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.  

Senscio Sytems Raises $1.5M Seed Round led by eCoast Angels and Walnut Venture Associates

Boxborough, MA,  -- Senscio Systems, Inc., a healthcare technology startup in Boxborough, has announced two financings: a $1.5 million Series Seed raise, led by members of eCoast Angels and Walnut Venture Associates with participation from members of Golden Seeds and Northeast Angels; and a $650,000 Emerging Technology Fund loan from MassDevelopment, the state's finance and development authority. Senscio is using the loan from MassDevelopment to make strategic hires and procure hardware for early deployments of IbisCare, the company's first product.

Senscio Systems' mission is to turn data into insights. IbisCare integrates Senscio's unique artificial intelligence platform with remote patient monitoring for people living with multiple chronic conditions. The product increases patient engagement, helps caregivers assist with timely interventions and provides analytical insights for population health management.  

According to Senscio's CEO Piali De, "Through IbisCare, physicians will be able to manage their patients' health in real time, based on knowledge about how their patients' self-management is impacting their health."

Senscio is currently deploying IbisCare to users through its first customer, a midsize Accountable Care Organization in New England. The company will use the $2.15 million in new funding to accelerate the product's deployment to the next 200 users. "The wonderful thing about IbisCare is that it literally pays for itself by identifying problems early, before they require expensive treatment or hospitalization," says George McQuilken, Co-founder of the eCoast Angels. "We are very supportive of this approach."  Michael Marsh of the eCoast Angels has joined the Senscio board.

"Massachusetts is on the cutting edge of technology and health care, and Senscio has combined both qualities to create a system that will help patients and caregivers treat illnesses such as pneumonia and diabetes," said MassDevelopment President and CEO Marty Jones. "The Emerging Technology Fund has helped many innovative companies stay and grow in the Commonwealth, and we're pleased Senscio can use these funds to hire highly-skilled workers for its operations." 

MassDevelopment, the state's finance and development agency, works with businesses, nonprofits, financial institutions, and communities to stimulate economic growth across the Commonwealth. During FY2013, MassDevelopment financed or managed 350 projects generating investment of more than $2.4 billion in the Massachusetts economy. These projects are projected to create more than 7,000 jobs and build or rehabilitate 800 residential units.

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Maine Angels Encourage "Boomerang Entrepreneurs"

A “boomerang” entrepreneur is one  who grew up in Maine, went to work elsewhere, and then brought his business ideas back to where he wanted to live,  according  to a recent feature in Maine magazine.

An example is Ben Polito, CEO of Pika Energy, a company funded by the Maine Angels, the eCoast Angels of NH, and the Maine Small Enterprise Growth Fund (SEGF). Polito grew up at the remote end of Georgetown Island, beyond the reach of Central Maine Power’s utility poles for the first seven years of his life. After earning a mechanical engineering degree from MIT, where he developed 3D printers, built autonomous submarines, and worked on Eink, the display technology of the Amazon Kindle, he returned to Maine where he co-founded Pika.

Encouraging Polito and others is Don Gooding, vice chair of Maine Angels and executive director of the Maine Center for Entrepreneurial Development.

“Sorry, not a boomeranger,” says Gooding.  “I grew up in Mass., married someone who was a third generation summer person, but that's not the same. But I'm a "boomeranger catcher." In addition to Ben Polito, I've worked with Shannon Kinney of Dream Local, Stephen Andrews of Abogen, and Kristen Gwinn-Becker of HistoryIT, all of whom are high potential boomerangers.”

Dream Local has received funding from three individual Maine Angels and the Maine Venture Fund; Abogen is negotiating with the Maine Angels and presented recently at the New England Angel Capital Association syndication summit in Boston.

“Watching Gooding connect people and ideas is like watching a bee pollinate an orchard—so many flowers, so much fruit to grow!” says Maine.

Phillip Conkling reports in Maine on recent visits to the Maine Angels and to Pika Energy. “When it comes time to report on current members’ investments, Paul Farrow holds up Pika Energy’s first wind turbine blade, a sleek biomorphic form made from a new injection molding process. For homeowners, a turbine blade is the key to energy production. Blades typically cost several hundred to a thousand dollars apiece. But Pika’s new process has reduced the cost to $30 per blade, which is a key part of their strategy to reduce the costs of the machines by half of the going price. Another key to their technology is  a patent-pending microgrid that allows customers the option of plugging in solar panels and tracking system performance.

“I had visited Pika’s new facilities at a Westbrook industrial park several weeks earlier and met its president, Ben Polito, and his partner, Joshua Kaufman, director of research. The pair met while they were students at Massachusetts Institute of Technology. The six employees at Pika were still unpacking after moving out of Polito’s and Kaufman’s basement, where they have been working for the past three years. Kaufman, who greeted me while intently fiddling with a little box filled with microcircuitry, said that because 96 percent of wind customers want the ability to add solar, Pika’s sophisticated electronic micro-grid technology is at the heart of their marketing strategy. 

“Polito tells me that they have recently closed their latest round of angel financing, which allowed them to invest in manufacturing tools and to double their workforce, including hiring an experienced plant manager, formerly of Tom’s of Maine. But this is also a personal quest for Polito, who grew up at the remote end of Georgetown Island, beyond the reach of Central Maine Power’s utility poles for the first seven years of his life. He remembers “electricity was this cool thing that I saw in kindergarten and the neighbors had,” and he got interested in how electricity makes things work. At Morse High School in Bath, Polito built small turbines for science projects.  He says, ‘You don’t really know how to design stuff until you know how to build stuff.’

“Polito, who has benefited from MCED’s  ‘Top Gun’ program, is a big believer in locating business in Maine, where everything is much more affordable and there is an ample supply of talent due to the quality of life. ‘Maine was a backwater when my parents came here,’ recalls Polito, ‘but the Internet has democratized where you can do innovation.’

Up in Aroostook County, North of the Haynesville Woods (“A Tombstone Every Mile”) close by Frenchville and the Republic of Madewaska, they say that Maine’s biggest exports are pine, pulp, potatoes, and people, eh!   Maybe someday a few more entrepreneurs will boomerang back.

Don Gooding at Work

République du Madawaska

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Are Increasingly Active Corporate VCs Good Partners For Angels? Q3 2013 Corporate Venture Capital Report published today.

Angels looking for expansion capital for their deals might be well advised to look to Corporate Venture Funds (CVC) according to the Q3 2013 Corporate Venture Capital Report published today by CBInsights.

With limited partners continuing to reduce their investments in traditional VC funds, the large balance sheets of corporate investors are becoming increasingly important in the VC ecosystem. In Q3, CVCs participated in deals that represented just under 30% of overall VC funding. And while corporate VCs typically invest in later stage deals, many of them have worked with angel groups in the past.

Of the most active CVCs shown in the chart below, our local group, the eCoast Angels, has invested alongside Intel Capital and Motorola. James Geshwiler of the Common Angels says they have invested with several of these CVCs, Google Ventures and Intel Capital, as well as Salesforce and Autodesk. Chrstopher  Mirabile at Launchpad Venture Group cites Google Ventures and Intel (and perhaps In-Q-Tel  in the past).

Some highlights from the report.

Google Ventures tops the list of most active CVC investors in U.S.-based companies in Q3’13, followed by Intel Capital, Samsung Ventures and SAP Ventures. Only two healthcare CVCs, Johnson & Johnson Development Corp. and GlaxoSmithKline’s SR One were among the top 10 most active.

The average deal size with CVC participation rose yet again in Q3’13 to hit $17.0M on average. The deal size gap versus overall VC averages in Q3’13 was the widest in five quarters, highlighting the concentration of CVC funding at the mid and later stages and strong balance sheets of corporate venture investors.

New York’s share of corporate venture deals topped Mass. for the first time in five quarters. But despite more deals, NY’s share of CVC funding fell to just 7% - a five-quarter low.

Despite early stage (Seed, Series A) CVC deal share increasing from Q2’13, CVC funding share at the early stage matched a five-quarter low at a combined 9%. A whopping 81% of CVC funding went to mid and later stage (Series C+) funding rounds.

The number of CVCs actively investing remained consistent with Q2’13 levels. But compared to Q4’11, the number of CVCs in the market has jumped 29%.

The most active CVCs in Q3 have also recorded the most exits (M&A and IPO) in the first three quarters of 2013. Intel Capital leads CVCs based on total exits by U.S.-based portfolio companies, followed by Google Ventures and a three-way tie for the #3 spot between SAP Ventures, Samsung Ventures and Mitsui Ventures.

The top 3 mobile & telecom CVC deals took 70% of Q3 mobile CVC funding, which more than doubled Q2’13’s funding amount and marked the highest quarterly total since the start of 2012. On a year-over-year and sequential basis, mobile CVC deals increased 68% and 39%, respectively.

CVC investment in healthcare hit a five quarter low in Q3’13. Compared to Q2’13, deals and funding in the quarter declined by 41% and 27% respectively. Deals and funding were also down on a YoY basis.

Clean Tech saw under 10 deals with participation from Corporate VCs for the third quarter in a row. Funding levels were anemic in Q3’13, dropping below $100M for the second time in five quarters. 

For the first time since Q2’12, California saw CVC funding cross the $1B mark behind a surge in mobile funding.

Many of the observations above are illustrated in the published report, which contains more than 50 pages of geographic, industry and funding round stage breakdowns.

 Most Active CVCs

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