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Solo GP secures $140M for fifth seed, third opportunity funds

Streamlined Ventures, led by Ullas Naik, secured $140 million in new capital commitments for its two newest funds. This brings the total funds managed to eight with the assets under management reaching about $325 million.

Institutional investors, family offices and high net worth individuals pumped $102 million into the firm’s fifth seed fund, which targets startups focused on data science, AI, software automation, APIs and Web 2.5. The second is $36 million into a third opportunity fund that invests in mid-stage financings of seed-stage companies from prior seed funds.

Naik is a solo general partner who started Streamlined Ventures in 2011, but prior to starting his own firm, had been in both angel investing and venture capital for more than 25 years. He was also a co-founder of the investment firm Cota Capital and spent a large chunk of time at Globespan Capital.

In the past 11 years, Streamlined has had its hand in the seed financings of such companies as DoorDash, AppLovin, Forge, Rigetti and Rappi. Naik told TechCrunch that 16 companies crossed $1 billion in value, with three of them over the $10 billion valuation mark.

He has already deployed some of the capital from the new seed fund in companies, including Ratio, byCore, fun.xyz, Haystacks.ai, Precog and FenixCommerce. He intends to invest in 30 to 35 companies with this new fund.

Naik sat down with me to talk about the new funds, the fundraising environment and why he decided to go it alone — he did admit that it was difficult for limited partners to initially embrace the idea. However, it’s clear that changed, enabling him to start with $33 million for his first fund and make his way up to $102 million with this latest one. The following was lightly edited for clarity and length.

TechCrunch: A lot of solo GPs start off that way, but don’t intend to stay that way. Why have you decided that was best for you?

Naik: Part of the reason I started off as a solo GP is because I’ve been in partnerships in the past. This is my third venture firm that I’m helping build. The other two I did with partners, and so I understand the pluses and minuses that come with having a partnership. I was moving with a certain velocity and assumed that having a partner in the mix would just slow me down, and it actually has been the case. We have built this platform at such a velocity over the span of 10 years, and I don’t think that would be possible if I had a partnership that was imposing “checks and balances” on my instincts. Now, if I was a new entrant into venture, the idea of having partners makes complete sense because you do want checks and balances on your behavior because your instincts haven’t been honed yet. In my case, I felt comfortable and confident in my instincts that it made sense to actually stay solo and accelerate, which is exactly what we did, and so far it’s been wonderful.

What was the fundraising environment like for you raising these two funds?

We closed the seed fund in May or June, but the bulk of it got raised when things were still relatively good. I think I’d already started to see the environment tighten, even when we were raising our seed fund, and so I think we may have been one of the last few that kind of made it through, but we definitely felt it on the opportunity fund. We were raising $40 million and we would have gone up to $50 million. I could sense that limited partners were having a harder time and were hurt by what’s happening in the public markets. It was just a question of rebalancing, where to allocate capital and everybody was in “risk off” mode.

What were some of the concerns from LPs this time around?

There is no doubt that innovation and disruption will continue with software, and I don’t think that anybody doubted that. Where they were more concerned is what happens with the current monetary policy. With inflation, a potential recession, implications for earnings and implications for the ability of our software companies to sell into our customers, which are mostly B2B businesses. The only way to address that is to say, “well, that is fair, but that’s probably not the likely scenario.” Valuations are ultimately coming down, and that’s why we’re buying low. However, we’ll be selling probably in four or five years. This environment is not going to persist. In about two or three years, all this will have been a memory, a bad memory, but a memory.

Are you looking at founders in a different way at all given the current fundraising environment? 

There’s a temptation to solve for more traction, which of course we look at, but at the end of the day, we’re betting on big market opportunities with founders who think in an uncapped manner. Almost every company we’ve invested in has that mix of things.

Are you doing anything different with these funds that you have previously done?

We generally tend to be the first money into those companies, but in today’s environment, I don’t have to be the first money. I can wait for a seed extension round and invest in the seed extension at the prior valuations. Now we get a lot more traction for the same valuation.

You invest mainly in data science, AI, software, etc. Are there industries that you are shying away from or staying away from? 

In terms of vertical markets, like fintech, insuretech or health tech, we’re looking at everything, and we still continue to. We’re doing this speculative phase on web3. We invested in a few web3 companies, but only in companies where we saw true value transfer, like in gaming or DeFi. The bar is kind of high around web3 and it’s an area where I’m sort of deploying dollars much slower.

How about sectors that you are looking for?

We’ve invested in the various iterations of AI for about 20 years and will continue to because I genuinely believe in its transformative capabilities. In addition, there are very significant open source frameworks that are being released by larger companies, the Googles, Amazons and Facebooks of the world, but also by organizations like OpenAI, right. There’s  another framework around visual modalities called DALL-E that allows you to generate high-quality visual visuals, and I’ve been taking that and applying it into the context of productivity, which is a really super-interesting idea. Imagine if you’re now generating PowerPoint presentations and want a specific idea to be represented visually, but there’s no true graphic for it. You can have DALL-E generate one in graphic form. Then, of course, neural networks are getting better.

Solo GP secures $140M for fifth seed, third opportunity funds by Christine Hall originally published on TechCrunch

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