The “operators for operators” fund will provide capital for early stage software companies in cyber, legaltech, and regtech.
There’s a new fund in town that officially launches today (19 October) and is raising $100m in growth capital to invest in high growth sectors including cyber security, legal technology and regulation technology. Bryce Catalyst is led by president and CEO Cary Burch and COO Erik Baklid: both are well-known names in the legal tech sector. Burch, before moving into the investment sector, was CEO of Thomson Reuters Elite as well as SVP and chief innovation officer. Baklid was president and CEO of search and text analytics provider ayfie group.
Bryce Catalyst, which is part of management company Bryce Partners, is raising the $100m through a SPV. Speaking to Legal IT Insider, Burch, who says the fund is about “operators helping operators”, tells us: “Bryce Catalyst is unique because we’re bundling up three pieces that need to work together. We’re not private equity or venture capital; we’re operators running businesses and raising money to help people like us.”
Also on the Bryce board are VP and treasury head Ola Baklid, who was director of strategy at ayfie, and director James C Row, managing partner of global investment bank and broker-dealer Entoro Capital.
Bryce Catalyst has entered into a strategic, broker-dealer partnership with Entoro and will be using OfferBoard to automate the offering process. OfferBoard is Entoro’s investor portal.
Joining Bryce as an adviser on cyber security and regtech is Gabriela Isturiz, who has built up and exited two successful businesses: eBillingHub (acquired by Thomson Reuters) and iTimekeep (acquired by Aderant). Isturiz has also launched an innovation hub to support female entrepreneurs that is joining forces with Bryce Catalyst in order to help grow the pool of female-led companies receiving investment. See more about that below.
Isturiz told Legal IT Insider: “For my first company it took us about 10 years to exit and the second was seven years to exit. The second time around we really engineered a process to grow and were growing 100% years on year. I’ll be using this expertise to achieve similar results with RegTech and CyberTech portfolio companies.”
The SPV will invest in companies generating under $10m in revenue. It will invest typically between $1 and $5m and charge an operations fee to help the companies they invest in to grow. Burch says: “We will be a co-investor and if you want us to provide a CFO or help with branding, we can do that.”
The company will argue that it is unlike other growth funds and Burch said: “Private equity is a commodity; it offers value but is more of a business transaction. I’ve worked with private equity firms and they are good firms but we thought why don’t we create a brand new model: operators for operators, where we come in from the beginning saying ‘What do you want your exit to be? Do you want $100m, or a better society? Then we decide if it’s a five-year hold, or ten-year hold, or we don’t sell at all. It’s a different strategy.
“A VC will put a little money in and try to get as much equity as they can. Private Equity looks at above $10m revenue but we’ll look after the company and when we hand it over to private equity they will be more prepared. We will coach and guide them.”
He adds: “We have credibility and connections, and we know the market. We know we need to automate desperately.”
Bryce is banking on targeted companies growing, in part, due to the disruption caused by the current global economy, COVID-19 and the opportunity to accelerate digital transformation.
In the small print investors are told that until they make 120% of what they invest Bryce Capital takes nothing and Burch says: “We make more money the more successful the investors are.”
He adds: “Our goal is to create value and make companies enduring and strategically valuable. The legacy is that the founders may then not sell but build the company. Many founders would have diversified but the journey became exhausting.”
There is a significant overlap between cyber, regtech and legaltech and Burch says the fund already has an investment pipeline. Bryce Cyber is run by Jessica Burch, who is an ethical hacker.
Female entrepreneur incubator
While we will have more details in the weeks to come on this, it’s exciting to note that Isturiz has started a non-profit initiative to help female entrepreneurs grow their businesses and is joining forces with Bryce in order to take the incubator global. Isturiz said: “In the US 40% of companies are created by women out of which the average revenue is just $140k and only 1.4% of female founded businesses make it to a million dollars. I want to work with Bryce to help early stage female led companies with funding and to get ready for the next level.”
She adds: “If you are a good business, you’re well run, you have a founder who can pitch properly and you are solving a problem and adding value, there is no gender. Don’t let perfection be the enemy of pretty awesome and that is trainable and coachable.”
The Bryce Leaders: