Crossbeam Venture Partners Raises $70 Million For Fund II In Three Weeks

Crossbeam Venture Partners launched its debut $20 million fund at what many would have considered the worst possible time — March 2020. The early-stage firm was founded by Ali Hamed, 2013 Forbes Under 30 alumnus Savneet Singh, Chris Ryan and Raj Date. Hamed and Singh had previously been investing across the credit stack at CoVenture, and were encouraged by their peers and underlying founders to institutionalize the angel investing that the firm had been doing informally on the side. While other emerging managers floundered during the first few months of the pandemic, Crossbeam found breakout success. Of the 26 investments the firm made out of Fund I, nine already have more than $20 million in ARR — five have more than $100 million — and are profitable. The firm has also already experienced an exit.  

“Fund Is are always really hard and scary because it really takes a long time to see if things are working,” Hamed tells Forbes. “But we were in the right place at the right time and we did a good job of backing companies that hit product market fit really fast.” Crossbeam was able to ride its early success to quickly come back to market for Fund II and raise the entire capital pool in three weeks.  

The New York-based firm raised $70 million for Fund II in its rapid-fire raise, as originally reported in Midas Touch newsletter. The fund was backed by investors including investment firm Eldridge, equity ownership platform Carta, asset manager Moelis Asset Management, financial services company Group 1001, and startup backer Social Leverage, among others. While many firms typically tap high net-worth individuals and family offices for their initial funds to avoid the minimum investment sizes associated with the bigger LPs, Hamed says it was really important for Crossbeam to be institutionally-backed from the start. “All the partners in the firm come from fairly institutional backgrounds, we didn’t want to raise Fund I and then have to find all new investors for Fund II,” he says. “I think it was really more important for us to have institutional backers than to tap shallower wells.”

Crossbeam targets pre-seed through Series A opportunities in sectors including platform economics, fintech, new asset classes and new forms of media, among others. Coming from a debt background, Hamed says that the firm likes to go for capital intensive but equity efficient businesses. These startups can deter some investors due to their bulky balance sheets, but offer a strong potential upside, he points out. This strategy led the firm to get incredibly active in the Amazon third-party aggregate seller space — a rapidly scaling sector that Hamed thinks could create 200 to 400 unicorn companies down the line. The firm ended up raising a sidecar fund to avoid over indexing Fund I in that sector but plans to continue investing in the space from Fund II Hamed says. “We have established ourselves as one of the most active investors in the sector and we have developed a lot of domain expertise,” he says. “ I think that’s allowed us to have a really strong point of view.” 

Some of the firm’s portfolio companies include Amazon third-party seller aggregator Acquco, which is based in New York and has raised $160 million, Nelo, a Mexico City-based buy now pay later platform aimed at Latin America that has raised $23 million, and Miami-based blockchain infrastructure company Quicknode, which has raised $40.8 million. 

While Crossbeam  is thematically driven, Hamed says his team is careful to follow where the market points in a quest to not pigeon hole themselves by their own thesis. He gave the example of Spotter, a startup that provides financing to creators. They were initially attracted to it due to its capital intensive yet efficient structure.  Once invested, they were  tapped into the creator economy and from there, how web3 will monetize which has helped them expand into that category, too. ”We try to be theme-driven and thematic so much that it helps us, not hurts us,” he says.