Overwater Ventures raises $20M debut VC fund

Overwater Ventures, started by a veteran from Andreessen Horowitz, announced it raised $20 million for its debut venture capital fund yesterday.

Based on last night’s report from Pitchbook and the National Venture Capital Association, this was actually an anomaly. In the midst of the economic downturn, limited partners are putting less money into venture capital funds. It’s also an anomaly in that this first fund was started by a woman, Kristina Simmons, who previously worked at A16z and Khosla Ventures. Women founders are rare in tech, and even more rare in the venture capital industry.

Her focus as the sole general partner of the new fund will be to support founders commercializing science and technology for human and planet health. She has already made 10 investments from the fund.

Simmons was a former partner at Andreessen Horowitz (a16z) and former chief of staff and investor at Khosla Ventures. Overwater Ventures is making strategic investments in early-stage companies pushing the boundaries of biology, healthcare, AI, robotics, climate tech and the future of food.

“We’re all about helping founders to turn breakthrough technology and science into brands that people love and help them to scale their businesses,” she said. “I plan to build a firm that the next generation of entrepreneurs want to take capital from.”

It’s not the greatest time to be asking for money, whether you’re a startup entrepreneur or a VC.

“Across the board with every venture fund that I’ve spoken with, it’s definitely a challenging environment. It’s a hard environment to fundraise,” even for VCs, Simmons said in an interview with VentureBeat.

During 2020 and 2021, VCs were deploying capital quickly at ever-higher valuations. Funds went back to limited partners to raise even more dry powder. Still, Simmons went for it for the thrill of being an entrepreneur and investor at the same time. She also saw more VC partners doing the same to create their own investing approaches and their own new brands.

While raising funding, Simmons found that many large endowments and public companies themselves were scaling back on being limited partners for venture funds. But she scored success in the funding for her fund with well-known family offices and more.

“I’m super happy with our number for a first-time fund,” Simmons said. “They are strong LPs and that’s what I care about. It’s less about the dollar number and more around making sure that the LPs were aligned with my vision and were super high quality.”

Still, she said she would focus on being capital efficient and she believes it’s a great time to start a new company and to fund startups. She believes AI will help companies become even more efficient as well.

She said her own style means that Overwater takes a holistic approach with its portfolio companies.

According to KPMG, just 20% of founders are satisfied with their mental health and wellness. With the understanding that better humans make better companies, Overwater will offer both business and personal support including programs focused on mental and physical well-being to help founders reach their leadership potential, believing this is key to entrepreneurs’ success and the work they bring to the world.

At Lululemon Athleta, Simmons helped launch the brand’s ecommerce, social, and digital platforms, and eventually, co-founded the company’s Emerging Products & Concepts efforts. As a partner at Andreessen Horowitz, she connected portfolio companies to Fortune 500 brands, helping them scale in new ways. As an investment team partner and chief of staff at Khosla Ventures, she invested in early stage companies and served on the boards of startups like Alivecor, Overture Life and Ginger.

Overwater’s investments

Overwater has invested in companies such as Overstory, which successfully reduced power outages and wildfires as it has analyzed over 500 million hectares of land. Overwater also invested in Conceive, named one of Fast Company’s Most Innovative Companies, which has tech that helps women get pregnant.

Gameto has licensed technology from Harvard’s Wyss Institute to grow human ovaries and has promising results from pre-clinical studies for its fertility therapy, Fertilo. Zero Acre Farms launched a cooking oil made by fermentation to reduce deforestation and improve human health and recently announced an investment from Chipotle.

Prose Foods is building a protein discovery platform for healthier and more sustainable foods. Overture Life is revolutionizing egg freezing and IVF, and recently achieved the first baby born with its technology.

The larger venture trends

The fundraising momentum of 2021 had all but dried up by the end of the first quarter of 2023, leaving a meager $11.7 billion closed across 99 funds, the report said. Now that we are seven quarters into declines, I wonder if it just took a while for the faucet to turn off.

The NVCA and Pitchbook report said that the foreshadowed decline in dry powder, lack of liquidity via public markets, and continued equity capital crunch have tested investors’ confidence in VC and stifled new commitments to fund managers.

Capital raised by emerging managers declined in the first quarter, and Q1 saw first-time fund
managers close a nominal $381.6 million in funding across 16 first-time funds. That was far behind 2022’s pace that saw 181 first-time funds closed through the end of the year.

There have been days when a new venture capital fund starting up in Silicon Valley wasn’t news. So much funding has poured into venture funds that there was $289 billion in uninvested capital sitting in funds at the end of 2022, according to the report.

Simmons said that she will have dry powder to invest in existing companies if needed. But she wonders if larger funds will focus on such “firefighting” with existing companies.

She is hopeful that it’s a good time to start a company and come out with breakthrough technology. She noted that “emerging managers” have been where the highest-performing funds are.

Originally appeared on: TheSpuzz