Rackhouse Venture Capital Closes Second Fund at $45M to Accelerate AI Innovation
We're thrilled to announce that Rackhouse Venture Capital has closed our second fund, Rackhouse Ventures Fund II, at $45 million. This milestone represents a significant step forward in our mission to empower early-stage AI startups that are changing the world with data.
Why did we decide to raise this fund? The answer is simple: to create more value faster for our portfolio companies and the AI ecosystem as a whole. With the AI market experiencing unprecedented growth and opportunity, we're positioned better than ever to support visionary founders who are solving real-world problems with innovative AI solutions.
The AI landscape is evolving rapidly, and the numbers speak for themselves:
AI investing is projected to reach $80B in 2024, a 2.6X increase from 2023, now accounting for 20% of all US venture investment.
AI businesses are commanding a 3.0X valuation premium, raising 70% more capital, and growing 2.5X faster than their non-AI counterparts at the Series B and C stages.
A record 394 Fortune 500 earnings calls mentioned AI in 2023, highlighting its growing importance across countless industries.
At Rackhouse Ventures, we're not chasing far-fetched science projects or deep tech investments. Our focus is on pragmatic founders who can respond nimbly to the evolving AI landscape and solve present-day problems. We are actively seeking AI companies that have achieved product-market fit, particularly those operating in overlooked niches with a clear and obsessive customer focus.
Since our last fund, Rackhouse Venture Capital has expanded its portfolio and impact significantly. Fund I, which closed at $22.3 million in 2021, has already shown impressive results:
Ranked in the top 5% according to Cambridge Associates; outperforming 95% of similar funds.
Included 32 investments with a 69% graduation rate.
Four founders from Fund I are now participating as LPs in Fund II, demonstrating their confidence in our approach.
With Fund II, Rackhouse Venture Capital will build on this momentum. We've already completed eight investments, including promising startups like Onbrand, Insummary, and Crosshatch.io. Our investments are split between San Francisco-based companies and those across the rest of the U.S., with new investments outside the U.S. in progress.
So, what's next for Rackhouse Ventures?
Our roadmap is ambitious, and we're excited to accelerate it. We're committed to identifying and backing the next generation of AI leaders, focusing on companies that possess:
A clear and obsessive customer focus
Generalist and agile technology organizations
Unique and hard-to-replicate distribution strategies
We're working tirelessly to support our portfolio companies and drive innovation in the AI space. If you're a founder with a vision of making the world more efficient through AI, we'd love to hear from you. And if you're an investor or industry professional interested in joining us on this exciting journey, stay tuned for updates on our expanding team and opportunities to get involved.
Rackhouse Ventures is the best-kept secret in the space, and we're just getting started in shaping the future of AI. We can't wait to see what our portfolio companies will achieve next.