Commerce Ventures, which invests in technology that seeks to modernize retail and financial services, has raised more than $150 million for its fifth fund.
The firm spent nine months marketing for Fund V, which was oversubscribed and collected nearly the same amount as the firm’s prior pool, according to founder and partner Dan Rosen.
Fund V’s corporate investor base increased to 20, including nine of the largest U.S. banks and two of the country’s largest retailers. LPs include Intuit, USAA, Franklin Park, Industry Ventures, and StepStone Group.
Commerce Ventures has invested in over 100 companies since its founding in 2013. Big exits include Bill.com, which went public in 2019; InAuth’s sale to American Express in 2016; the 2021 IPO of Marqeta; and Mastercard’s buy of SessionM in 2019. The San Francisco-based VC also has several unicorns in its portfolio, including Socure, Kin Insurance Technology Hub, Vestwell, and MX.
As it’s been for peers, fundraising was more challenging this time around. In 2021, Commerce Ventures wrapped up marketing for its fourth pool, which came in at $150 million, in just six months. Fundraising in 2021 was relatively easy, Rosen said. That year, considered a bubble in the venture world, saw more than 580 unicorns formed, according to Pitchbook—a figure that’s since changed dramatically. Valuations for startups have plummeted while rising interest rates have made it harder for VCs firms to raise money, Fortune reported in January.
Rosen said fundraising for Fund V “went about as smoothly as we could’ve hoped for. This is a totally different market than the VC fundraising market of 2021. We’re very, very grateful.”
For Fund V, Commerce Partners had to navigate different factors, including the fact that it’s no longer a young outfit. A number of large institutions have dedicated pools of capital for emerging managers, Rosen explained, so LPs have different expectations for younger firms than for maturing VCs. This includes proof of performance, infrastructure, and institutional processes, he said. “Younger managers aren’t expected to have those things,” he said, whereas Commerce Ventures has to deliver results. “It feels like we’re moving into our teenage years.”
Another complication was timing. Commerce Ventures launched marketing for Fund V in the same month Silicon Valley Bank collapsed. In the spring of 2023, several regional banks shut down. The first was SVB, a key lender for the tech and venture capital sectors and whose failure sent shockwaves throughout the industry. Signature Bank collapsed a few weeks later, followed by First Republic Bank. (None of the failed banks were Commerce Ventures’ investors.)
The SVB failure led Commerce Ventures to check in with their bank LPs to make sure they still had the desire and capacity to invest in private funds, Rosen added. “We were lucky to have the institutions come back,” he said.