- Alumni Ventures is now one of the most active VC firms in the US, according to PitchBook data.
- It’s backed by graduates of elite universities and uses that network to get into competitive rounds.
- Insider spoke with its chief investment officer about its distinct strategy of not leading rounds.
Mark Edwards remembers the day, nearly a decade ago, when his friend Mike Collins pitched him on the idea of a venture fund with a unique structure.
The pitch: They’d pool together money from alumni of specific universities, starting with Dartmouth, Collins’ alma mater. Edwards, who graduated from Dartmouth’s Tuck School of Business, agreed to invest and advise on its strategy.
The fund became the cornerstone of the venture capital firm Alumni Ventures, which now manages about $1.2 billion in assets across more than 40 funds. It’s among the most active VC firms in the United States by deal count, according to PitchBook data, ranking No. 1 in 2022 for seed-stage activity.
Among the companies it backed last year are the cloud-storage company Wasabi Technologies, valued at $1.1 billion, the auto-manafucturing-technology company Divergent, valued at more than $1 billion, and the abortion-pill provider Hey Jane.
Edwards, an early investor in Alumni Ventures’ first fund, is now the firm’s chief investment officer, leading a team of about 50 investors across the US. He took over the role in May from Anton Simunovic, who led Alumni’s investments for four years and landed on Insider’s Seed 100 list of the top early-stage investors. Simunovic is now an investor at Venture Guides, which focuses on software infrastructure.
Edwards, who previously worked in private equity, seeks to continue the firm’s strategy of getting into competitive deals by positioning itself as a partner to blue-chip firms such as Andreessen Horowitz and Lightspeed Venture Partners. Unlike many other firms, which seek to lead rounds as they amass enough assets to write larger checks, Alumni Ventures is content to follow on.
“We have carved out a role as a coinvestor of choice,” Edwards said. “We’re not in the marketplace trying to compete head to head with other established investors.”
The firm invests across all segments of technology. Like many others these days, Alumni has a keen interest in artificial intelligence, especially in potential applications to specialties such as drug discovery, Andy Ervin, Alumni’s deputy chief investment officer, told Insider.
Firms often seek to lead rounds in order to set the terms of the deals and to exert greater control over their deal pipeline. But Alumni Ventures’ network of limited partners and community members — graduates of elite US universities such as MIT, Stanford, and Yale — grants it a competitive advantage that makes leading rounds less necessary, Edwards told Insider.
“The company is getting the benefit of a friendly, aligned community of people,” he said. “At its core, it’s enlightened self-interest.”
Alumni draws from that network, full of successful alumni well-placed in the worlds of business and tech, to offer domain expertise to its portfolio companies. In that way, the network plays a similar role to the platform staff of larger VC firms such as Andreessen Horowitz and Insight Partners. The firm isn’t planning to expand the number of alumni-affiliated funds it runs, Edwards said, but it is continually expanding its network, which includes people who aren’t connected to specific schools.
The firm’s strategy of being a preferred partner to VCs who lead rounds also gives it deeper visibility into fundraising conditions and their impact on deal terms — and to pass that intel onto its portfolio companies, Andy Ervin, Alumni’s deputy chief investment officer, told Insider. The firm is also using that data set to hone its approach to sourcing deals, especially as investors it’s worked with in the past move to other firms or start their own.
In 2022, Alumni participated in 273 venture deals, from seed to growth-stage, according to PitchBook data. The firm has more than 1,100 portfolio companies, Ervin told Insider. Those startups include Algorand, Carta, Coda, and GrubMarket.
“With the number of deals that we see, that data set is very large,” he said. “We’re really thinking about how to leverage all that data.”