Cohen Likely to Keep Aim on “Angel-Scale” Deals with new $150M Fund
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never actually invest. They’re full of people who are being entertained by being around wealthy people, even if they’re wealthy. It’s a social sort of thing,” Cohen said.
Ultimately, his frustration and his desire to be more engaged with startups led to the formation of Techstars, which graduated its first class in 2007. But Cohen kept angel investing and made 20 to 25 investments. They were spread pretty evenly between Techstars startups, non-Techstars startups from around the country, and companies from around Boulder, he said.
The number of deals brought him to the point where enough of his net worth was tied up in startups that he had to slow down, and it led to a change in direction. Instead of investing only his personal money, Cohen thought he could use his money to create a small fund that others could invest in, making more and larger investments than he could on his own.
That realization, along with the help of prominent local investors, led to the creation of his first fund, Bullet Time Ventures, in 2009. It was good news for startups, but it also marked a change in Cohen’s trajectory.
“The moment when I created the first $5 million fund, I technically became a venture capitalist. A lot of people are confused by that. So even though we were investing $50K at a time, we were now a venture capital fund,” Cohen said.
Despite being relatively small, that fund’s investments went to winners like Uber and SendGrid, Cohen said. It also led to Bullet Time Ventures II, which raised $25.6 million and was formed in 2011. Cohen said that allowed him to make bigger investments, usually about $100,000, and to continue on in following funding rounds.
Following an angel’s strategy
While technically now a VC, Cohen said he follows an angel investor’s approach, making small bets in seed and early stage rounds and providing mentorship as needed. He also presents himself as an angel interested in helping entrepreneurs in a way that’s different and possibly more relaxed than early stage VCs can.
“If you look carefully at how I brand it, whenever I invest, you see it’s David Cohen, even though the fund is actually called Bullet Time Ventures. The reason I do that is that I want to be perceived as an angel, perceived as the first investor in. I think a lot of entrepreneurs want those individuals, they don’t want fund money that has pressure for returns and all that,” he said.
As the size of his funds jumped, the nature of his investors changed as well, and over time they are likely to become more like the institutional investors who are limited partners in large venture fund, Cohen said.
Those investors might be interested in the returns a successful angel investment could bring, but they would not be interested in screening hundreds of small companies and investing $100,000 in a few dozen deals, he believes.
We’ll have to see how that theory plays out with Cohen’s newest Bullet Time fund. With a target size of $150 million, it would be a much larger pool of cash to work with, and it could attract a new class of investors to angel-scale investing. But new types of investors are likely to bring with them new expectations for high returns. It will be interesting to see how Cohen balances their desires with the mentorship-focused approach he has been following for nearly a decade.