This morning, Utah-based Peak Ventures announced the close of its third fund, a $75 million vehicle. The venture firm also rebranded as Album VC, a move it explained by saying that it wants to help “founders [create] their best work,” making the new moniker an homage to music production.
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The $75 million capital pool is Album’s largest to date, following funds that totaled $21 million (Fund 1) and $56 million (Fund 2), partner Sid Krommenhoek told Crunchbase News
Krommenhoek said that Album had nine-figures of interest for its new fund, but capped the size of its new fund lower than it could have as its investing approach “doesn’t scale.” (The firm underscores relationships with founders when describing its investment approach.)
The move to not raise an even larger amount of dry powder is in slight contrast to the unicorn-era model in which venture firms boost their fund sizes dramatically over time; it’s not uncommon to see previously nine-figure funds tip into the ten-figure range, for example.
The firm formerly known as Peak Ventures is best known for its work in Utah. But Krommenhoek emphasized that while the firm indeed invests in the state, it has broader aspirations. While it expects Fund III to be “primarily domestic,” Album VC will cut checks around the United States; in Fund II, the investing group put capital to work on both coasts and in between.
Fund III comes after some early success. The newly-christened Album invested in Podium’s Seed round (a $500,000 event) back in 2014. That deal has performed well. Podium has since grown rapidly (our coverage here) and raised capital from firms like Accel and IVP. The software startup has raised $92.6 million to date.
Other Fund I and II investments include Owlet Baby Care (Seed, Series A), Omadi (Seed, Series A), and Weave (Series B).
Crunchbase News has written about Utah’s startup scene repeatedly over the past several years as its growth has demanded attention from the rest of the startup and venture world. Lucid Software is doing well in Utah. Qualtrics, another software company from the state, is a known success. Canopy and Divvy are two other firms growing rapidly in the locale.
Now Utah’s model for company formation and growth has a new set of cash to leverage.
Investment Minutiae
Speaking with Krommenhoek this week, Crunchbase News learned more about Fund III and how Album VC may invest the funds.
As mentioned above, while Album expects to write mostly domestic checks, the firm could invest in China or Brazil, locations where its members speak the language or hail from, providing context for investments. It’s open to SPVs, as needed, and can put up to 10 percent of its capital into one company.
Krommenhoek expects Fund III to invest in between 20 and 24 companies, up from Fund II’s 20. Among the two dozen possible new investees, Album expects to keep investing in SaaS, given what Krommenhoek called “muscle memory.” Utah-based startups are best known for building SaaS companies, making Album’s investment goals a good fit for its home state’s scene.
What will prove interesting is whether Album’s Fund III can put up similar returns to the implied success of Fund I’s early deals. If so, expect a Fund IV sometime in the early 2020s.
Illustration: Li-Anne Dias. Album VC image via the company.
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