(Photo by Christopher Michel)
Charlie O’Donnell announced today that he has completed fundraising for Brooklyn Bridge Ventures’ second fund. (He went head to head with some basketball player who also announced a new fund today.)
The fund is $15.1 million. That’s nearly twice the size of the firm’s previous $8.3 million fund. The larger pool of capital will enable O’Donnell to notch up the size of his seed-stage investments in new portfolio companies, he said, from about $200,000 to $350,000.
It was much easier to fundraise this time around, he said. He got commitments in about a third of the time it took to raise the firm’s previous fund.
“The first time around, there were lots of questions about how I was going to run the firm,” he said in an interview with Technical.ly. “‘Will you get deal flow? Can you make it work as a solo general partner?’ Those are easily answerable questions now.”
It’s still too early to tell what will ultimately happen with Brooklyn Bridge Ventures’ portfolio companies, but O’Donnell said things were looking good. He mentioned portfolio companies like Manhattan home security startup Canary, which raised a $30 million Series B last summer and Brooklyn communications startup goTenna, which raised a $7.5 million Series A earlier this year.
Charlie O'Donnell worked to attract different kinds of investors to this latest round. One example? Professional poker player Vanessa Selbst.
What makes O’Donnell stand out is his accessibility to founders. That might come from his background, which he often touts: working-class Bensonhurst roots and unconventional entry into venture capital, by way of an internship at General Motors in high school, which led to his first job in the auto manufacturer’s investing division.
O’Donnell said he’s willing to take meetings with founders at the earliest stages and is open to cold calls. He’ll even actively solicit them. He tries to go out of his way to make himself accessible, hosting dinners and startup events throughout the borough. (Tonight, he’s holding another #notapitch session, in which founders can present their unvarnished startup ideas, at Brooklyn Law School.)
As a result, nearly half of Brooklyn Bridge Ventures’ portfolio companies have female, nonwhite, or LGBT founders. But according to O’Donnell his focus is less on demographics than diversity of thought.
“You make returns by taking risks on new ideas,” he said. “If you have the same ideas as everyone else, that’s hard to do.”
That diversity extends to the fund’s limited partners. O’Donnell structured the fund so that more individual investors could participate, contributing $100,000 or $200,000 at a time. (SEC regulations limit the number of investors in a fund to 99. To get around that, Brooklyn Bridge Ventures’ new fund is actually split in two, one for institutional investors and one for individuals.) Among his new investors, for instance, is professional poker player and Brooklyn native Vanessa Selbst, the first woman to be ranked No. 1 on the Global Poker Index.
“She runs in circles that are very different than, say, the managing director of BlackRock,” O’Donnell said, referring to the investment management giant. “Her network positively adds to the fund.”
With more money at his disposal, will O’Donnell’s investment strategy change? Not really, he said.
He’ll continue to invest primarily in seed rounds — within the first $1 million a company raises — of startups within New York City. The larger fund will enable him to make small follow-on investments in portfolio companies that raise additional rounds, though that’s mainly to make fundraising easier for the founders.
“This way, they can confidently say all of their investors are continuing to support the company,” he said.
When he spoke with Technical.ly two years ago after raising his previous fund, O’Donnell spoke about venturing beyond Brooklyn’s established Tech Triangle. That remains the case: his next startup dinner, for instance, will take place in Ditmas Park. (O’Donnell is skeptical on the nomenclature, though: “I’m pretty sure we used to call that Flatbush.”)
He’s particularly bullish on Gowanus, where his firm’s office is based. He cites the proximity to convenient transportation — the F and G trains provide easy connections to other startup hubs in downtown Brooklyn and Williamsburg — and interesting diversions, such as Brooklyn Boulders and Brooklyn Fencing Center, as draws.
Though Brooklyn Bridge Ventures invests in a wide range of industries — “We seem to be getting more unfocused,” O’Donnell told Technical.ly — it might, in fact, be carving a small niche into eco-startups. This spring, he invested in Agrilyst, dubbed “Google Analytics for greenhouses,” and he’s currently closing an investment in Industrial/Organic, a Red Hook-based company developing a more efficient (and less stinky) method of composting.
“I never thought I’d answer ‘trash’ as one of the sectors I’m looking at,” he said. (Also, weed.) “I’m consistently surprised by the type and quality of entrepreneurs who come through my door.”
While VCs often identify the magical $1 billion mark as their goal, O’Donnell said he’d be satisfied if his big winners reached a $250 million exit.
“It’s very difficult to predict, but I make sure I know the math works at $250 million,” he said.
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