Reach Capital Raises $265M Fund V to Back AI Startups

Reach Capital has closed a $265 million fifth fund that will focus on early-stage companies developing artificial intelligence applications across learning, health and work.

The San Francisco venture firm plans to invest between $1 million and $10 million per company from Fund V, covering rounds from pre-seed through Series A. Reach expects to back roughly 50 companies over the next three years, though it has not yet made any investments from the new fund.

Reach Capital targets AI across three sectors

Reach, founded 11 years ago, is positioning its latest fund around AI products intended to expand human capabilities rather than replace them. Tony Wan, the firm’s head of platform, said that strategy translates into investments across learning, health and work.

Reach’s existing portfolio includes companies such as Replit, ClassDojo and Coral Care. The firm’s limited partners for Fund V include Capricorn Investment Group, the Los Angeles Fire and Police Pensions, the LEGO Foundation, and the College Board.

General partner Jomayra Herrera said Reach completed fundraising in less than six months, with most existing limited partners increasing their commitments and several new investors joining the fund.

Fund V follows two smaller Reach Capital funds

The $265 million vehicle is larger than Reach’s previous two funds. The firm raised $215 million for Fund IV in 2023, following $165 million for Fund III in 2021.

The fundraising comes as U.S. venture capital has become increasingly concentrated among established managers. Analysis from PitchBook and the National Venture Capital Association found established firms captured more than 90% of roughly $62 billion raised by U.S. venture funds through May, leaving a smaller share for first-time and mid-sized managers.

Reach’s long-running focus on education technology and impact investing gives it a more specialised position as it expands its investment strategy around AI applications.

Recent portfolio exit highlights AI exposure

One of Reach’s recent portfolio exits came in June when Superhuman, the productivity platform owned by Grammarly, acquired AI-detection startup GPTZero. Financial terms were not disclosed.

GPTZero, co-founded by Princeton graduate Edward Tian, had grown to more than 19 million registered users and $30 million in annual recurring revenue after raising $13.5 million in funding. Reach was among its investors alongside Uncork Capital, Footwork and Jack Altman’s Alt Capital.

Fund V provides Reach with fresh capital to continue its early-stage strategy while concentrating new investments on AI applications in the three areas it has identified as central to the fund: learning, health, and work.