CARY – Cofounders Capital not only has closed on a new fund – its biggest yet at $50 million – but the eight-year-old Cary-based venture firm also is making changes from management to investment reach. It’s also going to make larger investments available, which entrepreneurs might find very appealing.

“This additional capital will allow us the flexibility to write larger initial checks to get companies out of the gate faster, reserve more capital for those companies as they scale, and put meaningful capital to work in some deals that are a little further along than what we’ve typically invested in,” said Tim McLoughlin of the Cofounders team.

Cofounders team: From left, David Garner, Tim McLoughlin, Tobi Walter

Changes include:

  • Expanding the geographical focus of investment targets to beyond North Carolina
  • Promoting veteran team member McLoughlin to managing partner
  • Planning to add to its core investment team of four members

However, Cofounders management says the firm’s primary focus will remain North Carolina – especially for the Triangle – where it has made more than 30 investments in recent years, thus earning the label “most active investor” in the state from venture data site Crunchbase.

New investors in Cofounders include “serially successful entrepreneurs, enterprise CEOs, and local business executives.”

Fund III at $50 million follows Fund II at $31 million and the original Fund I at $12 million.

David Gardner, the firm’s founder and a serial entrepreneur who is a regular contributor to WRAL TechWire, remains Founding Partner.

Casting wider net

In the announcement made Wednesday, Gardner said the decision to cast beyond North Carolina for deals makes good business sense.

“We still plan to deploy this capital predominantly in N.C., but we can’t ignore the tremendous deal flow and great opportunities that we’ve been able to generate from our trusted partners, specifically in the southeast,” he point out.

Other members of the core team include Partner Tobi Walter and Venture Partner Scott Albert.

Cofounders raised the new capital in spite of a souring economy for much of 2022 – unlike a record-setting 2021 for venture fund raising.

“It certainly has been an interesting year for fundraising and venture capital as a whole, but this new fund will allow us to continue the mission we started 8 years ago,” said Tim McLoughlin in the announcement. “We will keep working hard to make great returns for our investors, provide early-stage capital to exceptional entrepreneurs, and create hundreds or thousands of jobs in the process”.

Investment focus remains:

  • B2B software companies at the earliest stages
  • First-time founders
  • Companies that are pre-revenue or only have a few paying customers

Background on the firm’s three leaders

Here a bios about McLoughlin, Gardner and Walter as provided by Cofounders:

Tim McLoughlin

Tim joined Cofounders Capital at the end of 2015, shortly after the firm raised its first fund, and became a Partner in Fund II in 2018. After graduating from Harvard in 2008 with a B.A. in Psychology he co-founded Prime Time Hockey Southeast, which scaled programs nationally and still operates out of Wake Forest, NC. He was a Young Entrepreneur in Residence for Idea Fund Partners and NC IDEA, where he still serves as a core reviewer for their Seed Grant program. Tim received his MBA from UNC Kenan-Flagler in 2016. In addition to serving on the Executive Committee for the Council for Entrepreneurial Development, he is a guest lecturer at many of the local universities and has a podcast, First Check.

David Gardner

David is a serial entrepreneur, writer, adviser, and early-stage fund manager with over thirty years of experience in creating and building software technology companies. After failing at retirement twice, David became the Triangle’s most active angel investor spending his time as a volunteer coach and mentor to startup founders and managing a free acceleratory. To combat the lack of early stage capital in NC, David created Cofounders Capital. As an entrepreneur, David was the founder or co-founder of seven companies including PeopleClick (purchased for $100 million) and Report2Web, which sold for $12M in less than eleven months from inception. He has demonstrated a record for consistency across multiple industries with six successful exits in a row.

Tobi Walter

Tobi is a former investment banker and serially successful tech entrepreneur. Originally from Germany, Tobi has now called Raleigh-Durham his home for the last fourteen years.  Tobi started his career with an MBA from Germany’s WHU – Otto Beisheim School of Management, before working in investment banking with Societe Generale in Paris, and Morgan Stanley in Frankfurt and London. In 2006, Tobi joined his first startup, studiVZ, widely known as the “Facebook of Germany”. studiVZ grew to become one of Germany’s most visited websites and exited to a large German media conglomerate. Tobi then moved to the Triangle to co-found Shoeboxed, a SaaS fintech startup that empowered business owners to manage receipts, invoices and automate bookkeeping. After successfully exiting Shoeboxed in 2018, Tobi brought his finance and marketing skills to the team at Cofounders Capital.