Bonfire Ventures, a Los Angeles venture capital firm, invests in seed-stage business-to-business software companies and aims to change the odds so that more than the average 33% of companies in this sector make it to Series A.
The firm seems to have some good traction so far. It says over 85% of its portfolio companies raise follow-on funding — a collective $1.15 billion — and its first fund is “ranked as one of the top 5% of VC funds globally,” while the second fund is in “the top 10% of their respective vintage years.”
Some of the companies getting follow-on funding include digital adoption company Spekit, led by CEO Melanie Fellay, which announced a $45 million Series B in January, consumer goods app company Aforza and e-commerce company Swell.
Both managing directors Jim Andelman and Mark Mullen were leading their own venture capital firms in the early 2000s and often co-invested on startups and decided to combine forces as Bonfire Ventures. The third managing director, Brett Queener, joined in 2018 after a career at Salesforce and Siebel Systems.
They secured $230 million in capital commitments for their two new funds, which include a third core seed fund of $168 million and a second opportunity fund flush with $63 million. The firm’s leaders tell me they are “intentionally selective” in the number of startups they invest in under each fund, around 25 to 30, so they can give more specialized support to founders.
Andelman and Queener spoke to me about the new funds, how the firm is working with startups and what they are telling their portfolio companies during this challenging investment environment. The following conversation was lightly edited for length and clarity.
TechCrunch: How did you and Mark Mullen start working together?
Andelman: The L.A. venture community was small for a long time, still relatively pretty small, and we all had small funds. We bumped into each other all the time and collaborated a lot more because we had independently developed the same investment focus in the same geography, same sector, same stage. We joined forces for a couple of reasons: One, we knew there was a great opportunity here for a bigger firm to play a bigger role in the ecosystem. We knew with a bigger team we could better support founders and the community. Two, we wanted to build something that outlasted us. It started as the two of us and now there are seven of us.
What’s your approach in investing in companies?
Queener: We’re going to spend the next 10 years of our lives together with the people that we invest in, so we have to like them and they have to like us because the journey or any software company is long and has lots of ups and downs. Our approach is pretty hands-on, like a two-way partnership. We are looking for software companies with a strong narrative that we think can become iconic brands with products that buyers cannot live without. We also want a strong …read more