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Raising a Venture Fund Now Often Takes Two Years—or Longer
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By Yuliya Chernova, WSJ Pro
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Good day. What a slog!
More than a fifth of venture funds that closed in the first quarter globally required three years to get to that point, according to data from research firm Preqin. That is a timeline unheard of five years ago. In 2019, no funds took that long, the data show.
The majority of venture funds that closed in the first quarter—61%—took more than two years to raise, according to Preqin’s data. In 2019, for example, just 13% stretched out that long.
Venture managers are going back to their limited partners to ask for more time to close their funds, the investors say. Typically, agreements between LPs and general partners set a limit of nine to 12 months between the first close and final close of a fund, according to Larry Naughton, co-chair of international practice at the law firm Mintz.
Michael Kim, founder of Cendana Capital, an investor in venture funds, says he is seeing more extension requests, though he hasn’t heard of a fund taking three years to close yet. His firm generally approves extension requests.
“We want the fund to have the capital to execute their strategy,” he said.
LPs usually want to ensure that their fund managers reach their goals even if it takes longer. Investors frequently allow the initial 12-month window to be extended another six to 12 months, Naughton said.
“If the fund raises meaningfully less than it intended, then it may need to alter its investment strategy because it either won’t be able to invest in as many companies or it will need to invest a lesser amount in each portfolio company,” Naughton said.
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And now on to the news...
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Roseanne Wincek, left, and Renata Quintini, both co-founders and managing directors of Renegade Partners. PHOTO: BRENDAN MAININI
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Sophomore fund. Renegade Partners, an early-stage venture firm founded in 2020, has reloaded with a $128 million sophomore fund, the latest example of the shift away from megafunds in favor of small or medium-size funds across the industry, WSJ Pro reports.
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The fund’s size will allow the firm to lead deals and focus on each investment, Renegade’s co-founders said. The firm isn’t focused on any specific sectors.
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“LPs understand that returning a billion-dollar early-stage fund is very difficult,” said Roseanne Wincek, a Renegade co-founder. “If we look historically at venture, what has done well are right-sized funds—call it one, two, maybe $300 million at the early stage.”
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Even for smaller funds, tapping limited partners these days isn’t easy. Most of the fundraising for Renegade’s new fund took place in 2023. The San Francisco-based firm’s co-founders said the fundraising process was tougher and took longer than expected because of macroeconomic conditions.
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$59,166
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The price of bitcoin at 4 p.m. ET Tuesday, per CoinDesk data compiled by Dow Jones Market Data. The token fell about 17% in April.
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Founder of Crypto Firm Binance Sentenced to Four Months
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Billionaire Changpeng Zhao, founder of Binance, the world’s biggest crypto exchange, was sentenced Tuesday to four months in prison, a lighter punishment than requested by prosecutors who hoped to send a message about crime in the industry, The Wall Street Journal reports.
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“You had a responsibility to comply with United States regulations. Not some, but all,” U.S. District Judge Richard A. Jones said. “You failed at that opportunity.”
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Zhao, 47, pleaded guilty in November to violating U.S. anti-money-laundering requirements. He agreed to step down as Binance’s chief executive.
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Biden Administration Aims to Reclassify Marijuana as Less Dangerous
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The Biden administration is seeking to reclassify marijuana as a less dangerous drug, a historic move that could make it much easier to buy and sell pot and make the multibillion-dollar industry more profitable, WSJ reports. Attorney General Merrick Garland on Tuesday submitted a proposal for White House review that would move marijuana out of the government’s most restrictive drug classification. Marijuana has been designated as a Schedule I drug since 1970, alongside LSD and heroin.
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Funds
Andrena Ventures has held the first close of a targeted $12 million fund that will back European fintechs at the pre-seed and seed levels.
People
Gaming-focused investor Griffin Gaming Partners said Emily Wang joined the firm as partner and chief operating officer. She was previously a managing director at LionTree.
Exits
Zuora agreed to acquire billing infrastructure company Togai for an undisclosed amount.
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Island, a Dallas-based enterprise browser startup, scored a $175 million Series D round, bringing the company’s valuation up to $3 billion. Coatue and Sequoia Capital led the investment.
Arbol, a New York-based climate-risk management startup, closed a $60 million Series B round from investors including Giant Ventures.
Beehiiv, a New York-headquartered email newsletter platform, landed $33 million in Series B funding led by New Enterprise Associates.
SafeBase, a San Francisco-based automated security review provider, secured $33 million in Series B financing. Touring Capital led the round, which included participation from New Enterprise Associates and others.
Peregrine, a San Francisco-based data integration platform for state and local government agencies, collected a $30 million Series B round from Friends & Family Capital and others.
Thintronics, a Berkeley, Calif.-based developer of interconnect insulator technologies, raised $23 million in Series A funding from investors including Maverick Capital and Translink Capital.
Urban Jungle, a London-based insurtech startup, picked up a $14.4 million investment from Sony Innovation Fund and others.
Screenverse, a New York-based provider of programmatic advertising technology to digital-out-of-home media owners, grabbed a $10.5 million investment led by Volition Capital.
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ILLUSTRATION: CAM POLLACK/WSJ, GETTY IMAGES, ISTOCK
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