The folks at the Collaborative Fund certainly love a challenge.
They do not specialize in SaaS, the business model favored by venture capitalists, and prefer to invest in areas such as climate, health and food. Moreover, they like companies that focus on the consumer. Their fickle attitude can add another layer of complexity to any business plan. Oh, and it has decided to raise its sixth flagship fund at a time when limited partners are becoming increasingly miserable.
It turns out it wasn't a bad strategy. Collaborative recently told TechCrunch exclusively that it raised $125 million for its sixth flagship fund, a process completed in just 90 days.
“The funding environment is more challenging than we’ve seen since we started the company over 10 years ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We did the fundraising because we thought the ’24 vintage would be a good vintage,” he said. He added that the slowdown in venture funding has made valuations more reasonable and given companies more time to complete due diligence. Additionally, there is less competition in the VC world because consumer investing has been out of fashion for several years. “These two combined factors are actually what makes investing more interesting for us now,” he said.
Some LPs have been hesitant to commit due to high interest rates and political uncertainty, but Shapiro said the Collaborative's investors do not fall into that category. “What we’ve seen is that the more sophisticated LPs with a very long-term view are getting that story. They understand the ebbs and flows of the market,” he said.
“The company had far more demand than we could accommodate,” said partner Sophie Bakalar. Part of that may be the fact that Collaborative recently returned capital to LPs, Shapiro said. Several of the company's earlier investments have enjoyed successful exits, including Reddit's recent IPO and Savvy Games Group's $4.9 billion acquisition of Scopely. “We have one LP who says he hasn’t received a dividend from his venture fund in almost 18 months. “The fact that we are allocating capital is what sets us apart.”
Collaborative did not disclose the names of the LPs, but said it has a diverse group of investors, including endowments, foundations, high-net-worth individuals, large asset managers and “large PE-focused Singaporean organizations.” VC investment too.” Most of the existing LPs have committed to the new fund.
The collaboration's flagship new fund will focus on early-stage companies, with approximately half of the fund set aside for first-round investments and the remainder for follow-on investments.
Shapiro is particularly interested in exploring how emerging companies can respond to changing consumer spending habits. “It’s clear how people spend their money, where they keep it, how they distribute it and where they invest it. These are all areas that we are interested in.”
Another element that unites the Collaborative’s portfolio is climate. “We sort of put climate sustainability as another category. But if we were sitting like flies on the wall in our team meetings, we were thinking much more horizontally on all the vertical aspects,” Shapiro said. “The food we eat, microplastics, air quality, etc. are all connected. Climate and sustainability are the fundamental foundations of all these categories.”
