Section 32, a venture firm founded by former Google Ventures CEO Bill Maris, has successfully secured $525 million in capital commitments for its fifth fund, with TechCrunch being the first to report this development.
This fresh capital infusion will be divided, with a portion allocated for early-stage investments, while the remainder will be set aside for follow-on opportunities. The firm, headquartered in San Diego, California, now boasts assets under management totaling $2.3 billion and has a history of notable exits over its six-year existence. Some of its investments have matured into publicly-traded companies, including Crowdstrike (2019 IPO), Coinbase (2021 IPO), and Relay Therapeutics (2020 IPO).
To date, Section 32 has supported approximately 100 startups spanning various software-driven sectors such as infrastructure, cybersecurity, gaming, brand experiences, enterprise, quantum and precision medicine, and computational biology. The firm has even ventured into unconventional territories like the electric boat startup, Arc. While the majority of its portfolio consists of U.S.-based companies, it has also made some international investments.
Among its highly valued portfolio companies are Cohere, which is developing an AI model ecosystem for enterprises; Scale AI, previously valued at $3.5 billion; and HR tech firm Gusto, which reported revenue exceeding $500 million in its latest fiscal year and was valued at nearly $10 billion in 2022.
Bill Maris founded Section 32 in 2017 following his leadership of Alphabet’s venture arm, Google Ventures (GV). According to CEO and Managing Partner Andy Harrison, the firm’s primary focus is on investing in software-driven businesses in the technology and healthcare sectors that aim to enhance the human condition.
Section 32 raised its fourth fund in 2021, initially targeting $400 million to $500 million but ultimately raising $740 million due to market conditions. This time, they have slightly reduced the fund size while staying close to the upper limit due to the current market environment. Although they have fully allocated the funds from their fourth fund, not all of the capital has been deployed yet.
Harrison emphasized that Section 32 has a broad approach to both investment stages and technology areas, with a focus on Series A and B investments and some later-stage investing as well.
Typically, the firm makes 20-25 investments per fund, committing $5 million to $10 million in the initial round and reserving substantial funds for subsequent support.
Given their history and relationships, Section 32 benefits from significant deal flow related to Google and Alphabet. Many of their investments can be traced back to Alphabet, including Cohere and Inceptive, co-founded by individuals involved in the 2017 Transformer paper, and Exai Bio and BigHat Biosciences, co-founded by former leaders of Google Genomics.
Section 32 recognizes the importance of AI in the software landscape but remains cautious about investing in this heavily-hyped sector. They focus on the practical application of AI in areas such as cybersecurity, enterprise solutions, and computational biology, where they believe cloud giants like Google and Microsoft may not cater to specific verticals.
The firm has already made five to six new investments from its latest fund and has announced the promotion of Wesley Tillu from senior principal to partner. Tillu joined Section 32 in 2021 from In-Q-Tel, the venture capital arm of the CIA and U.S. intelligence community.
