The folks at Collaborative Fund certainly like a challenge.
They don’t specialize in venture capital’s favorite business model, SaaS, preferring instead to invest in sectors like climate, health and food. What’s more, they like companies that focus on consumers, 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 have grown more miserly.
Turns out it hasn’t been a bad strategy. Collaborative recently raised $125 million for its sixth flagship fund, the firm exclusively told TechCrunch, completing the process in just over 90 days.
“This fundraising environment is tougher than any I’ve seen since starting the firm well over a decade ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We were motivated to fundraise because we think the ’24 vintage is going to be a good one,” he said. Because of the slowdown in venture funding, valuations have been more reasonable and firms have had more time to complete due diligence, he added. Plus, because consumer investing has gone out of fashion for years in the VC world, there’s less competition. “Those are two compounding factors that actually make us more excited to be investing right now,” he said.
While some LPs have been hesitant to commit given higher interest rates and political uncertainty, Shapiro said that Collaborative’s investors didn’t fall into that category. “What we saw is that the more sophisticated LPs, who have a very long term view, understand that narrative. They understand that markets ebb and flow,” he said.
The firm had “significantly greater demand than we could accommodate,” said partner Sophie Bakalar. Part of that could be the fact that Collaborative has recently returned capital to its LPs, Shapiro said. Some of the firm’s earlier investments have enjoyed successful exits, including Reddit’s recent IPO and Scopely’s $4.9 billion acquisition by Savvy Games Group. “We have one LP that told us that they haven’t received a distribution from any of their venture funds in almost 18 months. The fact that we were distributing capital set us apart.”
While Collaborative wouldn’t disclose the names of its LPs, it did say that it has a range of investors, including endowments, foundations, high net-worth individuals, a large asset manager and “a large Singaporean organization with a strong focus on PE and VC investments.” The majority of its existing LPs committed to the new fund.
As a Collaborative flagship, the new fund will also be focused on seed stage companies, with about half the fund set aside for first checks and the remainder reserved for follow-on investments.
Shapiro is particularly interested in exploring how emerging companies can address changing consumer spending habits. “It’s clear to us that how people are spending their money, where they’re keeping their money, how they’re divvying it up, where they’re investing it — those are all areas that we’re excited about.”
The other thread that ties Collaborative’s portfolio together is climate. “We break out kind of climate sustainability as another category. But if you were sitting like a fly on the wall in our team meeting, we think of that really more horizontally across all these verticals,” Shapiro said. “The food we’re eating, microplastics, air quality — they’re all linked. Climate and sustainability is an underlying foundation to all of these categories.”