Lerer Ventures said it has raised a $36 million third fund to continue making seed investments in New York and Silicon Valley.
The new fund is a noticeable step up from the firm’s $25 million second fund from 2011 and will enable Lerer to take larger positions in portfolio companies.
The firm says much of its investment strategy will remain largely unchanged. Sixty percent of deals are likely to continue being done in New York and most of the remainder in Silicon Valley, where it has struck a close partnership with Ron Conway’s firm, SV Angel.
“New York continues to grow as a center of technology,” says Eric Hippeau, a partner at the firm and the former CEO of The Huffington Post. “We feel we’re in a position to take advantage of it with the new fund.”
The firm, also run by partners Kenneth Lerer, a co-founder of The Huffington Post, and Ben Lerer, co-founder of Thrillist Media Group, has made a name for itself in the increasingly busy world of seed investing. It has been among the most active New York seed investors and has a portfolio of more than 80 companies.
Top exits so far include GroupMe, sold to Skype for an estimated $85 million; Venmo, which sold for $26.5 million to Braintree; and Hipster, acquired by AOL.
Hippeau said the new fund enables the firm to increase its initial investments to between $250,000 and $300,000 from the $200,000 to $250,000 of its second fund. About half of the fund’s capital is held in reserve.
This suggests that with new fund expected to invest in a similar number of companies – between 50 and 60 – follow-on investments could rise as well.
One LP, Cendana Capital, says the firm’s evolving strategy and its operational experience were top attractions. “We think they have a tremendous reputation in New York” and a growing one on the West Coast, says Managing Partner Michael Kim. What’s more, “as a longtime VC, Eric brings a deep understanding of the cycles in venture capital investing.”
Lerer expects its sector focus to remain similar to previous funds with its sights set on areas such as online media, commerce, ad tech, publishing and enterprise businesses.
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