NEWS

Foundry Group Says Latest Fund Will Be Its Last

Boulder-based venture firm Foundry Group is planning to gradually wind down its operations, announcing that last year’s $500 million raise for an eighth flagship fund would be its last.

Originally published in the February 14th edition of Transacted.

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At first glance, it may seem an affirmation of today’s turbulent early-stage environment, reminiscent of Boston-based firm OpenView’s decision to shut up shop late last year. Instead, Foundry Group’s leadership says the firm’s conclusion had been planned from the very beginning.

“While VC firms rarely make decisions like this, it’s precisely what we planned to do when we started Foundry in 2006,” wrote co-founder Seth Levine in a blog post announcing the move. “From our founding, we intentionally decided not to build a legacy or generational firm — one meant to live beyond the tenure of the founding partners.”

That’s an atypical approach to the institutional direction taken by many of Foundry Group’s multi-generational peers. Prominent examples include Sequoia Capital, which saw founder Don Valentine hand the reigns to Michael Moritz and Doug Leone, who have themselves since departed; though Sequoia is barely out of its infancy when benchmarked to Bessemer Venture Partners’ 113-year history.

 

A Transition Period

The firm says it still has up to 40 percent of Fund Eight left to invest, and plans to continue leading new Series A and B financings—one partner’s Medium post sharing the news also included an invitation for founders to reach out with new opportunities.

Founders may be hesitant to partner up with a lead investor that has publicly said it’s on its way out, though the firm’s leadership promised to continue actively working with portfolio companies for “at least the next decade.” Such a commitment may prove more challenging in its latter stages when management fees will have all but dried up.

 

Shaping the Ecosystem

The firm’s portfolio includes active investments Mapbox, Seat Geek, Stocktwits, and The Pro’s Closet, among others, as well as exited investments in Fitbit, Rover, SendGrid, and Zynga. Foundry Group has also been an active investor in other venture firms, launching a GP stakes strategy in 2016 that has since built a portfolio of nearly 50 early-stage managers, including Union Square Ventures and Forerunner Ventures.

Over its 18-year history, the firm has earned an exceptional reputation among both founders and peers. Its recent announcement was met with an outpouring of support from the venture community, partially triggered by press coverage that some deemed overly negative (including a TechCrunch headline implying the firm was immediately closing down).

“Foundry Group’s name will go down in history as one of the most incredible funds,” wrote Lux Capital general partner Bilal Zuberi on X. Spark Capital’s Nabeel Hyatt added, “Foundry was a beacon on building a VC firm loyal to founders, with a group that was a real partnership of good humans.”

Eric Bahn, co-founder of Hustle Fund (a 2021 Foundry Group investment), said the firm “helped kickstart an entire generation of fund managers.”

 

The Right Time 

While firm leadership says the recently announced wind-down was always the plan, it still hasn’t been immune from that turbulent early-stage environment. Foundry Group’s current fund is meaningfully smaller than its predecessor, a $750 million vehicle raised in 2018, and it may have simply felt like the right time to call it quits.

“We’ve had several moments over the last decade where we thought the fund we were raising might be our last,” said Levine. “Each of those times, after reflection and discussion, we decided to raise another fund. But not this time. Foundry 2022 will be our last fund.”

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on direct buyouts, as well as an earlier strategic advisory stint.