The folks at the Cooperative Fund sure love a challenge.
They do not specialize in venture capital’s favorite business model, SaaS, preferring to invest in sectors such as climate, health and food. Additionally, they like consumer-focused companies, whose fickle behaviors can add another layer of complexity to any business plan. Oh, and they decided to raise their sixth flagship fund at a time when limited partners have become more miserable.
Turns out it wasn’t a bad strategy. Cooperative recently raised $125 million for its sixth flagship fund, the company exclusively told TechCrunch, completing the process in just over 90 days.
“This fundraising environment is tougher than any I’ve seen since I started the company a decade ago,” founder and managing partner Craig Shapiro told TechCrunch.
“We were motivated to raise money because we believe the ’24 vintage will be good,” he said. Because of the slowdown in venture funding, valuations were more reasonable and companies had more time to complete due diligence, he added. Additionally, because consumer investing has been out of fashion for years in the VC world, there is less competition. “Those are two compounding factors that really make us more excited to invest right now,” he said.
While some LPs have been hesitant to commit because of higher interest rates and political uncertainty, Shapiro said the Collaborative’s investors don’t fall into that category. “What we’ve seen is that the more sophisticated LPs, who take a very long-term view, understand that narrative. They understand that markets ebb and flow,” he said.
The company had “significantly more demand than we could meet,” said partner Sophie Bakalar. Part of that could be the fact that Collaborative recently returned capital to its LPs, Shapiro said. Some of the company’s past investments have had successful exits, including Reddit’s recent IPO and Savvy Games Group’s $4.9 billion acquisition of Scopely. “We have an LP who told us they haven’t received a distribution from any of their venture funds in almost 18 months. The fact that we were distributing capital set us apart.”
While the Collaborative did not disclose the names of its LPs, it said it has a range of investors, including endowments, foundations, high-net-worth individuals, a large asset manager and “a large Singaporean organization with a strong focus on PE and VC investments .” A majority of its existing LPs committed to the new fund.
As the Partnership’s flagship fund, the new fund will also focus on start-up companies, with around half of the fund earmarked for early screenings and the rest earmarked for follow-on investments.
Shapiro is particularly interested in exploring how emerging companies can deal with changing consumer habits. “It’s clear to us that how people spend their money, where they keep their money, how they distribute it, where they invest it — these are all areas we’re excited about.”
The other thread that connects the Collaborative portfolio is climate. “We’re waking up to the climate sustainability kind of thing as another category. But if you’ve been a fly on the wall in our team meeting, we’re thinking much more horizontally across all those vertical lines,” Shapiro said. “The food we eat, microplastics, air quality — everything is connected. Climate and sustainability underpin all these categories.”
