16 October, 2024
Runway earmarks $5M to fund up to 100 films using AI-generated video
AI video generators need to believe that filmmakers will use their models in the production process. Otherwise why exist?
To jump-start the new AI film ecosystem, Runway has set aside $5 million in cash and more in service credits to fund up to 100 original films. If you’re an AI-curious director, now’s your chance to get a little backing.
Runway’s Hundred Film Fund is intended to help kick-start any video-based project that uses the company’s generative video model in some way. “Traditional funding mechanisms often overlook new and emerging visions within the larger industry ecosystem,” the company wrote in the blog post.
Specifically, Runway is dedicating $5 million of its own money to award as grants to filmmakers creating “features, shorts, documentaries, experimental projects, music videos,” or some as-yet-unknown format. The awards would also come with up to $2 million in Runway credits.
The announcement post does say that the cash side has “the potential to grow to $10M.” I asked what this means, and Runway Head of Creative Jamie Umpherson said they want to be “as flexible as possible in how we’re approaching the scope of this fund. We are starting with one hundred films but we hope to do more over time.”
As for how $5 million can be equitably and effectively divided 100 ways, when up to $1 million grants are being dangled as possibilities, Umpherson evaded, simply saying that “each project will be assessed on its own particular production needs when it comes to grant considerations.” (You can read the fine print and apply here.) If you’ve got some clout, you might want to gun for one of five “director residency” positions. It’s unclear what the requirements or benefits are here, but it can’t hurt to try.
The good news is that Runway will not itself assert any form of ownership or control over the projects, only requiring that awardees send biweekly production updates and that Runway is allowed to showcase the final result as it sees fit. They will have advisors, like Tribeca film festival co-founder Jane Rosenthal, and will.i.am, who will help select the awardees and maybe even offer some extra support.
The film fund does have an air of “please use our product,” though there’s truth to the assertion that newer, experimental tools are sometimes shunned by more traditional production companies. Sometimes it really does just take a little cash infusion to find that one breakthrough use of a technology, by someone who might not have been able to find funding otherwise.
There is also a legitimate worry that the results will be very uneven. As industry veteran Michael Black put it recently in a discussion of AI tools in filmmaking: “You can give somebody a powerful car, that doesn’t make them a Formula One driver, right? That’s a little bit like what we have now. Maybe some new voice will have an opportunity that they wouldn’t otherwise. But the number of people making really good films is still going to be small.”
In light of that, it is perhaps actually the wisest move to cast the net widely and fund as many as possible. “Spray and pray” is an unkind way to put it, but fundamentally accurate: The hope is that among the 100 films, at least one or two will show that AI-generated video is actually useful and perhaps even groundbreaking.
No doubt some filmmakers will take the shot just to put a couple bucks in the bank, and find a way to fob off Runway with a dream sequence or the like. But if a few dozen creators take the money and take the tech seriously, that’s probably a win in the startup’s books.
Former Citi, Battery VC has new $378M fund that helps startups land Prudential, Mutual of Omaha, others as investors and customers
PruVen Capital, a fintech and insurance tech venture fund founded by former Benchmark and Citi ventures VC Ramneek Gupta, has closed a new $378.5 million Fund II to invest in financial services and enterprise-focused startups.
This second fund is significant because Gupta expanded it beyond a corporate fund with one main LP – Prudential Financial – into one supported by a number of financial and insurance LPs. Prudential Financial is the lead investor but the fund also includes TIAA, Lincoln Financial, Generali, Nippon Life, Mutual of Omaha and Willis Towers Watson. Prudential was the solo LP in Pruven’s first fund of $300 million.
Gupta expects to wrap up investments from Fund I and begin investing out of Fund II later this month.
PruVen competes by offering portfolio companies access to partner with those top global insurance companies as customers. This not only helps them get a massive first customer, but also gives the LPs a first-look at emerging technologies.
Insurance and financial services companies are extremely technology driven and are eager to not just invest in, but partner with, startups, Gupta says. He points out that their partnership is significant because they are “real businesses” with real revenue and profits. They tend to be long-standing customers involved in everything from consumer to B2B, and at scale, he said.
This was something Gupta wished he had when he was at companies like Zappedy, which was acquired by Groupon in 2011. The company was working on closing the online to offline loop in the daily deals space.
Prior to that, Gupta had been a principal at ITU Ventures and partner at Battery Ventures and decided to get back into investing after the acquisition. During that time he thought about what would make him a better investor.
“I kept coming back to what would have happened if somebody was able to help me with that first reference customer,” he told TechCrunch. “I would have given an arm and a leg as a founder.”
He didn’t go out on his own right away, but got a call instead from Citi, which wanted him to help build Citi Ventures, which he did for the next nine years. During that time, he put that “first reference customer” hypothesis to the test and created a playbook to keep it going.
Between 2011 and 2020, the global investing venture team invested in 140 companies, including Square, Jet.com, Docusign and Honey, where over half of the companies landed actual commercial outcomes with a Citi business as a result of the team’s efforts.
In 2020, Gupta left Citi Ventures to start PruVen.
“I had the proof point that finding that first reference customer creates a lot of mutual value, and I had the playbook on how to do it,” Gupta said. “That’s when I decided to go improve on the structure with an independent firm structure.”
That’s when he joined forces with Prudential. As an independent firm, he said he was able to move quickly to build an even bigger network of LPs for his next fund.
Gupta’s first fund, raised four years ago, invested in companies like Bilt Rewards, Newfront Insurance, Angle Health, Contabilizei, UniteUs and Pismo, which was acquired by Visa for $1 billion in 2023.
It’s too early to discuss return on investment for Fund 1, Gupta said, but he did say the first fund currently has a 10% distributed to paid-in capital (DPI).
“We feel like we have some really good winners,” he said. “Obviously, it takes time for all of these to grow, mature and deliver returns. The best thing I can share with you is we do have actual DPI and money returned to our LPs. Even though it’s a start, it is a powerful signal to them that the model works.”
SparkLabs closes $50M fund to back AI startups
SparkLabs — an early-stage venture capital firm that has made a name for itself for backing OpenAI as well as a host of other AI startups such as Vectara, Allganize, Kneron, Anthropic, xAI, Glade (YC S23) and Lucidya AI — is gearing up to double down more startups in the space. The VC firm announced Tuesday that it has closed a new $50 million fund, AIM AI Fund, which will back AI startups out of its own AIM-X accelerator in Saudi Arabia as well as other AI startups across the globe.
SparkLabs’ new fund and its wider investment aims underscore the bigger trends that have swirled around artificial intelligence for the last few years. The explosion of interest in generative AI in particular has led to a surge of startups in the space, as well as a rush of investors looking for the next Open AI — or at the least, a startup that a bigger company might snap up as it looks to sharpen its own AI edge.
It also points to how the AI opportunity continues to widen beyond Silicon Valley. AIM-X is an AI-focused startup accelerator that SparkLabs launched earlier this year in the kingdom as part of its AI Mission, a national initiative to bolster AI technology over the next five years.
There has been a significant increase in AI startups on a global scale over the past few years. As of March 2024, more than 210 AI unicorns, valued at over $1 billion, have emerged, per the Edge Delta report. Yet despite it being a global phenomenon, the U.S. overall still leads the pack for founding the most AI startups between 2013 and 2022 with 4,633 startups, according to the report.
About 35% of SparkLabs’ new fund will support accelerator participants, with the remaining 65% targeted at making Series A and Series B investments beyond Saudi Arabia, according to co-founder and CEO of SparkLabs Bernard Moon.
“The accelerator will seek a minority allocation for Saudi Arabia or MENA investments, about 10%-20%,” Moon said. “The majority will be just the best AI startups regardless of location… I assume the majority in the U.S.”
The average check size for accelerator participants will be $200,000, but it can go up to $500,000 in unique situations, Moon told TechCrunch. The Series A and Series B investments will be between $1 million and $5 million, Moon added. It aims to invest between 50 and 70 companies in total from the fund.
SparkLabs did not name its limited partners, but Moon said its LPs include a government fund of funds.
Its first batch will be announced live at the GAIN Summit (Global AI Summit) in Riyadh next Tuesday, September 10. Moon exclusively told TechCrunch that SparkLabs has already invested in 14 startups, the first batch, via the AI fund:
viACT: a Hong Kong-based AI video analytics for workplace safety and construction management.IdeasLab: a New York-based startup that has built AI solutions for analyzing body movements without using sensorsAhya: a Pakistan-based startup that has built an AI-powred climate software for measurement, analysis, reporting, reduction of emissions, and transacting carbon offsets.Swirl: a video platform in India that uses AI to help brands connect with customers on their websites and mobile apps through features like videos, user-generated content (UGC) reviews, video ads, and live shopping.Contents.com: an AI content creation platform in ItalyOrko: a Singaporean AI-enabled EV fleet management platformLayla: an AI-powered travel startup in GermanyRoughneck AI: a San Francisco-based multimodal real-world data platform for deep learning applicationsArctech Innovation: a startup that spun out from the London School of Hygiene & Tropical Medicine, using AI to create sensor-enabled products for the detection of pests and diseasesOptimHire: an AI-enabled recruitment platform in San FranciscoWideBot AI: an Arabic generative AI platform in RiyadhOrbo AI: a Mumbai-based startup that has built an AI-powered tool to help beauty brands boost loyalty, engagement, and sales.Vyrill: an AI-powered video intelligence and marketing platform in San FranciscoStack Tech Farm: an agritech startup that specializes in vertical farming in Berlin.
SparkLabs has more than 14 funds across the globe and two funds in Saudi Arabia. It has invested in over 550 startups globally.
What StepStone's $3.3B venture secondaries fund tells us about LPs' current appetite for venture
StepStone raised the largest fund dedicated to investing in venture secondaries ever, the firm announced last week. This fundraise doesn’t just say a lot about StepStone’s venture secondaries investing prowess, but also about how LPs are thinking about the current venture market.
The fund, StepStone VC Secondaries Fund VI, raised $3.3 billion. This marks a big step up from the fund’s predecessor, which closed on $2.6 billion, a record size at the time, in 2022. Fund VI was raised from both existing and new LPs and was oversubscribed, according to StepStone.
Secondaries funds like StepStone’s buy existing investor equity stakes in both individual startups, known as direct secondaries, and LP stakes in venture funds. Direct secondaries allow LPs access to startup stakes in already successful companies nearing an exit, which means less risk and less time to reward.
This record-setting fund comes at a time when venture fundraising is down sharply. In 2023, venture funds raised $66.9 billion, according to PitchBook data. That marks a 61% decrease from 2022 when funds closed on a record-breaking $172.8 billion.
While the negative overall venture fundraising numbers may imply that LPs are less interested in investing in startups, Brian Borton, a VC and growth equity partner at StepStone, told TechCrunch he doesn’t think that’s necessarily true. He thinks LPs are still just as interested, but after the wild valuations of 2020 and 2021, many of which have evaporated now, they are looking for venture strategies that return results faster and with less risk.
“LPs’ interest level in venture capital continues to be strong,” Borton said. “A lot of LPs are looking for broader or more differentiated ways of building their venture exposure and I think secondaries as a method of building that exposure certainly resonated.”
He added LPs are looking for ways to invest in venture-backed companies without as long of a holding period too. VCs, especially those that invest at the early stages, hold investments the longest of any private asset class.
“A lot of LPs learned the lesson that you can’t time the venture capital market,” Borton said. “There continues to be this institutional commitment to the asset class that we haven’t necessarily seen in past cycles. LPs aren’t throwing in the towel, they are just being more selective in who they are backing and making sure they are doing it in the right way.”
This fundraise also shows what LPs are thinking about the primary late-stage market too. LPs may be choosing to back a secondaries vehicle over a traditional late-stage or growth-stage focused fund because of price. Median late-stage valuations actually have risen since their initial decline when the market cooled in 2022, according to PitchBook data. Meanwhile, many secondaries deals still trade at a discount, according to data from secondaries deal tracking platform Caplight.
This fund close, and what it says about LP interest in late-stage startups and venture secondaries, should be good news to VCs. Many VCs are looking for liquidity in a still quiet exit market and while investors and startups want to sell stakes not every investor is allowed to buy.
Venture firms, unless they are registered investment advisors, can only hold up to 20% of their portfolio in secondary stakes, per SEC requirements. This means that there aren’t a ton of buyers for these secondary stakes outside of dedicated secondaries funds, hedge funds and crossover investors like Fidelity and T. Rowe Price.
Borton said that $3.3 billion is actually a small fund when you look at the potential size of the venture secondaries market, which continues to grow as startups continue to stay private for longer.
“We have the largest fund but we truly believe that is still undersized relative to the market opportunity in front of us,” Borton said. “This allows to be very selective in what we choose and transact on.”
Venture secondaries activity is up this year compared to last. Javier Avalos, the co-founder and CEO of Caplight, told TechCrunch that its platform has tracked $600 million of transaction volume so far this year, which represents a 50% increase over yearly activity at this time in 2023.
“What’s encouraging is that the pickup in volume is coming from both an increase in the number of trades closed and an increase in the average trade size,” Avalos told TechCrunch over email. “In Q2 of 2023, the average closed secondary trade size we observed was $1 million. We’ve seen almost double the closed trade size this quarter, indicating more institutional investor buyers are active in the market, as these funds typically participate in larger deals than individual investors would.”
If LPs are increasingly interested in the venture secondaries space, and trading volume continues to increase, Borton might be right that while StepStone’s $3.3 billion fund is the largest now, the market has room for more funds of that size or greater. StepStone’s fund may not be the largest fund for long.
As Spain gets its latest VC fund, Southern Europe appears to be on a roll
While startup valuations have plummeted since the bull run of 2021-2022, a factor that’s hit the European startup ecosystem particularly hard, there’s one region of Europe where the correction has slightly worked in its favor: the South.
Evidence for this was apparent during Mobile World Congress in Barcelona earlier this year, as time and time again your TechCrunch reporter bumped into Northern European VCs scouting startups on the “Iberian peninsula” (Spain and Portugal). These young companies bring a killer combination that VCs love: significantly lower operating costs and far less punchy valuations.
Further evidence of this “Southern trend” arrives with news that a new venture capital fund, Plus Partners, is being launched by Enrique Linares, one of the co-founders of breakout European unicorn letgo, and Oriol Juncosa, a veteran of the Barcelona VC scene. While Plus Partners hasn’t released a figure for the launch of their new fund, the rumor I’m hearing is it will be in the $30 million-$50 million range.
Looking at the fund’s co-founders, Linares led letgo, a used goods marketplace, to become the first Spanish startup to achieve unicorn status, attracting investment from Accel, Insight Partners and Prosus, among others. Prior to letgo, he co-founded Captalis, a fintech company with a significant presence in LatAm.
Juncosa started his VC career at Nauta Capital in Barcelona and went on to co-found the early-stage VC firm Encomenda Smart Capital. He then become CFO of Carto, a data visualization SaaS company based in the U.S. and Spain, which has raised more than $100 million. As an investor/shareholder he’s invested in more than 75 startups — such as Carto, Cobee (which exited to Pluxee), Holded and Housfy, among others.
So what’s the Plus Partners thesis? It will concentrate on “health and nutrition,” “finance and property” and “future of work and productivity,” per Juncosa. The fund will focus on pre-seed and seed-stage startups in Southern Europe with a significant percentage of them coming from Spain.
Juncosa told me the fund is backed by founders and former C-Level execs drawn from companies including Carto, Luzia, Kantox, Red Points and Typeform, among others.
He said he thinks Spain and Portugal sorely need more professionally run VC funds because too many early-stage investors, especially non-professional angels and family offices, tend to “do more harm than good” in the nascent tech scene there, because they either blow up valuations excessively or enter rounds on punitive terms to the founders.
“The big news in Spain for me is that we have role models. Also the tech community in Spain and Portugal is extremely open, everybody’s happy to support everybody,” he told TechCrunch over a call.
Which country does the new fund think is “hotter” in terms of startups? “I would say, overall, we have three great entrepreneurial cities in Barcelona, Madrid and Lisbon. If you went back 10 years, Barcelona was the biggest tech city. But Lisbon and Madrid have played catch-up very well. Now, entrepreneurs have a choice of where they want to set up their company.”
Linares reiterated that Southern Europe is now “packed” with entrepreneurs who are role models for new startup founders, emphasizing: “We have a lot of talent and founders can internationalize very successful startups from here.”
“Barcelona and Madrid are on a par with each other as ecosystems, but Valencia is growing,” he added. “There is a summit in October that is called Valencia Digital Summit. We were speakers last a year and it was fantastic. I was very surprised. It was my first time there.”
The fund will also look at startups coming out of Italy, completing its “Southern Europe” thesis.
“We’ll have a significant share of our investments in Spain, but, within [Southern Europe], Italy is greatly overlooked. Rome and Milan are catching up. We’re very excited about it,” said Linares.
Plus Partners arrives at a time when VCs are dialing up their attention on Southern Europe.
Yellow, a new VC firm created by Oscar Pierre, Sacha Michaud (the founders of Glovo) and Adam Lasri (a former investor for VC giant Atomico), recently put their bets on the region, with a €30 million fund raised in less than five months.
Furthermore, Spanish VC Kfund raised $75 million to fund tech projects earlier this year.
According to a Dealroom report on the Spanish tech ecosystem, the combined enterprise value of Spanish startups surpassed €100 billion in 2023. It also found venture investment into Spanish startups held up last year, with €2.2 billion raised across some 850 funding rounds.
The annual “State of European Tech” report for 2023 found Spain’s ecosystem to be in fourth place overall and had the highest number of startup fundings last year.
Lastly, the European Investment Bank’s venture capital arm also backed a new fund in Spain this year which aims to invest €1 billion ($1.1 billion) in growth-stage tech startups.
Sub.club aims to fund the fediverse via premium feeds
A new service from the makers of the Mammoth app for Mastodon intends to bring the creator economy to the fediverse, also known as the open social web. Sub.club, launching on Thursday, will allow creators on Mastodon — a decentralized Twitter/X rival — to offer paid subscriptions and content by way of premium feeds. In addition to supporting creators, sub.club thinks premium feeds could also serve other use cases, like supporting helpful bots or generating funds to help maintain a community’s Mastodon server, for instance.
The latter would be particularly useful as the fediverse today is made up of independent servers that interconnect with one another to form a decentralized open social web that includes Mastodon and other services. Those servers tend to be community-supported, which can be a challenge when it comes to raising funds.
Developed over the past few months, sub.club shares engineering and design resources with Mammoth, the Mastodon app backed by Mozilla, Long Journey Ventures and Salesforce’s Marc Benioff. Though some fediverse supporters don’t like the idea of VCs and for-profit businesses entering their space, Mammoth’s co-founder Bart Decrem thinks bringing money into the fediverse could help it to thrive.
While he admits there will be some pushback at the idea, Decrem says that Mastodon and ActivityPub, the protocol powering the fediverse, could use more resources.
“I think it’s important, for the ecosystem to thrive, that there be a way to have premium content to build businesses here,” he said. “That’s a fundamental belief.”
To use sub.club, Mastodon users can set up their own premium feed at whatever price they choose, which others can subscribe to via the web. Designed to run on the ActivityPub platform, sub.club creates a feed that can be consumed from within any Mastodon client on the web. It’s also offering an API to allow Mastodon app developers to natively integrate these feeds into their own mobile and desktop apps. Third-party developer Thomas Ricouard, who makes the Ice Cubes Mastodon app for iOS and Mac, will be the first to implement the subscription feeds.
“I’m very happy that I can help with the creator economy over the Mastodon and the fediverse by expanding Ice Cubes features,” Ricouard told TechCrunch. “And we believe sub.club will help fund various creators and services over the fediverse, as it’s much needed.”
Sub.club will also roll out to Mammoth’s app starting on Friday, allowing users to click a button to subscribe to creators’ paid feeds.
When users click to follow a subscription-based feed, they’ll receive a direct message that links them to a payment page on the web. The payments are currently powered by Stripe, but over time, sub.club may add support for other payment providers.
To generate revenue for itself, sub.club takes a 6% cut of the transactions — that’s less than the 8% or 12% Patreon takes on subscriptions via its Pro and Premium plans, respectively.
Decrem says sub.club differs from Patreon in other ways, too, as it’s “more of a back-end service” than Patreon, as opposed to being a destination where content can be discovered.
(Still, it’s worth noting that Apple is currently forcing Patreon to use its in-app purchase system or risk being removed from the App Store. Sub.club, for now at least, may fly under the radar.)
The potential for sub.club could grow alongside the open social web. When Meta’s Threads fully integrates with ActivityPub, it would bring a new class of creators into the fediverse, and they may be looking for alternative means of monetization beyond advertising, which the fediverse generally avoids. (Threads, however, may not).
That’s a potentially monetizable activity, Decrem thinks, which is why Mammoth and sub.club’s parent company, The Blvd. Inc., is seeking to raise a seed round.
“If people start building little apps, you’ll start seeing entrepreneurial activity and money flowing through the system. And I think that’s exciting to a class of investors,” Decrem said.
Under Elon Musk, X (formerly Twitter) has sought to raise creator profiles allowing them to generate revenue from their posts and videos. But it has struggled to keep advertisers amid the controversial and toxic content that’s often shared on the network. As a result, the company is incentivizing posts that generate a lot of replies, as these can qualify for revenue-sharing, which is leading to more clickbait across the platform and diluting the more valuable pockets of conversation.
Mastodon, meanwhile, is largely untouched by any push to monetize its posts, supporting itself instead through Patreon, grants and more recently, merchandise.
Whether the fediverse will actually welcome paid content remains to be seen.
Sub.club — not to be confused with Sub Club from RevenueCat — is initially available as a developer preview and will later this fall roll out tools that will allow Mastodon server owners the ability to support their instance financially. For that product, sub.club will waive its fees and its Stripe fees for the first 90 days.
Early adopters of the premium feeds include the premium bot “Pups Where They Don’t Belong” and an account from developer and sub.club adviser Anuj Ahooja.
Anthropic looks to fund a new, more comprehensive generation of AI benchmarks
Anthropic is launching a program to fund the development of new types of benchmarks capable of evaluating the performance and impact of AI models, including generative models like its own Claude.
Unveiled on Monday, Anthropic’s program will dole out payments to third-party organizations that can, as the company puts it in a blog post, “effectively measure advanced capabilities in AI models.” Those interested can submit applications to be evaluated on a rolling basis.
“Our investment in these evaluations is intended to elevate the entire field of AI safety, providing valuable tools that benefit the whole ecosystem,” Anthropic wrote on its official blog. “Developing high-quality, safety-relevant evaluations remains challenging, and the demand is outpacing the supply.”
As we’ve highlighted before, AI has a benchmarking problem. The most commonly cited benchmarks for AI today do a poor job of capturing how the average person actually uses the systems being tested. There are also questions as to whether some benchmarks, particularly those released before the dawn of modern generative AI, even measure what they purport to measure, given their age.
The very-high-level, harder-than-it-sounds solution Anthropic is proposing is creating challenging benchmarks with a focus on AI security and societal implications via new tools, infrastructure and methods.
The company calls specifically for tests that assess a model’s ability to accomplish tasks like carrying out cyberattacks, “enhance” weapons of mass destruction (e.g. nuclear weapons) and manipulate or deceive people (e.g. through deepfakes or misinformation). For AI risks pertaining to national security and defense, Anthropic says it’s committed to developing an “early warning system” of sorts for identifying and assessing risks, although it doesn’t reveal in the blog post what such a system might entail.
Anthropic also says it intends its new program to support research into benchmarks and “end-to-end” tasks that probe AI’s potential for aiding in scientific study, conversing in multiple languages and mitigating ingrained biases, as well as self-censoring toxicity.
To achieve all this, Anthropic envisions new platforms that allow subject-matter experts to develop their own evaluations and large-scale trials of models involving “thousands” of users. The company says it’s hired a full-time coordinator for the program and that it might purchase or expand projects it believes have the potential to scale.
“We offer a range of funding options tailored to the needs and stage of each project,” Anthropic writes in the post, though an Anthropic spokesperson declined to provide any further details about those options. “Teams will have the opportunity to interact directly with Anthropic’s domain experts from the frontier red team, fine-tuning, trust and safety and other relevant teams.”
Anthropic’s effort to support new AI benchmarks is a laudable one — assuming, of course, there’s sufficient cash and manpower behind it. But given the company’s commercial ambitions in the AI race, it might be a tough one to completely trust.
In the blog post, Anthropic is rather transparent about the fact that it wants certain evaluations it funds to align with the AI safety classifications it developed (with some input from third parties like the nonprofit AI research org METR). That’s well within the company’s prerogative. But it may also force applicants to the program into accepting definitions of “safe” or “risky” AI that they might not agree with.
A portion of the AI community is also likely to take issue with Anthropic’s references to “catastrophic” and “deceptive” AI risks, like nuclear weapons risks. Many experts say there’s little evidence to suggest AI as we know it will gain world-ending, human-outsmarting capabilities anytime soon, if ever. Claims of imminent “superintelligence” serve only to draw attention away from the pressing AI regulatory issues of the day, like AI’s hallucinatory tendencies, these experts add.
In its post, Anthropic writes that it hopes its program will serve as “a catalyst for progress towards a future where comprehensive AI evaluation is an industry standard.” That’s a mission the many open, corporate-unaffiliated efforts to create better AI benchmarks can identify with. But it remains to be seen whether those efforts are willing to join forces with an AI vendor whose loyalty ultimately lies with shareholders.
Why most AI benchmarks tell us so little
Industry Ventures raises a $900M fund for investing in small, early-stage VCs and their breakout startups
The venture fundraising trend in 2024 is fairly clear by now: Large, established VC firms are continuing to attract capital from limited partners, while smaller, newer funds are finding it more difficult to raise.
But Industry Ventures’ latest fundraise should offer a dash of good news for emerging managers.
On Tuesday, the 24-year-old firm announced that it raised a $900 million early-stage hybrid fund for investing in emerging managers and directly backing breakout growth-stage companies alongside their managers. The fund will also buy a secondary interest in emerging managers from other limited partners.
This is Industry Ventures’ seventh hybrid fund, and it’s more than 50% larger than its predecessor, a $575 million vehicle raised in 2021.
The $900 million fund will be split three ways: backing VC funds (40%), directly investing in promising Series B startups from their existing partnerships (40%) and acquiring stakes in emerging investment firms from other LPs looking to exit (20%).
The common lore is that it’s very challenging for emerging managers to raise funds now, but Roland Reynolds, senior managing director at Industry Ventures, says that is not what he observes with the funds his firm backs.
“We’ve seen the vast majority of our managers are getting their funds done,” he said. “It might take them a quarter or two longer, but most are [raising] larger fund sizes.”
Part of Industry’s secret may be that not all VCs the firm backs fit the standard definition of emerging managers.
While Industry Ventures’ new relationships are usually firms on funds I through III, it will continue to invest in managers as they mature, as long as their fund sizes are $250 million or less and focused on seed and Series A startups, Reynolds said. These managers include firms that have been around for over a decade, including IA Ventures and Altos Ventures.
In addition to backing more-established small managers, Reynolds said it’s a good time to invest in new funds started by experienced investors who are leaving large firms.
As for direct investments, Reynolds said the firm is looking to back the best Series B companies sourced from its manager relationships. Some of the firm’s most recent deals include online banking and money management platform Relay and robotics company Cobot. Industry Ventures checks invested directly into companies range from $2 million to $12 million.
Industry Ventures was founded in 2000 by Hans Swildens. The firm is best known as a secondaries VC investor. The latest hybrid fund brings Industry Ventures’ total assets under management to over $8 billion.