Cohen Likely to Keep Aim on “Angel-Scale” Deals with new $150M Fund

The evolution of Techstars CEO David Cohen from an entrepreneur “vaguely dissatisfied with the way angel investing worked” to a full-fledged venture capitalist has taken another major step forward with his fresh efforts to raise a $150 million investment fund.

While Cohen is best known as the head of the Techstars startup accelerator, which has invested in nearly 300 companies and expanded all the way to London, he’s also a very active investor in his own right.

Cohen has made what he calls “300 angel-scale” investments in startups across the country. Many of those startups, such as SendGrid and Orbotix, have Techstars pedigrees, but many others do not.

Now, he’s shooting to invest in a lot more startups, although he’s stretching the definition of angel. The new fund, known as Bullet Time Ventures 2014, will be Cohen’s third, by far the biggest, and likely the most ambitious.

In an e-mail, Cohen declined to comment about the new fund, which was just revealed in an SEC filing Thursday and hasn’t officially collected any cash yet.

The evolution of an investor

So we don’t know much about Cohen’s specific plans for this new, larger investment fund. But recently I interviewed Cohen about his broader experiences as an angel investor and why he’s been working to change the angel-investing model—through Techstars, the Colorado chapter of the Open Angel Forum, and his first two personal funds.

The responses shed some light on how he’ll likely operate the new Bullet Time fund, whenever it finishes raising money and actually starts cutting checks to entrepreneurs.

The motivation to change things came in the mid-2000s, after Cohen had sold Pinpoint Technologies, the company he cofounded with Techstars president David Brown, to Zoll, a medical equipment manufacturer. Cohen continued with his own startups, but he also sought out a local angel investor group and began making investments with his earnings.

Cohen said he didn’t know how to pick a winner and was prepared to lose money in order to learn.

“I literally viewed it as a learning expense. It was like paying for tuition. I said ‘I’ll probably lose this money, but I’ll learn a lot in the process,’” he said.

Cohen made a good bet soon enough: his second investment, in Twilio, which makes cloud-based communications software, already has proven to be a successful business.

But Cohen’s ignorance went beyond vetting companies. He said he also didn’t know how to be helpful to the entrepreneurs personally, or what roles angels took on beyond cutting checks.

It wasn’t long until Cohen realized two important things—he wanted to make his living as an investor while staying in Boulder, and he thought angel clubs had too many non-investors who actually were “torturing startups.”

“Very often it is true that angel groups are full of people who … Next Page »

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