Two Sigma Ventures, the venture capital arm of quantitative investment firm Two Sigma, has raised $288 million for a new venture capital fund that will invest in data-driven startups, according to a person familiar with the deal.
This is Two Sigma’s first venture capital fund raised primarily from external investors, according to the person. The investors include endowments, foundations, and pension funds, among others. The fund raise exceeded its initial target.
Two Sigma’s venture capital business is totally separate from the firm’s better-known, computer-driven hedge funds.
Several of those funds had a rough time in 2019. The firm’s Absolute Return Enhanced fund gained just 2.5 percent for the year, its Spectrum fund rose only 1.1 percent, and its Risk Premia Enhanced fund lost 2.25 percent, according to a person familiar with the performance.
The new venture fund, Two Sigma Ventures III, is focusing on early-stage, data-driven startups across a number of industries, said the person familiar with the launch.
Two Sigma Ventures was created in 2012. It invests in high-growth technology companies that are positioned to take advantage of data science and advanced engineering, according to the firm’s description. It is led by four partners: Colin Beirne, who helped launch the business; Dan Abelon; Lindsey Gray; and Villi Iltchev.
Two Sigma Ventures has invested in more than 70 companies across enterprise and consumer software, AI-powered applications, and data-driven biotech and healthcare, among other sectors, according to the company. It made several investments in the second half of 2019.
In October, for example, it led the $10 million Series A financing of Firedome, an endpoint cybersecurity company, according to an announcement at the time. In June Two Sigma led the $12 million Series A financing of NewtonX, which described itself in a press release as “the first real-time expert search engine.”
Last year at least four private companies Two Sigma Ventures had previously invested in were acquired by another company. One was CoverWallet, a digital insurance platform for small and medium-sized businesses. Aon agreed to acquire the company in November.
In 2015 Two Sigma co-led CoverWallet’s seed round. CoverWallet operated out of Two Sigma’s co-working space in New York City throughout 2016 and 2017, Two Sigma pointed out in an announcement congratulating CoverWallet on its deal with Aon.
Last August littleBits Electronics, which provides a hands-on learning system of electronic building blocks that allows students to create using technology, agreed to be acquired by Sphero, a robotics and educational STEAM company (STEAM stands for science, technology, engineering, and math). Two Sigma Ventures participated in at least two earlier financings of littleBits.
Last May another Two Sigma Ventures investment, a company called Placed, was acquired by Foursquare. Both companies are able to track foot traffic to stores from a digital campaign or ad, according to crunchbase.com. In 2014 Two Sigma Ventures led the $10 million Series B financing for Placed.
Also last year, AppFolio acquired Dynasty, a provider of advanced artificial intelligence for the real estate market. Two Sigma previously invested in the seed round of Dynasty, according to crunchbase.com.