The venture capital business, said Penn State alum and State College native Peter Rigby, is a “terrible learning environment.” That’s why he was on the University Park campus recently, aiming to give students an advantage in the high-risk field.
Rigby, a 1979 graduate who dual majored in petroleum and natural gas engineering and arts and sciences, said the business offers little immediate feedback.
“You only get to make a few investment decisions a year and it takes years to figure out whether they work or not,” said Rigby. “And then, what’s the right lesson? Were you successful, were you lucky or were you good? Most of the time you were probably just lucky.”
Rigby was speaking to students in an Energy Corporate Finance course taught by Seth Blumsack, assistant professor in the College of Earth and Mineral Sciences’ John and Willie Leone Family Department of Energy and Mineral Engineering. Blumsack said Rigby is the perfect candidate to speak to the future work environment his students will encounter.
“Peter has seen all sides of the energy finance world, from small companies getting off the ground to major billion dollar deals from some of the world’s largest energy firms,” said Blumsack. “He brought the kind of real-world experience that helps our Energy Business and Finance students understand where their classroom skills can take them.”
In Blumsack’s classroom, Rigby listened as students gave “Shark-Tank” style elevator pitches to entrepreneurial business ventures they crafted during previous class sessions. As groups of students presented ideas such as solar-powered water filtration systems and solar-powered car roof panels, Rigby peppered them with logistical, marketing and financing questions. He urged students to spot and remedy trouble areas early on in their business ventures.
Rigby knows a thing or two about innovation and making money. Early in his career, the engineer discovered he had a knack for complex investments related to energy and for applying computer technology to the oil industry.
At Standard & Poor’s, where he worked for two decades, he helped increase the company’s rated investment portfolio from $5 billion to $200 billion.
Now retired from Wall Street, Rigby dedicates his time to several nonprofits and charities, including Astia Angels, a private equity and venture capital group focused on angel investing in women-owned startups. There, since its 2013 founding, the group has invested more than $12 million in more than 40 companies.
Expanding and diversifying your portfolio is another bit of advice he gives students. That’s why Astia Angels takes on so many deals.
Astia focuses on investments related to clean technology, health care and sustainability. They back entrepreneurs making strides in cancer diagnostics, stem cell research, sustainable clothing manufacturing and artificial intelligence applications.
Rigby told students entrepreneurship is a challenging career path but those who understand the paths to success can minimize their risks.
Entrepreneurs create new and unique things, so there’s no way to gauge the market for something new, he said.
“If you have a product that’s never been used, what’s the market look like? It takes a while for these markets to develop,” said Rigby, adding that market research is expensive and oftentimes out of reach for struggling startups.
Rigby said even great startups can face insurmountable roadblocks if a minor setback comes at a hard time, financially. He said entrepreneurs need to be realistic when assessing their strengths.
“Entrepreneurs tend to have gaps. It could be a financial gap. It could be a legal gap. It could be a manufacturing or operations gap,” he said.
Rigby said setbacks can foster success. At Standard & Poor’s, when the global financial market was rocked by the Enron scandal, he built early stage big data and predictive analytics platforms to help identify when history was at risk of repeating itself.
“I kind of had a big mandate to figure out what we could do from a market intelligence basis to look for emerging trends that perhaps the analysts might not see as quickly as possible,” said Rigby. “Once we had all these tools, which were good at capturing massive quantities of market data — both text and quantitative data — and analyzing using some interesting mathematical techniques, they helped our analysts begin looking at the market with a new perspective. We actually got our analysts to engage better with investors.”
His first platform, Sherlock, was a system to “read and analyze” U.S. Securities and Exchange financial filings, such as 10-Ks, 8-K and proxies, in real time. It led to a U.S. patent. Sherlock uses natural language processing, artificial intelligence and text categorization to identify emerging areas of financial risk.
Rigby said his successes all build from his engineering background and the systematic analysis and problem-solving that comes with being an engineer.
“It was a great experience and laid the foundation for a lot of other things I’ve done,” he said. The engineering discipline has turned out to be a really good discipline for business, especially for energy finance.”