Inside Raleigh investor's latest $20M fund

Raleigh innovation investor Oval Park Capital is more than $7 million of the way toward closing its next fund: A planned $20 million vehicle focused on "deep tech" startups.

The fund, called OPC Opportunity Fund I LP, has raised $7.4 million from 22 investors, and is still soliciting capital. But It's been a tough process, Oval Park founder Justin Wright-Eakes said.

Investors aren't just looking for returns on paper. "They're looking for the amount of cash you're distributing back to your investors," he said.

As it can take years to really start sending capital back, it's "limbo land" for startup investment firms like Oval Park, which started sponsoring its own deals through special purpose vehicles in 2018.

"We're ecstatic about how our companies are performing, but the market conditions are extremely challenging," Wright-Eakes said. "The thing that keeps me up at night is the thought that some of our companies could hit all their milestones ... and still not be able to raise money."

So far, Wright-Eakes said there have been no "casualties" in the portfolio, but he predicts tough months ahead for startups across the board. He hopes to see the market normalize next year with falling interest rates.

In the meantime, the latest fund's structure is "de-risked" in that some of the capital will go toward companies already in its portfolio, where it holds board seats and years-long relationships with founders.

"Our belief is that it will have similar returns to a venture fund, but with significantly lower volatility," Wright-Eakes said.

The plan is to deploy the cash in follow-on investments in its top performing portfolio companies as well as investments in new startups. The thesis will be the same: “Deep technology startups operating in undercapitalized markets and solving mission critical global problems.”

Wright-Eakes said the money, disclosed in a securities filing last week, is just the first closing of a planned $20 million fund.

Oval Park last closed on a fund in 2021. The firm's portfolio includes several Triangle companies, such as Nala Membranes, Phinite and Natrx.

Wright-Eakes founded Oval Park after spending years working at hedge funds in New York City. He returned to the Triangle to start his own firm in 2015. He has said most investments are the product of referrals, but that he does take cold inquiries from entrepreneurs through Oval Park’s website.