The folks at Collaborative Fund certainly like a challenge.
They don't specialize in SaaS, VCs' favorite business model, but instead prefer to invest in areas like climate, health, and food. Plus, they like consumer-focused companies, whose fickle attitudes can add another layer of complexity to any business plan. Oh, and they decided to raise their sixth flagship fund at a time when limited partners are getting increasingly stingy.
It turns out that wasn't a bad strategy after all: Collaborative recently raised $125 million for its sixth flagship fund, a process that was completed in just over 90 days, the firm told TechCrunch exclusively.
“This fundraising environment is tougher than any I've experienced since founding the company over a decade ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We were eager to raise money because we thought '24 was going to be a good year,” he said. The slowdown in venture funding has led to more reasonable valuations and given companies more time to complete due diligence, he added. Plus, there's less competition in the VC world, as consumer investing has gone out of fashion for years. “The combination of those two factors has us even more eager to invest now,” he said.
While rising interest rates and political uncertainty have made some LPs hesitant to invest, Shapiro said Collaborative's investors don't fit into that category. “What we've seen is that the more sophisticated LPs who take a very long-term view understand the story. They understand that markets will rise and fall,” he said.
The firm's “demand was way beyond what it could serve,” said partner Sophie Bakalar. One reason, Shapiro said, is that Collaborative has recently returned capital to its LPs. Some of the firm's earlier investments have had successful exits, including Reddit's recent IPO and Savi Games Group's $4.9 billion acquisition of Scopely. “One LP told us they hadn't received a dividend from any venture fund in almost 18 months. The fact that we were distributing capital set us apart.”
The Collaborative did not disclose the names of its LPs but said it has a wide range of investors, including endowments, foundations, high net worth individuals, large asset managers and “major Singapore organisations focused on PE and VC investments.” Most of its existing LPs have committed to investing in the new fund.
As the Collaborative's flagship fund, the new fund will also focus on seed-stage companies, with roughly half of the fund set aside for an initial check and the rest for follow-on investments.
Shapiro is particularly interested in exploring how startups can address changing consumer spending habits: “How people are spending their money, where they're keeping it, how they're allocating it, where they're investing it — these are all areas that interest us.”
Another element that ties the Collaborative's portfolio together is climate. “We categorize climate sustainability as a separate category, but if you've been watching our team meetings, you'll see that we look at it more horizontally across all of our verticals,” Shapiro says. “The food we eat, microplastics, air quality, these are all connected. Climate and sustainability are the underlying foundations of all of these categories.”