Iron Spring Ventures was founded in 2020 to back startups in industrial sectors like construction and manufacturing, but at the time it was one of a handful of early-stage venture firms focused on capital-intensive sectors. Now the firm is doubling down on that effort.
The Austin, Texas-based firm has raised $100 million for its second fund focused on industrial startups, a notable increase from the $61 million in the firm's first fund, which closed in 2021. This latest raise allowed the firm to hire its first principal, Colleen Konetzke, and head of platform, Stephanie Volk. The firm plans to use Fund II to invest in 20 startups, backing roughly three companies per year.
“What we saw then remains true today,” Ty Findley, co-founder and general partner at Iron Spring, told TechCrunch. “There's a big gap in the venture world for someone who has studied these industrial markets deeply, has true GP-market fit, and can help them navigate what can be a pretty difficult market entry.” [process]When you actually roll it [these industries] Together, they make up more than half of the U.S. GDP, and I strongly believe that as a country, we cannot afford to be left behind.”
The industries Findlay is referring to include manufacturing, construction, transportation and energy. In its first fund, the firm backed 16 companies, including Mexican trucking company payments infrastructure startup Solvent, last-mile logistics startup OneRail and ProKeep, a communications platform for distributors.
IronSpring has already backed six companies in Fund II, putting about a quarter of its capital into it. Findlay said the main difference between Fund I and Fund II is that the additional capital allows the company to write bigger checks this time around, between $2 million and $4 million, which he said will help it stay competitive as seed rounds get bigger.
Findlay said he is excited to now have a new pool of capital to invest in as macroeconomic tailwinds impact the industries they focus on. Supply chain constraints that began during the COVID-19 pandemic continue to this day, in addition to new constraints caused by the Middle East conflict. Policies such as the Inflation Control Act and the CHIPS and Science Act have brought attention and government funding to these sectors as well. Additionally, Findlay added that advances in AI could bring significant change to these industries.
“We're seeing a flow of top tech and innovation talent into these industries,” Findlay says. “Whether it's the return of recent tech unicorns or talent from other technologies who are simply looking to make a big impact in their careers rather than photo sharing, ad tech or chasing the next cryptocurrency, that's the macro trend.”
GoodShip is a great example: The freight orchestration and procurement platform was started by the former operator of Convoy. Ironspring co-led the company's 2023 seed round alongside Chicago Ventures and reinvested in its Series A earlier this year.
Ironspring was one of the first early-stage companies to focus on this space, but it has become more crowded as well-funded firms like Andreessen Horowitz, General Catalyst, and Bessemer have entered the field. But Findlay doesn't see these big names as competition.
“I believe the more capital that flows into these industries the better,” Findlay said. “They're great allies. Without significant growth downstream, we can't do our job at the seed stage.”
Findlay said it takes a village to make these types of startups successful, and he's happy that other firms can bring different perspectives to his portfolio companies. He added that the firm is inviting these other firms to join its podcast, “Heavy Hitters,” to create resources for its portfolio companies and beyond. The podcast features prominent VCs such as A16z general partner Katherine Boyle, NEA partner Aaron Jacobson, and Eclipse Ventures CEO and founder Lior Susan.
Findlay believes the company still stands out amid the growing noise thanks to its industry expertise and “secret sauce”: its LP base, made up of industry executives who own construction companies and manufacturing plants, who can not only provide guidance and advice to companies but also act as potential customers.
Iron Spring's Austin location gives it an edge as an investment destination, Findlay said, a counterpoint to how many in the venture ecosystem view Austin, once an emerging tech hub. Findlay said many of the industries the company focuses on have a history in Austin, and with Tesla moving its headquarters there and Samsung getting $6.4 billion in infrastructure funding recently approved to make semiconductor chips, the company has the right talent to drive the digital industrial revolution.
“The United States cannot allow these critical industries to be left behind,” Findlay said. “We will work long and hard to ensure that never happens.”