Todd Belfer – Managing Partner, Canal Partners

Todd Belfer is managing partner of Canal Partners, where he is responsible for all aspects of the company, including identification of potential acquisition targets, due diligence, financial analysis, and final investment decision making.

Todd has a long history of entrepreneurship and has been involved with a wide range of businesses throughout his career. In 1990, he co-founded Employee Solutions, Inc., a professional employer organization which he helped take public in 1993. He also co-founded a leading sports nutrition company, M.D. Labs, in 1993 and, after realizing triple-digit growth, sold his interest to a private equity firm in 2002.

Todd was also a founder in the successful Japanese restaurant chain RA, which has grown to more than 30 locations throughout the U.S. and was sold to Benihana in 2002. That same year, he founded NETtime Solutions, a software-as-a-service (SaaS) company dedicated to delivering on-demand time and attendance service, which was sold to Paychex in 2014. Additionally, Todd serves on the board of directors for Omedix, Deal Current Network, Limos.com, ClickDimensions, and Sauce Pizza & Wine.

Todd has been a dedicated volunteer with Big Brothers and Big Sisters for more than 10 years. Nationally, he is recognized for his work with The American Israel Public Affairs Committee (AIPAC) and received the prestigious Regional Wings of Memory Society “Excellence in Leadership Award” presented by the United States Holocaust Museum in April 2006 for his ongoing support and dedication to the Holocaust Museum and its efforts. He is also a board member of Crossroads, a recovery center for men and women.

Todd holds a bachelor’s degree in finance and a real estate degree from the University of Arizona.

Tell me about your early career.
Studied finance and real estate with a minor in economics. I’ve always had an affinity for business and over the course of my career have launched, grown, and sold several companies. Out of college, I co-founded my first business called Employee Solutions, Inc., a professional employer organization, which we took public in 1993. Following that, I co-founded a leading sports nutrition company, M.D. Labs, in 1993 and after realizing triple-digit growth, I sold my interest to a private equity firm in 2002. I then shifted gears, moving into the restaurant space. My first endeavor wasn’t as successful as we had planned, but soon thereafter we saw an opportunity to create a new category within Japanese cuisine. That was forming of a very successful Japanese restaurant chain called RA, which we grew to more than 30 locations throughout the U.S. before selling to Benihana in 2002.

I’ve since gone on to found NETtime Solutions, a software as a service (SaaS) company dedicated to delivering on-demand time and attendance service, which was sold to Paychex in 2014. All of this has led up to the launch of Canal Partners, a venture capital firm that provides capital to B2B software and internet technology companies.

How did the concept for Canal Partners come about?
I started Canal Partners nine years ago because I saw a need in the Southwest to fund early-stage software companies that didn’t have access to capital, and more importantly, human capital necessary to growth.

How was the first year in business?
We hit the ground running and haven’t stopped yet. I was fortunate to be able to partner with a very seasoned entrepreneur and investor who was very connected in the community. Between the two of us and our networks, we had a great deal of demand out the gate. Plus, we launched when startups were beginning to get hungry for investment and in a market where it was lacking at the time.

What was your marketing strategy?
We’ve relied heavily on referrals and word of mouth. Given that we have a very focused portfolio thesis, not everyone is a fit for us. It takes someone who already knows, likes, and trusts us to bring quality leads. We’ve also implemented some PR strategies over the years so we stay top of mind in the communities in which we operate.

How fast did the company grow during the first few years?
We’ve grown steadily from day one and quickly expanded into a few additional markets in which we have strong networks. Over the past nine years, we have put approximately $20 million in capital to work.

How do you define success?
Success to me is about having fun, and celebrating small wins within the business – customer wins, technology wins, small accomplishments throughout the day, and having low turnover internally and externally – as well as building a company culture that is so infectious it keeps people around.

What is the key to success?
Having a team that actively participates in the growth. Championing collaboration over dictatorship – creating an environment in which the team is able to work to alongside the CEO, and having a CEO who leads through motivation and inspiration, rather than fear. If you’re a solo operation, you need support – coaches, a board, mentors. You need people to help you move the business along. Never try to figure it all out inside your own head.

What is the greatest lesson you’ve ever learned?
Develop thick skin. At the end of the day, it’s not about you. Also, trust your partners, co-workers, and customers, but don’t bury your head in the sand. It’s a binary decision to either be supportive and engaged or to move onto something more worthwhile. You have to know when it’s worth it to solve conflicts and problems instead of hanging on to something that simply isn’t working.

What are some quotes that you live by?
This one, by Warren Buffett, is more related to investing, but it’s a great quote to live by: “Be fearful when others are greedy, and greedy when others are fearful.” Another is, “There’s no I in team”, it’s always we. I think a lot of business leaders can get caught up in the “I,” but magic happens when chemistry and teams work well together instead of individually.

What are some of your favorite books?
One of my favorites is Blink: The Power of Thinking Without Thinking by Malcolm Gladwell.

Tell me about one of the toughest days you’ve had as an entrepreneur.
I developed a pretty thick skin early on and have learned over the years not to sweat the small stuff. But one of the more challenging times during my entrepreneurial career was making the decision to shut down our first restaurant endeavor and transition in the Japanese cuisine category. Though that concept went on to become very successful, it was slow going in the early days. We didn’t know if we were going to make it, but we dug in, diagnosed where the friction points resided, and determined to course correct.

When faced with adversity, what pushes you to keep moving forward?
Developing a healthy attitude towards attachment has been key to overcoming challenges. I’ve learned not to become too attached to any one particular outcome or direction. This has enabled me to remain open to other possible solutions and open to pivoting to a new direction. You also have to be passionate about what you’re doing. For me, this has helped me get through even the most challenging days.

What advice would you give to young entrepreneurs?
Experience as much as you can and know the business you are in. We meet a lot of entrepreneurs with startups in which the product or service they’ve developed doesn’t match what the market is asking for or they simply aren’t familiar with existing solutions, why they are there, and how customers are making their purchasing decisions. Read the books and the blogs, attend the conferences, and get to know your competition.

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