Long before an entrepreneur can go public, he needs the private help of venture capitalists, underwriters and assorted ground-floor investors. They are the dreammakers whose cash and advice can mean the difference between survival and collapse for a fledgling company. They often risk big money, but with luck and savvy they can earn huge rewards. Four successful financiers who have helped launch small companies:
Thomas Unterberg: Staying on the Run. On a typical weekday Unterberg rises at 6 a.m. and dons a sweatsuit. From his Park Avenue apartment, he runs 28 blocks to a health club for a 45-minute workout and then runs back.
Once he reaches his Wall Street office by cab at 8:30 a.m., Unterberg, 53, keeps on hustling. As chairman of the investment-banking firm of L.F. Rothschild, Unterberg, Towbin, he has a talent for finding young companies ready to go public and selling their stock. He spends nearly half his time on the road, particularly in California, scouting for prospects. In 1983 Rothschild underwrote new issues worth $1.4 billion. The biggest: a $123 million stock offering in Diasonics, a Milpitas, Calif., firm that makes advanced medical diagnostic devices. On that deal, Rothschild earned a fee of $1.7 million.
Unterberg likes to sign up a company well before it goes public in the hope that he can continue to underwrite subsequent stock offerings as it gets bigger. When Cray Research, a Minneapolis-based maker of scientific computers, went public in 1976, Rothschild earned a fee of $150,000 on the $9.9 million issue. Cray has since sold an additional $63 million worth of stock through Rothschild-led syndicates and generated $500,000 in additional fees for Unterberg's firm.
Educated at Deerfield Academy, a Massachusetts prep school, and Princeton University, Unterberg was bred to be an investment banker. In 1931 his father co-founded C.E. Unterberg, Towbin, which merged with L.F. Rothschild in 1977. In an office with a view of the Brooklyn Bridge, Unterberg sits at the same solid-oak desk his father used. Though he is worth more than $10 million, Unterberg and his wife choose to live in the same two-bedroom apartment they bought for $70,000 when they were married 22 years ago. Unterberg marvels at the thought that he helps make multimillionaires of entrepreneurs little more than half his age. "It's like the atmosphere generated by Hollywood in the 1930s," he says. "The founders of these new companies are the stars of the 1980s."