A world away from Wall Street and the tech money culture of Silicon Valley, the Einhorn family started a venture capital firm here [in Milwaukee], which raised a $40 million fund last year. David Einhorn is the largest investor in the fund, run by his brother, Daniel, and their father, Stephen. The firm, Capital Midwest Fund, also led by another partner, Alvin Vitangcol, aims to tap the Midwestern work ethic and has ambitions of changing the way early stage investments are run. “This isn’t Silicon Valley, where you’re almost encouraged to fail a couple times, and your next opportunity is in walking distance,” said Daniel Einhorn, who is 40… if a company financed by the new fund doesn’t provide the investors an exit within five years — through an acquisition — then Capital Midwest requires the company to buy back its shares. Daniel Einhorn doesn’t hesitate to put executives on the spot. Last month, surrounded by Brewers memorabilia in his office, he questioned the chief executive of one of his portfolio companies. It was a start-up based in Ann Arbor, Mich., called CytoPherx, and the firm was discussing clinical trials of a medical device that were not going smoothly. At one point, with the receiver on mute, Mr. Einhorn said the chief executive was making a “poor me” excuse. [Dealbook]

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Comments (40)

  1. Posted by Mighty Taco | August 28, 2012 at 1:48 PM

    Gives a new meaning to the heartland!

  2. Posted by guest | August 28, 2012 at 1:55 PM

    when the brewers underperform, is he able to get them to buy back his season tickets?

  3. Posted by guest | August 28, 2012 at 1:55 PM

    Daniel Einhorn: You got leads. Mitch & Murray paid good money. Get their names to sell them. You can't close the leads you're given, you can't close shit, *you are* shit, hit the bricks pal, and beat it, 'cause you are going *out*.
    CytoPherx CEO: The leads are weak.
    Daniel Einhorn: "The leads are weak." The fucking leads are weak? You're weak. I've been in this business fifteen years…
    Dave Einhorn: What's your name?
    Daniel Einhorn: Fuck you. That's my name.
    [Dave laughs]
    Daniel Einhorn: You know why, mister? 'Cause you drove a Hyundai to get here tonight, I drove an eighty thousand dollar BMW. *That's* my name.

  4. Posted by John Paulson | August 28, 2012 at 1:59 PM

    "So far, Capital Midwest has benefited from a scarcity of venture capital in the region. Its current fund had an internal rate of return of about 43 percent through late August, according to Daniel Einhorn."

    *Begins furiously scouring the Midwest for relatives.*

  5. Posted by Appaloosa Commenter | August 28, 2012 at 2:06 PM

    You wanna know what it takes to come up with mildly funny Dealbreaker comments instead of just copying and pasting from IMDB and changing the names? ? It takes BRASS BALLS to come up with mildly funny Dealbreaker comments.

  6. Posted by Alt_EST | August 28, 2012 at 2:08 PM

    Midwestern work ethic…

    Is that the one where everybody leaves at 5:15?

  7. Posted by More Applicable Line | August 28, 2012 at 2:08 PM

    Ricky Roma: I subscribe to the law of contrary public opinion… If everyone thinks one thing, then I say, bet the other way…

  8. Posted by Guest | August 28, 2012 at 2:08 PM

    But why a spoon, brother?

    Because it's dull you twit, it'll hurt more.

  9. Posted by HAM05 | August 28, 2012 at 2:15 PM

    can't wait to see alec and billy's fund docs!

  10. Posted by Guest | August 28, 2012 at 2:26 PM

    Getting invited out for a Midwest biz lunch = 2 fucking hrs of valuable productive time wasted at Romano's Macaroni Grill listening to them rave about how good the Italian food is.

  11. Posted by guest | August 28, 2012 at 2:28 PM

    I GOT YOU FOR 5…. YEARS!!!


  12. Posted by Chiarb | August 28, 2012 at 2:34 PM

    That would be central time.

    Guy who is always gone by 5.

  13. Posted by ILoveLamp | August 28, 2012 at 2:50 PM

    I call bullshit. There is no way there is an actual person named "Alvin Vitangcol" investing in a company called "CytoPherx." Those are like names from a Seth Rogen movie.

  14. Posted by 25thHourTrader | August 28, 2012 at 2:54 PM

    "At one point, with the receiver on mute, Mr. Einhorn said the chief executive was making a “poor me” excuse"

    If you think you can guarantee all clinical trials will be successful then have at it.

    -Chief executive who has the balls to say things with the receiver off mute

  15. Posted by GUest | August 28, 2012 at 2:55 PM

    Macacroni Grill has delicious stuffed mushrooms.

    Just sayin..

  16. Posted by Guest | August 28, 2012 at 2:59 PM

    Daniel : David :: Fredo : Michael

  17. Posted by investorcluzo | August 28, 2012 at 3:03 PM

    I wish my brother was a wealthy hedge fund manger so my dad could raise a fund and give me a job that allows me to yell at executives of fledgling start-up companies even though I have no qualifications of my own…
    -SMU Grad

  18. Posted by PermaGuestII | August 28, 2012 at 3:10 PM

    They sound totally legit to me.

    -P. Gibbons
    Initech Corp.

  19. Posted by guesticles | August 28, 2012 at 3:12 PM

    Huh. A couple things:

    1. What makes you think he doesn't have any qualifications of his own? Or was that just a knee-jerk jealous reaction?
    2. It goes both ways– Einhorn's father put up the money to help him start Greenlight and since that worked out pretty well for him, I guess David decided this venture might be worth his investment, too.
    3. From the article:

    "Daniel Einhorn has focused on companies in the biomedical sector. After his daughter, Emma, received a diagnosis of leukemia at age 3, Mr. Einhorn raised more than $50,000 for cancer research and was honored by the Leukemia & Lymphoma Society in June. Emma, now 7, has been in remission for 19 months."

    You feel like an asshole now?

  20. Posted by Guest | August 28, 2012 at 3:13 PM

    I hate each Seth Rogen movie more than the last.

  21. Posted by Lowly Assistant | August 28, 2012 at 3:17 PM

    Yeah, me too, cunt face. Pour me…another.

    -CEO of Fledgling Medical Device Start-Up, Ann Arbor, MI

  22. Posted by guest | August 28, 2012 at 3:21 PM

    Thanks for sharing that. Maybe you could tell us all how you feel about Jason Segel and Jonah Hill movies.

    -Guy who doesn't much care what you think about current male movie stars

  23. Posted by oki | August 28, 2012 at 3:22 PM

    why do the non-green light einhorns need any money to start a vc? didnt they put up most of the first 500k greenlight started with? so if that went to a billion…shouldnt they have a shit ton of money via that?

  24. Posted by The Gumper | August 28, 2012 at 3:27 PM

    I had a giant heaping pile of SMU thrown at me once.

  25. Posted by Deez Nutz | August 28, 2012 at 3:31 PM

    Practitioner > Researcher > Giver of Money > Raiser of Money
    -UBS Quant

  26. Posted by Guest | August 28, 2012 at 3:51 PM

    A couple of things:

    1. A couple is usually 2 things.
    2. Unless you're related to the Einhorn's, you scare me a bit
    3. God bless Emma

  27. Posted by TobiasFunkeCFA | August 28, 2012 at 3:54 PM


  28. Posted by _guest | August 28, 2012 at 4:01 PM

    "…aims to tap the Midwestern work ethic…"

    Can anyone define Midwestern work ethic? I can't get any good answers from Google. Thanks.

    UBS Midwestern US Analyst

  29. Posted by Dateraider | August 28, 2012 at 4:23 PM

    My company blocks me from surfing SMU at work.

  30. Posted by Guest | August 28, 2012 at 4:31 PM

    If in the given scenario, one could opt to be successful at each of the above, I'd choose the exact inverse.

  31. Posted by Guest | August 28, 2012 at 4:35 PM

    Neighborly, cooperative, family-oriented, morally-stable, unselfish, less profitable.

  32. Posted by Guest | August 28, 2012 at 4:35 PM

    ^ east coast guy just guessing, by the way.

  33. Posted by guest | August 28, 2012 at 4:49 PM

    I think corn is somehow involved.

  34. Posted by George Allen | August 28, 2012 at 5:07 PM

    I think it's spelled Macacaroni.

  35. Posted by Joseph Caramadre | August 28, 2012 at 5:13 PM

    Sure, I can explain it to you, but I'm going to need you to sign a few forms first. By the way, you don't have AIDS, do you?

  36. Posted by Buboe | August 28, 2012 at 8:55 PM

    Deez Nutz, are you sure you're on the right forum?

  37. Posted by gekko jr. | August 29, 2012 at 7:23 AM

    this is the kind of shit we need more of – more activists, more gordon gekkos, more carl icahns

  38. Posted by FB shareholder | August 29, 2012 at 10:55 AM

    I'll always be Bud Fox.

  39. Posted by 2 cubes over | August 29, 2012 at 11:49 AM

    obviously you haven't been to MN.

  40. Posted by jan wall | August 30, 2012 at 12:02 AM

    It’s a good post.