Early-stage VC Defy.vc has closed its third $300 million fund to invest in its Pre-Series A funding round.
After leaving General Catalyst, Neil Sequeira, who co-founded Woodside, Calif.-based Defy.vc, said that if he needed $3 million to $10 million to lead a seed plus or A minus round, , “That’s our core deal. This niche stage.
The company has already made two investments from Fund 3, one in blockchain infrastructure and one in real estate.
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Most of the commitments to fund the three projects were made with insider support in early 2022. The company kept the fund open to add new investors when the market took a turn for the worse. Since we are still investing from Fund 2, we decided to wait for the announcement.
The company will invest in 33 core companies from this new fund, up slightly from Fund 2’s 27 and Fund 1’s 19 core companies.
Defy will set aside more than double the initial capital to invest in future rounds. He also invests 90% of his fund in these core companies and about 10% in smaller seed deals tied to the founders.
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From his experience investing at General Catalyst, Sequeira has found that early stage investments pay off a lot.
Fund 3 is twice the size of the first fund raised in 2017 and approaches the $262 million announced in Fund 2 in 2019. However, Sequeira notes that in his two very different funding environments comparing 2017 and his 2020 fund, “In his point valuation of entries between funds 1 and 2, the difference is his 3. %,” he said.
Sequeira says he owns an average of 17.6% stake in each of the eight most promising companies.
Niche market
When funding a late seed or small Series A early stage company, the startup does not need a separate party round. “You need someone who can actually sit on your board and be your partner,” Sequeira says.
“Being on the board, being active, leading the investment, and being able to really serve entrepreneurs, I felt this very strong traction in this niche.”
Notable investments from Defy’s first fund include:
- Airspace Technologies, which develops technology for time-critical logistics, says it has reached nine figures in revenue.
- Direct Homeowners Real Estate Marketplace Aalto.
- Pet insurance marketplace, Pawlicy Advisor.
Investments in Fund 2 include:
- Novi is a technology platform that enables enterprise customers to access data on product ingredients.
- Apploi creates software for workforce management in health clinics.
- Bazaar, a Pakistan-based company that connects independent shops and wholesalers.
- Arena Club is a sports card trading startup co-founded by Derek Jeter.
Defy’s strong exits include Securily, which develops security technology for schools, PullRequest, a code review company, Skubana, a commerce operations company, and Lumiata, a healthcare AI startup.
Illustrated by Dom Guzman
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