New Battery general partner seeks hidden gems, not runaway unicorns

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With private technology startups racking up investment stakes and paper valuations that once seemed unthinkable, some investors actually don’t care if they’re part of the latest hot financing deal.

Call it the joy of missing out.

“I’m the most boring man in the world, and that’s OK. That’s alright,” jokes Russell Fleischer, the newest general partner with Boston’s Battery Ventures.

Fleischer, 48, joined Battery last year and most recently was a partner at the firm. Fleischer also has experience as a tech-industry executive, including stints as chief executive of HighJump Software, a maker of supply-chain software, and Healthvision Solutions, a seller of healthcare software.

He’s being promoted to the firm’s top-tier investment team with a charge to find hidden gems among mature, later-stage tech companies — businesses that are far from a startup, but also aren’t blazing a path toward IPO anytime soon.

Fleischer said he plans to find those treasures in behind-the-scenes industries like healthcare IT, supply-chain management, and financial technology.

“My focus is on companies that have been around for a while … mature marketplaces with businesses that may have been around for 15 to 20 years, that have really sticky customers,” Fleischer said. “The core question is, are you building a good business and are you taking care of your customers and growing at appropriate market rates?”


If that sounds appropriately conservative and non-sexy for a Boston-based venture and private equity investor, you aren’t mistaken.

It’s the kind of investment attitude that can cause many young entrepreneurs in the region to roll their eyes and pine for the free-flowing check-writers in Silicon Valley, pop-culture caricatures be damned.

Fleischer is keen to point out that Battery has its share of investors who seek out early stage companies. But he and the firm are clearly betting that a focus on slower-growing, dependable companies is a relatively ignored slice of the private investment market today.

CB Insights, a private-investment analysis company, recently reported that the number of investors putting money into late-stage rounds of $100 million or greater has exploded in the past few years, rising from about 20 in 2010 to nearly 180 last year.

Many of those investors are the mutual funds, hedge funds, and sovereign wealth funds that in years past would have waited until an IPO to buy similar stocks.

“There isn’t much reason to go public,” CB Insights chief executive Anand Sanwal said. “You can raise IPO-size rounds in the private markets at a better valuation and with less scrutiny than the public markets will give you. It’s a no-brainer in some ways.”

But many of those companies aren’t entirely ready to go public, either, and may get stuck when investors begin itching for a return.

“We’ll be seeing a lot more of this in the coming 18 to 24 months,” Sanwal added. “Some will become dead unicorns, or what folks are now calling unicorpses.”

With that kind of reckoning on the horizon, maybe boring isn’t so bad.

“I would struggle in the earlier-stage environment,” Fleischer said. “My background is operations. I see what companies can do when they’ve had a runway behind them, how we might be able to help them do things a little differently, and make the business something that it otherwise might not have the opportunity to become.”