Exclusive: Inside Pillar VC’s $175 million fourth venture fund focused on the Boston tech ecosystem

As recently as the 1980s, Boston still challenged Silicon Valley for the country’s tech hub crown, thanks to its cluster of computer companies along Route 128 and the twin giants of MIT and Harvard. Boston was left behind during the PC revolution, but its rich tech culture remained, especially in sectors like biotech and robotics. (I still see Boston Dynamic’s “dogs” in my nightmares.) Boston is home to a variety of multibillion-dollar public companies from deep tech to consumer, like Akamai, HubSpot, and Wayfair. 

While Silicon Valley investors might find market-ready startups coming from Google alumni or Y Combinator, Pillar takes a unique approach by mining Boston’s rich fabric of university research, as well as other campuses like the University of Pittsburgh. Goldstein said that about three-quarters of Pillar’s investments come out of academia. Other firms might find it too risky a process to turn PhD students and professors into entrepreneurs, but that’s Pillar’s sweet spot. “We just love rolling up our sleeves and helping them find a market,” said Goldstein. 

Tony Kulesa, an investing partner at Pillar, said that other VCs underestimate the rate of innovation happening in tech right now. He pointed to the speed of ChatGPT’s launch, just 5 years after a landmark academic paper introduced the architecture breakthrough that facilitated its development. “What VCs have overlooked is how fast research products can go at scale,” he said. 

Pillar helps serve as a bridge between academia and industry, partly supported by its network of “pillars,” or executives, mostly from the area, who have ownership stakes in the firm and help serve as advisors. The first fund started with 16 founding CEOs, including from Wayfair and DraftKings, and the number has doubled to 32. Four new ones are joining the fourth fund, including Mike Salguero, the founder and CEO of the food subscription startup ButcherBox, and Dr. Shiv Rao, the founder and CEO of the health tech startup Abridge, a Pillar portfolio company. 

With the latest fund—its largest yet—Pillar has $500 million of assets under management. Goldstein says the firm has generated returns for its investors through two recent exits, including February’s acquisition of Zilla Security by CyberArk for $175 million. They’ve also been actively selling their “first capital in” stakes to other investors on secondary markets, which has been an increasingly common way for firms to generate distributions. “When I got in the business a long time ago, if you sold a single share, you were considered a traitor,” Goldstein told me. “That has completely changed, and everyone acknowledges that having money recycling in this ecosystem is very helpful.” 

Pillar is preparing to start investing from its new fund after making the final investment from its third fund last week. 

Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com

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VENTURE DEALS

- Dalma, a Paris-based pet insurance provider, raised €20 million ($21.8 million) in Series B funding. Breega led the round and was joined by Bpifrance Digital Venture and existing investors Northzone and Anterra Capital.

- Town, a San Francisco-based tax platform for small businesses, raised $18 million in seed funding. First Round Capital led the round and was joined by Conviction Partners, Alt Capital, WndrCo, and angel investors.

- AidKit, a Denver-based aid administration public benefit corporation for government agencies and nonprofits, raised $8.5 million in Series A funding from Blueprint Equity.

- ResiQuant, a San Francisco-based AI-powered property intelligence and risk platform, raised $4 million in seed funding. LDV Capital led the round and was joined by Foothill Ventures, Pear VC, Alumni Ventures, and angel investors.

- Nimblemind.ai, a Chicago-based AI-powered data infrastructure platform for health care providers, raised $2.5 million in funding. Bread & Butter Ventures led the round and was joined by Great Oaks Venture Capital, SpringTime Ventures, Stone Mountain Ventures, angel investors, and others.

- ORO Labs, a  Dubai, UAE-based tokenized gold protocol, raised $1.5 million in pre-seed funding. 468 Capital led the round and was joined by Fasset and angel investors.

PRIVATE EQUITY

- Sphere Investigations, backed by Sunlake Capital Partners and Mangrove Equity Partners, acquired a majority stake in Fraud Sniffr, a Grand Haven, Mich.-based investigation solutions provider for insurance and liability defense professionals, and Phenix Investigations, a Greenwood, Ind.-based private investigation company. Financial terms were not disclosed.

OTHER

- Clearwater Analytics agreed to acquire Beacon, a New York City-based cross-asset class modeling and risk analytics platform for quantitative developers, for approximately $560 million, 60% in cash and 40% in stock.

- Clearwater Analytics agreed to acquire Bistro, the portfolio visualization software platform of Blackstone, a New York City-based alternative asset manager, for $125 million, with $10 million paid in cash and the rest in stock.

- Arize acquired Velvet, a New York City-based AI gateway provider for developers. Financial terms were not disclosed.

IPOS 

- Klarna Group, a London-based e-commerce payment plans company, filed to go public on the NYSE. Sequoia Capital, Anders Holch Povlsen, Victor Jacobsson, and Commonwealth Bank of Australia back the company.

FUNDS + FUNDS OF FUNDS

- Monarch Collective, a Los Angeles-based investment firm, raised $250 million for its fund focused on women's sports.