Wired In: Thomas Parkinson

Wired In: Thomas Parkinson

Each week, staff writer Paul Wood talks with a high-tech difference-maker. This week, meet THOMAS PARKINSON, the senior director at IllinoisVENTURES, which helps entrepreneurs and technical founders who are affiliated with the University of Illinois launch new businesses.

You've also been a partner at other venture companies. What interests you about this kind of work?

When I was a student at the Kellogg School of Management in the 1980s, I had a summer internship with the city of New Haven, which was launching a research park and a technology incubator with Yale. I got to help review applications for seed capital investments from startup companies. I thought it was fascinating. When the internship ended, I came back to Evanston, where a research park project with Northwestern was just getting started. My job was to run a loan fund for small businesses. After a while, I called my board together and convinced them that we should focus exclusively on equity investments in technology startups. They agreed, and that's how my venture capital career started.

Are you a University of Illinois grad?

I graduated from Northwestern twice, but I've put two of my kids through the University of Illinois.

What is IllinoisVENTURES' mission as the venture capital arm of the university?

IllinoisVENTURES has been around since 2002, but I've only been here for two years. Our mission is to support faculty and students who are commercializing new technologies by providing very early-stage investment capital. We're usually one of the first backers to invest in a startup. We've invested in more than 85 companies over the years.

How do you measure economic impact?

We count how many jobs we're creating, but we really don't want our companies to hire too many people too quickly. They might run out of cash. Our main focus is on the amount of money that other investors are investing alongside us or after we've invested in a company. As of June 30, 2017, our companies have raised about $1.3 billion from other investors, which is about 25 times the amount that we invested. This speaks to the power of early-stage financing. Most of these companies are located in Illinois — almost all of them were at the time that we made our investments.

Did you ever make any mistakes that you learned from in your early years?

Most startups are not successful, which means that investors like me are wrong more often than they're right. The biggest lesson that entrepreneurs and early-stage investors can learn is that customers don't buy technology, they buy solutions to their problems. The No. 1 reason why startups fail is that it turns out that there is no real market need for their product. Make sure that you really have a product-market fit before you start raising and spending a lot of money to start a business.

TECH TIDBITS ... from THOMAS PARKINSON

Favorite app: I can't think of one I'd call a favorite. I play Words with Friends with my cousin in Omaha.

Book or Kindle? I'd much rather read a book. I do have a Kindle, but it's one more thing that I have to recharge. The thing with a book is, you give them away, and you never get them back and you have to buy another one.

What are you reading right now? "Talking To Humans" by Giff Constable, about how to find out what customers really want. The whole book is just 83 pages. I'm trying to catch up on "The Innovator's Dilemma" and Clayton Christensen's other books. I should have read those a long time ago.

Do you have any wearable electronics? I used to have a (fitness tracker) Jawbone. I'm not surprised that they're not around anymore.

Do you have an entrepreneur hero or venture capital guru? I'd probably pick Brad Feld, a venture capitalist at Foundry Group. He wrote the best layman's guide to fundraising I've ever read.