After a renewal at the venture capital fund Kleiner Perkins a few years ago, one of the leading B2B investors, Ted Schlein, kind of left to start his own company. Two years ago, it started Ballistic Ventures with $300 million in seed funding, a laser focus on cyber security, an interesting business model and a who’s who of investment partners.
Now Ballistic has already closed a second fund, even bigger than the first.
“We started raising a second fund of $300 million and stopped at $360 million,” Schlein told TechCrunch.
The past few months have involved many calls with prospective limited partners (LPs) asking them about everything from their background to “if you were a cat, what kind of cat would you be?” But they hit their target surprisingly quickly given the current VC market. Ballistic officially registered its plans for a second fund just four months ago in November TC was the first to report.
Really with their startups
In an age where some VCs say that being “founder friendly” means keeping their VC claws off, Ballistic has the polar opposite philosophy.
For example, Founders Fund partner and Anduril co-founder Trae Stephens told the crowd at TC’s Strictly VC LA event in February, “The more a VC says, ‘I’m going to add value,’ the more you should listen to them they say, “I’ll piss everything alive out of you for the rest of my time at the cap table.”
The ballistics crew scoff at the thought. They always get board seats. They talk to their founders “several times a week,” says Schlein. Because they’ve all run cybersecurity businesses — and invest only in security — their secret sauce is their involvement combined with their vast network of contacts, they say.
“I’ve been at this for almost 30 years and I’ve almost always helped deliver the first 10 customers at every company I’ve ever been on the board of.” said Slaine.
General partner Jake Seid says the entire Ballistic crew works with all of their portfolio companies, regularly bringing in their first three to four million dollars in annual recurring revenue or helping to hire their first engineers.
Seid cut his teeth at Cisco and startups, but is best known as a partner at Lightspeed since the beginning and for his own company Stone Bridge Ventures. General partner Roger Thornton was the former CTO of threat exchange AlienVault, which sold to AT&T Cybersecurity in a deal orchestrated by Ballistic general partner Barmak Meftah, who was president of the AT&T division at the time. The Ballistic team also includes general partner Kevin Mandia, the former CEO of Mandiant, which sold to Google in 2022.
Schlein only makes new investments from Ballistic’s fund, but remains a partner at Kleiner, overseeing his previous investments/board seats and keeping his “carry” — percentage of profits — if those startups do well.
Early success
Two years later, Ballistic’s methods seem to be working so far. Although they haven’t fully used their first fund, they already have one successful exit of holding company Talon Cyber Security, purchased by Palo Alto Networks a deal worth $625 millionTechCrunch reported.
It is impossible to know how many more hits they will have. But because Ballistic only invests in early-stage startups where they can be the first institutional money at the table and get a seat on the board, they have more control than other VCs.
This helps them, for example, protect their investments from terms from downstream investors that could hurt them, such as “liquidation preferences” that would give another investor priority over the cash from an acquisition.
And Ballistic incubates startup ideas internally, finding people to build and execute their ideas. There are two such startups under wraps from Fund 1 right now, the partners say.
Ballistic expects to finish investing from Fund 1 after perhaps two more startups, bringing its total Fund 1 portfolio to about 20 companies, and begin investing from the second fund in another two months, Seid said.
