Blue Heron Capital, a Richmond growth equity firm focused on health care and enterprise software, has made 24 investments across three funds since its founding in 2006 — and its co-founder says it wants to invest in more startups based in Virginia’s capital city.
More than 20% of the firm’s investments are in Virginia, co-founder Tom Benedetti said.
“Virginia’s a great business climate,” Benedetti said. “You have a lot of people moving out of the sort of the larger cities moving into Richmond, Charlottesville or Northern Virginia. So, there's a lot of talent around here.”
Benedetti said he would like Blue Heron to invest more in Richmond startups. Right now, Benedetti said his firm is actively looking for investments in Virginia, but doesn’t have any companies it is currently considering. Last year, it participated in an $11 million Series A round for Richmond virtual behavioral therapy company AnswersNow Inc.
The firm invests in companies that have a minimum of $2 million and no more than $20 million in annual revenue, Benedetti said. Blue Heron typically invests between $5 million to $10 million per deal and looks for a company with a growth rate north of 50%, Benedetti said.
Though the firm made an investment with Tava Health in Salt Lake City recently, Bendetti said Blue Heron typically invests in companies east of Dallas.
The firm utilizes a group of entrepreneurs and execs called its Operating Advisor Collaborative to help guide its portfolio companies and accelerate their growth. The collaborative counts more than 75 members that have built or sold companies in the firm’s target industries, Benedetti said.
“That deep network of talent is how we can help these companies really excel,” Benedetti said. “We're very intentional about partnering and curating those operators on a company and company by company basis.”
Benedetti said Blue Heron also stands out for its concentrated portfolio. Firms of Blue Heron’s size typically have 15 to 25 investments per fund. Blue Heron has eight to 12 investments per fund. Benedetti said the firm is on its third fund.
“We do fewer deals, which means these companies are much more important to us,” Benedetti said. “If we have a loss, it really affects our return profile.”
In December 2018, Blue Heron was the lead investor in a $10 million Series C round for McLean, Virginia, company Verato. Aside from having good chemistry with Blue Heron's people, Verato partnered with Blue Heron for its expertise in health care, said Issac He, chief financial officer at Verato.
Last year, ShiftMed, a McLean, Virginia, company specializing in health care workforce management, raised $200 million led by health care investor Panoramic Ventures with participation from Blue Heron Capital.
