The folks at Collaborative Fund certainly love challenges.
They don’t specialize in venture capital’s favorite business model, SaaS, but instead prefer to invest in sectors like climate, health and food. Also, 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 major fund at a time when limited partners have become more stingy.
Turns out it wasn’t a bad strategy. Collaborative The company exclusively told TechCrunch that it recently raised $125 million for its sixth major fund, a process that took just 90 days.
“This fundraising environment is more difficult than anything I’ve seen since starting the firm more than a decade ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We were motivated to raise the fund because we think the ’24 vintage is going to be a good year,” 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 said. Also, because consumer investing has been out of trend in the VC world for years, there’s less competition. “These are two factors that really make us more excited to invest right now,” he said.
While some LPs are hesitant to commit because of high interest rates and political uncertainty, Shapiro said Collaborative’s investors don’t fall into that category. “What we’ve seen is that the more sophisticated LPs, who have a very long-term view, understand that narrative. They understand that markets are going to fluctuate,” he said.
Partner Sophie Bakalar said the firm had “more demand than we could handle.” One reason may be that Collaborative has recently returned capital to its LPs, Shapiro said. Some of the firm’s past investments have had successful exits, including Reddit’s recent IPO And $4.9 billion acquisition of Scopely By Savvy Games Group. “We had one LP tell us they hadn’t received a distribution from any of their venture funds in about 18 months. The fact that we were distributing capital is what makes us different.”
While the Collaborative did not disclose the names of its LPs, it said it has a range of investors, including endowments, foundations, high net worth individuals, a large asset manager and “a large Singaporean organisation with a specific focus on PE and VC investing.” Most of its existing LPs have committed to the new fund.
As the collaborative flagship, the new fund will also focus on seed stage companies, with about half of the funds reserved for the first check and the rest for follow-on investments.
Shapiro is particularly interested in learning how emerging companies can address changing consumer spending habits. “It’s clear to us that how people are spending their money, where they’re putting their money, how they’re distributing it, where they’re investing it — these are all areas we’re excited about.”
The other thread tying the Collaborative’s portfolio together is climate. “We break out climate sustainability as another category. But if you were sitting as a fly on the wall in our team meetings, we really think about it more horizontally, in all of these vertical areas,” Shapiro said. “The food we’re eating, microplastics, air quality — they’re all connected. Climate and sustainability are the underlying foundation of all of these categories.”
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