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Mel Baiada talks about his new company, his new

venture fund and surviving the tech-stock meltdown

Mel Baiada is one of New Jersey”s most successful entrepreneurs. He started Bluestone, a Mt. Laurel-based software company, in 1989. The company later split into two parts: software and consulting. Bluestone Software went public last September. The stock came out at $15 and soon soared to $155 before becoming a victim of the April market meltdown. It”s been selling lately for about $18. Last month, Hewlett-Packard bought Bluestone Software for $467.6 million. Although Baiada, 42, is financially comfortable, he”s not stopping to smell the roses. He recently donated $1.5 million to establish the Laurence Baiada Center for Entrepreneurship in Technology at Drexel University in Philadelphia in honor of his father. Bluestone Consulting is now called Sengen, and Baiada is also launching a venture capital fund, BaseCamp Ventures.

BUSINESS NEWS: You”re busy these days.

Baiada: After splitting the company between Bluestone Software and Bluestone Consulting, I had someone run Bluestone Consulting. But in 1999, when I stepped out of the day-to-day operations of Bluestone Software, I focused on growing Bluestone Consulting. There had been a fair amount of turnover, and revenues had declined. So I spent 1999 stabilizing things and getting back on the revenue path. After the secondary offering of Bluestone Software in February, I was able to put some money into marketing, building infrastructure and so on. We also changed the name of the company from Bluestone Consulting to Sengen. Sengen is the Japanese goddess of transformation and eternal youth, so I thought it was perfect for a company that helps companies transform themselves. Innovation is one of our core values. A company is nothing more than an idea factory that is constantly churning out new ideas. Sengen is an e-service firm focused on helping companies build virtual trade communities. We provide everything from strategies and front-end development to technical implementation and hosting of applications. We can help a company with the architecture of its networks and systems.

BUSINESS NEWS: Can you tell us about your new venture capital fund?

Baiada: BaseCamp Ventures provides seed and early-stage capital to companies in New Jersey and eastern Pennsylvania. BaseCamp has made six investments so far from $100,000 to $500,000. The preference is to do ones that have some strategic benefit to Sengen. That way we get a better understanding of what the client is doing.

BUSINESS NEWS: How big is the fund?

Baiada: Right now it”s $5 million, and as soon as the Hewlett-Packard deal closes the intention is to raise it to $10 million. Tom Drury [the former CEO of Sensar, a biometric firm] is taking an active role in leading the BaseCamp initiative.

BUSINESS NEWS: How big is the BaseCamp staff, and how much of your time are you spending on it?

Baiada: Right now BaseCamp is Tom, myself and a couple of support staff. I spend about 40 to 50% of my time getting my arms around this investing thing. I”ve only been doing it since March. One of the interesting things we”ve been looking into is CXOs.

BUSINESS NEWS: What is a CXO?

Baiada: There are chief executive officers and chief technical officers. With a CXO, the X stands for a variable. These are business officers who have experience and are in transition between companies. We see them hanging out at BaseCamp, taking a look at business plans and perhaps becoming involved in some capacity in these portfolio companies.

BUSINESS NEWS: What are your reasons for doing BaseCamp Ventures?

Baiada: By being involved with the New Jersey Technology Council and other start-ups, you hear time and time again that there is plenty of large capital available, but there”s not enough early-stage and seed capital flowing into New Jersey. I think that people who have been successful in this process should put some money back into the system. I”m not doing this totally for altruistic reasons, but we need to prime the system. I”ve also invested in the New Jersey Technology Council Fund for similar reasons.

BUSINESS NEWS: What type of companies are you investing in?

Baiada: We”ll invest in information technology, Internet and ”Net services. We invested in InsureHitech.com., which just won the early-stage company award from the New Jersey Technology Council.

BUSINESS NEWS: Are you going to continue wearing two hats-Sengen and BaseCamp Ventures?

Baiada: I”ll probably scale back my time on BaseCamp and let Tom Drury run with the ball more. But I”ll still play a role. As we build out the management team of Sengen and grow, I”ll be busy there.

BUSINESS NEWS: Do you have an exit strategy developed for Sengen?

Baiada: All the employees have stock options, which implies there will be an IPO or a merger or acquisition down the road. But nothing is planned right now. For now we”ll keep growing and doing a good job. We”re well-capitalized and making money. We don”t have to do anything rash.

BUSINESS NEWS: At any point did you think of taking your profits from Bluestone and spend the rest of your life playing golf? Why are you starting another company and a new fund?

Baiada: I could do that anytime. I”m only 42, and I have no desire to be the CEO of a public company. When Sengen gets larger and we decide to do something like an IPO, I most likely would not be the CEO.

BUSINESS NEWS: You took a heavy hit when the market melted in April. At the time, our publication estimated that you had a paper loss of more than $200 million after your locked-in stock went from about $150 a share to about $15. What”s it like to lose that amount of money?

Baiada: That”s not real money until you have the ability to liquidate it. But I didn”t have any way to liquidate it, or hedge it or do anything else. That”s just the way it was.