Growing and Evolving: An Update on Our Funds
Our funds have experienced dramatic growth over the past year. So, I wanted to provide an overview of where things stand.
Ataraxia. In mid-2020, we set up our first formal fund management company, Ataraxia Partners. This isn’t a fund. Rather, it is a fund management company. Ataraxia will handle payroll and other day in and day out tasks on behalf of all of our funds. Investments will remain entirely the purview of each fund GP and LP. Having Ataraxia in place greatly simplified the operation of a company that now has 24 active entities in the US and Europe, and anticipates continued growth.
Social Starts Funds. All four Social Starts funds are now fully invested. Ataraxia will manage these funds through the end of their lifetimes.
SSLP1. Our initial fund is now nearing its completion. Investors have received more than 2X their original investment in distributions. The fund has had 4 major exits this year and anticipates a few more on the horizon. Boxed announced its SPAC and expects to list formally on the NY Stock Exchange soon. Valuation of the SPAC was $930M. Triplelift, a visual ad network, was acquired by Vista Private Equity for $1.4B. Greenhouse, the dominant digital platform for recruitment and employee management, was acquired by Texas Pacific Group at a $1B enterprise value. Epic!, a platform for structured reading for school-age children and their parents, was acquired by Byjus, the most valuable startup in India. Smart News, the Japan-based mobile news aggregator, completed a Series F round at a $2B valuation and announced the possibility of going public in Tokyo in the near future. These pending transactions should push the fund over 3X in investor return.
SSLP2. Many of the same companies are in SSLP2 as SSLP1, since this fund was set up as the follow-on fund for the first fund. The investments tend to be at a higher valuation, so the return of SSLP2 so far is a bit lower than SSLP1. SSLP2 has up to 4 years of life remaining.
SSLP3. We are beginning to see early exits from our 2014 fund. Part of our strategy is to be able to exit companies from the middle of the portfolio early to generate initial returns with the larger returns coming later in the fund’s life. To date, we have recycled the early exits into new investments we feel strongly about. But we may be approaching the point of initial distributions here. This year, we exited our shares in Apptopia at just under 3X. We sold 10% of our position in another portfolio company as part of their Series B for more than the value of our initial investment; that company is now at $175M in valuation and rising. We had a third portfolio company, Strong DM, close a Series B at $275M post valuation, 18X our original investment. While this fund is still relatively young, we have high expectations for its long-term performance.
SSLP-A. We just had the first major exit from our 2016 fund. Volumetric, which produces 3D lab organs, replacing animal organs for many clinical uses, was acquired by 3D Systems, the NYSE-listed pioneer in 3D printing. Our initial return here is 3X, with the potential to get much more based on going forward milestones. We have numerous companies in this fund at high-values Series B and C and expect to see vigorous exit activity over the next few years.
Joyance Partners. Our 2017 single-LP fund focused on individual health has expanded to 4 funds. The initial early-stage US fund is now fully invested, as is the small set-aside we used to test this fund’s investment strategy in Europe. This year we added a second early-stage US fund, an early-stage fund domiciled in Luxembourg to focus on companies in the EU, and a follow-on fund for Joyance early-stage investments. This has quadrupled the size of Joyance. We had the first exit from this 2017 vintage fund this year: Peace Of Meat, a European alternative protein company, was acquired by alternative meat 3D printing company MeatTech from Israel. MeatTech then listed on Nasdaq. Our initial $100K investment now represents 1% of a company listed at over $100M. Joyance also invested in the just exited Volumetric.
SH2. SH2 is short for The Science of Health and Happiness Fund. It focuses on individual health but with a broader lens than Joyance. SH2 looks for new science-centric companies that can help people live better, live longer, or both. We are partway through the fundraise for SH2 and have made 18 investments from the fund so far, in the US, Europe, and Asia. We plan to finalize the fundraise for SH2, our first multi-LP fund focused on health by mid-November. SH2 invested in Boxed, and so will have an exit almost immediately upon setting up the fund.
Overall, our funds are showing the signs we expect from our strategy. Many strong valuation mark-ups and dramatic MOIC and high early IRRs as companies raise at higher values fast. Here are some of the high spots across the portfolios:
Of 245 active portfolio companies, we have 24 at or over $100M in valuation:
Bodygram
Boxed
Builder.ai
Burrow
Closed Loop
Code Signal
Eden
Epic!
Greenhouse
Lark
Made in Cookware
Meati
Medal.TV
Naadam
Oishii
Outer
Phable
Planted
Smart News
Stream.io
Strong DM
Transfr VR
TripleLift
Wellthy
These companies span all our funds, US, Europe and Asia, and multiple investment focus areas. We think they are the vanguard for other high-value portfolio companies to come and point toward strong performance from all of our funds.
By Managing Partner Mike Edelhart
@MikeEdelhart
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