Foundation Capital has undergone significant transformation since it reduced its fund size from $750 million in 2008 to $282 million (its sixth main fund) in 2013. This drastic change marked a new beginning for the firm.

On Tuesday, the veteran firm, now 30 years old, announced the successful closure of its eleventh flagship fund, securing $600 million in capital commitments. Notably, this fund is 20% larger than its predecessor, the $500 million fund it closed approximately three years ago.

The key to Foundation Capital’s resurgence lies in its unwavering commitment to seed-stage investing, an approach that has become a hallmark of the firm’s strategy. By focusing on the early stages of company development, Foundation has managed to carve out a niche for itself in the competitive venture capital landscape.

General Partner Steve Vassallo shed light on the firm’s philosophy, stating, “Most firms that have been around for 30 years have typically expanded their scope to include multi-stage, multi-geography, and multi-strategy investments. In contrast, we have chosen to remain focused on the early stage, where we can make a meaningful impact on a company’s trajectory.”

A testament to this approach is the fact that Foundation is the first institutional investor in over 70% of its portfolio companies, demonstrating its willingness to take calculated risks on promising startups. Vassallo elaborated, “We seek out what I refer to as ‘$0 billion’ markets in enterprise, AI, fintech, and crypto – markets that are yet to exist, waiting for visionary founders to bring them into being.”

A case in point is Cerebras, which launched in 2016 from Foundation Capital’s office. At the time, the AI chip market was virtually nonexistent, with AI workloads being minimal and Nvidia’s GPUs primarily used by gamers and graphic designers. Fast forward to today, Cerebras has grown into a company valued at $4.25 billion, although its IPO was postponed due to a review by the Committee on Foreign Investment in the United States (CFIUS).

Foundation Capital was also the first institutional investor in the blockchain platform Solana, further underscoring its ability to identify and support pioneering companies. Vassallo drew an analogy between their approach to finding founders and the pre-criminals in the movie Minority Report, joking that they sometimes identify “pre-founders” before they’ve even left their previous job.

The firm’s strategy of creating new markets has yielded impressive results, with winning investments often ending up as category leaders, thereby achieving exponentially better outcomes. Vassallo attributed the firm’s ability to secure a larger fund in the current market to its history of high cash distributions to limited partners (LPs).

“Over the last three years, we have returned roughly $1.4 billion to our LPs,” Vassallo revealed, adding that this amount is over three times what the firm had called from its investors during the same period. Recent exits, such as the sale of fraud detection company EvolutionIQ to CCC for $730 million and the acquisition of cybersecurity startup Venafi by CyberArk for $1.5 billion, have significantly contributed to the firm’s cash returns.

Although Foundation remains committed to its early-stage strategy, it recognizes the need for a larger fund due to the increasing size of seed and Series A deals. The firm aims to maintain its ownership stake of 15% to 20% in each company at the initial investment stage. However, one notable change is the retirement of Charles Moldow, a veteran investor who spent nearly 20 years at the firm and backed notable companies like LendingClub, Rappi, and Kiavi, leaving Foundation with four general partners.