San Francisco’s Industry Ventures has raised a $425 million secondary fund and a $200 million special opportunities fund to purchase equity in venture-backed startups. This brings Industry’s total capital under management to $1.7 billion, more than any other secondary-focused firm.
Industry plans to invest in startups that have between $20 million to $100 million in annual revenue, with a focus on consumer Internet, software, medtech, and cleantech companies. Keeping an open mind, Industry plans to “opportunistically look at all the investments in the market,” according to founder and managing director, Hans Swildens. Industry previously invested in Twitter (NYSE:TWTR), Alibaba, Facebook (NASDAQ:FB) and Pandora (NYSE:P).
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The latest fund is Industry’s largest fund to date, marking a sign of confidence in venture returns. “The capital market for M&A and IPOs has been great,” says Swildens. “If you can buy into some nice growth businesses, it’s a good time to invest.”
Different than traditional venture rounds, Industry invests in startups by buying equity directly from employees and other early investors. In doing so, Industry gives existing shareholders liquidity before the company achieves an IPO or M&A exit. Industry sometimes provides startups with capital to pursue their own acquisitions.
Industry also invests in startups indirectly, by buying venture funds approaching the end of their cycle. Industry has served as a limited partner for 20% of all U.S. venture funds, by purchasing 120 funds since Industry’s inception in 2000.
Institutions investing in Industry’s latest fund include pensions, insurance companies, endowments and foundations. All 30 organizations have invested in previous Industry funds, suggesting confidence in Industry’s performance. Industry’s returns are not disclosed.