The trend in venture fundraising for 2024 is becoming clearer: Established VC firms are attracting capital from limited partners, while smaller, newer funds face challenges in raising funds.
However, Industry Ventures’ recent fundraise provides some positive news for emerging managers.
Recently, the 24-year-old firm announced the successful raise of a $900 million early-stage hybrid fund aimed at investing in emerging managers and supporting breakout growth-stage companies alongside their managers. The fund also includes buying secondary interests in emerging managers from other limited partners.
This marks Industry Ventures’ seventh hybrid fund, surpassing its predecessor, a $575 million fund raised in 2021.
The $900 million fund will be allocated across three main areas: backing VC funds (40%), direct investments in promising Series B startups from existing partnerships (40%), and acquiring stakes in emerging investment firms from other LPs looking to exit (20%).
Contrary to the common belief that it is challenging for emerging managers to raise funds, Roland Reynolds, Industry Ventures’ senior manager director, notes that the funds they support are successful in raising larger fund sizes.
Industry Ventures’ strategy includes investing in managers as they grow, not limited to just emerging managers. As long as the fund sizes are under $250 million and focused on seed and Series A startups, the firm continues to support managers, even those with over a decade of experience like IA Ventures and Altos Ventures.
Besides backing more-established small managers, Reynolds sees opportunities in investing in new funds led by experienced investors making transitions from large firms.
Regarding direct investments, Industry Ventures aims to support top Series B companies identified through its manager relationships. Recent investments include Relay, an online banking and money management platform, and Cobot, a robotics company. The direct investments range from $2 million to $12 million.
Founded in 2000 by Hans Swildens, Industry Ventures is renowned for its role as a secondaries VC investor. The latest hybrid fund pushes the firm’s total assets under management to exceed $8 billion.
