New York
CNN Business
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Reddit co-founder Alexis Ohanian’s venture capital firm has raised another $225 million to invest in early-stage startups.
This is the fourth and largest funding raised by Initialized Capital, a San Francisco-based venture capital firm founded by Ohanian and Garry Tan.
The new fund, announced Tuesday, comes as Ohanian devotes more time to the firm. About nine months ago, he quit his day job at Reddit, the popular discussion board platform he co-founded in 2005. Ohanian and Tan were also partners at Y Combinator, a Silicon Valley firm, when Initialized Capital launched in 2012. The Valley Accelerator Fund is known for helping companies like Airbnb and Dropbox get off the ground.
Tan and Ohanian credit their past experiences as engineers, operators and investors at Y Combinator to their success as investors in their own companies.
![Gary Tan (left) and Alexis Ohanian](https://media.cnn.com/api/v1/images/stellar/prod/181002160151-alexis-ohanian-and-garry-tan.jpg?q=w_1110,c_fill)
“We know the investors sitting around the table won’t be able to envision the future because we’re not the ones actively building it, but we’ve seen enough and built enough in software and scalable businesses that When we get on track with our founders, our ‘Spider-Man’ feelings start to tingle,” Ohanian told CNN on Tuesday.
Ohanian and Tan have jointly invested in several startups that have now become “unicorns” – privately held startups valued at $1 billion or more. These include cryptocurrency marketplace Coinbase and grocery delivery startup Instacart, among others.
Initialized Capital will continue to focus primarily on funding early-stage startups, but will cut larger checks, such as $1 million, while some of its first investments will be $50,000 in size. It’s a sign of the times – valuations and deal sizes have grown in recent years. The average deal size in the second quarter of this year was $18 million, the highest in a decade, according to PitchBook data.
The firm now has a team of eight partners who help portfolio companies with everything from product development to legal, design and marketing.
Ohanian and Tan said their approach to funding startups is “thesis agnostic,” but they tend to look for businesses that are “software-centric.”
They have invested in startups like Voyage, a self-driving car company that operates its vehicles in two retirement communities, and Ro, a healthcare company whose first brand, Roman, is helping diagnose and treat erectile dysfunction patients.
“We still feel there’s a lot of work to be done in terms of software solving big problems,” said Ohanian, who is also a Reddit and Ro board member. “This is our sweet spot.”