The dining room table is Vinny Smith’s preferred office these days.
It’s shortly before noon, and he’s scrolling through news stories, videos and other research that highlight “impact investing,” a growing interest that’s taking root at his Newport Beach-based venture capital firm and private foundation, Teach a Man to Fish.
“There’s this notion of not just investing for dollar gain but for a social impact,” says the software billionaire, dressed in a blue polo shirt, light-gray plaid shorts and sandals. “If you’re looking to make a profit, do you want to do it by any means feasible and chop down forests and dump oil all over Nigeria, or do you want to be conscientious?”
Two of Smith’s closest confidants are by his side: Matthew Gless, a Toba Capital partner and family office manager, and his wife, Tori.
Smith has made some tough decisions in life and business in the spacious dining room at his home in this family neighborhood in Newport Beach.
“Most of the meetings are right here,” Tori says.
It’s an unorthodox setup for OC’s largest venture capital firm—which now has a portfolio of more than 40 software investments and $400 million invested.
But don’t let the casual attire and demeanor fool you.
“I was always a pretty relaxed corporate guy, but I’m pretty relentless when it comes to things like excellence in business,” Smith says. “I appreciate people when they do their best and deliver. That’s why we still stay vibrant and energetic about this stuff.”
It’s that type of mindset that led two private-equity firms to reach out to Smith recently and gauge his interest in buying the software operation he grew to $1 billion in annual sales before selling it in 2012 for $2.8 billion to Dell Inc. The sale of Aliso Viejo-based Quest Software Inc. netted Smith some $800 million, money that moved him into the ranks of billionaires and ultimately paved the way for Toba’s launch later that year, when he brought several former Quest colleagues to the firm. He now ranks No. 14 on the Business Journal’s list of OC’s Wealthiest with an estimated worth of $1.5 billion (see separate section with profiles, related stories page 1).
He passed on the Dell Software deal but did agree to a meeting in San Francisco this week with the buyers, Francisco Partners and Elliott Management in New York, who want to tap into his insights on the company.
Dell was OC’s third largest software maker through April, with an estimated 600 workers in Aliso Viejo.
Future Deals
Smith and Toba have several other deals in the pipeline.
Toba, which has a corporate office overlooking the San Francisco Bay, recently invested $20 million in Mopro, securing the entire round of late-stage funding for the Irvine-based mobile device website developer, which fuses artificial intelligence, data mining and social content.
The company, established about three years ago, has more than 300 customers and projects that it will hit profitability and $10 million in sales this year.
Founder Cary Levine, who grew up in Turtle Rock, didn’t even know of Toba when a friend suggested he contact Smith. Now they speak three times a week, discussing strategy and scaling the operation.
“He understands every aspect of this business,” Levine said of Smith. “It’s pretty hard to turn partners like that down.”
That deal closely followed taking a minority stake—about 8%—in TerraForm Global Inc., a Maryland-based owner and operator of clean and renewable energy sources acquired from SunEdison Inc., which filed for Chapter 11 bankruptcy protection in April—and other entities.
Toba was part of a $100 million Series C round announced last month for Massachusetts-based Indigo. The funding, believed to be the largest private-equity deal in the developing agriculture technology segment, will help the startup launch its first two products: cotton and wheat brands that have shown greater yields versus traditional crops under stress conditions, including water scarcity. Indigo has tested microbes on more than a dozen crops on three continents in every growing season, showing promising results.
Investing in Health
Smith is pouring more resources and investments into improving the food supply and overall health. The issues hit close to home for the Smith family, who have five children between the ages of 3 and 20. Smith also battled prostate cancer two years ago, and Tori recently lost her sister, Marina, to breast cancer.
Smith owns about 65% of Irvine-based True Drinks Holdings Inc., a flavored water with no sugar that’s geared toward kids and expected to hit $12 million in sales this year.
“We’d like to see it click through $50 million,” Smith says during the 80-minute conversation, which touches on topics ranging from gun violence and artificial intelligence to healthier eating, cancer, the politics behind solar policies, and big data, among others.
He’s also invested in IPS All Natural, a Los Angeles manufacturer of high-protein potato chips with half the fat and less carbohydrates than traditional fried potato chips.
His private foundation, which has a $70 million endowment that’s expected to eclipse $100 million by year-end, has done some medical investing and plans to do more in the sector.
The foundation has funded Desert Medical Imaging in the Coachella Valley in its first clinical trial on MRI laser-guided surgery for prostate cancer, volunteering to pay financial aid for those who seek the treatment. It also has backed Boston-based Intarcia Therapeutics Inc., the developer of an osmotic mini-pump that’s inserted under the skin and gradually releases drugs into the body to combat Type 2 diabetes.
“When we did the economics on how big the opportunity is for this company, it’s bigger than Google,” Smith says.
The plan is to grow the foundation through cash-generating investments and additional funding so “the money keeps compounding and has more force,” according to Smith.
The foundation is generating annual returns in the high teens and is on pace to double about every three years.
It’s an entrepreneurial approach that Smith sees as holding potential to do well and good.
“That’s where we talk about impact,” he says. “We want to move the needle on some of the issues.”
