Following Coinbase’s direct listing, Initialized Capital expands with a new partner
After a year of mega public listings of its portfolio companies including that of crypto wallet Coinbase, venture capital firm Initialized Capital is bulking up.
Founded by Reddit co-founder Alexis Ohanian and former Y Combinator Partner Garry Tan, Initialized announced the hiring of its seventh partner on Thursday.
Parul Singh, previously a principal at Founder Collective, joined in June and will be making investments out of Initialized’s fifth fund, totaling $230 million. Now, the investing shop is searching for an eighth partner— the most partners it would have since its founding in 2012—as it looks to raise its largest fund yet.
“It is a really exciting time to be at Initialized. The firm is nine years old and in growth mode. We’ve had our first IPOs and SPACs over the past year,” Singh said. “The portfolio companies have more complex needs now and [there is] so much opportunity to invest.”
Singh’s comments are on the nose. Higher returns in a venture fund increases its attractiveness to limited partners—the pension funds and endowments— to invest in its next fund. And Initialized has benefited from the IPO-boom in recent quarters: Having invested $300,000 in Coinbase in 2012, Initialized turned that stake into one worth $680 million as of its public debut in April. The majority of those shares were distributed to limited partners at its IPO, says Tan— a seemingly smart financial decision by Initialized because Coinbase was then valued near $80 billion, but is now valued around $48 billion, meaning the firm either sold or gave those shares to said limited partners at or near the company’s peak valuation.
Meanwhile, another Initialized investment, house-buying startup Opendoor went public through a merger with a Chamath Palihapitiya-backed special purpose acquisition company, a company that is formed solely for the purpose of taking another public. Today, the company has a market capitalization of around $8.8 billion. Insurance company Blend, last valued around $3.3 billion, is expected to IPO this week.
Initialized also has investments in a number of hotly-anticipated, yet-to-go-public startups with unicorn status, including grocery delivery business Instacart and online tip jar, Patreon, last valued at $3 billion.
While Initialized did not say how much it plans to raise for its next fund, managing partner Tan says it’s safe to say the next one will be its largest yet. An announcement may come sooner than later as its recent funds have been raised at two-year intervals. In yet another sign that it is expanding operations, Initialized hired its first general counsel last month: Livingston Miller, from WeWork.
Pointing to its access to potential startups through high-profile social media channels, Tan, who has 161,000 followers on YouTube, says that has been part of “our golden ticket [so that] we are able to join the pantheon of the people who funded us who we looked up to over the years to be one of the top firms.” When asked if he hopes Initialized will be considered to be among the Sequoia Capitals of the world—one of the gold standard of startup investors even as it plays in the same field as Initialized—Tan is simultaneously admiring yet provoking. “I respect the hell out of [Sequoia]. I respect the hell out of Andreesseen Horowitz,” he says, mentioning another top firm. “But with our own focus, right.”
This all comes amid a shifting backdrop for Initialized: co-founder Ohanian left in the summer of 2020 as he moved toward investments earlier than the seed stage and Initialized promoted Brett Gibson to general partner shortly thereafter.
Healthcare technology is among that sectors that have become red hot amid the pandemic. That category will be part of Singh’s focus at Initialized. While at seed-stage-focused Founder Collective, much of Singh’s focus was on the space. She introduced the team there to the founders of PillPack. Founder Collective later invested in the startup that was then acquired by Amazon for $753 million in 2018. The healthcare industry is also one Initialized has made bets on, with investments in healthcare tech infrastructure startup Truepill and virtual care company Bodyport.
Beyond healthcare, Singh is also expected to focus on the marketing tech and subscription software—two industries that have grown as a result of pandemic-induced stay-at-home orders
While investors often emphasize that there’s a wall separating late and early-stage investing, Tan notes that the large number of late-stage players—including Tiger Global—has increased demand for early-stage funds to source such deals and help mature companies.
“I think the outcomes are bigger,” says Tan of the growing valuations in venture capital.
Having grown up working for her parents healthcare company, Singh said she started her career in tech support and in sending marketing emails on the weekend, leading to her continued interest in healthcare.
Currently based in Boston, Singh plans to move to San Francisco for the new gig.
Clarification: A previous version of this article stated that Gibson was hired as a general partner recently. He was promoted to the position internally.
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