As Insight Partners celebrates its 30th anniversary, you’d be hard-pressed to find a more influential venture firm that calls New York its home. Union Square Ventures created the blueprint for early-stage venture out of NYC, Tiger Global may earn the claim of infamy due to its 2021 spending spree, and Thrive Capital is quickly becoming a dynasty. But Insight, with its $90 billion of assets under management and army of software investors, has left an indelible footprint on New York—and the world’s—tech scene.
Part of Insight’s impact stems from its extensive alumni network of fund managers, which could fairly be characterized as a bona fide mafia—a venture equivalent to PayPal. In New York alone, there’s Elodie Dupuy of Full In Partners, Harley Miller of Left Lane Capital, Nnamdi Okike of 645 Ventures, and Bradley Twohig of Smash Capital, just to name a few, and I feel like I’m stumbling across someone new each week.
I have a new article that details Insight’s unique, bottom-up approach to software investing, which helps explain its prolonged success. Where most venture firms build their sourcing around their partners, who typically come from extensive backgrounds in operating or investing, Insight instead relies on early-career analysts and associates, most straight out of college.
It’s an approach that Insight’s cofounder, Jeff Horing, learned from private equity firms like Summit Partners and TA Associates, deciding to apply it to the burgeoning field of software investing. The idea is that, rather than relying on inbound deals or relationships, Insight could develop a framework for identifying success in untapped startups and then find them itself. And rather than hiring mid-career management consultants or bankers and retraining them to become investors, Insight decided to start hiring right out of college in the early 2000s, building a deep roster that has risen the ranks at the firm and set out on their own.
A few weeks ago, I attended Insight’s annual sourcing summit—a kind of sales kickoff for its 75-odd analysts and associates, where it teaches them how to perfect cold outreach, among other skills. Horing, an enigmatic figure who seemed totally in his element addressing the crowd of aspiring investors, compared the practice to baseball. “Your edge [in investing] only comes from pitches that you look at,” he said. “You can be the best baseball hitter in the world, but if you don’t see the pitches, you’re not going to make the hits.”
I spoke with 645’s Okike, who was part of one of Insight’s first analyst classes in 2002 and advanced through the firm before starting his own firm in 2013. He jokingly described the role as being a “glorified telemarketer.” Still, he said the approach of rigorous training and the application of specific metrics, such as web traffic, helped inspire his own firm, which applied the framework to earlier-stage investing, though he doesn’t hire right out of college. Left Lane’s Miller told me the same. “They’ve done a great service to the venture and growth ecosystem by just having the alumni network in the hundreds at this point,” Miller told me.
Insight’s aggressive approach to sourcing and spending hasn’t always worked in its favor. Its $20 billion fund from the frothy days of 2021, characterized by rapid deployment and a disastrous investment into the crypto fiasco FTX, will likely remain a drag on the firm’s performance. But it continues to have success, including a recent multi-billion-dollar windfall from its bet on Wiz.
And with Insight continuing its analyst program, bringing on around 14 analysts right out of college every year, its alumni network is only set to grow. “Sourcing is everything,” Horing told the new crop.
You can read my full article on Insight here.
Scoop…Though the crypto industry has long tried to shoehorn itself into the red-hot field of artificial intelligence, it hasn’t had much success. That could finally change with Nous Research, a decentralized AI startup that just closed a $50 million funding round, financed almost entirely by the crypto venture giant Paradigm. Nous says it has pioneered a new method for training open-source models using the blockchain. You can read all about it here.
Leo Schwartz
X: @leomschwartz
Email: leo.schwartz@fortune.com
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VENTURE DEALS
- Minimus, a Baton Rouge-based application security company, raised $51 million in funding from YL Ventures and Mayfield.
- Reco, an Altamonte Springs, Fla.-based SaaS security platform, raised $25 million in funding from Redseed and existing investors Insight Partners, Zeev Ventures, boldstart ventures, and Angular Ventures.
- Reducto, a San Francisco-based AI document processing solution provider, raised $24.5 million in Series A funding. Benchmark led the round and was joined by existing investors First Round Capital, BoxGroup, and Y Combinator.
- HepaRegeniX, a Tuebingen, Germany-based liver disease therapies developer, raised €21.5 million ($23.7 million) in Series C funding from Wellington Partners.
- Theo, a New York City-based crypto trading infrastructure provider, raised $20 million in funding. Hack VC and Anthos Capital led the round and were joined by Manifold Trading, Mirana Ventures, Metalayer Ventures, angel investors, and others.
- LayerX, a New York City-based browser security solution, raised $11 million in Series A extension funding. Jump Capital led the round and was joined by existing investors Glilot Capital Partners and Dell Technologies Capital.
- Cloud Capital, a San Francisco and London-based cloud cost management platform, raised $7.7 million in funding. Backed Ventures and Middlegame Ventures led the $5.4 million seed round and were joined by DFF Ventures and angel investors. Connect Ventures led the $2.3 million pre-seed round and was joined by Notion Capital, Concept Ventures, and angel investors.
- Hopper, a New York City and Tel Aviv-based open-source software risk management solution, raised $7.6 million in seed funding. Meron Capital and New Era led the round and were joined by the Sequoia Scout Fund, M-Fund, and others.
- SixMap, a Columbia, Md.-based attack surface management solutions provider, raised $7 million in funding. IAG Capital Partners led the round and was joined by TRE Advisors and existing investors DataTribe and California Innovation Fund.
- Deferred, a Los Angeles-based technology-powered qualified intermediary for real estate investors, raised $3.6 million in seed funding. B Capital and Fika Ventures led the round and were joined by others.
- CHASSY, a Seattle-based robotics software delivery solution, raised $1.2 million in pre-seed funding. Schematic Ventures led the round and was joined by Techstars.
PRIVATE EQUITY
- Dastex, backed by The Riverside Company, agreed to acquire Hydroflex, a Buseck, Germany-based cleanroom cleaning systems supplier and manufacturer. Financial terms were not disclosed.
- Frontline Road Safety, backed by Bain Capital, acquired PLP Company, a Bethel Park, Pa.-based pavement marking company. Financial terms were not disclosed.
- WestView Capital Partners acquired a majority stake in HOIST, an Ottawa, Canada-based systems integrator for IFS enterprise software. Financial terms were not disclosed.
EXITS
- AEA Investors Small Business Private Equity acquired a majority stake in Splash Car Wash, a Milford, Conn.-based car wash operator, from Palladin Consumer Retail Partners. Financial terms were not disclosed.
OTHER
- Flex acquired Maza, a New York City-based business formation and payments platform for Spanish-speaking customers, for $40 million, according to TechCrunch.
FUNDS + FUNDS OF FUNDS
- StepStone, a New York City-based investment firm, raised $705 million for its fourth fund focused on growth equity in the technology and healthcare sectors.
PEOPLE
- Ballistic Ventures, a San Mateo, Calif.-based venture capital firm, added Phil Venables as a venture partner. Previously, he was at Google Cloud.
