Upper90, a hybrid fund, has closed on its second fund. The firm has raised $195 million to infuse capital in early-stage fintech, e-commerce and enterprise companies.
About a third of the funding will go to fintech companies, Upper90 CEO and co-founder Billy Libby said in an interview with Finledger. Upper90 has already deployed capital from the fund and invested in five companies.
The fund’s average investment size is about $10 million to $15 million, but there is flexibility as the firm can “grow with the companies if they need us to,” Libby said.
New York-based Upper90 has more than $400 million in assets under management and $700 million in total originations since launching in 2018. It offers capital in the form of “founder-friendly credit and equity” to what it describes as “disruptor” brands.
The firm believes that not every early-stage startup needs equity in the beginning.
“A founder’s success is too often measured by how much equity she or he has raised,” said Libby. “At the same time, data is exploding and has become an asset for all companies allowing them to utilize credit earlier for their predictable future revenue streams. We believe it’s the right time for entrepreneurs with capital-intensive businesses to think about dilution-sensitive ways to finance growth. Equity is an answer, it’s just not the only answer.”
Upper90 is backed by 300 limited partners spanning the venture capital, technology, real estate and quantitative trading industries. Upper90’s first fund – in which it raised $75 million in 2018 – has over 20 investments in companies like Clearbanc, an e-commerce investor and funding platform, Thrasio and Octane Lending. About one-third of Upper90’s portfolio is made up of fintech companies, a number that Libby said he could see growing “to up to 50 percent.”
Specifically, within fintech, Upper90 is trying to find “niche supply chain and receivables financing,” companies, according to Libby, a former Goldman Sachs exec.
“[We’re] trying to find some of these new niche markets online where those companies have traditionally, because they’re not as well-known or serviced by banks, have been really growing with equity,” he said. “We can get into these companies earlier, help them get credit earlier and just help the founders own more of their company.”
Upper90 expects to deploy the entirety of the fund over the next 18-to-24 months into about 25 companies.
When it comes to what’s hot in investing, Libby said he thinks that embedded fintech is a huge trend.
“Every company that has an underlying customer is going to begin to offer a financing product,” he predicted.