General Catalyst’s Hemant Taneja on AI, LPs, and raising around $8 billion | Fortune

I talked to General Catalyst CEO and managing director Hemant Taneja in the dark.

Well, he didn’t know that, but by now he probably does. The news broke yesterday morning that General Catalyst (GC for short) had raised about $8 billion in new capital. I was up at 6 AM my time, got on the phone with Taneja around 7:20 AM, and about halfway through our conversation, I realized I’d completely forgotten to…turn on the light.

Taneja—whose investments include Stripe, Samsara, Canva, Anduril, and Gusto—walked me through how that $8 billion-ish number breaks down: $4.5 billion approximately is geared towards the firm’s VC funds, including seed and growth equity. From there, $1.5 billion is for GC’s “creation” strategy, plus another $2 billion is geared towards “separately managed accounts.” It’s GC’s 12th set of funds. I asked Taneja outright: To what extent is General Catalyst a VC firm, and to what extent is it becoming something else?

“So, we describe ourselves as a global investment and transformation company,” Taneja told Fortune. “Our core very much is early-stage venture capital…It gives us license to then think about transforming industries. That’s where we’ve been cultivating these ecosystems of founders and companies we’re working with—and then developing innovative partnerships with industry and policy to drive transformations. I think you’ve seen a lot about our work in health. We’re starting to do that work in many other industries broadly.”

That answer—I think—translates to something along the lines of “we do venture capital, but are not precisely a venture capital firm.” It’s unsurprising, given that Taneja has previously (and publicly) expressed his views on the limitations of the traditional venture capital model. Accordingly, much of what Taneja and I discussed as I sat in my flannel in the dark wasn’t what you’d term standard VC. We talked about the firm’s headline-grabbing healthcare strategy. (Taneja confirmed that GC’s acquisition of Akron, Ohio-based health system Summa Health, announced in January, hasn’t yet closed.) What might it mean to bring that sort of all-in strategy to other sectors?

“We are actively working through that,” said Taneja. “What does that mean for doing it in defense? What does that mean for doing it in manufacturing? You probably saw that we invested in rebuilding manufacturing in the U.S. We’re thinking about manufacturing from a global perspective, in all of our geographies where we focus, and we’re thinking about that in other industries, as well. So, our whole idea is to bring resiliency to these critical industries.”

The $1.5 billion for “creation” strategies will focus heavily on AI. Taneja sees venture capital as “very serendipitous,” whereas creation is more “intentional” and involves “catalyzing projects.” GC decided it needed to lean into “applied AI” opportunities right now, and “that’s why we scaled that fund quite a bit this time around.” (GC may be an investor in France-based Mistral AI, but my personal favorite GC investment right now is Bird Buddy, a smart bird feeder company that utilizes AI.)

Taneja is interested in opportunities around onshoring AI productivity to reverse offshoring trends, and is looking at areas like call centers, legal, and accounting as he tracks AI-fueled “workforce transformation.” And as GC scaled up its creation strategy, the firm also scaled up its separately managed account (SMA) strategy this time around.

Taneja told Fortune that some of GC’s larger LPs are interested in SMAs as they want to “curate their exposure” to long-term transformational technologies, including AI. I asked Taneja: How are the LPs feeling? He said that LPs see potential for “really high and really excellent returns” and suggested there’s comfort with GC’s patient approach. But yes, liquidity is a topic of conversation, and Taneja turns to startups themselves.

“That’s definitely top of mind…and we’ve been putting these processes in place,” he said. “We developed this product called the customer value strategy, which provides a pathway to liquidity for companies.” This strategy, broadly, is to finance customer acquisition costs (CAC) like an asset, freeing up cash for companies to grow without relying on dilutive equity financing. As companies stay private longer, the idea is to generate liquidity for businesses without needing IPOs or acquisitions. (The customer value strategy is not specific to this new set of funds and is allocated through a separate pool of capital.)

“Our industry needs to mature as our opportunity is maturing, with the financial apparatus that we have to build these companies and generate liquidity,” said Taneja. “That’s, to me, the bottom line.”

After all, at the end of the day, it’s about keeping the lights on—for startups and the firms that back them. Taneja hung up, I glanced around, and turned on my own light.

Blue skies (maybe) ahead…Bluesky has raised a $15 million Series A led by Blockchain Capital, with participation from Alumni Ventures, True Ventures, and SevenX, among others. Bluesky—known as a challenger to Elon Musk’s Artist Formerly Known as Twitter, X—said it surpassed 13 million users. For the sake of a little fun, a moment of time travel: Twitter raised a $15 million Series B way back in 2008. The company didn’t disclose user numbers at the time, but by August 2009 reports pegged Twitter users at about 23.5 million. So, after all these years and headaches, the value of a microblogging service is more or less…the same?

You’re invited…Network with the world’s top business and policy leaders in New York City Nov. 11-12 at the Fortune Global Forum. Confirmed attendees include CEOs of PayPal, Dow, Nasdaq, Siemens USA, Indeed, Yum China, and AT&T, along with seven-time Super Bowl champion Tom Brady and Pulitzer Prize-winning composer Wynton Marsalis. Request your invite here.

See you Monday,

Allie GarfinkleTwitter: @agarfinksEmail: [email protected] a deal for the Term Sheet newsletter here.

Nina Ajemian curated the deals section of today’s newsletter. Subscribe here.

VENTURE DEALS

- Finix, a San Francisco-based full-stack payment processor, raised $75 million in Series C funding. Acrew Capital, Leap Global, and Lightspeed Venture Partners led the round and were joined by Citi Ventures, Tribeca Venture Partners, existing investors Homebrew, Insight Partners, Inspired Capital, Cap Table Coalition, and others.

- Concentric AI, a San Mateo, Calif.-based AI-based data security solutions provider, raised $45 million in Series B funding. Top Tier Capital Partners and HarbourVest Partners led the round and was joined by CyberFuture and existing investors Ballistic Ventures, Engineering Capital, Clear Ventures, and Citi Ventures.

- Nooks, a San Francisco-based AI sales assistant platform, raised $43 million in Series B funding. Kleiner Perkins led the round and was joined by existing investors Lachy Groom and Tola Capital.

- Medtech Alimetry, an Auckland-based gastric diagnostics technology developer, raised $18 million in Series A funding. GD1 led the round and was joined by Olympus Innovation Ventures, IceHouse Ventures, AGA Ventures, and existing investors.

- Bluesky, a Seattle-based social app, raised $15 million in Series A funding. Blockchain Capital led the round and was joined by Alumni Ventures, True Ventures, SevenX, and others.

- FiberSense, a Sydney-based smart sensing technology developer, raised $14 million in funding. Prosus Ventures led the round and was joined by Investible, existing investor Colinton Capital, and others.

- Ozlo Sleep, a Boston-based sleep technology products developer, raised $12 million in funding from LifeArc Ventures, Drive by DraftKings, Wise Ventures, and others.

- OLOID, a Sunnyvale, Calif.-based access and identity management workplace technology provider, raised $6 million in Series A1 funding. Yaletown Partners, Exposition Ventures, George Kaiser Family Foundation, Carya Ventures led the round and were joined by existing investors.

- Cascade AI, a Seattle-based enterprise AI HR and benefits solution, raised $3.75 million in seed funding. Gradient led the round and was joined by Myriad Venture Partners and Success Venture Partners.

- Boardy, a New York City-based AI social connection platform, raised $3 million in pre-seed funding from HF0, 8VC, Precursor, and others.

- [cafeteria], a New York City-based brand insights production platform for teens, raised $3 million in seed funding. Collaborative Fund and Imaginary Ventures led the round and were joined by Bertelsmann and Guy Oseary.

PRIVATE EQUITY

- Genstar Capital increased its investment in Likewize, a Dallas-based tech protection and support provider, and is now the majority investor. Financial terms were not disclosed.

- Kudu Investment Management acquired a minority stake in Revelation Partners, a Sausalito, Calif.-based healthcare-focused secondaries manager. Financial terms were not disclosed.

- One Equity Partners acquired York Telecom, a Wall, N.J.-based IT services firm. Financial terms were not disclosed.

- Snow Peak Capital acquired TurbineAero, a Phoenix-based auxiliary power unit maintenance, repair, and overhaul service provider for the aerospace industry. Financial terms were not disclosed.

EXITS

- Latour Capital agreed to acquire Groupe VISCO, a Chalette Sur Loing, France-based high-precision mechanical machining company for the defense, aerospace, energy, and luxury watchmaking sectors, from Tikehau Capital and Credit Agricole Regions Investissement. Financial terms were not disclosed.

- Levine Leichtman Capital Partners agreed to acquire a majority stake in Schülerhilfe, a Gelsenkirchen, Germany-based tutoring services provider, from Oakley Capital. Financial terms were not disclosed.

OTHER

- Socure agreed to acquire Effectiv, a San Francisco-based real-time risk decisioning company, for $136 million.

- Keurig Dr Pepper agreed to acquire GHOST, a Chicago-based lifestyle sports nutrition business, by initially acquiring a 60% stake and acquiring the remaining 40% stake in 2028. Financial terms were not disclosed.

IPOS

- Septerna, a San Francisco-based GPCRs-focused biotech company, plans to raise $275.4 million in an offering of 15.3 million shares priced at $18 on the Nasdaq. The company posted $1 million in revenue for the year ending June 30, 2024. Third Rock Ventures, RA Capital, Samsara BioCapital, Invus Public Equities, Deep Track Capital, Goldman, and Biotechnology Value Fund back the company.