Peter Thiel’s Founders Fund is gearing up to close its latest $3 billion growth fund by the end of March, reports TechCrunch citing sources familiar with the development. This latest fund is expected to be oversubscribed, reflecting strong investor demand despite a more cautious venture capital landscape.
The San Francisco-based venture capital firm, known for its bold bets on disruptive technology, is not using this fund for early-stage investments. Instead, it will focus on follow-on funding for late-stage companies already in its portfolio, many of which have shown exceptional growth. This strategic move underscores Founders Fund’s confidence in its existing investments and its belief that doubling down on winners is a smarter play in the current market.
A strategic move amid market shifts
The firm’s decision to bypass raising a ninth core fund for early-stage startups isn’t a retreat from venture investing but rather a strategic shift. In 2023, Founders Fund reduced the size of its eighth venture capital fund from $1.8 billion to $900 million, reallocating the remainder into what became its ninth fund. Effectively, that early-stage capital had already been raised three years ago, making a new core fund unnecessary at this stage.
This move contrasts with the broader trend among multi-stage venture firms, many of which are still attempting to maintain or expand the massive fund sizes they raised during the zero-interest-rate policy (ZIRP) era. Founders Fund, however, has opted for discipline over scale, ensuring it raises capital selectively rather than overextending in an uncertain macroeconomic climate.
Focuses on backing winners
With this new fund, Founders Fund is doubling down on some of its most successful late-stage bets. Notably, Rippling, the HR and finance software company raised $200 million in April. Another major focus is Anduril, the defence tech startup that is all set to raise $2.5 billion at a $28 billion valuation. Founders Fund is reportedly leading this round and making its largest single investment ever, potentially a $1 billion commitment.
The firm has yet to confirm whether its Anduril investment will be drawn from its previous $3.4 billion growth fund, which closed in early 2022 and is now fully deployed. In addition to Anduril and Rippling, the investor has backed other industry-defining companies like SpaceX, OpenAI, Stripe, and Figma, a portfolio that continues to deliver standout returns.
Founders Fund’s latest move is a reminder that the VC market is shifting. Rather than chasing new early-stage bets at a time when capital efficiency is becoming paramount, the firm is ensuring its existing portfolio companies have the financial backing needed to scale further. The coming months will reveal how this capital is deployed.
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