Russell W. Howard, managing director of The Berkshires Capital Investors (BCI), remains optimistic about the prospect for Internet-related businesses in the area.
“We definitely are in somewhat turbulent times now with the public markets. There’s been a lot of publicity ... with the crash of a lot of the public Internet stocks,†he said in an interview last week at BCI’s offices at the Williamstown Financial Center. “But I think really that the message is that not all Internet companies are the same by any means.â€
Information technology businesses developing the Berkshires cannot be easily categorized.
“They all serve different markets, and they’re all going to have different dynamics to their business,†he said. “We think as of now that we’ve got a pretty good capital base for the ones that we’ve invested in, and still are very optimistic that a lot will become ... sustainable, permanent businesses in the region that will employ a lot of people.â€
Howard has been with BCI nearly a year, having started last March. He succeeded Matt Harris, BCI’s original managing director. Before coming to BCI, Howard worked for about five-and-a-half years at GE Equity, the venture capital arm of GE Capital in Stamford, Conn. He worked in the technology and communications investing area.
Before that he worked for about four years with Equitable Capital Management in New York City in their corporate finance group in a variety of investing activities.
He graduated from the University of Virginia’s business school in 1990, and is an 1984 graduate of Williams College.
Right out of Williams, Howard worked for four years with a consulting firm called The Futures Group in Glastonbury, Conn. He’s originally from Storrs, Conn.
A career shift
What brought him to BCI?
“It specifically was the opportunity to come in and have a very active involvement with BCI, the investments we make, the companies we invest in ... the challenges and the opportunities to try to help stimulate the economic growth in the region,†he said.
This was interesting coming from GE Equity, which did larger transactions and more “later-stage venture capital†with companies that have already received early-stage capital investments, he said.
“So it’s not quite as hands-on. Companies are more mature,†Howard said of his previous position.
“While the opportunity here with BCI to come in and succeed Matt Harris, who had done a great job ... building up the BCI for a couple of years, was a chance to be much more of an early-stage investor with companies that are just getting going, provide a lot of hands-on support and help, and really feel much more of a part of the companies and hopefully their ultimate success.â€
In addition to being a career shift to early-stage venture capital business, the move to BCI also offered a chance to join a venture capital firm “that was doing interesting things from an investment standpoint, but also has this whole other side benefit of helping to promote economic growth in an area, which was kind of neat combination,†he said.
Thirdly, BCI offered an opportunity for Howard and his family — wife Christina, and daughter Lauren, 17 months old — to move up to the Berkshires, different from where they had lived before. “It was something that we thought would be kind of fun to try.â€
How does he spend his week?
Howard broke his time into three categories: evaluating new investment opportunities; working with the portfolio companies BCI already has investments in, doing such things as going to board meetings or helping them raise more funds; and attending to BCI administrative matters as managing director.
BCI has over the years invested in such companies as eZiba.com; Streetmail; PRG, now known as MindBranch; and HealthShare Technology, Inc., an Acton firm with a technical team at MASS MoCA. BCI investments in Central and South Berkshire include Berkshire Wireless in Lee, and Waggin Tails, “the high-end, super-premium pet business,†also in Lee.
In all, BCI has invested capital in 15 or 16 companies, most in Northern Berkshire, some in Central or South Berkshire or elsewhere in Massachusetts.
“Somewhat of a slowdownâ€
Howard said that six months ago he was probably spending half of his time on new investment opportunities, perhaps 30 percent on portfolio companies, and about 20 percent on administrative tasks. Now, at least 50 percent of his time is spent working with the companies BCI has investments in, and 25 to 30 percent of his time on new investment opportunities, and the balance on administrative tasks.
One reason for this is that BCI has now invested about two-thirds of its second fund, with perhaps money for one or two more new investments out of this fund.
Another reason for less time spent on new investment opportunities is what has gone on in the broader capital markets, both in public markets as well as the venture capital business.
“There has been somewhat of a slowdown in the amount of new entrepreneurial activity,†he said. “If you went back six or nine months, there was just this huge amount of optimism and everyone was thinking that they were going to get rich on the Internet.â€
Is there a danger to the Berkshire economy from this slowdown or downturn?
“I don’t see anything like a real danger to these companies or to the economy that’s been built up,†he said.
In the BCI model from the start, companies raised relatively small amounts of money and had to try to make that capital last as long as they could and build a business more in the traditional way, with prudent spending matched with growth of the business, he said.
In the wider business world, Internet companies that failed “were things that had a lot of money thrown at them, scaled up way too quickly.â€
When this approach didn’t work out, or if it was an unsustainable business model, they had no choice but to go out of business — “if they looked out to the future there was no way to scale it back and achieve profitability,†Howard said.
“Most of the companies, I think, up in this area have been in general much more kind of prudent in ... achieving and trying to meet their business plan and their objective,†he said. “So I think we have a lot more stability up here at this point.
“And it’s not to say that all the companies are profitable at this point and will never need additional capital — that’s definitely not the case,†he said. “But I think most of the firms that I’m aware of are pretty well situated for at least the foreseeable future from a cash standpoint.â€
It was noted that Streetmail and MindBranch, both based in North Adams, have recently had layoffs.
“I was actually pretty pleased with, I think, how the local people and some of the press seemed to handle that in that realizing that there is kind of a natural kind of evolution of a business, especially ones that are early stage,†Howard said. “They’re going to go down some paths and try some things. ... Some will work great, some won’t work great. And there’s always going to be some tinkering with the business model, with what’s working and making sure that you’re living within your means.â€
This is the process those companies are going through, especially given the overall environment in which people know that capital is not limitless.
“Folks are tightening the belt a little bit to make sure that they’re going to be there for the long-term. And that’s really, I think, the key message that we’re trying to impart to the companies that we have investments in ... that we want to try to build companies that are going to be around and be sustainable,†Howard said. “We’re not looking to have a huge home run in a year or two or else the things goes belly up, and we’re just going to roll the dice and see.
“We’re really looking to try to help build companies that are going to be sustainable and profitable someday, and will be an important part of the local economy,†he said. “What we’ve been spending more of our time on is trying to make sure that ... the current strategies, the ... cash expenditure levels of our existing companies are kind of prudent given the uncertain times that we’re in.â€
BCI has a staff of three full-time employees. Three managing partners, Matt Harris, George Kennedy, and Bob Magill, function something like a board of directors. BCI also has a small group of limited partners who have invested with BCI who make up an advisory committee.
The first BCI fund started in 1997 with $5 million raised, and this was completely invested by the middle of 1999. BCI next raised $15.7 million for a second BCI fund. A third BCI fund is in the back of officials’ minds but is nothing that’s specifically in the works, Howard said.
Relationship with Village Ventures
Matt Harris, BCI’s first managing director, in January 2000 founded Village Ventures with Tripod Inc. cofounder Bo Peabody. Peabody is chairman and Harris is CEO of this Williamstown firm that services a network of nine early stage venture capital funds operating in seven states. It aims to bring venture capital to areas that are underserved by traditional sources of capital.
Howard said BCI is an independent fund and an affiliate fund of Village Ventures. Village Ventures is an attempt to replicate the success BCI had in the Berkshires in other regions across the country.
BCI works closely with Village Ventures in a couple of ways.
“The way that we work with them is that we are still kind of the early-stage, get-things-going investor for the Western Mass. region that we’ve always been,†Howard said. “Village Ventures, through our relationship with them, co-invests about 50 cents on the dollar with us side-by-side in all these deals. That’s part of their business model ... to co-invest with the funds, and then provide ... a lot other support services and other ways to help out us and the portfolio companies we invest in.â€
“Village Ventures is out here as kind of a resource for us to be able to use in various ways to help us to do a better job ... or add more value to the companies we’ve invested in,†Howard said.
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Berkshire County Homes Celebrating Holiday Cheer
By Breanna SteeleiBerkshires Staff
There's holiday cheer throughout the Berkshires this winter.
Many homeowners are showing their holiday spirit by decorating their houses. We asked for submissions so those in the community can check out these fanciful lights and decor when they're out.
We asked the homeowners questions on their decorations and why they like to light up their houses.
In Great Barrington, Matt Pevzner has decorated his house with many lights and even has a Facebook page dedicated to making sure others can see the holiday joy.
Located at 93 Brush Hill Road, there's more than 61,000 lights strewn across the yard decorating trees and reindeer and even a polar bear.
The Pevzner family started decorating in September by testing their hundreds of boxes of lights. He builds all of his own decorations like the star 10-foot star that shines done from 80-feet up, 10 10-foot trees, nine 5-foot trees, and even the sleigh, and more that he also uses a lift to make sure are perfect each year.
"I always decorated but I went big during COVID. I felt that people needed something positive and to bring joy and happiness to everyone," he wrote. "I strive to bring as much joy and happiness as I can during the holidays. I love it when I get a message about how much people enjoy it. I've received cards thanking me how much they enjoyed it and made them smile. That means a lot."
Pevzner starts thinking about next year's display immediately after they take it down after New Year's. He gets his ideas by asking on his Facebook page for people's favorite decorations. The Pevzner family encourages you to take a drive and see their decorations, which are lighted every night from 5 to 10.
In North Adams, the Wilson family decorates their house with fun inflatables and even a big Santa waving to those who pass by.
The Wilsons start decorating before Thanksgiving and started decorating once their daughter was born and have grown their decorations each year as she has grown. They love to decorate as they used to drive around to look at decorations when they were younger and hope to spread the same joy.
"I have always loved driving around looking at Christmas lights and decorations. It's incredible what people can achieve these days with their displays," they wrote.
The Wilsons' invite you to come and look at their display at 432 Church St. that's lit from 4:30 to 10:30 every night, though if it's really windy, the inflatables might not be up as the weather will be too harsh.
In Pittsfield, Travis and Shannon Dozier decorated their house for the first time this Christmas as they recently purchased their home on Faucett Lane. The two started decorating in November, and hope to bring joy to the community.
"If we put a smile on one child's face driving by, then our mission was accomplished," they said.
Many homeowners are showing their holiday spirit by decorating their houses. We asked for submissions so those in the community can check out these fanciful lights and decor when they're out.
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