Bull City joint venture partner is the opposite of flashy. This 20-year-old general venture outfit only invests in 2-4 companies per year. It primarily invests in founders who have been around the block at least once, catching them early in their new adventure. And from its headquarters in Durham, North Carolina, it largely invests in East Coast startups located between Philadelphia and Atlanta.
Investors seem to approve of its deliberate approach. According to company founder Jason Caplain, the outfit has just completed a $50 million capital commitment for its fourth fund, nearly double the size of the previous fund, which in itself is a huge step up from its predecessor. the company’s first two funds ($15 million and $5 million), respectively).
It’s not the kind of rapid rise that industry watchers have grown accustomed to seeing in recent years. Caplain insists that is an important issue. “We are driven by performance,” he said, referring to the profit a venture capital firm generates from its successful bets. “We are not property collectors” make a living on management fees.
It seems that Bull City is holding its own position, when it first launched in the market. Indeed, Caplain, a Massachusetts native who moved to Durham in the late ’90s to work for Red Hat, says he decided to start a venture company in part because Red Hat turned to investors. far from California (Benchmark and Greylock) before it went live. made public in 1999.
“The original goal was to create a fund so that future Red Hat could recoup funds,” said Caplain, who raised money from former Red Hat CEO, COO, head of engineering and head of development. business over the years said. (Before Red Hat was acquired by IBM in 2019, the company itself invested in Bull City’s previous fund.)
Today, the company remains largely focused on local companies, many of which are being launched by employees of regional giants like Epic Games and SAS Institute, an analytics firm. The 40-year-old giant is said to have plans to go public in 2024.
But Plain – joined by longtime partner David Joneswhom he leads the company (they also bring in a newer addition, Michael Lee, last fall) – said the partnership is now focused on the broader East Coast and that 10% of the time, it invests even further. For example, in 2020, the company co-led seed round of LaunchNotes, a Bay Area-based company, due to a previous relationship with founder Tyler Davis.
Caplain says the strategy is working. While it’s been a while since Bull City has had a portfolio company go public – a few over the years have included omnichannel trading firm ChannelFast (IPO in 2013) and Motricity (out). went public in 2010 and put into a different outfit a few years later after a lackluster run) – many portfolio companies have been acquired in recent years. Of these, Durham-based e-commerce marketplace Spoonflower sold to Shutterfly last August for reporting. $225 million. Caplain suggests Bull City has also seen a nice comeback from the 2019 acquisition of the VividCortex performance management outfit for SolarWinds for $117.5 million.
It doesn’t exactly rely on more startups, on that momentum. Wsays the company has just doubled the size of its previous fund, the plan is to continue investing between $250,000 and $2 million in early startups, mostly in those with the least amount of revenue. $25,000 a month. It will also occasionally sneak into a mature startup.
In rarer cases, it will become a dedicated vehicle. (Caplain says they’ve done this twice so far.)
A running theme, says Caplain, is that a founding team “makes me want to quit my job and go work there” and that it needs – and wants – the company’s help.
“We are indistinguishable by check size, so our competitive advantage is to be a great partner and to ensure the founders we work with have a great experience with us. . We want them to recommend and come back to us when they start their next company.”
