On Wednesday, venture capital investment firm Prime Movers Lab announced that it has raised a US$500 million fund to expand its investments in growth-stage startups. The fund will be focused on growth rounds for companies in its existing portfolio as well as new investments.
“One of the big motivators was we have both tons of companies in our current portfolio and a fantastic pipeline of Series B and Series C companies that need growth capital,” explains Prime Movers founder and general partner Dakin Sloss.
This is the third fund for the Jackson, Wyoming-based venture firm. Its first two funds, Prime Movers Lab Fund I and Prime Movers Lab Fund II, raised a combined US$345 million to make early-stage investments. With the new early growth fund, the firm says it now has over US$1 billion in total assets under management.
On the surface, it might seem like a rough time to be starting a new venture capital fund, as firms have been slowing down their rate of investment. According to Crunchbase, this past August saw the lowest amount of monthly venture funding since August of 2022. Venture capital investments overall were down 10% from July and 52% year over year.
Sloss, however, seems undaunted by market conditions. “If you look historically, everyone almost always mistimes the market,” he says. “And when everyone is running away from something, that’s the time to lean in, because that’s when phenomenal deals are happening.”
It probably doesn’t hurt, either, that the types of companies Prime Movers Lab likes to invest in have long development timetables, making it easier to ignore short-term churns in the market. For example, its portfolio company Boom Supersonic isn’t expected to roll out its first commercial supersonic airliner for at least another three years. Its investments into fusion power companies Commonwealth Fusion Systems and Focused Energy are likely even further away from having their energy hit the grid.
“At this point, there are a dozen very specific niches that we know we’re looking for,” Sloss says. “We just haven’t found the right deal yet.”
To minimize the risks of those investments, Sloss says, Prime Movers consists of partners who have both extensive expertise and networks of experts in their fields to research new firms. With those skills, he says, “we can pretty quickly filter through the bullshit.”
The firm had already seen demand for this type of capital prior to launching the fund, Sloss adds. “We’d already built a growth portfolio that was on a healthy multiple through [special purpose vehicles],” he says. But managing the firm’s high number of SPVs made it seem like a fund was a more viable solution.
With the new growth fund, Sloss says that his firm intends to both support existing companies in its portfolio as well as expand into some areas it thinks are ripe for more capital. “At this point, there are a dozen very specific niches that we know we’re looking for,” he says. “We just haven’t found the right deal yet.” One such niche that Sloss is particularly excited about is psychedelic medicine, in which Prime Movers has already begun investing, but which he thinks has more promise to come.
The bottom line for Sloss is that this new fund is something that will give his firm more of an opportunity to help build startups that are poised to solve hard problems and help expand a portfolio that’s already seen five exits to IPO since it was founded in 2018.
“We’re really happy in this period of financial winter to be available to the best entrepreneurs in the world,” says Sloss, “and to be the source of capital that will boldly lean in with them when everyone else is running away.”
This article was first published on forbes.com