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The Good Seed

The winner and runners-up of the 1994 Supporter of Entrepreneurship award.

Alan Ruvelson has been backing entrepreneurs since before it was fashionable -- and before the term venture capitalist existed

Supporter of Entrepreneurship

An individual whose assistance or encouragement fosters the creation of entrepreneurial companies

The Winner

Alan Ruvelson

First Midwest Capital, Minneapolis

Venture-capital firm

Founded in 1959

3 employees

The Runners-up

Jay Lebowitz

Intercounty Appliance, Commack, N.Y.

Purchasing cooperative

Founded in 1972

35 employees

Jack Sterling

Emergent Group, Greenville, S.C.

Holding company

Founded in 1968 as NRUC Corp.

200 employees

It's Wednesday, September 21, and Alan "Bud" Ruvelson is on his way to meet the manager of Minnesota Technology Inc.'s equity fund for lunch. It could be pretty much any lunchtime meeting between money mavens in Any City, USA, except that Ruvelson will turn 80 on his next birthday.

The topic of discussion will be Ruvelson's plan to roll out local venture-capital firms for the state fund. The venture is vintage Ruvelson -- a deal that amply illustrates the man's concern for more than just the highest return. It is intended to finance start-ups primarily among the agriculture-based communities outside the bustling Twin Cities area by having state funds augment those raised by local corporations. It's an idea that Ruvelson has been championing for five years in the thick of intense bureaucracy.

The local venture-capital concept is just one of many pioneering ways this financier continues to support entrepreneurship. The son of a diamond broker, Ruvelson has spent more than three decades devising innovative techniques for financing entrepreneurial ventures. In 1959 he started one of the first small-business-investment companies (SBICs) in the United States -- First Midwest Capital Corp. He made the first SBIC investment in the country, to Pride Seed Corp. of Glen Haven, Wis., a player in hybrid-corn seed -- an industry that, at that time, was as potentially lucrative (and as desperate for cash) as biotechnology is today. Ruvelson also was one of the first financiers to invest in a software company. And although his own company has never made the big leagues -- First Midwest has invested $15 million in 63 companies since 1959 -- Ruvelson is credited with pioneering the concept of tax-free returns for venture-capital investors. That idea alone greatly encouraged the growth of the U.S. venture-capital industry, which in 1993 had almost $35 billion under management.

To fully understand the magnitude of Ruvelson's achievements, you have to step back and think of the world before venture capital. It was a world in which America's richest families -- the Rosenwalds who started Sears, the Bessemers who started U.S. Steel, the Vanderbilts and the Rockefellers -- doled out seed money in the form of loans to a few members of their own privileged class.

The value Ruvelson brought was that he helped make the business of financing start-ups more of a meritocracy. If an entrepreneur had a good idea and a good track record, and the numbers added up, he or she could be in the running for some of the new money available through the SBICs, such as Ruvelson's First Midwest.

Ruvelson himself was a small-business man -- he'd worked with his father in the diamond business. After campaigning for Eisenhower, Ruvelson heard about Ike's proposed Small Business Development Act. An SBIC sounded promising as an entrepreneurial opportunity, so he left his father's business to start one. The notion of money for entrepreneurs of every stripe appealed to the humanitarian in him, too; his father had preached the value of a strong community conscience and taught him that while loyalty to his Jewish community was crucial, a broader embrace of society was also important.

One of the first people Ruvelson invested in was Chris Possis, the son of a Greek immigrant who grew up in a working-class section of St. Paul. It wasn't just Possis's bid to better himself that impressed Ruvelson; it was that Possis was taking almost no salary from his new company because he was determined to make his fortune by driving up the value of his stock -- music to a venture capitalist's ears. Says Dan Haggerty, a partner at Norwest Venture Capital, in Minneapolis, "Ruvelson bet on people. He wasn't a technology investor."

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