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St. Anthony: Capitalist trades 'paper profits' for nonprofit

  • Article by: NEAL ST. ANTHONY
  • Star Tribune
  • July 8, 2012 - 4:18 PM

Back in the late 1990s, Jeff Tollefson was a "hard-working, money-hungry venture capitalist," by his own admission, knocking down a few hundred thousand bucks a year as one of eight partners at red-hot Crescendo Ventures.

At the top of the telecom boom, his share of Crescendo's soaring portfolio of telecommunications firms was worth nearly $60 million.

Between 1995 and 2000, red-hot Crescendo, with offices in the Twin Cities, Silicon Valley and London, raised more than $1 billion from affluent investors and institutions and boasted a $1.2 billion "profit" in his portfolio when the telecom boom peaked in the fall of 2000.

Tollefson was about to become a multimillionaire after restrictions on his ability to sell stock in several Crescendo companies expired. But the boom busted. The gains became goners for the partners and many investors.

"I had tried not to confuse brains with a bull market and I always thought of myself as fortunate ... to invest in a hot market," Tollefson recalled last week. "It sure seemed like easy pickings. You invest in a little communications company and 18 months later it goes public. And it looked like life was going to be set financially. To have it all gone in several months was a shock. It was just paper profits."

Tollefson spent the next six years performing "triage," shutting down hopeless portfolio companies and continuing to invest in other firms that limped along. He still made a six-figure salary, thanks to Crescendo's 2 percent management fee. Meanwhile, investors in the big 1998 and 2000 funds lost their shirts.

"I was making money but never feeling like I was earning it," Tollefson said. "This was a terrible feeling."

Burned out, "feeling a complete failure" at a 20-year career that made his wallet bigger but contributed to unhappiness and divorce, the then-45-year-old Tollefson quit Crescendo to reconnect with his two sons and figure out his future. He did a lot of soul searching.

It paid off in 2008 when he learned from an acquaintance that Genesys Works, a Houston-based nonprofit run by a former computer executive, was looking to start a Twin Cities chapter. Tollefson was hired as executive director.

Minnesota Social Venture Partners, a group of several dozen capitalists of which Tollefson is a member that assists nonprofits focused on disadvantaged youth in the Twin Cities, put up the inaugural $20,000 in seed capital.

Lo and behold, Tollefson now runs a $2 million nonprofit enterprise, largely funded by 40 contracting businesses and government agencies. It started with 11 high school students in 2008. This summer, Genesys will train and place nearly 200 low-income public school kids during the school year in 20-hour-a-week IT jobs that pay $9 to $10 an hour.

The companies pay Genesys Works $18 an hour, which covers most of the staff and overhead expenses. Tollefson raises the rest through individual and corporate donors.

Tollefson, who's learned to live happily on a $100,000 salary, supervises a staff of about dozen trainers, mentors and support staff. They essentially run an IT contractor firm staffed by low-income, mostly minority kids who first have to pass an eight-week summer course that focuses on everything from teaching IT essentials to how to dress and conduct themselves in the workplace. There are three applicants for every one who is accepted, largely because of funding limitations.

"I go back to volunteer at Genesys as much as I can," said Dina Hussein, a 2011 Minneapolis Roosevelt High School graduate who was an IT intern at a U.S. Bank office in Richfield during her senior year, and is now a University of Minnesota student. "I got to see what the real world looks like."

Tollefson was pleased to accept $160,000 several days ago in cash and equipment from Dell Computer and a commitment for another $100,000 next year. Dell last year acquired Compellent, the data-storage company in which Crescendo was an investor.

"I encouraged Jeff to apply for this job," said Phil Soran, a former middle school math teacher, the retired founder and CEO of Compellent, and a longtime acquaintance of Tollefson and supporter of Genesys. "These kids are earning and learning. This program is inspirational."

Tollefson said he's getting more than he's giving.

"My life is so much richer now," he said. "I feel joy each day leading Genesys Works and experiencing life with these amazing young men and women."

For more information: www.genesysworks.org/twincities.

Neal St. Anthony • 612-673-7144 • nstanthony@startribune.com

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