Investor Alan Patricof Is Just Getting Started

As he writes in his new memoir, “No Red Lights,” published this week, Mr. Patricof’s interest in meaningful longevity moved him to start Primetime, a $50 million venture fund for the over-60 market. “Listen, this is the fastest growing part of the population, so we’ve got to figure out how to keep these people active, motivated, interested and entertained,” he says.

Mr. Patricof says he became interested in the shifting needs of older people while caring for Susan, his wife of 50 years, who died in 2021 after a long bout with Alzheimer’s. He also noticed how many of his friends reached retirement age with significant stores of energy. He worries that too many people are being nudged out of the workforce when they still have a lot to give.

“I always say if you finished your career, go back into the same business,” he says. “You’ve got the best Rolodex, you know where all the bodies are.”

The son of Jewish immigrants from Eastern Europe, Mr. Patricof grew up playing stickball with broom handles on the Upper West Side of Manhattan and nursed early dreams of a future in finance. His father, a former fabric merchant who later sold stocks on Wall Street, taught him how to read the stock pages but was “adamant” that his son “be on the buying side” and not become another salesman. Mr. Patricof wallpapered his teenage bedroom with the front pages of corporate annual reports, but his Depression-era childhood left a mark: He still flies coach (unless it’s international) and rides the bus and subway. “I’m not suffering,” he says with a laugh.

After studying finance at Ohio State, Mr. Patricof spent several months knocking on Wall Street doors in search of work. He says he got lucky when a “typical Yalie” at a prestigious investment firm called Naess & Thomas decided to bypass the latest crop of Ivy League graduates and hire him as a securities analyst trainee: “It felt like the beginning of something big, and it was.”

Mr. Particof swiftly learned how to clock industry trends and predict a company’s value. His nights studying business at Columbia, where he earned an M.B.A. in 1957 and met his first wife (they divorced after seven years), taught him how to use earnings and dividends to assess a company’s future and opened his eyes to “the burden debt can put on a young company.” But Mr. Patricof soon grew bored betting on established businesses. “Stocks would go up and down, and I felt so remote,” he says. “Building a company from the earliest stages is just so much more satisfying and exciting than owning stock in GM,

IBM

or

International Paper.

”

In 1960 Mr. Patricof began making his own deals at Central National Corporation (CNC), the investing arm of the Gottesman family, which had made a fortune in the paper business. Although the company’s $1 billion portfolio favored traditional industries, Mr. Patricof seized the chance to invest in young, prepublic firms. He backed an early medical device company called Datascope that became a market leader in cardiology products. His backing helped start New York magazine in 1968, and he was the company’s chairman when

Rupert Murdoch

bought the weekly in a hostile takeover in 1976. (Mr. Murdoch is executive chairman of

News Corp,

which owns Dow Jones & Co., publisher of The Wall Street Journal.) “The sale never had to happen,” Mr. Patricof notes wistfully. “It’s the one that got away.”

Hot off his private investment successes, Mr. Patricof decided to go into business for himself. He opened the doors of Alan Patricof Associates in 1970, when he was 35 and the venture capital business was still novel. Early bets on

Apple,

AOL and Cellular Communications Inc. grew the company, and new laws in the late 1970s that lowered the capital-gains tax rate and allowed pension funds to make venture investments boosted the amount of money in the venture market.

Although he has been a beneficiary of tax provisions that reward investors, Mr. Patricof has long argued that they are unfair and costly to general taxpayers. “I’ve never known a venture investor who’s ever said I’m not going to start this company because I have to pay a higher tax,” he says.

In the 1980s Mr. Patricof’s firm, rebranded Apax Partners, spread to the west coast and Europe to capitalize on larger deals. But the burst of the dot-com bubble around 2000 nudged the company toward lower-risk acquisitions and takeovers, which held less appeal. “I like working with young companies who are breaking out and starting something,” he explains of his decision to pull back from firm, which he finally left in 2005.

After spending some years fundraising for Democratic politicians and supporting charities that fight poverty in New York and around the world, Mr. Patricof decided to get back into the venture business with Greycroft in 2006, betting on digital firms like the Huffington Post and Venmo. Mr. Patricof is now chairman emeritus of the fund, which manages over $2 billion.

In a male-dominated industry, Mr. Patricof partnered with women in each of his funds: “I’ve just gone after the best people, and if they happen to be women, great,” he says.

Patricia Cloherty,

now known as the first female venture capitalist, had little investing experience when Mr. Patricof made her a partner in 1971, after she spent years in the Peace Corps. “I thought she was smart,” he says.

As he notes in “No Red Lights,” Mr. Patricof learned a few lessons the hard way. He says he failed to invest in a fledgling coffeehouse business in Seattle in the 1980s because he didn’t see the appeal of hanging out over coffee. “I imagine

Howard Schultz

laughing at me as

Starbucks

opens store number fifteen thousand,” he writes.

Yet Mr. Patricof believes his loyalty to business fundamentals has allowed him to capably surf several booms and busts. He says he is always looking to back companies that solve a problem, serve a large market and are managed by a nimble founder—“Bet on the jockey, not the horse,” he writes. He worries that too many investors today fail to grasp that most business valuations are rooted in wishful thinking, warning that companies like Zoom and Peloton “will require fifty years of earnings to justify current prices.”

In life and in investing, Mr. Patricof believes in playing the long game. “I’m going to live until I’m 114,” he says. “I’ve got 27 more years to go.”