Global playground, the renowned early-stage venture capital firm, brought in $410 million in capital commitments for its Fund III to invest in early-stage deep technology and science companies. The new fund gives Palo Alto-based Playground more than $1.2 billion in assets under management.
Before co-founder and general partner Peter Barrett became a venture capitalist, he began his career as an engineer (a video game engineer, to be exact). Fun facts about him – he still codes everyday and is sought after giving Elon Musk his first job.
Barrett is surrounded by equally tech-savvy general partners Jory Bell, Matt Hershenson, Bruce Leak and Laurie Yoler, all with similarly deep scientific and business backgrounds.
Together, they are attracted to companies creating the next generation of technologies in the fields of IT, automation, infrastructure, logistics, decarbonization and bioengineering.
With Fund III, similar to the $500 million Fund II it raised in 2017, capital deployments in Fund III will focus on startup and Series A companies with initial investments ranging from $1 million to $20 million.
Playground is often an early stage or early stage investor, and Barrett told TechCrunch that the company “believes only a handful of transformative companies are created every year.” Some of its portfolio exits include MosaicML, acquired by Databricks in June for $1.3 billion, and Velo3D, a company that allows Elon Musk to print Raptor engines to power Starship, which launched to the stock market in 2021.
TechCrunch spoke with Barrett via email to discuss how the fundraising landscape has changed since his last fundraise, lessons learned from investing in deep tech, and what he looks for in a startup.
The following has been edited for length and clarity.
TC: Playground last raised money in 2017. What was the fundraising environment like this time around?
PB: The macro environment has been challenging for everyone, but as we met with investors from around the world, they told us that they are trying to avoid fads and trends and instead focus on companies and industries where real, lasting value is being created. Durable and defensible companies.
The new fund and fund raisings of many of our companies have proven that investors, especially in down markets, are flocking to quality and that there has never been a bad time to invest in great companies.
We had great support from existing investors and also used the opportunity to invite new investors into the fold. For Fund III, we expanded our LP base to include endowments, foundations, and single and multi-family offices.
What is unique about what Playground offers to startups?
We are an early stage venture capital firm and a true partner to our companies since their inception. If you talk to our entrepreneurs, you will find that they think of us as co-founders as well as investors. We have a unique superpower in being able to take on and retire technical risk, and we can leverage the roadmaps we’ve developed to identify best-in-class emerging technologies.
We also don’t invest in competing companies, so there’s real camaraderie in the portfolio. We had several new portfolio companies introduced to us by the founders of Fund I and Fund II. In addition to our platform services, our 70,000 square foot studio is home to many of our own portfolio companies and other non-competing startups in the deep tech space.
Tell me about your pivot from consumer to deep tech. What led to this decision?
When we founded Playground, our team was built specifically to help grow both consumer tech and deep tech companies. Early on it was clear that our superpower was taking technical risk, not reading the market risk tea leaves. By focusing on deep technology and investing in the roadmaps that guide our investment decisions, we’ve captured a fair share of the world’s most transformative companies.
What have you learned from diving deep into technology?
We’ve been investing in deep tech companies since we founded Playground, with PsiQuantum being one of our first investments. We’ve learned that everything is impossible until it isn’t, and a combination of thoughtful capital and brilliant, persistent people can move civilization forward.
Which areas of deep tech excite you and which ones do you tend not to invest in?
Our first underwriting for chemistry, biology and computation enables us to invest in pioneering companies in next generation computing, artificial intelligence/automation, infrastructure, engineering biology and decarbonisation.
There is no conflict between investing in downstream technologies and strong returns. We are attracted to companies that can build large trench techniques and enter markets where they have a clear leadership position in the category. We follow our road maps and don’t surf on zeal.
What do you look for in a startup?
We look for controlled cases that address significant problems with reasonable paths to success. We are not looking for a possible solution to a problem. we are looking for the solution that brings together the right idea, the right people, at the right time.
How many investments have you made from Fund III so far?
Playground has already made several investments from Fund III, including d-Matrix, Ideon Technologies, Amber Bio, Infinimune and Atomic AI, along with other stealth portfolio companies.
We believe our stealth companies are uniquely positioned to revolutionize green metal manufacturing and provide the foundation for the next generation of semiconductor manufacturing.
d-Matrix, for which Playground led the Series A, has already raised its next round with a $110 million oversubscription for the Series B round announced in September. The company is building the next generation of AI HW through an in-memory computing platform that focuses on inference in the data center.
Given your previous relationship with Elon Musk, what is your opinion of the management of X, Tesla, etc.?
We all wish Elon would focus more time on electrifying the planet and sending rockets into space.
