Foundation Capital has come a long way since being forced to reduce its fund size from $750 million in 2008 to $282 million (the sixth main fund) in 2013.
On Tuesday, the 30-year-old company announced it had gathered its $600 million 11th flagship fund, 20% larger than its predecessor's $500 million fund, which was closed about three years ago.
The Foundation believes that its revival is sticking to seed stage investment, which is knitting.
“Most companies that have been around for 30 years have usually become multi-stage, multi-joe fiss, multi-tactics. Instead, we are still very focused on the early stages,” General Partner Steve Vassaro told TechCrunch.
The foundation is the first institutional investor with over 70% of portfolio companies.
“We're looking for what I call the 'billion dollar' market for enterprise, AI, Fintech and Crypto,” Vassallo said. “These are markets that don't even exist until the founders have them there.”
He explained that when Celebras was launched from the Foundation Capital office in 2016, the AI chip market was virtually nonexistent. “AI workloads were very tiny back then,” Vassallo explained, adding that Nvidia's GPUs are primarily used by gamers and graphics designers.
Since then, Celebras has grown to a $4.25 billion company. The company submitted its S-1 last fall, but postponed the IPO mainly due to reviews by the US Foreign Investment Committee (CFIU).
Foundation Capital was also the first institutional investor in blockchain platform Solana.
In his film's Minority Report, Vassallo compared the founder's quest to previous criminals. “We sometimes joke about appearing in advance before quitting our previous job,” he said.
The foundation argues that by creating a new market, the company's winning investments will “own the category,” leading to better results exponentially.
Vassallo attributes the company's ability to raise more funds than its predecessors in the market to its high history of cash distribution.
“We've returned about $1.4 billion to LPS over the last three years,” Vassallo said, adding that the amount is more than triple that we've (or requested) from investors during the period.
A recent exit that helped drive the company's cash returns will be selling fraud detection company EvovolutionIQ for $730 million to CCC, with CyberArc's acquisition of cybersecurity startup Venafi for $1.5 billion.
The foundation is firmly stuck with its early stage strategy, but with the growing size of seed and Series A transactions, it needs a larger fund and wants to continue to own 15% to 20% of each company at its initial investment.
But one thing about the foundation is different now. Charles Moldow, an investor who spent nearly 20 years at companies such as LendingClub, Rappi and Kiavi last year, retired last year and acquired four general partners.