2024 Annual Update & Outlook
7GC II Annual Review & Outlook
As we wrapped up 2024, we wanted to REITERATE on some of the profound shifts we saw across the technology landscape that capitulated through our portfolio.
In 2024, we made four new investments while successfully closing our first exit for the portfolio. These new investments include Anthropic, Poolside, Fluidstack, and Lucra. The exit stemmed from the successful closing of Draftkings' acquisition of Jackpocket for $750 million in June 2024.
Throughout the year, we held true to our core thesis points that we internalized at the start of the year. This allowed us to execute on our new investments and continue to build a robust pipeline of new opportunities as we kick off 2025.
These thesis points remain today and will continue to be guideposts for us in the next couple of quarters:
Breakaway early-stage companies are winning with less.
FOMO cycle has cycled out of interesting verticals and themes.
Generative AI hype is warranted and this wave will drive seismic winners.
Across the 2024 year, we tracked and ranked a select cohort of 1,900 VC-backed companies across various different stages based on specific parameters set. Across that cohort set, we held outbound efforts for over ~20% of those names that tracked well across our leveraged by targeting exercises to drive four new investments and a robust pipeline for upcoming rounds in the first half of 2025.
NEW INVESTMENTS
Anthropic
EARLIER IN FEBRUARY, 7GC FUND II MADE A SUBSTANTIAL INVESTMENT IN ANTHROPIC'S SERIES D ALONGSIDE MENLO VENTURES.
We continue to see major leaps in the company's performance across the enterprise and consumer. Publicly available information displays that ARR has 10x'ed since our investment in Q1 2024. This rapid acceleration was a combination of an increasingly growing enterprise LLM market size coupled with increased market share across closed-source models.
According to Menlo Ventures' latest research survey, closed-source solutions maintain 81% of all usage across enterprises versus just 19% market share for open-sourced models. Within closed-source models, Anthropic has shown the ability to displace first-mover adoption from OpenAI, doubling its market share from 12% to 24%.
In November, the company announced another $4 billion investment from AMAZON, DEEPENING their partnership. This brings their total investment into the company to $8 billion and validates ANTHROPIC’S partnership value to the Amazon Web Services AI ecosystem. Since Amazon's inception, only two acquisitions have exceeded this type of investment—Whole Foods and MGM Studios.
Poolside AI
FOLLOWING OUR ANTHROPIC INVESTMENT, 7GC SOUGHT TO ESTABLISH MORE RELATIONSHIPS WITH FOUNDERS ACROSS THE GENERATIVE AI ECOSYSTEM TO FIND AN APPLICATION-LAYER COMPANY THAT HAD HIT ESCAPE VELOCITY.
WE MET FOUNDERS JASON WARNER AND EISO KANT IN MAY AS THEY WERE IN THE VERY EARLY INNINGS OF THEIR FUNDRAISING PROCESS FOR A TARGETED $450M SERIES B FINANCING ROUND. A DUO THAT CUMULATIVELY FOUNDED OR LED ENGINEERING TEAMS, SIX VC-BACKED COMPANIES, AND REALIZED FIVE EXITS BEFORE FOUNDING POOLSIDE. AT THE TIME OF THE MEETING, THE DATA FROM HYPERSCALERS WAS CLEAR – THE SOFTWARE DEVELOPMENT AND CODING USE CASE IS A CLEAR GAME-CHANGER USE CASE FOR UTILIZING LLM TECHNOLOGY.
POOLSIDE IS A FULLY VERTICALIZED SOLUTION TAILORED TO BRING A BEST-IN-BREED CODING ASSISTANT PRODUCT READY TO SHIP FOR ENTERPRISE DEVELOPMENTS. UNLIKE MANY OTHER CODING ASSISTANTS, POOLSIDE HAS BUILT A FULL-STACK OFFERING, INCLUDING ITS OWN OPEN-SOURCE MODEL, VERSUS BEING RELIANT ON A GENERALIZED LLM MODEL. UNLIKE THESE OTHER WIDGET COMPANIES THAT ARE FULLY RELIANT ON OPENAI AND WILL BE CONSTANTLY LOOKING OVER THEIR SHOULDER, POOLSIDE HAD THE AUDACIOUS STRATEGY TO BUILD ON THEIR OWN.
Since our initial investment in AugUST 2024, the company announced its strategic partnership with AWS. Poolside was spotlighted on stage at AWS Re: Invent in November with AWS leadership to introduce its first-party strategic partnership. The agreement enabled secure, customized generative AI for software engineering on Amazon Bedrock and Elastic Cloud Compute (EC2).
What does this partnership mean? Customers will sign any paperwork directly with AWS as the seller of record, dramatically reducing the length of Poolside's sales cycle. Simultaneously, 100% of poolside consumption will be accounted for by customers' existing AWS commitments, so no additional budgets are required from enterprise customers.
Lucra SPorts
WE INITIATED A POSITION IN LUCRA SPORTS AT THE END OF JUNE (FUNDED IN EARLY JULY) 2024 AFTER BUILDING A ROBUST RELATIONSHIP WITH THE CO-FOUNDERS DYLAN ROBBINS AND MICHAEL MADDING SINCE Q4 2023. FOLLOWING OUR LIQUIDITY EVENT IN JACKPOCKET, WE HAVE BEEN EVALUATING HOW WE COULD DOUBLE DOWN ON DELAYED DIGITALIZATION ACROSS GAMING. GIVEN THE CHALLENGING DYNAMICS OF REGULATION, THE MARKET TENDS TO MOVE SLOWLY, AS WE SAW WITHIN DIGITAL LOTTERY OFFERINGS WITH JACKPOCKET.
LUCRA IDENTIFIED A GAPING HOLE IN THE MARKET NEED FOR A REGULATORY-COMPLIANT PRODUCT OFFERING THAT FACILITATED SOCIAL GAMING VIA A B2B WHITE-LABEL SOLUTION TO LEGACY CONSUMER DISCRETIONARY COMPANIES LIKE DAVE & BUSTERS. THIS STRATEGY INSTANTLY RESONATED WITH US AS THE COMPANY HAD SPENT THE LAST FIVE YEARS SOLVING REGULATORY AND TECHNOLOGICAL HURDLES TO DEPLOY AND REMOVE THE COSTLY UNIT ECONOMICS PROBLEMS FOR B2C GAMING OFFERINGS. THE COMPANY BUILT A SAAS MODEL WITH A HIGHLY PREDICTABLE SALES CYCLE, LICENSING TERMS, AND A ROBUST CUSTOMER PIPELINE BY SELLING DIRECTLY TO ENTERPRISES.
7GC CO LED LuCRA’S Series A+ round. THe ROUND WAS covered broadly by multiple press sources, with a spotlight in Axios.
When we first connected with the team in 2023, the company was in the early innings of providing a new B2B business model that offered a white-label software solution for businesses to gamify their existing mobile applications. Fast-forward 12 months, and the company has signed over 20 B2B partnerships, continuing to define a clear market opportunity and first-mover advantage. The company's product will officially go live with its first wave of customers in Q1 2025.
Other investors who participated in the round alongside us were SeventySix Capital, Raptor Group, and individuals, including Steve Kuhn, Marc Lasry, Dennis Wong, and Giannis Antetokounmpo.
Fluidstack
We made our fourth and final investment at the tail-end of Q3 in Fluidstack.
We have continued to press our Generative AI infrastructure strategy—to follow the money and what value layers have significant revenue scale and business durability. With transformer technology remaining the leading architecture and the CUDA developer platform remaining the far-and-away leader for developers to leverage Generative AI technology, Nvidia still remains the center of the universe as we enter 2025.
We believe the computing/data center infrastructure will continue to be aggressively scaled out in 2025, led by the continued investment of hyperscalers and AI research labs. In addition to GPU demand, there are precise needs to improve efficiency and optimize training and inference. These are software problems that will continue to draw high demand and intrinsic value from whichever vendors can enhance efficiency.
Fluidstack is a leading AI cloud provider specializing in delivering large-scale GPU clusters to top AI companies with unparalleled speed and efficiency. Founded by Gary Wu and Cesar Maklary, with former Trade Desk COO Rob Perdue joining the leadership team, Fluidstack has positioned itself at the forefront of the AI compute ecosystem within Europe.
Fluidstack's unique value proposition lies in its ability to deploy GPU resources significantly faster than competitors—offering 1,000 GPUs in just two days compared to the industry standard of two months. This speed is complemented by a suite of high-quality services, including sophisticated monitoring, a 99% uptime SLA, and 24/7 MLOps support. Unsurprisingly, this customer support has allowed Fluidstack to gain confidence with key partners.
We are excited to share more about this investment with our investors and community in the following months.
Jackpocket EXITs
The company announced that it was to be acquired by DraftKings in FEB 2024, and we fully exited our position in Q4 2024. Given the stock/cash mix, we were able to sell all our shares at the 52-week post-lock-up. We viewed this as the best possible outcome for our investors and required patience and discipline to deal with retail trading volatility in Draftkings.
Fund I POrtfolio highlights
RELiance Jio
Mukesh Ambani, CEO of Reliance Industries, publicly stated that Reliance Jio will go public. Since the announcement, sources have widely REPORTED that the IPO will occur in the second half of 2025.
The IPO is estimated to raise between $4.2-4.8 billion, representing the largest IPO in Indian history. While terms have yet to be finalized, discussions for the pre-IPO placement have already begun. Though the final structure is yet to be determined, target levels have been disclosed at a $120 billion target valuation.
Roofstock
In May 2024, OUR PORTFOLIO COMPANY Roofstock, MERGED with leading competitor Mynd. Mynd merged into the Roofstock corporate entity, while property management operations will continue to operate under the Mynd brand.
We remain enthusiastic about Roofstock's positioning as the last survivor within the proptech ecosystem within single-family rentals. As we see a more accommodative macro environment within the real estate industry, the company will be well-positioned to capitalize on increased transaction volume and a strong recurring service revenue business.
Fundraising: 7GC II Set To CLose on Feb 15th, 2025.
AS HIGHLIGHTED IN THE PREVIOUS LETTER and Communicated to several LPs, Fund II will be closing its doors on February 15th 2025. WE ARE GRATEFUL TO THE NEW and existing partners for THE vote of confidence THEY’ve SHOWED uS in Q4. Particularly also AS WE WORK ON GROWING THE 7GC PLATFORM AND NETWORK WE ARE vERY proud to HAVE EARNED THE FAITH of a Large INSTITUTIONAL Asset manager in Italy.
Since the New Year, Fund II continues to show momentum carry over across our entire portfolio that gives us strong optimism for our fund performance.
2025 & Onwards
We continue to be optimistic as we go into 2025, as this remains one of the best times to invest in the last decade. We want to thank our current LPs for your ongoing support. We are excited to continue to work hand-in-hand to provide accessibility to some of the most promising N=1 startups in the technology ecosystem today.
