Upfront Ventures, L.A. County's biggest venture capital firm, just got bigger
Los Angeles County’s most prominent start-up investor just got bigger.
Upfront Ventures closed June with the announcement of a $400-million investment fund that it plans to spend on dozens of start-ups in the next couple of years.
It’s believed to be Los Angeles County’s largest-ever venture capital fund by raw number, though Upfront Ventures’ $390-million investment fund in 2000 comes out far on top when adjusted for inflation. Still, it beats the $280 million that Upfront Ventures picked up at the end of 2014.
Mark Suster, managing partner at the firm, declined to provide specifics about the returns that prior funds have generated.
“The new fundraising speaks for itself,” he said. “We not only raised $400 million, we did it in 2-1/2 months from start to finish. That speaks to our track record.”
But Suster noted that huge returns were generated for investors in Upfront Ventures’ $185-million fund from 2008 through the $675-million sale of online video company Maker Studios to Walt Disney Co. and the initial public offering of auto-buying app TrueCar.
In recent weeks, Upfront Ventures sold about 18% of its ongoing stake in TrueCar, or about $150 million worth of shares, according to FactSet research data.
“We’ve started sending real cash back to investors,” Suster said.
The 2008 fund could yet see more returns, with ad technology start-up GumGum, which Upfront Ventures first put money into in 2009, still chugging along.
“There’s a saying in venture capital: Lemons ripen early,” Suster said. “The best companies you want to hold for 10 to 12 years.”
Upfront Ventures’ 2013 and 2014 investors could see paydays with the potential growth of doorbell maker Ring, secondhand clothing shop ThredUp and sneaker buying app Goat.
Suster said Upfront Ventures has played a crucial role in the developments of companies like Goat, which had been known as Grubwithus and was pursuing restaurant app services until a discussion with Greg Bettinelli. A partner at Upfront Ventures who held leadership roles at EBay, Bettinelli thought that the firm’s technology could be more valuable serving a market that EBay had overlooked.
Upfront Ventures’ new cash comes from the most balanced mix of investors it has had across six funds over the last 20 years. About one-third of the new fund’s capital contributors are foundations and endowments, one-third pension funds and one-third insurance companies. The variety acts as a hedge against shakiness in public stocks or other assets that might lead one type of investor to pull out from a venture capital firm down the road.
The Santa Monica firm has expanded since its last fund in 2014, adding both Kobie Fulleras an investor focusing on virtual reality and marketing software and Kevin Zhang as an investor looking at health and video game technologies.
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