SOSV, the worldwide enterprise agency, simply closed a $100 million fund to again its maturing startups – TechCrunch

Sean O’Sullivan, the founding father of the worldwide enterprise outfit SOSV, has slowly however steadily constructed up a large operation through the years.

SOSV began off as a household workplace, investing the capital of O’Sullivan after he cofounded two corporations, together with MapInfo, an outfit that went public in 1994 earlier than Pitney Bowes acquired it years later, in 2007. The seed-stage investing outfit has since raised three extra funds, together with a $277 million early-stage fund that it closed in 2019 and is actively investing from proper now.

Now, to enhance these funds, the group has raised $100 million for what it’s calling a “choose fund” that’s meant to assist SOSV preserve its professional rata stake in a few of its breakaway portfolio corporations.

Due to different instruments available in the market, SOSV wasn’t fully hamstrung till now. As an alternative, SOSV has, now and again, assembled a particular function automobile to re-invest in sure of the startups it has backed. However O’Sullivan says these had been comparatively small SPVs — assume $2 million in dimension or much less. The brand new fund, he says, is anticipated to put in writing checks of between $2 million and $5 million and even as much as $10 million — or 10{69439eabc38bbe67fb47fc503d1b0f790fcef507f9cafca8a4ef4fbfe163a7c5} of the fund, per SOSV’s settlement with its buyers.

Actually, the brand new fund additionally offers startups much more purpose to work with SOSV, which tends to put in writing its seed checks to first-time founders, who O’Sullivan observes are sometimes neglected — wrongly —  by buyers in favor of repeat founders.

He factors to Apple, Microsoft, Fb, Google and Alibaba, noting that panorama would look somewhat completely different with out them. He says skilled the phenomenon himself when he cofounded an organization (NetCentric) after MapInfo. “Folks had been simply lining as much as make investments,” he says. “It was really easy to lift the funds with out something aside from a marketing strategy, and nowadays, you don’t even want a type of.”

That doesn’t imply SOSV will get as large a chunk as it would like in each deal. Although SOSV has loved success by betting on new entrepreneurs — it was among the many first buyers in FormLabs, for instance, an organization now valued at $2 billion; it additionally backed JUMP, the bike-share startup that Uber acquired in 2018 — a $100 million fund is small by present requirements. SOSV might effectively discover itself competing towards gamers which have billions of {dollars} to deploy and that are writing greater checks to youthful corporations at a velocity by no means earlier than seen on the earth of enterprise capital.

It’s not an absurd concern, agrees O’Sullivan. He says he noticed some sharp elbows simply this week, actually. A part of a $100 million-plus spherical was coming collectively, and a agency that O’Sullivan declined to say didn’t wish to make room for the startup’s Collection B or A buyers as a result of it wished to satisfy a sure fairness threshold.

O’Sullivan suggests the sooner buyers acquiesced. (“They’re giving us a multi-billion valuation” and are additionally “making an attempt to purchase secondaries from present buyers,” he explains, whereas including that SOSV would usually desire to carry its shares by means of an IPO.)

Nonetheless, he suggests there’s no want to fret about SOSV. Whereas it’s keen to glide, O’Sullivan says that in “most instances, there’s sufficient to go round for the earlier buyers.”

It’s merely “good protocol for the late-stage buyers [to make room] in the event that they wish to proceed to have us introducing offers to them.”

Put one other method, SOSV doesn’t must handle a megafund; it has leverage all the identical.

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