True Ventures Announces $840 Million in New Funding

True Ventures, a firm established 15 years ago with locations in Palo Alto and San Francisco, California, has announced the closing of two new investment funds today. The company has successfully completed fundraising for its seventh early-stage fund, securing $465 million, and has finalized its fourth opportunity fund – dedicated to further investing in its most successful portfolio companies – with $375 million.

This represents a significant amount of capital committed to True, which was founded and is currently led by Jon Callaghan and Phil Black. The firm has grown considerably since its inception, now comprising a team of 35 professionals, including 10 individuals focused on investment activities, alongside colleagues in finance, operations, and platform support roles.

It is readily apparent why True would seek to establish another, somewhat larger opportunity fund (its previous fund of this type closed with $285 million in 2018, coinciding with the close of its last early-stage fund at $350 million). It was through a similar investment vehicle that True was able to make substantial investments in consumer fitness company Peloton, including participation in its Series F funding round.

Following the company’s public debut last fall at a valuation of $7.2 billion, True held the position of the second-largest external shareholder. Approximately one year later, Peloton’s market capitalization has surpassed $38 billion, and True continues to maintain its investment.

Earlier this week, we spoke with Callaghan and Black regarding the firm’s approach to managing and potentially divesting a position in a publicly traded portfolio company like Peloton. We also discussed True’s ongoing commitment to providing a robust support system for its founders and teams, and whether they foresee a shift in the central hub of startup investment away from the Bay Area. Key excerpts from our conversation are presented below, edited for conciseness.

TC: With the new year comes larger funds?

PB: The increased fund sizes reflect the strong interest from many individuals eager to participate in our endeavors, and we are very appreciative of that support. Our expanded team also contributes to this growth.

JC: Over 90% of our existing limited partners (LPs) reinvested, and we received considerably more requests than available capacity. We intentionally seek to incorporate new capital from established relationships with each fundraise, fostering fresh perspectives. We maintain active engagement with our LP base, which provides valuable insights.

TC: Are a significant number, or any, of your investors other venture capital firms? It appears increasingly common for VC firms to invest in one another’s funds.

PB: We do have investments from funds of funds, such as Greenspring Associates and Foundry Group Next. However, we observe venture funds investing in smaller funds – those under $50 million – but this practice is not applicable to our fund size.

TC: Historically, you’ve made relatively small initial investments, acquiring a 20% stake in a company. Is this still feasible in the current market?

JC: Our fundamental strategy remains unchanged. We continue to invest $1 million to $3 million in founders or small teams at the outset. We have refined our approach and dedicated $15 million to our platform over the past decade to leverage the expertise of our team and extensive network. Having a single point of contact on your board can create a bottleneck.

TC: True offers programs like Founder Camp and True University, alongside various cultural initiatives. How would you assess the firm’s progress in terms of diversity?

JC: We are dedicated to continuous improvement, but acknowledge that the industry as a whole needs to do better, and we are part of that industry. We have successfully funded numerous women entrepreneurs and entrepreneurs of color, but recognize the need for greater representation. We are currently exploring long-term solutions. Our fellowship program, which has involved 165 college students over the years, has also been instrumental, with half of participants securing full-time positions at True-backed startups.

We have consistently prioritized gender equality, with recent classes leaning more heavily toward women. We are also focused on attracting diverse candidates from a variety of backgrounds. We aim to create more pathways into the technology and startup sectors, and our fellowships provide access to students before they finalize their career paths.

TC: Peloton, one of your portfolio companies, is experiencing a particularly successful period. Have you sold your stake in that company? How do you approach returning capital to LPs after a company becomes publicly traded?

JC: We continue to hold shares in the company, and I remain on the board of directors.

PB: The decision to sell or distribute shares is made on a case-by-case basis. It often takes time, as our substantial ownership positions are subject to public market conditions and trading volume. LPs generally prefer to receive shares, as many family offices and funds of funds can transfer them to their public market investment groups. However, some investors, particularly those in Europe, may prefer cash due to tax or other considerations.

TC: We are seeing an increase in the number of special purpose acquisition companies (SPACs) launched by venture funds. What is your perspective on these?

PB: Jon and I have been involved in the investment world long enough to remember when SPACs were viewed negatively. I believe they have evolved into a more viable instrument today. Several of our companies are exploring this option, and there is considerable interest in understanding the implications of raising capital through a SPAC or going public via one. Currently, we are in an information-gathering phase and have not considered launching a SPAC ourselves.

JC: I believe the innovation surrounding access to capital is noteworthy. However, it is still too early to determine the long-term impact on founders and companies. The process is complex, and we are monitoring it closely.

TC: True often identifies emerging trends early on, investing in hardware companies like Fitbit and Peloton before many other generalist firms. This was also true with digital health and biology. What areas currently pique your interest?

JC: Our primary focus is to listen to the insights and ideas presented by our founders. Currently, we are exploring the future of work – considering not just the next year, but the next five. We are also developing a theme we call the “roaring ’20s,” drawing parallels to the post-World War I and World War II periods and analyzing how consumer behavior shifted, and what might occur following the pandemic with the availability of vaccines.

TC: Could you elaborate on these areas?

JC: We are examining art, music, dining, travel, and entertainment. What will happen when live performance venues reopen? We anticipate hybrid experiences becoming more common. Regarding the future of work, while initial demand for platforms like Zoom may decrease as people return to in-person interactions, we foresee increased virtual access to resources for remote employees, as well as shifts in the dynamics between suburbs and cities, informed by our investments in companies like Blue Bottle Coffee, Sweetgreen, and Madison Reed.

TC: Many companies are now making remote work a permanent option. Do you believe this is a widespread trend, and how might it affect the Bay Area?

JC: We recently held a virtual team event, and in the final moments, the conversation centered around access to COVID testing so we could all gather in person.

People thrive on human connection and require in-person interaction. I believe the Bay Area will remain a vibrant hub for innovation, akin to Florence during the Renaissance. It may take time to adjust, but this region continues to attract top talent for numerous reasons.