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Tuesday, Sep 26, 2023

Equity Firm to Spend Big On Health, Fintech

Santa Monica-based private equity firm Upfront Ventures has raised $655 million to put toward startups and emerging companies. That includes $280 million raised as its seventh early stage fund, which was announced July 26.

Upfront partner Mark Suster, in an online post at his blog Both Sides of the Table on online publishing platform Medium, said that the $655 million would go toward companies in health care and applied biology, defense technologies, computer vision, agriculture technology and sustainability, fintech, consumerization of enterprise software and gaming infrastructure.

“None of these categories are new for us, but with this fund we are doubling down on our areas of enthusiasm and expertise,” Suster wrote in the post.
In addition to the $280 million in Upfront VII, the company also raised $200 million in its third growth stage fund, Growth III, and $175 million in its Continuation Fund.
In the blog post, Suster explained how Upfront Ventures follows a barbell strategy of investing in seed rounds, ignoring A and B rounds of financing and then getting back into a company during its early growth stage.

“When we get involved in seed investments we usually represent 60% to 80% in one of the first institutional rounds of capital, we almost always take board seats and then we serve these founders over the course of a decade or longer,” Suster wrote in his blog. “In our best-performing companies we often write follow-on checks totaling up to $10 to $15 million out of our early-stage fund.”

Among the companies that Upfront has invested in are ZestAI, a Burbank fintech company; Goat, the world’s largest marketplace for buying and selling authentic sneakers which is based in Culver City; and Palms-based Bionaut Labs, which is developing nanorobots that can be used to deliver drugs to treat brain diseases. Upfront Ventures was also an early investor in scooter company Bird Global Inc.

“We believe in being active partners with our portfolio (companies), working alongside founders and executive teams in both good times and in more challenging times,” Suster wrote. “We have strong views, take strong positions, and operate from a place of strong conviction when we invest. Every founder in our portfolio is there because an Upfront partner had unwavering belief in their potential and did whatever it took to get the deal done,” he added in the blog post.

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