Conversion Capital Targets $50M For Fund Aimed At Solving Challenges Born Out Of COVID-19

Early-stage venture firm Conversion Capital announced this morning it has launched a new investment vehicle called Conversion Labs.

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Conversion Labs will focus on helping fund and support startups that are “tackling some of the biggest issues created by the COVID-19 pandemic.”

New York-based Conversion said it is in the process of raising $50 million to go toward those investments.

Eugene Marinelli, co-founder of Conversion portfolio company (and fintech unicorn) Blend, will spearhead COVID-19 Labs’ efforts.

A new economy

Conversion Labs seeks to back “the next generation” of software, cloud and data startups addressing challenges in the post-COVID-19 era. It will focus on building software infrastructure for highly regulated industries such as government, health care and financial services.

The effort will aim to bring together entrepreneurs and engineers “to develop and scale software solutions for the most pressing challenges reshaping society during and after the pandemic.”

Sun Microsystems co-founder Scott McNealy will serve as “a key advisor” on the initiative. The firm emphasizes that Conversion Labs is not an incubator, rather an effort to “bring together a team of engineers, designers, and growth experts who will partner with public and private counterparts and a network of industry advisors to build solutions that have long-term positive impacts.”

Marinelli and McNealy will co-lead Conversion Labs in its efforts.

“COVID-19 has accelerated technology adoption by a decade in the past two months, catalyzing a transition to a new economy,” Marinelli said in a statement.

Conversion Capital Managing Partner Christian Lawless said the new fund aims to invest in more than 10 companies a year. Most of the initial checks will be between $500,000 and $2.5 million, he said.

“We expect most of them to be about the same amount for this fund and grow over the lifecycle of a company,” he added.

Conversion Labs’ investment thesis is heavily focused on software, data, cloud and security.

“We’re not closing the door on other opportunities, but software is our overwhelming priority,” Lawless said.

Reinventing legacy industries

Marinelli’s experience at Palantir and Blend made him “uniquely positioned” to help find and support other early-stage software startups that are working to reinvent legacy industries, according to Lawless.

“Eugene is incredible at scaling engineering teams and will be a vital force multiplier for our new initiative to tackle some of society’s biggest challenges,” he said.

Conversion has made dozens of early-stage investments since its 2012 inception, according to Crunchbase data (and funded five unicorns). Portfolio companies include Improbable, Booster Fuels, Dataminr, Figure, Qualia and Blend. It has raised two early-stage funds, and is in the process of raising a third. It favors companies that focus on AI/data, enterprise (SaaS), cloud and security.

Many of the best innovations were created during a paradigm shift in behavior and/or technology, Lawless noted.

“Our investments will focus on companies advancing that change today, especially those working in highly regulated industries like fintech, govtech and healthcare,” he told Crunchbase News, speaking of Conversion Capital. “While we will focus on companies seizing opportunities in the wake of COVID-19, our investments will not be exclusive to those areas. We’re open to investing in companies that have evolved their approach or are brand new. Conversion Labs, on the other hand, is designed to specifically support new solutions tackling the biggest issues created by the COVID-19 pandemic.”

Illustration: Dom Guzman