David Blumberg, a seasoned investor with decades of experience in early-stage tech companies, recently joined Nataraj on the Startup Project Podcast to discuss his investment journey, successes, misses, and current focus.
Blumberg’s path to venture capital began unconventionally. Inspired by a desire to solve big problems, he initially pursued government and economics. However, three pivotal experiences steered him towards business: the thrill of entrepreneurship through a student-run distribution service, disillusionment with government bureaucracy, and a thesis on African-Israeli relations which highlighted the enduring power of economic interests over political rhetoric.
Early Investments and the Rise of Startup Nation
Blumberg’s investing career began at T. Rowe Price, where he analyzed companies poised for IPOs. His first investment was in Scitex, a significant step as it marked T. Rowe Price’s first investment in a publicly traded Israeli company. He challenged the prevailing view of Israel as a risky, socialist country, arguing that these factors were already reflected in stock valuations. This insight led to further investments in the burgeoning Israeli tech scene.
Blumberg highlighted the importance of government deregulation in fostering Israel’s tech boom, drawing parallels with India’s economic liberalization in the 1990s. He recalled his involvement with Yozma, a government program designed to attract foreign venture capital to Israel. While acknowledging Yozma’s role in promoting collaboration between international and Israeli investors, he emphasized that the government’s primary contribution was simply “getting out of the way” of entrepreneurs.
From Family Offices to Bloomberg Capital
After T. Rowe Price, Blumberg worked at Claridge, a family office in Montreal, where he gained valuable experience navigating the different investment criteria of family offices. He then founded Bloomberg Capital, initially operating as a “virtual venture catalyst” connecting family offices with promising deals. This evolved into a successful venture capital fund, now on its sixth iteration, with over 65 companies in its portfolio. The firm employs a two-pronged strategy: early-stage investments (pre-seed to Series A) and growth investments (late Series A to early Series B).
The Enduring Power of Teams
Blumberg stressed the paramount importance of talented teams, especially in pre-seed investments. He recounted his early investment in Nutanix, where he recognized the exceptional technical abilities of the founding team, which eventually led to a highly successful IPO. He underscored the importance of strong leadership, citing the example of Checkpoint Software, another successful investment with a founding team possessing diverse skills. He further emphasized the firm’s unique approach to supporting its investments through its CIO Innovation Council, providing valuable feedback and access to potential customers.
Looking Ahead
Bloomberg Capital’s current thesis revolves around data-intensive companies applying AI and machine learning to specific verticals. Their portfolio includes companies like Vair-AI (AI for mining), Imogene (cancer detection), Joshua (insurance policy writing), and Telen (automated receipt inspection).
Beyond the fund, Blumberg’s personal investment strategy involves diversifying public stock holdings, real estate, and contrarian investments in oil and gas, driven by his belief in “energy humanitarianism.” He cites Peter Thiel, Joe Lonsdale, Mark Andreessen, Ben Horowitz, and the team at Sequoia as investors he admires.
He emphasizes the importance of continuous learning, adapting to changing technologies, and understanding the interplay of economics and policy. His advice to young investors? “Always get your contracts in writing!” This simple yet crucial step protects hard work and sets the stage for success.
To hear the full conversation, tune into the Startup Project Podcast episode with David Blumberg. Subscribe on Spotify, Apple Podcasts, and YouTube.