This week Craft Ventures, best known for its founding member David Sacks (PayPal, Yammer, Zenefits), closed a second, larger fund. The new capital pool totals $500 million, $150 million or about 43 percent larger than its initial fund.
Craft’s first fund, called Craft Ventures I, closed $350 million in October of 2017.
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Notably, despite Sacks’s reputation as a SaaS guru, the investments that Craft has made thus far are somewhat distributed. According to Crunchbase’s sorting of the group’s investments thus far, bets on healthcare-related operations, transportation-focused entities, and blockchain companies comprise a material portion of its deals. The fund has also written checks into the sorts of software companies that we expected.
That Craft’s second fund is larger than its first isn’t a surprise. Crunchbase News has noticed a regular trend amongst investing groups in recent quarters of raising new, larger funds. The current, competitive private capital market is driving valuations up, forcing funds to raise more money or get priced out of deals. Larger funds, therefore, might necessitate even larger funds.
Crunchbase News recently covered the launch of M13’s new fund, and a $110 million investing pool aimed at clean energy.
That Craft Ventures raised a second fund so quickly isn’t a surprise when we examine its activity numbers. According to Crunchbase data, the firm has made 38 known investments, including 18 lead checks. You can chew through $350 million (leaving some room for follow-on deals, I presume), quickly with those numbers.
Seeing three new funds that we found worth covering in a single week helps us understand that the current pace of VCs raising from their limited partners (LPs) is still quick. I’ve heard competing statements from venture players concerning the current market for new venture fund raising, with some saying that LPs are active, and some saying that they are more hesitant. Regardless of what we’re being told, however, recent news paints the picture of a busy market.
And that means lots of capital is still finding its way to investors so that they can wager it on companies that won’t likely provide cash returns for years to come; there’s still optimism in the market.
If the fallout from falling share prices of some recent IPOs, or the WeWork fiasco will slow venture fund raising isn’t clear, as the effect from those issues will take some time to work there way into results. Recently, though, private capital feels quite active.
Illustration: Li-Anne Dias.