Venture capital firms continue to raise new funds at what appears to be lightning speed. Two companies have gone out in the last few days, including: Urban Innovation Fundwhich closed with $100 million commitments for its Fund III and $20 million Opportunity Fund, and VMG catalytic converter‘s $400 million Fund II.
Both companies are led by women, Clara Brunner and Julie Lein at Urban Innovation Fund, and Brooke Kiley at VMG. What was unique about these two was the limited focus of each fund. As the name suggests, the Urban Innovation Fund invests in companies that build technology to shape the future of cities, while VMG focuses on commerce.
Before founding the Urban Innovation Fund, Brunner and Lein, both managing partners, were active in commercial real estate development when they met Lein, who was doing political polling and consulting, at business school at MIT. Their freshman year, they set up their second year and hosted the largest women’s event on the MIT campus at the time.
They kept trying to recruit each other to start a company in their respective sectors before coming together around a love of startups and the urban tech space. The company invests in companies that work on liveability, sustainability or economic vitality and often have many regulatory and political challenges.
Having such a narrow stance and other unique features is something Brunner said was beneficial as the fund raised its third tranche earlier this year.
“I think it’s a combination of we look different, we invest with a very different strategy and we have a strong track record,” she told londonbusinessblog.com. “That meant that the lap came about much faster than we expected. We were shocked at how fast it went.”
Urban Innovation Fund is a 100% women-owned company and 77% of the companies it supports have had a woman or person of color on the founding team.
According to the Cambridge benchmarks, the Urban Innovation Fund is one of the top-performing 1% funds and has invested in companies such as electric vehicle charging software company Electriphi, which was acquired by Ford in 2021, and ESG asset management firm Ethic, which has $2 billion in assets under management and small business lending platform Jeeves, which was valued at $2.1 billion earlier this year.
Brunner and Lein set out to raise $80 million in January and eventually hit their hard limit of $100 million, with 95% of the new capital coming from institutional investors. Not a bad deal to have, but Brunner said they have a great limited partner base from previous funds and should turn down investors.
This is how the $20 million Opportunity Fund was born, the first Urban Innovation Fund in this category. Previously, the company used special purpose vehicles to invest in a single deal, and had raised several of them in recent years to later invest out of its portfolio in breakout companies.
“Now that we have our new opportunity fund, we don’t have to do any SPVs anymore,” Brunner said. “We can make all of our late-stage follow-up investments through the new vehicle.”
Urban Innovation Fund just activated the third fund in July, so it’s in fervor with a few new startups, but hasn’t made any investments yet. The average size of checks for previous funds was about $1 million, and the new fund will allow that to grow to $1.5 million. The fund aims to form a big second check in about 30 rounds of the launch phase.
VMG catalytic converter
At VMG Catalyst, Founder and Partner Brooke Kiley has been in venture capital since graduating from Wharton and joining Insight Partners. She told londonbusinessblog.com via email that she “had always had a passion for entrepreneurship and the idea of working side-by-side with startups seemed like a dream career.”
Kiley left Insight in March 2020 to join VMG Catalyst. The company’s first fund was worth $250 million and it recently closed a $400 million Fund II. VMG typically leads Series A and Series B rounds that are between $8 million and $50 million. It has made 22 investments so far and its dissertation revolves around software and marketplaces for facilitating trade.
The second fund is 60% larger than the first, and most of the growth has come from existing limited partners, she said.
Within the second fund, the company has made three investments in the vertical supply chain, a category it says the company was “particularly excited about.” Among them was Milk Moovement, which provides supply chain tools for the dairy industry.
“We believe innovative software and advanced supply chains will define the next generation of leading brands and retailers,” said Kiley. “We have a unique vantage point in the consumer industry thanks to VMG’s history as CPG investors, and this allows us to invest with conviction, speed and serve as committed strategic partners in today’s rapidly changing, competitive landscape.”
Even more new funds
As we’ve reported before, venture capital firms have more dry powder than ever before, and the past few weeks have been no exception:
- Upper90 had an initial close of its first $180 million fund.
- South Colan e-commerce accelerator, launched a $50 million accelerator fund to provide capital, guidance and operational resources to the founders of the industry. South Col is a joint venture between SellersFunding, Global Wired Advisors and Escala.
- FRAMEthat invests in Series A and Series B companies, said it is a first closes more than $100 million for its Fund II and expects to close the fund by the end of the year, targeting $250 million. It also unveiled its new operating capital model that leverages proprietary data, growth and operating frameworks “to reinvent the early investment ecosystem and enable intelligent hypergrowth in startups.”
- CEI Venturesthat manages socially responsible venture capital funds, closed his fifth fund — known as “The Good Jobs Fund” — in July with $21.5 million, the largest fund in its history, according to the company.
- Silversmith Capital Partners closed its fourth fund after two months with $1.25 billion in pledges of limited partners. The Silversmith team will also raise $90 million to make Fund IV the largest company to date, bringing total capital raised to more than $3.3 billion since its inception in 2015.