VC Firm Moderne Ventures Raises $230M Fund to Invest More in Proptech

The new funding exceeds the oversubscribed $200 million MV Core Fund II, bringing the firm’s total available investment funds to more than $500 million. The Chicago-based venture capital firm’s investors in the latest round include GCM Grosvenor, as well as returning investor the Illinois Growth and Innovation Fund, and various strategic investors.

“What prompted Fund III was a continuation of the strategy that we’ve been investing on since 2008,” said Constance Freedman, founder and managing partner at Moderne Ventures. “Under this strategy, we had fully invested our Fund II, which had been oversubscribed at $200 million, and we fully allocated that fund at the end of 2023. Then we started investing in Fund III at the beginning of this year.”

Modern Ventures has already allocated some of the new fund to two proptech companies, with a third working on a term sheet, said Freedman, declining to name the companies.

“We invest across the proptech vertical, but we really like companies in particular that also have applicability in other markets,” said Freedman. “And we like that because I started doing this in 2008, and then 2009 and 2010 happened. You quickly realize that companies beholden to any one vertical don’t fare well on a downturn. So, while all our deals will apply to the vertical, or adjacent industries, they also largely apply to other markets as well.”

As an example, Freedman pointed to Docusign, her firm’s first investment under that strategy. Docusign works with real estate, but also beyond that industry, she said. Qloo, an artificial intelligence company that claims to predict consumer tastes and preferences, is another and more recent example, she added.

From a generalist investor point of view, Moderne Ventures is looking at companies that are addressing subjects such as AI and digital transactions, robotics, deep tech connectivity and mobility, Freedman said.

“We think about half our capital comes from strategics in the industry, and we think a lot about the business challenges that they’re facing,” she said. “So things like workforce optimization, waste management, ways to increase revenue and decrease operational costs, and customer experience are what we’re focused on.”

In addition to its three core funds, Moderne Ventures will soon announce a growth fund, according to Freedman.

“The growth fund will be focused about half on doubling down on our existing portfolios, companies we’ve maxed out of core-fund investments,” she said. “So, later stage, Series D and pre-IPO round. The other half will go toward new companies. Core funds generally focus on companies [with] $2 million to $20 million in revenue, and the growth fund will focus on companies beyond that.”

In addition to its investments, Moderne Ventures says it works to bring customers to companies through its industry immersion program, the Moderne Passport, which is aimed at helping companies refine and execute their go-to-market strategies. The program further connects them to the Moderne Network, a curated group of more than 1,500 executives and corporate partners.

Co-led with partner Liza Benson, Moderne Ventures is a diverse and woman-owned firm with 70 percent of the company made up of women and minorities. Freedman launched Moderne Ventures in 2015. Its early exits include Porch (NASDAQ: PRCH), Homesnap (acquired by CoStar) and TaskEasy (acquired by WorkWave). Among its other notable investments across funds are ICON, Caribou, Measurabl and Xeal.

Philip Russo can be reached at prusso@commercialobserver.com.