Foundry Group Decides to Close Doors: A Shift in Venture Strategy

Foundry Group, an established venture firm with nearly $3.5 billion in assets under management, has made a surprising announcement—it will not raise any more funds and is shutting down its operations.

The Decision

The decision to cease fund-raising activities came as a shock to many, especially considering that the firm had announced a $500 million fund just the year before. Foundry Group, based in Boulder, Colorado, disclosed on January 19 that its current fund would be its last. This move marks the end of an 18-year journey for the venture firm, which had been actively investing since 2007.

Foundry’s Legacy

Throughout its existence, Foundry Group has made significant contributions to the venture capital landscape, investing in over 200 companies and nearly 50 venture firms. Some notable investments include Fitbit, Zynga, and AvidXchange. Co-founder and partner Seth Levine emphasized that the decision to shut down was part of the firm’s original plan, highlighting their intention to focus solely on investing without building a legacy or generational firm.

Unusual Decision

Acknowledging the unusual nature of their decision, Levine explained that Foundry Group had always re-evaluated the prospect of raising new funds with each fundraising cycle. Despite previous instances where they considered closing, they ultimately decided to continue. However, this time, Foundry 2022 will indeed be their final fund.

Future Outlook

Although Foundry Group is winding down, it still has a significant portion of its current fund left to invest. Levine stated that the firm intends to continue leading Series A and B financings from the remaining capital. However, this decision raises concerns for portfolio companies, as accepting funding from a firm in the process of winding down may pose challenges in securing follow-on investments.

Continued Commitment

While the firm plans to complete its investments by around 2026, Levine emphasized that they will continue working with portfolio companies beyond that timeframe. Foundry’s partners, including Brad Feld and Chris Moody, intend to stay with the firm until its work is complete. However, the future plans of other partners remain uncertain.

Industry Trends

Foundry Group’s decision to shut down is not an isolated incident in the venture capital world. Boston-based OpenView also recently announced its decision to stop investing in new companies shortly after raising a substantial fund. These developments reflect shifting dynamics within the venture capital landscape.

Foundry’s closure marks the end of an era in the venture capital industry, but its legacy of innovation and unconventional thinking will continue to influence the startup ecosystem for years to come.