Interplay, a venture capital firm based in New York, has successfully closed its third fund, securing $45 million in capital commitments. Specializing in Series A stage investments, the firm channels funds into software ventures, focusing on B2B marketplaces and vertical software. This latest fund builds upon the success of Interplay’s previous early-stage funds, and it follows their separate fundraising efforts in 2022.
Mark Peter Davis, Interplay’s founder and managing partner, highlighted the firm’s interest in the marketplace sector, observing companies digitizing previously overlooked areas due to changing economic dynamics. Davis emphasized a notable industry trend: a shift toward specialization over the past decade, with emerging companies competing against established horizontal platforms by offering tailored solutions for specific industries.
Interplay distinguishes itself in several ways. Notably, the same team of general partners, including Davis, Kevin Tung, and Mike Rogers, has been making investment decisions across all fund vintages for over eight years. The firm’s investment committee has executed over 50 deals. Another distinctive feature is its outsized value proposition relative to its check size. Additionally, Interplay’s studio facilitates the incubation and launch of new companies, expanding its reach and deal flow.
With the completion of Fund III, Interplay now manages $150 million in assets. Davis anticipates investing in 20 companies, allocating $1 million to $2 million per check, with reserved funds for follow-on deals. Approximately 40% of the fund has already been deployed, with recent investments in construction tech companies OnSiteIQ and Roofr.
Despite a challenging fundraising landscape in the current market, Interplay remains proud of its successful outcome. Davis acknowledged the difficulty of reaching Series A, attributing the challenge to market shifts. However, he expressed optimism about the quality of companies with improving key performance indicators securing funding at reasonable valuations.
In navigating the current investment landscape, Interplay remains disciplined, cautious of inflated valuations resulting from the recent investment boom. Davis emphasized the attractiveness of the current market, where valuations have returned to what the firm considers reasonable levels. While acknowledging potential challenges for entrepreneurs when valuations are healthy and fair, Interplay believes these conditions set companies up for sustained success.
