In memoriam, George Schwenk, Breakfast Club Co-Founder

Active for over 40 years in forming, financing, and managing start-up companies, George Schwenk will be fondly remembered for his role in creating The Breakfast Club,  a pioneering gathering of private investors who contribute both their capital and their expertise to supporting entrepreneurs.

The Breakfast Club was founded in 1976 due to coincidence when NH residents and fellow MIT Alumni Mort Goulder and Dick Morley met on a cruise.  George Schwenk and Doug Drane joined them to form the group, which met over breakfast at the Country Club in Nashua, NH.  Bill Wetzel, then at UNH, named them "Angels."

The Breakfast Club reviewed about two business deals a week and invested in about four companies a year. By 2005 the Breakfast Club had invested in more than 100 startup companies. Schwenk, who kept meticulous records, was able to track annual returns approaching 30 per cent over those 30 years.

As a member of The Breakfast Club, Schwenk was the recipient of the 1990 New England Entrepreneur of the Year award as a Supporter of Entrepreneurship. The Breakfast Club was also a National finalist in that category. In 1995, he was awarded an honorary membership in the INC 500 Hall of Fame in recognition of his contributions to multiple INC 500 companies.

In his career prior to the Club, Schwenk  was a founder of Modicon Corp., later a division of AEG, and of Termiflex Corp., acquired by WPI, Inc. He has been closely involved with eight INC 500 companies: Logicraft (1987, 88, 89), wTe Corp. (1987, 89, 90), Datasec (1988, 89), Ocean Isle Software (1994), Termiflex (1982), Kalow Technology (1994), eCopy (2001, 02, 03, 04) and SpectorSoft (2004).

Now primarily active in financial matters, he was previously involved in the technical areas, developing the software for the first computer controlled machine tools. He served as National Treasurer and Administrative Vice President of the Numerical Control Society from 1975 to 1978.

He held an SB in Physics from MIT and an MA, also in Physics, from the University of California and is a graduate of the US Army War College. Retired as a colonel from the US Army Reserve, he served thirty years in various intelligence assignments, finishing with the mobilization assignment of Deputy Director of Foreign Intelligence, G-2, Department of the Army.

Active in the Boy Scouts for over sixty years, he was Scoutmaster in Mason, NH for fifteen years and received the Silver Beaver for distinguished service to youth in 1984. He was also active in town government, including as Trustee of Trust Funds. 

Aftermath:  Angel Group Acceptance

The concept pioneered by the Breakfast Club, a group comprised of individuals who work together identifying and evaluating seed stage investments but  investing as individuals, has grown continuously and become one of the major reasons the US continues to be among the world’s leaders in entrepreneurship and innovation. As of today, summer 2017, there exists a national Angel Capital Association representing 260 angel groups and accredited platforms.  These groups consist of over 13,000 members holding over 91,000 entrepreneurial companies in their investment portfolios. 

Today, the oldest active Angel Groups in New England are the Walnut Venture Associates,  eCoast Angels, Hub Angels, and Launchpad Venture Group, all founded in 2000, twenty-five years after the Breakfast Club.

Selected Tributes to George from Angels and Entrepreneurs

From Jean Hammond:

Gentleman George

George …he made you feel welcome, he translated for Mort (when needed), he told people how smart Mort was.  But after you got to know him you realized he was sharp as a tack, he made the process work.   I spent the most time with him at a stage when the breakfast club was getting down to about 5 or 6 folks showing up and sometimes fewer.  I managed to make a few meetings, to decipher a few “group faxes” and to co-invest with some fun, smart, and dedicated-to-helping-the-entrepreneur investors.

George, I remember him as being the man with the records and regret failing to get him up-to-date info on that one more deal that we we are in together.  He was the guy that made sure we all finished the process.  And I can likely repeat verbatim his rational for converts with warrants instead of discounts, and the time the Breakfast Club members exercised warrants to force a minority shareholder rights issue.  I heard a bit about Numerical Control but I never even heard of Entrepreneur of the Year award or Scouting.

George was always the gentleman.  

What Makes The Boston Startup Scene Special? Jeff Bussgang Tells All.

Boston author, professor, and venture capitalist Jeff Bussgang is perhaps our greatest proponent of the Boston startup scene. “Every fall, I deliver a presentation at Harvard's iLab, open to the community, on what makes the Boston startup scene so special” says Bussgang. “It has become a nice opportunity to step back and appreciate all the rich resources entrepreneurs have at their fingertips in the Boston community. Here is this year's version (which I'm delivering this month), complete with a lot of updated content and data on our local tech hub:” 

Jeff's insights include the realization that those who compare Boston to California sometimes ignore the  fact that California is geographically, population wise, and economically much much larger than either Boston or New England.  But Bostonians try harder, averaging $4.3K/per person in venture capital, compared with $3.7K in California.

Jeff’s investment interests and entrepreneurial experience are in consumer, e-commerce, education, financial, marketplace, mobile and SaaS start-ups. He is a General Partner at Flybridge Venture Capital. He also serves as a Senior Lecturer at Harvard Business School and teaches a class on entrepreneurship and lean start-ups called Launching Technology Ventures.  In this capacity, he has co-authored twelve HBS cases and notes regarding startup management and entrepreneurship.

Jeff also describes himself as a former entrepreneur turned VC, HBS Senior Lecturer, author, dad of three, husband of one, civic leader, Cross Fitter and fan of all Boston sports.

 

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Angel Round Sizes and Valuations Rising Says New HALO Report

Both round sizes and seed stage valuations  for angel investments have continued to rise according to a national survey of angel group investment activity released today. “There has been a long term trend towards increasing round sizes and valuation in all geographies. What makes this report unique is, for the first time, we can see the difference between regions within those trends, and also relative to industry sectors” says Rob Wiltbank, Vice Chairman of Research for the  Angel Resource Institute at Willamette University (ARI).

Highlights of the 2015 Q2 ARI HALO Report: Geography Edition

·      Seed stage valuations have risen steadily over the last five years to an all-time high of 3.95M (Median), a 30% increase over 2014.

·      Round sizes in deals with only angel investors have grown from $800K in 2014 to over $1M year to date in 2015.

·      All regions across the U.S. have seen increases in round size in the last 6 quarters. The largest increases in round sizes were in the Great Plains ($0.2 to $1.1M), Mid-Atlantic ($0.3M to $1.5M), and Northwest ($0.3M to $1.5M) regions.

·      Over the last 5 years, California consistently completed the most investments, at 19.6% of the total, with New England (12.7%), and the Great Lakes (12.2%) following closely behind. 

·      Angel investing activity is equally distributed across the country when parsed either East and West or North and South at approximately 50% / 50%.

·      Each region has different industry concentrations. California and New York tend toward Mobile and Internet, while Texas has completed more investments in Food & Beverage than any other region. The Great Lakes tend toward Industrial and Healthcare, while New England and the Southeast maintain a relatively balanced “portfolio” across sectors.

The ARI Halo Report includes aggregate analysis of investment activity by angels and angel groups, and highlights trends in round sizes, location, and industry preferences. The data is collected via survey and aggregation of public data using innovative data analyses. The 2015 Q2 ARI HALO Report: Geography Edition data is based on 4,719 deals totaling $7.5B in total rounds including co-investors. The full report can be accessed here.

Angel groups and individual angel investors interested in including their data in the ARI Halo Report should contact Katie Hamburg, (425) 330-0952 or khamburg@angelresource.org

The Angel Resource Institute at Willamette University  is a charitable organization devoted to education, mentoring, and research in the field of angel investing, a growing driver of our entrepreneurial economy. ARI was founded by the Ewing Marion Kauffman Foundation. The programs of ARI include educational workshops and seminars, research projects and reports, and information on best practices related to the earliest stages of angel investing and new-venture development.

Willamette University MBA is a leader in early stage investment research and entrepreneurship. In addition to being the home of the Angel Resource Institute, Willamette launched the world’s first student run angel investment fund in 2008. Willamette faculty and researchers published the world’s largest and most cited study on angel investor returns, Returns to Angel Investors in Groups (2007), and one of the most widely used textbooks on entrepreneurship, Effectual Entrepreneurship (2011). They also preform data analysis for the HALO Report.

Are You One of the Most Important Investors in Tech? Check the Periodic Table of Tech from CB Insights to Find Out.

Those of us who teach or lecture regularly are often hard-pressed to identify and explain the key components of the startup ecosystem.  Undaunted, one analyst has organized them into what he calls the Periodic Table of Tech.   

 

“With the explosion of players (both investors and acquirers) in tech today, we’re often asked by those trying to navigate the space who they should know.  We’ve tried to answer that question with prior analyses of various groups (angels, micro-VCs, corporate VCs and VCs) using our data on investor quality, brand, and deal activity,” says Anand Sanwal, CEO of CB Insights. 

“Today, we’re releasing our first-ever Periodic Table of Tech which aggregates many of those prior quantitative analyses into one unified view highlighting the 118 most important investors and acquirers in tech.”

 Naturally, our eyes were drawn to the angels. The top angel groups listed are Tech Coast, Boston Harbor, Golden Seeds, New York, Sand Hill, and Atlanta. When asked how he selected them, Sanway referred us to his earlier report on top angel groups.

One issue remains. Why is a group such as Golden Seeds, that manages a substantial fund, listed as an angel group rather than as a Micro VC?

“Golden Seeds is a bit of a hybrid, says Sanwal.  “They're a fund but also an angel group, i.e. they report via Halo Report.  There are some folks like them; i.e. 500 Startups is both an accelerator and micro VC.  We had to pick one.”

For perspective, Golden Seeds raised $26.1 Million back in 2011 for its 

Fund II.

Picking individual angels is even more difficult.  According to reports from the UNH Center for Venture Research, there are roughly 250,000 active angels in the US this year. The Periodic Table lists 12, only one of whom we have met in person.  For this selection, Sanwal refers us to his report on top angels. More analysis could be done here.

CBInsights is a National Science Foundation-backed data-as-a-service firm that collects information on private companies and their investors and acquirers.  CB Insights data and technology is used by firms to make better marketing, procurement, lending, acquisition and equity investment decisions and to gather data-driven market and competitive intelligence.  The firm's data is regularly cited by leading media publications including the New York Times, Forbes, Bloomberg BusinessWeek and Fast Company among others. 

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