The folks at the Collaborative Fund actually like a challenge.
They do not specialize in enterprise capital’s favorite business model, SaaS, preferring as an alternative to invest in sectors comparable to climate, health and food. Moreover, they like consumer-focused firms whose variable approach can add one other level of complexity to any marketing strategy. Oh, and they decided to raise their sixth flagship fund at a time when limited partners had turn into even stingier.
Turns out it wasn’t a bad strategy. Cooperation recently raised $125 million for its sixth flagship fund, the company exclusively told TechCrunch, completing the entire process in just over 90 days.
“The fundraising environment is tougher than any I have seen since founding the company over a decade ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We were motivated to raise funds because we think the ’24 will be a good one,” he said. Due to the slowdown in enterprise capital financing, valuations are more reasonable and firms have more time to conduct due diligence, he added. Additionally, since consumer investing has been out of fashion in the VC world for years, there is less competition. “These are two factors that make us more excited to invest now,” he said.
While some LP investors have been hesitant to commit due to higher rates of interest and political uncertainty, Shapiro said Collaborative’s investors do not fall into that category. “What we’ve seen is that the more sophisticated LPs, who have a very long-term view, understand this narrative. They understand that markets ebb and flow,” he said.
The company had “much more demand than we could meet,” said partner Sophie Bakalar. Part of that could be the indisputable fact that Collaborative recently returned capital to its LPs, Shapiro said. Some of the company’s previous investments have been successful, comparable to Reddit’s recent IPO and Savvy Games Group’s $4.9 billion acquisition of Scopely. “We have one LP who told us that he has not received a payout from any of his venture capital funds in almost 18 months. What sets us apart is the fact that we distributed capital.”
While Collaborative didn’t disclose the names of its LPs, it said it has a range of investors, including endowments, endowments, high-net-worth individuals, a large asset management firm and “a large Singaporean organization focused primarily on PE and VC investments.” Most existing LPs committed to the recent fund.
As the flagship of the collaboration, the recent fund may also focus on seed-stage firms, with roughly half of the fund allocated to initial screenings and the remainder reserved for follow-on investments.
Shapiro is particularly interested in exploring how emerging firms can address changing consumer spending habits. “It’s clear to us that how people spend their money, where they keep it, how they divide it, where they invest it — these are all areas that excite us.”
The second thread that ties the Collaborative portfolio together is the atmosphere. “We distinguish the type of climate sustainability as a different category. But if you were like a fly on the wall during our team meeting, we think about it more horizontally, across all these verticals,” Shapiro said. “The food we eat, microplastics, air quality – it’s all connected. “Climate and sustainability are at the core of all these categories.”