Uncork Capital's Andy McLoughlin on the company's new funds, succession and why next year could be a bloodbath (sorry, startups)

A few weeks ago, Uncork Capital announced that it had recently closed $400 million in capital commitments to two new funds: $200 million for a development-stage vehicle seed and another $200 million for an opportunity. -style fund that primarily aims to support startups that are already part of its portfolio.

The funds are double what Uncork raised in 2019 when it last announced two new funds, and late last week managing partner Andy McLoughlin told us the firm would invest probably 70% of that money in B2B software startups. While some of Uncork's most high-profile wins have come from consumer brands including Fitbit, Postmates and Poshmark, the 19-year-old outfit has stakes in companies including 401(k) service provider Human Interest and the software development company LaunchDarkly, and it's more dazzled these days, for example, by developer tools, infrastructure opportunities, vertical industry software, and traditional enterprise software.

“We think there are a lot of really exciting opportunities in consumer markets and marketplaces and in fintech, but [B2B software] is definitely the bread and butter of what we do today” , said McLoughlin.

We were also curious about the changing makeup of Uncork and what McLoughlin sees as the broader market, where the dark headlines of the tech world don't align as well with the many startups that continue to grow. announce funding. Catching McLoughlin at Uncork's current office in San Francisco — he'll be moving to a larger location in the city later this year — he explained how the market is changing in real time. This conversation follows.

TC: Congratulations on your news holdings. You announced them on Medium. Meanwhile, [Uncork founder Jeff Clavier]'s peers are starting to get into other things. I wonder if we are seeing a succession plan being put in place.

AM: That was always the ultimate goal. Jeff wanted to build something that would be bigger than him and outlast him and that's the beginning of what we're building right now. But to this day Jeff is still fully involved as a GP. He's not going anywhere. He still has his great French opinions.

Most opportunity funds are restricted to portfolio companies. Is that the case here too, or will you be shopping outside?

In fact, for the first time, we've given ourselves the leeway to look elsewhere and have set aside up to 20% of the fund to research net new names. It's entirely possible that 100% of it will go into the existing wallet. When we look at the companies and the opportunities there, we could probably invest that $200 million two or three times just in the portfolio. But if it's potentially a deal that I did as an Angel before I joined the team or a deal that Tripp or Susan led to Series A (before joining Uncork) and it's going to raise a Series D, we wanted to give ourselves the opportunity to take a look at it without having to break the rules and go to [our sponsors] for approval.

Is there less competition for late-stage deals than early-stage deals? Where do you see more investors showing up and trying to write term sheets?

Oh, it's really busy at the seed. I think in the long term there will be a seed contraction and a lot of seed companies will disappear because fundraising is much more difficult. But for now, there is still a lot of money lying around. And to be clear, we don't write small pre-seed crowdfunding bets and we don't get involved in Series A or Series B with our first check. What we do is we lead or co-lead selection rounds.

As for Series A, it's a bit like the haves and the have-nots. If you build a super hot generative AI business, you're going to have money thrown at you. If it's something that may be out of fashion all of a sudden, it's much more difficult.

Many deals are done and not announced, but it seems Uncork has been quiet on some deals announced earlier this year. Have you invested more quietly or become more cautious in this market?

There was definitely a time when everyone was in price discovery mode, but I feel like it was maybe last March to last September. We were certainly calm then. I don't think we wrote any seed checks during that time, and it was the longest time without making any new investment. But really, from September, we were very active. What we tend to find is that when we...