The Engine Raises $230M for Second Deep Tech VC Fund

The realm of advanced technology is often referred to as deep tech, hard tech, or, as The Engine has termed it, Tough Tech.

Contemporary venture capital largely mirrors practices found on Wall Street, concentrating on due diligence materials, financial modeling, SaaS customer retention rates, and cohort evaluations. However, the origins of venture capital are deeply connected to universities and their research endeavors. Several prominent VC firms, such as Kleiner Perkins, began by funding promising research initiatives originating from laboratories and supporting their progression towards broader commercial application.

Many venture capital firms tend to shy away from technical risk, but The Engine has specifically established its brand and investment philosophy around embracing it. Situated within Kendall Square and the larger MIT network, The Engine launched several years ago with a focus on “tough tech” challenges that may be premature for other investors. This approach has resulted in investments in companies like Boston Metal, dedicated to creating environmentally responsible steel alloys, WoHo, which is innovating modular building techniques – as we previously covered – and Commonwealth Fusion Systems, focused on the development of fusion power.

In fact, the firm’s investment portfolio is notably one of the most captivating in the industry today.

Fortunately, the firm’s ambitious investment strategy appears poised to continue. They announced this morning a $230 million raise for their second fund, bringing the total assets under management to $435 million when combined with their first fund. According to a press release, the firm has already invested in 27 companies from its initial fund. While MIT remains a key limited partner, Harvard has joined as an investor in Fund 2, establishing a collaborative venture platform across Cambridge, MA.

Katie Rae continues to serve as CEO and managing partner of the fund, and her team has grown alongside the firm’s expansion.

An additional noteworthy detail is that MIT is constructing a 200,000 square foot facility for The Engine near its campus, designed to provide substantial space for startups and portfolio companies to establish and expand their operations. The building is anticipated to open in 2022, ideally coinciding with a return to more regular in-person collaboration as the pandemic subsides.

Boston has emerged as a significant center for advanced technical projects. Local company Desktop Metal, which manufactures 3D printers capable of printing metal, is currently pursuing a SPAC merger that values the company at approximately $2.5 billion. With this latest development from The Engine, it’s evident that Boston’s tough tech ecosystem will continue to generate a stream of innovative and promising companies.