645 Ventures has closed on its fourth fund and first select fund, oversubscribed at $348 million. With this latest fund, the New York- and San Francisco-based firm now manages more than $550 million.
We spoke with co-founders and partners Nnamdi Okike, previous principal at Insight Partners and a board member at the NVCA, and Aaron Holiday, who was previously a software engineer at Goldman Sachs and currently sits on the board of Cornell Tech.
“We’ve had a lot of success in our first three funds in terms of returns and recent exits,” said Okike. The founders reached out to its limited partner advisory committee last year to strategize for its next fund.
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“We’ve really focused on capital-efficient companies,” Okike said, commenting on the firm’s success in raising its fourth fund. “We shy away from a lot of the exuberance of the past couple of years.”
Holiday noted that last year the firm’s portfolio raised $1.1 billion in follow-on capital, far exceeding the reserves of its core fund, which led to its first select fund.
The firm is reserving 44% of the capital to invest in follow-on funding rounds, in what it calls a “tournament strategy” to invest in its most successful companies that could potentially return the fund.
For its new fund, 75% came from existing LPs who stepped up. And 95% are institutional investors including endowments, foundations and fund of funds.
645 Ventures invests at seed between $1 million to $5 million, and up to $10 million at Series A. From the select fund, it can invest between $10 million and $15 million.
To source and track investment opportunities, an in-house four-person engineering team built Voyager, a core asset to the firm that enables it to find investments outside of the firm’s network. It also has an investment research team to evaluate opportunities, a success team to support its portfolio companies, and a finance and operations team.
645’s winning bets
Since July the firm has had three portfolio companies acquired, and its first IPO. Washington-based FiscalNote, a global intelligence company, went public in August 2022 via a special-purpose acquisition.
It is a seed investor in two San Francisco-based unicorn companies: user engagement marketing platform Iterable and cybersecurity company Panther.
It also has two emerging unicorn companies, both based out of New York, in its portfolio: sports network Overtime and barbershop management service Squire.
The team raised its first fund of $8 million from high-net-worth individuals in 2014. Its second fund with its first institutional investors was raised in 2018, totaling $41 million, and its third fund in 2020 totaled $160 million.
Among its Connected Network advisers it counts Howard Morgan, previously at First Round Capital, Scott Maxwell previously at Insight, and Greg Pass, previously CTO at Twitter.
Illustration: Dom Guzman
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