Home / Articles / Urban Innovation Fund, VMG Catalyst among female-led firms raising new funds

Urban Innovation Fund, VMG Catalyst among female-led firms raising new funds

Urban Innovation Fund, VMG Catalyst among female-led firms raising new funds Image
  • Posted on 11th Aug, 2022 15:33 PM
  • 1157 Views

Venture capital firms continue to raise new funds, at what seems like lightning speed, and two firms stuck out in recent days.

Venture capital firms continue to raise new funds, at what seems like lightning speed. Two firms stuck out in recent days, including Urban Innovation Fund, which closed with commitments of $100 million for its Fund III and $20 million Opportunity Fund, and VMG Catalyst‘s $400 million Fund II.

Both firms are led by women, Clara Brunner and Julie Lein at Urban Innovation Fund, and Brooke Kiley over at VMG. What was unique about these two was the narrow focus each fund had. As the name suggests, Urban Innovation Fund invests in companies building technology to shape the future of cities, while VMG targets commerce.

Prior to starting Urban Innovation Fund, Brunner and Lein, both managing partners, were in commercial real estate development when she met Lein, who was doing political polling and consulting, at business school at MIT. Their first year they founded and ran their second year, the largest women’s event on MIT’s campus at the time.

They each kept trying to recruit the other into starting a company in their respective industries before coming together around a love of startups and the urban tech space. The firm invests in companies working on issues of livability, sustainability or economic vitality and often have a lot of regulatory and political challenges.

Having such a narrow thesis and other unique characteristics is something Brunner believes was beneficial when the fund was raising its third installment earlier this year.

“I think it’s a combination of we look different, we invest with a very different strategy and we have a strong track record,” she told TechCrunch. “That meant the round came together much more quickly than we were expecting. We were shocked by how fast it went.”

Urban Innovation Fund is a 100% woman-owned firm and 77% of the companies it backs have had a woman or a person of color on the founding team.

According to the Cambridge benchmarks, Urban Innovation Fund is a top 1% performing fund and has invested in companies like electric vehicle charging software company Electriphi, which was acquired by Ford in 2021, ESG asset management company Ethic, which has $2 billion in assets under management, and small business lend platform Jeeves, which was valued at $2.1 billion earlier this year.

Brunner and Lein set out to raise $80 million in January and ended up meeting their hard cap of $100 million, with 95% of its new capital coming from institutional investors. Not a bad problem to have, but Brunner said they have a great base of limited partners from previous funds and had to turn away investors.

That’s how the $20 million Opportunity Fund, Urban Innovation Fund’s first in this category, came about. Previously, the firm was utilizing special purpose vehicles to invest in a single deal, and had raised a bunch of them in the last few years to do later stage investing in breakout companies from its portfolio.

“Now that we have our new opportunity fund, we don’t need to do SPVs anymore,” Brunner said. “We can do all of our late stage follow-on investing through the new vehicle.”

Urban Innovation Fund just activated the third fund in July, so it is in diligence with a few new startups, but has not made any investments yet. Average check size for previous funds was around $1 million, and the new fund will enable that to grow to $1.5 million. The fund is looking to either lead or be a large second check in about 30 seed stage rounds.

Urban Innovation Fund, VMG Catalyst among female-led firms raising new funds View Story