Interplaya New York-based venture capital firm, closed a third fund with $45 million in capital commitments.
The company, which is focused on investments in the Series A stage, deploys capital in software, including the B2B market and vertical software. The new fund is a continuation of the company’s previous two early-stage funds. We previously covered Interplay in 2022 when it raised a different car.
Within the market industry, Interplay has seen companies digitize areas that have not yet entered that stage simply because the economics previously did not make sense, Mark Peter Davis, founder and managing director of Interplay, said at TechCrunch.
“The main trend is that we see a big shift towards specialization, which has happened especially in the last decade. These horizontal platforms are becoming more tailored and specific to particular industries,” said Davis said. “We’ve had a lot of success investing in this transition, and that’s the underlying thesis of this vintage.”
In previous funding, Interplay had what Davis called “a vintage angel.” What is different about Fund III is that it is an institutional fund, with support from funds of funds, family offices and founders within the Interplay portfolio.
Davis called a few ways that Interplay stands out: The first is that limited partners and founders get the same group of general partners who make investment decisions every time the fund is harvested. The company’s investment committee has now done more than 50 deals. The second is the outsized value proposition in relation to its check size. And the third is the studio that allows Interplay to incubate and start companies. For Davis, it expands its reach and creates deal flow.
The new funding gives Interplay $150 million in assets under management. Davis expects to invest in 20 companies with the fund, injecting $1 million to $2 million per check, with some held back for subsequent deals. The company has deployed 40% of the funding so far. It most recently invested in two construction technology companies, OnSiteIQ and Roofr.
Meanwhile, fundraising itself, for companies and VC firms, is being tested this year.
“It’s a tough market to raise,” Davis said. “We are very proud of the result we have achieved despite the market, and I would say that it is a testament to the extremely hard work that the team has put in today for a decade-plus.”
Getting to a Series A is challenging of late, and Davis admits that this particular stage is affected by market shifts. However, Interplay sees several promising companies with improving key performance indicators raising money “at reasonable valuations.”
Higher valuations during the investment boom continue to keep Interplay disciplined in where it deploys its capital. Davis noted that the company “ended up passing on a lot of opportunities that reflected the overzealousness of the market.”
“It’s an attractive market to invest in because the company’s valuations are back to what we think is reasonable,” Davis said. “In some cases, they overcorrect. That also has its own problems for entrepreneurs, and we don’t like that, but if they’re healthy and they’re fair, we think they set the company up for continued success .
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