce and life without proper security in place — so security technologies in every form and flavor are going to be increasingly important. We will also see great opportunities for some cutting-edge technologies like nanotech, life sciences, and neuroscience to develop in the period ahead.

What advice do you give entrepreneurs that are looking for venture capital?

First off, you need to have a great idea. In the very early days of a company, what is most important to me is the idea itself. You cannot expect to raise capital with a "me too" concept. You also need to realize that it still is a difficult time to raise money. Many of the angel investors are no longer in the market and we have conditions similar to the early 80's. Some of the most pioneering ideas and technologies are not capable of getting outside funding, so if you believe in the idea enough you have to be prepared to do what great entrepreneurs have always done — finance it yourself with sweat equity, home equity loans, etc. Venture people will appreciate an entrepreneur who has the guts to invest his own money in proving out a concept. There is a great debate about management. A lot of venture capitalists say - it's all about the management team. I disagree. The greatest technology success stories have been achieved by people who the professional venture capital community would not have recognized early on as great managers — people like Bill Gates and Larry Ellison.