John Pappajohn says one of his favorite songs goes something like, “Everybody wants to go to heaven, but nobody wants to die.”

Similarly, “everybody wants to be rich, but most people aren’t willing to pay the price,” said the 76-year-old venture capitalist, who spent 14 hours in his downtown office on a recent Saturday and another 12 on Sunday “because I had work to do.”

“That is one of the conditions — successful people have to do whatever they have to do,” he said. “If you have a positive mental attitude, obviously that makes a big difference.”

As entrepreneurs and business leaders from across the state prepare to meet Tuesday for the annual Iowa Venture Capital & Entrepreneur Conference in Des Moines, Pappajohn said he believes that one key to improving the state’s business climate has been to instill a more entrepreneurial mindset, beginning with Iowa’s students.

“This is what venture capital is all about,” he said, pointing to a fact sheet detailing statistics from the network of entrepreneurial centers that he and his wife, Mary, founded eight years ago.

Through the centers, “we have started 1,600 new companies in Iowa in seven years. Some of these are barber shops, beauty shops and grocery stores, but some are manufacturing, software and high tech,” Pappajohn said. “And the important statistic is right here: We’ve trained 35,000 students in how to be entrepreneurs, how to put a business plan together, how to become more entrepreneurial, because it really starts with a mindset. That mindset is what helps people get motivated to think, ‘Well, maybe I can do something other than just work for somebody.’”

Pappajohn, who in 1999 donated more than $10 million to create the Pappajohn Entrepreneurial Centers on five Iowa college campuses, said he’s planning a further donation to the centers, but hasn’t decided when that will occur.

He also wants to create a business incubator in Des Moines within the next couple of years by adding a wing onto the John and Mary Pappajohn Higher Education Center, which recently opened in Gateway West. The building was designed to be expandable, and its plans included provisions for a wing that could be built onto the west end of the building and extend south.

“Des Moines has enough activity going on that I think it would be very helpful,” said. Pappajohn, who said the project is still at the “vision” stage. “We would be training people who want to become business owners, that are entrepreneurial.Eventually, if you have an incubator, these people can come in and set up their own little business. We’ll get some work from [the University of] Iowa, Iowa State [University]. Furthermore, I’m personally interested in inviting high school students to come in and take some classes.”

In addition to investing in the infrastructure to make more Iowa venture capital possible, Pappajohn has made direct investments in some Iowa start-up companies, such as a $7 million stake he and co-investors made in Coralville-based EnzyMed Inc., which Albany Molecular Research Inc acquired for approximately $50 million in 1999. The deal generated about a $1 million profit for the University of Iowa, Pappajohn said.

Pappajohn has also collectively invested more than $10 million in three companies located at the Iowa State University Business Park: Advanced Analytical Technologies Inc., which specializes in bacteria-detection technologies; Palisade Systems Inc., an Internet and systems security provider; and Phytodyne Inc., which is developing technologies to simplify the production of genetically modified crop plants.

“We’re committed to helping create businesses and economic activity in the state of Iowa,” he said. “It takes time, and the education is what’s needed to get it started.”

Pappajohn, who has always used his personal wealth to invest in companies rather than raising investment funds from others, said he’s looking forward to the day when other Iowa venture capital firms will generate enough capital to invest in large deals on a consistent basis.

“I don’t know that there’s anybody who’s real active or profitable yet,” he said. “I think some more firms are going to start up. I don’t know any that are real active all the time. There are a few people that do one or two deals or something. We’ve done billions of dollars in business. But there will be other firms, and we would certainly welcome other firms, because it helps the activity.”

One legislative initiative that’s proven to be productive is a tax-break program in which a group of Iowa-based insurance companies pledged $60 million in venture capital investments in return for a reduction of premium taxes from 2 percent to 1 percent. The program has to date generated more than $30 million in investments, from companies that include Wellmark Blue Cross and Blue Shield, Principal Financial Group Inc., FBL Financial Group Inc. and Aegon USA.

“I have sitting on my desk right now four requests for money from four start-up companies that we’re going (to take) directly to Wellmark,” Pappajohn said.

Another initiative, the Iowa Capital Investment Corp., which seeks to create a venture capital “fund of funds,” was approved by the Legislature in 2002. The law created state tax credits to encourage large private investors to put up capital to be invested in a portfolio of venture capital funds, which in turn would consider investing in Iowa start-up companies. The fund manager originally hired by the ICIC, Great River Capital LLC, which was subsequently purchased by Dresden Bank, resigned this summer after not being able to reach its intermediate funding goal of $75 million.

The ICIC is a good idea that suffered from having the wrong fund manager for the job, Pappajohn said.

“They hired a German firm (Dresden Bank) to come in to invest in Iowa; it was a very bad decision,” he said. “They don’t know Iowa people; they don’t know the Iowa mentality. (Dresden) is a brilliant firm and they have a very good reputation, but they can’t relate to Iowa deals.

“We are not just plain investors. We are like little merchant bankers; we really work with our companies,” Pappajohn said. “We not only put up money; we assist them all the way through. We hire management. If they don’t have an accountant, we help them with their accounting. Firms like Dresden are really not geared to do that. They’re used to investing $5 million to $10 million and being passive. We are not passive. We are so proactive, some people accuse of us running our companies, but what we really want to do is help them enough to make them successful.”

Pappajohn said he doesn’t know enough about the Oklahoma model that the fund of funds is now emulating to know whether it will be successful. And at his age, he said, it’s unlikely he would participate in it because of its long-term investment horizon, though it’s possible one of his associates “may be interested somewhere down the road.”

Pappajohn said the Grow Iowa Values Fund has been another valuable tool for the state, and one that has worked well in combination with the training and support the entrepreneurial centers provide.

“I’m planning, if they’ll let me, to go to the Legislature this next year and tell them that we really need additional Values Fund money, that it’s wonderful for the state of Iowa, that that’s what creates new businesses and new jobs,” he said.

Pappajohn acknowledged that there is a big difference between awarding a business a $1 million state grant and sending that company to an entrepreneurial class, “but it’s the combination of the two that works,” he said. “It’s the chicken and the egg — you need money, but you also need the concept, the management team. The entrepreneurial centers assist people to avoid the pitfalls that every business faces. It’s a combination of the two that really makes things work.”

Pappajohn said he particularly likes the idea of creating businesses in small communities “where the town gets together, they call a meeting, everybody puts some money in, and then you get some money from the Values Fund, and all of a sudden you’ve got enough money to start a business.”

This approach, which can be further assisted by the growing number of community-based seed capital funds throughout the state, is one that will be outlined in a breakout session during the venture capital conference, he said.   Though venture capital is still in its infancy in Iowa, the climate to nurture further growth is the best he’s seen yet in the state, Pappajohn said.

“I think things are really getting a lot better,” he said. “I’ve been in the venture capital business almost 35 years, and at this time there’s more money available. You have the Values Fund, you have fund of funds, you have the insurance companies, who have all been supportive of Iowa and venture deals. I think the venture capital conference every year brings it to a head. I think it’s very important to try to motivate some of the young people who are involved.”