Former SoftBank executive Marcelo Claure and serial entrepreneur and investor Paul Judge are in the throes of raising a new $200 million fund.
The duo were deep in investing calls when they took a break to catch up with Business Insider. It’s been about a month since the Open Opportunity Fund announced that Claure was rejoining the fund — one he was instrumental in launching over three years ago while he was at SoftBank.
The past year has been transitional for the fund since Claure and Judge bought the $100 million fund from SoftBank. Other details about the deal were not disclosed.
Since then, there haven’t been any new investments, but the two are poised to capitalize on the success of the first fund and are raising the second Open Opportunity Fund.
The first $100 million Opportunity Fund — fully backed by SoftBank — invested in 75 startups and has had seven exits, including payments startup Arcus, which Mastercard bought in 2021, and AI sales and marketing software startup Drift, which Vista Equity Partners acquired, also in 2021. The fund, however, has not had any of its portfolio companies IPO, as that market continues to remain frozen.
“I’m incredibly optimistic in terms of us being able to raise the money we set up because I’ve just had a few meetings, and they’ve all been incredibly positive,” Claure, the fund’s general partner and vice chairman, said.
Judge, the fund’s chairman, is a three-time startup founder who transitioned to venture investing with the incubator TechSquare Labs and Atlanta-based firm Panoramic Ventures. He said that limited partners’ interest has been positive overall since the Open Opportunity Fund’s first fund has had so much success. Many of these LPs, including corporations, have a “dual mode” business mindset of wanting to do the right thing but also delivering meaningful capital returns, Judge added.
Claure also said they received a “soft commitment” from SoftBank but now need to go out and close that investment. He also said he’s contributing $20 million of his own cash to the new fund.
Judge said that he expects the first Open Opportunity Fund to continue to deliver “top quartile” returns to its investors over the next five to seven years.
For the first fund’s portfolio companies, Claure and Judge said 75% of them have gone on to raise more funding. And the companies, on average, are growing revenue 100% on an annual basis and have at least two years of cash runway, Judge said.
About 80% of the Open Opportunity Fund’s portfolio comprises companies in the B2B SaaS space, including startups like Runway, a mobile app release management startup. Claure and Judge believe focusing on investing in software startups is one of the reasons they’ve seen so much success in such a short time.
For this next fund, they want to replicate the same winning recipe with an eye toward backing companies in the fintech, healthtech, and edtech spaces. Judge said they plan to invest in late seed to early Series A startups, with about a third of the fund dedicated to growth-stage investing.
Claure, who was also previously the CEO of Sprint, helped to conceive the first Opportunity Fund after protests in the US erupted in the wake of George Floyd’s murder in the summer of 2020. He recalled that he turned to Masayoshi Son, SoftBank’s CEO, and told him he wanted to start a diversity-focused venture fund. Claure, with Judge, and Shu Nyatta, then a managing partner at SoftBank who now leads Bicycle Capital, a Latin America-focused fund with Claure, and TaskRabbit CEO Stacy Brown-Philpot, were on the fund’s investment committee. And so, the Opportunity Fund was born to invest specifically in Black and Latinx startup founders.
In 2023, Black startup founders received just 0.48% of all venture funding — about $661 million of $136 billion — TechCrunch reported, citing Crunchbase data. The share of funding to Latinx founders is also very similar.
“The decimal point is in the wrong place,” Judge said of what’s become the typical funding trend to underrepresented founders. “Our point is the difference between where it is right now and where it should be — that’s a lot of money to be made.”
Judge said that access to capital will have a downstream impact — more underrepresented founders will be able to pursue their entrepreneurial dreams in areas typically overlooked by traditional investors, and they’ll have more diverse company boards and hire diverse workforces. And that ultimately will hopefully lead to more generational wealth for these founders, their families and their communities.
For Claure and Judge, the fund’s focus is also deeply personal. Both Claure and Judge experienced firsthand the difficulties of raising capital as entrepreneurs of color, and they don’t want that same experience for the next generation of startup founders.
“The joy and satisfaction that I get by helping diverse founders, not one at a time, but 10, 20, 30, 40, 50 at a time,” Claure said. “We’re going to be able to create an exponential effect.”
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