Betaworks Closes $66M Fund for AI Startups

Betaworks Closes $66 Million Fund III for Early-Stage AI Investments

Betaworks, headquartered in New York City, has successfully finalized its $66 million Fund III. This new fund is strategically designed to concentrate investments on companies operating in the early stages of Artificial Intelligence (AI) development.

A History of AI Investment

The firm’s involvement with AI extends back to at least 2016. Through its incubator program, Camp, Betaworks has provided crucial backing to prominent companies like Huggingface and Granola.

Jordan Crook, a partner at Betaworks and previously associated with TechCrunch, indicated that the fund’s investment strategy will prioritize three key areas: AI agents, natively integrated AI interfaces, and AI applications.

Investment Strategy and Program Details

“We will maintain both direct seed investments and the Betaworks Camps around these core themes,” Crook stated.

Fund III is planned to facilitate a minimum of 25 investments in companies at the pre-seed and seed stages. Additionally, the fund intends to support at least 50 startups through the Betaworks Camp program.

To date, approximately 37 deals have been completed, with an average investment size of around $500,000, according to Crook.

Navigating the Current Fundraising Landscape

Crook characterized the present fundraising climate as “frothy” for startups and “spiky” for venture funds. Despite these conditions, Fund III benefited from significant reinvestment from the firm’s existing limited partners.

“The venture capital fundraising environment presented challenges in 2024, and we experienced these difficulties while increasing our fund size,” she explained.

Previous Funds and Firm History

Betaworks previously secured $46 million in its Fund II in 2020 and $48 million in its Fund I in 2016.

Established in 2008 as a venture studio, Betaworks has become a significant presence within the New York City technology sector. The Betaworks Camp program was initiated in 2016.

Notable past investments made by the firm include Tumblr and Kickstarter.