Venture capital club

Venture capital club

Nir Sharon is already a successful entrepreneur at 35, but he discovered that his Naples night club is the perfect place to do deals.

Forget investor conferences in New York and Chicago or venture-capital presentations in Palm Beach or Naples.

It turns out one of the best places to raise capital is in a nightclub, especially the one you own.

Who would have thought pounding music and grinding bodies could lead to multi-million-dollar deals? Maybe Nir Sharon, the 35-year-old Israeli-born entrepreneur who recently bought Sway Lounge in Naples.

Sharon acknowledges Naples isn't a town known for its club scene. There are no big colleges and the housing costs are prohibitive for young people starting out.

"It's not a money maker," says Sharon. The club is only open two nights a week, on Friday and Saturday nights, when it's packed with 600 people. He says he nets $20,000 a month.

But Sharon says Sway has become a great place to make connections with potential investors to fund other startups. It turns out even older millionaires want to boogie down and their wealth attracts groupies and other hangers-on.

Sharon makes it his business to know who is in his club at all times and he invites them behind the velvet rope to the special VIP section of the club. To keep the riff-raff or worse out, Sway has 14 employees who oversee security. That includes one whose sole job is to make sure no one puts drugs in unsuspecting women's drinks.

Sharon claims to have turned down millions from potential investors of his latest venture called Traveltisment. He declines to discuss the new company, but a Web site his company created touts a new, patented technology to display advertising in buses and motor coaches.

Despite his age, Sharon already is an accomplished entrepreneur. With just $2,000 in savings, he and a friend started a toy retailer called Aliza Bernstein in 1998 that eventually operated 162 mall-based kiosks. They sold the company for $25 million in 2001.

Sharon says he's not looking for money alone. He wants investors who can provide insight into technology or advertising.

It's the kind of insight he worked hard to gain before he launched the toy retailer. He spent two months learning the business as an employee of a mall kiosk. He learned every aspect of the business, from how to find suppliers to the sneaky ways employees stole merchandise.

Fact is, mall-based kiosks have a big advantage over many stores. Sharon paid about $2,000 a month in rent for a kiosk, whereas stores in the mall paid $17,000 or more. During the holiday season, each kiosk would gross $250,000.

A millionaire by 2001, Sharon had grown tired of selling toys because it was such a seasonal business. So he contracted with an Israeli skin-care company to distribute their products to mall kiosks. Today, Premier USA owns 200 kiosks and supplies another 400 with annual sales of $12 million.

The key to selling skin-care products in the mall is that the products have to show immediate results. Anyone who has been accosted by a kiosk employee in a mall knows this. For example, one hot seller is a sea-salt buffer that can shine a fingernail in one minute as well as manicure.

Sharon sees the economic downturn as another opportunity. "The economy is so bad that shopping centers are calling me," he says. He's exploring leasing mall-store space for free or greatly reduced rental rates to sell inexpensive women's accessories, from handbags to earrings. Because women usually control household spending, he's betting they'll flock to his stores where they can buy five or six items for $10.

But the biggest venture he's working on now is Traveltisment, in which he's already invested $1.2 million. At Sway, Sharon says one prospect has already offered to invest the $6 million he needs to build the business, but he turned him down because he wouldn't be involved in the company. "I want brains on the board," Sharon says.

Boogie down.

-Jean Gruss