Ajay Agarwal, managing director of Bain Capital Ventures, remembers when members of the Boston-based firm elected to go west.
It was at a Rhode Island bar in 2009. And it took only one vote for the Boston-based team to decide to open an office in the San Francisco Bay Area.
Agarwal, who grew up in Pittsburgh and earned a bachelor’s degree from Stanford University, recalls it was he and fellow investor Mike Krupka, previously a consultant with Bain & Company, who championed the move. They were prepared to order another round and take another vote if the tally didn’t go their way.
“We got the decision we wanted,” said Agarwal, who came to the Bay Area in 2011 to setup a West Coast locale with Indy Guha, now a partner at the firm. Bain Capital Ventures today has offices in Palo Alto and San Francisco in addition to Boston and New York.
It’s not unusual for venture firms to invest from multiple offices on both coasts. Battery Ventures, Bessemer Venture Partners, CRV, General Catalyst Partners, Highland Capital Partners, to name a few, have partners in California and the East Coast. But what’s remarkable about Bain Capital Ventures is how much it has cultivated its California presence from a bar vote into a formidable firm in Silicon Valley.
From 2001 to 2010, Bain Capital Ventures operated out of a lone Boston office and invested infrequently in California. During that period, early-stage investments in California represented less than one-fifth of its overall activity, the firm reports.
Since 2011, the firm’s investments in the state represent 51 percent of its overall early-stage activity, with at least 22 deals made from its Palo Alto or San Francisco offices since 2012, according to data from the firm.
For the first few years, it was just Agarwal making deals here. He recalls video conference meetings, discussing investment decisions with 15 other colleagues in Boston. Agarwal and Guha are now joined on those calls in California by Managing Directors Salil Deshpande, Ben Holzman and Enrique Salem. The firm, which focuses on B2B software, SaaS and data services, including marketing tech, security, healthcare and fintech, is investing from a $650 million main fund and a $200 million co-investment fund that were raised in 2014.
In California, the team has seeded Captora and Onera, which were incubated by the firm. Other recent early-stage investments made in California include Troo.ly, 6sense and Fra.me, among others. Also, the firm achieved close to a 10x exit with the sale of TellApart, a provider of a digital ad platform that Twitter purchased for about $533 million. Bain Capital Ventures led the company’s Series B round in 2011, with Agarwal joining the board.
“We used to be an unknown quantity in California, but now we’re known here,” Agarwal said.
That sense of the firm as a significant California investor was confirmed by Nick Mehta, CEO of Gainsight, a Redwood City, Calif.-based customer service management platform provider that has raised more than $104 million from Bain Capital Ventures and others.
Mehta, who like Agarwal is a Pittsburgh Steelers fan and led an outing to see a game at Heinz Field at the start of the season, credits Bain Capital Ventures for being in the Golden State. He said what he sees is that firm is able to make quick decisions when they want to make a seed or early-stage investment in California.
“Ajay was one of the first to jump on marketing tech when he came out here, and to their credit, the firm has stuck with it,” Mehta said.
“There’s a shift taking place and a number of hot companies are here in San Francisco,” Agarwal said. “For us as a firm to be active and have success in California, we need to physically be on the ground here.”
Photo: The West Coast team of Bain Capital Ventures. Left to right, Partner Indy Guha and managing Directors Salil Deshpande, Ajay Agarwal and Enrique Salem. Not pictured is Managing Director Ben Holzman. Photographer: Damian Marhefka.