Catherine Mott is launching a next act for angels, effectively upstreaming the 18-year-old network of high-net-worth individuals that she pioneered to stake tech firms past the seed stage.
BlueTree Capital Group on Tuesday announced that its new Blue Tree Venture Capital Fund I LP has raised $12.5 million and will begin investing.
BTVC, which is targeting $30 million to $50 million, is focused on Series A funding rounds for software-enabled tech companies from Pittsburgh to Chicago.
Mott, BlueTree’s president and CEO, founded the Wexford-based company in 2003. The launch of its angel network made the format for early stage investing accessible to a wide range of high-net-worth individuals, many of them in western Pennsylvania, enabling them to opt into deals that appealed and to spread the potential risk. Between 2010 and 2020, BlueTree Allied Angels had a track record of 18.8% realized returns.
The angel network shut down on June 30, Mott confirmed, in order to focus on the new fund. While it will continue to support existing companies, she said, it is not doing new deals.
"Angel funds are seed funds,” Mott said. “We moved up to Series A to plug a hole we saw in the marketplace.”
While the Midwest footprint spans several tech ecosystems, it lacks locally based capital, she believes. The BlueTree heritage provides the pipeline, deal flow, relationships, syndicators and marketplace knowledge to capitalize on the opportunity. It is also the common ground for the new fund's early investors.
The new fund is known by its initials, retaining the BlueTree brand while also eliminating confusion due to its different investment purpose. Its investors so far had staked BlueTree deals. Now the fund will also target family offices and institutional investors to raise the rest of the capital.
“The biggest question new investors have — besides ‘What’s your track record?’ — is ‘Who’s supporting you in this new venture?'" Mott said. “They want to know if people you’ve worked with before are investing. Nobody knows you better than your previous investors.”
Mott has some big deals to point to. Expedia Group’s $21.5 million 2018 acquisition of Chicago-based ApartmentJet translated to a 4.3 times return on BlueTree’s original investment in less than a year. BlueTree saw a 12 times return from its investment in Wombat Security Technologies when the Pittsburgh-based cybersecurity company was bought by Silicon Valley’s Proofpoint for $225 million three years ago.
Mott is serving as co-managing partner of BTVC with Sreekar Gadde.
Gadde joined BlueTree Capital Group in 2018 as head of due diligence and became executive director a year later. He came to Pittsburgh in 2015 as assistant chief intellectual property counsel at Dynamics Inc. Before that, he was an associate at Sterne Kessler Goldstein & Fox and at Ropes & Gray in the Washington, D.C., area after working as a validation engineer for Intel Corp. in Austin, Texas.
“We know and grow transformative tech,” Gadde said in a prepared statement. “The trends are compelling, our team is proven and the timing is favorable. BTVC will identify promising capital-efficient, software-enabled technology companies, invest in well-vetted companies raising Series A rounds in the Midwest, and grow those companies from the point of early market traction to a profitable exit.”
In addition to its headquarters — Wexford is north of Pittsburgh — BTVC will have a presence in Chicago, Mott said, though it has not yet been determined if that means a physical office.
There are other metros that Mott and Gadde know well and where BTVC will look for deals.
“Think Cincinnati, Cleveland and Indianapolis as key markets where we’ve developed key relationships as well,” Mott said.
