Felicis funded 50% more deals last year than it did in 2021, some because prices were still rising — and it says it hasn’t looked back

Felicis, a now 17-year-old venture firm based in San Francisco and Menlo Park, announces today that it has closed its ninth flagship fund for $825 million compared to the $600 million core fund, which it announced in the summer of 2021. The vehicle brings the company’s total assets under management to exactly $3 billion, and it took just three months to raise it, they say.

It’s a feat in the current market, but Joanna Rupp, managing director of private equity at the University of Chicago — who is one of Felicis’ limited partners — suggests it boils down to the numbers, saying in a statement to TechCrunch, that Felicis “has delivered strong results for the foundation.” (Some of Felicis’ exits include IPOs of Shopify, Adyen, Recursion, and Matterport, as well as acquisitions, such as selling Credit Karma to Intuit and selling Fitbit to Google during the year 2021 after the company first went public in 2015.)

The question is whether Felicis’ returns will look this strong for years to come. His most recent fund was aggressively invested in the foamiest market ever in terms of dollars invested and startup valuations. Investor Chamath Palihapitiya summed up the fears of many institutional investors at a recent investment conference, saying that despite the “gradual amounts of capital” startups have raised during the pandemic and the resulting “valuation appreciation” they have enjoyed, “it’s not going to what lead is the actual money that (VCs) will get back.”

In an interview this week, company founder Aydin Senkut said he wasn’t concerned and suggested that the best returns for Felicis may be yet to come, for two main reasons.

First, while the firm’s partners have pumped a lot of money into the market in a short period of time, they’ve invested a lot of it in earlier-stage companies. One of these is Prenuvo, a Redwood City, California-based startup that has created an alternative to traditional magnetic resonance imaging that can be used to screen and diagnose more than 500 conditions, including most stage 1 solid tumors, and the last case garnered a $70 million Series A round led by Felicis.

Another is Meilisearch, the four-year-old Parisian creator who is behind an eponymous open-source search engine project and completed a $15 million Series A round led by Felicis last fall.

“If you go wrong a little earlier, on average, the check sizes go down a little more and you (get more from the company) in the deal,” says Senkut.

Felicis also goes for winners, he emphasizes, and in his experience it doesn’t matter what the “entry price” is if you back the right horses. “People who just look at reviews are missing a big part of the equation,” says Senkut. “The entry point is important, but it depends on which companies you choose and whether they exit or not,” he adds.

He notes that when Felicis invested in a deal with 100x sales multiples in 2014, “everyone thought we were crazy,” but the company, he continues, “grew 1,000x sales from there.” That deal was an investment in what is now Australia’s most valuable private company, Canva, which was valued at $40 billion by investors in autumn 2021, although another of Canva’s biggest investors, Blackbird, put his own valuation of the company at $40 billion. Dollar dropped $25.6 billion last summer.

Other companies that have received big checks from Felicis recently — and which the firm would write again, Senkut suggests — include Supabase, a two-year-old Pleasanton, Calif.-based open-source database-as-a- Services (DBaaS). ) company that raised $80 million in Series B funding led by Felicis last May; Weights & Biases, a 4.5-year-old San Francisco-based machine learning company that raised $135 million in Series C funding in Fall 2021 led by Felicis; and Runway ML, a four-year-old New York-based video editing software maker that is one of the two startups behind popular AI text-to-image model Stable Diffusion and has raised $50 million in Series C funding , led by Felicis in December.

In fact, in conversation, Senkut proudly speaks about the merits of each one, saying about Runway, for example, that it’s exactly the type of investment that Felicis likes because it’s the “original creator of the intellectual property” it’s built on, and that it has a large and growing customer base, including a variety of Fortune 500 companies, who are already using its technology for a variety of purposes, including CBS’s “Late Show with Stephen Colbert” and New Balance, according to a recent Forbes article.

Saying you’re cost-conscious “sounds smart and makes some LPs feel better,” says Senkut. “But you don’t have to worry about valuations when you’re investing in a company that’s one in 10,000 in terms of its potential.”

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