Builders VC, a new manager in the fundraising industry, is aiming to raise 60% more than its previous effort. If the Los Angeles City Employees’ Retirement System is any guide, Builders has a good shot at reaching its $400 million target.
The San Francisco-based company closed on $171.8 for its debut fund in 2017. This was followed by $250 in 2021, after a year-long fundraise during pandemic covid.
Builders filed an notice of Fund III fundraising with the SEC on 26 January, but did not disclose any target amount. The $400 million target is in documents prepared for LACERS’ board meeting on June 25.
Documents show that LACERS’ investment team invested $20 million in Fund III, which is twice as much as it had invested in Fund II, following a recommendation from Aksia – the pension’s private equity advisor.
LACERS’ large commitment is even more impressive given that it is a rare investor in venture funds. According to Fundraising Data provided by affiliate Buyouts, the $77 billion system invested in 11 buyout funds from vintage 2023 but only one VC fund. This was Red Arts Capital Opportunity Fund 1.
For the 2022 vintage year, LACERS committed to 13 buyout funds, one growth equity fund, one distressed/turnaround fund and a single VC fund, Storm Ventures Fund VII, Buyouts reported.
The recommendation from Aksia noted that “the six Partners at [Builders] VC have a track record of investing in Fund I and Fund II as well at their previous firms.” It also noted, “the majority of the team has been together for one fund and has overlapped tenures at other firms. Prior to Builders, the members of the investment had experience working together both at Formation 8 and Khosla Ventures.”
According to the SEC filing, Fund III’s six managing partners are Mark Blackwell (as well as Jocelyn Doe), Mark Goldstein (as well as Jim Kim), Alex Kinnier, and Amit Mehta. (Blackwell was named one of the 40 “Rising Stars ” by Venture Capital Journal for 2021.
Kim, one of the founders of the company, did not reply to a comment request before press time.
VCJis not aware of any other large LPs that returned to Fund III. According to buyouts, at least nine institutions supported Fund II. This included four other pensions than LACERS. These were the Employees’ Pension System of the State of Hawaii (15 million), Montana Board of Investments (25 million), Northwell Health Pension Plan(undisclosed), and The Pension BoardsUnited Church of Christ Inc. (undisclosed). Fund II LPs also included fund of funds manager Alberta Enterprise and economic development agency Business Oregon.
It is not surprising, given its youth, that Fund II has not made any distributions in the past. This was according to a LACERS performance report. The report stated that the fund generated a TVPI multiplier of 1.07x, and an IRR of 4,94 percent. Fund II had withdrawn about 42 percent of its total capital at the time the report was written.
Fund I performance data is not available.
Builders believes that it is different from other VCs because it focuses on start-ups which “modernize antiquated industry.” Aksia said that Fund III will target North American tech companies that are targeting healthcare, industrials and agriculture, industries that traditionally have been slow to adopt technology.
Builders’ website states: “While VCs are looking for the next hot thing, the revolution of existing industries will yield great returns.”