Origin Ventures Closes $130 Million Fund

Origin Ventures Closes $130 Million Fund V

Origin Ventures, a Chicago-based venture capital firm established 22 years ago, has successfully finalized its fifth fund, securing $130 million in capital commitments. This represents the largest fund to date for the early-stage investor.

While not initially focused on setting new records, according to managing partner Jason Heltzer, the firm originally targeted a $100 million raise. Increased institutional interest in private company investments, coupled with recent successful exits – notably the $400 million sale of Tock, a restaurant reservation platform – contributed to the larger fund size.

Fundraising Strategy and Investment Focus

TC: Could you outline the core message presented to Limited Partners (LPs) during the fundraising process?

JH: Our central argument revolved around our investment thesis. We communicated our continued dedication to the digital native economy, specifically targeting software and marketplace businesses. These businesses address the distinct requirements of millennial and Generation Z consumers, both in B2B and direct-to-consumer models.

These generations, having grown up with constant access to the internet, smartphones, and social media, exhibit unique behaviors in how they live, work, and engage with entertainment. This difference creates significant opportunities for innovative startups.

As these demographics mature, their purchasing power and influence within companies will naturally increase, driving further growth for our portfolio companies. Currently, they comprise over half of the workforce and already hold substantial consumer spending power.

Team Expansion and Geographic Reach

TC: This fund is considerably larger than your previous one, which closed at $80 million. Have there been any changes to the firm’s team?

JH: We have expanded our team since the last fundraise. Alex Meyer joined as a managing partner, and Scott Stern and Prashant Shukla were promoted to partner. Additionally, Jacquie Marshall Siegmund and Angela Smith have been added as senior associates.

Prashant Shukla has relocated to Silicon Valley, and Scott Stern is moving to the DC Metro area. This strategic positioning ensures that we have partners within a 90-minute flight of any promising, disruptive venture across the continental United States.

Investment Parameters and Ownership Targets

TC: What is the typical check size you anticipate writing, and what level of equity do you seek in exchange for your investment?

JH: We will be making investments ranging from $500,000 to $6 million, primarily leading seed and Series A funding rounds. The increased fund size will enable us to take larger positions in Series A financings.

We aim to secure meaningful ownership stakes in each initial investment, typically targeting 7% to 12% of the company in the current market conditions.

Chicago’s Venture Capital Landscape

TC: Is Chicago still undervalued by venture capital firms based on the coasts? This has historically been a challenge.

JH: No, that perception is changing. Chicago’s track record of success – including companies like Grubhub, Cleversafe, G2, Livongo, Cameo, Tovala, Tock, Groupon, and ShipBob – is undeniable. Most prominent firms have already invested in Chicago-based companies, and that trend is accelerating.

The barriers to investment have diminished, particularly since the onset of COVID-19. Chicago continues to offer strong venture returns due to its lower cost of operation, more reasonable valuations, and consistent positive outcomes.

Emerging Investment Themes

TC: What new areas are you exploring for investment that weren’t prominent themes three to five years ago?

JH: We have long been interested in the ‘future of work,’ but emerging themes now include the creator economy, Web3 technologies, and the development of strong online communities.

Valuation Trends and Deal Evaluation

TC: Are valuations in Chicago comparable to those seen in other major venture hubs?

JH: Valuations are generally high across the board, though they are most pronounced in the Bay Area. The gap between Chicago and other markets has narrowed in recent years, but some difference remains. We invest in 18 metropolitan areas outside of Silicon Valley.

TC: How sensitive are you to pricing? At what point does a deal become too expensive?

JH: We prioritize paying a fair price that reflects current market conditions. Having been involved in venture capital since 1999, we’ve navigated numerous market cycles. Successful exits like Grubhub, BacklotCars, and Tock have reinforced our belief that conviction in a winning company is more important than minor valuation fluctuations in the early stages.

Investment Pace and Portfolio Performance

TC: How many investments does Origin Ventures typically make each year?

JH: We anticipate investing in 22 to 24 companies from this fund over a three-year period. To date, we’ve completed 14 investments, averaging approximately 8 new investments annually.

TC: Which portfolio company has secured the largest amount of follow-on funding?

JH: Our portfolio companies have collectively raised over $450 million in growth funding in the last 18 months. Notable examples include Cameo’s $100 million Series C (total raised: $165 million), Fountain’s Series C (total raised: $119 million), and Tovala’s $30 million Series C (total raised: $69 million). These represent our most significant active investments in terms of capital deployed.