SignalFire Launches $1 Billion Fund for Applied AI Investments
San Francisco-based venture capital firm SignalFire has successfully closed its fifth fund, raising an impressive $1 billion. This new fund marks the largest in the firm’s history, setting the stage for significant investments in applied AI companies.
Investment Philosophy and Growth
In a recent conversation, founder Chris Farmer articulated the firm’s investment philosophy, reflecting on its achievements over the past 12 years. He noted, “It’s a fantastic validation that we have enough proof points in the portfolio and enough scale with companies that we’ve gotten into very early, that are quite large at this point.”
With this latest funding round, SignalFire’s total assets under management reach $3 billion. This builds upon the previous fund, which raised $900 million in February 2023.
New and Existing Investors
The new round of funding has attracted a diverse array of limited partners, including:
- Large U.S. public pension funds
- An Asian sovereign wealth fund
- A major global bank
- A significant insurance company
Existing partners consist of various endowments, foundations, family offices, and fund-of-funds.
Data-Driven Approach with Beacon AI
Central to SignalFire’s methodology is its proprietary machine-learning platform, Beacon AI, which integrates the firm’s operations. Farmer describes Beacon AI as “the fabric that stitches the entire firm together,” emphasizing five key areas of venture capital:
- Sourcing
- Picking
- Winning
- Adding value
- Portfolio construction
Beacon AI monitors approximately 80 million entities and 650 million individuals to identify key traction anomalies, benchmark companies, and optimize portfolio performance through talent recruitment and lead generation.
Funding Strategy and Investment Plans
The newly raised fund will be deployed over a period of 2.5 years, during which SignalFire aims to execute around 100 investments at the pre-seed stage, with individual commitments ranging from $100,000 to $1 million. Additionally, it plans approximately 60 investments at the seed stage, with amounts between $1 million and $5 million.
In its early-stage investing, SignalFire will participate in Series A and B rounds, contributing between $5 million and $30 million. The firm anticipates making about 30 investments through its Executive In Residence (XIR) program, dedicated to pairing seasoned executives with emerging companies.
Notable Investments
Recent XIR investments include companies such as Anomalo, which focuses on data monitoring, and CodaMetrix, a medical coding platform that originated from Mass General Brigham. Other significant applied AI investments include:
- EvenUp – Legal technology for personal injury cases
- Stampli – Accounts payable automation
- Horizon3.ai – Continuous penetration testing in cybersecurity
- Grow Therapy – A scheduling platform for therapists
Moreover, SignalFire is diversifying its portfolio with consumer-oriented companies, including Monarch Money for household finance management and Whop, a digital goods platform akin to Shopify.
Major Successes
SignalFire’s most substantial exit to date is Frame.io, which was acquired by Adobe in 2021 for nearly $1.3 billion. This achievement underscores the firm’s capability to identify and nurture promising ventures in the technology landscape.
