Bull City Venture Partners is the opposite of flashy. The 20-year-old, generalist venture outfit only invests in two to four companies each year. It mostly invests in founders who've been around the block at least once, catching them as early in their new adventure as possible. 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 firm founder Jason Caplain, the outfit just closed on $50 million in capital commitments for its fourth fund, roughly doubling the size of its previous fund, which was itself a big step up from the firm's first two funds ($15 million and $5 million, respectively).
It's not the kind of fast rise that industry watchers have grown accustomed to seeing in recent years. Caplain insists that's kind of the point. "We're driven by carry," he says, referring to the profits a venture firm makes off its successful bets. "We're not asset gatherers" who make a living off management fees.
Seemingly, Bull City is holding its own, having filled a bit of a vacuum in the market when it launched. Indeed, Caplain, a Massachusetts native who moved to Durham in the late '90s to work for Red Hat, says he decided to launch a venture firm partly because Red Hat had turned to investors far away in California (Benchmark and Greylock) before it went public in 1999.
"The goal initially was to create a fund where future Red Hats could turn for capital," says Caplain, who wound up raising money from Red Hat's former CEO, COO, head of engineering and head of business development over the years. (Before Red Hat was acquired by IBM in 2019, the company itself invested in Bull City's previous fund.)
Today, the firm remains focused largely on local companies, more of which are being launched by employees of regional giants like Epic Games and SAS Institute, a 40-year-old analytics behemoth that is reportedly planning to go public by 2024.
But Caplain -- joined by longtime partner David Jones, with whom he leads the firm (they also brought aboard a newer addition, Michael Lee, last fall) -- says the partnership is now focused on the East Coast more broadly and that, 10% of the time, it invests even further afield. For example, in 2020, the firm co-led the seed round of LaunchNotes, a Bay Area-based firm, because of an earlier relationship with its founder, Tyler Davis.
The strategy is paying off, says Caplain. While it's been a while since Bull City had a portfolio company go public -- the handful over the years include the multichannel commerce company ChannelAdvisor (its IPO was in 2013) and Motricity (which went public in 2010 and was folded into another outfit several years later after a lackluster performance) -- numerous portfolio companies have been acquired in recent years.
Among these, the Durham-based e-commerce marketplace Spoonflower sold to Shutterfly last August for a reported $225 million. Caplain suggests Bull City also saw a nice return from the 2019 acquisition of the performance management outfit VividCortex to SolarWinds for $117.5 million.
Bull City isn't exactly leaning into more startups, based on that momentum. While the firm just doubled the size of its previous fund, the plan is to continue investing between $250,000 and $2 million in startups initially, predominantly in companies that are seeing at least $25,000 a month in revenue. It will also occasionally sneak a check into a mature bootstrapped company. On even rarer occasion, it will spin up a special purpose vehicle. (Caplain says it has done this twice to date.)
The one thread throughout, says Caplain, is a founding team "that makes me want to quit my job and go work there" and that further needs -- and wants -- the firm's help.
"We can't differentiate by check size," he says, "so our competitive edge is to be a great partner and to ensure the founders we work with have an incredible experience with us. We want them to make referrals and come running back to us when they start their next company."