Kevin Hartz’s early-stage venture firm, A* Capital, has closed its third fund with $450 million in commitments, the firm announced Tuesday. The new fund, Fund III, more than doubles the size of its $300 million debut fund in 2021 and represents a significant step up from the $315 million it raised for Fund II in 2024.
A generalist approach with a focus on emerging tech
A* Capital takes a generalist investment strategy, backing companies across a wide range of sectors, including AI applications, fintech, healthcare, and security. With Fund III, the firm plans to write checks between $3 million and $5 million per startup, aiming to back at least 30 companies over the next two to three years.
Also read: Altman testifies Musk once proposed handing OpenAI to his children during control dispute
The firm’s limited partners include a mix of nonprofits, foundations, and endowments. Carnegie Mellon University is among the publicly named backers, signaling institutional confidence in the firm’s strategy.
A track record of backing young founders
Founded in 2020 by Kevin Hartz and Bennet Siegel, A* Capital has drawn attention for its willingness to back unusually young founders. Hartz told TechCrunch last fall that nearly 20% of the firm’s current portfolio involves teenage entrepreneurs, a practice that has become more common in venture capital but still carries higher risk and scrutiny.
Also read: Former Tesla Executive Drew Baglino Quietly Launches Heat Pump Startup Sadi Thermal Machines
Among its notable investments are fintech company Ramp and AI firm Mercor, both of which have seen significant growth. Hartz, a serial entrepreneur, co-founded Xoom, the international money-transfer service acquired by PayPal for $1.1 billion in 2015, and Eventbrite, the event-ticketing platform that went public in 2018.
Why this matters for the startup ecosystem
The close of Fund III comes at a time when early-stage venture funding has shown signs of recovery after a prolonged downturn. A* Capital’s ability to raise a larger fund suggests strong investor appetite for disciplined, generalist funds that can identify breakout companies before they hit mainstream radar. The firm’s focus on young founders also underscores a broader industry trend of betting on precocious talent, though it remains to be seen how many of those bets will pay off over the long term.
Conclusion
With $450 million in fresh capital, A* Capital is positioned to continue its strategy of making concentrated, early-stage bets across a range of technology sectors. The firm’s willingness to back teenage founders and its generalist approach set it apart in a venture space often dominated by specialized funds. As it deploys Fund III over the next two to three years, the startup community will be watching closely to see which of its bets become the next breakout success.
FAQs
Q1: What is the size of A* Capital’s new fund?
A* Capital closed its third fund, Fund III, with $450 million in commitments.
Q2: How does A* Capital invest?
The firm takes a generalist approach, investing in early-stage companies across AI, fintech, healthcare, and security. It typically writes checks between $3 million and $5 million per startup.
Q3: Who are the limited partners in Fund III?
The limited partners include nonprofits, foundations, and endowments, with Carnegie Mellon University publicly named as one of the backers.
