Frank Slejko’s interest in chemistry started in high school where his photography hobby quickly evolved into making his own developer formulations. At the University of Wisconsin-Milwaukee as a sophomore he jumped at an opportunity to work in Prof. F. T. Fang’s lab to do undergraduate research. That research involvement lasted through graduation and he continued as a NSF Fellow at the University of Illinois at Urbana-Champaign where he obtained a PhD. Degree in Inorganic Chemistry under Prof. Russell S. Drago. He worked in the chemical industry for Rohm and Haas and Sybron Chemicals for 12 years applying his chemical knowledge to research, commercial development, marketing and technical sales. He then started a publishing company aimed at educating industry users of high-purity water on the latest treatment technologies. After 30 years of applying chemistry to the water treatment industry he sold the business to a British publishing house. He is currently active as an investor in start-up firms having a chemical focus.
When you’re putting your faith in yourself and your ideas as an entrepreneur, sometimes you need someone to give you that start financially—an investor. When you finally get that investor, it can feel like a guardian angel was sent down from the skies, especially when they give you the first half a million to two million dollars for your business. For 18 startup companies in the STEM industry, that’s where experienced business owner, chemist and investor Frank L. Slejko of the Chemical Angel Network comes in.
Slejko graduated from University of Wisconsin-Milwaukee in 1969 with a bachelor’s in chemistry and got his Ph.D. in inorganic chemistry in 1972 from the University of Illinois at Urbana-Champaign. He was the senior research scientist at a chemical manufacturing company for ten years and a marketing manager at an ion exchange company for two years before he started his own publishing business in 1984. He sold it after a 30 year run in 2014. Now, he’s an investor with a portfolio of 18 investments, almost all with the Chemical Angel Network.
“I saw there was a need for information, a nation of information,” Slejko said. “I also saw, at that point, that the personal computer, which was just coming out in the early 80’s, also had the opportunity to compete in many businesses, but especially in the publishing industry by computerizing everything and being able to do things a lot more efficiently than traditional publishing companies. I saw that opportunity and I jumped at it.”
When Slejko started his publishing business, he was covering new developments in water treatment, at the cutting-edge of technological developments in that industry, and in delivering information about those developments via the newest technology in the publishing industry. Focusing on water treatment for 30 years though, Slejko said, kind of narrowed his perspective.
“I found out about the Chemical Angel Network maybe about a year or two before I sold my publishing business. I found out about them in Chemical and Engineering News, and that kind of peaked my interest and I wanted to learn and get involved in different aspects of chemistry and science besides water treatment,” Slejko said.
The Chemical Angel Network is a group of accredited angel investors who provide funding for entrepreneurs. Unlike venture capitalists or private equity firms, angel investors get involved in a startup early-on. Typically, an entrepreneur or group of entrepreneurs get their initial funds from friends and family or government grants and some grants with no expected returns. After that stage of funding, the angel investors get involved when a company needs to raise about half a million to two million dollars
“It’s really exciting,” Slejko says, “because it’s so varied in so many different areas of technology and it’s also very, very risky but the rewards are there.”
Slejko is aware of the statistics, and the risk of being an angel investor. He also knows the rewards, and what he wants to see in the companies he invests. He says that the typical portfolio for an angel investor may contain 20 companies. Ten of those will never make it—no return of capital or under capital for the investor. Another three or four companies out of ten will give an investor a modest return. An investor is hoping and looking for the two or three out of ten that will give them ten to 20 times return on their investment. In the long term, angel investors do well. An active angel investor, Slejko says, may get about a 25 or 26 percent return on their investment on an annual basis.
In five to ten years, any of these companies the angel investor has put their money into will most likely exit—either failing or being bought out by a larger company. The entrepreneurs and investors both need to have to have a feel of where the market is heading in those five to ten years, according to Slejko.
“Let’s say you invest in a company when their valuation might be five million dollars,” Slejko said. “You hope that, in five, seven or ten years they will be bought out by a larger company for 60 million, 100 million or 200 million dollars. That would be the ideal exit.”
When Slejko looks for a company to invest in, he looks for a good grasp of the technology and a realistic feel for the market. He says that these are the fundamentals.
“In other words, having that street smart feel about doing business. It’s all these intangibles that you can’t quantify,” Slejko says. “When you talk to them, you kind of get a feeling. If the planets line up, you have a chemistry going between the entrepreneur and the investor. If you have a good feeling about that, then I would go ahead and make the investment.”
If an entrepreneur is trying to look for someone to invest in them, Slejko says that they need to stick to those fundamentals, and stay away from the hype.
While Slejko is an investor now, he is first and foremost a chemist. While he published his magazine, he had staffs of people and an editor. He says he used his technical expertise for sorting out the articles that had meaning to the marketplace.
“I use my chemical, scientific skills first,” Slejko said, “and all my other skills second and third.”