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| Flint Capital Raises $160M for Third Fund, Defying Market Trends and Expanding Global Tech Investment in IT, Cybersecurity, and Digital Health Image credit: Flint Capital |
Flint Capital, a Boston-based venture firm, has successfully closed its third fund at $160 million, a significant increase from its initial 2013 fund. The new capital will be equally divided between early and late-stage investments, with a primary focus on startups in IT, cybersecurity, fintech, and digital health sectors. This marks a notable achievement in a challenging fundraising environment, where smaller and emerging funds have struggled to secure capital.
Flint's Unique Approach to Securing Limited Partners
Founded over a decade ago by Dmitry Smirnov, formerly CEO of Russia-based FINAM Global, Flint Capital adopted an unconventional strategy in attracting limited partner (LP) investors. Instead of targeting traditional LPs like pension funds or endowments, Smirnov sought out IT entrepreneurs who were eager to gain early access to the next wave of technological innovation. This approach has significantly contributed to Flint's success and helped establish a strong foundation for the firm’s growth.
Global Investment Strategy and Successful Exits
Flint Capital’s global mandate allows it to invest in startups across Europe and Israel, provided they have ambitions to expand into the U.S. market. This strategy has proven effective, with the firm backing several successful companies. Notable investments include Socure, an identity verification startup valued at $4.5 billion, WalkMe, an adoption platform acquired by SAP for $1.5 billion, and Flo, a women’s health app recently valued at over $1 billion. According to partner Sergey Gribov, Flint is less concerned with the physical location of a startup’s team, as long as there is a clear plan to enter the U.S. market.
Founders Reinventing as Investors: A Testament to Flint’s Success
One of Flint Capital’s distinguishing features is its ability to attract former founders as investors in its funds. Partner Andrew Gershfeld highlighted how several investors in the latest fund were entrepreneurs that Flint had backed in the past. For instance, Nir Giller and Omer Schneider, founders of cybersecurity company CyberX, which was acquired by Microsoft in 2020, have reinvested their profits into Flint’s latest fund. Gershfeld sees this as a strong endorsement of Flint's investment strategy, signaling that the firm is doing something right in the eyes of its most successful partners.
Challenges and Triumphs in a Difficult Fundraising Environment
Raising the third fund was no easy feat, taking the Flint partners 18 months to complete. Despite being anchored by previous investors, the sluggishness of the current market was palpable. Gershfeld noted a decline in the conversion rate from initial conversations to securing LP commitments, reflecting the broader difficulties faced by venture firms in 2024. According to the Q2 2024 Pitchbook-NVCA Venture Monitor, funding for venture firms this year is at its lowest since 2019, with established firms capturing a larger share of the available capital.
Resilience Amid Global Conflict: Supporting Israeli Startups
The fundraise is particularly impressive considering the challenges Flint faced in supporting its Israeli portfolio companies during the ongoing conflict in Gaza. Gribov, who frequently travels to Israel, recounted how he engaged with founders via video chats while they were in combat gear and provided guidance to companies with employees who were drafted into the military. Despite these challenges, Flint’s Israeli startups, such as Cynomi and Sensi.AI, have continued to thrive. Notably, Sensi.AI, a digital health startup, closed its $31 million Series B in June 2024. Gribov’s experience has reinforced his confidence in Flint’s global investment strategy, observing that many companies continued to perform well even in the face of global adversity.
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