FJ Labs closes $260M third fund

By Connie Loizos reproduced from TechCrunch

Fabrice Grinda says he never intended to run a venture firm. He just really (really) enjoyed angel investing. In fact, by late 2013, when he was on the verge of selling the global classifieds marketplace OLX — his third business — he says he had already written checks to more than 150 startups with his longtime friend, serial entrepreneur Jose Marin. “We’d been working together forever. It was really a family office that was angel investing at a massive scale,” Grinda recalls.

Noting that flurry of checks, potential LPs, including strategic investors, family offices, and founders began to express an interest in investing with them.  By 2016, a Norwegian telecom company Telenor offered to provide exclusive funding to the duo, giving them $50 million to invest toward that end.

Fast forward, and their outfit, FJ Labs, has evolved from a two-man outfit to a sprawling firm with 34 employees, including eight investors and four “full-blown partners.” It began to grow in earnest in 2018, when LPs committed to invest $175 million with the outfit. Now, Grinda is announcing that FJ Labs has garnered $260 million in capital commitments across a pre-seed fund and an opportunity-style “Series B and beyond” fund, with backing from family offices, institutional investors, and a wide array of founders, including of LinkedIn, PayPal, Supercell, Transferwise, MongoDB and Wayfair.

Indeed, over time, FJ Labs has come to look less like a “lab” and more like a traditional venture firm, though Grinda rejects the comparison.

“We are a venture fund,” he says, but one that does “angel investing at venture scale,” he insists. “We don’t lead. We don’t price. We don’t take board seats. We decide after two one-hour meetings over the course of a week whether we’ll invest or not because we have extraordinary pattern recognition that allows us to decide extremely quickly.”

It sounds high risk, yet FJ Labs has results to show for its approach. Among its many investments, for example, it has bet early on outfits that have ballooned over time, including Alibaba, Coupang, Flexport, and Delivery Hero.

Focusing on marketplaces and network effects businesses — which Grinda knows well — certainly helps. So does the portfolio that FJ Labs has built over time, which includes 900 active investments as part of what Grinda describes as the “world’s largest marketplace portfolio.” (Pitchbook data supports that FJ Labs was the most active venture outfit globally in the third quarter of last year.)

It all builds on itself like its own kind of flywheel, Grinda suggests, pointing to the firm’s deal flow to underscore the point. Through FJ Labs’s 900 companies, it has connections to roughly 2,000 founders, and they “come back for their next companies, and send us their friends and employees,” says Grinda.

Similarly, because FJ Labs is a “source of differentiated deal flow for the VCs, they invite us to their deals,” he says.

FJ Labs will get bigger still if everything goes as planned. Grinda says that the “idea is to create an institution that is going to be a legacy and “be around “for decades.”

It’s hard to imagine that Grinda, who is famously itinerant, could stick with venture capital so long. But he says to believe it. Right now there are three problems FJ Labs would like to help address, while also making money, and none of them are minor. The first is inequality of opportunity, the second is climate change, and the third is the “mental and physical well-being crisis.”

One related bet is on User Interviews, a seven-year-old Brooklyn startup that helps user experience researchers source study participants across different demographics and behavioral criteria. (TechCrunch covered its newest funding here.)

Other startups don’t easily fit into one of those three buckets, including Gravitics, a one-year-old Seattle startup that is developing living and work modules for space travel and that announced a $20 million round last year. (We covered that round, too.)

Apparently, if there is a web3 angle, that also works. Just yesterday, a year-old London-based blockchain infrastructure company said it has $8.5 million in seed funding to build private sharding capabilities for blockchain networks, with participation from FJ Labs.

A lot of the firm’s bets boil down to what FJ Labs’s perspective on what the future of humanity looks like, offers Grinda. “We have a perspective on the future of food, automobiles, real estate, work . . . we’re trying to solve the world’s problems; we’re also thesis driven.”

You can find out more about what FJ Labs is funding and why from a story we published last month about the outfit, before FJ Labs closed its newest funds.