Venture capitalists in the pandemic economy could be forgiven for asking, “What slowdown?”
In the face of dislocation caused by the coronavirus, VC firms still are amassing formidable war chests across the US industry as limited partners show their continuing faith in the venture market.
After peaking in 2018, total VC fundraising this year already has matched the more than $54 billion raised in all of 2019, according to PitchBook data through Sept. 18.
What’s different in the pandemic climate is that funds in the $500 million-plus segment have been making up more of that haul, and less of the total can be attributed to funds of $100 million or less.
For first-time funds in particular, it’s a more humble story at a time when limited partners are getting more conservative and re-upping allocations with tried-and-true GPs, rather than taking a chance on fund management newcomers.
Fundraising activity for first-time funds has taken a hit during the pandemic, with only $1.9 billion raised so far this year versus $5.3 billion for all of last year, according to preliminary PitchBook data for the third quarter.
However, the few newcomers who do score with LPs are coming away with more firepower. Median fundraising for first-time funds has risen this year to a new high of $42.3 million, up from $35 million last year.
One member of the 2020 freshman class is Will Ventures, led by former Harvard football players Isaiah Kacyvenski and Brian Reilly. Their early-stage fund weighs in at the high end of its peer group, with a final close of $55 million to invest in startups focused on services and products catering to the growing sports market.
“There’s no shortage of follow-on capital in this space,” Kacyvenski said.
Will had reached its target funding level as of this past winter, but then the coronavirus erupted.
Over the ensuing months, Kacyvenski and Reilly were in wait-and-see mode to make sure their LPs were going to stand by their funding commitments to Will. They all did, and the fund even was oversubscribed as additional backers showed interest in their sports investment strategy.
“We knew there was pent-up demand in this space based on the comps we have seen,” Reilly said. “And there was a real demand for investors with subject matter expertise in sports.”
The partners emphasize the breadth of their research background along with a network spanning the increasingly overlapping realms of sports and tech.
Kacyvenski, a former linebacker for the Seattle Seahawks, co-founded Sports Innovation Lab, a research and advisory firm. He and Reilly previously worked together there, and they sourced deals for Blue Star Innovation Partners, the investment vehicle of Dallas Cowboys owner Jerry Jones’ family.
Based in Boston, the Will partners are investing across a range of startups that have some kind of tech intersection with sports or fitness. One of their portfolio companies is Player’s Health, an insurance marketplace catering to youth athletes. Another is Breathwrk, an app provider that aims to optimize performance based on advanced breathing methods.