Venture Capital: General Catalyst Raises $2.3B Despite Pandemic
General Catalyst made notable investments such as Kayak, Snap, and Datalogix.
Undeterred by the coronavirus health crisis and its grim impact on the economy, investors have plowed $2.3 billion into General Capital (GC) to deploy across three new funds. (Forbes)
But the virus has certainly affected GC’s investing thesis. Suddenly, technology is again front-and-center, with its potential to improve lives in a world scarred by fear and loss from the disease.
Technology to the fore
“This pandemic has shed light on how technology can be used to rethink many core services like healthcare, education, and small business,” said GC Managing Director Hemant Taneja to Forbes. “We’re optimistic that founders will step forward and do some profound work.”
General Catalyst plans to use the funding across three new funds: A $600 million early-stage fund, a $1 billion growth fund for companies with annual revenue of $10 million-plus, and a $700 million “endurance fund” to invest in large companies posting over $100 million in sales.
Traditional markets of stocks and bonds are caught in a high-volatility tailspin. However, long-term investors such as endowments and pension funds continue to invest through such turbulence. That’s because their investing time frame can stretch to a decade or more. They may, therefore, tend to deploy funds at these times when according to Taneja “there’s a reset in valuations.”
“Long term, the technology being built just three months ago and the new solutions created during the pandemic are massive ideas,” he said. “The need for capital to help scale these businesses will remain as strong as ever.”
The virus moment is like the 2008 credit crisis and 9/11
GC Chairman Ken Chenault likened the virus outbreak to previous crises such as 9/11 and the GFC. “The entire venture community understands the dire situation that the world is in, and technology is more important than ever,” he said. “We can’t freeze as a society.”
Joel Cutler and David Fialkow founded General Catalyst in 2000. Its portfolio features companies such as Airbnb, Stripe, Gusto, Warby Parker, Oscar, Deliveroo, and Lemonade.
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