Lux Capital has raised an additional $ 1.5 billion to invest in – and create – new startups – TechCrunch
Fundraising continues at a rapid pace in the go-go world of venture capital. Today, it was Lux Capital – known for its cutting edge investments – that closed a $ 675 million start-up venture capital fund and $ 800 million growth fund from its existing LPs, including numerous foundations, endowments and family offices that have supported the company since its creation in 2000.
It’s easy to see why they would snap back into place. In the past 12 months alone, a dozen companies in Lux’s portfolio have either been acquired, gone public, or announced their intention to go public, or through an old-fashioned SPAC. Among them, Zoox, acquired by Amazon last year; Desktop Metal, which went public by merging with a blank check company last December; and Shapeways, which agreed in April to merge with a blank check company.
The most recent of Lux’s portfolio companies to announce a SPAC deal is Bright Machines, a manufacturing software company that announced a merger with a publicly traded shell company two weeks ago. (Lux also raised her own $ 345 million blank check company last fall, a company that has yet to identify a target.)
Yet even a company with Lux’s track record is not immune to competition in a crowded market. This is partly why Lux – whose last two funds closed with a collective billion dollars in August 2019 – has incubated more than a dozen companies, said company co-founder Peter Hebert, who told us. spoke to Menlo Park yesterday about this approach, as well as if and when he sees a correction coming. Some of that conversation is taken below, edited slightly for length.
TC: What size checks are you going to issue from these new funds?
PH: The median investment in this current seed fund will be around $ 25 million over the life of [each] investment, and it could range from $ 100,000 to something like $ 50 million. With our opportunity vehicle, that could go up to a check for $ 100 million and more, but I would expect there to be at least one investment in that range.
TC: And the opportunity fund can support companies inside or outside the portfolio?
PH: It’s true. I would expect the majority to be companies in which we were an early stage lead investor, but that there would be no requirement that they be exclusively Lux-funded or Series A companies receiving the l ‘investment. There have been a handful of businesses that we have supported in the past [that weren’t earlier bets] including (the liquid biopsy company) Thrive Early Detection [which was acquired soon after], (manufacturer of contract management software) IronClad [backed earlier this year], and (the home health testing company) Everly Health [which Lux first funded in December].
TC: Which startup in your portfolio has currently received the most funding from Lux?
PH: I guess it would be Applied Intuition (which makes simulation software and infrastructure tools to test and validate autonomous vehicles at scale).
TC: How much do you think you have?
PH: Usually when we come in as the primary institutional investor in a Series A, it’s 20-25%, and it can be higher or lower. In many cases we will be starting businesses from scratch and more often than not these can reach 50%.
TC: I didn’t realize that business incubation was a big part of Lux’s business.
PH: Yes, for us one of our most successful investments has been a company called Kurion, which was a pioneer in the remediation of nuclear waste that we created based largely on my vision. co-founder, Josh Wolfe, and his vision for the future of alternative energy. We recruited all of these great people into the Materials Science Department at MIT and built and owned it north of 30% when it was acquired by a French wastewater treatment company, Veolia, for $ 400million. dollars in 2016 – and this [was part of a] Fund of $ 100 million.
TC: How active are you on this front at the moment? Considering the rising prices, I think it’s a good time to start businesses in-house.
PH: Over the past two or three years we’ve been more active in the news [company] training for exactly [those] the reasons. It’s not like we’re just a factory [looking to] bring things out. Inspiration is the starting point. But whether it’s a market opportunity we’re evaluating, or whether it’s interesting science and technology that needs a catalyst to get things going, we’re happy. to play this role.
TC: What do you think of what’s going on in terms of the feverish pace of funding and how quickly corporate valuations are soaring? It sounds crazy, but it’s also hard to imagine it ending anytime soon.
PH: I think we’re uncomfortably optimistic. Structurally, [I’m optimistic] because the way science and technology is funded today has changed so much. When I went into business in the late 90s the venture capital industry was small, it was provincial, it was the people of Sand Hill Road who weren’t talking to someone over there. 10 miles from their office. People were proud to know nothing about financial markets because there was little connectivity in terms of impact on [what VCs were doing].
Now it’s global and while some might say the market is sparkling, [all that capital is] enabling companies that are truly ambitious and need capital that otherwise would not have [materialized] at [gain momentum], and from the point of view of scientific progress and technological progress, that is good.
There will certainly be experiments, people will lose money, there will be hundreds of businesses funded and most of them will disappear. But there are going to be a lot of lasting transformative changes that will emerge from all of this.