The first thing that catches my eye about Human Ventures, cofounded by Heather Hartnett and Joe Marchese, is its name.
“Even before Heather and I started working together, almost 10 years ago, if we introduced someone to the other as a ‘good Human’ it meant the other person had to take the meeting,” said Marchese, Human’s executive chairman and build partner.
The New York-based firm is at a turning point: Human is currently raising its second fund, and has approached the $50 million threshold, Coins2Day has exclusively learned. (The firm declined to comment on the final number the fund would close on.) As an emerging manager, one of the hardest things to do is raise a Fund II, as these newer firms need to make the leap by proving a track record and gaining the interest of institutional LPs. And there’s a dropout rate—PitchBook in February estimated that 37% of VCs who raised a first fund will not be able to raise a second.
Recently, Human landed Churchill Asset Management as its newest anchor LP (Bank of America is also an investor). Churchill, a Nuveen affiliate, has more than $50 billion in committed capital, and takes on a very limited number of emerging managers. Why did Churchill Asset Management managing director Raja Doddala decide on Human?
It started with, well, the humans at Human. Doddala got to know Marchese and Hartnett over a relatively extended period of time, while speaking to as many references for the two as possible.
“Universally, we got the feeling talking to people that they’re highly collaborative, very well-liked and respected,” Doddala told Term Sheet.
Doddala describes an expansive process that’s both qualitative and quantitative—and deliberate.
“We try not to make decisions hastily, because in this industry, there are a lot of narratives, content, and marketing—you have to try to be super dispassionate and very methodical,” Doddala told Term Sheet.
And Human’s thesis and its partners ultimately resonated with Doddala. Hartnett, Human CEO and general partner, broke down the firm’s approach, which focuses on “categories that we think aren’t really categories yet.”
“I look at what I call the human needs economy—health, wellness, your livelihood. And Joe’s really been looking at the attention economy [which includes hospitality and media],” said Hartnett, adding that: “The attention economy and advertising is the business model of the Internet. It’s going through a massive shift.”
Human started as a venture studio and physical space for founders—and now has more than 60 portfolio companies, three unicorns among them. About half of Human-backed founders are women. What does Human’s approach look like from the founder’s side?
Evvy CEO and cofounder Priyanka Jain told Term Sheet: “I do actually feel like a human, not just a founder or a number.” And Jake Wood, founder and CEO of Human-backed Groundswell, said via email that “so many funds talk about their network, but Human actually activates theirs.”
And this can mean lots of different things—this week, for example, Human’s founders and LPs are all invited to psychotherapist Esther Perel’s show in New York. Perel, whose extensive work on human relationships has made her a household name, is an advisor to Human. When reached via email, Perel said that she’s been drawn to Human’s understanding “that financial success can be driven by how you care for the people you work with…and how you care for your customers.”
This isn’t to say raising this second fund has been a cake walk for Human. In this environment, fundraising isn’t easy for anyone. From the LP perspective, it’s a good time to invest in venture, and a cautious one. I ask Doddala if LPs really are nervous.
“Downturns are the best times to deploy capital,” said Doddala. “There’s not a lot of free capital flowing and LPs are better positioned to underwrite and have more time to underwrite, so paradoxically it’s better to deploy during this time—but you are right about LPs being skittish.”
But ultimately Hartnett says it’s “a good sign when it’s hard to raise.”
“It means you have to see a little bit further out,” she said. “That’s what 2021 was, when anybody who thought they should have a fund could raise money for it. I think that’s dangerous because you’re likely not seeing where the alpha is…And friction is good, that’s how you find people who really fit with you.”
Elsewhere… A scoop from my colleague Jessica Mathews: Workers at Elon Musk’s Boring Company last year dug too closely to foundational pillars of Las Vegas’s elevated monorail train, forcing the public transportation service to temporarily stop operating at least once. Read the whole story here.
See you tomorrow,
Allie Garfinkle
Twitter:@agarfinks
Email: [email protected]
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Joe Abrams curated the deals section of today’s newsletter.
VENTURE DEALS
- Anrok, a San Francisco-based global sales tax platform for software companies, raised $30 million in Series B funding. Khosla Ventures led the round and was joined by IndexVentures, SequoiaCapital, and others.
- Dot Compliance, a Phoenix, Ariz. And London, U.K.-based provider of an AI-enabled quality management system for life sciences organizations, raised $17.5 million in a Series B extension. IGP Capital and Vertex Ventures led the round and was joined by TPY Capital.
- Captura, a Pasadena, Calif.-based developer of technology designed to remove carbon dioxide from the ocean, raised $10 million in a Series A extension from National Grid Partners and Japan Airlines Innovation Fund/Translink Capital.
- Trident IoT, a Carlsbad, Calif.-based technology and engineering company designed to decrease time-to-market for manufacturers of connected devices, raised $10 million in funding from Todd Pedersen and others.
- Patlytics, a San Francisco-based AI-powered patent platform, raised $4.5 million in seed funding. Gradient led the round and was joined by 8VC, Liquid 2 Ventures, Tribe Capital, Vermilion Ventures, Gaingels, Alumni Ventures, Position Ventures, and angel investors.
- HyLight, a Paris, France-based developer of hydrogen airship drones designed for aerial inspection of energy infrastructure, raised €3.7 million ($4 million) in funding from Y Combinator, RingCapital, Kima Ventures, CollaborativeFund, and others.
- Paraform, a San Francisco-based recruiting marketplace, raised $3.6 million in seed funding. A* led the round and was joined by Primer Sazze Partners and others.
IPOS
- UL Solutions, a Northbrook, Ill.-based provider of product testing and safety certification services, raised $946 million in an offering of 33.8 million shares priced at $28 on the New York Stock Exchange.
- Bowhead Specialty Holdings, a New York City-based propert and casualty insurance company, filed to go public on the New York Stock Exchange. The company posted $283 million in revenue for the year ending December 31, 2023. Bowhead Insurance Holdings, AFMIC, GPC Fund, and Bowhead management back the company.
- Silvaco Group, a Santa Clara, Calif.-based developer of design software, electronic design automation software, and semiconductor intellectual property, filed to go public on the Nasdaq. The company posted $54 million in revenue for the year ending December 31, 2023.
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