Blumberg Capital, which was founded in 1991 by investor David Blumberg, has just closed its fifth early-stage venture fund with $225 million, a vehicle that was oversubscribed — Blumberg had planned to raise $200 million — and has already invested in 16 startups around the world, according to Blumberg (the firm has small offices in San Francisco, New York, Tel Aviv, and Miami, where Blumberg moved his family last year).
We spoke with him earlier this week and he sounded almost ecstatic about the current market, which has clearly been good for returns, with Blumberg Capital’s biggest hits being Nutanix (which claims a 68x return), DoubleVerify (which claims a 98x return at IPO in April), Katapult (which went public via SPAC in July), Addepar (which is currently valued at over $2 billion), and Braze (which is currently valued at over $2 billion) (it submitted its S-1 in June). We also discussed his new life in Florida, which he quickly clarified is “not a clone of Silicon Valley.” Last but not least, he explained why he believes we are living in a “golden era of applying intelligence to every business,” from mining to athletic performance.
DB: Our previous 30 to 40 deals have all been about large data that has been processed by artificial intelligence of some kind then wrapped in a better wrapper of software process automation on the internet and mobility rails. Okay, there are a lot of buzzwords there. DB: What I mean is that this ability to take raw data that has either been sitting around and not analyzed, or data from new sources such as sensors, social media, or a variety of other places, analyze it, and then distribute it to all of these businesses that have existed for a long time, is beginning to [have] incremental [impacts] that may appear small [but add up].
One of our [unannounced] startups uses AI in mining — lithium mining, gold, and copper mining, for example — so that miners don’t waste time looking for the richest vein of deposit. We work with mining companies to bring extra data that they don’t have access to — some of it is confidential, some of it is public — and since we’re masters at AI modeling, we can apply it to their geography and geology, and as part of the business model, we take a stake in the mine.
DB: This is clearly done a lot in the oil and gas industry’s E&P, or exploration and production, and we’re just following a tried-and-true model, where some of the service providers put in value and take a cut. As a result, our interests are aligned, and the better we perform for them, the better they do. DB: In general, we write checks ranging from $1 million to $6 million. We could go lower for anything in a seed where we can’t obtain a bigger slice, but we like to have a big stake upfront. We discovered that [we need to be math-minded about things] to have a fund return of at least 3x — and our funds seem to be returning considerably more than that].