Runa Capital has closed its third investment fund with $157 million to back startups in deep tech areas such as artificial intelligence and quantum computing.
The firm said Runa Capital Fund III surpassed its target of $135 million. The new capital will allow the company to continue its strategy of making investments that range between $1 million and $10 million in early-stage companies.
In placing greater emphasis on AI, the firm has joined the larger surge the sector has been attracting. AI startups set new U.S. and global funding records in 2019, and had been on a strong pace to start 2020 before the coronavirus hit.
Over the past decade, the company has sought out emerging technologies and bet on companies before they had demonstrated much in the way of customer traction. As formerly cutting-edge technologies such as cloud and open source software have gone mainstream, the firm is now scouting for new transformative technologies that are just over the horizon.
“The core thesis around the firm continues to be the same,” managing partner Andrey Bliznyuk said. “You’re effectively investing in this ongoing digital transformation which has a number of angles. For us, that means this deep technical infrastructure.”
Founded in 2010, the firm originally intended to focus on European startups. But with its second fund in 2015, the firm expanded to target U.S. companies as well. The firm’s three funds now total $427 million and have been used to back 70 companies, including Nginx, Wallarm, ID Quantique, and MariaDB.
Despite the growing VC attention on AI, Runa managing partner Dmitry Chikhachev said, the firm believes it can still maintain an investment edge in AI when competing for deals because it’s willing to back a company much earlier. The firm prides itself on having enough in-house knowledge to validate algorithms under development to assess their potential impact, he said.
“We focus on investing early and we’re very happy taking the technical risk,” he said. “We have the ability to do our diligence in the early stages without waiting for the company to scale to millions and tens of millions of revenue.”
The firm has continued to make investments during the pandemic and believes the dramatic shifts in work and personal habits are accelerating the broader digital transformation the firm has been predicting. As the world becomes more digital, more data is generated, which gives rise to even more opportunities for startups that can help secure and make sense of that information.
“Businesses need more and more information,” Chikhachev said. “I would anticipate that in post-COVID era, people will do more business remotely. That requires even more information than doing business face to face. And the mass adoption of the remote workplace means additional requirements for security. We will see some evolution in this area and others like online education and collaboration.”