Venture firms raised $9.3 billion in the first quarter, according to Beachbook dataWhich means this year likely won’t match or exceed 2023’s total of $81.8 billion. while Emerging managers They are most sensitive to the rigidity of the fundraising market, and some VC startups like A* have enough name recognition, and a good enough track record, to succeed.

A*, led by the former Eventbrite founder Kevin Hartz, former Coatue partner Bennett Siegel and former Opendoor and Uber operator Gautam Gupta, raised $315 million for its second fund, which was oversubscribed. The company plans to continue its focus on leading seed rounds and double its investments in portfolio companies at the Series A stage, in addition to making selected new investments at the Series B stage.

“We have found our product to be a market fit at the seed and seed stage, where we partner with founders on a zero-to-one ratio while continuing to support breakthroughs in our portfolio,” Siegel said. “That’s where we’ve been most successful.”

“From Zero to One” is a reference to Peter Thiel’s book of the same name. In venture capital parlance, it means turning a new, unproven concept into a company with a product and customers, rather than a startup that imitates or expands on an existing idea.

The fund will continue to be public and invest in various industries. They like to find the right founders and follow them in whatever industry they’re building in, Gupta said. For now, this means the company is spending a lot of time on artificial intelligence and the return of consumer technology.

“Everything takes care of itself when you support the right people,” Gupta said.

The only noticeable change between the first box and the second box is the vehicle’s LP base. The second fund was raised entirely from institutional investors, while the first fund was backed by several well-known venture capital firms and previous operators. Max Levchin, David Sacks, and Peter Thiel of former PayPal fame have all been Fund I backers as well as DoorDash co-founder and CEO, Tony Xu, and Opendoor co-founder and president, Eric Wu, among others.

Turning to institutional investors is not unusual at the second stage of a fund, another venture capital firm told me this week after doing the same thing. This is because companies have enough of a track record to attract institutional investors and these deep-pocketed investors become essential as companies look to increase their fund sizes in the future.

However, A* is not seeking to raise as much money as possible. He intentionally kept the second fund a modest step up from the firm’s first fund — the first fund raised $300 million, exceeded its $250 million goal, and closed in 2021.

“The size of the fund is the strategy, and the strategy is the size of the fund,” Siegel said. “We want to be the partner of choice but small enough that we can focus on generating amazing returns for our investors. We wanted to focus on mentorship and not necessarily just deploying large amounts of capital.

The company backed 35 startups in the first fund, including fintech startup Ramp, workflow tool Notion, and wholesale marketplace Faire, all of which are at Series B or later. She has also led seed rounds for companies such as AI startup EyeTell, recruitment marketplace Paraform, and primary care startup Aligned Marketplace. The company also incubated three companies that are still under wraps.

The company believes it stands out from the very crowded seed market because of its three founding partners, their extensive experience in various industries and three different decades.

Hartz’s name recognition in the tech industry probably doesn’t hurt either. Hartz launched both Eventbrite and Xoom and scaled them through their respective exits before a stint at Founders Fund and angel investing in companies including Gusto, Pinterest and Reddit. Gupta was the former CFO of Uber and COO and CFO of OpenDoor. As an investor in Coatue, Siegel has backed Peloton, Instacart, DoorDash and others.

The group had known each other for years before they started talking about launching a fund in late 2020. Now they’re looking to use this latest fund to continue finding great early-stage founders and backing them in a very different market than the company they initially launched in.

“The challenge of our time is that companies are not dying of hunger, but of indigestion,” Hartz said. “We can really help these companies that are hungry for vision and want to go from zero to one where capital is abundant.”

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