Arthur Ventures, a venture capital firm in Minneapolis that primarily invests in early-stage software companies in North America, recently announced it raised $470 million for two new funds, the largest funds yet for the company.
The raise comes amid wide speculation investors would be more conservative with their dollars given the broader market backdrop, including fear of a recession.
Of the capital, $300 million will go into a "core fund" — the firm's fifth — which is used to invest in new companies. The other $170 million will go into a growth capital fund for supplying more money to companies it is already invested in.
The funds' partners were clearly under pressure, "as a result of the public market stock market sell-off, rising interest rates, crypto correction and the [Silicon Valley Bank] collapse," said Patrick Meenan, the firm's co-managing partner.
Fundraising started in January with the funds allocated by March. Arthur Ventures invests in software companies that sell products to large businesses and organizations. In 2022, the deal value for software companies was at a six-year high in the U.S., with buyers spending $453.2 million across 1,614 deals, according to Seattle-based investment tracker PitchBook.
"We are excited to remain aggressive in this market as we expect early-stage software companies to continue to exhibit high-revenue growth rates in spite of macroeconomic headwinds, but we do expect to see a more rational valuation environment for the foreseeable future," Meenan said.
Arthur Ventures has more than 50 active investments in software companies serving a variety of industries, including financial services, cybersecurity and information technology services, Meenan said.
Through its core fund, Arthur Ventures will have an investment range between $3 million and $30 million per deal, and with its growth fund, investment sizes falling between $10 million and $50 million.
The company's active investments include Minneapolis software companies Drip, Nomics, phData and When I Work.
The latest capital raise puts Arthur Ventures over $1 billion in total assets. The firm raised $155 million in 2019 and $72.5 million in 2017. It raised $45 million for its first fund in 2013.