Bullpen Capital Raises Fund for ‘Unloved Gems’
A new $145 million fund will target startups that are turned away by other investors, a general partner says
Bullpen Capital said it raised a new $145 million venture-capital fund, which will support overlooked startups across all sectors with the potential for long-term growth.
The fund, the firm’s sixth and largest to date, signals continued confidence from Bullpen’s backers in its ability to identify “unloved gems” among startups that were passed over by other investors—especially during the past year’s turbulent markets, said Paul Martino, Bullpen co-founder and general partner.
“VCs can fall into looking for patterns and if you don’t match the pattern, you don’t get the money,” Mr. Martino said. “That’s a big mistake.”
Based in San Francisco, Bullpen typically provides early-stage startups with several million dollars of what it calls post-seed funding. Mr. Martino said post-seed startups are new businesses that have tapped their first funding round but aren’t quite ready for a formal Series A round. The firm spends up to a year coaching startup founders and teams that have identified clear market opportunities but need help fine-tuning their products or services, he said.
In the initial phase of business development, he said, “we’re the sixth and seventh inning pitchers,” Mr. Martino said.
Though Bullpen invests across the startup ecosystem, both its name and Mr. Martino’s sports analogies reflect some of the firm’s most successful investments. That includes early funding for fantasy-sports betting company FanDuel.
More recently, Bullpen in November took part in a $33 million Series B funding round for OneRail, an Orlando, Fla.-based last-mile delivery software startup, which has grown revenue by more than 300% and expanded services to over 330 U.S. cities since a previous fundraising round in 2021, OneRail said.
Bullpen’s latest fund adds to the venture-capital market’s record-high levels of dry powder—the estimated amount of capital available for VC firms to invest. Venture-capital firms in the U.S. raised a combined $151 billion in the first three quarters of 2022, exceeding any prior full-year totals, according to market-research firm PitchBook Data Inc. It estimates that, going into the new year, VC firms are sitting on nearly $300 billion in dry powder.
Yet market observers are divided over whether the level of pent-up venture capital bodes well for startups in the year ahead, or reflects investors’ reluctance to make risky bets in the face of mounting economic uncertainties. Both the number and size of funding deals slowed sharply in the second half of year, PitchBook said. It expects the pace of venture-investor fundraising for new funds to ease in the months ahead as rising interest rates offer lower-risk opportunities for limited partners, among other issues.
Mr. Martino said Bullpen’s investing strategy—which involves avoiding hot startups that draw a “pile on” of investors, he said—helped shield the firm from deep losses incurred by other VCs from overheated funding markets in 2021 and early 2022, especially in areas like crypto.
“You’ve just gotta move slowly and even more methodically than you did before,” Mr. Martino said about navigating uncertain conditions in the year ahead. “Being different is the key,” he said.