AV8 Ventures unveiled its AV8 Ventures II fund with $180 million from Allianz Group, an insurance and asset management giant, aimed at supporting entrepreneurs developing artificial intelligence-driven technologies in the areas of health, mobility, enterprise and deep tech.
Since the Palo Alto venture firm’s launch in 2018, it has invested in 20 seed-stage companies, with another four in the pipeline. Its first fund was also $180 million and backed by Allianz, George Ugras, managing director at AV8, told TechCrunch. The new fund will also invest in seed stage and some Series A and will aim to go into 25 companies.
“The idea is to operate as a financial VC with the support of the world’ largest insurance company and asset manager behind us,” Ugras said.
Some of the technologies the firm is excited about include how chronic diseases are managed. Ugras believes the lack of access to swaths of data and alignment of interest around the table are prohibiting many of the right solutions from bubbling up. In enterprise, AV8 is looking at management around cyberattacks, predicting vulnerabilities and the impact they have on enterprises, so that companies can be proactive in securing their vulnerabilities versus reactive.
Meanwhile, the driver for the second fund was to ensure continuity in deal activity. AV8 “is seeing so many deals right now,” and the competition to get into a VC deal makes it difficult to project how fast a fund will be able to deploy the capital. Even if a firm gets excited and issues terms sheets, there is always uncertainty, he added.
With venture capital being abundant these days, Ugras noted that the velocity is the fastest he has seen in 22 years. The competitiveness in the market is such that if a startup has a decent team, there is no issue raising capital. However, on the investor side, they have to do things better than ever.
“In terms of the key diligence, you need domain expertise to be very clear on how you can add value and key execution milestones going forward,” he added. “Healthcare and insurance more so than others because the business models are complicated. If you have the startups educating you on the front end, it is going to be difficult for the fund.”