Venture Firms Drowning in Lackluster Funding, Except for the Elite
In a bleak Q1, venture firms collectively raised a paltry $9.3 billion, far short of last year’s whopping $81.8 billion haul. The sorry state of the market has spelled disaster for emerging managers, but lucky for some, their prestige and proven track record can still rake in the cash.
Take A*, for instance. Despite the fundraising slump, this illustrious firm has just closed a $315 million oversubscribed Fund II, led by former Eventbrite founder Kevin Hartz and ex-Coatue partner Bennett Siegel. The trio of founding partners, including Gautam Gupta, boasts an impressive CV, with decades of experience across various industries and a history of backing successful startups.
So, what’s their secret to success? For A*, it’s all about identifying the right founders and partnering with them from the very beginning. As Siegel puts it, "We’ve found our product market fit is really at the seed and inception stage, partnering with founders on zero to one while continuing to back the breakouts in our portfolio." In other words, they’re obsessed with transforming unproven concepts into companies with a product and customers, à la Peter Thiel’s "Zero to One" book.
The fund’s focus on backing founders, rather than specific industries, has allowed them to excel in areas like AI and consumer tech. And with institutional investors now on board, the firm is poised for even greater heights. But don’t expect them to become complacent – they’re intent on staying small, focusing on generating incredible returns for their investors, and continuing to mentor their portfolio companies, rather than simply deploying large sums of capital.
A*’s success stands in stark contrast to the struggles faced by many emerging VCs. Can they replicate their magic in the years to come? Only time will tell.
