CrossCut Ventures, one of Los Angeles' most prolific venture capital firms, has raised a $75-million fund that would enable it to invest in about 20 additional start-ups over the next two years.
Tuesday's announcement is significant both for the amount of capital and its source. CrossCut's two previous investment funds, totaling $21 million, had mainly drawn checks from high net worth families and individuals. The latest fund attracted capital from six nonprofit foundations and endowments, who took notice of Los Angeles' improving start-up sector and the Venice firm's performance, said Brian Garrett, a CrossCut managing director.
New investors include the James Irvine Foundation and Top Tier Capital.
CrossCut has already made nine investments from the new fund. Seven went to Los Angeles start-ups, including MobCrush, a service for live streaming smartphone gameplay. The gaming investments are led by Clinton Foy, a former video game industry executive and CrossCut's newest managing director.
The $75-million figure makes CrossCut the largest early-stage-focused venture capital firm in Los Angeles, Garrett said.
"We've viewed ourselves as a lead investor in deals, but we didn't have the capital to back up that statement," Garrett said. "Now, people are looking us to lead and price investments, but with more capital and the [big] ownership levels we want to achieve."
CrossCut's first fund has returned twice the $5 million invested, and 10 of the 18 start-ups in the portfolio have or are expected to generate a return. The second fund, launched in 2012, is on a similar trajectory, according to CrossCut data. Investments include online retailers JustFab, Ipsy and Club W and gaming start-up SuperEvil MegaCorp.
At least three other Los Angeles venture capital firms are in the midst of fundraising.