David Einhorn’s Brother Will Rip Out The Hearts Of Underperforming Companies And Shove Them Down Their Throats, But In A Polite, Midwestern Way

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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40 Responses to “David Einhorn’s Brother Will Rip Out The Hearts Of Underperforming Companies And Shove Them Down Their Throats, But In A Polite, Midwestern Way”

  1. Mighty Taco says:

    Gives a new meaning to the heartland!

  2. guest says:

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

  3. guest says:

    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.

    • Appaloosa Commenter says:

      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.

    • More Applicable Line says:

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

  4. John Paulson says:

    "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. Alt_EST says:

    Midwestern work ethic…

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

  6. Guest says:

    But why a spoon, brother?

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

  7. HAM05 says:

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

  8. guest says:

    I GOT YOU FOR 5…. YEARS!!!


  9. ILoveLamp says:

    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.

    • PermaGuestII says:

      They sound totally legit to me.

      -P. Gibbons
      Initech Corp.

    • Guest says:

      I hate each Seth Rogen movie more than the last.

      • guest says:

        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

  10. 25thHourTrader says:

    "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

  11. Guest says:

    Daniel : David :: Fredo : Michael

  12. investorcluzo says:

    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

    • guesticles says:

      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?

  13. Lowly Assistant says:

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

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

  14. oki says:

    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?

  15. The Gumper says:

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

  16. _guest says:

    "…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

  17. jan wall says:

    It’s a good post.