SAN DIEGO – The venture capital industry is “broken.” Blueprint Equity wants to fix it.
The private equity investment firm invests in high-growth enterprise software and technology businesses that are already generating between $1 million and $7 million, but aims to avoid the standard process that results in startup founders eventually selling their companies for several hundred million dollars, the vast majority of which is then shifted to equity investors that previously funneled large sums of money into the company.
“We’re just not believers in getting on that continuous fundraising hamster wheel and going down the alphabet for funding rounds A, B, C, D,” Blueprint co-founder and Managing Partner Sheldon Lewis said. “That, we believe, doesn’t create the most sustainable, efficient, healthy businesses and leads to, much more often than not, negative outcomes for the entrepreneurs and the early investors.”
The firm announced the close this month of its oversubscribed third investment fund, Blueprint Equity III, LP, totaling $333 million.
Blueprint intends to make investments between $5 million and $15 million in each startup, according to Lewis, who said the firm expects the newest fund to last three-to-four years. Blueprint previously closed its second fund in 2022, but that only totaled $175 million.
“What we really want to do is kind of back up the truck on the ones that we can see a clear path to a big outcome, and do more (mergers and acquisitions),” he said. “So I would expect the same pacing … until we think about raising fund four.”
‘Betting on the Jockey’
Lewis co-founded the firm in 2018 with Managing Partner Bobby Ocampo after the two worked together as analysts for the investment banking and financial services company Piper Sandler Companies, then known as Piper Jaffray. Blueprint raised its first fund of $75 million that same year.
Lewis described the firm as operating between early stage venture capital firms, which make up for their 80% loss rate by receiving a significant return from the remainder of their investments, and late-stage equity firms that are more focused on leveraging tools like debt or cost cutting rather than pure growth.
“These are not companies that have raised millions and millions of dollars and artificially gotten that growth,” Lewis said of the kinds of startups Blueprint targets. “It’s been earned through product-market fit, through great product, great team.”
The firm primarily aims to surround company founders with the resources necessary to substantively propel their existing self-sustained growth.
“We’re betting on the jockey, not just the horse,” Lewis said.
Since the firm’s founding, Blueprint has made 24 investments with six partial recapitalizations. The firm invested in roughly 20 companies via Fund II, and plans to support roughly the same number of companies through Fund III.
While San Diego County is home to a wide variety of life science and biotechnology startups, Lewis argued the region is also ripe for investment in software and technology companies despite not being as heralded as the San Francisco Bay Area and Silicon Valley.
“A lot of people over the years have asked us, ‘is it a disadvantage that you don’t live in the valley?’” he said. “And I think we’re proving quite the opposite because we don’t subscribe to that Silicon Valley mentality, so it’s almost good to be away from it.
“I think we’re super fortunate to be great at what we do,” he added. “We’ve got to, obviously, keep earning it every day. Fund one and fund two have been phenomenal, and hopefully fund three will be just as good.”
Blueprint Equity
FOUNDED: 2018
MANAGING PARTNERS: Sheldon Lewis and Bobby Ocampo
HEADQUARTERS: La Jolla
BUSINESS: Private equity investment firm
EMPLOYEES: 14
ASSETS UNDER MANAGEMENT: Over $600 million
WEBSITE: https://www.onblueprint.com/
CONTACT: [email protected]
NOTABLE: Before becoming investors and co-founding Blueprint, Lewis and Ocampo initially met as ana-lysts with the financial services firm Piper Sandler Companies.
Eli is an award-winning reporter primarily covering the tech and life sciences industries. He previously worked as the San Diego City Hall reporter for the regional wire City News Service. He has also covered public health, transportation and state and local politics in the San Francisco Bay Area for Local News Matters, the nonprofit arm of the regional wire Bay City News Service, where he also oversaw the development and daily content management of the outlet’s public health and COVID-19 news and resource webpage. He is also a contributing writer covering Minor League Baseball for the analysis and commentary website Baseball Prospectus. Eli is a graduate of San Francisco State University and a native of Northern California.
