When IronSpring Ventures launched in 2020 to back startups in industrial sectors like construction and manufacturing, it was one of very few early-stage venture firms focusing on capital-intensive sectors. Now, the firm is doubling down.
The Austin, Texas-based firm raised $100 million for its second fund focused on industrial startups. This is a significant increase from the firm’s $61 million debut fund that closed in 2021. This latest raise enabled the firm to hire its first principal, Colleen Konetzke, and head of platform, Stephanie Volk. The firm plans to invest Fund II in 20 startups, supporting approximately three companies a year.
“What we saw then is still as true today as it was then,” Ty Findley, IronSpring’s co-founder and general partner, told TechCrunch. “There’s a huge gap in the venture industry that studies in-depth and real GP market fit with these industrial markets and can help them navigate a very challenging go-to-market [process].that’s when you really roll [these industries] They are more than half of the U.S. GDP. I am of the firm opinion that we as a country cannot leave the U.S. behind.
The industries Findley is referring to include manufacturing, construction, transportation, and energy. The firm backed 16 companies in its first fund, including Solvento, a payments infrastructure startup for trucking companies in Mexico, last-mile logistics startup OneRail, and ProKeep, a communications platform for distributors.
IronSpring has already backed six companies with Fund II and has deployed about a quarter of the fund. Findley said the main difference between Fund I and Fund II is that the additional capital allows the firm to write bigger checks this time around, of $2 million to $4 million, which will help them stay competitive as seed rounds get bigger.
Findley said he is excited to have new capital to invest at this time, as macroeconomic tailwinds are impacting the industries he focuses on. Supply chain disruptions that began during COVID-19 are still ongoing, in addition to new ones brought on by conflict in the Middle East. Policies including the Inflation Reduction Act and the CHIPS and Science Act are also bringing discussion and government funding to these sectors. Additionally, Findley said advances in AI could make a huge difference in these industries.
“We’re seeing a flood of more top-tier tech and innovation talent moving into these industries,” Findley said. “Whether they’re coming back from recent tech unicorns, or just other tech talent who want to make a bigger impact in their careers that aren’t based on photo sharing or edtech or chasing the next crypto coin, those are the macro trends.”
GoodShip is a good example of this. The freight orchestration and procurement platform was started by former Convoy operators. IronSpring led the firm’s 2023 seed round alongside Chicago Ventures and joined again in the Series A earlier this year.
While IronSpring was one of the first early-stage firms to focus on this area, the category has become more crowded as richer firms such as Andreessen Horowitz, General Catalyst and Bessemer have entered the field. However, Findley does not see the entry of these name-brand firms as competition.
“I believe the more capital that flows into these industries, the better,” Findley said. “They’re great partners. We wouldn’t have been able to work our way to seed-stage if we didn’t have great downstream growth.”
Findley said startups like this need a community to grow successfully and he’s glad other firms can bring different perspectives to their portfolio companies. He said the firm invites these other firms onto its podcast, Heavy Hitters, to make it a resource for its portfolio companies and beyond. Notable VCs on the firm’s podcast include: Katherine Boyle, a general partner at a16z, Aaron Jacobson, a partner at NEA, and Lior Susan, CEO and founder of Eclipse Ventures, among others.
Findley thinks they will stand out even amid the growing noise because of their sector expertise and their “secret sauce” LP base. The firm’s LP base is made up of operators in the industries they work in, who own construction companies and manufacturing plants and can not only offer guidance and advice to companies, but also serve as potential clients.
Findlay said IronSpring being based in Austin is an asset because that’s where they invest — a narrative that contradicts the views of others in the venture ecosystem. Emerging tech hubFindley said many of the industries the company is focusing on have history in Austin, with Tesla moving its headquarters there and recently being approved for $6.4 billion under the Infrastructure Act. Samsung It has the right talent to make semiconductor chips there, driving the digital industrial revolution.
“America cannot allow these vital industries to be left behind,” Findley said. “We are here for the long haul to make sure that never happens.”
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