When Ironspring Ventures launched in 2020 to support startups in industrial sectors like construction and manufacturing, it was one of the few early-stage enterprise capital firms being attentive to these capital-intensive sectors. Now, the firm is doubling down.
The Austin, Texas-based company has raised $100 million for its second fund, which is expected to focus on industrial startups. This represents a notable increase over the company’s $61 million debut fund, which closed in 2021. This latest raise enabled the company to hire its first director, Colleen Konetzke, and head of platform, Stephanie Volk. The company plans to invest Fund II in 20 startups, supporting roughly three firms per 12 months.
“What we saw then was as true as we see today,” Ironspring co-founder and general partner Ty Findley told TechCrunch. “There is a big gap in the enterprise capital industry that appears deeply into the GP market and really suits into these industrial markets, which might help them navigate what is quite a difficult market entry [process]. When you are really into it [these industries] upwards, they account for greater than half of US GDP. “I firmly believe that as a country we simply cannot allow the United States to be left behind.”
The industries Findley mentions include: manufacturing, construction, transportation and energy. As a part of its first fund, the company supported 16 firms, including Solvento – a start-up dealing with payment infrastructure for transport firms in Mexico, OneRail – a start-up dealing with last-mile logistics and Prokeep – a communication platform for distributors.
Ironspring has already backed six firms with Fund II and has invested about a quarter of the fund. Findley said the major difference between Fund I and Fund II is that the additional capital allows the company to write larger checks this time, ranging from $2 million to $4 million, which is able to help them stay competitive as seed rounds have turn into larger.
Findley said they are excited to have a recent pool of capital to invest now due to the unfavorable macroeconomic conditions impacting their focus industries. Supply chain restrictions that began during Covid-19 proceed, in addition to recent ones caused by the conflict in the Middle East. Policies, including the Inflation Reduction Act and the CHIPS and Science Act, are bringing buzz and government money to these sectors as well. Additionally, Findley added that advances in artificial intelligence could make a huge difference in these industries.
“We’re seeing more and more top technology and innovation talent flowing into these industries,” Findley said. “Whether they are returning from the latest tech unicorns or just another tech talent who just wants to make a big impact in their career and not based on sharing photos, advertising or chasing the next cryptocurrency, these are the macro trends.” .
GoodShip is a good example of this. The platform for organizing freight and supplies was founded by former Convoy operators. Ironspring co-led the company’s 2023 seed round with Chicago Ventures and re-raised its Series A earlier this 12 months.
While Irongspring was one of the first early-stage firms focused on this space, the category has turn into more crowded as deep-pocketed firms akin to Andreessen Horowitz, General Catalyst and Bessemer have entered the field. However, Findley does not see these branded firms entering the market as competition.
“I’m convinced that the more capital that flows into these industries, the better,” Findley said. “They are great allies. We wouldn’t be able to do our work at the seed stage if we didn’t have a lot of growth down the line.”
Findley said it takes a village to successfully grow these kind of startups, and he’s excited that other firms can bring different perspectives to their portfolio firms. He added that the company invites other firms to its podcast, Heavy Hitters, to create resources for their portfolio firms and beyond. The company’s podcast has featured notable VCs, including Katherine Boyle, general partner at A16z; Aaron Jacobson, partner at NEA; and Lior Susan, CEO and founding father of Eclipse Ventures.
Findley believes they may proceed to stand out from the growing noise thanks to their industry knowledge and “secret sauce” LP base. The company’s LP base consists of operators from the industries in which it really works, with their very own construction firms and production plants, and can’t only provide guidance and advice to firms, but also function potential clients.
Findley said Ironspring’s Austin headquarters is an asset because of where they’re investing – a narrative that is at odds with how many others in the enterprise ecosystem view the once-emerging tech hub. Findley said many of the industries the company focuses on have a history in Austin, with Tesla moving its headquarters there and the recently approved $6.4 billion in Infrastructure Act funding for SAMSUNG to produce semiconductor chips there, it has the right talent to power the digital industrial revolution.
“The United States cannot allow these critical industries to be left behind,” Findley said. “We are here for the long haul to make sure this never happens.”