A prominent venture capital firm that last year moved its headquarters to Austin from the San Francisco Bay Area is planning to raise a massive new fund that could lead to dozens of investments in startups, including local companies.
8VC, led by Palantir co-founder and recent Austin transplant Joe Lonsdale, submitted June 14 a filing with the U.S. Securities and Exchange Commission that shows it intends to raise an $880 million venture capital fund.
The new fund is called 8VC Opportunities Fund II LP.
It's not immediately clear how long the firm might take to raise the fund or what type of investments will be made. 8VC couldn't be immediately reached, and venture firms typically decline to discuss fundraising efforts until the money is fully raised.
If fulfilled, the fund would be one of the largest in Austin's startup ecosystem, outside of private equity firm Vista Equity Partners. Having such a large fund in Austin would give local entrepreneurs additional opportunities for both early- and growth-stage investments and benefit the broader startup scene in town, said Morgan Flager, managing partner at Austin's Silverton Partners.
"Our position is a rising tide lifts all boats," he said. "For a robust ecosystem, you need to have multiple sources of capital for entrepreneurs. And, obviously, this is the next step in that direction, which I think is good for everybody."
8VC, which announced its relocation last November, has filed paperwork for several funds in recent months. The Opportunities Fund is separate from its flagship fund, which it calls 8VC Fund. That fund is now in its fourth iteration, and the company last year filed paperwork showing it could raise $640 million for 8VC Fund III. The firm this week also filed to raise $640 million for 8VC Fund IV.
The new fund filings come at a time when Austin's venture capital ecosystem is booming. And this would be one of the largest batches of money dedicated to startup investing in the city. Several other firms, including Silverton Partners, LiveOak Venture Partners, Next Coast Ventures, ATX Seed Ventures, Ecliptic Capital and Quake Capital, have raised funds of more than $100 million.
Meanwhile, several new funds have moved to Austin or opened offices here. Flager said that trend will likely continue because Austin has a strong startup scene, as well as the business-friendly environment of Texas.
"It was an interesting ecosystem before, and it's even more interesting now," he said. "It's super high growth. That's certainly one reason for people to look at Austin. But it's also in Texas, which is a favorable tax state, which I think makes it more attractive for fund managers versus California, where the other tax environment isn't as favorable."
Texas' business-friendly tax structure could become even more attractive if carried interest gets taxed as short-term capital gains and other proposed laws end up getting approval.
While a majority of 8VC investments are in companies outside of Austin, the firm has a history of making investments here.
For example, in February, it joined LiveOak Venture and Next Coast Ventures in a $4 million seed round for Austin-based e-commerce returns and resale software startup FloorFound. It led a $3.1 million seed round for Austin health tech startup DocStation in April. It was also in on a recent $23 million series B round for Hearth, a local startup that created a tool to help contractors manage finances for home repairs.
8VC, which Lonsdale founded in 2015, has also invested in Elon Musk's The Boring Company — which has been steadily but quietly growing its presence in the Austin area — as well as Deliverr, Hims, Hive, Oculus and Wish. In one of its most recent investments, 8VC joined a batch of other investors in an $83.5 million series A round for Waabi, a Toronto company focused on self-driving technology.
Meanwhile, Lonsdale’s brother, Jon Lonsdale, is co-founder of Austin property management startup Ender.
