Interplay, a venture capital firm based in New York, successfully closed its third fund, securing $45 million in capital commitments. The firm specializes in Series A stage investments, directing funds towards software ventures, including B2B marketplaces and vertical software. This new fund follows the trajectory of Interplay’s previous early-stage funds, as we covered in 2022 when the firm was in the process of raising a separate vehicle.
Mark Peter Davis, Interplay’s founder and managing partner, shared insights into the firm’s focus on the marketplace industry. According to Davis, Interplay observes companies digitizing sectors that had not yet reached that stage due to economic feasibility. He highlighted a significant trend towards specialization over the last decade, with new companies competing with established horizontal platforms by offering tailored solutions specific to particular industries. This thematic shift forms the core investment thesis for the new fund.
Interplay’s uniqueness lies in a few key aspects. Firstly, limited partners and founders have consistent access to the same team of general partners—Davis, Kevin Tung, and Mike Rogers—who have collectively made investment decisions for over eight years. The firm’s investment committee has completed over 50 deals. Secondly, Interplay emphasizes an outsized value proposition relative to its check size. Thirdly, the firm leverages its studio to incubate and launch companies, expanding its reach and generating deal flow.
With the closing of the new fund, Interplay now manages $150 million in assets. Davis anticipates investing in 20 companies, allocating $1 million to $2 million per check, with some reserves for follow-on deals. Approximately 40% of the fund has already been deployed, with recent investments in construction tech companies OnSiteIQ and Roofr.
Reflecting on the fundraising landscape, Davis acknowledged the challenges posed by a tough market environment in the past year. Despite the difficulties, Interplay achieved a successful outcome, attributing it to the dedicated team’s decade-plus effort. Davis acknowledged the challenges of reaching Series A in the current market and recognized the impact of the market shift on this particular stage. However, he expressed optimism about identifying good companies with improving key performance indicators that are raising funds at reasonable valuations.
While acknowledging the attractiveness of the current market for investments, Davis emphasized Interplay’s discipline in deploying capital. The firm carefully navigated higher valuations during the investment boom, passing on opportunities reflecting market over-excitement. Davis emphasized the importance of reasonable valuations, stating that, in some cases, corrections have occurred, providing a healthier foundation for sustained success for companies.
