(NECN: Peter Howe, Boston) Peter Brooke didn't invent venture capital in New England. But over five decades in the business -- during which he founded two multi-billion-dollar investment shops -- maybe no one's singlehandedly done as much as Brooke to make Boston a world-class hotbed of venture and private-equity investing.
Say "investing in startups," and the first places many business people will think of are California's Silicon Valley and Greater Boston. Through good decades and bad since the end of World War II, startups in Kendall Square and Route 128 and Interstate 495 and other high-tech and biotech hotbeds around Boston have attracted -- and enriched -- venture capitalists.
Brooke, who recently published a memoir called "A Vision for Venture Capital,'' recalled in an interview Thursday that as he got started building venture businesses in the late 1950s and 1960s, "We were attracted to it because of the excitement of creating something that was new . . . to improve the way companies were managed or to start new companies from scratch.''
Everyone starts somewhere. For Peter Brooke, it was at what was then called the First National Bank of Boston, later BankBoston and Fleet, today Bank of America. He started out in the credit department, but soon concluded that, as he writes, "The prescribed way of getting ahead was to do the same thing everyone else was doing, but just a little better -- an approach that had no appeal to me.'' As a last-ditch alternative to leaving the bank altogether, he found his way into specialized lending divisions, including one focusing on the fledgling Massachusetts "high technology" sector of the late 1950s.
As he tells in a new memoir, his break came on a sales call one day in 1958 to an inventor whose secretary had for weeks been deftly blocking Brooke from getting in for a talk. Brooke suddenly wound up joining a group of men that helped the fledgling inventor save a computer-like device from falling off a delivery truck as it was being loaded. "Two months of work would have, you know, gone out the window -- and probably the company might have gone out the window too,'' Brooke said in the interview.
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The inventor was An Wang -- the founder of Wang Laboratories, which would go on to become one of the biggest and most important Massachusetts computer companies of the 1970s and 1980s.
Brooke said, "I found myself next to Doctor Wang, and he introduced himself and said, 'What are you doing here?' And I said, 'I've been trying to see you for the last three months.' And he said, 'Well, I'll give you 10 minutes.' ''
Brooke wound up landing Wang as a borrower for the Bank of Boston, and ultimately became himself a director of Wang Labs, which built a huge corporate headquarters at the intersection of Interstate 495 and Route 3 in Lowell before it succumbed to a souring market for minicomputers and years of management problems, and filed for bankruptcy protection in the early 1990s.
Enjoying the exhilaration of dealing with start-up technology companies, in 1968, Brooke launched T.A. Associates in Boston, one of the early and ultimately most successful private-equity/venture capital firms in the city. "We were going after anything,'' Brooke said. "Technology-based companies that were startups, new technology in the semiconductor industry. We invested in the furniture business. We invested in a mail-order-catalogue business. We invested in a great many things. Anything that we felt we could add value to. To me those were the most exciting years, because we didn't know whether we were going to eat from one week to another, and it was exciting.''
There was, for example, the time his secretary accidentally tossed out $2 million sent in by investors for a T.A. fund.
"My senior investment guy, Kevin Landry, was able to trace those checks from the guy who picked up the trash outside our office,'' Brooke recounted. "We got the recycling plant to stay open an extra hour while we rifled through this immense amount of garbage trying to find an envelope with the checks in it -- and we did!''
"There are a lot of stories like that that went into those early days,'' Brooke said with a satisfied laugh.
T.A.'s first fund was $6 million, the next $10 million, the next $15 million . . . Now, the firm manages $16 billion in investment capital.
Brooke became increasingly interested in the idea of taking venture and private-equity investing to countries outside the U.S., something his T.A. partners resisted. So in 1985, he struck out from T.A. and founded Advent International, a global investment firm that has attracted a cumulative $24 billion in investment capital through locally-operated investment funds in countries across Europe, Asia, and the rest of the world.
Some of the observations and lessons he recounts from his book:
- "I have always thought that by using capital and management assistance to build profitable companies that create jobs and advance prosperity, I could make a real contribution to economic well-being, first at home in New England and eventually around the world."
- "Venture capitalists and private equity managers are problem solvers. They know how to define and set objectives, they know how to organize, and they know how to execute.''
- "Great instincts [are] what really separate the winners from the also-rans in venture capital.''
- "Venture capital is an activity in which apprenticeship matters more than classroom learning. It's a business one learns by doing It takes a long, long period of hands-on experience to develop a good deal doer. New investment managers have got to take their lumps and fail, while the more senior people in the firm just have to make sure that the failure isn't cataclysmic.''
- "My generation of venture capitalists was fortunate to have entered the industry at a time when just being in venture capital was an adventure. The industry was young, and the prospect of success was uncertain. We knew we were creating something new, and before we became prosperous, we had nothing to lose.''
- "Private equity investing by responsible and forward-looking practitioners is not just about financial engineering and asset stripping. It is about taking advantage of the benefits of private ownership -- the ability to use not just higher levels of debt but also to focus managers on long-term strategy, help them execute the strategy, and monitor their performance closely -- to improve companies' long-term prospects.''
Elaborating on those lessons in an interview with NECN, Brooke said a common theme in his investment career has been that "I think you look for some company that has an advantage, whether it's in technology, products, distribution.'' But in helping launch dozens and dozens of successful companies -- like locally Biogen, M/A Com, and Unitrode -- Brooke says he learned that successful investing "can never be reduced to a formula," and what matters more than anything is people.
"The first thing is management: Do you feel that the management has the capacity to grow, that the senior management has the ability to attract good people? Is the senior management and the leader of the company someone we can trust?''
Now 80, Peter Brooke has seen scary recessions come and go, and it's natural to ask him how he thinks the investing climate of 2010 compares to, say, 1968 or bleak years like 1975 or 1982 or 1991.
"I don't buy for a moment that our good days are behind us,'' Brooke says. "I think there's never been a better time to invest than right now. Good ideas will respond to the availability of capital.''
What gives him encouragement about investing today? "There's nothing like adversity to cause smart people to come up with new solutions.''
It's optimism tested by half a century of investing and building.
With videographer Christopher Garvin.
