David Gardner Startup Hats 2014

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**The ExitEvent team agreed to edit this story to respect the legal requirements of the sources. It will be updated when more details about a potential fund can be shared.

David Gardner
is a victim of his own success.

In two years, the Cary angel investor and serial entrepreneur has amassed a portfolio of 17 Triangle-area startups, a third of which have raised larger rounds of funding, threatening his typical 10-15 percent stake in each company unless he re-ups.

You see, Gardner likes to get in early. Many times, his entrepreneurs have only an idea. Sometimes they have technology. Other times, they have research and intellectual property. In rare cases, they have customers and revenue. As is evident in his new book The Startup Hats, he prefers to have a large impact on a company's development, "to know his companies intimately," he told me during an interview yesterday. 

But he started to notice a problem late last year. Seven companies—Validic, ArchiveSocial, Stealz, FilterEasy, Tuee, FotoSwipe and Fortnight Brewery—either raised or planned to raise a bridge or series A round in the last quarter of 2014 or first 60 days of 2015. With some of those companies now commanding $20 million valuations, he didn't have the financial wherewithal to exercise his pro rata rights (which allow him to maintain his equity position) and continue to invest in later rounds—especially without his companies far enough along for an exit that would return cash to his bank account. He wanted to keep his large stakes in the companies he'd invested so much time in building.

So when former Silicon Valley-based Trinity Ventures investor Alex Osadzinski reached out last year with hopes of creating a fund, Gardner listened. And quickly, they found some synergy. Though Osadzinski has made seven local angel deals, he doesn't consider himself an early stage investor—he previously specialized in the series A and later rounds. 

But after coinvesting with Gardner and watching the success of the Cary man's portfolio, he trusted Gardner to find the early stage deals. And Osadzinski could use relationships in Silicon Valley and elsewhere to help Gardner's existing portfolio companies and new ones grow or raise additional funds beyond the Triangle. 

Today at Bull City Venture Partners' Entrepreneurs' Series event, Gardner expressed his interest in raising a seed fund with Osadzinski and Whitney Rowe, a Raleigh investor and Kauffman Fellow, as partners. Gardner would likely focus on B2B software companies—he built and exited seven of those companies over his 27 year career as an entrepreneur and they make up the majority of his portfolio today. There could be an occasional consumer-oriented startup due to Osadzinski's experience and affinity for those.

I asked Gardner if there would be any downside to two active angel investors partnering up, and he said no. They could do deals faster and more effectively—eliminating the half or more of his time now spent raising additional rounds for his companies.

They could do more deals (He sees eight business plans a day.) and support those companies longer in their life cycle. And they could bring more investors to the pool. Rowe, for example, has many connections with family offices both here and around the nation, as a result of her relationship with the Kauffman Foundation.

If all goes as planned, the Triangle could soon have another early stage seed fund, a necessary step to get more funding—and VC attention—to our region.