SOSV, “the accelerator VC,” closes third fund at $150 million

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SOSV, “the accelerator VC,” closes third fund at $150 million

Because the introduction of accelerators, enterprise capitalists have competed to lock in offers with the most effective startups in a given batch. Entrepreneur turned investor Sean O’ Sullivan thought it could be higher to develop a enterprise agency that owned and ran its personal accelerators.

At the moment that agency, SOSV, has closed its third fund at $150 million to again startups which are admitted to and have graduated from one in every of its many packages.

O’ Sullivan stated, “There are lots of actually nice concepts on the market. However Collection A rounds are usually not occurring as simply as they used to. We’re right here to get extra firms additional, sooner, and get them to a larger diploma of traction and profitability earlier to allow them to go on to boost these Collection A’s.”

Of eight complete, SOSV’s better-known accelerators embody: hardware-focused HAX, FOOD-X for meals and agriculture firms, IndieBio for all times sciences startups, and Chinaccelerator for cross-border web and cellular firms in Asia.

Most of SOSV’s accelerators give attention to what O’Sullivan calls “actual world merchandise,” product of atoms not simply bits. When SOSV does spend money on software program, it’s normally an app or service that corresponds with “actual world merchandise,” shopper electronics or medical units, robotics, meals, or life sciences particularly genomics.

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O’ Sullivan is best-known immediately as an investor. He starred as a “dragon” on the Irish model of the fact TV enterprise competitors Dragon’s Den. However he has a protracted and colourful background in tech and enterprise.

He based MapInfo in 1986, which put road mapping on private computer systems after which on the early web. He’s credited with coining the time period “cloud computing,” with George Favoloro, as a founding father of NetCentric.

He additionally has a large humanitarian and philanthropic streak. He began a non-government group referred to as JumpStart Worldwide to assist Iraqis rebuild Baghdad. And he was the preliminary supporter of Khan Academy, and CoderDojo.

Now SOSV, which calls itself the “accelerator VC,” is starting to have the identical model recognition its founder enjoys.

HAX batch VIII demo day on the Folsom Road Foundry in San Francisco.

The SOSV portfolio consists of: FormLabs, Breather, and Harmonix. Its accelerator alumni embody: Clara Meals, Memphis Meats, Makeblock, Prynt, Qidni Labs, and scores of different firms with manufacturers well-known in tech circles already.

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O’Sullivan famous that ten SOSV-backed firms ran Kickstarter fundraising campaigns for his or her merchandise that broke the $1 million mark as of the top of 2016.

Typically, SOSV the lead or sole seed investor within the very early stage startups it attracts to its packages.

The agency takes a six to 12 % stake within the firms it backs and invests $80,000 to $250,000 in each when they’re admitted, investing additional after the packages finish and offering the startups with entry to cutting-edge laboratories, or different services the place they will develop and take a look at their merchandise.

Lately, SOSV has fired up one other accelerator program, referred to as HAX Increase, for startups that have already got a product in the marketplace and actual income coming within the door. It’s extra about serving to startups appeal to company companions, get retail distribution and develop their buyer base, than it’s about scoring extra enterprise capital.

In 2017, O’ Sullivan says, SOSV shall be seeking to begin yet one more accelerator that will get a few of its alumni to an preliminary public providing.

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“It’s an actual downside for the VC trade that extra tech firms are usually not going public. LP’s need a return. VC’s need a return. It could shock individuals, however occurring the general public market to get that return doesn’t truly require you to boost billions,” O’ Sullivan stated.

Wholesome firms which are doing tens of thousands and thousands in income may go “straight public” as a substitute of elevating a Collection D, E and past from later stage companies, O’ Sullivan is betting.

“Why not go public and lift $50 million in an IPO? It used to work this manner. We don’t need to make firms that function for the primary seven years at a loss,” he stated.

Restricted companions in SOSV’s new fund are a of institutional backers, household places of work and tech executives, even some alumni of SOSV’s personal accelerators. They included: the IFC of the World Financial institution, the Lemelson Basis, the Russell Household Basis, Harmonix co-founder Alex Rigopolous and others.