Early-stage venture firm 645 Ventures has raised $40 million, oversubscribed with strong demand for its Fund II. Founded in 2014, the firm invests in software and Internet companies in the seed to Series A stages. 645 is pioneering an outbound investing approach at the early stage, leveraging software called Voyager that the firm developed in-house to augment its network and transform the traditional venture capital operation. 645 also helps companies scale to the growth stage through its OPS team and platform.
The firm’s approach blends the combined experiences of co-founders Nnamdi Okike and Aaron Holiday. Co-founder Okike spent eight years as an investor at growth equity firm Insight Venture Partners, where he worked on investments with a combined exit value of over $5 billion. Co-founder Holiday, a computer scientist who worked at Goldman Sachs and played an important role in launching Cornell Tech’s billion-dollar tech campus in New York City, realized that applying software to venture capital could supercharge the operations of an early-stage investment firm, allowing it to operate at a much larger scale than historically possible.
FUND II WILL INVEST IN SAAS, INFRASTRUCTURE SOFTWARE, AND SELECT CONSUMER COMPANIES
“We partner with exceptional founders who are building software and Internet companies that can reach large revenue scale, have capital-efficient business models, and have competitive moats,” says Okike. “We partner closely with these early-stage companies, providing targeted resources to help them scale to the growth-stage and beyond.”
“As venture capitalists, we invest in breakthrough technologies; however, GPs are still in the early days of using software to disrupt their own operations,” says Holiday. “The unique data layer of our software has enhanced our ability to correct mistakes often made when pattern matching and to connect portfolio companies to relevant customers, industry experts, and specific performance expectation data needed to scale from the seed stage to the growth stage. We take this approach even further by sharing our expertise with founders that are deep in our due diligence process.”
645 Ventures, Fund II is backed by world-class institutional Limited Partners (LP) that include the Andrew W. Mellon Foundation, Princeton University’s endowment, Spelman College’s endowment, and Klingenstein Fields Wealth Advisors. 645 has also built an LP roster of prominent technology investors who can help its companies reach growth and later stage funding milestones. These individuals include Albert Wenger, General Partner at Union Square Ventures; Ken Chenault, Chairman & Managing Director at General Catalyst; Howard Morgan, co-founder of First Round Capital and Chairman of B Capital; Scott Maxwell, founder of OpenView Ventures; Neil Mehta, founder of Greenoaks Capital; Ben Levin, co-founder of Level Equity; and Neil Malik, founder of K1 Capital.
“Aaron and Nnamdi have been doing a great job as early stage investors, and have built an innovative process around sourcing and decision making that I found compelling as an investor” says Morgan.
Additionally, the firm has attracted several prominent individual investors including Mellody Hobson, President of Ariel Investments; Bill Lewis, co-chairman of Investment Banking at Lazard; Greg Pass, former CTO of Twitter; Cathie Black, former CEO of Hearst Magazines; Mark Patterson, co-founder of Matlin Patterson; and Al Zollar, Board of Directors at Red Hat and Executive Partner with SIRIS Capital. 645 says the new fund is well oversubscribed.
The firm raised Fund II on the heels of investing its Fund I, which closed in 2016. Fund I has already realized four liquidity events, including Fly Labs (acquired by Google), Source3 (acquired by Facebook), ALICE (majority transaction by Expedia), and Abacus Labs (acquired by Certify).
In Fund I, 645 Ventures also backed several seed stage startups that have already become growth stage businesses, including Goldbely, MM.LaFleur, Overtime, FiscalNote, and Iterable. “In just three years, several of our firm’s breakout winners are growing over 100% year over year and many have already exceeded $50 million in net revenues,” says Holiday. The growth of 645’s Fund I portfolio has attracted later stage investors such as Charles River Ventures, Bessemer Ventures, Andreessen Horowitz, Index Ventures, Thrive Capital, and Meritech.
“645 Ventures was one of the earliest VC firms who believed in Iterable’s vision. They have been instrumental in helping us raise successful follow-on rounds from some of the best VC firms in the industry. They continue to be trusted advisors as we continue to scale rapidly,” says Justin Zhu, co-founder of Iterable.
In Fund II, the firm will continue to invest in rapidly-growing startups at the seed stage and selectively at Series A. Applying a similar sector focus as Fund I, Fund II will focus on SaaS and infrastructure software, while also selectively investing in consumer technology sectors such as online marketplaces and digitally-native consumer brands.
Sarah LaFleur, CEO of 645 portfolio company MM.LaFleur, comments, “We have been so lucky to count 645 as true partners to the MM.LaFleur team. They are keen operators with a deep understanding of both brand and data. They have advised us on business-critical issues, even preparing research and analysis on our behalf in order to give us a competitive advantage. Their laser focus on our business needs has been a great asset for me and my team.”
In addition to the firm’s Investment & Research team and Engineering team, led by CTO-in-Residence Blake Jennelle, 645 also built the 645 OPS internal operations team led by Vice President & Head of Story Dessy Levinson. 645 OPS supports the GPs’ efforts in winning deals and adding value to portfolio companies by activating the firm’s influential network, combined with hands-on support for strategic growth that encompasses customer acquisition, fundraising, branding, and organizational scale.
