PicoBlog

This week, we announced a new $250M fund that includes outside investors for the very first time. It’s a decision that is representative of a major inflection point for AlleyCorp. Not in the way we invest or deploy capital (our focus areas and strategy will remain the exact same), but in the way we think about AlleyCorp’s impact in the years to come.

There are two primary reasons we decided to accept outside capital for the first time. First, our small group of carefully selected LPs embody the spirit of true partnership, and we’re excited to work with them to add strategic and tactical value across our portfolio.

Second, it’s become clear to me that what our team is building at AlleyCorp can and should extend beyond just me. Transitioning to a fund structure enables us to build an enduring, multi-generational platform under the stewardship of our exceptional team and myself.

Over the last few years, we’ve realized that people often think of AlleyCorp primarily as an incubator, and many don’t realize that we are also one of the most active early-stage investors in New York. We deploy about $100 million per year into early-stage startups (Pre-Seed, Seed, and Series A) across consumer and enterprise technology, healthcare, robotics, and impact.

Because of our research-driven approach, investing and incubating together works very well for us. We see both strategies as deeply intertwined, and we intentionally do not break them into separate teams. This means that all of our investors who look at early-stage deals simultaneously uncover and pursue incubation opportunities.

While immersed in a certain domain, an investor may meet great companies that we’re excited to back, or they may find white space that presents an opportunity to start something new. This happens in both directions; sometimes we start by looking at an area where we’d like to build a company, and discover that there are already exceptional teams to invest in there.

Our dual approach has another important impact on our team: it continually sharpens our operational prowess. Almost all of our investors are former operators themselves. Launching incubations at AlleyCorp keeps those skills fresh and current, which is a big help when supporting founders. Occasionally, one of our investors is so excited about a new idea that they spin out an incubation full-time, often joining as CEO. I love when the AlleyCorp family grows this way.

This process results in about 20–30 new investments per year and 5–8 incubations. Every year brings new discoveries, new technologies, and new tools to solve the many problems we still need to solve. Personally, I keep doing this because nothing is more fun. After 30 years, I feel as excited to do what I’m doing as I ever have, and I look forward to AlleyCorp’s next phase with our outstanding team, now augmented by our wonderful new group of external limited partners.

Radical AI is one of the most ambitious incubations in AlleyCorp’s history, and our largest check ever. Radical AI is changing the way materials are designed, developed, and discovered through the integration of artificial intelligence, engineering, materials science, and applied research. Co-Founders Joseph Krause and Jorge Colindres bring deep expertise in materials science, engineering, and building technical teams, and Co-Founder and Chief Science Officer Dr. Gerd Ceder is world-renowned for his pioneering research in high-throughput computational materials design, and in the development of autonomous labs for materials discovery.

Radical’s goal is to build self-driving labs: from AI-generated materials to autonomous, high-throughput experimentation.

AlleyCorp incubation Conduce Health launched out of stealth in March. Co-Founders Eric Rosow, Najib Jai, Jeffrey DeFlavio, and their team are building a multi-specialty value-based care solution: the Conduce marketplace supports risk-bearing primary care organizations by bridging the gap to the highest quality, personalized specialists who need it most.

60% of US healthcare dollars are spent on specialty care, an area where value-based models are still emerging. The heterogenous nature of specialty care often introduces multi-variable complexities around local community dynamics, data opacities, and patient attribution. Conduce’s marketplace leverages data science to better understand the nuances of patients with chronic diseases, unburden primary care providers, and meet specialists where they are on the path to managing risk-based economics.

AlleyCorp and Obvious Ventures led the $30 million Series A for Pi Health, which is transforming access to innovative oncology medicines and clinical trials across the globe.

Carmoola, a UK car financing fintech, raised a £15.5 million Series A extension led by VentureFriends with participation from AlleyCorp, QED, InMotion Ventures, and u.ventures.

ShopMy, a platform for content creators to connect with brands, raised $18.5 million led by Inspired Capital with participation from AlleyCorp, Scott Belsky, Jennifer Fleiss, and Rand Currier.

Siftwell Analytics, a platform providing insights to community health plans to help improve member outcomes, raised a $5.8 million Seed round led by AlleyCorp. Additional investors in the round include Arkin Digital Health, Tau Ventures, and The Charlotte Fund.

AlleyCorp made an investment in Lilac Software, which just announced their modern, cloud-native payer analytics stack to drive better business and health outcomes. Neetu Rajpal, the former CTO of Oscar Health, is leading the team as Co-Founder and CEO.

Valisure, a pioneer for independent quality assurance in pharmaceutical drugs, announced a strategic financing led by AlleyCorp and the new appointment of Chip Phillips as CEO.

AlleyCorp incubation Chamber Cardio, a population health platform enabling cardiology teams to shift to value-based care, secured $8 million in Seed funding led by General Catalyst, with participation from AlleyCorp, Company Ventures, American Family Ventures, and CityLight Capital.

Rogo, the first generative AI platform built specifically for financial services firms, raised a $7 million Seed round. Investors in the round include AlleyCorp, BoxGroup, Company Ventures, and ScOp Venture Capital.

Vicarius, an AI-powered vulnerability remediation platform, raised a $30 million Series B led by Bright Pixel with participation from AlleyCorp, AllegisCyber Capital, and Strait Capital Partners.

Glacier, which builds next-generation robotics for recycling, announced a $7.7 million Seed round led by NEA and Amazon’s Climate Pledge Fund, with participation from AlleyCorp, Overture Climate VC, and VSC Ventures.

Viam, which builds flexible cloud solutions that close the gap between software and hardware, announced a $45 million Series B with investors including Union Square Ventures and Battery Ventures.

In partnership with Management Leadership for Tomorrow and their mission to equip high-achieving individuals from underrepresented communities, we are proud to launch Peerless, a $1M pitch competition that supports visionary Black, Latine, Native American, and female founders focused on early-stage startups.

Alongside support from a network of incredible partners that include Primary Ventures, BBG Ventures, VamosVentures, Human Ventures, Harlem Capital, Amazon Web Services (AWS), Tech:NYC, Pillsbury, and New York City Economic Development Corporation, one grand prize winner will receive a $1M investment along with talent recruitment support as they scale, legal support, ongoing mentorship and coaching, access to industry networking events, and membership to Tech:NYC.

We’ve already received interest from hundreds of founders, but there are still 2 weeks remaining for any founders hoping to participate. You can learn more and apply here.

DHNY is out with their in-depth look at the investment trends, opportunities, and challenges in the digital health sector, where they’ve found persistent optimism despite broader business challenges in 2023.

The report showcases the companies and leaders driving growth and innovation across the healthcare ecosystem, trends to watch in digital health, and the 2024 Digital Health 100 (DH100), their list of the most promising health startups in New York. Read the report here.

Fortune broke the news with an exclusive story on our new fund. Read the full story here for a deeper look at our decision to transition to a fund structure.

Kevin joined Harry Stebbings on his 20VC podcast this week for a wide-ranging conversation on entrepreneurship, lessons founding companies, and the current venture landscape.

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