Boldstart Ventures, a seed- and early-stage venture firm that markets itself as a “day one partner for developer-first, crypto-infrastructure and SaaS founders,” has closed on two new funds roughly 14 months after announcing its last two funds.
The firm — which began in New York with a $1 million proof-of-concept fund in 2010 — has closed its sixth flagship fund with $192.2 million, it is announcing today; it also closed its third opportunity-style fund to back its breakaway companies with $175 million in capital commitments.
Early last year, Boldstart closed on $155 million in capital commitments for its fifth flagship fund and $75 million for its second opportunity fund, so its newest later-stage vehicle is a big step up in particular. It also comes at an auspicious time, given that some of the industry’s most active late-stage investors, including SoftBank and Tiger Global, are writing fewer and smaller checks at the moment. (The less competition for late-stage deals, the less frothy the deal terms and the more time for due diligence, yadda yadda.)
Not much has changed otherwise, unless you count the move of firm co-founder Ed Sim to Miami, which is notable given that Boldstart’s early focus was largely regional, including a focus on New York, as well as on underfunded Canadian talent. (The firm remains active up north.) The firm will still writes checks as small as $250,000, it says; it is also willing to invest up to $30 million in a single portfolio company.
Some of its best-known deals to date include Snyk, a company that helps developers use open source code and stay secure and whose valuation, as of last fall, was $8.5 billon; Blockdaemon, a blockchain infrastructure company valued at $3.25 billion earlier this year; and the data intelligence platform BigID, valued at $1.25 billion by its investors last year. Boldstart was also among the first investors in Kustomer, a startup that specializes in customer-service platforms and chatbots and which Facebook acquired in November 2020 for a reported $1 billion.
We talked with Sim last week about the markets, which he noted “suck” right now. At the same time, he’added, “I do think that things [had grown] a bit too frothy.”
Among the newer developments he has observed are pulled term sheets, he told us, particularly on the later-stage side. He said he also saw terms for a 2x liquidation preference inserted into a sizable round, meaning investors demanded that in exchange for their funding, they be guaranteed twice the amount of their invested capital in an exit scenario — before anyone else gets paid.
Indeed, like a lot of VCs right now, Boldstart is actively counseling its startups to conserve cash so that they aren’t in the position of having to accept terms that can hurt them down the road.
“Founders can get shocked when they see that because on the one hand [they’re thinking], ‘I’ve raised money. I maintained my valuation,” said Sims. “The reality is maintaining your valuation is not great if you take a 2x liquidation preference [to do it].” If you do, “under certain scenarios,” he continues, “you’re not gonna make a dime.”