Brightstone Venture Capital Launches New Fund BVC2 Targeting $100m



Via News Release

BRIGHTSTONE VENTURE CAPITAL today announces the formation and first closing of its new venture capital fund focused on early stage technology and life-science businesses, primarily in Minnesota but also across the U.S.

The new venture fund will be called BVC2 LP and be managed by the same general partnership team of David Dalvey, Patrick O’Shaughnessy and Seth DeGroot.  The new fund formally accepted its first limited partners last week, has made its first investment and expects to close on just over $25 million in fund commitments thus far, primarily from existing limited partners in its previous Brightstone Venture Capital Fund.”

The new BVC2 fund will have a hard cap total size of $100 million and invest amounts ranging from $1 million to $10 million into venture stage technology and life-science companies across the U.S.

Today, the new BVC2 venture fund also closed its first investment in a Boston-based cloud storage platform called WASABI, a new venture formed by the two previous founders and CEO/COO of CARBONITE, which now trades publicly with a market cap of $650 million on annualized sales of $250 million.  Wasabi founders David Friend and Jeff Flowers formally launched their online storage service a few months ago and currently have over 600 initial customers and claim to deliver storage speeds over 6X faster at 1/5 the per/GB cost of Amazon’s S3 cloud storage services.

Brightstone Venture Capital has been investing in Minnesota since 1985 and has invested in over 70 primarily Minnesota businesses. Most recently, Brightstone invested in 14 companies over the past four years including local companies such as:  BiteSquad, Celcuity, Stemonix, Atavium, Gravie, HomeSpotter, MiroMatrix, and has prior successful exits such as: Definity Health (sold to United Health), AppTec Labs (sold to WuXi Pharma), August Tech (sold to Rudolph Tech), chf Solutions (sold to Gambro), Health Fitness (sold to Trustmark JNJ), Gentra Systems (sold to Qiagen NV), XIOtech (sold to Seagate), IntraTherapeutics (sold to Sulzer) and SpineTech (sold to Sulzer).

With the number of VC firms based in Minnesota dropping to a low in recent years, Brightstone Managing Partner David Dalvey states that “Brightstone will continue to be one of the largest and most active early stage investors in Minnesota and we are excited to continue our long history of helping extraordinary entrepreneurs realize their vision and help create significant value for their stakeholders and build extraordinary companies”.  Dalvey states that he believes the broader venture cycle dynamics and market conditions remain very favorable for the active investor buy-side of the market.  In particular, “pre-money valuations for early stage venture transactions in the Midwest remain lower than those on the Coasts, as the relative scarcity of active investors means less competition.  Competition amongst costal VCs can inflate investment valuations prematurely” states Dalvey.

“While our largest geographic focus will remain towards the Midwest, we have strong connections with other mainstream venture firms as well as young entrepreneurs all across the country” says Brightstone Managing Partner Seth DeGroot.  With a particular focus on emerging industries such as artificial intelligence, virtual/augmented reality, IoT and blockchain, DeGroot feels the firms connections nationally will help them syndicate investment transactions led by Brightstone, and participate in exciting deals nationally.  “We love to wake up every morning and see what new ideas and technologies and market leading companies are developing here in Minnesota and across the world”, says DeGroot.

Brightstone’s third Managing Partner, Patrick O’Shaughnessy feels that co-investment is another strong suit for Brightstone as the team’s prior venture fund led nine of their 14 deals and allowed for co-investment opportunities into five of those deals in an amount that collectively exceeded the entire amount invested by their fund to date.  “While there is no assurance that every investment will have a co-investment situation, we feel our ability to selectively show our limited partners what we believe are very unique and promising co-investment opportunities is a very valuable difference in our investment strategy”, says O’Shaughnessy.