Pre-seed and seed companies now have a new tranche of capital to tap into. Twelve Below, a New York-based venture capital firm, has closed $108 million in capital commitments.
Taylor Greene and Byron Ling launched Twelve Below in 2021 after previous careers at Collaborative Fund and Lerer Hippeau for Greene, and Canaan and Primary Venture Partners for Ling. However, the two men have known each other and worked on deals together for a decade, including investments in Mirror, Papa and K Health.
Greene and Ling told TechCrunch that their philosophy is reminiscent of the “old ways of venture capital.” They say it’s a matter of confidence: keep your fund size, conviction high, participation high and make a low number of investments.
“Our mentors told us this type of old-school approach would generate great results,” Greene said. “We started from a blank slate, designing the business around this mentality based on relationships and trust with entrepreneurs.”
Twelve Below aims to lead or co-lead pre-seed and seed funding with the goal of securing a 10-15% stake in the fund’s core investments. The firm invests in New York-based startups in the fintech, healthcare, energy, SME and consumer sectors.
Its first fund was $50 million and the portfolio includes Accrue Savings, Odyssey Energy, Croissant, Campus and Truehold. Greene and Ling say more than 60% of their portfolio has already been used to raise follow-on capital.
Greene and Ling say their big differentiator is their focus on trust. They also don’t have a platform team, so the founders work directly with them.
“We believe that trust is what underpins the ability to truly know what’s going on in business, but it also has an outsized impact,” Ling said. “Their success and ours are closely linked. We’ve been very deliberate in this model because we think founders really want personalized attention with a trusted individual partner, which is very different and that’s why we’ve resisted the model of having a platform team. form and having all these different people that could potentially fragment. this relationship over time.
The new capital is split between two new funds, $80 million for its second seed fund and a $28 million opportunity fund, bringing the firm’s total assets under management to $160 million . The company is backed by entities including large university foundations, institutional funds of funds and large family offices.
It was the large number of portfolio companies seeking follow-on capital that got Greene and Ling thinking about how they could further support their companies. Greene described the opportunity fund as “a little bit unique.”
“It’s just investing in our existing businesses,” Greene said. “We’ve seen this disconnect in the market where we’re very excited about pricing, especially as we expand into our existing companies. The price, from a risk-reward perspective, looks great. We’re also very excited about how the portfolio is evolving, which therefore gives us the opportunity to invest more money into our existing companies.
The couple invested in 21 companies with their first fund and are planning about 25 for the second fund and between five and eight companies for the opportunity fund. They haven’t invested in the second fund yet, but say it will happen early next year.