Playground International closes Fund III with $410M for early-stage deep tech investments

Playground Global, the storied early-stage enterprise capital agency, introduced in $410 million in capital commitments for its Fund III to spend money on early-stage deep tech and science firms. The brand new fund offers Palo Alto–primarily based Playground over $1.2 billion in belongings underneath administration.

Earlier than co-founder and normal companion Peter Barrett turned a enterprise capitalist, he began his profession as an engineer (a online game engineer, to be precise). Enjoyable details about him — he nonetheless codes every day and is touted for giving Elon Musk his first job.

Barrett has surrounded himself with equally tech-loving normal companions, Jory Bell, Matt Hershenson, Bruce Leak and Laurie Yoler, all with related deep scientific and operational backgrounds.

Collectively, they’re drawn to firms creating the subsequent era of applied sciences throughout the computing, automation, infrastructure, logistics, decarbonization and engineered biology industries.

With Fund III, much like its $500 million Fund II raised in 2017, capital deployments in Fund III will give attention to seed and Collection A firms with preliminary investments starting from $1 million to $20 million.

Playground is commonly an early or first investor, and Barrett advised TechCrunch that the agency “believes there are only a few transformative companies created each year.” A few of its portfolio exits embrace MosaicML, acquired by Databricks in June for $1.3 billion, and Velo3D, an organization that enables Elon Musk to print the Raptor engines to energy Starship, which went public in 2021.

TechCrunch spoke with Barrett through e-mail to debate how the fundraising setting has modified since its final fund elevate, classes discovered whereas investing in deep tech and what it seems to be for in a startup.

The next was edited for size and readability.

TC: Playground final raised a fund in 2017. What was the fundraising setting like this time round?

PB: The macro-environment has been difficult for all, however as we met with buyers from around the globe, they advised us they wish to keep away from fads and tendencies and as an alternative give attention to firms and verticals the place there’s actual, lasting worth being created. Sturdy and defensible firms.

The brand new fund and the fundraises of a number of of our firms have demonstrated that buyers, particularly in down-markets, are flocking to high quality and there’s by no means been a nasty time to spend money on nice firms.

We had nice help from current buyers and likewise used the chance to ask new buyers into the fold. For Fund III, we broadened our LP base to incorporate endowments, foundations, and single and multifamily places of work.

What’s distinctive about what Playground gives to startups?

We’re an early-stage enterprise capital agency and a real companion to our firms from their formation. For those who converse with our entrepreneurs, you’ll discover they consider us as co-founders as a lot as buyers. We’ve a novel superpower in having the ability to underwrite and retire technical threat and might reap the benefits of the roadmaps we’ve developed to determine best-in-class rising applied sciences.

We additionally don’t spend money on competing firms, so there’s true camaraderie throughout the portfolio. We’ve had a number of new portfolio firms launched to us by Fund I and Fund II founders. Along with our platform providers, our 70,000-square-foot studio is residence to lots of our personal portfolio firms and different non-competitive startups within the deep tech area.

Inform me about your pivot from shopper to deep tech. What led to that call?

After we based Playground, our staff was purpose-built to assist develop each shopper applied sciences and deep tech firms. Early on it was clear that our superpower was underwriting technical threat, not studying the tea leaves of market threat. By specializing in deep tech and investing within the roadmaps that information our funding choices, we’ve captured an unfair share of the world’s most transformative firms.

What have you ever discovered from diving into deep tech?

We’ve been investing in deep tech firms since we based Playground, with PsiQuantum being one in all our very first investments. We’ve discovered that the whole lot is unimaginable till it isn’t, and a mix of considerate capital and sensible, tenacious folks can transfer civilization ahead.

What sectors inside deep tech excite you, and which do you have a tendency to not spend money on?

Our first precept underwriting of chemistry, biology, and computation permits us to spend money on breakthrough firms throughout next-gen compute, AI/automation, infrastructure, engineered biology, and decarbonization.

There isn’t any battle between investing in consequential applied sciences and robust returns. We’re drawn to firms that may construct massive technical moats and enter markets the place they’re the clear class chief. We observe our roadmaps and don’t surf the zeitgeist.

What are you searching for in a startup?

We’re searching for testable hypotheses that deal with necessary issues with believable paths to success. We’re not searching for a possible answer to an issue; we’re searching for the answer that brings collectively the correct concept, the correct folks, on the proper time.

What number of investments have you ever made out of Fund III to this point?

Playground has already made a number of investments from Fund III, together with d-Matrix, Ideon Applied sciences, Amber Bio, Infinimmune and Atomic AI, together with different portfolio firms working in stealth.

We consider our firms working in stealth are in prime place to revolutionize inexperienced steel manufacturing and supply the muse of next-generation semiconductor manufacturing.

d-Matrix, for which Playground led the Collection A, has already raised its subsequent spherical with an oversubscribed $110 million Collection B spherical introduced in September. The corporate is constructing the subsequent era of AI HW via an in-memory-compute platform that focuses on inference within the information middle.

Given your earlier relationship with Elon Musk, what’s your opinion of his stewardship of X, Tesla, and so forth.?

All of us want Elon would focus extra time on electrifying the planet and sending rockets to area.