Uncork Raises $400 Million to Invest in and Support Seed-Stage Startups From Inception Through Growth

TL;DR: Uncork Capital has raised $400 million across two new funds: Uncork VII, a $200 million seed fund, and Uncork Plus III, a $200 million growth fund dedicated to follow-on support for Uncork companies when they break out.

This post is not about AI. Or crypto. Or spatial computing. This post is about the opposite of trends. It’s about commitment.

There’s a running gag among entrepreneurs that the most common reaction they get from venture capital investors after a pitch is something like: “Who else is in the round?” or “Call me after you get another term sheet.” But how will you raise capital if no one steps up to be the first investor? That kind of groupthink is how you get hype and FOMO — the most dangerous four-letter words in investing.

At Uncork Capital, we believe venture capital is about taking a leap of faith in a team and an unproven product, having the courage of your convictions to be the first to put down a term sheet, and making a long-term commitment that reflects your values and interests — not someone else’s. That ethos has served us well through multiple economic booms and busts, and we’re sticking with it. Indeed, today, we are proud to announce that we are literally doubling down on our strategy: Uncork Capital has raised $400 million — twice the size of our last fundraise in 2019 — across two funds: Uncork VII, a $200 million seed fund, and Uncork Plus III, a $200 million fund dedicated to follow-on support for Uncork companies as they break out.

Team Uncork: Andy, Ashley, Tripp, Jeff, Susan, Tilly, Adriana, Joyce, LJ

While the current story in Silicon Valley is about shrinking, Uncork has been growing. We have recently expanded the size of our team by recruiting two new investing partners, Susan Liu, and Tripp Jones, as well as a new Head of Talent, Adriana Roche, and Joyce Lee, our new Head of Finance, to give our investing team more leverage and provide more support to Uncork founders. (We also plan to welcome two more investors who are joining the team this summer. More on that later.)

With the new funds, we will continue what we have done for the past 19 years: invest in outliers and out-performers who use technology to solve real problems for real people and real businesses.

If you look across our portfolio, we invest in teams and products that improve the infrastructure of how companies create software, build companies, and change behaviors and industries. That includes companies such as Tailscale, software infrastructure that helps teams safely work from anywhere in the world by providing secure access to remote resources; Crossbeam, which allows companies to tap into warm leads and close more deals by leveraging data from their partner ecosystem; and Loft Orbital, which is pioneering a new business model in space: satellites-as-a-service.

The barbell

In 2016 we introduced a new investing concept: the barbell. The idea is that we would invest $1–3M+ in seed capital for a 10%-15% stake in a promising startup, and then deploy meaningful reserves when breakout Uncork-backed companies raise later rounds in order to maintain and deepen our exposure. This strategy has worked very well for us. A few examples:

• Poshmark. We made our first investment in Poshmark in early 2011 after partnering with the company’s co-founder and CEO, Manish Chandra, on Kaboodle in 2005. Poshmark struck a chord in the secondary retail market and its trajectory inspired us to make our first Uncork Plus investment in 2016, with subsequent follow-ons to bring Uncork to a total position of $9 million. The Poshmark IPO enabled us to return both the seed and growth funds, confirming the strength of this approach.
• Human Interest. Uncork has invested in every single round Human Interest has ever raised, starting from a $1.5 million seed investment in 2016, and including multiple rounds from Uncork’s Plus funds. We are big believers in the company and mission, which makes it possible for small-to-medium-sized businesses to offer 401ks to their employees, and have so far invested more than $20 million.
• LaunchDarkly. Another example of Uncork committing early and sticking around. We have invested in every round since leading LaunchDarkly’s seed in 2015. Our first check was ~$1 million and we have invested more than 15X that amount into the company over time.

Real talk: fundraising in the current environment

To be clear, the past year has been a brutal environment for fundraising. Many of our peers, including those with long track records, are struggling to meet a fraction of their initial target amounts. A few learnings we can share:

1. Many institutions that have been investors in venture capital funds for many years are facing “the denominator problem.” Institutional investors often allot a set percentage of their portfolio to private equity, which includes venture capital. As the value of their public market portfolio came down this past year, so did the proportionate amount of their capital that could go into venture. A number of our long-term limited partners fell into this category.
2. New institutional investors are eager to invest (in proven investors). We have spent a decade-plus building relationships with blue-chip limited partners and are humbled by and grateful for their support. As we expanded the target size of our new funds to accommodate our new investors and the opportunity ahead, we thought about the types of people and organizations that would be complementary to our existing network. We have signed up more than two dozen new investors, including state and local pension funds, educational endowments, and a healthcare system, among others. They expressed an interest in investing in teams with successful track records, as well as emerging investors; firms trapped in the middle may have a harder time.
3. Entry valuations and multiples still matter. Regardless of what has been going on in the public markets this past year, we are finding that at the earliest stages, startup valuations haven’t come down as much as many expected. Startups continue to raise similar amounts of seed capital at similar valuations and multiples. The main difference is that these funds are now meant to last 24+ months instead of twelve.

Checking our assumptions

We operate in an increasingly crowded marketplace with 2,000+ seed, micro VC, and syndicated angel investors. In a competitive space like this, you will not succeed if you chase the same opportunities as everyone else. Sometimes you need to turn the board upside down to see things differently. At Uncork we look for ideas and teams that don’t come from Silicon Valley central casting. A few recent examples:

1. GPT Zero. Chat GPT kicked off a wave of generative AI investment late last year as VCs began to chase applications that could automate work processes. Meanwhile, we met a young entrepreneur who aims to identify and preserve what is human. A college student named Edward Tian endeavored to create a tool that would help teachers figure out whether a piece of schoolwork was written by AI. He and a handful of fellow students built GPT Zero and discovered an unexpected level of demand from people who want to know the provenance of a piece of content, including educators, content publishers, and media outlets. The company is early, yet it is already one of the fastest-growing SaaS companies we have ever seen. We led the company’s $3.5M seed round in March 2023.
2. Hallow. The media has written much about the decline in Americans’ religious attendance. While the institution of religion may be less popular in the US than in years past, globally, Catholicism is on the rise: Baptized Catholics comprise nearly 18% of the world’s population and their numbers increased 1.3% in 2021. Hallow provides its users a private way to practice their faith through a guided prayer app with an interface and experience that is similar to mainstream meditation apps. Uncork led Hallow’s seed round in 2019; the company counts more than 10 million downloads and raised a series C in May.
3. LiquiDonate. Consumers love fast fashion and easy overnight delivery and returns because they make shopping easier, but they also contribute to a glut of unwanted merchandise that retailers end up dumping into landfills. LiquiDonate turns that waste into valuable resources for people who need them through its marketplace for retailers and nonprofits. We led their $1.8M seed round in September 2022 when most VCs weren’t even taking meetings. Notably, LiquiDonate’s founder and CEO, Diz Petit, was employee number fifteen at Postmates, one of several Uncork multi-billion-dollar outcomes.
4. Stark. The internet is not a user-friendly place for people with disabilities. For many years, the corporate world has ignored accessibility and/or treated it as a costly after-thought they would rather forget. As a designer and a person with disabilities, Stark’s CEO and Co-founder, Cat Noone, saw an opportunity to build for the unseen and unserved. Stark makes accessibility easy with an automated solution that plugs into applications companies are already using, such as AdobeXD, Sketch, and Figma, and works in the background to find and remediate issues. Uncork led Stark’s $6 million seed round last March.

We can’t thank our founders enough for the privilege to fund and advise them (and give them tough love when we have to) over the years.

History has shown us that companies founded during financial downturns tend to have outsized success — perhaps because they use the time to sharpen their focus and their competitive advantages. For our part, we have been fortifying our team and our funds, and recommitting to our mission: to partner early, help with the hard stuff, and stick around. Really.

We aim to find and support teams and products that improve the infrastructure of how companies create software, build companies, and change behaviors and industries. If that sounds like you, please reach out.

- Andy, Jeff, Susan, Tripp & everyone at Team Uncork

PS: We’re moving to a fantastic new space in San Francisco in Q4. We can’t wait to host you there next year!