Bain Capital Ventures is debuting $1.9 billion in two new funds: The market is ‘picking up right now’

The firm announced a record $1.9 billion across two new funds: Fund X (its 10th fund), which will invest across the cycle from seed to growth, split roughly 50/50, and its Select Fund IV, which will largely focus on helping the firm’s portfolio companies scale. The funds were raised throughout the middle of 2022 and closed at the end of January this year, Salem told me (although they haven’t started deploying yet). The new funds are separate from BCV’s private equity parent Bain Capital’s new $2.4 billion buyout-style fund. 

The firm, headquartered out of San Francisco and New York, will continue to invest in fintech, infrastructure, apps, and commerce startups, per their focus areas, which also center on B2B (business-to-business) companies. The new funds are a step up in size from BCV’s last two funds, launched in 2021, which totaled about $1.3 billion. Though the firm invests from seed to growth, BCV says that 90% of the firm’s deals in 2022 were seed or Series A (in line with the firm’s focus in recent years). As with its previous funds, the new Fund X will also invest in solo GPs and other VC seed funds, while Bain’s partners chipped in about 11% of the combined new funds themselves, Salem told me. BCV has also added four new investing partners in the last year.

The fresh funds serve to accomplish what BCV partners kept reiterating to me on our call: Find the best founders early and have enough cash to keep supporting them as their companies grow. But it sounds like a lot of that money may not be going to their own portfolio, at least not yet: “The guidance that we’ve given is: Let’s plan to not raise again until 2024,” and to ensure that their portfolio companies are spending appropriately for that timeline, Salem said. 

But zooming out, the current VC market is nuanced: It’s been a challenging time for some firms to fundraise—Tiger Global Management, for example, has reportedly been lowering their latest venture fund target—while other managers are finding LPs are still willing to write a check. BCV’s funds were oversubscribed, and another of a pair of VC firm NEA’s recent funds raised more than initially planned as well (NEA announced $6.2 billion across two funds in January). 

Naturally, many of my questions were a variation of, How did your LPs feel about investing in this environment? Salem says they don’t try to predict when to raise (they raise roughly every two years), and, surprisingly to me, that their fundraising process was actually “boring,” he laughs. The BCV team told me that investors were eager to jump back in, and the firm also opened the funds up to new LPs (Salem told me it was “a couple” new LPs akin to their current base: meaning endowments, pensions, etc.). “Even in this environment, they wanted to upsize, and more people wanted in,” Salem explained. He also says the size is no accident: Demand for capital in startups has increased alongside the cost of talent, Salem says, so having a larger fund would allow them to “really lean into” the “best” early- and later-stage rounds. 

In particular, the BCV team is excited about investing in companies in infrastructure, vertical SaaS, or software-as-a-service, and of course, the buzzy sector du jour: generative A.I. BCV has been investing in A.I., like with machine learning startup Unstructured last year. And from what Kevin Zhang, a partner at BCV, is seeing, valuations are still piping hot: “We’ve seen multiple $30 to $40 million post [money valuation] seed financings from top firms over the past few weeks,” he told me. But Salem doesn’t believe it’s all hype: Compared to previous years, “Now, I think that what we can deliver is ahead of the hype.” Salem says the firm is seeing, “on any given week, multiple new opportunities” in the A.I. space. 

What did strike me is what Merritt Hummer, a BCV partner focused on the growth stage, told me: She’s actually seeing things “picking up right now. I mean, even in the last few weeks, there’s been a step change.” In fact, Hummer says the companies they’ve seen “were actually raising—not just doing relationship-building conversations, but like, preparing a data room, sharing information.” Compared to last year, “That’s looked really different,” she noted.

And God knows, there’s bound to be plenty of startups that will be vying for that fresh $2 billion right now.

See you tomorrow,

Anne Sraders
Twitter: @AnneSraders
Email: anne.sraders@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- ProsperOps, an Austin-based autonomous cloud cost optimization platform, raised $72 million in funding led by H.I.G. Growth Partners. 

- GeoPura, a Nottinghamshire, U.K.-based green hydrogen company, raised £36 million ($43.4 million) in funding. GM Ventures and Barclays Sustainable Impact Capital co-led the round and were joined by SWEN CP and Siemens Energy Ventures. 

- Flock, a London-based fleet insurance company, raised $38 million in Series B funding led by Octopus Ventures.

- Andrena, a New York-based residential and commercial internet provider, raised $15 million in Series A funding. Dragonfly Capital led the round and was joined by Afore Capital, FJ Labs, Castle Island Ventures, Chaos Ventures, KohFounders, J Ventures, Blockchange Ventures, Moonshot Research, and EV3.

- Voicemod, a Valencia, Spain-based voice-changing and sound expression software provider, raised $14.5 million in funding. Kfund’s growth fund Leadwind led the round and was joined by Minifund, and BITKRAFT Ventures. The company also acquired Voctro Labs, a Barcelona-based audio technologies research company. 

- Robin AI, a London-based generative A.I. startup, raised $10.5 million in funding. Plural led the round and was joined by Episode 1 and others.

- Champions Round, a Los Angeles-based fantasy sports company, raised $7 million in Series A funding. Point72 Ventures and Goodwater Capital co-led the round and were joined by Pipeline Capital, Quest Venture Partners, Mana Ventures, Band of Angels, and Gaingels.

- Spade, a New York-based transaction data provider, raised $5 million in seed funding. A16z led the round and was joined by YCombinator, Gradient Ventures, Dash Fund, and other angels. 

- Domatic, a San Francisco-based building power and automation system, raised $4 million in seed funding led by Brick & Mortar Ventures.

- Inarix, a Paris-based crop analysis platform, raised €3.1 million ($3.29 million) in seed funding. Ankaa Ventures, Label Investment, Newfund, Alliance for Impact, Resiliance, and others invested in the round.

PRIVATE EQUITY

- AmerCareRoyal, backed by HCI Equity Partners, acquired Team Three Group, a Chesterfield, Mo.-based disposables provider for the food service and janitorial industries. Financial terms were not disclosed. 

- Marco Rubber & Plastics, an Align Capital Partners portfolio company, acquired Jet Gasket & Seal, a Las Vegas-based seals, gaskets, and related products distributor. Financial terms were not disclosed. 

EXITS

- An affiliate of Turnspire Capital Partners acquired USG Water Solutions, an Atlanta- and Perry, Ga.-based water asset management services provider, from Veolia North America. Financial terms were not disclosed.

OTHER

- Molekule Group agreed to acquire Aura Air, a Tel Aviv-based air purification company. The deal is valued at $10 million.  

- FranchiCzar acquired Pinot’s Palette, a Tomball, Texas-based paint-and-sip franchise. Financial terms were not disclosed. 

- Quantexa acquired Aylien, a Dublin-based natural language processing company. Financial terms were not disclosed.

SPAC

- Shenzhen Cloudsky Technologies, a China-based digital storage and computing service provider, is considering an initial public offering that could raise about $200 million as soon as this year, according to Bloomberg. 

FUNDS + FUNDS OF FUNDS

- New Markets Venture Partners, a Washington, D.C.-based venture capital firm, raised $160.2 million for a fund focused on early- and growth-stage education and workforce technology companies.

PEOPLE

- 500 Global, a Palo Alto-based venture capital firm, hired Saemin Ahn, Shahril Ibrahim, and Martin Cu as partners. Formerly, Ahn was with Rakuten Ventures, Ibrahim was with Khazanah Americas, and Cu was with Ninja Van. 

- Cambridge Associates, a Boston-based investment firm, hired Adam Lester as head of corporate strategy and promoted Harinder Soin to chief data officer. Formerly, Lester was with J.P. Morgan Asset Management.

- General Atlantic, a New York-based growth equity firm, appointed Samir Assaf as chairman of the Middle East and North Africa.

- Gresham House Ventures, a London-based growth equity investor, hired Grant Paul-Florence as director of investments. Formerly, he was with BGF.

- Knox Lane, a San Francisco-based investment firm, hired Ryan Buntain as head of investor relations. Formerly, he was with The Carlyle Group.

- Mercury Fund, a Houston-based venture capital firm, hired Eddie Lou as a venture partner. Formerly, he was with OCA Ventures.