hearing M&A advisor Basil Peters speak at an Angel Capital Association summit. His key advice? “Don’t neglect the Asian buyers,” Esser said.
And what do Asian investors and businesses want to buy? Ownership in high-tech manufacturers that will help their businesses, according to Esser.
“If we acknowledge that manufacturing has moved to Asia … then we should learn how to serve that market,” Esser said.
She believes that Wisconsin, a long-time manufacturing juggernaut, is well-positioned to attract Asian investment. Although many of the jobs in manufacturing have moved overseas, it remains a core industry in the Badger State. Esser thinks there are plenty of companies here that fit her model with this new fund: mid-sized industrial firms that generally fly under the radar but have patented technology, talented craftspeople, and products and services that solve a real problem. (“Mittelstand” is a German term for smaller businesses that the average consumer hasn’t heard about, but serve important niches and form the backbone of Germany’s economy.)
BioSystem Development is an example of the type of company Esser will target with the fund, and demonstrates the success she wants to replicate. Silicon Pastures invested in the Madison company, which developed a platform to automate certain processes for drug developers and was acquired in 2011 by Agilent Technologies (NYSE: [[ticker:A]]) of Santa Clara, CA.
Esser has had difficulty attracting investments from possible syndication partners on the coasts because investors there are only interested in information technology, healthcare, and pharmaceuticals, not manufacturing, she said.
“This is not sexy,” Esser said. “[But] I am not jumping on the [IT] bandwagon like everybody else in Silicon Valley.”
When the Angel Capital Association brings corporate development staff from Google and Facebook to the association’s conferences, the line of entrepreneurs and investors sniffing around for investment or an exit is “out the door,” Esser said.
“If I’m one in 5,000, those are bad odds,” Esser said. “I’m not interested in doing IT. They can go to the end of the line and [try to get acquired by the Googles of the world]. … I want to do business with people who actually want the services that Wisconsin people have.”
That means Asia, she said, and her first target is South Korea. The country is Wisconsin’s 13th largest export destination, with more than $403 million worth of Wisconsin goods exported there in 2012, according to Wisconsin Economic Development Corp. data. A free trade agreement signed between South Korea and the U.S. in 2012 is expected to boost Wisconsin exports there.
Esser has started to learn to speak Korean, and in the mean time she wants to hire someone who speaks English and Korean fluently. She has one applicant so far, she said.
“If the money is in Asia, then I should learn how to speak Korean,” Esser said.
