Seattle lost one of its most prolific angel investors last month when former banking executive Robert Arnold died at the age of 84 after a brief illness. Arnold was one of the most active angel investors in the Pacific Northwest, using his skills as a banker as well as his love of people to discover some of the hottest startups emerging in the region.
Alliance of Angels chairman Dan Rosen said at one time Arnold was actively invested in 189 startup companies.
A former banking executive at Seattle First National Bank, Arnold took an unconventional approach to angel investing. He’d often back entrepreneurs based on a gut instinct, picking teams that he believed in.
On more than one occasion, Arnold would write down a dollar amount on the back of a business card after hearing a pitch at an Alliance of Angels meeting. He’d then present the card to the entrepreneur after the pitch.
“It was on more than one occasion that that entrepreneur would come afterwards and say: ‘What’s this?’ But Bob helped start some of the very best companies in Seattle, and was very active with many of them,” said Rosen. “He will be sorely missed by all of us in the angel community.”
One of those entrepreneurs was Todd Humphrey, an executive at Kobo who previously raised money from Arnold and others for the Seattle analytics startup CleverSet. Arnold was the largest investor in the company, which sold to e-commerce software company ATG for $10 million in 2008.
Humphrey said that Arnold invested first and foremost in the people behind the idea.
“Bob believed in investing in people first, and that allowed him to stand out from other investors,” said Humphrey. “He believed in giving entrepreneurs a chance to prove themselves and that served him, and this community, so well.”
Humphrey also encountered Arnold’s unconventional approach when he was raising a second round for CleverSet.
“I left his office with a check in hand, but received a call from him not 10 minutes later saying: ‘Todd, I believe in you, and what you are building. If you will allow me to, I would like to double the investment I just made to you. Please come back to my office for a revised check.’ That is how Bob worked, from his gut, from his heart. He was a pillar of a man, and I will miss him, as will Seattle.”
Not everything that Arnold touched turned to gold, and one of his most recent investments also turned out to be one of his worst. He bankrolled a company called MOD Systems, which was developing a digital media kiosk technology for distribution of movies and TV shows. The company imploded after co-founder Mark Phillips was sentenced to four years in prison in July 2011 on fraud and money laundering charges. The matter remains tied up in litigation, including a recent suit by Phillips against Arnold’s estate and others.
Denny Hill Capital’s Jan Hendrickson said that Arnold largely moved on from the MOD Systems mess. And Hendrickson noted how Arnold’s investment style will be missed in Seattle.
“He was this region’s pioneer angel, writing checks to entrepreneurs long before it was considered fashionable or a way of giving back to the ecosystem. But he understood that the economic health of our region stemmed in part to growing new companies and therefore new jobs,” she said. “He embodied the best of what an entrepreneur could hope for in an investor: patience, a guiding hand when needed but happy to sit on the sidelines/get out of the way after providing his considered thoughts. He willingly took on significant risk, far greater than most angels today.”
According to a paid obituary in The New York Times, Arnold graduated from the Lakeside School in Seattle, Lawrenceville School in Lawrenceville, New Jersey and received his BA from Yale University in 1951. He later served in the Korean war as a naval aviator, flying missions from the decks of the Yorktown and the Essex aircraft carriers. The family has asked that donations be made to the Fred Hutchinson Cancer Research Center; The Seattle Art Museum or The Swedish Medical Center — all philanthropic causes that Arnold was directly involved with.