When Ironspring Ventures launched in 2020 to back startups in industrial sectors like construction and manufacturing, it was one of very few early-stage venture firms paying attention to these capital-intensive sectors. Now, the firm is doubling down on its initial commitment.
The Austin, Texas-based firm raised $100 million for its second fund, focusing exclusively on industrial startups. This marks a significant increase from the firm’s $61 million debut fund that closed in 2021. The latest raise has enabled Ironspring to expand its team by hiring its first principal, Colleen Konetzke, and a head of platform, Stephanie Volk. With Fund II, the firm plans to invest in 20 startups, supporting four to five companies annually.
The Gap in Venture Capital for Industrial Markets
“What we saw back then was as true as we see today,” Ironspring co-founder and general partner, Ty Findley, told TechCrunch. “There is a big gap in the venture industry that deeply studies and has genuine GP market fit with these industrial markets and can help them navigate a pretty challenging go-to-market process. When you really roll these industries up, they are over half of the U.S. GDP. My strong opinion is, we as a country simply cannot afford to let the U.S. get left behind.”
Findley refers to industries including manufacturing, construction, transportation, and energy. The firm backed 16 companies in its first fund, among them Solvento, a payments infrastructure startup for trucking companies in Mexico; OneRail, a last-mile logistics startup; and Prokeep, a communications platform for distributors.
Investment Strategy and Fund Allocation
Ironspring has already backed six companies with Fund II and has deployed about a quarter of the fund. Findley notes that the main difference between Fund I and Fund II is the additional capital, which allows the firm to write larger checks, ranging from $2 million to $4 million. This financial capability helps Ironspring stay competitive as seed rounds have grown larger.
| Fund | Amount Raised | Number of Companies Backed | Check Size |
|---|---|---|---|
| Fund I | $61 million | 16 | Smaller initial checks |
| Fund II | $100 million | 20 (planned) | $2 million to $4 million |
Findley expresses enthusiasm for having a fresh pool of capital to invest now, given the macroeconomic tailwinds affecting the industries they focus on. Supply chain constraints that began during COVID-19 persist, and new challenges have emerged due to conflicts in the Middle East. Policies like the Inflation Reduction Act and CHIPS and Science Act are also bringing attention and government funding to these sectors. Additionally, advancements in AI could significantly impact these industries.
“We are seeing more top-tier tech and innovation talent flood into these industries,” Findley said. “Whether they are recirculating from recent tech unicorns, or just other tech talent that simply wants to make a big impact on their career that’s not based on photo sharing or adtech or chasing the next crypto coin, that is what the macro trends are.”
Case Study: GoodShip
GoodShip, a freight orchestration and procurement platform started by former operators at Convoy, exemplifies the type of company Ironspring is keen to support. Ironspring co-led the firm’s 2023 seed round alongside Chicago Ventures and re-upped at the Series A earlier this year.
While Ironspring was one of the first early-stage firms focused on industrial startups, the space has become more crowded as deep-pocketed firms like Andreessen Horowitz, General Catalyst, and Bessemer have entered. However, Findley views the entrance of these name-brand firms not as competition but as a positive development.
“I’m a believer that the more capital flowing into these industries, the better,” Findley said. “Those are great allies. We wouldn’t be able to do our job at the seed stage if we didn’t have great downstream growth.”
Findley emphasizes the collaborative nature required for these types of startups to grow successfully, appreciating the different perspectives other firms can bring to their portfolio companies. Ironspring even invites these other firms onto its podcast, Heavy Hitters, to create a valuable resource for their portfolio companies and beyond. Notable VCs such as Katherine Boyle, a general partner at a16z; Aaron Jacobson, a partner at NEA; and Lior Susan, the CEO and founder of Eclipse Ventures, have been featured.
Ironspring’s Unique Approach and Local Advantage
Findley believes Ironspring stands out among the growing competition due to its sector expertise and unique LP base. The firm’s LP base includes operators in the industries they invest in, such as owners of construction companies and manufacturing plants. These LPs can provide guidance and advice to companies and serve as potential customers.
Being based in Austin is also a significant asset for Ironspring, according to Findley. Contrary to the perception that Austin is merely an emerging tech hub, he points out that many of the industries Ironspring focuses on have deep roots in the area. With Tesla moving its headquarters to Austin and the recent approval of $6.4 billion from the infrastructure act for Samsung to build semiconductor chips there, the city has the right talent to drive the digital industrial revolution.
Findley’s commitment to ensuring that critical U.S. industries are not left behind is unwavering. “The U.S. can’t allow these critical industries to be left behind,” he said. “We are here for the long haul in ensuring that will never happen.”
Key Takeaways:
- Ironspring Ventures has raised $100 million for its second fund, significantly up from its $61 million debut fund.
- The firm focuses on capital-intensive industrial sectors such as manufacturing, construction, transportation, and energy.
- Ironspring plans to invest in 20 startups, writing checks between $2 million and $4 million.
- Supply chain constraints, government policies, and advancements in AI are creating favorable conditions for industrial startups.
- The firm’s unique LP base and location in Austin are key assets in its strategy.
With a fresh pool of capital and a strategic focus on industries vital to the U.S. economy, Ironspring Ventures is poised to make a significant impact on the industrial startup landscape. The firm’s approach, combining sector expertise and collaborative investment strategies, ensures that it remains a key player in fostering innovation in these critical sectors.
Leave a Reply