• Fri. May 13th, 2022

Artisanal Ventures closes $62M fund, takes ‘connected capital’ approach to investment

ByASNF

Feb 4, 2022

Cloud is the big buzzword these days, with people talking about why it’s a smart move for companies, and lots of venture-backed startups developing easy ways for companies to make the shift.

Artisanal Ventures, a Bay Area venture capital firm investing in B2B cloud startups, closed on its first fund, the oversubscribed $62 million Artisanal Ventures I. The inaugural fund is backed by more than 50 founders and senior executives from companies like Square, Atlassian, CrowdStrike, AppDynamics, Snowflake, Splunk, UiPath and MuleSoft.

The firm is led by Andy Price, general partner, and also founder of cloud-focused executive search firm Artisanal Talent. He has brought in Andrew Van Nest as a partner. Van Nest was previously a venture investor at Blumberg Capital.

“We sit in a unique spot in the B2B software landscape as both investors and recruiters,” Van Nest said. “Our lens into the flow of great talent allows us to monitor and invest in spaces that are truly at the cutting edge. We’ve been focused on ML/NLP, cloud security and automation. We’re excited to be supporting companies leading the charge.”

Meanwhile, Price expects most of the check sizes to be between $500,000 and $1.5 million for early-stage companies and $2 million to $3.5 million in later-stage companies.

Rather than compete with the VC ecosystem, Price’s strategy is to complement the biggest VC firms by building companies with them, he said. That includes combining the expertise of the firm’s limited partners with Artisanal Talent’s executive search capabilities to help portfolio companies build best-in-class teams.

“Much of the success of these ventures has to do with the dynamics of the people supporting the founders,” he added. “If that dynamic works, and you know that you’re a part of that group that has a constructive approach, lots of intellectual value to bring to the table, a track record and a bunch of brand power, it makes company building so much easier. That’s really our formula and what we already have been doing intentionally.”

For every company like Meta, there are 5 million “flameouts” in the consumer landscape. However, with B2B, the win rate is a lot higher, he said. That’s why he likes investing in cases that correlate to public markets, a strategy he doesn’t think many venture capitalists think about — how Wall Street is ultimately going to embrace or not embrace what a company is doing.

So far that strategy has worked in Artisanal Ventures’ favor. The firm has invested in 14 companies so far, and Price says the fund has won allocation in over 90% of deals it has pursued.

Among the portfolio of companies, the firm has invested in email security company Abnormal Security, which raised $50 million back in 2020; biotech software developer Benchling, which raised $100 million in Series F funding last November; and Transmit Security, which took in a $543 million Series A last year on a pre-money valuation of $2.2 billion to rid the world of passwords.

Price started fundraising for the fund early last year, and while his vision for a second fund will be going after about $200 million, he is not yet ready to go for a second fund.

“We’ll likely do it in the next two to three years, but for the next 12 months, we are singularly focused on deploying capital intelligently, as the market is getting utterly destroyed in the public markets,” he added. “What’s happening is that is starting to correlate with startups, and we’re waiting to see how that affects the pricing dynamics of private companies. Before going into another big batch of investments, we will play a wait-and-see approach and tap the brakes to see if we can’t get more great assets at more fairer prices.”

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