Russell Howard Of BCI Enjoys Challenge Of Supporting Economic Growth In The Berkshires

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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.” 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.” 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.” 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.” 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 slowdown” 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.” 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.” 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.” 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.” 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.” 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.” “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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North Adams Jewelry Store Has New Owner

By Breanna SteeleiBerkshires Staff

Cheryl Coppens put out a call for someone to take over the jewelry business she began last spring  — jewelry maker Alexandra Padilla answered the call.

NORTH ADAMS, Mass. — The Artful Jeweler has a new owner who is looking to expand its offerings.

Cheryl Coppens opened the jewelry store in May, showcasing local artists, offering fine jewelry, and jewelry repair.

But a new grandson in Texas, and the difficulties in flying back and forth to see him, had her looking to move closer to him.

Last month, she posted on the business's Facebook that she wanted someone to take over the space and continue the venture. Alexandra Padilla reached out to her and Coppens said she met all her criteria she was looking for in anew owner.

"You have to really want to be in retail. You have to want to be in this community, priced where people can afford it. Alex is native to North Adams. Her husband, she's got two great kids, so it just felt like they would be able to continue the store," Coppens said. "So the criteria really was somebody that would work the store, not somebody that would just come in and hire employees. I didn't want that."

Padilla started taking over the store in the beginning of December. She has been selling jewelry for about three years, and has an online shop, and has worked in wholesale jewelry for about 15 years.

"I always wanted to have my own thing on it, and I wanted to bring something new, and I want to involve my family, my kids do something, and I want to be independent," she said.

Now Padilla showcases her jewelry in the Ashland Street store and plans to keep some of the local artists' items, like stained glass made by Coppens' mother.

Padilla customizes jewelry and tailors pieces to her customers.

She plans to work around her job at Berkshire County Head Start so she can open store for more hours. 

She also plans to redesign the store a little bit and bring in a couple more lines, like more rings and pearls. 

The store is open on Saturdays and Wednesdays from 10 a.m. to 6 p.m., Thursdays 9 to 2, Fridays 9 to 6, and Sundays 9 to 3. The store has also been open on Mondays 10  to 5 and Tuesdays 10  to 3 for the holidays. 

Padilla thanks Coppens for trusting her and hopes customers continue to support the Artful Jeweler.

"Thank you for trusting me. I'm going to try and do my best and work hard to make it happen," she said. "This is our first time selling retail, so we hope the community supports us in here."

Coppens will be helping Padilla until she is comfortable operating the store on her own. She said it will continue to be a space of community support.

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