Early-stage venture firm A* has closed its third and largest fund to date, a USD 450 million vehicle that underscores the conviction of its founders and limited partners in a strategy defined less by sector specialization than by a willingness to back outlier founders at the earliest possible stage. The fund, announced on Tuesday, brings the total capital raised by the firm since its inception in 2020 to more than USD 1 billion, a trajectory that reflects both the market’s appetite for high-conviction early-stage betting and the particular reputation that A* has built for identifying talent long before most traditional venture firms would consider writing a check. Operating with a generalist mandate, A* will deploy the new capital across artificial intelligence applications, financial technology, healthcare, and security, among other categories, maintaining a flexible approach that allows the partnership to pursue opportunities wherever they emerge rather than being constrained by a single thesis. The average check size from Fund III is expected to fall between USD 3 million and USD 5 million, a range that positions the firm to lead or co-lead seed and Series A rounds while retaining the capacity to support portfolio companies through subsequent financing events. The partnership intends to back at least 30 startups with the new fund, deploying the capital over the next two to three years in a cadence consistent with its previous vehicles. The limited partner base for Fund III includes a mix of nonprofit organizations, private foundations, and university endowments, with Carnegie Mellon University publicly named among the institutional backers, a signal of confidence from an institution deeply associated with technology and engineering excellence.
A Rapidly Ascending Fundraising Trajectory
A* was founded in 2020 by Kevin Hartz and Bennet Siegel, both of whom brought substantial operating and investing experience to the venture studio model that the firm has since refined. The firm’s first fund, a USD 300 million vehicle raised in 2021, established its presence in early-stage investing during a period of extraordinary market activity. That was followed in 2024 by a USD 315 million Fund II, which was reportedly oversubscribed, a sign that limited partners were eager to increase their exposure to the firm’s approach even as the broader venture market showed signs of cooling. The jump to USD 450 million for Fund III represents an acceleration in the firm’s fundraising capabilities and suggests that A* has delivered returns or at minimum demonstrated a compelling narrative that resonates with institutional capital allocators. The consistent growth in fund size from USD 300 million to USD 315 million and now to USD 450 million indicates a disciplined but ambitious expansion, one that prioritizes maintaining the firm’s focus on early-stage investments rather than chasing larger check sizes that might push the firm into later-stage territory.
Kevin Hartz: From Entrepreneur to Venture Builder
Kevin Hartz is not a career venture capitalist who moved into investing directly from business school or an investment bank. He is a serial entrepreneur who built companies that reshaped entire industries before turning his attention to backing the next generation of founders. Hartz co-founded Xoom, the international money transfer service that PayPal acquired in 2015 for USD 1.1 billion, a transaction that validated the thesis that digital cross-border payments represented a massive underserved market. He also co-founded Eventbrite, the event ticketing and management platform that went public in 2018 and became a staple of the live events economy. These experiences gave Hartz a firsthand understanding of the challenges that founders face when building companies from zero to scale, and they inform the operational support that A* provides to its portfolio companies. Bennet Siegel, his co-founder at A*, brings complementary expertise from the investing side, and together they have built a firm that operates with the urgency and pragmatism of a startup while managing capital with the rigor that limited partners expect from institutional venture managers.
A Generalist Mandate in a Specialist Era
The venture capital industry has increasingly trended toward specialization over the past decade, with many firms focusing exclusively on a single sector such as enterprise software, healthcare, or climate technology. A* has deliberately chosen a different path, maintaining a generalist approach that allows it to back companies across a wide range of categories. The firm’s focus areas include AI applications, fintech, healthcare, and security, but these are not rigid silos. The partners are willing to look at opportunities in virtually any sector where they see a founder with exceptional insight and the ability to execute. This approach has several advantages. It allows the firm to deploy capital across the entire innovation landscape rather than being forced into a narrow set of deals within a single sector. It also enables the firm to identify thematic connections between seemingly unrelated industries and to build a portfolio that benefits from diversification. The generalist model does require a particularly strong pattern recognition capability from the partners, who must evaluate founders and business models across domains that may be entirely unfamiliar to them. Hartz and Siegel have demonstrated that they can do this effectively, drawing on their own operating experience and a network of domain experts to inform their decisions.
Deployment Strategy and Check Sizes
With Fund III, A* will maintain the same disciplined deployment strategy that characterized its earlier vehicles. The USD 3 million to USD 5 million average check size is calibrated to allow the firm to take meaningful ownership positions in early-stage companies without overwhelming the capitalization tables of the startups it backs. This range is typical for a seed or Series A round, and it positions A* as a lead or co-lead investor in most of the deals it does. The firm plans to back at least 30 startups with the new fund, which implies that it will maintain a concentrated portfolio compared to many early-stage firms that might back 50 or more companies with a similar amount of capital. This concentration reflects the firm’s conviction-driven approach, where each investment represents a significant commitment of both capital and attention. The capital will be deployed over two to three years, with the firm reserving a portion of the fund for follow-on investments in its most successful portfolio companies. This reserve strategy is critical in early-stage investing, where the companies that show the most promise often require additional capital to scale, and where the ability to double down on winners can be the primary driver of overall fund returns.
Backing Teenage Founders: A Distinctive Portfolio Strategy
One of the most distinctive aspects of A*’s approach is its willingness to back founders who are unusually young, including teenagers, at a time when the practice of investing in very young entrepreneurs has become more common but remains far from mainstream. Hartz told TechCrunch in late 2024 that close to 20 percent of the firm’s current portfolio involves teenage entrepreneurs, a statistic that is striking given the firm’s relatively small portfolio size and the conventional wisdom that young founders lack the experience and maturity to build successful companies. The logic behind this strategy is straightforward. Some of the most transformative companies in technology history were founded by people in their late teens or early twenties, including Facebook, Microsoft, and Google. Young founders often bring a level of ambition and risk tolerance that more experienced entrepreneurs may lack, and they are frequently closer to the emerging consumer behaviors and technological trends that will define the next decade. Backing teenage founders does carry additional risks, including legal and regulatory considerations around contracts and governance, but A* has developed processes for managing these risks and has demonstrated that the approach can produce strong outcomes. The firm’s portfolio includes Ramp, the high-growth fintech company that has become one of the most valuable private companies in the corporate spend management space, and Mercor, an AI company that addresses talent evaluation and recruitment. These investments demonstrate that A* is not simply making bets on youth as a novelty but is identifying genuinely promising companies led by founders who happen to be young.
Ramp and Mercor: Flagship Portfolio Companies
Ramp has emerged as one of the most prominent companies in the A* portfolio, and its trajectory illustrates the kind of outcomes that the firm aims to achieve. The company, which provides corporate credit cards and spend management software, has grown rapidly and raised substantial venture capital from some of the most respected investors in the industry. Its success validates the firm’s ability to identify fintech opportunities at the earliest stage and to support them through subsequent rounds of financing. Mercor, the AI firm backed by A*, operates in the talent evaluation and recruitment space, using artificial intelligence to assess and match candidates with opportunities. The company sits at the intersection of two trends that A* has identified as central to its thesis: the application of AI to transform traditional industries and the growing importance of efficient labor markets in an increasingly distributed workforce. Both Ramp and Mercor are examples of the kind of companies that A* seeks to back, businesses that combine technological innovation with clear market demand and that are led by founders with the vision and execution capability to build lasting enterprises.
The Limited Partner Base: Institutional Confidence
The composition of A*’s limited partner base for Fund III provides insight into the firm’s reputation and the confidence that institutional investors have in its strategy. The inclusion of nonprofit organizations, private foundations, and university endowments reflects a LP base that is sophisticated and long-term oriented. Carnegie Mellon University, named publicly as one of the backers, has a strong association with technology and computer science, and its decision to invest in A* signals that the firm is viewed as a credible partner by one of the most respected institutions in the technology education space. Endowments and foundations typically conduct extensive due diligence before committing capital to venture funds, and their participation in Fund III suggests that A* has demonstrated strong performance with its earlier funds or has presented a compelling investment thesis that aligns with their return objectives. The presence of nonprofit and foundation capital also indicates that the firm’s strategy resonates with investors who are looking for both financial returns and the positive externalities that come from backing innovative companies across a range of sectors.
Context and Competitive Landscape
The closing of Fund III comes at a time when the venture capital industry is navigating a complex market environment. After the record fundraising and deployment activity of 2021 and early 2022, the market experienced a significant correction in 2023 and 2024, with many firms struggling to raise new funds and portfolio companies facing pressure to demonstrate a clear path to profitability. In this environment, the ability to raise a USD 450 million fund is a signal of strength, particularly for a firm that has been operating for only a few years. A* has benefited from the reputation of its founders and from a strategy that emphasizes discipline and conviction over volume. The generalist approach, while less common in today’s specialized market, allows the firm to pivot toward the most promising opportunities regardless of sector, which may be an advantage during periods of rapid technological change when the most interesting opportunities often emerge in unexpected places.
Fundraising Momentum and Market Positioning
The progression from USD 300 million to USD 315 million to USD 450 million in three successive funds represents a clear upward trajectory, but the firm has also demonstrated restraint by not chasing larger fund sizes that might have been available given the demand from limited partners. A* could likely have raised a larger Fund III, but the partners have chosen to maintain a fund size that allows them to deploy capital at the early stage with the same discipline that characterized their earlier funds. This decision reflects a long-term orientation and an understanding that in venture capital, capital deployment discipline is as important as fundraising ability. The firm’s market positioning as a generalist early-stage investor with a distinctive approach to founder identification sets it apart from both the mega-funds that dominate later-stage investing and the highly specialized seed funds that focus on a single sector. A* occupies a middle ground that combines the flexibility of a generalist mandate with the focus of an early-stage specialist, a positioning that appears to resonate with both founders and limited partners.
Implications for the Early-Stage Ecosystem
The availability of USD 450 million in early-stage capital has implications for the broader startup ecosystem, particularly for founders who may not fit the traditional profile that most venture firms seek. A*’s willingness to back teenage founders and to look across sectors means that a meaningful pool of capital is available to entrepreneurs who might otherwise struggle to find support. This can have a catalytic effect on innovation, enabling companies to be built that might not otherwise exist. At the same time, the firm’s focus on a relatively concentrated portfolio of 30 or more startups means that each company it backs receives substantial attention and support from the partnership. This combination of capital availability and hands-on support is valuable for early-stage founders who need both the financial resources to build their companies and the operational guidance to navigate the challenges of scaling a business. For the broader venture ecosystem, A* serves as an example of how a firm can differentiate itself not through sector focus alone but through a distinctive approach to founder identification and support, an approach that may become more common as the venture capital industry continues to evolve.
Outlook: What Fund III Enables
With Fund III now closed, A* is positioned to continue pursuing its strategy for the next several years, deploying capital into what the partners believe will be the most promising early-stage companies across a range of sectors. The fund provides the firm with the resources to lead rounds, to support portfolio companies through follow-on investments, and to attract co-investors who are drawn to the firm’s sourcing capabilities and its track record of identifying outlier founders. The next two to three years will test the firm’s ability to maintain the same level of performance with a larger fund, as the pressure to deploy capital at a steady pace can sometimes lead to compromises in investment quality. However, the partnership has demonstrated discipline in its previous funds, and there is little reason to expect that this discipline will falter with Fund III. The broader market environment remains uncertain, with interest rates, geopolitical tensions, and technological disruption all creating both risks and opportunities for early-stage investors. A* has built a firm that is designed to navigate this uncertainty, with a flexible mandate, a concentrated portfolio, and a willingness to back founders who are building companies that can reshape industries. Fund III provides the capital to continue this work, and the coming years will reveal which of the firm’s bets become the next generation of transformative companies.
