There has been a big debate over the last few years over whether the Series A crunch is real or not.
What everyone can agree on, though, is that there are definitely more seed and early stage funds now than ever before, and more people willing to give more and more money to young companies looking to make it big.
But just who are these funds and venture capitalists that run then? What kind of investments do they like making, and how do they seem themselves in the VC landscape?
In the coming weeks, we will be highlighting members of the community to find out.
Before forming Bullpen, Davidson was a managing director at VantagePoint Venture Partners, where he focused on digital media and mobile. He is also the founder of Covad Communications, an independent DSL provider.
He has also formed SkyPilot Networks, developer of a robust outdoor wireless mesh system, which was sold to Trillium in 2009 for connectivity to smart meters, and Xumii, Inc, a provider of mobile social network technology to carriers, which was bought by Myriad Labs.
VatorNews: What do you like to invest in? What are your categories of interest?
Duncan Davidson: We have pioneered ‘Post Seed’ investing, investing in seed funded companies that are showing product-market fit. Often they will be suitable for an A Round, but would prefer a smaller raise now to set up a Super Sized A later. Or, they are growing well but need more time in market to garner a larger investment from a traditional VC.
VN: What would you say are the top five investments you have been a part of? What stood out about those investments in particular?
DD: In our angel investing, our favorite successes were Zynga and Tanium. Both came from our network and had unique advantages to grow fast in winner-take-most markets. In our first fund, our favorites are Fanduel, Ipsy and Life360. All three showed similar characteristics: fast growth in winner-take-most markets. We also liked that their approaches were (when we invested) a bit out of favor.
VN: What do you look for in company's that you put money in? What are the most importany qualities?
DD: We look for fast-growers with product-market fit in large markets, plus some special characteristics: unique or highly differentiated, in winner-take-most markets with network effects, and run by the right sort of team.
VN: What is the investment range? How much do you put into each startup?
DD: Between $750,000 and $1 million.
VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?
DD: "Post Seed” which is either an early A or a late seed. Tthe letters having lost a lot of their prior meaning.
VN: In a typical year how many startups do you invest in?
DD: We invest in 10 companies.
VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world?
DD: Steve Jobs said you connect the dots in your life looking backwards. I was always a technologist – ham radio, coder – but first went to law school and became one of the early pioneers of computer law; then to consulting around technology, then did three startups, two of which were dot-com IPOs, then joined a major venture fund. Only recently did I start Bullpen with my two partners.
VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?
DD: We normally get 7% to 8%, but don't have a specific "gotta have" percent.
VN: What percentage of your fund is set aside for follow-on capital? What is the size of the fund?
DD: Reserves are 125%, which means for every $1 of investment we reserve $1.25. We are currently investing out of a $30 million fund.
VN: What percent of bullpen's companies received follow-on capital so far?
VN: Where is Bullpen currently in the investing cycle of its current fund?
DD: We are half way invested.
VN: Is there anything else you think I should know about you or the firm?
DD: Most funds are started to be like all the others. We started Bullpen more like a tech startup, to do something different, in this case Post Seed.