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News from September, 2000

The Sun Also Rises

Friday, September 22nd, 2000

Michael Schwab is starting Small – but with a big name.

Schwab, the 24-year-old son of discount brokerage pioneer Charles Schwab, is forging his own entrepreneurial path financing seed and early-stage companies with his $2.2 million venture firm Big Sky Partners Inc. Venture investing allows Schwab to make the most of his extensive contacts and the ability to tap deep pockets when he discovers promising early-stage companies.

‘It’s all about leveraging relationships,’ said Schwab, who currently runs Big Sky as a one-man show from his home office. When your father is Charles Schwab, you start learning about investments at a tender age. Michael Schwab began as an 11-year-old, courtesy of a $10,000 gift from his dad. He poured the money into Gap Inc., Coca-Cola Co. and other companies that were familiar to him.

More recently, prior to his full-time focus on Big Sky, Michael Schwab managed community development and fund-raising efforts for Walden House and was later manager of business and development for Creditland. Schwab, who attended the University of Southern California, said he was inspired to leap into the venture capital arena after taking a rafting trip with legendary venture capitalist Don Valentine in Montana – thus the firm’s name.

‘I was impressed with his grasp of the future, and I said to myself that’s what I want to do,’ Schwab said of the venture capitalist, who was an original investor in Apple Computer, Oracle, LSI Logic and Electric Arts.

And it’s the success of Valentine’s Sequoia Capital and other Silicon Valley venture groups that has prompted many of these firms to raise their minimum investment requirements, creating a greater opportunity for small VC firms and angel investors to finance smaller deals that in the past would have been financed by traditional VCs.

Big Sky Partners’ Investment portfolio holds 15 small companies, primarily in the Bay Area. Also among the holding is, based in Irvine. Big Sky recently participated in a $5 million financing of the Irvine dot-com along with the Orange County Tech Coast Angels, Springboard Capital and other investors. uses the Internet to streamline the handling of auto insurance claims between insurers and auto repair shops and their trading partners. ‘My decision to further invest in is a direct reflection of the business model and what I’ve seen accomplished by the management team,’ said Schwab, who will join the company’s board.

The company has two contracts signed with insurance companies and is operating five live pilot projects. ‘Michael has been one of the strongest supporters of since the beginning,’ said CEO Paul Farber. ‘He believed in us back when the company was simply a concept on paper.’

Some of the more nascent companies in Big Sky’s portfolio are little more than what Schwab calls a ‘visionary with a business plan.’ But Schwab says helping young entrepreneurs and their ever-changing business plans is exciting. And he’ll get an even bigger taste of startup life when his Union Street restaurant opens later this year.