Moneta Ventures is scaling up its startup investing operations in Texas with a new Houston hire and plans to raise its biggest fund yet.
Moneta is headquartered in Sacramento, California, and has a secondary office in Austin, as well as satellite operations in Portland and Houston. It has $110 million under management from its first and second funds, which mostly includes investments in Austin and California startups. The second fund is winding down, and Moneta is no longer deploying capital from it.
A source close to the firm confirmed it is raising a $300 million third fund with a hard cap of $350 million. Moneta declined to comment on the fundraise. But Aasim Hasan, a partner at the firm, said Moneta intends to invest 30% to 50% of any future funds in Texas startups. The firm said it invests between $1 million and $20 million in pre-seed, seed and series A and B funding rounds. That means the forthcoming fund could help back 15 to 20 Texas startups.
Meanwhile, the firm has brought on Brent Kelton as a new partner. He's based in the Houston area and will make frequent trips to other Texas startup hubs, including Austin, Dallas and San Antonio. Moneta has also added Carter Bourassa as an associate in Austin.
Kelton has been part of the Houston business community for about 28 years. He's led companies including Pittsburgh-based Rapidigm, California-based Sparta Consulting and most recently New Jersey-based Ameri100, which went public in 2017. He was one of Moneta's founding limited partners, so he's been working closely with many of Moneta's team members for years.
Kelton said he and Bourassa will be active across the Texas startup ecosystem, with Bourassa making frequent trips to the Dallas-Fort Worth area, as well as Houston and San Antonio.
"Obviously, Austin still seems to be the epicenter of [Texas startups], but I think it's definitely expanding to not only Houston, but Dallas as well," Kelton said. "So I guess my somewhat uneducated take on it would be, there's a lot of opportunity, and I'm very excited to get more plugged into that environment in Houston. I think a fair amount of it will revolve around energy, which I think there's still a lot of opportunity for technology to impact the industry."
Hasan said Moneta's leaders have a distinctly different pedigree those at many of Austin's well-known firms, which often have ties to Austin Ventures, because their backgrounds tend to be at major corporations, including PricewaterhouseCoopers and Fujitsu Consulting, where both Hasan and Kelton worked.
Moneta first opened its Austin office in 2018 with plans to invest about $20 million into Austin- and Texas-based tech startups. It has invested in five Austin companies, including ConverseNow and QuickStart. The firm was among the first to open an office in Austin as a growing number of firms expanded to Central Texas in the past several years. Others include Breyer Capital, 8VC and Mainsail Partners.
Changing market dynamics
As Hasan told Inno Austin during South by Southwest in March, slumping tech stocks on Wall Street have translated to lower valuations, and investors are generally acting more cautiously as the economy sours a bit.
"The bar for investment is much higher; the valuation has to be a lot more reasonable," he said. "There's plenty of money to go around. But the craziness of last year, a company doing $800,000 in revenue raising at $150 million valuation because you know, Tiger Global is putting some money in — more power to those founders, good for them. But we did not participate in that."
Hasan said Moneta has continued with its investment thesis and hasn't made major changes to how it vets potential portfolio companies, but market dynamics are evident nationwide even though it's unclear whether we're currently in a recession.
"We also think that this recession, unlike the 2008 recession, which really didn't impact the technology sector as much, is going to impact the technology sector," he said. "We are telling our portfolio companies to ensure that they have plenty of runway to a point where if you have to sacrifice a little bit of growth to give yourself a decent amount of runway, it is a better strategy as long as you're growing at a 100% clip year over year."
