A new $30 million venture capital fund for tech companies in Pittsburgh is underway.
With the help of a prominent group of local investment advisors, the BlueTree Venture Fund has closed on $10.2 million with the goal of raising $30 million total, money that will go a long way toward filling a gap in the local funding pipeline, says Catherine Mott, CEO and founder of BlueTree Allied Angels in Wexford.
“I’ve wanted to do a fund for a long time,” says Mott, whose company has long been a primary source of angel funding for budding entrepreneurs in the region. “Many people have said to us that they really liked what we’re doing, but didn’t want to attend the meetings. They asked if they could just give us the money.”
In doing the diligence for the fund, Mott and her advisors found a growing gap in available Series B funding for early stage companies. A shift is taking place in the venture ecosystem, she says. Angel investment has taken over the bulk of Series A rounds while the larger VC firms have become more active as Series C and D funders. This means Series B rounds are harder to obtain.
“When it’s time to scale, after they’ve (startups) proven their product, that’s when companies need a Series B,” she says. “It’s a more sizeable chunk (of money).”
BTVF will work with regional angel groups, economic development organizations like Idea Foundry, Innovation Works and others to provide follow-on investment. Most of the funding will be targeted for companies within a 250-mile radius of Pittsburgh, she says, but companies outside the region may qualify as well.
Mott is joined by BTVF’s managing partners Royer Byford, Vocollect founder; Jonathan Pastor, founder and CEO of Rent Jungle; David Motley of Headwaters SC Life Sciences and a team of technical advisors including Pete DeComo of ALung.
The fund will focus on capital efficient life science companies and IT and hardware companies.
BTVF has received funding through Pennsylvania’s Commonwealth Financing Authority as well as 28 limited partners, each investing a minimum of $250,000.
“I’ve been riding this wave and it’s been fascinating to see how entrepreneurism continues to grow in the U.S.,” says Mott. “It’s called paying it forward. That’s what all of these angels do. So many people who have great ideas and great aspirations are funded by people willing to take the risk.”