Venture capital firm Proof.VC has been on a roll in 2020.
The Reston company's portfolio has seen 3D-printing startup Desktop Metal and Inc. online gaming platform Skill Inc. both announce their intentions to go public, as well as the earlier IPO of mattress company Casper Sleep Inc. This year has also included two separate acquisitions, a $400 million cash-and-equity injection into Frontier Car Group, which valued the firm at $700 billion, and streaming service Tubi Inc., which was acquired by Fox Corp. earlier in the year for $440 million.
And since the Covid-19 pandemic hit in full force, Proof has invested in eight new companies, including male-focused digital clinic Roman Health Ventures Inc., online-only bank Varo Money Inc., cyber firm Dragos Inc. and online education and learning platform MasterClass (officially named Yanka Industries Inc.), among others. Six of its portfolio companies saw marked-up valuations during Covid as well, according to Proof co-founder and Managing Partner John Backus.
He stressed this was just proof that their model — which employs pro-rata investing rights of other firms to get in on big-dollar transactions — is a successful one. That means Proof can create co-investment vehicles with its limited partners to bring in even larger sums to potential deals, and those partners have invested $3.50 for every $1 Proof has invested, Backus added.
“We are trying to show that venture capital doesn’t have to be an asset class that relies on one or two companies to get a great return,” Backus said. “It can have a couple of home runs and doubles and triples and maybe a grand slam.“
The firm has grown significantly since it was founded in 2015, swelling to $240 million in assets under management, with 38 portfolio companies and 50 financing rounds, with 18 companies having seen an uptick in value, versus just one the company had to write off and three the company had to mark down, Backus said.
Proof also boasts investments in 11 unicorns — private companies valued at $1 billion or more — including including Zipline International Inc., a medical delivery drone startup that recently inked a deal with Walmart Inc. to start offering medical supply delivery near its Arkansas headquarters, as well as construction technology company EquipmentShare.com Inc. and equity management startup Carta Inc. (formerly called eShares Inc.).
And in January, I reported the firm had raised nearly $70 million for its second fund, more than double the $34.5 million it ultimately raised for its first fund — although Backus declined to comment on any fundraising efforts.
The success it saw in 2020 is on top of another high-profile exit in 2019, this time in meat substitute company Beyond Meat Inc. Proof invested $30 million across two rounds at $10.94 per share in late 2017 and $24.23 per share in late 2018 through the company’s series G and H rounds, respectively, before the company went public in May 2019, having one of the best performances in two decades. It now trades around $155.50 per share.
Proof has also seen a tailwind from the sudden rise and proliferation of so-called "special purpose acquisition vehicles," essentially publicly traded companies consisting of just cash that "merge" with private companies — taking them public in a way that avoids the sometimes lengthier and costly traditional IPO. Both Skillz and Desktop Metal are going public via this route, and Backus expects that trend will continue as investors look for additional opportunities.
"I would be shocked if we didn’t have some other big exits in the next year," Backus said, stressing the Proof portfolio has a large number of high-value companies. "I’ve got to believe there are a lot of SPACs looking at those companies."
Proof was founded by Backus and Thanasis Delistathis — both were co-founders of Reston-based New Atlantic Ventures LLC — and John Burke, founder of True Ventures. The firm also made new hires in 2019, bringing on former Goldman Sachs associate and entrepreneur Jennifer Schretter as a partner. In addition, Brian Lampe, a former George Washington University senior business analyst, signed on as the firm's director of tax and finance.
