Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Charlie O’Donnell, Brooklyn Bridge Ventures was recorded in November 2017.
Charlie O’Donnell, Partner at Brooklyn Bridge Ventures, talks about his Seed investing activities and related industry trends.
Sramana Mitra: Let’s start by getting acquainted. Tell us about Brooklyn Bridge Ventures as well as yourself.
Charlie O’Donnell: Brooklyn Bridge Ventures is a seed fund based in Brooklyn, New York. It’s the first fund to be located in Brooklyn. I’ve spent the vast majority of my career in the venture capital asset class, which is actually pretty rare. Usually people start off as founders or they come from another industry. It’s not usually something where you apprentice your way up, but that’s what I did.
I started at the General Motors pension fund as an institutional investor. The fund has been investing in the asset class since 1978. That’s what led me to working at Union Square Ventures as their first analyst. Union Square pitched us back in 2004 with their first fund. From Union Square, I did some startup stuff on my own and returned to venture to help First Round Capital open up their New York office. I worked with them for about two years before going off on my own and starting Brooklyn Bridge.
At Brooklyn Bridge, we fund early stage companies across a wide variety of industries, mostly but not all tech. The criteria is if the company is yet to raise $750,000 in a previous round, then I’m open to take a look.
Sramana Mitra: What is the size of your fund?
Charlie O’Donnell: The second fund that I’m investing out of is a $15.5 million fund.
Sramana Mitra: What is the size of investments that you like to make?
Charlie O’Donnell: About $300,000 to $400,000.
Sramana Mitra: What types of ventures do you like to invest in – B2B, B2C? What is your sweet spot?
Charlie O’Donnell: It is probably the most diverse portfolio you will find. I am investing in everything from B2B SaaS, consumer electronics, to brick and mortar, to an organic waste processing facility. It’s a bit all over the board.
Sramana Mitra: Our work is entirely in IT and IT-enabled services. Let’s focus the rest of our conversation on that sector of your investment. Within that, I’d like to explore your stage preference a bit more. You said that you like to invest in companies that have raised a maximum of $750,000 prior to your participation. Did I get that right?
Charlie O’Donnell: Basically. You referenced the wide variety of terms that people use around early stage investing. There’s way too many to keep track of. Frankly, they’re inconsistent. What I was looking for was a very hard and fast rule where somebody could very easily understand whether or not they were the stage I was looking for. I use funding as a proxy.
Sramana Mitra: If you use funding as the proxy, $750,000 is the max. What is the minimum?
Charlie O’Donnell: Zero.
Sramana Mitra: So you would do concept stage?
Charlie O’Donnell: Absolutely. What I’m trying to do is work with the founder as they spent their first million dollars. I’ve invested at PowerPoint stage. I actually even think that my investment Tinybop was before a PowerPoint.
Sramana Mitra: Great. What about geography? What are your focus areas?
Charlie O’Donnell: I’ve got to be able to bike to the company so that means New York.
Sramana Mitra: Within IT and IT-enabled services, could you help our entrepreneurs with some more specifics of what you think are good opportunities that you are looking to invest in? What trends are you excited about? What technologies are you interested in right now?
Charlie O’Donnell: I consider entrepreneurs to be a lot more knowledgeable about this stuff than investors. I would caution founders to avoid trend following. If you think about it, the time it takes for a company to go from concept to first product is oftentimes six months to a year. The time it takes for a concept or product to turn into a company that would exit for a venture capital sized exit could be five to nine years.
It’s very hard to win by catching super specific micro trends. You look at something like AI. There are perfectly fantastic use cases for that technology and there are bad ideas. I tend not to be a trend follower and to be opportunistic. We really expect the founder to come to me and say, “Let me tell you what’s going on in my industry. Here’s why I can create value.” I consider myself more of a learner than a predictor.