Durham-based Jurassic Capital has closed its inaugural fund—Jurassic Capital Growth Fund I—with over $20 million in investor commitments, the group announced today.
The closing comes after two years of working to fill the funding and opportunity gap that often faces bootstrapped software founders running companies with between $1-$5 million in annual recurring revenue (ARR). These startups may seek capital as well as operational expertise, but traditional venture capital or larger growth equity (or private equity) investments are often not ideal fits.
“As the Triangle tech ecosystem matures and gets bigger, we need different shapes and sizes of funders as well,” Jurassic partner Joe Colopy said. “We have a number of early-stage venture capitalists. We don’t have any growth equity, and so this is a natural progression that helps fill that gap that we’ve had in this area for a long time.”
Jurassic was created with that mission in mind by Colopy—the former Co-Founder and CEO of Durham’s Bronto Software—and former Bronto employee Kevin Mosley. Bronto was acquired by Netsuite in 2015 for $200M. [Editor’s Note: Joe is also affectionately known as the GrepBeat Godfather.]
After reconnecting at a Bronto reunion party, fellow Northeast Ohio natives Colopy and Mosley started imagining how they could address the issue of how few funding avenues there were for startups in that $1-$5M ARR range that are solid performers who have built real businesses, but are maybe not growing at the meteoric early rates favored by traditional VC investors.
At first, the team essentially invested Colopy’s money, but has now convinced other investors to put their money behind Jurassic’s bets.
Said Mosley, “It’s nice to take something that we’ve spent a lot of time on and worked really closely with founders, entrepreneurs, our network, the ecosystem, and made something bigger than just us as well. But it’s good to see the market validate that strategy and get us to where we are now.”
Mosley says ultimately Jurassic Capital serves as a growth equity firm, instead of a venture capital firm, meaning they can write bigger checks into fewer companies that are typically more mature, and stick with them for a while.
“It kind of helped show this thesis that yeah, we can do this,” Mosley said. “We can do real growth equity strategy, just at a smaller scale, and help these bootstrapped founders really make it to the next stage.”
Since Jurassic came to fruition in 2019, Mosley said the team has evolved in its equity approach. Originally coming from an operating perspective, he said they believed they would only be making majority investments (i.e. owning more than 50% after the deal) so that they would have full operational control. With time, they’ve realized it more so depends on the situation and the company.
“Originally, we thought we would not want to put money onto the balance sheet of these companies, that they would just be able to run profitably forever,” Mosley said. “It turns out now we’ll say, ‘Oh, actually, we have the opportunity to accelerate their growth.’”
He adds, “These are companies that are not distressed. They are actually growing pretty well on their own, and we actually have the opportunity to help them take a pretty solid growth rate and not blow it out by any stretch, but just take that and increase it slightly.”
Spurring a virtuous circle of exits
Now with the $20 million-plus fund finalized, Jurassic hopes to invest in 8-10 additional B2B SaaS startups in the Southeast in their sweet spot of $1-$5M ARR over the next few years, with an average check size of about $3.5M. The hope is that with Jurassic’s help, the companies will be able to hike their growth rate and be poised for an exit down the road.
If more companies are able to exit, these founders will hopefully be able to recycle their money back into the Triangle tech ecosystem, Mosley said.
“We want to make them the healthiest, most investable-looking companies around the time that they get to $10 million or so (in revenue),” Mosley said. “That doesn’t mean that we will exit at that time, but to be able to give them the option to to exit at any given point down the road is really what we’re trying to do.”
Mosley recommends founders in the area reach out for guidance on navigating the ecosystem, no matter how far along they are in their entrepreneurial journeys.
“We’re excited just to see more companies get to that point where exiting is a real option a few years down the road,” Mosley said. “We hope that that just continues to recycle the ecosystem. This should encourage more investors from outside the region as well to be able to come here and see just all the incredible experience and skill sets that we have here in the Triangle.”