An early-stage venture capital firm headquartered in Chicago announced the close of its newest fund on Wednesday.
Hyde Park Venture Partners (HPVP) recently completed the raise of a $98 million fund. It is the fourth fund HPVP has closed since its inception in 2012 and its first since 2019, when the firm closed $100 million for Fund III. HPVP also closed a $30 million 2021 Opportunity Fund.
At roughly the same size of HPVP's previous fund, Fund IV is the optimal size for the firm, said partner Allison Lechnir.
"We find it's effective to be able to maximize the returns," she told Chicago Inno.
Over the past few years, several HPVP portfolio companies have had significant exits, and the fund was an early backer of prominent Chicago startups like ShipBob, FourKites, G2, LogicGate and Dentologie.
"A lot of our companies are software-oriented, but we are also very flexible about what we invest in," Lechnir said. "It's been an interesting and exciting time. Capital is loosening, certainly at the seed stage, and we're thrilled with the quality of founders that we're seeing."
Lechnir said that while many limited partners may be sitting on the sidelines, HPVP was fortunate to be able to complete its raise in the time frame it expected.
"Most of our existing LPs from our prior funds are participating in the new fund and we added several new LPs, including notable institutional LPs," she said.
Drop in early-stage funding in Q1
HPVP's new fund comes as a sluggish deal-making pace appears to have trickled down to nascent startups, according to PitchBook's Venture Monitor report.
Some $2.6 billion was invested at the pre-seed and seed stage nationally in the first quarter — a decline of 39% compared with Q1 2023. Overall, PitchBook researchers found a significant drop in deal count and value at the pre-seed and seed stages.
"Investors have become cautious and selective when doing deals, and the bar has gone up," the private market data firm wrote.
Lechnir said that she hasn't seen the dip in rounds and valuations at the seed stage that she has at later stages.
"I'd say there's been a bit of a bifurcation," she said. "The top tier of startups are still raising sizable seed rounds at high valuations. You especially see that in anything AI right now."
HPVP typically invests between $500,000 and $4 million for companies that are raising a total round size of $1 million to $8 million.
Lechnir expects HPVP to make around 20 investments over the life of the new fund.
