Battery Ventures, one of the area’s largest venture capital firms, has raised several new funds totaling $3.8 billion.
The Boston-based firm, in business since 1983, said $3.3 billion would go toward its 14th venture capital fund to invest in startups plus a companion fund. Another $530 million would go toward the firm’s second-ever “select” fund, which backs more mature startups that Battery supported at earlier stages.
The fresh fund-raising comes even as the bubble has popped for tech investing. Share prices of public tech companies have plunged, very few startups have been able to go public, and private tech companies are slashing jobs and expenses.
Despite the challenges, Battery’s new funds total more than $1 billion more than similar funds it launched in 2020 and 2021. Investors such as pension funds and endowments that participated in the new Battery funds are banking on the firm’s long track record of success. Last year, before the tech stock market crash, eight startups backed by Battery went public, including consumer lender Affirm and crypto company Coinbase.
It may take some time for Battery to deploy the new funds. The total amount of US venture capital funding slipped 9 percent to $144.2 billion in the first half of 2022 compared to a year earlier, according to data compiled by PitchBook and the National Venture Capital Association. And Battery will still have plenty of competition in investing: Fund-raising by VC firms hit $121.5 billion in the first half of 2022, nearly matching the record $138.9 billion raised for all of 2021.
Along with the announcement of the new funds, Battery also promoted Zack Smotherman to general partner. Smotherman, who joined the firm in 2013, is based in Boston and invests in industrial-technology and life-science tools startups.
Startups in those markets aren’t exactly household names. SPT Labtech, a British company Smotherman backed, makes equipment for liquid handling and sample management in labs. During the pandemic, it supplied key gear for genetic research into the COVID-19 virus. Private equity firm EQT bought the company last month for about $770 million.
Meanwhile, industrial tech “is not a market that a lot of people necessarily know about or appreciate,” Smotherman said in an interview. “One of the things that attracted me is a lot of the companies are kind of behind the scenes or under the radar, but ultimately are very impactful.”
Smotherman, who has an MBA from MIT, had a background in buyouts and banking before he joined Battery. Still, he seems to have absorbed the conventional wisdom in venture capital about investing during tough times.
“There’s a lot of volatility at the moment across a number of markets,” he said. “But we feel like this next couple of years when we will be deploying this fund should be an attractive time to invest.”