- Firm raises $100 million seed fund to back young startups
- A $50 million fund will invest in portfolio companies
SoftTech VC, a San Francisco-based backer of Fitbit Inc. and Postmates Inc., has raised $150 million for a pair of new venture funds to invest in technology startups.
A new $100 million fund will be used to make small investments in fledgling tech companies. SoftTech has also raised $50 million to make bigger bets on companies the firm had previously backed.
Stephanie Palmeri, a SoftTech partner, said it took less than six weeks to raise the financing from about 40 investors, including Knollwood Investment Advisory and the State of Wisconsin Investment Board. With seed investing on the decline recently, Palmeri said the firm had to overcome skepticism about whether investors would be interested in such a fund.
Since October, U.S. venture capitalists have been making fewer investments in young startups, choosing instead to put their money into mature companies with proven business models. The first three months of 2016 saw the fewest number of seed-stage venture deals in three years, according to a report released in April by research firm PitchBook Data. More than half of all venture capital funding went to late-stage funding rounds in the first quarter.
With SoftTech’s seed fund, the firm aims to back about 40 young startups by the end of 2019, with a focus on connected devices, marketplaces and “blue-collar tech,” a subset Palmeri describes as “productivity technology designed for people who aren’t sitting at a computer.”
Initially, SoftTech will make investments of $500,000 to $1.5 million with the goal of owning a 7 percent to 10 percent stake in Silicon Valley’s next hit. In 2008, SoftTech founder Jeff Clavier cut a $125,000 check for a 3 percent stake in Fitbit. The fitness band maker’s market cap peaked at more than $10 billion last August but has since tumbled to about $3 billion.