New capital commitments for the two newest funds have been secured. The assets under management reach about $325 million.
The fifth seed fund received $102 million from institutional investors, family offices and high net worth individuals. A third opportunity fund invests in mid-stage financings of seed-stage companies from previous seed funds.
Prior to starting his own firm, Naik had been in both angel investing and venture capital for more than twenty five years. He was a co-founding partner of the investment firm Cota Capital.
In the past 11 years, Streamlined has been involved in the seed financing of many companies. Naik said that 16 companies crossed $1 billion in value, with three of them over $10 billion.
Some of the capital from the new seed fund has already been deployed in several companies. He wants to invest in up to 35 companies.
Naik admitted that it was hard for limited partners to initially embrace the idea of going it alone. He was able to start with $33 million for his first fund and go up to $102 million with this latest one. The following was edited to make it clear and long.
A lot of solo GP start off that way. Why did you decide that was better for you?
Naik started off as a solo GP because he has been in partnerships before. My third venture firm is being built by me. I know the positives and negatives of having a partnership. I thought having a partner in the mix would slow me down because I was moving with a certain speed. If I had a partnership that imposed checks and balances on my instincts, I wouldn't be able to build this platform at such a fast pace. If I were a new entrant into venture, the idea of having partners makes sense because you want checks and balances on your behavior because you haven't figured it out yet. It made sense for us to stay alone and accelerate, and so far it has been great.
How did you raise these two funds?
The seed fund was closed in May or June, but the majority of the money was raised after that. When we were raising our seed fund, I think we were one of the few that made it through, but we definitely felt it on the opportunity fund. We could have raised up to $50 million. I could see that limited partners were hurt by what happened in the public markets. Everyone was in risk off mode when it came to allocating capital.
What were some of the issues that theLPs had this time?
There is no doubt in my mind that software will continue to be innovative and disruptive. What happens with the monetary policy was more important than anything else. 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 That is fair, but that is probably not the case. We are buying low because valuations are going to come down. We will probably sell in four or five years. The environment isn't going to continue. In about two or three years, all this will have been a memory.
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Is it possible that you are looking at founders in a different way?
There is a temptation to solve for more traction, but at the end of the day, we are betting on big market opportunities with founders who are uncapped. A lot of the companies we have invested in have that mix of things.
Do you do anything differently with the funds that you have done before?
In today's environment, I don't have to be the first person to invest in those companies. I can wait for a seed extension round and invest in it. We are getting more traction for the same valuation.
Do you shy away from industries you don't like or stay away from them?
We are still looking at everything in terms of vertical markets. This speculative phase is happening on web3. We only invested in companies that showed true value transfer, like in gaming or Defi. The bar is high around web3 and it's an area where I'm slower in deployment dollars.
What sectors do you want to look for?
We have invested in various versions of artificial intelligence for the past 20 years because I believe in its potential. There are very significant open source frameworks that are being released by larger companies, like Facebook and Amazon, as well as organizations like OpenAI. There is a framework called DALL-E that allows you to create high-quality visual visuals, and I have been applying it to the context of productivity, which is a really interesting idea. If you want a specific idea to be represented visually in a powerpoint presentation, there is no real graphic for it. You can use DALL-E to make one. Neural networks are improving.
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