In a market that still faces difficulties in raising capital, the venture capital firm Cloud9 Capital raised R$ 600 million in its second fund, double the amount of its first fund, which raised R$ 300 million.
“Investors in the first fund, on average, allocated 50% more to this vehicle. This shows that the thesis worked and that we were able to increase the size of the checks with flexibility,” says Felipe Affonso, partner at Cloud9 Capital, to NeoFeed .
The asset management firm, founded by him, Noah Stern, and Rafael Serson, which positions itself as an early growth firm , does not reveal who the investors in this new vehicle are, but states that it has managed to attract new names to its base, in addition to retaining previous investors, due to the good performance of the first fund.
In this new fund, the thesis remains the same: to find technology companies in the growth stage that generate cash and have scalable business models. Now, the idea is to add a touch of artificial intelligence.
Cloud9 Capital also seeks entrepreneurs outside the Rio-São Paulo axis, who did not study at the top schools in the United States and who have never received capital from institutional investors.
With double the capital, the checks should be larger. In the first fund, the manager invested in seven companies. The goal now is to allocate the capital to up to ten businesses.
In its first fund, Cloud9 invested in the corporate travel platform Onfly ; the artificial intelligence solution for workshops and insurance companies Cilia ; the accounts payable solution for large companies V360 ; and the management system for gyms Nexfit.
The second fund has already begun allocation and has invested in Canopy, betting on the thesis of software consolidation, and in Uncover , a platform focused on media optimization and digital performance.
According to Affonso, the Brazilian venture capital market has changed. In 2021, when the first fund was raised, the sector was experiencing a period of euphoria, with inflated valuations and excess capital.
According to him, Cloud9 was diligent in its investments, making few contributions in the first three years and focusing on writing more checks from 2024 onwards.
The partner at the management firm believes the scenario is more favorable. “I’m seeing companies growing 200% annually, profitable and generating cash. The deal flow is much better than in 2021. The quality of the entrepreneurs is higher,” he states.
Artificial intelligence, on the other hand, brings new challenges for investors. “I see exceptional entrepreneurs and very good products. But some barriers have fallen. It's easier to create a company and launch a product. This makes the investment more rewarding, but also more difficult. It's necessary to better understand the barriers and how to capture the market,” says Affonso.
Cloud9 Capital's fundraising comes at a time when approximately 40 venture capital firms are attempting to raise funds in Brazil, according to NeoFeed . Most of them, however, have failed to meet their targets or are closing funds below expectations.
Even so, firms with a history and tradition in the market, such as Astella Investimentos , Canary , Valor Capital, OneVC, Big Bets, Volpe Capital , Spectra , and DNA Capital, have managed to attract investors to their new vehicles.
