Playground Global Raises $410 Million for Fund III to Invest in Deep Tech and Science Companies
Playground Global, the renowned early-stage venture capital firm, recently announced the successful closure of its third fund with $410 million in capital commitments. This injection of funds brings the total assets under management for the Palo Alto-based firm to an impressive $1.2 billion.
What sets Playground Global apart is its team of highly experienced professionals, led by co-founder and general partner Peter Barrett. Before his transition into the world of venture capital, Barrett established himself as an engineer, primarily in the video game industry. What’s interesting to note is that he continues to code on a daily basis, earning him the reputation of being the man who gave Elon Musk his first job.
The other general partners at Playground Global, Jory Bell, Matt Hershenson, Bruce Leak, and Laurie Yoler, also have a strong tech background and a deep understanding of science and operations. Together, they are drawn to companies working on revolutionary technologies in industries such as computing, automation, infrastructure, logistics, decarbonization, and engineered biology.
Fund III follows the same investment strategy as the firm’s previous $500 million Fund II, focusing on seed and Series A companies with initial investments ranging from $1 million to $20 million. As an early and often first investor, Barrett told TechCrunch that Playground Global believes in backing only a select few companies each year that have the potential to be truly transformative. Some notable exits from the firm’s portfolio include MosaicML, which was acquired by Databricks for a staggering $1.3 billion, and Velo3D, the company responsible for printing the Raptor engines for Elon Musk’s Starship, which went public in 2021.
An Inside Look at Playground Global’s Approach to Investing in Deep Tech
In an email interview with TechCrunch, Peter Barrett shared his insights on the fundraising environment and the lessons learned while investing in deep tech. He also shed light on the firm’s criteria for choosing startups to add to their portfolio.
TC: Playground last raised a fund in 2017. What was the fundraising environment like this time around?
PB: The macro-environment has been challenging for all, but as we met with investors from around the world, they told us they are looking to avoid fads and trends and instead focus on companies and verticals where there is real, lasting value being created. Durable and defensible companies.
Investors, especially in down-markets, are flocking to quality, and there’s never been a bad time to invest in great companies – as demonstrated by the success of our new fund and several of our portfolio companies’ recent fundraises. We had great support from existing investors and also used the opportunity to invite new investors into the fold. In Fund III, we expanded our LP base to include endowments, foundations, single and multifamily offices.
TC: What sets Playground apart and makes it an attractive option for startups?
PB: As an early-stage venture capital firm, we are true partners to our portfolio companies from the very beginning. Our entrepreneurs often view us as co-founders rather than just investors. This partnership approach, along with our unique ability to underwrite and retire technical risk, sets us apart in the industry. Additionally, our team’s combined technical expertise enables us to identify and invest in the best emerging technologies with confidence.
Moreover, we also strive to foster a collaborative and non-competitive environment within our portfolio as we do not invest in companies that directly compete with each other. This has led to several new portfolio companies being referred to us by founders from Fund I and Fund II. Our 70,000-square-foot studio is also home to many of our own portfolio companies as well as other promising deep tech startups.
TC: Can you talk about your pivot from consumer to deep tech and what led to that decision?
PB: When we founded Playground, our team had a diverse skill set that enabled us to develop both consumer technologies and deep tech companies. However, early on, it became evident that our true strength lay in underwriting technical risk, rather than trying to predict market trends. By shifting our focus to deep tech and investing in the roadmaps that guide our investment decisions, we have been able to secure a significant portion of the world’s most transformative companies.
What Playground Global Looks for in a Startup
TC: What have you learned from your experience in investing in deep tech?
PB: We’ve been investing in deep tech companies since the inception of Playground, with PsiQuantum being one of our very first investments. One of the key takeaways we have gathered is that everything seems impossible until someone makes it a reality. With the right combination of capital and brilliant, dedicated individuals, we can drive significant progress in society.
TC: Which sectors within deep tech are you most excited about, and which do you usually avoid?
PB: Our first principle approach to underwriting chemistry, biology, and computation allows us to invest in groundbreaking companies across various verticals such as next-gen compute, AI and automation, infrastructure, engineered biology, and decarbonization. We believe that investing in companies that bring about significant technological advancements can also lead to strong financial returns. Hence, we do not get swayed by popular trends and focus instead on following our roadmaps.
TC: What qualities do you look for in a startup before making an investment?
PB: We’re constantly on the lookout for startups that have a clear and testable hypothesis and are tackling significant problems with viable pathways to success. We don’t just look for potential solutions to a problem; we’re looking for solutions that bring together the right idea, the right people, and the right timing.
TC: How many investments has Playground Global made from Fund III so far?
PB: We have already made several investments from Fund III, including d-Matrix, Ideon Technologies, Amber Bio, Infinimmune, and Atomic AI. We also have other portfolio companies operating in stealth mode.
Some of our stealth companies are well-positioned to revolutionize the production of green metal and power next-generation semiconductor manufacturing. d-Matrix, which received Series A funding from Playground Global, recently closed an oversubscribed $110 million Series B round in September. The company is developing an AI hardware platform for data center inference through in-memory computing.
TC: Given your previous working relationship with Elon Musk, what are your thoughts on his leadership of X, Tesla, etc.?
PB: We all admire Elon’s achievements in electrifying the planet and pioneering space exploration. However, as investors, we would love to see him devote more time to these groundbreaking ventures.