Ralph Wagner | Walnut Ventures
The Walnut Ventures meeting provides a relaxed, casual setting for angel investors from diverse backgrounds. The format was similar to other investor meetings I’d attended. There was is an introduction and the pitch itself, which was followed by a round of questions. After a company presents, the entrepreneurs are asked to leave the room and the angels discuss the startup. Members with more background in the relevant fields, such as med-tech, technology, and robotics, draw from their wealth of knowledge and express positive points and reservations regarding each venture. I had the pleasure of interviewing with Ralph Wagner, founder of Walnut Ventures, about the history of the group and what he’s observed as an investor.
“It was a frothy time in the tech business”
It was early 1997 and Ralph Wagner had just sold his startup and moved into a temporary office at 70 Walnut Street. At the time he had a group of professionals and friends who were well acquainted and wanted to create a group and invest together, and Walnut Ventures became a locus for them.
Wagner had known Babson professor Julian Lange since the day he was CEO at Software Arts, a company that developed the first successful spreadsheet for the Apple computer in ‘79/’80. When Professor Lange came to Babson in 2000, he suggested that Walnut Ventures move their meetings to the Blank Center. At the time the group was probably a dozen strong.
“It was an interesting time because the bubble burst and everyone ran for the hills.”
Like many, Walnut Ventures had a hugely successful win in 1999 and then a decline in 2001. Fewer and fewer members were attending by 2002 until only six or so members remained, but they just kept going.
Since its creation, it has remained a monthly meeting on the second Tuesday of the month. They’ve had many successes, and a few missed opportunities. The meeting structure is to generally meet monthly with 4 companies visiting. Thus, they see 40 companies annually, and of those a handful get the nod, although investments are made by each member individually and not via a fund.
What does the investing landscape look like today?
It’s a pretty frothy time again – deals are being sourced, and it’s happening faster than it used to happen. Also, the angel community is more robust than ever, with more groups. Wagner commented that Walnut Ventures is seeing better deals that are more well-prepared.
What do you look for when investing in companies?
“It’s gotta be really interesting, and make you think ‘That’s a really good idea.’ You look for that flash of inspiration that makes you want to learn more about it…some level of electricity. The company also needs to be something that you feel you can make a contribution to. While I’m not currently on any boards, when you are it is an added bonus to be a part of the life-blood of successful venture.”
What is your definition of entrepreneurship?
“An individual who can almost see the future and figure out how to make it happen. You’ve gotta have the vision, drive, intensity, and ‘sticktuitiveness’ to get through the bad times that you go through in an early stage company. When it does go well, it’s a very heady experience. You’ve got to be so confident that you’re going to make it happen.”
What do you wish you saw more of in the startup scene?
“Another sure winner, haha. But in all seriousness no-one is investing their family’s money, it’s all ’fun money.’ You’ve got to have the financial history to say ‘I’m willing to invest in this, but I’m also willing to lose it.’ Our backgrounds are in software related businesses. There is a lot of focus on software, although we’ve also seen hardware companies such as chips and cooling systems.”
How would a startup get involved with Walnut Ventures or a similar group? What are the first steps?
“Most of our investors find startups through the web page, or are referred through a banker or lawyer. We also are out in the community, with guys who attend multiple groups. There is a tremendous amount of interaction between the groups. You can actually hear about our deals through a podcast created by Sal Daher that talks about Angel investing and features a number of our members!
Beyond profit, what purpose do you think Angel Investing serves in the startup ecosystem, and in society?
“A lot of things. First of all, it encourages entrepreneurship. I can’t think of anything more important than teaching someone the ability to do for themselves. Entrepreneurship is a special skill set that can’t be taught. It’s the key to what makes Walnut go. There is a great deal of satisfaction that you get in seeing something grow.”