THE JOURNEY CONTINUES - ANNOUNCING BONFIRE II
When we first came together to form Bonfire Ventures, we did so because we believed we could do more together vs apart. Invest in more B2B software companies. Partner with more amazing founders set on changing the status quo. Publish more about building such companies. Develop more templates, tools, and guides for portfolio companies founders, and for founders beyond the portfolio. Do more to support the B2B software startup ecosystem, especially in Southern California. Broaden the value-add that we’re able to deliver. Build a bigger team to do all of the above.
We kicked off Bonfire’s first fund in January of 2017. We raised $63M for that fund, a nice step-up from the prior funds at the predecessor firms that maxed out at $36M. And $63M in absolute terms is a pretty good size for a first-time fund. While we had a strong and directly-relevant investing track record -- each of the three most recent funds were above vintage-year top decile performance -- we had never formally invested together as a team, so our institutional investors were taking the risk that we’d continue to be good at it, together.
Our plan for Bonfire was to invest in 25-30 companies over a three year investment period. We hit the mark, with 28 companies added to the portfolio, investing from that fund through December 2019. We hit our reserve targets as well, investing 45% in initial checks and saving 55% for follow-ons in existing portfolio companies. We’ve been so grateful that talented founders like these chose to partner with us to help build their businesses:
(Plus many others! Please go here for the full list) The companies in the Bonfire I portfolio are as a group scaling impressively. Their collective revenue has grown over 800%, despite a short hold period (average two years). They have gone on to raise follow-on financings from such great firms as Emergence Capital, Index Ventures, Toba Capital, Greycroft, Drive Capital, March Capital, Alpha Edison, PeakSpan, Bessemer and others.
Along the way we are also grateful that our investors funded our first Select Fund, which exists to participate in the Series B rounds and beyond of companies in the family that are breaking out. Through this vehicle, we were able to invest more in such great businesses as ChowNow, TaxJar, Rainforest QA, Earnest Research, Particle, Invoca, EVConnect and Inspire.
Now, we’re very pleased to announce that we’ve completed the final close on our second core fund, Bonfire II, which we kicked off in January of this year. We were oversubscribed and cut off the fund size at our cap of $100M. In the midst of a global pandemic, we feel exceedingly fortunate to have achieved this milestone in such a short timeframe. Building a VC firm and managing its funds is a decades-long endeavor: we’re delighted to be continuing the journey.
The game plan for this new fund is very similar to the game plan for the last fund. A tight focus on leading Seed rounds in B2B Software. 25 to 30 companies over a three year investment period. A deliberately concentrated portfolio for seed stage, to allow us to continue to be attentive and responsive to founders’ needs, and over the life of their Company earn the position of most trusted investor/advisor. The larger fund size allows for a slightly larger initial investment and a slightly higher percentage reserved for follow-ons. And now we have an investment team of four vs two, with room to expand the team and invest even more in the future of the firm.
Furthermore, we, as a firm, strongly believe in the power of diversity for a very simple reason: more diverse teams win more. From day one we have included in all of our term sheets a “Hiring Inclusion” term and an “Anti-Harassment” term, where we set the expectations that each company will put in the extra effort to seek out and consider candidates from underrepresented categories, and that each company will be deliberate in ensuring that people feel safe and respected in the workplace. We are pleased to share that over 40% of our investments to date have at least one founder who is not a straight white male. That said, there remains room for improvement with respect to backing underrepresented and under-appreciated founders, and with respect to the diversity of our own team, and we are committed to improving.
Special thanks to our “anchor” investors, without whom we would not exist. These include Daher Capital, Foundry Group, Mercer Advisors, Atento Capital, Aspen Grove Capital, and Shea Ventures. Thanks too to the over 30 successful startup founders and executives who are supporting us by investing in this fund. Our LP base is a powerful advantage.
We started investing from this new fund in January of this year, and have already welcomed seven companies to the new portfolio and the Bonfire family. These include Optimize Health, SKAEL, and Cube Software, plus four others that have not yet been announced. If you’re a talented founder building a software company seeking funding at our stage -- or if you know one -- we hope you’ll reach out to us. We welcome inquiries and submissions via our website at the bottom of the page, where it says “Submit an investment opportunity”.
Mark, Jim, Brett, Loren, & Tyler
