A shoeless Paul Martino opened the door to his imposing Doylestown home and led a visitor past the office where he keeps his hippo collection and then down into the basement to the poker table.
That's where this once-entrepreneurial whiz kid from Lansdale — now a pioneering investor in start-ups, known for his uncanny ability to see potential where others don't — prefers to conduct all manner of business, not just games of badugi, a variant of draw poker.
Most remarkable about the next 80 minutes was that Martino, described by others as having seemingly endless energy, sat still. His lips were another story: If power speaking were a sport, Martino would be a medal contender.
A fast talker with a high-pitched voice who launched a business selling computer games while still a student at North Penn High School, Martino said he returned to the East Coast from the start-up heartland, Silicon Valley, in 2010 not just because he missed late-night hoagies from Wawa, but to start a family. He and his wife, Aarati, a senior engineer at Google, had always agreed they would.
But there was a business incentive, too: The move gave an East Coast presence to a unique venture fund that Martino and two others founded in San Francisco that year to address what they considered a serious funding gap for start-ups. Seven years later, Bullpen Capital – the name inspired by former Phillies relief pitcher Chad Durbin — has invested in about 50 companies and is poised to do a lot more after just raising $85 million.
Yet Martino, 42, a father of two, is still adjusting to his new role as investor rather than creator in the world of start-ups — though not because it's populated with "flaming balls of risk," as he put it.
"I still to this day get kind of aggravated when I get introduced as the managing partner of a venture fund," he said. "I'm still a passionate entrepreneur, and I'm just going to happen to innovate on this thing called venture capital."
And innovate he has, those in a largely uninspired industry say.
"The venture industry itself has never really innovated. This is probably the first innovative venture fund I've seen,” said Jim Lim, a managing partner in Greenspring Associates, a fund based in Maryland and Silicon Valley that was one of Bullpen's first institutional investors. (Lim also grew up in Lansdale and went to North Penn, but did not know Martino, seven years his junior.)
Praise also comes from one of Philadelphia's most accomplished serial entrepreneurs, a trailblazing venture capitalist in his own right: Josh Kopelman, who cofounded First Round Capital, a seed fund, in 2004 (and who is board chairman of PMN, which publishes the Inquirer, Daily News and Philly.com).
Martino "was among the first in understanding the ripple effect to the rise in seed-stage capital," Kopelman said.
The problem Martino identified?
Seed funding is the first million or two a startup manages to raise, but that amount often is not enough to keep fueling the start-up's growth to what is the next fund-raising goal: Series A, which usually involves a minimum of $5 million.
Start-ups have to achieve certain progress in product or service development, including some sales, before qualifying for Series A.
So Martino saw opportunity to provide them with the kind of funding to help get them from the post-seed stage to qualifying for Series A. Those are the $1 million to $2 million investments Bullpen Capital makes.
Martino launched Bullpen, partly inspired, he said, by First Round Capital, which he considers "probably the most innovative thing that happened in venture capital in the history of the asset class."
Before Bullpen, Martino experienced entrepreneurial success, selling an internet-security software company he cofounded at Princeton University with other students. After moving to Silicon Valley in the early 2000s, he spent many hours around other entrepreneurs' kitchen tables, brainstorming about social media. At those confabs were Reid Hoffman and Eric Ly, who went on to create LinkedIn.
Martino teamed with Mark Pincus to launch a social network that he termed a “failure” — Tribe Network. Pincus later cofounded Zynga, an online games company. Martino created Aggregate Knowledge, an ad-tech company he sold, leaving with $150 million, including stock options, in 2010.
His plan for another start-up was sidetracked by a friend's suggestion that he create a venture fund.
“I started realizing there were massive inefficiencies in venture capital,” Martino said. “There were all sorts of classes of companies that weren’t getting paid attention to. There were all sorts of biases in the selection process of the companies you’d pick based on the backgrounds of the founders or the geographies of the companies.”
After identifying “six or eight inefficiencies,” Bullpen went to market to serve the post-seed/pre-Series-A niche.
Typically, it invests $1 million to $2 million in companies that are 12 to 18 months old and have already raised $1 million to $2 million in seed funding, but that have not reached the technical or commercial milestones that attract traditional Series A checks, usually $5 million or more.
Those in the venture world say Martino, who majored in computer science and math at Lehigh and Princeton, is "wickedly smart" and "a brilliant guy" with incredible insight.
“He can see what's going on between founders' ears,” said Dave Peterson, who was chief marketing officer at Aggregate Knowledge and is now a San Francisco entrepreneur.
That made Bullpen's early days hard, Martino said, "because we had very contrarian and very subversive views on things like risk and bias. We were using words, I'm sure, no other fund manager was using."
Bullpen's first investments were FanDuel, a fantasy sports company that originated in Scotland; Ipsy, a California cosmetics company; and Namely, a New York human-resources technology company.
Start-Ups With Investments by Bullpen
Still, despite multiples that Martino would not disclose but said "make our limited partners very happy," he and Bullpen are a relative secret in the Philadelphia region.
"I don't know him, and I don't know Bullpen," said Bernie Rudnick, an angel investor in primarily life-sciences companies and chief financial officer at Atrin Pharmaceuticals in Doylestown, Martino’s backyard.
Ditto, said Katherine O'Neill, executive director of Jumpstart NJ Angel Network, an investor group most active regionally but with projects from Connecticut to Virginia.
Around Philadelphia, mention of Martino's name is likely to be met with a " 'Who?' " said Steve Barsh, chief innovation officer at DreamIt, a global accelerator. "But if you're out in Silicon Valley, they would say, 'Oh! Paul!' "
That has a great deal to do with opportunity, said Martino: About 25 percent of Bullpen's portfolio — currently $160 million to $180 million in assets under management — is East Coast companies.
"There just aren't as many deals here," he said. "There are good deals here. There's just not the volume of them that there are in Silicon Valley."
And that's OK, said Martino, who spends one week a month in California, where he still has a home and where his partners, now totaling four, are based.
A question he hears frequently and says is wrongheaded: “When will Philadelphia break out and be as big as Silicon Valley?”
Asserted Martino: “It doesn't need to rival Silicon Valley to be good and useful and an economic driver for the city."
Philadelphia’s start-up infrastructure has improved substantially in the last 10 years, he said.
“You have law firms who know how to incorporate you. You have incubators who know how to coach you. And you have some number of capital sources,” he said. “The idea that you can’t get your 10-, 20-, 50-person company going in Philadelphia, get to $10 million in revenue, you absolutely can do that.”
But after that, “there is a raw-talent issue with the kinds of people you need to hire to scale your company,” Martino said. Those are engineers, salespeople, and marketing experts who “need to be rock stars."
"There’s just not enough of those people here. I don’t view that as a problem, but I don’t view it as solvable, either.”
With the $85 million raised this year — after rounds of $25 million in 2010-11 and $35 million in 2014 — Bullpen will be able to hire support staff and, consequently, do more for the companies it invests in, Martino said.
“In many ways we had to … take shortcuts in Funds 1 and 2 because we didn't have enough money to do the model correctly.”
Matt Straz, the founder of Namely, which has a $1.37 million investment from Bullpen, has no complaints.
"They are the guardian angels of the VC industry," Straz said. "They’re … ensuring that companies like ours live on to become big companies down the road.”
As meaningful as the money, Straz said, are the visits by Martino once or twice a year, during which "he gives me one or two nuggets of information that are very important and very forward-looking. He's really good at preparing founders for the next thing that's going to happen to them ... without being overbearing."
Not that Martino sugarcoats, either. Some of his self-described “radical candor” is on display at the Post-Seed Conference that Bullpen hosts each December in San Francisco. At one, Martino said, he promised an “in-your-face Philly presentation” and encouraged anyone who might be "uncomfortable with that" to leave.
“Most people get that there’s a certain jarring honesty about a Philadelphian,” he said. “That's the Philly in me, and that's not going away anytime soon.”