The Up Round #26

Welcome to issue #26 of The Up Round. As a reminder, this is a summary of relevant news and firm-building resources for VCs. Expect us to land in your inbox every other weekend.

Sorry for the hiatus over the last month. Between firm, family, and some time off, I skipped a couple issues. No worries, we're back and this covers the last month of fund raises, talent moves, and LP activity!

I'll finish with introducing a new segment of the newsletter- at the suggestion of Sean Doolan at Virtue, we've added a new section to highlight career opportunities in the industry. Let me know what you think! Equally, if you have a role you want to highlight, send me a note. The Multiple's audience is best for Principal and Partner roles.

🙏 Do me a favor, if you find this content valuable, forward this on to a friend or share it on social media.

What I'm Reading

Mary Meeker on AI and Education (link). Mary's first report in four years brings back vibes from the years prior when I along with everyone else would wait in earnest for her famous "Internet Trends" reports. I'd add that higher ed seems to be embracing AI from my conversations with faculty and leadership at the country's largest universities. Where it appears to be breaking down is in industry as interview processes are slow to recalibrate in the opening innings of the AI era (some of my thoughts here, on this).

📼 Best Practices for Building a Compelling Pitch (link). Watch it!

SVB: State of the Markets H1 2024 (link) via Marcelino Pantoja at Amity Ventures. I'd draw attention to: 1) an expectation of continued down rounds in late stage VC; 2) a handful of VC-backed companies are expected to IPO by year-end - we'll see what the election cycle does to this!; 3) late stage VCs grappling w/ a lack of liquidity but I still feel that Seed valuations are as robust as ever! I'd add that I think that the M&A market is more important to pay attention to if liquidity is the name of the game.

Why IRR On CAC is the Only Metric that Matters (link). "At a deeper level, using yield on CAC is the first step towards understanding your GTM engine as a separate business. Every growth-stage company is really two companies in disguise: an R&D and G&A machine, taking unstructured but high-reward risks that are paid for by your stable and existing customer base; and a GTM machine, consuming cash to acquire new customers in a structured, predictable, and high-yielding fashion."

VC Fundraising Roll Call (link) via Trace Cohen. Meme extraordinaire is gather some data on sub $100M VC funds that have closed in the last year.

Fund Debuts

Connexa Capital Closes $20M Debut Fund (link). The Miami-based fund will invest $250K-$1M in startups, from seed stage to Series B. The strategy in Founder, Jonathan Beda's words, “We believe the optimal balance of risk and reward lies at the inflection point beyond product-market fit and before meaningful scale. Our process is designed to identify early-stage companies with clear signs of customer traction, compelling unit economics, and capital-efficient business models. As former operators ourselves, we obsess over the sustainability of a startup’s growth strategy and put a premium on profitability and cash flow potential.”

Veridical Ventures Launches with $30M Target (link). It appears that leaks are commonplace with the anemic fundraising environment. Veridical is led by Greg Stofman who is formerly of Struck Capital. It's unclear what the focus of the firm is and how much capital has been closed thus far.

QuantumLight Launches $200M "Systematic" Fund (link). The fund is the brainchild of Revolut, founder, Nik Storonsky who anchored it with a $60M check. The firm takes a quantative approach to VC and has funded nearly 12 startups so far as it ramps to a pace of roughly one investment per month.

Other Fun(d) Stuff

Rackhouse Capital Closes $45M Fund II (link). Led by Kevin Novak who brought us surge pricing as Uber's first Head of Data Science, Rackhouse focuses on pre-seed and seed stage startups that are data intensive as well as opportunities around AI.

Refactor Closes Fourth Fund at $50M (link). With 90% of capital raised from existing LPs, Refactor will invest the new fund across 20-25 startups at the pre-seed and seed stage with a focus on bio, climate, and other hardtech opportunities.

Freeflow Ventures Closes $50M Across Two Funds (link). Freeflow invests in "science-driven solutions to human and planetary health challenges." The new funds are split between a $35M Fund Two and a $15M Opportunity Fund. The firm sources heavily from the Caltech and Berkeley ecosystems.

The Westly Group Closes $100M Fund for Decarbonization (link). The new fund is an extension of Westly's core $312M Fund IV that focuses on A-rounds and later. This fund will "invest in entrepreneurs transforming the energy, mobility, building, and industrial sectors that make up more than 50 percent of the world’s GDP."

Ludlow Ventures Returns with $50M for a Fifth Fund (link). Ludlow will continue it's focus on investing in exceptional people and build a portfolio of 25 startups as it has with prior vintages. LPs include Dan Gilbert, Northern Trust, Vintage Investments, and StepStone Group.

Collaborative Fund Raises Sixth Fund at $125M (link). The fund was raised in just over 90 days despite the massive headwinds facing both emerging and established managers. The speed is a testament to Collab Fund's discipline around AUM, contrarian thesis (albeit genuine to them), and historic performance. The majority of LPs appear to have committed to the new fund which include endowments, foundations, high net-worth individuals, a large asset manager and “a large Singaporean organization with a strong focus on PE and VC investments.”

High Alpha Closes $125M Fund; Expands Partnership (link). The fourth and largest fund for the Indianapolis-based outfit surpassed it's original target of $110M and also the inclusion of a new LP, ServiceNow Ventures. As part of the announcement, High Alpha shared that Blake Koriath, Seth Corder, and Mike Langellier were promoted to Partner.

Day One Ventures Lands $150 Fund II (link). Led by former PR entrepreneuer, Masha Bucher, Day One invests $1-2M checks into seed stage startups. Day One's track record is impressive given that six companies have earned billion-dollar-plus valuations since the original investment and 22 have been sold or gone public.

AI Fund Raising $150M Sophomore Fund (link). AI Fund is founded and led by AI luminary, Andrew Ng. The core of it's approach is an incubation strategy focused on using AI to solve big problems. The firm seeks to provides capital through Series A at which point startups will be introduced to the firm's broader network. As a note, this fund is slightly less than the first $175M fund that counted Greylock, NEA, Sequoia, and SoftBank as LPs.

The General Partnership Closes $300M for Second Fund (link). TheGP's predecessor firm was started in 2018 by Dan Portillo, who had previously led a group at Greylock that helped portfolio companies with non-exec hiring. He was joined in 2021 by Phin Barnes from First Round and the duo raised $240M for the first General Partnership fund. The novelty of "The GP" approach is that they get sweat equity for very specific statements of work that they execute on behalf of the portfolio company.

The Engine Raises $398M for DeepTech Investing (link). The MIT-spin out fund's last vehicle was $250M (2020 vintage). The larger fund will allow The Engine to flex it's check sizes at seed and Series A while deploying more reserves in later round as their deeptech companies further derisk their technologies and achieve commercial scale.

Benchmark is Marketing a Fund 11 of $425M (link). Dubbed "Benchmark 1" the new fund will make 30 investments in this new "technological era" defined by AI. It's fund size remains constant as a way to “force discipline and accountability to focus on what matters" according to the partnership.

Kleiner Perkins Closes $2B Across Two Fund Strategies (link). The raise includes KP21, an $825M fund to back early stage companies, and KP Select III, a $1.2B fund to back high inflection (read growth) investments. Needless to say, AI is a big focal for the firm with fresh capital in-tow.

General Catalyst Merging with Venture Highway to Push Into India (link). Following a similar approach with Europe and La Famiglia, GC plans to use the Venture Highway platform in India to invest close to $1B over the next three years. Venture Highway's latest $78.6M fund was raised in 2020 largely to invest in early stage startups. The new tie up will extend Venture Highway's capability to also incubate startups. It's worth noting that GC is not acquiring the existing portfolio of Venture Highway.

Talent Tracker

Anne Fazioli-Khiari Joins G2VP at Partner & COO (link). Anne brings a variety of financial and operational experiences from roles at JPM, GE, BrightSource Energy, and Ubiquity Networks, most recently.

Urvashi Barooah Promoted to Partner at Redpoint Ventures (link). Urvashi has carved her own path into venture and overcame naysayers. She joined Redpoint as an associate in 2020 and has served as a principal since late 2021. Urvashi will focus on vertical SaaS and AI.

Octopus Ventures Trims Investment Staff (link). The layoffs impacted eight junior investment staff as the firm focuses more on portfolio management and less on new investments.

Point72 Lays Off Fintech and Crypto Team (link). The hedge fund's multistage VC arm exited three fintech investors and two "digital asset" (aka crypto) investors as they shift to invest further into AI and national security. Partners Tripp Shriner and Sugam Sarin (who was promoted in May) were not part of the redundancies but are rumored to be considering a departure.

LP Radar

StepStone Closes $3B Fund Dedicated to Secondaries (link). The fund is 25% larger than StepStone's predecessor fund which at the time was the largest secondary strategy. The fund will purchase stakes in VC funds as well as individual portfolio company interests where they see upside of 2-3x.

Industry Ventures Closes $900M Hybrid Fund; 20% Allocated to LP Secondaries (link). The fund is >50% the size of the 2021 $575M vehicle. Funds will be investing: backing VC funds (40%), directly investing in promising Series B startups from their existing partnerships (40%) and acquiring stakes in emerging investment firms from other LPs looking to exit (20%). It's worth noting that Industry sees their GPs take 1-2 quarters longer to raise in this environment but noted that they're also securing larger fund sizes.

CalPERS' PE Strategy (link). I had the good fortune of getting to know Anton Orlich who leads PE for CalPERS as part of the Kauffman Fellowship. Whilst this is PE-centric, I share it because Anton is super sharp on the subject of VC and as we've seen elsewhere, VC continues to leverage many of the best practices that are commonplace in VC. It might be that this will accelerate the "cheap co-invest" that many large institutions and FOs seek.

🎙️ Venture Unlocked: Michael Kim on EMs, Fundraising, and Liquidity (link). I think this is one of the best interview's Michael has given (and he's given plenty of killer ones) and I told him as much. I'd draw attention to 09:50 on attributes crucial for GP success; 14:00 on high ownership; and 39:00 on trust and transparency.

Meet Willgrow: A Family Office Setup to Weather the Freight Cycle (link). Given my focus on supply chain investments, this hits close to home. Willgrow is built off of Lithuanian native, Mindaugas Raila's $2.5B trucking fortune. It's meant to serve as a diversifier and hedge to the core business and the freight market vagaries it's exposed to.

Marina Rostein Joins NVNG as Head of Platform (link). Marina will be based in Chicago and responsible for connecting and facilitating relationships amongst NVNG's stakeholders: LPs, GPs, and portfolio companies.