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645 Ventures secures $347M to finance seed-stage startups with metrics

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Nnamdi Okike and Aaron Holiday’s venture firm, 645 Ventures, just secured $347 million in commitments. The data-driven duo raised the funding to finance seed-stage startups with metrics.

Aaron Holiday and Nnamdi Okike prefer data over the type of pattern matching that most venture capitalists swear by. Given their origins, it is hardly unexpected. Okike was a principal at the data-driven investing juggernaut Insight Partners before starting their venture business, 645 Ventures, in 2014.

While Holiday was a software developer at Goldman Sachs before joining straight from DFJ Gotham Ventures. Of course, when a firm is first getting started, data is difficult to get by.

Okike and Holiday claimed that 645 has just received $347 million in capital commitments from a variety of traditional venture investors (foundations, family offices, and endowments) across two new funds because their proprietary software and “resource-intensive model to early-stage investing” is performing so well. One is an early-stage fund worth $195 million, while the other is a $153 million fund that will support its breakthrough winners as they become older.

In a market when LPs are feeling far less wealthy than they were a year ago, these are significant sums. A vast cry from the pair’s $7.6 million proof-of-concept fund, the funds are also. They later raised an additional $40 million from LPs in 2018 and $160.6 million in 2020; as a result, they currently oversee $555 million in total.

It’s possible that some liquidity from FiscalNote, a provider of policy management software that started trading publicly in August following its merger with a blank-check firm, was helpful. According to the team, seven more portfolio firms have since been sold, and many more—including two businesses whose subsequent rounds were managed by Insight—are significantly more valuable than when 645 Ventures financed them.

These include the $50 million Series B round of the cybersecurity firm Shift5 and the $60 million Series C of the nationwide medical practise Eden Health.

The $1.4 billion valuation of Panther Labs, a cloud security company, and Overtime, a sports league startup that has received a $100 million expansion round, are two other achievements to celebrate (for the time being). Naturally, there have been misses as well.

Okike laments that he and Holiday “sadly passed” on the chance to invest in the NFT marketplace OpenSea while it was in the startup stage. He claims that they “didn’t realise how quickly the NFT market was developing” at the time.

The good news is that there are a tonne of other fantastic New York-based firms to invest in, says Holiday. As a board member of Cornell Tech, I can attest to the fact that the city is experiencing a surge in the number of young entrepreneurs and tech founders moving their headquarters from other tech centres to New York City. The group also views it favourably that more “storied Silicon Valley VCs,” who “previously saw San Francisco as the centre of the world,” are setting up shop in New York. This includes Index Ventures and Sequoia Capital, which both did so earlier this year.

Do they worry about the competition at all? Really? Okike replies. As a lead investor, “we have adjusted our product to deliver a compelling value proposition.”

Efficient Capital Labs, which provides funding from American businesses to software entrepreneurs in India, is one of the company’s newest bets; 645 Ventures led its $3.5 million seed round.

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