Kli Capital Goes From Family Office To Institutional VC - TechCrunch

When Elias Davis joined Klee Capital in 2018, it was your average family office run by a former tech entrepreneur looking to opportunistically back a new fleet of founders. Kli, started by Ice.com founder dot-com darling Shmuel Gniwisch, had been cutting checks for two years when Davis arrived, and his laid-back investment strategy began to pay off.

Kli’s first investment was in Hippo Insurance’s first round — it went public in 2021 — and has since backed growth companies like Stor.ai and Nym Health. Davis joined to institutionalize the family-oriented operation and take it to the next level.

The firm has deployed two funds in 79 companies and has seen 4.6 times that capital raised to date; It’s worth noting that these are still relatively newer funds. The fund is now making the final transition to becoming an institutionalized manager: raising external capital. The firm is holding a first close on its third fund, which has raised 90% of its $50 million goal, half of which came from investors outside the family office.

Kli began raising four months ago at what analysts say will be a particularly difficult time go to the marketbut good times are part of the company’s DNA—founder Gniwisch sold and bought back Ice.com before both the dot-com bubble burst and the 2008 financial crisis.

“Timing is everything in life,” Davis told TechCrunch. “Many of the co-investors we’ve brought in deals in the past started asking if we’d ever consider taking their money.”

This new fund will continue the firm’s strategy of investing in early-stage companies in four categories that tap into the firm’s family office roots – and now the LP network – including insurance, fintech, health technology and e-commerce, an area that According to Davis, the company is particularly excited about.

The big difference in strategy compared to the firm’s previous two funds is that Kli will now be able to write bigger checks and take more concentrated positions. It aims to lead or lead pre-seed and seed rounds with checks up to $1.5 million. They hope to use 30% of the fund for follow-on investments. The firm primarily supports companies in the US and Israel, but will also invest in emerging markets.

Davis said they hope this new approach will offer them more opportunities to hold board seats, and the concentration will allow them more time to work side-by-side with their portfolio companies.

“It’s so fundamental to our thesis and the way we work that we can have an impact on the companies we work with,” said Juliette Garay, a senior fellow at Kli. “Investing in fewer companies really allows us to multiply our impact.”

While every VC touts their ability to add value beyond the check, Kli’s portfolio company founders are ready to fight for them. Micha Breakstone, founder of health technology company NeuraLight, said Davis invested in NeuraLight’s seed round and helped them structure the round after one of the investors backed out. This was before Kli was technically on the hat table. The support didn’t stop there.

“When I moved to Austin, he flew out and spent the weekend with me and my wife,” Breakstone told TechCrunch. “This is a white glove service. We are part of the team in a deeply meaningful way. I know very few investors who would fly out and help you set up a headquarters in Austin.

Breakstone said Davis also helped him with the company’s first hiring and go-to-market strategy. So when Kli decided to take on outside capital for this latest fund, it was an easy decision for Breakstone to get on board.

Davis said 50% of the founders the firm has backed have signed on to be LPs in the fund. Other backers include Nick Molnar, founder and CEO of AfterPay, and GPs at NFX and Harlem Capital.

“Frankly, a lot of these people invested without really caring what our performance was, but they knew we were a top-performing fund and they liked the idea of ​​us being hands-on,” Davis said.

The company hopes to finalize it in the next few months and definitely by the end of the year.

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